Buying Utopia

I read an article today about a gang called Global Wind Systems, Inc that is bringing a "ray of hope" to Michigan where the unemployment rate is the nation's highest and the economy is something out of a Marx Brothers comedy.  These guys are "creating" 250 jobs and the big boss - a guy named Chris Long - thinks being in Michigan is great because "unions are fantastic for us".  I put the word 'create' in quotes because the idea that these guys have created jobs would be like saying I went to the grocery store and 'created' the gallon of milk I walked out with.  Nothing was created - Michigan paid this guy $7.3 million.  It would be more accurate to say that the woeful economy of Michigan spent $7.3 million to buy 250 jobs.

Let's set the job debacle and often insane leadership of the state of Michigan aside, however, and take a look at the bigger picture - and the picture is very, very big indeed.  7.3 million is a lot of bucks by any measure, but it is a drop in the bucket for environmental improvement these days.  The bankrupt state is ready to plow another half billion into this and similar ventures.  And Mr. Long is just getting started - he is going to turn all that cash into 2,000 jobs.  And he is going to sell his wind generators for $2.5-3 million a pop.  Creating jobs and saving the plant is happening on an epic scale in Michigan, apparently.  No small measures in the Great Lakes State.

You can read the results of similar investments in Spain where they came to the conclusion that "for every green job that's created with government funding, 2.2 regular jobs are lost and that only one in 10 green jobs wind up being permanent".

The planet is going to be saved - if it needs saving - by kaizen, not by such grandiose schemes.  I have worked with companies that are making extraordinary improvements in their impact on the environment, and reducing their costs at the same time.  And every one I have seen is doing it like a tortoise, rather than like the hares that grandstanding politicians and environmental maniacs so love.  They are saving a few kilowatts here and a few pounds in a landfill there.  They have relentless teams of front line employees making a never-ending stream of small improvements that, after a year or so, add up to serious improvements.

I am probably too harsh on the folks at Global Wind Systems - although I wish them luck with their love affair with organized labor - but the whole thing sounds to me like old school leadership.  A few smart guys in the back room are going to dream up the massive techno-project that will take everything and everyone to a new level of utopia.  It rarely works - whether it is government, manufacturing, health care or anything else.  Progress is more probable, more sustainable, and more substantial when it is driven by the people closest to the thing we are trying to improve; and when those people are asked to make improvements that are real and within their grasp; and to do it again next week, and again the week after that, and to never stop.

Lean is all about driving waste out of the business.  Energy going up and out through the roof, packaging material and scrap piling up in dumpsters and landfills, and oil burning to haul stuff around the globe connecting consumers with cheap labor all qualifies as waste.  The big project thought up by the real smart folks with huge price tags and breathtaking improvement goals aren't lean and they aren't the answer.

A fraction of the $7.3 million spent on teaching kaizen to every organization in the state would have saved more money, made more organizations more cost effective and healthy, created more jobs and done more for the planet.  Sounds better to me than - by Spanish math - creating 25 permanent green jobs at a cost of 550 real jobs and $7.3 million of taxpayers money.

Comments

[Bryan]

Kevin,

You are on the mark with this one. The hundreds of thousands people, given jobs in the first round of the The New Deal, were back on the street in 12 months. (source: The Forgotten Man, by Amity Shlaes. If you haven't read this book yet, now is the time to purchase this account of a bizarre parallel universe that mirrors our current political-economic times.) When are we going to figure out that government doesn't create value? It can only redistribute wealth? But I suppose the problem lies in whether we believe redistribution is good or not? And if we subscribe to this behavior, do we know if it is sound economics or not?

[Rick Bohan]

Are you kidding? 7.3M is cheap compared to the gazillions that companies like Hewlett Packard, Dell, and Cabela's wring out of states and regions. Michigan got a deal.

The alliance between government and big business to redistribute our wealth to said big business has been going on a long time and is ineffective. Better that the money would be put into schools, colleges, hospitals, and roads. And I don't say this as a soft-hearted liberal (though I am one) who believes that it's better to spend money on initiatives that have direct benefits to the community than to "buy jobs". Empirical data show that such expenditures are more effective in attracting and retaining investment than are big tax abatements and subsidies to specific companies...whether they're making windmills or snack crackers.

[david foster]

For most politicians, it's all about the press release and the photo op. If the politician can get associated with the "creation" of X jobs, he can generally be assured that few are likely to connect his name with the project/enterprise later, when it goes under. By that time, he'll be on to a whole new set of "job creation" programs.

[Jeff Holloway]

In her 2006 State of the State address, Governor Jennifer Granholm stated: "In a few months, we will begin making prudent investments in the diverse companies that will grow jobs in Michigan. And by this time next year, we’ll see new businesses doing just that. In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy."

Who knew that Global Wind Systems would be diong the blowing?

[Mike]

Off the mark this time, Bill. Anyone that starts a manufacturing operation in Michigan should be applauded, not ridiculed. You do not know that the jobs this company offers will only be temporary. You do not know they will not be able to make good on their predictions of 2,000+ jobs in the future. The future has not happened yet, so you can not predict it. Maybe you should give them the benefit of the doubt before you hammer them down. And really, isn't it picking nits to go after the claim that they are "creating" jobs? Really, who cares if those jobs replace others that no longer exist or if they are "new" jobs? People who were not working can now be working. There are plenty of good targets for you when you are on your soapbox, Bill, but I think you missed it this time.

[Bill Waddell]

I'm gonna stick by my post Mike. Michigan has been rated 48th in desirable states to get into business for the second year in a row in a survey of CEOs by Chief Executive magazine. Only California and New York are worse.

The people of Michigan would be much better served if the governor concentrated on fixing the fundamental, underlying problems that have Michigan dwelling in the industrial basement. Instead she is borrowing money the state does not have to create jobs for a product the market is not demanding. Our children and granchildren will have to pay for it, and the basic problems will still be there for them to solve, as well.

You can read the survey results here:

http://www.reuters.com/article/pressRelease/idUS217209+12-Mar-2009+MW20090312