Thursday, August 11, 2011

The Race to Rock Bottom

Frank owns a factory that makes winter hats. He is the fourth generation of his family to run the factory, located in a small town in Middle America. Forty percent of the town has a steady, well-paying job in the factory. For years, the company's hats have been in local sporting goods stores, hardward stores and general stores across the country. They had a reputation for being made of the finest quality wool and leather, assembled in America, long-lasting, and good at keeping hard working Americans warm all winter long.

A large retail corporation with plans for global price and sales domination comes along, let's call this company Sprawl-Mart. The executives of Sprawl-Mart like Frank's hats, and while they find his company's family history, local roots, and quality product touching, they think his prices are too high. Too high by half, in fact. But they really want to sell Frank's hats, so the product development director of Sprawl-Mart calls Frank one crisp autumn morning, and offers to buy one million of Frank's hats. Frank's jaw drops! That is more hats than Frank's company has made in the last ten years. Frank will be able to expand his shop, hire more local people, and offer everyone a bonus come Christmas time. But Sprawl-Mart has one condition...the price of his hats needs to be cut by 75%.

Frank is speechless. He sputters into the phone: "But! I can't increase my production by 500% AND reduce my costs by 75%! It cannot be done!" Sprawl-Mart disagrees. They tell Frank that they will be ordering one million hats from someone, whether it be him, or his biggest competitor. Sprawl-Mart tells Frank that once they start selling his competitor's hats in large quanities across the globe, at rock bottom prices, it will put Frank's fourth generation company right out of business. "Find a way to make these hats 75% cheaper," Sprawl-Mart hisses into the phone.

Frank has no choice but to meet Sprawl-Mart's demands, because if he doesn't, it will likely mean the end of his family's business. So Frank calls a factory meeting, and tells the workers, some of whom he grew up with, that the company will be moving it's operations to Vietnam, and that the factory where four generations of locals have worked will be closing down. They already have a buyer for the factory, in fact. A Sprawl-Mart subsidiary, Concrete Jungle Developers will be bulldozing the place to put up high-dollar condos.

One day, Frank walks into a new Sprawl-Mart location just outside of town. He sees Helen, who used to be a foreman at the factory, now she is working for minimum wages and no benefits; she doesn't say hello. Frank see's Marty, who was a talented shop mechanic, fixing a light fixture high up in the Sprawl-Mart ceiling. He shouts a "hello" up to Frank; Marty shouts back down, "No time to talk, gotta wrap up here so I can head to my second job." Then he gets to the aisle where Sprawl-Mart stocks their hats. And there he sees it, the new version of his family's legacy, made out of foreign cotton, foreign imitation leather, and all put together in Vietnam.

This story is fictional in the strictest sense of the word, but many of the products hanging on the shelves at big box retailers across the country have a similar story to tell, stories that are all too real. For every one low-paying retail job that big box retailers create, there is no telling how many good paying American manufacturing jobs they put out of business forever; the kind of jobs that America was built on. This is the cost of the American obsession with low-priced goods. Your cheap back to school supplies and snacks for the big game have a low price, but an incredibly high cost.

1 comment:

Chad said...

This is the truth! Hats off to a well written revolutionary topic of coversation and controversy! Nice work! Whats the solution?