The Winds of Change

If you’re heading back into work this morning from a long, Labor Day weekend with a general feeling of malaise and discontent, you’re not alone, if the most recent spin on American sentiment by CNN is to be believed.

Most of your neighbors are "angry about something" when it comes to how the country is run, and it's more likely than in previous years voters will effect changes in November. The Opinion Research Corporation came to such conclusions from a half-sample of 1,004 adult Americans polled between Wednesday through Saturday. They asked how folks believe things are going in this country.

• 29 % said "pretty badly"
• 25% said "very badly" -- up from 15 percent a month ago
• 37% said things are going as "fairly well"
• 9% said "very well"
• 76% said there was "something" to be angry about in the country today

By comparison, 59% felt that way when polled in February.
Only 21% said they were "generally content" in the latest poll.
9% considered the economy to be "very good," but the number who considered conditions "somewhat good" dropped from 42% to 35% over the same period.

55% are more likely to back a challenger in races on this year's ballot. This level of anti-incumbent sentiment is higher than the 48% recorded as "pro-challenger" in a similar survey in 1994, when the GOP took control of both houses of Congress.

Interestingly, 48% said that there would be no difference in the way the country is being run if most of the present members of Congress were replaced with new members. 42% said a changing of the crew in Congress would be a change for the better, and 7% said it would change Congress for the worse.

Not surprisingly, the Economy topped the list of concerns, 28% calling it the most important issue when deciding how to cast their ballots. Iraq was in second place (25%) with terrorism (18%), moral issues (15%) and immigration (14%) rounding out the list of concerns.

CNN gleefully noted that Democrats lead Republicans by a 10-point margin among likely voters asked which party's congressional candidate they would support in November, and Democrats held a 56-40 lead on the same question among registered voters.

How do you identify with those results?

In which group would you place yourself?

Knowing what others are thinking and feeling, how do you adjust your strategy for making money through the end of the year?

My friend, Tobin Smith, shared an e-mail over the weekend from a disgruntled listener in the midwest, who was whining that the poor are getting poorer, the rich are getting richer, and the middle class is getting smaller, and not getting any richer, blaming the present administration for the dilemma, blah blah blah, yada yada yada.

Toby’s response, I thought, was right on: You cannot blame George Bush Jr., or for that matter, George Bush Sr., Bill Clinton, Ronald Reagan, or even Jimmy Carter for what’s happening in the world today. President Bush is hardly responsible for the rest of the world, i.e., India, China and South America, deciding to join the global economy.

Manufacturing jobs in this country have been shrinking for the past four decades. The reality is that manufacturing customers today are faced with a wider choice of suppliers from around the world, and they’re going to go with the cheapest source in order to stay competitive, much less survive.

The patriotic mantra of “Buy American” is not the best business decision, and for the sake of the US economy, no longer a prudent philosophy. The right source of labor and products is not necessarily the politically-correct source.

Here’s the handwriting on the wall: if you are providing a product or a service that is available at a cheaper price, or with better quality, you’re in the wrong business. American labor is currently running 50-to-70-percent higher with no appreciative increase in value for the higher cost. If you’re in a business that can be replaced at half the cost, you’re in trouble…or in denial.

The automobile manufacturers are a prime example of what’s gone wrong—with American mentality--as well as car manufacturing. I believe many of the popular notions of the day are misplaced, and here’s why:

It’s not George Bush’s fault that We the People use 25% of the world's oil while only possessing 3% of the world's supply of oil. George Bush is not to blame for the fact that the US builds the lowest-quality domestic cars in the world (i.e., GM or Ford), nor can he be held responsible for the fact that US consumers choose to buy the highest-quality cars from Toyota and Honda. In fact, Toyota and Honda make significantly more fuel-efficient cars and trucks that also look better and are consistently rated by American consumers as more reliable.

(Personal disclosure: In my driveway sit four automobiles, all less than two years old; three are of Japanese origin, and one has as many parts of German design as American. All but one were assembled in the United States by US workers.)

Here’s the ultimate irony: since most Toyotas and Hondas and 3-series Beemers are "Made in America," there is little to sustain the argument that so many more automotive manufacturing jobs are being exported overseas. Auto makers are falling behind foreign competitors in technology, design, and marketing—not because of outsourced assembly line workers.

The new facts of life in the 21st Century are that GM and Ford must build products that Americans prefer to buy, or continue to lose market share and manufacturing jobs in the Midwest, as well as the South, East, and West.

Don’t you find it interesting that GM is doing great in China -- making money building cars and trucks and taking market share? Is there perhaps a correlation in the fact that those vehicles are being made in China because that is the best source of competitive labor?

Meanwhile in our country, because it's been politically suicidal for the Federal Government to act, 22 states have taken on the task of increasing the cost of labor by raising minimum wages. Texas is considering jumping on the bandwagon, and it’s a pitiful tune to be played.

The facts are that minimum wages should not be confused with living wages. Raising minimum wages increases costs and in turn eliminates entry-level jobs. When you add the union element to wage negotiations, you reach a point where labor prices itself right out of a job.

Union labor is going to be the final nail in the coffin of Ford and GM if their product issues cannot be resolved. Tobin Smith points to the breaking of Caterpillar’s ties to its union in the '90s so that it could compete with Kubota in Japan as a perfect case in point. Amazingly, Caterpillar has added 50,000 manufacturing jobs since they broke the strikes against the union in the '90s. Tobin says almost every manufacturing company he’s spoken with that is not union-based has added American jobs in the last five years. Only the union-labor-bound manufacturers have had to cut jobs.

The times have changed, and we’re now competing in an age where skilled manufacturing is available and cheap on multiple continents—which was not the case 25-years ago.Watch for the survivors—corporately and individually—to be those who grasp this concept and adapt aggressively.