Volume 38, Issue 8, August 2003

Lawrence Logic

Hogs at the Trough
There's Been a Lot to Think About Lately
by Bob Lawrence

I am pretty well stirred up, and not having written lately has resulted in a pent-up desire to vent on a number of subjects. The title of this column may be a little confusing, but I promise it will make sense soon.

On Imports 
For the first time ever, Boeing, the world’s largest aircraft manufacturer and the single largest U.S. exporter, was trumped by European consortium Airbus Industrie at the Paris air show last June. Airbus Industrie walked away with orders for 100 large commercial aircrafts to Boeing’s 35. Why is this newsworthy? Because Boeing supports the U.S. economy with about 60 percent of its purchases from within our borders. 

Our country is under siege by very cheap, decent-quality, imported products. More and more jobs are being lost in the United States’ manufacturing sectors that are yet to be replaced. While American companies struggle to generate a reasonable profit and/or find capital to invest in modern equipment during this onslaught, multinational companies are cultivating interests in countries like China, India, Taiwan, South Korea, Vietnam and more. Actually, it’s the other way around … those countries are cultivating our multinational manufacturing businesses. 

Cheap labor and very favorable business incentives provide a huge advantage for multinationals manufacturing in those countries. This more than offsets the costs of building a facility and then transporting their goods to market. These incentives allow companies to invest in modern equipment abroad to 
produce cheaper goods for export to international consumer markets, which include the world’s largest: the United States of America. There are already so many imports coming into North America that there is a premium for containers destined for the United States. Why is this so? Because, without enough competitively priced products to ship back, U.S. companies are unable to take advantage of the empty containers returning to foreign shores for another load. 

So, will Boeing be forced to reverse that supplier ratio in order to remain competitive? What other critical reasons instigate our American manufacturing base moving offshore?

On Litigation 
There is a very exclusive residential area in Houston where most of the residents used to be in the oil and manufacturing businesses. The percentages there now favor lawyers greatly, the worst of which are plaintiffs and class-action lawsuit lawyers. You’ve seen the ads: “I’m J.D. ‘Junkyard Dog’ Sleazebag, attorney at law. I’ll fight to the finish to get you WHAT YOU DESERVE.” This is followed by the obligatory testimonials from the common people of work-related accidents, bragging of hundreds of thousands of dollars they received in settlements. Then there are all the good lawyers who are needed to represent those being sued. How can it be right that an industry, which produces nothing of viable use to consumers, is at the top of the food chain? This is not just happening in Houston. This phenomenon is well-represented in every large city in the nation. 

We live in a society that has piled all fiduciary responsibility on corporate American defendants for the lack of common sense and responsibility on the part of litigants. Why? Because that is where the bucks are. Remember the case where McDonald’s was sued around $10 million for providing coffee that was “too hot” to a woman who promptly nested it in her lap when she drove off, spilling it, then suing that big-bucks chain for her own stupidity? How about the latest craze: class-action lawsuits against fast food chains, and now Oreos®, of all things, simply because their porky-butted clients won’t take responsibility for simply eating too much?

On Insurance 
I remember being told about 20 years ago that Ford Motor Co.’s biggest vendor was not in the steel industry, nor glass, tires, plastics or upholstery, but rather insurance. You would have to live under a rock not to notice the skyrocketing costs of all insurance. Have you ever talked to a doctor (who has never been sued) about what it costs to secure malpractice insurance just so he can practice medicine? And those premiums are passed to you through your doctor’s bill. There are places in America where there isn’t enough money among patients to offset those costs, so some doctors have been forced to abandon rural areas, or go naked on insurance, gambling everything they have in order to provide medical services to rural Americans. The majority of these doctors are heroes, and should never have to defend themselves for being good Samaritans. Besides doctors, medicine manufacturers are at a huge risk for lawsuits. Hospitals are assaulted daily with lawsuits. As a result, our health insurance premiums reflect double-digit increases at every renewal. 

Talk to the rest of us in business about annual increases in general liability and workers compensation insurance costs. All those costs are born from huge settlements by corporate defendants for tens to hundreds of millions and billions of dollars. One example comes from corporations that own or bought companies that stopped making asbestos products as long as 50 years ago. Today they are faced with billions of dollars in litigation settlements. Some of you may be thinking that those industries deserve it, but how do you rationalize the effects it has on every business in the country today? Can you imagine how much insurance costs have been saddled on the products you buy, and the domino effect it has on every part and product that you and your supplier and his supplier provides? Do you think this might be a pretty good reason that we find it hard to compete with imported products?

On Employees 
I read an article about a citizen of Benton Harbor, Mich., returning home only to find there were few good jobs for lots of unemployed people, and little more to do than stand around street corners with all the other out-of-work fellows—you know the problem— “idle hands.” We are always looking for good employees. There is, however, a prevailing problem all over this country, and that involves recreational drug use. What surprises me, is that even after my company advises job applicants that we drug test as a condition of hiring, we still get a number that will swear that if we invest in a drug test for them they’ll pass. How does a 1 in 8 failed test ratio sound to you? Even with this precaution, random drug testing ferrets out some who manage to make it past the screening process. 

On Education 
Have you noticed, as I have, that a number of young job applicants cannot spell, do simple math and do not have good manners? The last year President Clinton was in office he promoted the idea that every graduating high school student in the United States should be awarded two years of college. I was incensed with subtlety of this proposal. Why? Because the educational system is so screwed up that kids would actually now need two years of college to get the equivalent high school education that they used to get before discipline could no longer be enforced in school. Take a moment and reflect back on the successful parent/student lawsuits on discipline that included what students could wear, how long their hair could be, being allowed to show more skin, tattoos and piercing jewelry, what they can be taught and if their feelings were being hurt.

I learned years ago that if there are problems that share a common denominator, you’re most effective if you first act on resolving the common denominator issue. I did not start out with the intention of saying what I’m about to say, but our problems have one glaring common denominator: the legal system. When Texas decided to undertake tort reform years ago, it was laughed at. Asking our legislature to pass laws to keep lawyers from 
blackmailing and skewering corporations for money was likened to demanding that a bunch of hungry hogs refrain from feeding at the trough. How do you think Enron became the most costly bankruptcy case of its kind, killing any chance of its survival? The system legally milked it dry. For years, lawyers have had control of financing the election and judicial system. It took years of grass-roots efforts to just get within sight of reasonable tort reform. This is a national problem, and, as business people, we must become more involved and start looking out for our own interests.

On Governance
Aren’t you tired, as I am, of the rhetoric in our government? While one side wants to stimulate the economy by giving tax breaks to people who paid high taxes, the other side says no, we should not give back to the rich, but to the less fortunate people, some of whom may not have even paid taxes. Giving money back to the taxpayers will certainly stimulate the economy. I’m for it, but it is like using aspirin to treat cancer—you feel better, but you’re going to die if you don’t tend to the tumor. 

So, the nation continues to lose jobs to foreign manufacturers at an alarming rate. Ask your hardware suppliers where the parts that compose the finished products you buy are really being produced. Aren’t you curious about from where your glass is really coming? How about the aluminum storefront system and doors you buy? Buying American works when the product components are really manufactured here, are of acceptable quality and reasonably priced. But, it’s aspirin.

It is shameful that years of increasing the burden of social programs, taxes and responsibility for consumer stupidity on to corporate America has made us impotent in our ability to be competitive in our own market. There are efforts by one party to offer tax breaks to American businesses for investing in machinery, equipment and employee training. This could not come at a better time. But, it’s still aspirin. 

Teachers through high school should be given merit raises based on their ability to educate our kids, and not just on how much college they’ve attended or how long they have been in a union or their political affiliations. We need to support what it will take to graduate educated students and good citizens, and that includes giving teachers the right (without threat of lawsuit) to keep order in the classrooms. One thing is for sure: let’s get back to what made this country great and teach responsibility, values, manners, good and evil and that there are good and bad consequences for the choices people make. Above all, let’s invite God back into our schools and fight against the ACLU and their ilk for His rights.

The Tumor: The System 
One party that offends me most is the one, which for some reason has found solace in all that is controversial, and forces compromise after compromise that only weakens all potentially effective reform. I’m sorry if this offends anyone, but I have to say that much of our liberal leadership, while saying just the opposite, undermines the part of our national interest that is responsible for producing things. Ever think of why? Think again who is in control. Lawyers dominate our legislatures. They are individually and collectively the bigger contributors, are the most willing to offer candidates the bucks needed to win a campaign and are most adept at getting their money’s worth. Most of those lawyers are not going to support legislation that prevents their brethren from feeding at the trough that our businesses are forced to keep full. A factory worker whose $10 contribution means much more to that worker than a $2,000 contribution by one of those plaintiff lawyers should be revered by the candidate for the gift that it truly is. Unfortunately, it seldom is. 

Without fixing the system, all those aspirin fixes are moot. So it is imperative that we support tort reform, support Citizens Against Lawsuit Abuse or any organization that favors common sense alternatives to lawsuits, which undermine our society. Find out who among your city, state and national government represents you, what their objectives are and see if they are in sync with your opinions and if they actually vote that way. They represent you and all your fellow constituents who voted for them. Don’t hesitate to organize and be vocal about removing them if they continue to allow undermining interests to feed at the government-created trough. 

So the question becomes this: is the leaning liberal party finally ready to recognize that corporate America is not the greedy villain they demagogue at every opportunity, and that businesses which manufacture goods, and as a result, provide jobs, are good? Is Congress willing to do what it takes to create a better climate for cultivating good jobs for every capable American? 

The greatest of our natural resources is our workforce. It’s the best in the world. Its pride is dimming, however. It’s a shame to see the growing number of laid-off workers, some standing around street corners with little prospect for an immediate job, using recreational drugs that will keep them on that corner when the opportunity finally does arrive. We need to let our leaders know we expect change, and that they must cater to responsibility and values—common sense objectives—and reverse the trend for businesses that are anxious to step up and put good productive people back to work, and who offer the opportunity for re-igniting the light in workers’ pride. 
Time to go … see you on down the fairway.

P.S. Not all lawyers are bad; really, some of my best friends are lawyers! 

Bob Lawrence
Bob Lawrence
is the president of Craftsman Fabricated Glass in Houston. E-mail him at bobl@gwiweb.com. His wife, Toni, is running for Houston City Council - District A.


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