Taxing Proposal

Last month, O+F invited readers’ comments on a proposal by Sen. John Kerry to remove tax incentives for U.S. companies sending jobs overseas. Here are some of the responses we received. Names and other identifying information have been withheld where requested.

I do support Kerry’s proposal. It is ridiculous that the U.S. government offers incentives to U.S. companies, via lax tax laws, to send U.S. jobs overseas. I would prefer to support a Republican, but the interest of U.S. workers and the U.S. economy should be a bipartisan issue, not a political one.
Melanie Lux
Lux & Associates

Sen. Kerry’s proposals should be viewed for what they are — politically motivated. Such action would serve to undermine the expansion of global free trade, of which the U.S. is a primary beneficiary.
Rob O’Connor

Sen. Kerry’s tax plan, like most of his other plans, will not work. We live in a global economy. If outsourcing jobs to another country works, then do it. We would be putting dollars in the hands of others, which in turn they will [use to] buy products from American companies. To think that changing the tax structure will save American jobs is shortsighted and short-term.
David Sujkowski

Kerry doesn’t have a plan; like most politicians running against an incumbent, he will only say that the present administration is doing it all wrong, and he will say what the crowd in front of him wants to hear. He was speaking to a labor union, and God forbid he say the real reason U.S. companies are taking the jobs overseas — which is that the labor unions have made it all but impossible for businesses to compete and pay the high salary and benefits packages that union employees demand. I personally don’t want to pay $50 for a pair of Levi’s just because they are made in the U.S.A. Don’t blame it on the Bush administration — lay the blame where it belongs.
Scott Bartley

Anyone who thinks this will work doesn’t have a clue how business works. It’s called the bottom line. The reason companies are shifting their jobs offshore is for cheaper costs, not necessarily because of the tax advantage. They still have to pay taxes to the country in which they operate. We don’t currently tax the income of residents or businesses in foreign countries. Why should we assume that we have that right with American-owned companies or American citizens living and operating offshore?

We need to realize that we are part of a global economy and start acting like it exists. The market forces of the world economy will dictate where the jobs will go, not politicians in Washington. I was once chastised by a colleague for buying a “foreign” car made in America, because the profits went to Japan. I had to remind him that the publicly held American company we worked for sent its dividends to Japan also.
Name withheld by request

Any “reform” plan that substantially reduces offshore outsourcing will ultimately harm our economy. Creating a bubble around [the information technology] industry to prevent domestic job loss will only ensure that our ability to compete internationally in this, or any other field, will be hindered and that we will eventually lose all of these jobs in the “protected” industry to foreign markets.

If a U.S. company wants to trade internationally, it must utilize the “best of breed” practices in the industry where it competes. Unfortunately, in a free-market economy, transitions aren’t well planned — they are more knee-jerk reactions to the latest crisis. But it doesn’t appear to be a problem that one political party or the other can remedy!
Name withheld by request

Our tax system is broken! We need a two-tier, flat-tax system — one for individuals and one for companies. No deductions, no special interests, no loopholes. You can have a minimum level before taxes are levied and at certain times use tax credit or incentives to spur the economy. These incentives must have specific time periods. At year end they must be evaluated and increased to the percentages used, but must be voted on by 75% of Congress before any increases can occur.
Patrick Mastrola

Punitive taxation of business discourages job creation and economic expansion. If Kerry wants to try something radical but fair, how about a flat tax? That would really stimulate business and create jobs and simplify accounting procedures. How about moving toward a flat tax by annual increments so that the effect can be measured without catastrophic effects and adjusted accordingly?
Nat Florian

Sen. Kerry voted for every one of the tax incentives to reward companies for moving jobs offshore and continues to take contributions from those companies. Does anyone really believe that after all the huff, puff, and smoke clears he will bite the hand that has supported his candidacy from day one? The guy’s a Ted Kennedy clone — a tax-and-spend Democrat who believes in his heart that the people are idiots so Uncle Sam will have to control every aspect of their lives. Kerry was born to wealth and privilege, and with the exception of his military service has never worked a day in his life. Like Bill Clinton before him, he doesn’t even own a car, let alone buy gas at $2 a gallon.
Name withheld by request

I strongly support every aspect of the Kerry Tax Reform Plan. It is urgently needed and will ultimately benefit all parties, individual employees, employers (higher quality, less exposure to unpredictable operating factors), and the federal and state governments (by reducing deficits, stronger funding of FICA, etc.).

Congress has simply acted in this matter as it has consistently done under Republican administrations — anything to ultimately benefit the wealthy at the cost of undermining fundamental requirements of the U.S. economy.
Errol M. McGuire, Ph.D.
EM Consulting Inc.

Address letters to: Letters to the Editor, O+F, 11 River Bend Dr. South, P.O. Box 4949, Stamford, CT 06907. Send e-mails to: barnn@primediabusiness.com. Published letters do not necessarily reflect the opinions of O+F and may be edited for length and clarity.


Productivity Measures

I read with interest the Frontline Fixes articles with regard to productivity measurement in a distribution environment in the March 2004 issue. We have struggled for years in measuring our processes at the each, case, pallet, and order line level. The problems we encountered were that even at these levels of measurement, not all units of measure were equal, especially in a distribution environment as varied as ours.

We have recently borrowed (pirated) the measurement methodology that our packaging plant has utilized with success for several years. This methodology centers on a productivity measure that is based on a calculation of standard man-hours per compensation dollar.

In this method, we have developed rates for each of the respective pick-and-put processes in our distribution center. We pull our actual production information on a daily basis, and using our pre-established rates, we calculate what we believe to be the standard man-hours needed to accomplish the given production. On a weekly basis, we take the totals and the actual payroll by department and calculate a standard hours per $1,000 compensation figure.

The week-to-week comparisons really go to show how the volatility in order volume and order composition can affect how productive we really are. From a control standpoint, we are striving twofold to (1) stabilize the overall measurement and (2) improve it by raising the overall number from week to week. This is done at the departmental level on a proactive basis in actively managing the day’s production and minimizing labor waste.

We have been measuring ourselves this way for about six months and the results have been very interesting. I would be remiss if I didn’t credit a large portion of the development of this project to our lean operations analyst, Katha Mayland, and our operations supervisor, John Tracy. We are very much in infancy with regard to this process, but with further development at our facilities, the future looks promising.
Jim Douglas
Warren Distribution

Offshore Outsourcing

Our business is heavily dependent on foreign companies and products. We would be deeply affected should protectionist policies be put in place. I believe it is shortsighted to look at one particular sector of the economy, such as manufacturing, and bemoan the normal progression of labor to the most efficient production location. Those of us in the fulfillment industry actually benefit when products are produced in overseas markets. The demand for our services increases, and the opportunity to grow is real. My company has been creating jobs to get foreign-manufactured low-cost products to the American consumer. The men and women in our business don’t seem to mind getting paid to operate forklifts and assemble orders. The dollars in their paychecks are just as green with foreign goods as they are with locally produced items.
Daniel N. Lucht
ProPack Inc.

We currently have three offshore business partners. They are essentially entry-level positions in data entry, but they do a good job. Lately we have noticed a certain amount of reluctance among our clients to send work overseas. My guess is that this is some spillover from the campaign rhetoric. In Wisconsin, a good portion of the manufacturing jobs have left, but that cannot be attributed solely to offshore — or maybe it can. But those jobs are gone for good and a politician is not going to bring them back.
Rich Hamilton
OnCourse Information Services

I would have to go with Senator Dodd on his bill to limit federal monies for outsourcing contracts. It is important that the government motivate business to fulfill needs here in America. Federal money is American people and American business. The harder question is [that of] penalties on companies who outsource in the private arena.
John Brick
Big Horn Music Services

I honestly think that protectionism is by far one of the most unhelpful and just plain dumb actions we can take as a powerful capitalist nation. This entire argument is ridiculous given the fact that outsourcing overseas from the U.S. has been going on for decades and should continue. I believe it is anti-capitalist to even fathom that we would restrict governmental contracts, of all things, to companies that do not use overseas workers.

We are a nation of innovators (leaders), not unimaginative doers (followers). The last thing we need to do is build walls and start with protectionist attitudes. If someone else in the global economy can do it better, faster, cheaper, so be it! It’s called capitalism for a reason.

Although some will certainly argue the point of capitalism, it’s a changing, fluctuating state, not a stagnant process. Globalization changes the way capitalism works. We should definitely not build walls but accept this fact and compete as we always have. Thanks for starting the discussion in this venue, and we hope to hear some constructive feedback.
Jeff Sosville

Although I object to the issue of offshore outsourcing, I object even more to the government telling us what we can and what we cannot do. The government is already into our businesses more frequently than is necessary. Why not look for more attractive, incentive-based means to cause businesses to employ domestically? There are numerous counterproductive forces, imposed by the boards of directors of many companies, that basically become the survival strategies of managers — either find ways to cut costs or we will find others that will. Consequently, those forces cause many managers to look for any means to save money, even if it costs jobs in our own country, as long as it is not their own. Regardless, the government has no right to tell us how to run our business. They need to look introspectively for the elimination of waste within their own organizations.
Edward R. (Ed) Danner II
Kable Fulfillment

We absolutely support Sen. Chris Dodd’s bill. We think it’s criminal that federal monies are being used to indirectly fund the offshore outsourcing of the jobs of American workers … the same people who, by the way, pay the taxes.
DW Stevenson
DW Stevenson & Associates

Address letters to: Letters to the Editor, Operations & Fulfillment Magazine, 11 River Bend Dr. South, P.O. Box 4949, Stamford, CT 06907. Send e-mails to: barnn@primediabusiness.com. Published letters do not necessarily reflect the opinions of O+F and may be edited for length and clarity.