July 11, 2015

Oh Myopia

(note this was written 5th July and updated 6th, 7th, 8th, 9th, 10th, 11th, 12th and 15th July... so far ;-)

A few PCBs arrived for dumping about a month or two ago. Due to me working 6 days a week for the entire year and 7 days a week for the last 3 months as the company I worked for panicked to get work out the door due to a planned closure, I didn't have time to deal with them. But I have plenty of time now because I'm retired since 1st July 2015. In case you are wondering, I'm 47 ^_^

Sadly the great company I worked for from 1990-2005 was bought by a large Swedish corporation named Sandvik in 2005, paying a whopping $106 Million for it. That figure is amazing because they don't even own the building or land, they really only bought intellectual property and equipment. The previous owner leased the land and building to them at a rate of $70,000 a month.... a total of $8.4 Million over the 10 years and he still owns it! He's certainly one smart cookie ;-)
If I had paid $106M for a company I would have wanted the land and building too, or I would have walked away. Not so with Sandvik they have shit for brains and money to burn. As with most large corporations they are run by morons who are paid millions and don't have a clue, the result being a waste of hundreds of millions of dollars over the last 10 years in a downward spiral. This is particularly prevalent in countries like Australia where management think they are more important than workers..... not so my friend..... you can pay managers millions but without workers you have no product and no profit, therefore no company and thus you are sitting behind a desk pushing a pen with no purpose. This is even more important for a technical engineering company. Without quality skilled workers in key positions you have major mistakes being made across the board in many critical areas time and time again..... but no, they hire losers in every sector of the company and pay the management millions and hope it all works out for the best.

So after 10 years of making mistake after mistake after mistake and generating less profits than they wanted (which they tell us is because of having to pay high wages to workers, thus the cost of production is too high in their opinion... in reality wages are only 5-10% of expenditure), someone in Sweden got a "brilliant" idea to close up this company and 25 other companies world-wide over the next 5 years and move all manufacturing to India and China (which costs $100 million per factory to build and set-up). Hold on a second. Brilliant Idea? I think not. A company making mistake after mistake and now all of a sudden they make a good decision? Again, I think not. This is just another big mistake. And yes that's right, I said 25 companies world-wide will close. That gives you an idea just how clueless Sandvik is when they have to close 25 factories worth 100 million each just to save their asses. The correct thing to do is hire quality people who know how to run a company in profit and put them into key positions and actually "fix" the problems. Then get other people on board at the production level to streamline production and processes. Of course this requires skilled people, of which Sandvik have very few. One of Toyota's core principles is constant improvement and respect to all employees. This is a great way to run a company and is known as 'The Toyota Way'. This would surely involve quality people who know what they are doing. Quality people with key attributes like qualifications, experience, knowledge, dedication and discipline. In my 25 years of working I never met anyone who had all 5 qualities. Here there is zero improvement because they only hire lazy assholes who do as little as possible (and I'm not just talking about the production workers) and there's zero respect for the workers, primarily because they believe they are more important. Instead they screw everyone and just close it and walk away. With idiots like that in charge it's amazing they lasted 150 years, but keep an eye on the major news sites because I'm sure it will get worse.
Aside from that, Sandvik subsidiaries include entities set up in Ireland that have no home country for tax purposes and all products are invoiced to 'Sandvik Ireland'..... meaning abuse of the Australian Taxation System and avoidance of the GST or at least minimizing the amount of tax payable. Since they are already saving millions in taxes the 5-10% of expenditure paid as wages to employees is not a great burden on the company and giving the reason to close because of that is in fact a gross untruth. The real reason is of course, intellectual shortsightedness caused by greed and the lack of the 5 key attributes mentioned above.

It's sad in a couple of ways. One because they just trashed everything in the bin and walked away (instant ~$60 million loss) and secondly because this kind of business practice is not illegal. Corporations should be made accountable for their mistakes.... or in the case of Sandvik, 1000's of mistakes costing 100's of millions. If I had my way all of them would be shot, although thinking about it that's probably a waste of a lot of good bullets. Maybe I could line a few up together and get them all with one bullet in an optimized process to save time and money (something Sandvik have no idea about). But hey that's an improvement. And if more losers are lined up on some kind of production line it could even be considered constant improvement! Thus we have harmony because we are doing it 'The Toyota Way'!

It was actually pretty funny watching those myopic morons trip up over their asses time and time again. As a master in my field I told them so many times what to do and they just ignored my advice and did it their way. Or they asked what I thought about something 3 months after they already spent several million on it. I just laughed and told them they were on their own. It was 10 years of great entertainment.

So you might have a few questions......

1. Why are they closing now?
Sandvik bought the company purely to obtain products and patents. They had no intention of staying longer than necessary. I believe this closure was planned many years ago. Possibly even 10 years ago.

2. Why give us 1 year notice?
Because in general Sandvik don't have quality people working for them so things take a long time to happen. Most people employed by Sandvik are low skilled because they can pay them less. Another reason is because they pay low rates they can't attract quality people so they scrape the bottom of the barrel and take whatever sticks. As such, Sandvik needs a lot of time to get things going. Even the people doing the planning are losers so the result is zero planning and it takes years before things are running well. Last I heard Sandvik India and China were in VERY serious trouble with production and running way behind schedule, even after being given 1 year to get production running. Hence the reason why all of us here were working 6 or 7 days a week making stock which will be shipped to China/India to cover their asses. Most, if not all of that is caused by losers in charge and losers doing the work. If they absolutely had to close down and were smart they would have given us 2 or 3 years notice. But well, they're just not. And like I always say, if you pay peanuts you get monkeys.

3. Why move to China/India?
Their primary reason for the move to 3rd world countries is purely so Sandvik can avoid having to pay company taxes to the government. With around $2.5 million a month in sales you can imagine how much tax would need to be paid. That figure is actually very funny because this company is bigger than the previous company they bought and previously was doing around $4 million a month every month. It puzzles me how a larger company with more employees and more production capacity can produce less in sales. Obviously the losers in charge are wasting millions somewhere, production output is actually lower because they only hire losers and clearly people at the top are being paid way too much.... and what's funnier is that Commodore back in the 80's and mid 90's (after Jack Tramiel left) did exactly the same thing and died because of it, and it's all documented in the book "On The Edge: The Spectacular Rise and Fall of Commodore". Pity the morons in charge here didn't read it, they could have avoided the same mistakes.
Their secondary reason is to avoid paying high wages to employees (this country has a high standard of living with only around 6% unemployment). They really don't care how cheap and nasty the product is because the products are designed very poorly (again, by losers) and don't last a long time anyway. And they don't care how much scrap is made or how long it takes because they pay their employees the equivalent of a bowl of rice a day.

Speaking of rice, you might not realize this, but in China/India companies are required to provide on-site meals to employees. That cost has to be paid by the company, including providing a room, tables/chairs, cooks/servants and food, and cleaning up afterwards. In Australia no such thing happens. The employee provides his/her own food and eats it in their own time (employees attend work an extra half-hour to cover that because most companies don't pay for the meal breaks). Another thing you may not realize is there was an agreement where the employees here would do two jobs at the same time (essentially operate two machines at the same time.... quite easy because they are fully-automatic specialized computer controlled CNC's) and because of that the pay rates were adjusted ever-so-slightly higher than average, but the company is effectively getting more output for their money (at least in theory if skilled and dedicated workers were doing the work in an efficient manner). In China/India the workers absolutely refuse to do two jobs at the same time and/or operate two machines at the same time (and their unions will get involved if they are told to do so) and their pay rates are about half (on average) of the western-world's rate (hence the reason for doing only one job) so the company is actually getting less for it's money. Think about it.... one person operating two machines for a rate (with no additional burden to the company), or one person operating one machine for half that rate AND the company has to provide meals too. It's hilarious to think the company thinks it's a wise decision to move there in the first place but looking now at the real costs makes it clear it's a bad decision. By moving to China/India they have actually achieved nothing except a phenomenal waste of millions of dollars by dropping everything here and putting extra pressure on China/India to produce the items that were being produced here, which they have failed to do because the time frame required to get up to speed and take over that work is longer than 1 year. Of course it's no big surprise it's a major stuff-up because they've been doing that here since they bought the company in 2005.

Eventually those countries will get better and pay rates will equal the wealthier countries then companies like Sandvik will likely go back to those wealthier countries so production becomes more cost effective (i.e. better workers and faster production with less scrap equals lower costs). Unfortunately that is some way off, probably 30-50 years from now. So China/India, get it while you can because one day it will be all over, rover.

Some major manufacturing companies such as those in the USA and Germany have already seen the light (USA less than 5 years ago and Germany more than 10 years ago) and have moved back to their own countries because not only are they screwing their own country's economy by producing overseas but they are not doing themselves any favors by making cheap crap in China that doesn't last it's useful life. You only need to look at Apple products to see that cheaply produced is not better. Although in the case of Apple cheaply produced and cheaply sold are mutually exclusive ;-)

I should write a book about it. Maybe I'll call it 'How not to run a company'. Oh, erm, I think I just did hahaha!

Anyway I don't need to work so I decided to just say 'fuck-it' and catch up on sleep and hobbies, including of course, dumping! :- D
On with the show!