Wherever the Road Leads

The Hundred Dollar Fill Up

But I got off easy

After paying over $2.00 in sales tax alone on the haircut that I got by the lady from Afghanistan, I decided to fill up with gas, as the price has come down 11¢ per US gallon over the past week. I authorized $100 on my debit card at the pump at the ESSO station. Yes, ESSO, not Exxon. It used the entire $100 and could have gone further.

Converted from metric, I got 20½ gallons. The rough math is easy to do: $100 for 20 gallons equals near enough $5 per gallon. $4.89 per gallon to be exact. A full 26 gallon fill up would be $127.00

But I still got off easy. For me, this is temporary.

Just before filling up I received an email from an old friend here in Canada. This season, she and her husband have paid $3,300 in Heating Oil. Lord have mercy. Year-round living in Florida or any other southern US State may not be an option for snow-bound Canadians, but Costa Rica sure is. The American dollar, excellent health care and a fabulous climate all at a reasonable – affordable – cost. Sell up and go.

Another Canadian friend told me that yes, it is much more expensive to live in Canada, however Canadian wages are higher to compensate for that. I’m sure they are. But isn’t that a bit like the chicken or the egg? A vicious circle? Much similar to the discussions about Minimum Wage.

The Minimum Wage battle is going on currently in both countries, Canada and the US. Firstly – and primarily – Minimum Wage was never meant to mean minimum living wage. It was merely to insure that an employer was not taking advantage of his workers.

If you want to be able to afford the niceties of life, stay in school, get an education and be wise with the income from your worked-for, better-paying job.

In manufacturing, eighty percent of the cost of doing business is payroll. Manufacturing jobs – hourly – pay at the lowest going rate for the geographic area. In many cases, it may well be at Minimum Wage.

If a manufacturer is forced to increase his payroll costs, that increased expense must come from somewhere. In today’s competitive market, in most cases costs are trimmed as low as possible, therefor the only way to cover the increased payroll cost is to increase the price charged the consumer.

Two events might take place. Preferably, the small increase that the hourly worker receives is eaten up by the increased cost of goods, leaving him in the exact same situation he was before the increase.

Scenario number two is that the manufacturer finds it cheaper to have his product manufactured offshore, so closes the facilities, sends production to China and instead of getting an increase, the hourlies are out of a job completely.

Hypothetical? Theoretical? Republican rhetoric? Uh… no.

Container_Maersk

I used to work for a Contract Manufacturer. At the plant where I worked, we had the ‘contract’ to manufacture Hewlett Packard computers. We had the contract to do that because we could do it cheaper in Alabama than HP could in California. Our profit margin was nominal, based on volume. HP could cut costs by not paying California wages and could cut staff by not needing an HR and Benefits department anywhere near as big. They did not need to pay utilities or taxes on a building large enough to house a manufacturing process. The hourly jobs that used to be in California, got moved to another state.

When Compaq bought HP, our company lost the business as Compaq was having many of their models assembled in China. Even Alabama couldn’t compete.

The plant I was working at closed, but I stayed with the parent company. I went on the road as a ‘hatchet man’. I traveled to various domestic plants of our own, closing them down, putting the locals out of work and moving production to Mexico. I moved one contract to a plant in Mexico. The building was available because what we had been manufacturing there had been lost to China. Even the Mexicans were feeling the pinch.

The final project I worked with this company was with a new customer. This customer was doing exactly the same as HP had done – closed their own manufacturing facility and contracted the work out to us. I went in to this vary large customer’s facility and had to work daily with the very people whose jobs we were taking. How to make friends.

In assessing my own lot in life at the time, I looked long and hard at the future of manufacturing in North America. It’s about as bright as those new-fangled light bulbs. I decided to get out of manufacturing and into Warehousing and Distribution. Manufacturing was being sent overseas where production costs were less, and domestic hourly jobs were disappearing.

But that coffee maker or that left-handed widget had to be warehoused somewhere before it was sent to JCPenney or The Bay or to Wal-Mart. Ironically, it meant job security for me as others were losing their unskilled, hourly jobs.

So don’t tell me that increased wages compensate for increased costs. I’ve seen too many people in tears sticking their time card into the punch clock for the last time.

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