leaving only a legacy....

It seems, everytime I read a newspaper, the news is bad.  And, today is no different.

Last year, Bruce Cochrane was recognized by President Obama at his State of the Union Address for bringing industry back to the United States by opening a bedroom manufacturing facility in Lincolnton, North Carolina.  During the speech, Cochrane sat next to the First Lady and met all of the dignitaries, sniffing the rarified air of Washington, D.C.

Today, after investing $5 million of his own money, Cochrane announced his factory would be closing, less than a year after being recognized.  No spring chicken in the industry, Cochrane's furniture roots date back to 1850.  This is not a case of someone getting in over his head.  He has a great reputation, great products, and no shortage of goodwill.  What he didn't have was the ability to compete making U.S. made goods.

Also, in today's paper, Henredon Furniture announced they would be closing a plant in Mount Airy, North Carolina.  It seems the land of Andy Griffin is the latest victim of a company longer able to compete, at least with products made in America.  110 people will be looking for jobs.

As a matter of full disclosure, our company produces goods offshore.  We recognized long ago we could not compete with foreign made products.  While it is good to have the Made in the U.S.A. sticker on your products, it seems only pipe dream to be able to succeed.

Best wishes to all of you at Lincolnton Furniture and Henredon.  You fought the good fight.  You made good products.  Your legacy is intact.

I hate Lucy!

...well, not exactly.

But, I did see the play last night at Water Tower Place in Chicago, and I can't believe I sat through the whole thing.

 

Based on the TV series, I Love Lucy, this play takes you through a few episodes, sort of a studio audience view of the show, with live commercials from the show. 

 

To be blunt, it sucked.  It sucked so bad I wanted to leave in the first 20 minutes.    I didn't put a stopwatch on it, but the Lucy character wasn't on stage as much as the stage host, who wasn't very good either. 

 

The real pity here is that Lucy, being this iconic character, offered so many over-the-top performances, that adapting her to the stage seemed natural, with the opportunity for grand gestures and even grander farce.  It felt like somebody took a great piece of filet mignon and put it in the hands of a line cook.  Too bad, because a real Lucy could have been spectacular.

a taxing question.....

As I watched the fiscal cliff fiasco unfold, it became very clear to me we have a fragile economy.  With a GDP running at $15.1 trillion and federal debt running at about 120% of that level (Greece's percentage is lower), we need to continue to grow to support that ever burgeoning number.  Think of our government as a house with a mortgage being more than the value of the house.  Simply put, we need a robust economy to produce to simply pay the bills.

With taxes needing to go up to pay for our government, we need to address how we keep the economic wheels rolling.  Do we give breaks to business and billionaires to make sure they invest in our economy?  Do we give breaks to the middle class to make sure they can continue to support our economy by just buying stuff?  And, at what level do we need to look at how export could help us through this mess?  That is the focus of this blog.  Because, I truly don't believe the American consumer can drag our country out of this mess by themselves.

The fastest growing major economy in the world is China.  Still small by our standards, China has been playing catch up to the world by producing cheap goods.  While we are all led to believe cheap labor has everything to do with it; it is actually their tax policies which drive their businesses.  China has something called VAT (Value Added Tax) for all transactions between businesses.  For export, companies are rebated 13%.  That is huge.

We, on the other hand, place equal taxes on all transactions, whether internal or external.  This makes navigating the international playing field difficult.   Instead of a simple policy allowing us to compete, like China, we look to local governments to make concessions on taxes, infrastructure, and education to make it feasible for these companies to compete.  And then, we get into all of these battles pitting people against business. 

As a result of our tax policies, it has been prudent for many companies to flee the U.S. in order to compete on a worldwide stage.  If they stayed here, they would have no or little international business. 

As we condemn them for doing what is necessary for their businesses, thinking it is about making a fatter bottom line; it is more about survival in an increasingly flat world. 

So, why don't we look at a new model, some sort of a VAT used in most countries.  For all products imported, we place a tariff (17% is common) on those goods.  For all goods created for export, we offer a rebate, maybe 13% like the Chinese.  And, for all goods produced and staying in the U.S., we place a standard tax.  Based on our current trade deficits, this would put additional revenues to the bottom line (more imports producing VAT versus exports offering rebates).  It would also be an incentive for companies on the edge of moving out of the country to reconsider.

Quite frankly, I don't understand why we don't hear conversations like this.