Archive for June, 2012

Does this book hold the key to Restoring American Prosperity?

Tuesday, June 26th, 2012

Every day Americans face choices on what products to buy to meet their every day needs.  A 2010 Harris poll, showed three in five Americans (61%) say they are more likely to purchase something when the ad touts it is “Made in America.”  Recently, an ongoing poll on www.ewednewz shows that 61 percent say they would buy American products if they existed.

Take a look at what you have in your own home and check the country of origin label.  If you have set up your residence in the last 15 years, it is likely that most everything was made somewhere else besides America.  It is highly likely that the majority of the products were “Made in China” because so much of the manufacturing of consumer products has been shifted offshore to Asia, especially China.

As our country slogs along in a recession that has never ended for many, more and more Americans are realizing that making and buying products made in America is essential to strengthening our economy, creating jobs and balancing our trade deficit.

San Diego entrepreneur and businessman, Alan Uke, has written a book, Buying American Back:  A Real-Deal Blueprint for Restoring American Prosperity, that provides a simple solution that “puts control in the hands of American consumers to make powerful buying choices to boost our economy and create jobs,” as well as reduce our trade deficit.

Mr. Uke is the founder and president of Underwater Kinetics, which he started 41 years ago as a sophomore at the University of California San Diego.  He holds more than 40 patents, and the majority of his SCUBA diving and his industrial lighting products are exported to more than 60 countries.

In his introduction, he writes, “Our future as a nation and as individuals is being threatened.  Since our spending habits as consumers have contributed to this situation we can change our spending habits to reverse it… in order for a change to happen, consumers must demand to be more honestly and completely informed about what they are buying and where their money goes.  To this end, we are starting a consumer movement to bring this to the attention of Congress…The goal of this movement and of this book is to encourage people to change their buying habits toward purchasing things that help the U. S. economy and job situation.”

In chapter 1, Mr. Uke states that because consumer spending makes up 70% of the U. S. economy, we consumers have been encouraged to spend in order to spur the economy.  The problem is that when the majority of the consumer goods we buy are imported, our shopping doesn’t support our own economy and create jobs.  Our money goes to support the economies of foreign countries.  Mr. Uke writes, “In order to support our economy and American industries, we must have easily accessible, clearly communicated, and truthful information about a product’s entire origins.”

In chapter 2, Mr. Uke shares his perspective as a business owner stating that “despite the challenges and the heartache, I like making my products in the U. S. because I want to help our country.”  He could move his production to Asia like many of his competitors, but he wants to keep his factory here in America, see more companies return, bringing jobs back with them, and see the American worker regain security and prosperity.  As I have pointed out in my book and previous articles, he writes that “U. S. factories lost 5.2 million jobs from 2000 to 2010” while large, multinational corporations hired 2.4 million workers at their oversees operations.

In chapter 3, “The Importance of Manufacturing in America,” I really like his illustration of the jar of marbles that we as a nation have to use to trade with.  When we buy something within the U. S., the marbles stay in the jar, but when we buy something from another country, the marbles go out of the jar.  If they buy from us in the same amount that we buy, then the number of marbles in the jar stays the same, but if we buy more than they buy, our jar of marbles begins to empty.  Our jar is becoming empty because in 1960, only 8% of the manufactured consumer products Americans purchased were imported, but today 60% are imported.   Our deficit with China alone reached $260 billion in 2010, and the Department of Commerce estimates that each $1 billion in trade deficit translates to about 13,000 lost jobs.  Manufacturing jobs now only make up 9% of the American workforce.

Imports to the U. S. now represent 17% of the gross domestic product (GDP) while manufacturing’s share of the U. S. GDP has dropped to 11.5%.  Alan quotes economist Ian Fletcher, who stated, “We could quite literally export our entire manufacturing output and still not balance our trade,” and concludes that “we are importing almost 25% more than we are exporting.”

Mr. Uke emphasizes that he isn’t against trade because “it’s good for business,” “good for foreign relations,” and good for development in all sectors of the economy.”  However, it’s important for us to have balanced trade because “in 2010, each person’s share of the annual trade deficit adds up to about $2,700.”   He comments that “creating free-trade agreements around the world are devastating for our country because they only benefit big businesses that can boost their profit margins by replacing our American workforce.”

In chapter 4 on “How Competing Countries are Succeeding,” Mr. Uke provides insights into how Germany, Japan, and South Korea have managed to keep a strong manufacturing base and successfully export more manufactured goods than they import.  One of the key factors is that consumers in these countries prefer to buy products made in their own country even if they cost more than imports.

Chapter 7, “The Label Game,” discusses the fact that current information provided on country of origin labels is “misleading, incomplete, inaccessible, or all of these.”    In order to have a “Made in USA” label, a product has to be “substantially all” made in the USA, defined as follows by the Federal Trade Commission:

  • “The product was last substantially transformed in the United States and U. S. manufacturing costs are at least 75% of the total manufacturing costs; or
  • The product was last substantially transformed in the United States and all significant parts or components of the product were last substantially transformed in the United States.”

The vagueness and looseness of these definitions have led companies to intentionally mislead the public with brand names that imply that the product was made in one country when it was actually made in another, such as expensive “American Girl” dolls that are actually made in China.  Labels that say “assembled in the United States from domestic and foreign components” are even more confusing and vague.

It’s even worse for consumers who purchase products online or from catalogs ? no information on country of origin is required to be provided.  It is estimated that 11% of all retail sales will be Internet sales by 2015.  A few companies, such as Levi Strauss, Patagonia, and Nike provide the locations of manufacturing plants around the world on their websites, and New Balance goes a step further in providing a comprehensive listing “detailing exactly which of its shoes are made in the United States, which ones are assembled or only partially made in the U. S., and which ones are entirely imported.”  Mr. Uke recommends that consumers be provided the country of origin information they need at the point of sale whether at a store or online.

In chapter 6, Mr. Uke presents his proposal for the U. S. government to require detailed country-of-origin labels for all manufactured products similar to the nutritional information labels now required on packaged food products.  These labels now list all ingredients, the nutritional information about the food, and the possible presence of eight of the most common allergens in the product.    He feels that it is important for consumers to not only “see the last place where the product was manufactured. You should be able to discern what portion of its components came from other places.”

So far the only industry that provides detailed country of origin information is the automobile industry.  The American Automobile Labeling Act of 1992 “requires all cars to  have labels displaying the percentage of American/Canadian parts content, the country of its assembly, as well as the country of origin of the engine and transmission…Any car with less than 70% American/Canadian content is classified as an “import.”

Chapter 7 describes what “The Transparent Label” would be:  one that would include the cost by country of origin by both percentage and trade ratio, as well as the location of the company’s headquarters.  The percentage is the total cost of the product that is produced or transformed in a particular country.  The trade ratio describes the amount of exports vs. imports for a country in relation to the United States.  “A healthy, balanced trade ratio is close to 1.0” ? equal exports to imports.  A number more than one means more U. S. exports to that country than imports from that country, and a number less than one means more imports from that country than U. S. exports to that country.   Part Two of the book provides information on our major trading partners by detailing the state of their manufacturing and what kind of trade balance we have with that country.  For example, we have a balanced trade relationship with New Zealand at 1.02, Switzerland at 1.06, and the United Kingdom at .97 whereas our balance with China is .25.

According to Mr. Uke, accessibility is just as important as accuracy.  A consumer shouldbe able to review this data before making a purchase whether it is in a store, online, or through a catalog.    Since manufacturers succeed by providing products that consumers want to buy, the “ultimate goal is to apply consumer pressure on companies in order for them to see a direct, profitable benefit in relying on American labor and components.”

Accurate labeling of the percentage of the product that is attributable to the U. S. will benefit manufacturers because consumers can select products that have the highest content of American parts and labor even if it doesn’t qualify for a “Made in USA” label under current law.

The last chapter shows how Americans can make every dollar count by choosing what products to buy.  Mr. Uke writes that “it is really, we, the consumers, who are the power that can initiate the change…This power is located in the sum of our buying decisions.  Our climb back to the top begins with where you spend your next dollar.”

If every American would make the decision to buy American products and avoid imports from countries with which we have a deficit trade balance, we could make a real difference in our nation’s economy.  That’s why Mr. Uke has called on Congress to pass a resolution to make July 1 to 7 “Buy American Week.”  Whether or not this resolution passes, I urge every American to make a personal resolution to “buy American” that week and continue doing so thereafter.

What’s Really Wrong with Corporate America?

Tuesday, June 19th, 2012

A common refrain is that the purpose of a business is to maximize profits.  It’s obvious that a company has to make a profit to stay in business, grow, and prosper, but I don’t think this should be the main purpose of a company.  Most entrepreneurs have some kind of “vision” or bigger reason for starting a company ? whether it’s to produce a new product that will benefit others or to provide a service they feel they can provide better than others.

What’s wrong with companies today, especially publicly trade corporations, is that they have lost their “soul” ? their vision or bigger reason for being a company.  They have become too focused on the “bottom line” of maximizing profits and forgotten the real reason the company was founded.  Our history as a country is filled with men and women of vision who changed the world by the products or services they invented or provided ? Thomas Edison, Henry Ford, George Westinghouse, and Aaron Montgomery Ward.

Today, you need to be able to provide or add value to have a place in the global supply chain of goods and services.  If you don’t provide or add value, you won’t be able to stay in business in the long run.  Providing or adding the maximum value possible is the goal behind all of the steps and tools used to become a “Lean Six Sigma” company whether you are a manufacturer of a service provider.   You focus on the customer by removing wasted and non-value added steps to become “lean” and reduce variation and improve quality to achieve the “Six Sigma” level.

However, this renewed focus on the customer by becoming a “Lean Six Sigma” enterprise won’t restore the soul of a company.  To do this, you need to create or revive the concept of “for the sake of others;” that is, serving others by what you do or make.  This is the main concept presented in Dr. Tony Baron’s book, The Art of Servant Leadership.  This book shows you how to design or redesign your organization for the sake of others and is “a guidebook on how a private or public company can achieve its true purpose in the world.”  The book has a lofty purpose:  “To equip, inspire, and encourage those we influence in order to make a profound positive difference in the world.

In a 1970 Times magazine article, the economist Milton Friedman argued that businesses’ sole purpose is to generate profit for shareholders, as long as it is doing so legally and ethically. In contrast, Dr. Baron believes that the “sole goal of a business is to exist for the sake of others.”

The book provides “a case study of the principles and practices Art Barter used as a servant leader to reform Datron and transform lives inside and outside the company.”  Datron World Communications, Inc. (DWC) is a privately owned company located in Vista, California. For over 40 years, Datron has provided tactical military and public safety radio equipment to a diverse worldwide customer base doing business in over 80 countries through an international sales representative network and regional support centers.

Part 1, “The Need for a New Kind of Leader,” discusses leadership and the common misguided use of “applied power” vs. “true power” in the first chapter.  Chapter 2 examines a leader’s epiphany or defining moments that transforms him/her into a “servant leader.”  In Art Barter’s life, his father’s example, his work at Disney Company as a young man, and the teachings of Ken Blanchard and John Maxwell led to his being ready to become a “servant leader.” with the guidance of Dr. Baron.

In chapter 3, we learn that a leader often is best revealed by adversity and what was the adversity that contributed to the transformation of Art Barter and Datron.  Mr. Barter had started at Datron in 1997 as Chief Financial Officer, assumed the position of General Manager after Titan Corporation bought Datron in 2001, and purchased Datron in 2004 during the depths of  adversity.

Chapter 4 considers the fact that most corruption and disruption in corporations results from leaders’ failure to lead themselves and what are the seven essential elements of leading yourself before leading others.

At the end of each chapter, there are Table Talk” questions you can ask yourself and others to use the book as a guide to help you transform yourself or your company.  For example, after chapter 1, some of the questions are:  “What is your organization’s story?  Who are your leadership role models?   How did they shape your beliefs about leadership?”

Part 2 provides “The Formula for Success:  Living for the Sake of Others,” beginning with how to create a servant leadership culture in a company or organization in chapter 5.  Dr. Baron’s definition of corporate culture “is a way of life cultivated over time through shared experiences, values, and behaviors.”  He states that every corporation must share the following at a minimum in order to sustain a healthy environment:  shared beliefs, shared experience, and shared expressions; that is, “a verbal commitment to do what they know they can do.”

In chapter 6, “Cultivating a Servant Leadership Culture,” Dr. Baron writes that the four components necessary for transformation within an organization are:

  • Cultural Architect – a person with the highest level of positional, power within the corporate circle of influence
  • Commitment level – a personal commitment of belief, behavior, values and vocational activities that align with servant leadership by the cultural architect
  • Climate control – creating an atmosphere of balance with the right people, opportunities and resources
  • Culture formation – based on new experiences repeated and reinforced through modeling, teaching, affirming, and rewarding to transform people and the business

Dr. Baron writes, “Because most corporations have taught that profitability is the sole purpose of the organization, the workforce has lost its faith in business and in people.  They have lost the confidence that leaders have their best interests in mind when considering corporate decisions that affect the bottom line.  They have lost trust.  I don’t blame them. Over the last twenty years in various boardrooms around the country, I have seen executives choose to receive their year-end bonuses over keeping employees on the payroll.”

Teaching servant leadership progresses through four stages:

  1. Instruct-  solid instruction on the principles of servant leadership
  2. Invest – use some of the principles with varying degrees of success
  3. Influence – high discussion and consensus building
  4. Incarnate – the servant leader is building other servant leaders

Chapter 7 considers “Vision, Values and Virtues.”  Dr. Baron writes, “In corporate language, vision describes the vivid mental image created by a leader so that people will have the experience of truly seeing into the future.”  The vision statement of Datron states the company’s purpose “a self-sustaining, profitable communications company which positively impacts the lives of others today and in the future.”   Dr. Baron laments that so many Fortune 500 companies don’t consider that “their primary mission is to exist for the sake of others” outside of their shareholder family.  He believes that “the stakeholders for every company are our local, national, and global community.”

The book concludes with the chapter on “Extending the Servant Leadership Culture to the Community” describing how Art Barter, his wife, and the employees at Datron have worked “for the sake of others.   Shortly after acquiring Datron, Art Barter and his wife set up a charitable fund with a donation of $600,000.  Datron employees can submit a request for donations to a charity of their choice.  From 2004 – 2010, over $2.5 million dollars was contributed to causes as diverse as the Boys and Girls Club, an orphanage in Kenya, the Special Olympics, Breast Cancer Research, AIDS research, and women’s shelters.  Datron also founded the Servant Leadership Institute, headed, by Dr. Tony Baron, whose mission is “to create servant leaders who will transform organizations.

Datron has been able to make these contributions because of its financial success, increasing revenue from $10 million in 2004 to $200 million in 2010, while being organically funded internally and debt free.  New products introduced include the Scout Air Reconnaissance System unmanned vehicle designed to capture and transmit high quality video and images in the field and the PRC7700H variant of its high frequency software-defined radio.

Datron has been my customer for over 25 years, and a long-time employee, Mark Satttel, said, “although the transformation was difficult at times, servant leadership is gaining at Datron.”  A new employee recently told me that working at Datron is different than working at any other company ? “it works as if the pyramid is upside down, with the president at the bottom.  Everyone keeps asking me “what can I do to help you.’”

Every American has the choice of using your talent and experience for the sake of others by becoming a servant leader. Doing this would make American great again and make the world a better place.  What’s your choice?