When journalists and politicians spout off about corporate downsizing, it’s the Al Dunlaps of the world who tend to get the blame. We’re painted as villains; but we’re not. We’re more like doctors. We know it’s painful to operate, but it’s the only way to keep the patient from dying. Take the restructuring at Scott. We had to fire 35 percent of the work force. It was a difficult task. Coming from a working-class family (my father was a union steward), I know what it’s like when someone in the family loses a job. But while we had to cut some jobs, we were able to give 65 percent of the work force a more secure future than they might have otherwise had. And Scott’s stockholders came out $6.5 billion to the better.
So why are shareholders so important to workers? By doing a good job for them, we’re encouraging them to invest, to build new plants and create new products. At the end of the day, that will mean more and better jobs down the road. And that’s the point people need to remember: the only way corporate America is going to do right by its workers is to compete. And in order to compete, companies need to become efficient. That means if you have workers for whom you don’t have a real job, you can’t keep them on the payroll.
Let me put this in some historical perspective. In the ’70s America lost its position as a leader in global business. Look at the industries we once had that barely exist: shoes, machine tools and consumer electronics. Don’t blame today’s executives who are having to face up to the tough decisions blame the executives who created bloated corporations that are noncompetitive. People are always criticizing companies that bring in record profits and then announce layoffs. What they don’t realize is that if an organization doesn’t make record profits, it doesn’t have the money to invest in new plants and new technologies.
That’s not to say that I don’t believe in CEOs’ being accountable to their workers. I think a CEO has an obligation to communicate with workers and prepare them for the inevitable. Before the restructuring at Scott, I personally went around the world and talked to people on the shop floors. One of the things we told them was that we weren’t keeping the elitist tools of corporate America at the expense of workers. Our biggest cutback was to sell the 750,000-square-foot corporate headquarters and downsize 71 percent of the corporate staff. At one plant, the workers actually applauded me. People are pretty intelligent if you tell them what’s going on and explain why you’re doing what you’re doing.
On the other hand, the politicians don’t seem to be getting the message. They pander to the public and polarize people. And they try to tell American industry how to conduct its business. The job of industry is to become competitive - not to be a social experiment. God help us if we pass legislation to make American companies less productive and compromise our global competitiveness. Then it won’t be a case of a relatively small number of people losing their jobs. It will be huge numbers losing their jobs-and the death of the American free-enterprise system as we know it.
