listen to yourselves "yeah, let's send another US money maker to the wall...yay..that should help the economy." would you really want that right now...? sounds crazy to me but you must know better.
Just trying to make it right Bushranger not asking them to leave, yet....there is always someone else. Americas true spirit is a level playing field with equity for everyone - life, liberty and the pursuit of happiness.
Now, if IKEA want to treat their workers like shit, that's one thing. I'm sure it's likely overblown, or part of a much bigger story that we'll hear about soon as most corporations do provide more than adequate rewards when they can and the workers themselves will make sure of it, without your help or without making it worse IMHO. But whinging about the $12 million means you don't understand what it costs for a good business plan, and albeit the plan has probably already made you $100 million back already. Why is IKEA there and not only in China & India & the cheap places to run business of that size? It's called tarriffs and economic viability. From an Aussie perspective, I reckon it likely went like this. First we had John, working hard making good furniture but it costs a bomb. He makes a load of good quality furniture and is doing quite well selling to the locals. Then IKEA opens up in Sweden, has crappier furniture but its much cheaper and they start shipping it over to the USA. Within no time John can't sell his furniture anymore because everyone's buying that cheap imported crap so he complains to the government that they shouldn't be allowing this crappy furniture in the country, as number one it is crappy, but number two it is putting him out of business. The government says John has a point. It places a new tarriff on all imported furniture which now pushes the prices up of all imported furniture. Hopefully the higher import prices will sway buyers towards John's furniture but if not they can use this extra 'free' money to help compensate John in the form of welfare. Now, the imported furniture is a lot dearer than it used to be and government is earning a right whack on the side but unfortunately the imported furniture is still way cheaper than John can do it for. Nobody is buying John's furniture and he's about to claim social welfare for the first time in his life. His five employees are out of work and all of the furniture makers he knew are claiming the social too. The Republicans, who diverted the tarriff funds from social to military, are now up in arms at the rising cost of the social welfare program.... Then some government senator gets a brainwave....! Hey, if we brought IKEA here, and had them run their money making business plan here, well we can employ those 300 currently out of work furniture makers here, and that will shut up the Republicans, and all my problems would be solved! IKEA will make more money because it won't need to pay import tarriffs and that should help our economy! He sends off a minion with a budget of $20 million to do all they can to drag IKEA and their business plan over. Offers them a great deal, ends up signing up for $12million and you now have a successful business running a proven business plan where, from here on, it is supposed to make everyone more money and employ the unemployed. The main thing this post was meant to convey, IMHO, you surely can not complain that you paid $12 million to build it because you will reap the rewards as long as it stays there.
@ Rebecca re: your quote: I like it. LOL. I'd add a direct link to one of the stories. That gives it much more authenticity. I've been non stop busy all day....but once I get a break I'll take some actions. In reading as much as I could on the story, it simply appears to me that Ikea is practicing bully tactics....because they can get away with it. I don't mind hitting them up on the problem. Yeah, the way Google Places works there will be a different Places page for each store in each location. Down deep i know Google won't like it if its Places Page becomes a forum for political action and reaction....and if it occurs they'll probably start hand removing these types of reviews...but until that reaction occurs I bet the reviews will be dramatically effective and they will force a reaction of some type by Ikea. It hits them where it hurts---> in the pocket. That is also why if they changed their ways and became more fair, I'd take down my comments
Good idea. As far as being busy, I'm unemployed right now. lol. I was let go at the end of April, but I've found a new job. It's actually better, pays more, but doesn't start for another week and a half. So, I still have a bit of time on my hands. I'll get started on it tomorrow. Well said.
@Bush: I'm not against Ikea being there. I'm against what I read in its entirety and what appears to be deliberate bullying tactics that are dramatically taking advantage of the workers and the prevailing political environment. This is how that political environment at its extreme takes the population backwards in terms of human rights. I don't like the net result of the $12 million investment/incentive by the state. I have good familiarity with these incentive programs jurisdictions use to compete for and entice employers to move to their particular regions. Nobody has a great analysis of the value and payback. Do they work. Too many anecdotal examples where businesses take the incentive program and it doesn't work or the company later moves or closes long before a payback might occur. My guess is they don't provide any payback relative to the way they are politically sold to the public. Can't prove it either way though. Specifically actual history and facts in that neck of the woods show some overlapping similarity to your scenario with regard to furniture construction in the US. That area is specifically where lots of furniture manufacturing took place in the US. In the 20th century that area had lots of factories for furniture manufacture. There is still some but it is a shadow of what once existed. As with so many industries cheaper labor in different parts of the world moved a lot of furniture manufacturing to third world nations. That area lost thousands if not tens of thousands of jobs. Ikea has unique twist. It does have inexpensive manufacturing. It does have factories in third world parts of the globe. It also has factories in Europe with far higher wages and extraordinarily better treatment of workers. Read the links provided by Rebecca. Ikea also offers something else. Its funky, stylish, has a nifty flavor. Its like getting a champaign meal on a beer budget. It gives you functional and stylish furniture at a very low price. Pretty cool. But the specifics of this story are different. Read through the details. They are intimidating the workers. Despite the fact that unemployment is very high in that region, jobs are scarce, people are leaving that job in droves. Their turnover is very high. On top of that they used a hiring strategy to enforce high turnover. Its a combination business strategy to keep labor costs real low. Believe me, I'm an employer. You want to get employees to leave without having to pay unemployment insurance,--get them to quit. We've used it. It was used on me when I was a lowly worker. In this example add up all the evidence. Its a clear business strategy to beat the sh1t out of workers. Its over the top. Look, I'm not whining about the loss of lower skilled manufacturing jobs to other parts of the world because of the difference in labor costs. Its a fact of life. Its everywhere. If China can get labor at $12/day for certain kinds of work that work can't be matched in the US. You can't live in the US at $12/day income and have a life that represents a wealthy country. On the other hand there are anecdotal and hard evidence of export smart European and specifically German factories with high labor costs selling specialty items into the huge growing affluent part of China. And these factories are making money. And the workers make solid salaries. On top of that the workers in the factories get health benefits at a higher rate through the government rather than the employers. So you have smarter, savvier factory operators making things work with high wages. Overall the US doesn't have a great track record emulating the style, smarts, savvy that is being used in Germany. I don't think we've had tariffs on furniture. Not sure about it though. I simply think we lost a lot of jobs. I'm a business guy. I totally believe in demand and supply. I look at Ikea running 3 shifts a day plus having last minute requirements for overtime and what I smell is a company making a lot of money on the products from that factory. I have a strong suspicion that the money its making is not staying in the US and isn't necessarily going back into Virginia at any kind of rate that justifies the $12 million in state taxpayer money. I ran some numbers to look at the payback. Assume there are 330 employees averaging at $10/hour. (The company isn't telling us what they make.--Why not. We do know they are starting people at $8/hour and creating tremendous turnover through abuse and low wages. We know it from history. If the employees are working and getting paid on a 40 hour week they are making $20,800/year. That is way low relative to the US averages. Plus working conditions suck. The company has shown no evidence that its a sweet place to work. . The max rate is 5.75% state tax on income. Except its lower in that its phased in at lower rates and there are exemptions. If the full $20,800 resulted in exactly 5.75% for the 330 workers that would be less than $400,000 in state income tax revenue. Now at $12 million in a gift/incentive from the state....that would be a 30 year payback on that $12 million. VERY VERY POOR. doesn't make sense. The factory is located right next to the North Carolina border. No restrictions on residents from North Carolina working there. That diminishes the potential money made off of state income taxes--though you gotta pay the state where you are earning your money. In that the factory is located right next to North Carolina they are buying some of the local goods and services from vendors in NC. No state sales taxes from that money. Its a piss poor rate of return. Its that simple. In addition the company is knowingly treating the workers like peons. Ikea knows it. Its deliberate. That is how employers work. I'm an employer. It doesn't occur without oversight. its just a crappy situation. Should be changed, IMHO.
@Rebecca: Well I posted a review in an Ikea Google Places Page. I gave it a bad review; the first couple of words get right to the situation with factory workers. I added a link to the first LA Times story. I'm going to monitor that single one for a while. See if I can tell how Ikea responds react, potential readers respond, how google responds. I do know this.....its a place where some potential customers can see it. Its a public protest that potentially hits right in the pocket book. It'll be interesting to see what happens.
Okay, I did three locations! The link I used was to the petition. I'm keeping a word file with this project and so I can keep track as well. Btw, thanks EarlPearl.
LOL. Earl you know very well this is what American companies did both locally and internationally for a century but now when American workers are on receiving end and even worse by a non American corporation then everyone wants to complain.
GWorld: I move somewhere in the middle of political extremes. My heart leans leftish but my experience is as a business person. As I moved into owning businesses I strive for both profits and treating employees well. I know that American businesses abused workers on a local basis for a long time. There is ample history. International businesses, no matter where they are based do the same. Not all. Some are more compassionate. Some are ruthless. Its not just American businesses, though. All business entities around the world have histories for sucking the lifeblood out of the workers. That has been going on for centuries. Nations became empires and enslaved people. Then things changed as people threw out the oppressors. I always go back to Versailles to think about that. You are a traveller. Have you been there? The current version of Versailles is a tiny shadow of what it was. Its development was created on the backs of the entire French population. It bankrupted an entire nation so the King, Queen and a few more people could live in opulence. It resulted in the overthrow of the French monarchy. Marie Antoinette the imprisoned French Queen thought herself so priveleged and was so out of touch with human reality....that her comment while in prison...about the French population...."Let them eat cake" lives in infamy. As if the population which had been sucked dry by the monarchy could afford crumbs let alone cake. Yet I appreciate capitalism when it works....just not when it moves to extremes and abuses people. I see the US in that direction now...and the situation in Danville Va is an extreme example of it. In the late 1970's the US enhanced competition and capitalism by eliminating the monopoly on communications owned by AT &T. It unleashed a level of competition and growth that spurred incredible growth and advances in communications both in the US and around the world. Terrific. By the end of the 1990's it had run its course. The owners of huge companies engaged in massive fraud, and the last great investment effort (building endless miles of cable everywhere----didn't pan out.) Capitalism can be good and bad. Threatening and railroading workers and pure bullying is not a unique American phenomena. The entire revolution of humans against oppressive governments occurring throughout the middle east is an example of citizens revolting against miserable oppressive governments. At this point in time I find the Ikea/Danville situation repugnant.
Rebecca: I was looking at comments about Ikea on twitter. Its tremendously positive. Also Ikea recently invested in solar panels for some store(s). that gives it "love" in the liberal world. Creating awareness of the factory worker situation in Danville is gonna take some work. One other thing abt Ikea on twitter. Its popular. There are a lot of tweets abt it. Also means it gets lots of searches in Google and a fair amt of people will get to those Google Places pages.
Okay, here's what we gotta do. We'll pay 10 people on Fiverr to make 100 Twitter accounts each, then, we set up automatic posting for the 1000 accounts every hour upon the hour... lol, just kidding. No, but, I think I will write a few more reviews for Google Places.
What do you suggest is the alternative if Ikea simply says Fu*k it and close the factory, more unemployed Americans on welfare? The world has changed and Americans are in no way better than people from the rest of the world which have much lower standard of living. The devaluation of American dollar in combination with lower wages, is making it possible to employ American workers again. The world is changed and American workers just need to get use to lower standard of living.
GWorld: Before commenting I looked at a lot of the information in newscasts. I don't think they are going to close the factory, just as factories in the past amended their ways and created better conditions under pressure. I suspect the factory is quite profitable. I say this because they have been running 3 8 hr shifts/day--> 24 hours a day weekdays. Plus they are running overtime on weekends. I am a financial guy by training and then experience including auditing and working on internal finance and accounting for a big company. First off factories don't work 3 shifts/day unless demand is huge. On top of that they don't do overtime without that huge demand. They are making money off of it. How much? Nobody knows and will know unless you get inside Ikea's books. I bet its sweet profitable. They are eliminating shipping charges from overseas. They are eliminating transfer from ships to trucks. Its factory->to trucks they control to -> to their own stores. Again, deep control on costs and even more profit. And if they say f*ck it and close the factory....then it hurts the 300+ people who work there and of less importance, I'm wrong. I don't think I'm wrong though. Through history and while less evident now there is a long long history during periods of labor strife wherein workers were getting their @sses kicked by oppressive management/ownership. Workers got better wages and the factories kept pumping out products and the companies kept making money. Frankly, some of that is happening in China now wherein in various cases workers salaries are going up and meanwhile those factories keep pumping out their stuff and the businesses keep making money. here is something else on profit from manufactured goods. Its anecdotal. Its not the end all and be all. When I was doing corporate finance we had a side business that basically sold very inexpensive items that was treated sort of like a side business from the main business. The items were inexpensive. Cost of goods sold was infinitetesmily low low. We could have halved the price of the goods we were selling and still could have made a lot. In some cases costs of goods sold is nary but a tiny fraction of selling price. It often happens with a business such as Ikea. Ikea is an individual business within the furniture business. It creates unique but inexpensive furniture. It has a great marketing wing. Know of any nationwide/worldwide competitors that have all its attributes? I don't. I'd bet nice big money these guys are making a lot of money on the products they are producing!!!
Companies are already moving from China to lower cost countries. The only way you can pay higher wages in real term (higher standard of living) is through technical innovations that make it possible to produce similar product in lower number of hours than some other place. America has lost it´s technical advantage and the world is becoming a level playing field. Why do you think American workers should have higher standard of living than workers in Vietnam, China or Pakistan? The answer because we are American is not good enough any more.
Flipping burgers and working on a line at a factory require the same set of skills and coordination. I've done both. Very respectable and brainless work. When I did it, it was less than 5 bucks an hour and it was DAMNED good money at the time. Of course I was a kid, did not have a family and still lived and home and went to school. If people working in a factory made more than 8 bucks and hour for brainless work, there would be no reason to advance beyond a (grade 10 is it in Canada?)... There are college educated professionals and business owners that do not receive the same level of pay and benefits. There's obviously a reason IKEA is outsourcing to the US of all places... I mean how the hell can you sell a $4,000 couch to someone like me for $700 when you pay people more than that to build it? Americans like cheap goods, or at the very least, good products at a fair price. When a union drives that price up so high that you cannot possibly sell it to that same union loving piece of dog shit for that cheap price they want, what else are you supposed to do? You just cannot expect someone to product cheap goods with expensive labor. Even a 3rd grader can understand that math.
Stunning DP P&R scenario: GWorld and Mia agree on something. I look at all this stuff so differently. Here is what I look at: The factory is running 24 hr/day. Five days/week. Plus there is overtime...and evidently a lot. And evidently it comes last minute. All of that tells me demand is huge. Its not weak. When new auto sales plummeted in the US for all new cars from 16 million/year to 10 million in the last few years--what occurred? Factories eliminated shifts. Then they shut down. Demand was weak. Cars are not like Ikea furniture. I'd like to be in Ikea's condition. They have a unique situation. They have this worldwide dramatic following. They cultivate a unique branding. An article about them from 2005 is revealing: http://www.businessweek.com/magazine/content/05_46/b3959001.htm To me the most revealing information was that estimates for their profit margins were far far higher than that of competitors. Ikea is one of those smart lucky well run businesses that can establish pricing somewhat independent of the competition. Ikea, according to the information I got is privately owned. Nobody is going to see their books. But I did some research. The Danville factory makes Expedit bookshelves. Cheapest one in the US sells for $70. The same unit in Sweden sells for 599 Kroner. Current conversion rate says that =$92.55. But the Swedish bookshelves are being produced by labor costs that are MORE THAN TWICE AS HIGH AS THE US LABOR COSTS That is just base salary. The Swedish workers get lots and lots and lots of vacation. US workers get very little!!! I'm telling you Ikea is making money on those Danville workers. Don't give me your non researched political views. Look into the details. Now what is going on in Danville. from the literature: Starting salary in Danville: $8/hour Starting factory salary in Sweden: $19/hour. Danville worker gets 12 days of vacation: Swedish worker gets 5 weeks vacation. Original starting salary in Danville was going to be $9.75/hour. Manufacturer cut that rate. Manufacturer was hiring from temp agencies so it could pay still lower rates. Looks like 50% turnover in Danville factory since 2008. Hard to believe in an area where unemployment is so high and pay rates are low. Regardless company fires a lot of people and makes work unbearable. That purposely drives down labor rates. Workers get demerits for going to bathroom, having to take off for medical emergencies etc. Get enough demerit points and you are fired. Company has not denied that charge. Worker who wanted representation was denied it and forced to meet with powerful anti labor law firm representing the Ikea company. company hasn't denied that. The list goes on. This company is abusing and taking advantage of the workers. The govt of Virginia is lying down on this issue after giving Ikea $12million in incentives to locate there. If all you are going to do is spout off mindless political crap....do it inside a toilet. Otherwise look at details.
I wouldn't support unfair or abusive treatment to workers, even for cheaper goods. I think there needs to be balance. With IKEA, the workers there are complaining not only of low wages, but an unsafe work environment, and an environment in which they claim they are treated with a lack of respect. It's not that I'm pro or anti labor union. With the idea of a union, it's probably because they have come to the conclusion that conditions won't improve without one. I blame that on IKEA. I believe corporations can make a profit, and also treat workers fairly. As far as the $8 an hour, that's quite low. According to Indeed.com, the average salary of a factory worker is about $32,000. At $8 an hour, that would be about $16,600 a year before taxes. Excellent post.
LOL. I know about IKEA. The owner is actually a guy who was a member of National Socialist party of Sweden during WWII (NAZI). You should also look at their history, IKEA to large extend was built by high profit margins that they had by using Swedish and east European prisoners for production and paying them less than 1/5 of the normal wage. IKEA has high profit margin, so what? Isn´t the purpose of capitalism to maximize the profit? Why aren´t you complaining about the standard of living of workers in Vietnam or Pakistan? American workers in Ikea factory still have a higher standard than them. This is a simple question that you avoid to answer, what makes American workers so special that they should receive higher salary than necessary and why are they more important than other workers in the world that have lower standard of living? To compare me and mia shows your desperation in avoiding to answer the question. Unlike mia stupid post, I see a world that there will be no difference between American, Vitenames,Chinese,.... workers and I see a global Capitalism system were American, Chinese, Russian,... capitalists work as one. May be it is time for you to read the manifest of Communism.