11/14/09 3:13 PM
Swedish Meatballs
Spiegel Online International reports this week of a shocking tell-all penned by IKEA managing director Johan Stenebo. I investigate IKEA in detail in my new book, CHEAP:The High Cost of Discount Culture, and I'm delighted to see a former IKEA executive coming clean on the company's questionable business practices.
Stenebo, a 20 year veteran of the company, headed up IKEA's GreenTech division and had quit thanks to what he describes as a crisis of conscience. "The company was easier to run when (founding director Igmar) Kamprad played the role of an ascetic, slightly dim geriatric," Stenebo says. "Apart from that, the petit bourgeois façade helped to push down prices with suppliers." IKEA, the largest furniture company in the world, is also one of the largest users of wood in the world, and it keeps prices low by sourcing timber from the Russian Far East and China, where forestry practices are--to put it kindly--questionable. Cheap furniture--like cheap clothes, cheap food, cheap electronics--come loaded with a long list of externalized costs--most of them unknown to consumers.
Despite its Scandinavian elan and cool image, IKEA is no different from any other highly profitable discount retail chain--it keeps its prices low by paying its suppliers as little as possible, and scouring the globe for cheap labor and cheap resources. At IKEA the meatballs may be tasty and the designs adorable, but environmental and human rights concerns take a far back seat to profit.
11/04/09 4:59 PM
It's About the Money, Stupid
Contrary to what we're so often told, American students are not bad at math and science.The John J. Heldrich Center for Workforce Development published a study not long ago that concluded that, contrary to fears expressed by educators and potential employers, American students have not wavered in their interest in science and math over the past 30 years. But, the study also found that many of the highest performing students were choosing non-science and math careers, the reason being, of course, a lack of opportunity and growth in those fields.
Basic economics tells us that human beings tend to follow the money. In the late 1990s, the dot com boom sent many very smart and hard working youngsters in the direction of computer science--at MIT, the famous "Course 6" (electrical engineering and computer science) was the hottest offering on campus. And MIT was not alone--enrollments soared in programs across the country. But with the post dot com bomb climate for computer geeks not nearly as sunny, these ultra-smart and eager hordes are looking elsewhere.
Whining and hand wringing over the state of science and math education in this country will have little impact if the jobs for scientists, engineers and mathematicians remain so uncertain, and so readily outsourced or filled by visa holders from abroad. Young Americans are not nearly so lazy or stupid as many pundits make them out to be--the best and the brightest will turn to math and science only if and when it pays to do so.
Photo Credit: Flickr User woodleywonderworks
10/21/09 4:36 PM
Let Them Eat Hot Fudge and Whipped Cream
In Wednesday's New York Times, Tom Friedman posited (yet again) that Americans are losing ground because we are lazy, passive, and/or just plan ignorant. As is his custom he begins with an anecdote, a supposedly chance encounter with a one time PepsiCo and Kraft Europe executive now laboring in the stony fields of international investment. We learn nothing of this man's personal educational background or his credentials, but we do hear him warn that " education failure is the largest contributing factor to the decline of the American worker's global competitiveness, particularly at the middle and bottom ranges."
Say what? There's a growing body of evidence to show that extremely well educated Americans are scrambling for work--some with advanced degrees in science and engineering from the country's most demanding institutions of higher learning. But wait, education is not enough -- we must hustle, too. Friedman quotes another unnamed "friend" a lawyer whose firm has gone through a series of lay-offs. This friend shares the "interesting" observation that "lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn't there. But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the new untouchables."
Who are these untouchables? Well, certainly not the "average" among us, that great majority of ordinary humans who simply know how to do a job and do it well. "It's all about what chocolate sauce, whipped cream and cherry you can put on top," Friedman concludes. "So our schools have a doubly hard task now -- not just improving reading, writing and arithmetic but entrepreneurship, innovation and creativity."
Last time I looked, schools were having a hard enough time teaching kids the basics--now they are expected to "teach" creativity and entrepreneurship? One wonders how Mr. Friedman would have managed as an independent entrepreneur without the power of the Times to back him. But one wonders even more about the reasoning of a commenter who argues that the average American doesn't have a chance in this new global economy, and that only the extraordinary deserve a place in his brave new world.
(Photo: Flickr/GIHE)
10/08/09 10:36 AM
The (Not So) Great Walls of China
The New York Times reports today that drywall imported from China and used in newly built homes in the U.S. emits fumes that can lead to headaches, nose bleeds and other nasty symptoms. Apparently, the fumes also corrode and/or turn "every piece of metal indoors" black.
The Times goes on: "While tainted Chinese imports like toothpaste, pet food and baby formula have been quickly removed from store shelves, drywall is installed throughout homes and does not lend itself to a quick fix."
The Times was rather late to this story. Last spring the EPA tested a batch of Chinese made drywall and found it emitted not only sulfur, but also excessive amounts of strontium compounds.
Chinese-made drywall is used in American homes because it is cheaper than American- made drywall. That is the one and only reason. But this incident leads to a question: What shortcuts are required to make a product as heavy as drywall so cheaply that it can compete in this country on price even after being shipped halfway around the globe?
Photo Credit: Flickr Users exfordy and Bone.P7
09/29/09 8:13 AM
A Snake, After All, is a Snake
Last month, Hyatt Hotels Corp. fired 98 housekeepers, many of them veteran employees who made $15-per-hour, and replaced them with $8-per-hour "temporary" workers provided by Hospitality Staffing Solutions, an outsourcing firm in Atlanta. While the details are murky, and Hospitality Staffing Solutions has refused to respond to this correspondent's repeated request for specifics, at least some of these new employees are reportedly "guest workers'' on H-2B visas.
The guest workers were trained by the Hyatt veterans, who were told the new recruits were not replacements, but part-timers who would "fill in" for sick and vacationing permanent workers. According to union officials, after successfully training the new workers, the Hyatt veterans were told to clean out their lockers for "health purposes." They gamely did so. The next day they were told to hit the road.
The H-2B visa program was designed to allow employers to hire temporary help for peak and holiday periods; for example wait staff and construction workers during the summer months. Now, it seems, outsourcing firms are luring H-2B's to what in better times would be permanent positions, but due to today's crushing unemployment are breezily turned into part-time, some-time jobs without benefits or a living wage. Since H-2B holders are tied to this country by their jobs, they have no power to object to conditions or terms. Voiceless and without recourse, they are to some minds the ideal employees--they keep their mouths closed, their complaints to themselves, and their eyes averted.
This episode recalls the old story of Mr. Snake and Mr. Toad. Snake offers to carry Toad across a rising river, promising not to bite him. Toad agrees, and hops on for the ride. Half way across the river Snake coils back and bites him. Toad's dying words are: "You promised not to, why, oh why?" Snake responds sadly: "Because I'm a snake."
Cutting costs, especially labor costs, is the quickest and easiest way to pad the bottom line. But this race to the bottom is not only immoral, it is debilitating in the long term. A low wage, transient workforce is a shaky base from which to build a corporate pyramid. Indeed, history shows it will not stand. Yet, despite self-serving rhetoric claiming otherwise, this is increasingly the direction corporations chose to go. Rather than innovate or perform their way out of whatever difficulty they're in, companies cut their workforce and their payroll and hope for the best.
Hyatt replaced an experienced, loyal workforce with a bevy of ill-paid temporary workers with no voice and few rights. This is not surprising. What is surprising is that so far, they seem to be getting away with it. Brian Lang, vice president of the Unite Here Local 26, which represents Boston's hospitality workers, told me that what happened at the Hyatt was the worst infringement of worker rights he'd wittnessed in his entire career. Let's try to make sure it remains the worst, rather than being just a taste of what's to come. Mr. Snake cannot help being a snake. But it's a fool's game to hop on its back and hope for a smooth ride to shore.
Photo Credit: Flickr User markhillary
09/10/09 4:46 PM
The Big Business of Keeping America Fat
It's rare for me to write two posts in one day, but Michael Pollan's brave opinion piece in today's New York Times deserves applause, and amplification. In it, Pollan points out that a shockingly significant share of the skyrocketing cost of health-care can be traced to the nation's high rate of obesity and obesity linked disease. This phenomenon, he says, is about to get swept up in a "sea change." Pollan writes:
AGRIBUSINESS dominates the agriculture committees of Congress, and has swatted away most efforts at reform. But what happens when the health insurance industry realizes that our system of farm subsidies makes junk food cheap, and fresh produce dear, and thus contributes to obesity and Type 2 diabetes? It will promptly get involved in the fight over the farm bill -- which is to say, the industry will begin buying seats on those agriculture committees and demanding that the next bill be written with the interests of the public health more firmly in mind.
Cheap food is cheap only because American taxpayers pay for it in ways both obvious and subtle--from agricultural subsidies for grain and the livestock that fattens on it to food safety mishaps to our soaring medical bills. While industry sponsored "pundits" and radio shock jocks rant on and on about "food nannies" limiting our "choices," for millions of low income Americans there is no real choice--they buy what they can afford, and what they can afford is predetermined by a politically driven agricultural and retailing system over which they have very little say or control.
So, as with so many things, food offers us a choice: pay me now, or pay me later. Frankly, given the quality of life costs incured by a food system built around quick profit rather than human needs, this choice seems like a no brainer to me.
Photo Credit: Wikimedia Commons
09/09/09 9:36 AM
Keep your Hands off my Cheap Junk
Last week the Los Angeles Time published an attack on my new book, Cheap: The HIgh Cost of Discount Culture by wacky blogger Charlotte Allen. The tongue lashing went something like this: in these tough times, Shell and similarly misguided elitists (Michael Pollan came in for a particular drubbing) want us all to PAY MORE. NPR then invited Ms. Allen to broadcast her thoughts on Talk of the Nation. There she elaborated that while it's certainly true that Chinese factory workers are mistreated and their environment despoiled in the course of making low price goods for us, they were afterall Chinese, not Americans, so why should we care?
I suppose this makes sense in some universe, but not the one I inhabit. China is not an island unto itself. The push for ever lower prices has suppliers of all nationalities struggling to minimize costs, resulting in growing unemployment, less job security, and lost income and lower quality of life for millions of Americans. Meanwhile, the cost of health care, education, and other necessities continues to climb. Cheap t-shirts and toys are poor compensation for an unemployed home owner struggling to make his or her mortgage payments. And the production and distribution of cheap, disposable goods threaten not only China's environment, but our own.
Ms. Allen is perhaps most famous for her Washington Post opinion piece entitled "We Scream, We Swoon, How Dumb Can We Be?" the "we" being women. In it she argues that "The theory that women are the dumber sex...is amply supported by neurological and standard testing evidence." Ms. Allen goes on: "I am perfectly willing to admit that I myself am a classic case of female mental deficiencies." Putting aside for a moment why the Washington Post would publish the musings of a self-defined "mental deficient," one must ask a deeper question: why a major metropolitan newspaper would chose to share with its readers the ravings of someone whose views are so clearly out of line with reality. Could it be the more than one thousand protests readers launched objecting to this bit of idiocy? Do all those protests make the paper feel more valued, more popular, more loved?
There's an old cliche that a sure way to draw attention to oneself is by pulling down one's pants. Yes, it gets eyeballs, but to what end? One would hope that in these days of shrinking subscriber lists and revenues, newspapers will come to understand that while printing unsubstantiated ideological rants might indeed grab plenty of eyeballs, it is not the way to grab hearts and minds.
08/11/09 4:59 PM
Decoding the Supply Chain
China, "factory to the world," sends fleets of container ships to our shores, as do many other nations. But who precisely makes the stuff contained in these boats? Where do they make it and under what conditions and circumstances? The answer to these vexing questions may soon come in the form of a tiny barcode sticker called GS1 DataBars. Here's the technical description:
GS1 DataBar (formerly Reduced Space Symbology or RSS) symbols can identify small items and carry more information than the current EAN/UPC bar code. GS1 DataBar enables Global Trade Item Number® (GTIN®) identification for hard-to-mark products, such as apples, pears or other types of loose produce. It also can carry GS1 Application Identifiers, such as serial numbers, lot numbers, and expiration dates, which creates the opportunity for solutions supporting product authentication and traceability, product quality and effectiveness, variable measure product identification, and couponing.
Yes, that's right, these babies are small enough to stick on individual pieces of fruit, making tracing stuff back to its source a relatively simple matter. That means we could trace any number of goods--from bras to hammers to Tommy Toy Train sets-- to the individual factory where they were made--simply by plugging barcode data into the company's website.
Those in doubt might note that Wal-Mart has already taken up the practice--at least in a line of Love Earth jewelry, the lineage of which can be traced back from Sam's Club showcase to a specific gold mine. Icebreaker, a company specializing in woolen garments, labels sweaters with a "baacode" they claim allows you to trace the wool back to an individual sheep.
Were retailers required--or even requested--to code all their wares, I wonder if the supply chain leading to sweat shops might find a new direction...
08/05/09 9:10 AM
Your Thoughts?
The formidable Megan McArdle and I have just begun our discussion of CHEAP on her site, and, not surprisingly, several of Megan's followers are outraged at the suggestion that predatory pricing has contributed to labor abuses and environmental devastation, in addition to doing serious damage to the bargaining power of Americans who work. (At least one of these critics has gone so far as to accuse me of being a "liberal arts" major! Given my struggles with organic chemistry, perhaps I should have been.)
Slurs aside, these angry folks subscribe to the "Sweatshops are A Dream" view of history, a view I do not share.
What are your thoughts?
08/04/09 11:21 AM
Ellen Ruppel Shell
