Archive: Business & Technology

Click to purchaseThe story of West Haven, Connecticut is not unlike the story of many other American baby-boomer generating towns.  In the 1960s, while heading downtown by way of Elm Street, one would smell the stench of rubber coming from Armstrong’s tire production plant.  This was very noticeable 45 years ago on a hot summer day using the 4 x 35* cooling system which predated automotive air conditioning.

The tire plant, along with the Miles Laboratory plant which produced Alka-Seltzer, employed a large number of people in the town.  Numerous small businesses flanked both sides of Campbell Avenue, which traversed around 5 miles from Long Island Sound toward New Haven.  The city had one high school, three public middle schools, around a dozen elementary schools, and a handful of Catholic schools.

In the early 1970s, when the Armstrong plant was closed and jobs (not workers) were relocated to the southern United States, unemployment in the town became a problem.  It was the beginning of a wave of plant closures supposedly driven by high taxes and high wages to a lower-cost region.  In the 1980s, Connecticut went through a business boom (bubble??).  The insurance industry created numerous office jobs in the state.  Additionally, a number of defense-related plants remaining operational during the Reagan administration's rebuilding of the military helped the economy recover.  Today, the Cold War is over, and the Internet has enabled outsourcing traditional office jobs that were created in the 1980s.  It's not clear what's next as taxes and unemployment remain high.

Well into the 1970s West Haven was a home to many multi-generation families.  Cousins went to school together.  You couldn’t get into too much trouble with a buddy whose grandfather knew your grandfather, or a girlfriend whose mother went to high school with yours.  No longer....

North Carolina in the ‘80s and ‘90s.

In the 1980s and the 1990s, North Carolina went through some major growth spurts.  Part of what fueled the growth was a movement in manufacturing from the Northeast, where wages were high and unions were strong, to this ‘right to work’ state.  As jobs moved in, so did many Yankees.  The climate was good, the economy was strong, and the cost-of-living was reasonable.  Charlotte became a financial center, Raleigh-Durham-Research Triangle Park became high-tech, and various communities absorbed the industries moving in from the northern states.  Transportation hubs grew; the furniture industry boomed filling the new standard size house with more; telecommunications boomed and data and call centers opened.

In the mid-90s advances in telecommunications went global.  NAFTA opened the opportunity to use low-cost labor in Mexico.  The doors to China continued to open.  Japan proved that you didn't have to make things in America in order for them to be high quality.  MBAs became the degree of the decade, and a business model that said financial leverage, low labor costs and taxes, and advanced process technology led to the next migration of industry.  Now the jobs were not just moving to a different part of the United States, but they were moving overseas.  Guess where North Carolina jobs have since migrated?  Any idea what happened to employment rates in North Carolina as we entered the 21st century?

Interestingly, in the next decade, Japanese companies like Toyota and Honda were building plants in North America.  They too were leveraging an educated workforce, with the lower wage rate, protecting their intellectual property, and spreading their supply chains closer to the customer.  As new auto industry jobs were created, the Japanese found hard working Americans with reasonable wage rates living in the heartland and bible belts. 

New York State in the 21st century

Just west of New England is New York State.  With good transportation routes, farmland, educational systems, and plenty of migrant workers who came in through Ellis Island, New York became the Empire State as she grew with the Industrial Revolution.  General Electric.  Carrier (air conditioning).  Eastman Kodak.  IBM.  Grumman.  Bausch and Lomb.  Ever heard of any of these manufacturing powerhouses? If you want to invest in them, buy stock via Wall Street, another New York State asset.

As industries grew so did the need to provide transportation, protect the environment, and advance the education of workers in a strong state university system. State run altruism, in order that no citizen would be an embarrassment to the state, contributed to the growth of government.  As labor unions and industry were both strong, and the state was generating wealth, government spending escalated.  In the second half of the 20th-century, it became less profitable to expand businesses in New York State.  So the major industrial companies began expanding in other states.  Moving even farther, overseas, to take advantage of low labor costs and taxes became a critical skill in the 21st century.  Companies became so well skilled in moving manufacturing…   that it’s actually gone.  Ever read Dr. Seuss’ The Lorax.

The Global 21st Century

Over the last few decades, advances in telecommunications and computer science have accelerated the need for interconnectivity.  In business strategy and social circles this is sometimes referred to as ‘positive network externality’.  In the 1980s, how many people felt the need to have a cell phone?  When no one else had cell phones, it didn't matter.  People called you back if you weren’t there, unless of course your machine took the message.  Today, everyone has a cell phone and they expect you to answer at any moment. 

History repeats itself…  In order to offset extensive transportation costs, companies in the same industry, especially the same supply chain, often located in the same regions along transportation routes.  So it was natural that when the major industrial companies began to move away, so did their suppliers and the associated jobs.  As extended family members with varying trades needed to move closer to the job opportunities, the movement had a major impact on the viability of extended families.  In places around the world today (like Taiwan, Thailand, Germany, China, India, South Africa, and more) industrial parks have been built.  These are places where the economic strategy is bringing related businesses together and providing jobs to the people who live there come to life with efficient production. 

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