Thursday, May 03, 2007

Anatomy Of A Death Spiral

I live in a town that once had a large industrial base. Manufacturing and machining were our economic mainstay, with factories and machine shops staggered along the river, south to north. Our industries also provided our social hierarchy; a true "ownership society", if you will, where businesses bore the name of the families who owned them and those families accepted their place as the caretakers of the community they employed, dutifully gracing us with parks and hospital wings and other random acts of philanthropy. You could be employed for life at one of those places if you were willing, with wages that would support a modest, traditional lifestyle.

My first real job in IT was for a local insurance company, a fairly good sized employer in our city. It was still a privately held company when I was hired, run by the founder's grandson who was assigned a "III" after his surname. The company held three buildings downtown, the oldest of which was a big marble encased symbol of its former boomtown glory. The craftsmanship of its domed interior ceiling was breathtaking although the building itself was in a state of general disrepair and used only for storage. The second building was younger and more practical but endowed with a misleadingly grand lobby. An oil painting of the company's deceased founder was hung in the stairwell. The third building was a more recent tribute to the III's dreams of something bigger; a poor man's skyscraper standing a full 10 stories over the river. At night the blue neon sign bearing the company's initials reflected down into the water. Yearning to move to a bigger pond, the III took the company public in 1995 and later added a fourth building to his real estate portfolio: An impressive glass and steel structure in an executive office park in a western suburb of Chicago.

I had worked at that company for seven years when the III finally declared his ambition to the world and offered his company up to Conseco, which was trading at exactly $42 a share. Rumor has it that the III imagined himself on the brink of corporate greatness when he was unceremoniously booted a few months after the merger (one too many CEOs, apparently). After that, he ran off to reinvent himself in Nebraska. Ironically, Conseco itself finally ate an indigestible bit of grist when it bought Greentree in 1998. It traded as a penny stock for years after until it divested itself of Greentree in 2003 and then it, too, went off into the corporate wilderness to reinvent itself.

After the III was finished destroying his grandfather's legacy, I went to work for a manufacturing company in the small neighboring town of Freeport. The masters of this company had all of the III's ambition but none of his pretense. Housed in an ancient, boxy, red brick building, the company had only just stretched itself out a bit to add a non-descript, one storied, white building a block up the street for its growing IT department. The company was now publicly traded but still retained a board member or two who shared the company's name. The business had been growing rapidly through a formula of acquisition and integration. They were good at this process and they repeated it over and over, resulting in the ownership of many small manufacturing plants all over the country.

Offshoring had picked up steam since the 80's and my new company embraced the trend. It was popular at the time to excuse the job bleed by blaming lazy American workers who demanded inflated union wages to produce inferior quality products. That lie was apparent to anyone who spent any time in one of those heartland manufacturing towns. My coworkers were just hardworking folks trying to make a steady, honest (and non-unionized) wage. It was painful to watch their jobs vanish offshore. I felt a sense of impending doom but tried to believe that the jobs were being replaced by higher paying tech industry jobs, as everyone said, and I was grateful to have already jumped on that wagon.

Despite its national holdings, mine was a company that took pride in its small town - big dreams heritage, and it kept its headquarters in the tiny town of Freeport until after I left. In the end, my old company entered a marriage of convenience with a bigger, better known company, shuffled around the company officers, and dropped its emotional ties to Freeport in favor of Atlanta. They've retained a small presence in Freeport, for now, but the separation is almost final and whatever responsibility the company felt toward Freeport, and whatever Freeport felt towards it, are just symbols of another era.

To be continued...


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