Technicolor‘s Albemarle and Greene CD/DVD manufacturing facilities are being moved to Tennessee and Mexico. Technicolor (nee Nimbus Records) is one of the region’s largest employers, and it is speculated that their move will deal a serious economic blow to the Charlottesville area. Explains the company CAO, labor is simply cheaper in Guadalajara. Layoffs of the 750 employees will begin in January. In the Daily Progress, Olympia Meola has an overview, and David Dadurka has a story on the economic impact of the closing.
33 thoughts on “Technicolor Moving to Mexico”
I wonder how long it will be until the Chamber’s Timothy Hulbert, a strong opponent any minimum wage (as best as I can tell), decries this to be yet another business that’s fallen victim to the tyrannical federal minimum wage? Why, if only we could pay our employees as little as Guadala-freaking-jara, we wouldn’t have this problem!
Does this really come as a surprise to anyone? The rumor mill has been circulating for quite some time that they were going to abandon their local facilities.
Almost all of large area employers have tanked or are in the process of doing so. Obviously, the county governments are not doing enough (anything?) to retain large employers, or to attrat new ones to replace those that have tanked.
This post means no disrespect to our local Mexican population, but Technicolor currently employs a large number of Mexicans as it stands now. I guess minimum wage is cheaper or non-existent in Mexico.
Boy, that NAFTA thing is turning out to have been a great deal for Mexico, eh?
RANDY FORD IS A MORON…ANYONE ELSE AGREE? THEY RELEASED ME A WHILE BACK…MANAGEMENT THERE SUCKS, AND IM GLAD THOSE PUNKS ARE GETTING PAYBACK..SORRY TO ALL YOU WORKERS…BUT, THE PLANT MANAGERS THERE ARE ASSES.
RANDY FORD AND THE REST OF THE PLANT MANAGERS THERE DIDNT HAVE A CLUE AS TO HOW TO RUN THAT PLACE. DID I MENTION RANDY FOR SUCKS? THAT GUY IS A COMPLETE AND UTTER MORON. I WORKED THERE FOR A LITTLE WHILE, AND WORKED UNDER RANDY FORD…DID I MENTION THAT GUY WAS A MORON? WHO ELSE AGREES WITH ME????
I don’t know Randy Ford, but I think he’s an idiot.
Hooray for NAFTA.
Why are people required to manufacture DVD’s in the first place? Why is it that people get pissed off when they’re replaced SIMPLY BECAUSE THEY ARE OBSOLETE? Robots build cars now, people complained. The longshoremen are pissed that a machine can offload a ship… Why do you want to do these things? I certainly don’t. Learn to do something that a machine can’t do, and perhaps someone will hire you.
Funny thing is, Waldo, that he’s probably right.
That doesn’t necessarily mean that there shouldn’t be a minimum wage, but you shouldn’t be surprised that some companies are going to go somewhere where labor is just flat-out cheaper.
This has been a steadily growing problem in the IT industry as well. Right now, technical support centers are hugely cheaper (for corporations) in India than they are locally.
During EA’s layoffs last year (was it last year? or the year before?), they opened a couple of tech support centers in India. The layoffs locally were actually just "moves" (to India), because financing the (admittedly higher) requirements of employees in the good ol’ US of A made the bottom line look worse to some evil corporate henchman.
So, while the minimum wage has made things better for those folks who are relying on it, sometimes it is high enough for the businesses to just shut down (here) completely, and go somewhere that’s going to be "friendlier" to them.
Now I’m going to throw in the obligatory inflammatory remark to foster discussion: "Funny, the same kind of problems seem to crop up any time we institute a socialist idea like minimum wage."
Give it time and Helix Systems and many others will be automated…..
Actually, I think the problem is with Free Trade, not minimum wage. Corporations can move where ever they want, but workers can’t. That gives the corporations lots of leverage to get local governments to sell out their citizens. Look at it as a race to the bottom: Mexico has worse conditions for workers than Virginia, so corporations move there. If we can lower our standards farther than Mexico, we can get the corporations back.
I have a proposal: Let’s make it illegal to own a company in a place other than where you live. Then if you want to move your factory to Mexico, you have to move, too.
Funny thing is, Waldo, that he’s probably right.
In a global economy, yes, he is. And that’s the worst part.
Personally, I’m not particularly eager to live in a country where wages are set by the lowest wage anywhere on the planet. That’s not a game that we can win.
"Let’s make it illegal to own a company in a place other than where you live. Then if you want to move your factory to Mexico, you have to move, too"
Agreed. And let’s make it illegal to own stock in a company in which you have no "material participation".
Yes, I’m perfectly willing to fall on the "idiot" side of this argument. I mean, you did say he was a manager right? Ok then.
To use a silly phrase, you’re thinking inside the box.
Market forces are funny things. Corporate weasels are less funny, but much more predictable. Together, these two things sort of guarantee that this game doesn’t necessarily play out that way.
Imagine, if you will, corporate weasel Fred. Fred decides that in the USA, it’s going to cost him 10 million dollars a year to run the BO factory, but in Mexico, Fred can run the same factory, producing similar quality product, for only 3 million, and will have to pay 1 million extra in taxes. Fred cheers and lays off everyone in the USA factory and moves shop.
Meanwhile, the USA is realizing that their economy has taken a hit, that local workers don’t have as much opportunity, and that things (to put it succinctly) are going to hell in a handbaske (at least as far as unemployment is concernd). First thing they do is bump up taxes on imported goods.
Let’s not ignore what’s happened in the meantime though. Fred temporarily lowered the price of his product for us greedy American consumers, just enough to corner the market. Other people can’t compete as well with Fred’s product, so they either make a similar move to Fred’s, or branch out into other products. So for a while Fred is top dog when it comes to BO products. That’s when, naturally, Fred sees more dollar signs and raises his prices back to similar levels, if not higher.
Ok, we’re back in the future a little ways and suddenly Fred’s profit margin is cut, because he’s paying more in taxes. Meanwhile, corporate weasel Bob has figured out that if he hires USA workers, and isn’t paying such high taxes, that he can compete on price and quality with Fred. What’s more, Fred now can’t lower his prices like he could before, because then he’d take a loss due to all those taxes.
This is an over-simplified setup, but it’s fairly analagous to some of the things that go on in the real "global market". The things is, just like the stock market, there are peaks and valleys. You’ll have rough times, and you’ll have boom times, and in the middle we’ll all be cursing or cheering. But over all, it seems to work fairly well.
Maybe I missed something, but I thought this story wasn’t about American workers being replaced by machines that can do their job better but rather American workers being replaced by Mexicans who will do their job more cheaply.
This shoots a serious hole into the Greene County Supervisor’s idea of getting more corporate tax payers.
The only companies that will locate to Greene are service ones which pay low wages and require almost as much in service as they pay in taxes. They need police and fire protection along with additional sewer and water infrastructure. Greene doesn’t even have a reservoir yet.
Greene is getting is more residential growth from all the businesses and UVa developement in Albemarle. It won’t change despite the wishful thinking of the county’s BOS.
People, machines, whatever…
Yes, you have a soul, but it’s made out of billions of tiny robots.
Mexicans are machines, didn’t you know?
Excellent explanation. But as much as I like it, I have to poke a hole in it: The increased taxes for companies based in Mexico are not high enough to offset the hugely slashed operation costs, so it’s still much cheaper to operate with Mexican labor. After all, if the taxes were high enough to offset any cost cuts, why would companies make the move in the first place?
You are correct, right <b>now</b> the taxes are not high enough to off-set the slashed labor costs. But once all of the economic pressures (high unemployment, lack of a local tax base, etc ad nauseam) come to bear, <b>that</b> is when the local/city/state/federal government steps in and starts imposing duties, tariffs, taxes, et al to try to make up for the difference. Then you’ve got all the other things that will affect this process, like new technologies being invented, new efficiencies discovered, not to mention any local perks that governments use to lure/keep new/existing businesses.
In short, the correction doesn’t come until we’ve felt some pain, but the correction <b>will</b> come.
And also please do keep in mind that this scenario <b>is</b> over-simplified, so there’s lots of other factors thrown in that I haven’t even tried to mention. :)
Gah. Please pretend that the formatting tags I threw in there worked, or something. :)
Yes, and one day they too will be obsolete, and replaced with faster better cheaper machines.
Absolute nonsense. You, and many other MBA types who think they understand markets, are playing chess without an opponent. You figure 5 moves in advance and are absolutely persuaded that’s the way it’ll work out. Then, when it doesn’t, you’ve got a bunch of back up excuses.
The Internet boom and bust was fueled by a very same shortsightedness. There’s much more to global markets than supply, demand and wages. I dare to say every industry and every market is unique enough to warrant paying careful attention.
And last but not least, there’s much more to socio-economics than “peaks and valleys”. There’s people, their families and their communities.
No Sympatico, I was not attempting to say that I know what is going to happen. I was simply trying to show that saying that the minimum wage will be controlled by wherever it’s lowest is most likely incorrect. There’s too many other factors involved to make a simple, blanket statement like that.
Saying that it’s more complicated than my (admittedly) over-simplified example merely furthers my point.
No, Lafe. The issue is with your way of presenting things and ultimately the way things end up being done. The movement you are victim of (in your way of thinking) dates back to the 19th century and has been accelerating every since. Technological, medical, and other scientific or pseudo-scientific advances have lead a majority of people to believe that science and engineering can overcome almost everything.
So, what you end up doing is manipulating everything and anything. Initially, by curiosity (scientific discovery), then by progressivity (the desire to better oneself), and finally by necessity (‘cuz you can’t roll back the clock). These are not necessarily bad instincts or deeds, but it’s when they become dogmatic to the point of obscuring common sense, then that’s when we get in trouble.
You have the desire to shift economic factors around, by determining low cost labor, by maximizing profit on every product and service, etc. But what you (and other MBA types) forget is what was evident in previous generations: make a quality product or provide a quality service, be respectful of the community in which you live (hopefully) and operate, and smartly keep things in check over time.
The only peaks and valleys that are acceptable are caused by obsolescence, not ill-conceived and short-sighted management decisions. On one of the recent Business Week covers, the title was “The Good CEO”, in which the mag listed and presented 10 so-called good CEOs. Guess what? They all kept their eyeballs on the real bottom-line: happy customers, happy employees, happy communities. The stockholders are considered and satisfied, but only once the 3 other constituents are. That’s the way it should be, thank you very much!
So forget about explaining away why labor is shifted to other parts of the world because of xyz reasons. A good and truly responsible leader is like a captain of a ship: glory is his to share when the sea is bountiful, but he will go down with the ship should the situation arise. We’re not seeing that from the majority of our industry, commercial and political leaders: they are charlatans and they should be thrown out.
But how do we throw them out?
The efficacy of advertising combined with most of humanity’s basic world-view make this challenging indeed.
Roughly three quarters of us mere mortals accept the world as its presented to us. Pretty much end of sentence. Make-up is advertised, I wear make-up. Others have grass in front of their homes, I have grass, too. From the sublime to the ridiculous, we replicate what we see around us. Advertising influences us directly and indirectly. Advertising works, that’s why billions of dollars are spent on it annually.
People who have been worked on by advertising and other propaganda often don’t see why they oughtn’t to work on others in the same way. It’s a vicious cycle.
Advertising sells even the undesirables, from pet rocks to politicians. Money is made and power is collected en route. I’d love a much higher degree of responsibility in almost every aspect of our society, but it’s tough to compete with money and power.
Any chance we can successfully return into common use the word "duty" and have it apply beyond the military?
No, Lafe. The issue is with your way of presenting things and ultimately the way things end up being done.
You are the victim of a misunderstanding. My illustrating that other factors do play a part in the global market does not equal me advocating “the way things end up being done.” In no part of my message did I advocate any way of doing things, I was simply pointing out a fallacy.
It is not my desire to manipulate any economic factors, but I do know that they do get manipulated. Some manipulations may be long-sighted and wise, others are short-sighted and ill-conceived.
In fact, I would ask if manipulating the minimum wage might not be short-sighted in itself. From what you’ve written about the “Good CEO”, it appears that you advocate a minimum wage. But what if, in the real world, that results in higher unemployment in your area? Are you a hero? A villain? Short-sighted?
So forget about explaining away why labor is shifted to other parts of the world because of xyz reasons.
I was pointing out several reasons that labor might be shifted away, and several reasons why labor might be shifted back. Burying your head in the sand (by saying “Don’t explain it”) is a poor tactic, if you intend to change anything.
Regardless, I wasn’t advocating change, or the status quo, I was merely explaining some of the things that happen in the real world. Railing against the way things are is probably fun, and offering alternatives equally fun, but please don’t accuse me of doing either. :)
(At least until I have!)
I’d like to offer a solution, a magic bullet, the druid’s supernatural potion. But as I mentioned, the clock cannot be rolled back. How do you instill ethical behavior, find honorable chiefs of industry or explain to an MBA graduate that a $6 minimum wage is simply a modern form of indentured servitude (while he’s spewing out charts, stats and quotes ‘proving’ that keeping wages low in fact protects employment and keeps the economy churning).
To me, this is evidence our most basic systems are broken, or worse, corrupt. My sad prediction is that our empire, the United States of America, will slowly recede into a second rate power (if Bush doesn’t bring us the World War III before that happens). The Euro zone (ever expanding), China and other Asian economies (Japan, Korea) will have surpassed the U.S. within 3 decades.
The American holy grail of globalization (also known within my entourage as the ‘Wal-Mart way’) is a disease that cannot be contained. Explaining why I feel this way would be an entire dissertation, so I’ll just state it as a factor here. The wheels and gears of decadence are fully engaged and although adaptability is one of America’s strongest talents, I don’t think even that will save it (hint: it’s the lack of political will not the raw capabilities that is missing).
Of course, I could be wrong :-)
Okay, I guess you’re just an objective spectator that’s just trying to explain how it all works to us little folk. Thanks Lafe!
"But how do we throw them out?"
I have an idea… STOP BUYING USELESS CRAP!
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