Thursday, April 17, 2008

Greed in NZ, too

I've written about corporate greed many times. I've been critical about corporate ethics, and about the modern business paradigm in which nothing matters to corporations except maximising return to investors.

Today, there was an example of what I've been talking about.

New Zealand appliance manufacturer Fisher & Paykel has announced that it's shutting factories in Dunedin in New Zealand, Brisbane in Australia and one in California, shifting the jobs to Asia. 1070 people will loose their jobs, 430 of them in New Zealand. Last year the company announced that it was eliminating even more jobs in Auckland, shipping them to Asia.

In justifying its shipping jobs to what Fisher & Paykel referred to as "low cost labour countries", the company said, "Our products are innovative and high end but unless we can reduce some of the cost disparities in the manufacturing process, particularly the cost of labour, we will not be able to continue to provide an adequate return to our shareholders."

It's refreshing, in a weird way, for a corporate to admit that it's exporting jobs in order to maximise payments made to shareholders. Usually, they just talk in vague terms about "maximising return" or something similar.

This highlights exactly what I've been criticising about the modern business paradigm. While I don't know for sure what economic impact the company's moves will have in other countries, the loss of so many jobs in Dunedin will be painful.

The company will also seek suppliers close to their new manufacturing facilities, and that will mean a loss of business—and jobs—for many more companies. By the time all the dust settles, hundreds more jobs will probably be lost. And all of this to guarantee "an adequate return" to their shareholders.

There has got to be a better way. All the bright sparks among the world's universities and thinktanks have got to be able to come up with a better way to capitalise business that doesn't involve using the money of greedy people who put their own profits ahead of the interests of society and the commonwealth. This is the 21st century—why are we still using 18th century economic ideas?

This is a problem that goes far beyond one company or one factory, but extends everywhere. It includes: Oil companies making obscene profits, paying their executives obscene salaries and refusing to invest in new energy technologies; food being diverted from people to "bio fuels"; pollution being tolerated because cleaning up would reduce payouts to greedy investors.

Without real change, all we'll be left with will be the scraps the greedy people leave us. That's not a situation that's sustainable or justifiable. I hope it's not inevitable.

And as a final underscore to this story, after Fisher & Paykel made their announcement, their share price shot up 15%. Clearly they pleased their greedy shareholders.

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