At Bottom, Bottom Line
Terry H. Schwadron
Two reports from the business world seemed to capture oversized attention this week. What do they tell us? Why do we care?
Under pressure, the top leaders of Uber walked away from their jobs, rejected by their companies. And Ford, under jawboning pressure from the President to keep jobs in the U.S., announced that Ford Focus cars will be built in China instead.
At Uber, Travis Kalanick is out as chief executive of the company he created in 2009 to challenge entrenched taxi fleets. In his unique, often rude and insulting personal way, he built the idea from nothing into a major company. But continuing internal scandals about sexual and employee harassment, bad treatment of people, and probably some slackening of profit rise propelled a stockholder and board revolt.
Internal dissension had been so high that the company called in former Atty. Gen. Eric Holder as an independent reviewer. His recommendations were voluminous and included a change of leadership.
But it’s a company and a rich business guy? I know it is unusual for a Silicon Valley entrepreneur, but I’m a little confused about why the general public is supposed to care? Have we now decided that employees should be treated humanely? Are we now drawing a line about sexual harassment?
What about Ford? That company also has been in the news of late, with a replacement at the top of its leadership over not making enough money fast enough. The announcement that Focus cars, small cars, can be made more flexibly, cheaper and under fewer labor rules in China is exactly the target of Team Trump campaigns at the White House. That trend of sending factories overseas is the reason cited for lowered corporate taxes, for repealing the Affordable Care Act and for eliminating tons of environmental regulations.
By contrast, it is clear why this announcement should draw attention. It is about jobs in a key industry, and one that has been singled out for kid-glove treatment. Apparently, that is not enough to keep Ford in the United States. For its part, Ford did say that they are not eliminating current jobs in Michigan because the company will produce more larger trucks and cars that are selling at greater profit than Focus models.
The only thing these announcements seem to have in common is that they make change when the profits start to wane from expected results. Profit is an outsized value, apparently considered more important that building employment or, say, participating in community.
It’s important because profitable operations is the one area over which the government has no control. The Trump administration is moving to remove consumer protection regulations, environmental rules, labor rules — anything that may be considered an obstacle to more profit. There were reports this week, for example, that the administration wants to eliminate some reviews and regulations governing introduction of new drugs in the hope that lower prices will result. But none of this has anything to do with keeping profits high.
Of course, this overlooks what happens when the business IS the government, as in the Trump Organization, which has benefitted directly from government policies that the President heads.
I’d like to think that we care about Uber because of the practices that were going on in the company, essentially a finding that sexual harassment and insulting behavior have no place in the workplace. But I don’t think so. From what I can gather, the attention on Uber, a successful start-up, was mostly about an effort to protect the stockholder investment in the company, which was represented by Kalanick as its chief spokesman.
But as in Fox News, sexual harassment problems did not surface until there were reports of the financial impact on the company. As at Fox, Uber, investors could lose billions if the company were to be marked down in valuation.
At Ford, earlier this year the company had canceled plans to open a plant for Focus production in Mexico. President Trump had leaned on the car maker to halt the move overseas. Now, the company says — for business reasons — that even if there is a tariff on cars produced in China, it will save money by the move.
Ford’s decision, like Uber’s, is about money, not about being the best corporate citizen it can be. Perhaps this is not surprising, but it is a good reminder that we don’t get lost in the personality politics involved.
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