27/07/2004 - 22:00

US recovery a false dawn?

27/07/2004 - 22:00


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I did try to slip away quietly for a couple of weeks but my colleagues let it be known that I was “on assignment” in the US, so I’d best deliver a few pearls of wisdom on that front, otherwise some of you might be disappointed.

I did try to slip away quietly for a couple of weeks but my colleagues let it be known that I was “on assignment” in the US, so I’d best deliver a few pearls of wisdom on that front, otherwise some of you might be disappointed.

The Economy

Clearly the biggest issue when anyone talks about business and the US is the economy.

Most of you would be aware of the rocky ride that America has had since September 11 and, despite a positive start to 2004, that remains the case.

Manufacturing, a staple of small town America, has been hit hard and has yet to recover, even though the economy has been performing well this year.

Businesses have stopped laying workers off (something which happens much more quickly in the US than here) but have been hesitant to rehire, partly because of uncertainty and partly because technology investment has provided productivity gains that reduce the need for more people.

The first reason, uncertainty, is understandable given the economy spluttered in June, and there is much concern that this year’s recovery has been a false one.

The second is perhaps more surprising, given the elasticity of the US labour market. It seems business has preferred to invest in technology ahead of simply bringing more people on board.

This latter point possibly underlines the trauma of what the US has undergone in recent years. It has been so heart wrenching for business and communities to deal with the huge lay-offs; few want to risk going through anything like it again.

One conversation I recall was about a man’s uncle who had been within days of retrenchment after 18 years with his company. Normal procedure with layoffs, I gather, is a first in-first out system. At this company they worked their way up the ranks to fire anyone with less than time at the company than that man’s uncle, and he only survived by a whisker!

Certainly, it was top-of-mind topic for the various business newspaper editors I met.

What I find quite surprising, for a nation of capitalists, is the strong protectionist ethic there, even in the business press.

There is real concern, as there is here, about ‘off-shoring’ – the drift of jobs to other countries – both to neighbours such as Mexico but also distant places like India.

While I have never understood the wailing over the loss of jobs in places such as call centres, which have traditionally proved hard markets to find staff, I guess I can sympathise with a technology leader like the US bemoaning the loss of software work to India.

But what about the opportunities?

Few of those I spoke to could see the opportunities for US companies in 10 or 15 years from the potential unleashed by allowing India, to repeat an example, to prosper.

They wanted to protect jobs for the short-term rather than allow for a much greater opportunity in the future.

Los Angeles

While I spent most of my time in the fantastic city of Chicago, I did manage a brief stopover in Los Angeles.

Ostensibly there to visit some local business papers, I think it really was a cover to catch up with Jim Trandos, the charismatic farmer from the Trandos family whose Wanneroo farm business won a Family Business Award last year.

Jim was not only a great host in a place where a car is a necessity, he helped explain a few of the nuances that explained the differences between the west coast US and here.

That’s his stock in trade these days, so I won’t give away any secrets, except to say that he is well connected for a bloke from near-urban Western Australia and has managed to access good venture capital markets there – something more than a few local businesses need.

It is perhaps not so surprising that Jim feels at home in LA. I was surprised to find the freeways lined with Australian eucalypts, which obviously feel at home in the dry conditions.

As glad as I was to see a “successful” export to the US, I couldn’t help wanting to warn the Californians to cut them down while they could. The region has a real bush fire problem and I can’t see any advantage in them allowing Australian trees that create the conditions for fire to spread..


On the way home I flew the newly introduced New York to Singapore direct flight with Singapore Airlines, which I gather is the longest scheduled commercial flight going at the moment.

The extra-room economy seats certainly make the 18 hours in the air go a little quicker, as does the concept of keeping the flight in a sort of perpetual night, which helped get over the jet lag.

Singapore Airlines did give me club access at Singapore so you may consider following as a gratuitous lounge-for-comments line, even though it isn’t.

We actually missed our scheduled flight (adding a full day to the return journey) and Singapore staff were fantastic all the way – a stark contrast to their Star Alliance partners United Airlines, which consistently showed to me that the service culture isn’t to be taken for granted in Amercia.


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