Part 86: Confessions of a Corporate Executive – How Small & Mid Sized Companies Grow

The political mantra today is to create and retain jobs for the American worker. That is a great and noble idea. This was not however ever the charter of American businesses. The objective of every US Corporation was first and foremost “to maximize the value of the company, as measured by the growth of its earnings per share and insuring its long term future”. Nowhere in this charter was its responsibility to provide for the jobs of its citizens.

More recently some corporations have modified this objective to include things like Google’s “do no harm” mantra, or not investing in country’s with human rights abuses such as TIAA-CREF or being environmentally friendly like Tesla Motors; but create and retain American jobs has not typically been a stated objective. This may however become one in our current political climate and that’s fine and may well become a marketing tool going forward.

Given the above, as a Fortune 500 executive, I was charged with maximizing corporate profits. I closed unprofitable plants typically in the high union labor markets in the US and relocated them elsewhere. In my case this included Latin America, the Caribbean, and nonunion towns in the Southeast. This made us the lowest cost producer and maximized our profit. We reduced our labor rates, had lower energy costs and taxes, free land, better work rules, incentives from politicians in the new location, etc. In some cases the existing factories I relocated were profitable, but we could make more money in another location.

I knew that not only was this my job, but if I didn’t do this, someone else would. I said on many occasions, that if I was prevented from moving by US law I would adhere to that, but absent that I did what I had to do. In addition most of the time, if we did not relocate, or were forced to remain where we were it was just a matter of time until those facilities would be shuddered and not only would no one have a job, but the company eventually would not survive.

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