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A large typical business cycle since the early 80s #1068268 01/20/14 01:51 PM
Joined: Jan 2001
Posts: 3,876
Tag Offline OP
Roll Me Over
*****

A very profitable company in the early 80s has shed its unions by renaming itself and hiding it is actually the same corp or by any other typical union busting techniques.
This company thinks that every bit of profit is due to one guy and a few of his followers at the top. One day the company decides they need to give the guy a deserved raise and bonus. He takes this first raise that by all standards even that of the floor workers is deserved and all is well.

Then he decides maybe he can get more for himself and a few of his top big wigs which vote for his raises and put him on this pedestal. So he runs the company very lean for a very large unsustainable short term profit. Now the company looks great in turn so he does get the massive bonus and raise. Now this bigger raise is at the cost that they have to get rid of some of the workers and less maintenance. With younger lesser paid and less experienced employees come in and trigger lower Labor cost for now. So with labor cost lower or at least not rising and fewer employee benefits the companies profit grows larger. About now though since he was running the company lean the machines are starting to break down but still going with bailing wire and duct tape. The employees are starting to get tired of being blamed for all the down time due to worn out machines and threats of replacement. But still short term profits are rising along with the big wig profit sucking bonus which did start out deserved.

Now many of the lower paid workers don't know how to fix the machines and the company is not willing to pay for the knowledge of the older workers to come back and repair the poorly maintained machines and dirty building or buildings.

A few years and more cycles later production is taking a hit and soon so will profits. So now the man at the top sees a potential decrease in profits and thinks it is time to bail from the company before the reason for his profits comes to light. So he leaves and takes a check with him that most of the employees will not earn in a lifetime. Along with his normal check that is almost as big as all the floor workers combined.

Now the company has declining production. Profits are declining and so is the condition of the various dirty buildings. Now the equipment worn out and the company has a less skilled workforce that can not repair it.

Eventually the company says we need new machines and lots of work on the buildings but do not have enough money to get it. So we need to sell many more shares. During this time they hire a new big wig that has just parted from another company that is starting to have the end of its short term boom cycle but since he departed before the similar type of decline he looks great on paper. This guy MUST deserve even a bigger portion of the potential profits to attract him. So the company sells stocks while cutting employee wages more and even replacing many of the with Temp workers.

The infusion of cash works for a while but with all the temp workers the little bit of budget set to maintenance is not affective enough to sustain the factoies. At this time the hunger from the top is still growing but now the company has more dividends to pay and the employees wages have been dragged down so far there is little to nothing more to take. So now the company has little choice but to blame the "High cost of Labor and "regulations" then either move over seas or shut down all the way.

Last edited by Tag; 01/20/14 05:24 PM.
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Re: A large typical business cycle since the early 80s [Re: Tag] #1068269 01/21/14 05:22 AM
Joined: Oct 2002
Posts: 15,887
kewlynx Offline
Toyota & Classifieds Moderator
*****
Sounds like the 'rise in employment' numbers.

There may be more work, but it sure as heck isn't at a living wage.

Good read.


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Re: A large typical business cycle since the early 80s [Re: kewlynx] #1068270 01/21/14 01:09 PM
Joined: Jan 2001
Posts: 3,876
Tag Offline OP
Roll Me Over
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I did not have much time to type it all out.


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Re: A large typical business cycle since the early 80s [Re: Tag] #1068271 03/23/14 10:52 PM
Joined: Jan 2000
Posts: 8,160
Lloyd Swartz Offline
Web Wheeler
I will start by saying modern unions are worthless. That said, the ridiculous wages paid to CEOs is idiotic. You cannot tell me there is not a qualified, or hoards of qualified leaders willing to lead for less then millions and millions of dollars, and do just as good a job if not better. There is no problem with Significant compensation, but when it drags the company down or comes even a company loses money? There is something wrong. The problem is really Board of Directors that have established this culture, and stock holders that don't vote them out.


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