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2009-01-18 BACK
That Which Doesn't Kill Us Makes Us Stronger
That Which Doesn't Kill Us Makes Us Stronger This article originally appeared in the Texarkana Gazette on January 18, 2009 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business When faced with difficult circumstances, I'm reminded of the quote I heard often during my MBA program from my Baylor managerial economics professor, (attributed to 19th century German philosopher Friedrich Nietzsche), "That which doesn't kill us makes us stronger." In many ways, this "truism" is appropriate when reflecting on the economic conditions of 2008. Nietzsche's quote reflects the notion that if we (individuals and organizations) can change and adapt in response to difficult circumstances we can grow and improve to better ourselves. The idea is that our survival is dependent upon our developing undiscovered talents in response to circumstances that threaten our survival. Companies survive by discovering and using new methods and technologies to deliver new and better products to their customers at lower and more competitive prices. What happens when a person is spared the consequences of their actions? They are denied a learning and growth experience and are worse off because they will not be in position to meet new future challenges. Parents know that a child becomes "spoiled" when "the rod" is spared. Economically speaking, companies, spared from the consequences of their own actions in the face of market conditions (fair or not), become "spoiled" when unproductive actions are seemingly rewarded. Ultimately, a previously protected company, when left unprotected, becomes vulnerable. From a free market perspective, failure is proof that the market is working. Buyers and consumers want products and services that most efficiently and effectively meet their specific needs. Companies not doing so ultimately need to fail so that scarce resources can be better combined and utilized by those organizations to better serve customers and consumers. Cold? Yes, but the long run alternative is much colder. These same principles apply to economic communities. These communities must compete with other communities to keep and grow current business and attract new business. They do so by creating an economic environment that is relatively more attractive or unique than relevant competing environments. A great local example that ties these concepts together is the recent situation with our Cooper Tire plant. In response to declining demand and increasing price sensitivity, Cooper Tire and Rubber, Inc. (the corporation in Findley, OH) considered ways to become more profitable in order to survive. They forced their four plants and the economic communities in which they operated to "compete" with each other to avoid plant closure. This "competition" will save the company $75 to $80 million a year. I think this will make our local Cooper Tire plant stronger. We are told that we can expect to add 250 to 300 jobs or more in the short run. Longer term, I believe we will add more jobs in Texarkana as the company shifts tire production to the three remaining plants. Another positive effect of this not killing us but making us stronger is the multiple partnerships that have been formed/re-formed between our economic community and various state and local governments. Just as we've benefitted in the past from these partnerships (think the most recent BRAC and Red River), the continued development of these partnerships will help us realize benefits that we in Texarkana can expect to enjoy in the future. All of us know from a gut-level how big keeping the Cooper Tire plant was for Texarkana. A look at the numbers tells us just how big this will be for our community. Cooper currently employs over 1500 employees at its plant. Over this last year, monthly statistics show that roughly 60,000 people are employed in the Texarkana MSA. The latest statistics show 60,758 employed. A 4.7% unemployment rate means that 2,996 people are currently looking for a job. A Cooper Tire plant shutdown with a loss of those 1500 jobs means that one third of the unemployed would have been Cooper jobs. The unemployment rate would immediately jump to 7.1%. We haven't seen 7% unemployment rates in almost ten years. The long term effect that would have occurred from losing Cooper doesn't end with the loss of 1500 jobs. These jobs directly and indirectly support other jobs in Texarkana. The direct jobs are those business-to-business local Cooper Tire vendors. The indirect jobs are the local consumer businesses selling goods and services to Cooper Tire employees. Using a jobs multiplier of 2 in this case, the Texarkana economy would eventually lose another 3,000 jobs. This would have been devastating to our economy. Hats off to the Texarkana Chamber of Commerce point person Jerry Sparks and Chamber President/CEO Jeff Sandford for their leadership in pulling together all of the members of the Save Cooper team. They coordinated the efforts of both side's city/county governments, and the State of Arkansas. It was reported that more than 30 different teams worked together during this process. Especially to be appreciated is the local Cooper union, Steelworkers Local 752L, and President David Boone. They truly made the difficult choice of accepting wage and benefit concessions for the local employees. This likely led to the final decision of our plant being sparred. In this case, that which didn't kill the Cooper Tire plant (potential shutdown) made it stronger (more jobs and higher efficiencies). All of us benefit from this. Here's to wishing you a prosperous and productive 2009 and hoping that you and your organization are made stronger. Contact me at Edward.Bashaw@tamut.edu.
TOP
That Which Doesn't Kill Us Makes Us Stronger
That Which Doesn't Kill Us Makes Us Stronger This article originally appeared in the Texarkana Gazette on January 18, 2009 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business When faced with difficult circumstances, I'm reminded of the quote I heard often during my MBA program from my Baylor managerial economics professor, (attributed to 19th century German philosopher Friedrich Nietzsche), "That which doesn't kill us makes us stronger." In many ways, this "truism" is appropriate when reflecting on the economic conditions of 2008. Nietzsche's quote reflects the notion that if we (individuals and organizations) can change and adapt in response to difficult circumstances we can grow and improve to better ourselves. The idea is that our survival is dependent upon our developing undiscovered talents in response to circumstances that threaten our survival. Companies survive by discovering and using new methods and technologies to deliver new and better products to their customers at lower and more competitive prices. What happens when a person is spared the consequences of their actions? They are denied a learning and growth experience and are worse off because they will not be in position to meet new future challenges. Parents know that a child becomes "spoiled" when "the rod" is spared. Economically speaking, companies, spared from the consequences of their own actions in the face of market conditions (fair or not), become "spoiled" when unproductive actions are seemingly rewarded. Ultimately, a previously protected company, when left unprotected, becomes vulnerable. From a free market perspective, failure is proof that the market is working. Buyers and consumers want products and services that most efficiently and effectively meet their specific needs. Companies not doing so ultimately need to fail so that scarce resources can be better combined and utilized by those organizations to better serve customers and consumers. Cold? Yes, but the long run alternative is much colder. These same principles apply to economic communities. These communities must compete with other communities to keep and grow current business and attract new business. They do so by creating an economic environment that is relatively more attractive or unique than relevant competing environments. A great local example that ties these concepts together is the recent situation with our Cooper Tire plant. In response to declining demand and increasing price sensitivity, Cooper Tire and Rubber, Inc. (the corporation in Findley, OH) considered ways to become more profitable in order to survive. They forced their four plants and the economic communities in which they operated to "compete" with each other to avoid plant closure. This "competition" will save the company $75 to $80 million a year. I think this will make our local Cooper Tire plant stronger. We are told that we can expect to add 250 to 300 jobs or more in the short run. Longer term, I believe we will add more jobs in Texarkana as the company shifts tire production to the three remaining plants. Another positive effect of this not killing us but making us stronger is the multiple partnerships that have been formed/re-formed between our economic community and various state and local governments. Just as we've benefitted in the past from these partnerships (think the most recent BRAC and Red River), the continued development of these partnerships will help us realize benefits that we in Texarkana can expect to enjoy in the future. All of us know from a gut-level how big keeping the Cooper Tire plant was for Texarkana. A look at the numbers tells us just how big this will be for our community. Cooper currently employs over 1500 employees at its plant. Over this last year, monthly statistics show that roughly 60,000 people are employed in the Texarkana MSA. The latest statistics show 60,758 employed. A 4.7% unemployment rate means that 2,996 people are currently looking for a job. A Cooper Tire plant shutdown with a loss of those 1500 jobs means that one third of the unemployed would have been Cooper jobs. The unemployment rate would immediately jump to 7.1%. We haven't seen 7% unemployment rates in almost ten years. The long term effect that would have occurred from losing Cooper doesn't end with the loss of 1500 jobs. These jobs directly and indirectly support other jobs in Texarkana. The direct jobs are those business-to-business local Cooper Tire vendors. The indirect jobs are the local consumer businesses selling goods and services to Cooper Tire employees. Using a jobs multiplier of 2 in this case, the Texarkana economy would eventually lose another 3,000 jobs. This would have been devastating to our economy. Hats off to the Texarkana Chamber of Commerce point person Jerry Sparks and Chamber President/CEO Jeff Sandford for their leadership in pulling together all of the members of the Save Cooper team. They coordinated the efforts of both side's city/county governments, and the State of Arkansas. It was reported that more than 30 different teams worked together during this process. Especially to be appreciated is the local Cooper union, Steelworkers Local 752L, and President David Boone. They truly made the difficult choice of accepting wage and benefit concessions for the local employees. This likely led to the final decision of our plant being sparred. In this case, that which didn't kill the Cooper Tire plant (potential shutdown) made it stronger (more jobs and higher efficiencies). All of us benefit from this. Here's to wishing you a prosperous and productive 2009 and hoping that you and your organization are made stronger. Contact me at Edward.Bashaw@tamut.edu.
TOP