Corporate Illogic

Yves smith writes:

You must go, now, and read a critically important piece questioning the logic of sending American manufacturing jobs offshore. It’s titled Losing Sparta (hat tip Dikaios Logos) by Ester Kaplan in VQR. We have written regularly about how we have been repeatedly told by managers and executives that the case for offshoring was often not compelling,

I’ve had executives attest to variants of this behavior, that they offshored even though it was not particularly good for the company because Wall Street wanted it and doing so popped the stock. One can similarly imagine that the simple minded story that Phillips was “concentrating manufacturing” would sound great at investor presentations and never got scrutinized once it became a pillar of the professed strategy.

There’s much more good reporting in this compelling, if sad case about how soi disant business leaders throw loyal, skilled workers on the dust heap with no thought and not even a real commercial justification. Confirming our dim view:

A 2012 study by Michael E. Porter and Jan W. Rivkin of Harvard Business School, based on interviews with 1,767 executives involved in location decisions over the previous year, confirms Bronfenbrenner’s view. Porter and Rivkin found that “rigorous processes for location choices” are “far from universal” and that such decision-​making processes “have lagged behind those for virtually all other major investment decisions.” They found that companies often underestimate the hidden costs of offshoring, overlook the advantages of a US location and “fall prey to biases that work against the U.S.”

So workers are correct to see the treatment of workers in class warfare terms. It may take a long time to come to pass, but this level of irresponsibility among what passes for our elites is sowing the seeds for widespread upheaval.