Jose Thomas

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BOLD MOVE
Thursday 26th January, 2012



     

 

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With a lot of uncertainties happening in this world related to financial health of nations, banks and political instability, I, as a businessman necessarily have to pay attention to these challenges. I usually try and stay on top of what goes on in the world. But of late my assessments have been giving me very negative picture of various economies. While I am aware of the fact that the U.S. economy is limping back into better health, the latest happenings in the Euro zone has impacted my business confidence?.

Even the Indian economy, where I am headquartered is going through challenging times. Major fluctuation in the currency, less than projected GDP growth, high interest rates, change in minimum wages act, more and more challenges on direct and indirect taxes force a business man like me to start making smart decisions to protect my business. Protecting a business enterprise becomes the sole responsibility of an entrepreneur. Here I am making certain strategic moves, re-aligning my business in order to isolate it from unknown shocks. Even though I was well aware of the recent instability of various currencies, I got seriously hit hedging the Rupee against the U.S. Dollar. This was one major hit I believe various businesses took (which is basically currency related losses). This is mostly related to my export business because we export in Rupee and not in hard currency. Even though hedging is possible, if you pick the wrong date to edge your currency risk and if the currency either appreciates or depreciates, it impacts your business. And this is what is happening all over the world today.

The U.S. government is talking of bringing jobs back by either giving incentives to companies to shut down their BPOs or Call centers and bringing in provisions under the law to take punitive action. America being the largest economy in the world which determines the future of many nations including China, the second largest economy, it is very clear to me that America has to stay in good financial stead in order to help the rest of the world. I would agree that bringing jobs back to the U.S. would be the most critical path in turning around the American economy. With the next U.S. Election approaching fast and with various issues still not decided by the Congress, it is to be seen how things are going to shape up in America.

America is my No.1 trading partner and it becomes highly necessary for me to keep a track of the happenings in the U.S. I accomplish this by reading and experiencing first-hand information during my frequent travels to the U.S. Six months back when I saw some instability in my business related to currency risk and some sort of inefficiency in the work flow, I started to think, “Why not consider moving one of my production units to the U.S”? When I initially proposed this, the juniors in my organization thought I could not be in my right sense. The seniors even wondered how I could even conceive such an idea when the U.S. was moving their manufacturing overseas to the emerging markets. I am known for making decisions contrary to what others think and in my experience, it has worked. I have never made decisions without a justification. But as I started to think more and more of moving our processed food unit to the U.S., I had more and more convincing answers. Of course, one would even term this move as a big mistake.

I started to work on my numbers, looked into various factors such as currency risk, labour efficiency and even my contribution towards the American economy. After detailed analysis, I came up with a proposal within Choice to move our assembling unit to the U.S. My numbers justified my decision and I made the “ bold” move . Today, I should be an exceptional individual who took this gutsy decision in shutting down one of my major assembling units in India and moving it to a small town in the U.S., Quaker Town, Pennsylvania. This is where I set up this unit and hired close to 15 American employees. After we moved the operations we realized we had huge savings on labour due to better efficiency and various other benefits. By shifting the operation, we assembled products only against orders whereas in the past we used to ship finished products from India which had to go into inventory. Friends, see what I did. Huge Savings!

As we started to do the final manufacturing in Pennsylvania, one of the major aspects that came to my attention was better efficiency. So, on one of my recent trips to the U.S, I went down to Quaker Town with my senior employee and met with all the other employees (all local people) at the plant. I definitely saw something different in them. They worked efficiently and were bursting with energy. This is totally contradictory to what I see in my plant in India. Recently I took a picture of a five member family which works in my Pennsylvania unit in Quaker Town. The picture is attached. They are so happy to be working in this unit and they are performing beyond my expectations. Today in India it is hard to get labour in the State that I live in which is Kerala. Nobody wants to work in a factory. All are interested only in white collar jobs. If you visit my factory in India you will wonder if you are visiting a Chinese factory as 95% of my labour are from the North Eastern part of India. They neither speak the local language nor do they look like people from this part of the world. What does this mean?

Be bold. Look at unconventional options!!

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