American
Roller Coasters
Translation (Novy
Khozyain - New Owner, July, August, September 2000)
The first visits of Kharkiv delegations to the U.S. started back in
perestroika times, when in 1989, Cincinnati, Ohio, became Kharkiv’s
American sister city. At that time those were mostly familiarization tours
to demonstrate the good will of both parties concerned and their mutual
desire to cooperate. Today, when friendly relations and cultural
connections between the two cities have been established, business
contacts come to the fore.
In late 1999, the U.S.-based Center for Economic Initiatives in
conjunction with the International Executive Service Corps held a
competition among Kharkiv businesses for a chance to go to the U.S. to
participate in study tours. Applications to take part in these
competitions were accepted from companies that are directly involved in
manufacturing packaging for the processing and food industry and whose
leaders had attended a marketing course at the Kharkiv Regional Business
Assistance Center. 2,500 individuals from more than 800 Kharkiv companies
attended the training classes.
The Center for Economic Initiatives, based in Cincinnati, was very
demanding when selecting applicants. Associates of the Center, including
our tour leader Dr. Belal Siddique and Mr. Leland Cole, President of the
Center, carefully studied the materials provided by the applicants,
explored the applying companies twice and learned about their structure,
operations, marketing strategy and products. For this study tour they
selected 13 companies involved in manufacturing, maintenance and repair of
processing and food industry equipment, energy-saving technologies for the
food industry, as well as packaging manufacturing.
These included the following companies well known in Kharkiv:
Ukragroservice, UkrNIIKhimmash, Orgstankinprom, Frunze Plant, Elektromash,
Extruder, Molprom, TFK, Korvet, Vostok and Nargus. As a result, a group of
15 was formed to go to the U.S. New Marshall Plan
I met one of participants in this tour, Mikhail Yefimovich
SHVARTSMAN, Ukragroservice deputy general manager, and asked him to share
his impressions about the study tour. - Mikhail
Yefimovich, how did the idea for this project originate? - The Center for Economic Initiatives,
which organized our tour, is a non-profit organization. Most Center
associates work there part time. They are for the most part Americans of
the older generation, well educated, with tremendous business experience.
Each of them is a high-class professional in his area. When they had a
chance to retire, just to take it easy and travel, they realized that they
could not, and would not, be passive. Having formed a small group, they
started thinking about planning their life in the future to put to best
advantage their knowledge, to share the experience they had accumulated
and also to learn about other countries and cultures. At that time the
idea of another post-World War II Marshall Plan was conceived to fit the
present-day post-Soviet countries.
While studying archive materials on the subject, the Center
associates discovered the interesting piece of information that one of
developers and ideologues of the original Marshall Plan, Mr. James
Silberman, was alive and well. The 300-year history of James’s family
has been tightly connected with Ukraine. That is why the veteran of
American economics became so fond of the idea created by the group of
initiators. He not only shared with them the methodology of developing an
economic assistance plan, but also supported this project in the U.S.
government.
As a result, the Center for Economic Initiatives obtained a grant
from the U.S. government which has been used over several years to educate
Ukrainian, Kazakh and Moldovan entrepreneurs about American business and
to strengthen connections with these countries. - How
was your study tour organized? - We spent 21 days in America and
managed to visit 24 companies during this time. The program for our study
tour was very intense, I would even say, physically challenging. We rode
more than 5,000 km on American roads, visiting, on the average, two
companies per day in different cities.
We had a small cultural program during weekends. The [CEI]
organizers gave us a chance to visit an elite club for Cincinnati
businesspeople. There we received our certificates of program completion.
We also visited the home of one of the Center associates - Mr. Daniel
McKinney, an attorney.
The program was so intense and full of impressions that we felt as
if riding roller coasters. By the way, in the West, this famous
attraction, which we also had a chance to experience, is known as
“Russian hills.” - Was
the whole tour financed by the Americans? - Yes, it was. The money involved is
significant even by American standards. One day of our hotel stay - and we
stayed at very good hotels - cost the organizers not less than $200 per
person. Our group was the third this year, and two more are being planned. -
It is known that Americans are a pretty calculating nation and they do not
throw their money to the wind. What, in your opinion, guided the U.S.
government when allocating funds for this program? - The grant was awarded by the United
States Agency for International Development. From that fact we can derive
the conclusion that its main objective is establishing friendly relations
with the country, which as a part of the USSR in the not so distant past,
was America’s strategic opponent. That recalls Germany right after the
war. Besides, every American understands that any business, including
international business, is based on personal relations. They are
interested in helping Ukraine develop its economy and become an emerging
market. Encouraging development of market relations in our country, the
Americans are in fact preparing the soil for their investments and
expanding the sphere of their political influence. Business Starts with a Smile - Every
adult Ukrainian has a good understanding of what the Soviet influence is.
What shall we expect from the American influence? How did the American way
of life impress you? - I did not make a special study of the
American lifestyle. I simply did not have time for that. But I can say
that we covered a large distance, stayed at hotels in different states,
met a number of different people of various levels - from clerks in
supermarkets to top managers of companies with several billions of dollars
in sales. Tons of impressions, but the main one is that Americans are very
open and unusually friendly people. You meet someone’s eyes, and this
person immediately smiles and says “Hi!” When that happens at a hotel
or in a restaurant, one might think that that is a part of their job. But
when you see it all the time, everywhere - on the streets, in the park, on
a boat, at the office, you come to realize that cheerfulness and
friendliness are national features of Americans, and not just social
conventions. Even the police are friendly and gracious. - Did
you feel any difference in attitude to “their own people” and
foreigners? - No, Americans do not have any
explicit disdain or prejudiced attitude to foreigners. It is very hard to
figure out there who is their own and who is foreign, because America is a
multi-ethnic country.
At any rate, I did not feel any negative attitude. What I did feel
was a patronizing attitude, from the position of somebody older. They are
proud of achieving much, and they have really achieved a lot. That was
what they showed to us. They have a great desire to share their experience
and knowledge, but nobody talked down to us. - Did
you see any unemployed people at the labor exchange - something our
socialists are frightening us with? - Just the other way around. America
doesn’t have enough labor force. Unemployment is only 3 percent.
Unemployed are the people who do not want to work; most of them are
homeless bums. But there are homeless bums in any country. Americans do
not hide this problem. “Yes, we have that, too,” they say. Their
homeless bums, just like in our country, rummage in the trash and feed on
leftovers. The difference is that those leftovers are nicely packaged and
are available not on a dump, but in elegant containers. Americans who wish
to help the underprivileged donate money to organizations that are
directly involved with this population group, which as a rule will use the
donations to buy alcohol and drugs. Manual Laborers Are All Different - What
can you say about the imperialist sweatshop system, exploitation of man by
man and about all other propaganda-filled arguments of the communists? - Indeed, there is plenty of manual
labor in America. For example, we visited a large family-owned farm
growing vegetables and greens.
This company with six million dollars in sales was amazingly
similar, if we disregard their conveyers and modern packaging equipment,
to our wholesale vegetable distributors under “developed socialism.”
The same women and teenage employees, only there they were from Latin
America, in high rubber boots, manually sorting vegetables, the same
dirty, unskilled and monotonous work. The only difference is that the
seasonal employees of that company earn 12 dollars an hour. For that money
they can rent decent housing and buy food and clothing beyond the wildest
dreams of our manual laborers. The seasonal workers live in a paid
dormitory with TV and showers.
The owner does not have enough funds to hire managers; that is why
the farm is run by family members, five or six in all. As the owner was
very busy and was not able to spend more than 15-20 minutes with us, our
guides were his daughter and niece. These girls had professional knowledge
of the process they were introducing us to. It was evident that they were
ready to join the work at any stage of the technological process - from
harvesting and sorting vegetables to managing the hired labor. In spite of
the fact that this farm is a prosperous company by American standards,
their profit is only two per cent of their revenue. Agriculture in America
is low margin; it is not competitive in the world market. The government
subsidizes it - firstly, to make sure that the land is taken care of; and
secondly, to guarantee that their country is provided with
domestically-grown food products.
This way or another, hourly work is considered not prestigious in
America, and Americans, with the exception of children and students, try
not to do this kind of work. Those jobs are mainly filled by Latin
Americans. - Is
child labor legal in America? - I cannot say exactly starting
from what age, but ten-or-so-year-olds deliver newspapers and pizza,
vacuum carpeting at hotels and so on. Older kids work - especially in
summer - on farms, at cafes and restaurants. It is explained not so much
by economic reasons but by the fact that Americans are trying to prepare
their children since childhood for an independent adult life. Even
children from pretty wealthy families have part-time jobs. Parents provide
all the necessities for the children, but the children have to earn their
own money for recreation and entertainment. Join Middle Class - For the First Time -
Our politicians, mass media and businesspeople keep complaining about the
lack of the so-called middle class in our country. How does the U.S. fare
in this respect? -
Almost all hourly wage earners are considered low-income people in the
U.S. There is a lot of such low-paying work. The average American income
level is $40,000-$60,000 a year. Every American family keeps saving funds
for their children’s education since their birth, because it is pretty
hard to achieve anything in life without decent education.
The dream of any immigrant is to become a representative of the
American middle class, that is to own a house with automated household
appliances, to buy a car for each family member, to provide expensive
prestigious education for the children... Representatives of this class,
as a rule, perform intellectual or managerial work. -
How hard do these people work? - Not at a single company we visited
did we observe “vertical races,” scandals, fuss and people “covered
with foam.” Everything runs quietly, smoothly and, I would even say,
lazily.
To all appearances that can be explained by the fact that the
American market is extremely well structured. This, in combination with
effective economic legislation, ensures reliability and good measure for
entrepreneurial activities. The plans and orders are fulfilled
unhurriedly; the deadlines for these orders are established with some
leeway.
In spite of the fact that America is known to the whole world by
its gigantic corporations, such as IBM, General Motors, Procter &
Gamble, Philip Morris and many others, 85% of American business is made up
of small companies with less than 20 employees. All the companies with
sales from several million to hundreds of billions of dollars are united
into a well-adjusted and well-interacting infrastructure, where
competition does not create chaos, but enhances the established strict
order at the market. -
Going back to marketing issues, I would like to clarify what allows small
companies to survive and where they get all their
orders. - This is a very broad and important
subject. Briefly, I can answer that all American companies practice
division of work and cooperation.
Food processing companies publish image-enhancing information in
industry magazines and on the Internet and take part in trade shows.
Farmers in winter collect orders, drive around and call around restaurants
and stores. Most companies that hosted us during this study tour have
multi-year histories, established images and sales markets. That is why
they practically do not experience any problems with getting orders. -
You are perhaps right: this is really a very interesting and extensive
subject, worth a separate discussion. But we will do that in our next
issue... Picture captions
- Cleveland Rock-n-Roll Museum, Columbus city skyline, Cincinnati’s city
symbol on main square. American Roller Coasters [Part II] (Novy
Khozyain - New Owner, No 8 (10), August 2000)
In the early 1990s, in our
Motherland, there appeared a great number of new, hard-to-understand
foreign words. “Sociology,” “management,” “marketing” sounded
almost like an incantation. It appeared that as soon as we mastered them,
our life would change for the better. There were crowds and crowds of
students willing to study in schools and all kinds of courses offering the
above-mentioned subjects. Naive but enthusiastic entrepreneurs paid from
$30 to $100 for a month-long course in the named subjects. The results of
this unanimous learning drive, however, turned out not so impressive. Life
taught us once again that miracles do not happen! Crowds of market
analysts with diplomas of various kinds ended up in approximately the same
situation as, previously, crowds of engineers – that is, without jobs in
their area. The foreign concepts are still not quite fitting within our
Soviet heads, breeding pessimism and excuses of the type that “all that
stuff is incompatible with our enigmatic Slavonic souls.” - The
organizers of the marketing seminar and MTM Productivity study tours in
the U.S. were complaining that it was pretty tough for them to select the
participants for this project among Kharkiv companies. Even considering
that all the training and the study tour were underwritten by the U.S.
government. - I must say that initially our
attitude to this proposal was pretty skeptical and somewhat mistrusting.
Here in Ukraine, we got used to the practice that when something is being
offered to you free of charge, it means, as a rule, that you will be
cheated. But the Americans treated this project seriously, at a pretty
high level. The study tour was extremely intense and useful. - As
far as I know, even before this trip you treated marketing very seriously
and professionally. As far as the lack of trust in marketing many other
Ukrainian entrepreneurs feel, that is caused, in my opinion, by their
unwillingness to change. Marketing is the science of compliance with
market laws. The mentality of a Soviet industrialist assumes, however,
that it is the market that has to be compatible with his products and
adjust accordingly.
For example, I happened to hear pretty often from various
entrepreneurs that all their problems were caused by the drop in
purchasing power of our community, and that the only way to change this
economic situation is to pass “normal” laws. It did not occur to
either of them that there exists at least one different alternative –
lower the costs and, consequently, the prices. - I think that our marketing plan
played not an insignificant role in getting invited by the Americans to
participate in this project. We, as practice shows, have developed a
sufficiently effective marketing strategy, which allows us to mass produce
our products, without worrying who will buy them. Our processing equipment
sells well. We achieved that by intricate simplicity and reliability, as
well as by affordable and even low prices. - Every
nation has concepts which are an organic part of its culture and
mentality, that individuals literally absorb with their mother’s milk.
Later on these concepts do not need any additional deciphering or detailed
explanation. These concepts are very hard to assimilate for individuals
from a different culture, which lacks adequate similar concepts. In my
opinion, the concept of marketing belongs to this category – there is no
exact translation of this word into Russian and certainly none into
Ukrainian. The situation with the word “market” is even more
interesting. In our city “Barabashka” [the largest open-air clothes
market] proudly calls itself “the market,” and individual behavior at
the market recalls a gypsy selling a stolen horse. Of course, everywhere
and always the seller has been trying to sell high and the customer to buy
low. To solve this contradiction, humankind invented both bazaars
[farmers’ markets] and markets in general. Although the main slogans at
the bazaar are “Keep your eyes open” and “Not caught, not a
thief.” The civilized market has very different laws; there “the
customer is always right!” - Market is the most important concept,
rooted in the fundamental human function – providing for ourselves. As
is known, over all human history only four main ways of supporting oneself
were developed – self-sufficiency; theft or robbery; begging, asking for
donations or alms; and, finally, exchange.
Market is the structure where the process of exchange takes place.
Depending on economic conditions, these or those participants in exchanges
get to the top. In the modern capitalist society, the customers are at the
top. That is why they dictate the conditions for exchange. This tendency
is so stable that it constitutes an economic law which can be defined as
“Customer needs are above everything.”
Huge institutions provide studies of customers’ needs in the U.S.
For example, at Borden Foods Corporation we visited a marketing research
center which deals with both product development and customer research. We
were introduced to the method of holding so-called focus groups. Using
certain methodology, taking into account gender, age, ethnicity, social
status of individuals and many other factors, they select a group of
individuals, each of whom represents a certain class of consumers. For
participating in research focus group participants get paid $40-50 an
hour. The focus group gathers in a comfortable room, specially designed,
equipped with a round table and a variety of office equipment, to discuss
the qualities of would-be products. One of the walls in this room includes
a one-way mirror, behind which sit experts from the [research] company.
They most carefully follow the discussion and record all the details,
comments, suggestions, responses and emotions of the participants.
Simultaneously, the discussion is being audio-recorded and videotaped. The
recordings are later analyzed by the Borden specialists. When a product is
in the development stage (this company makes pasta and quick-to-fix
sauces), more testing is conducted, this time to taste and finally check
out the product. Each “expert” from the consumer group that has been
invited is placed at a separate booth and is served products being tested
through a special window. As in the previous case, the company employees
are sitting on the other side of the mirror wall, watching what is going
on, while dictaphones and video cameras are running. At the next stage the
quality of product packaging is tested. A different laboratory provides a
room surrounded by kitchens, equipped with all kinds of household
appliances: gas and electric stoves, microwave ovens, etc. For testing,
housewives are invited. They are invited to cook a certain product, using
the company brand in a new packaging. Here a most detailed analysis is
made of how these individuals would open the packages, how they would get
out the product, how the packaging would be disposed of or where it would
be placed... Only after dozens and hundreds of such tests and improvements
the product would be launched. There are more than 10 different
laboratories at this center, studying product storage and product
performance in different situations... The budget of this center is about
$11 million a year. One product’s development takes from one year to 18
months. Borden is a very large company with annual revenues of $7 billion,
which makes it possible for them to spend a lot of money on product
marketing. These expenses pay back. - I
am far from thinking that unscrupulous sellers are only found in our
country. It appears, there are plenty everywhere. But in the West the
pervasive inclination to sell everything is seriously opposed by consumer
rights’ groups and the unconditional presumption of consumer’s
innocence, even when the latter is doubtful from the moral, ethical or
religious point of view. As an example, in spite of fierce religious
opposition, the market is striving to satisfy customers by offering
condoms or cloned organs. On the other hand, consumer rights’ groups
oppose sales of low-quality and unhealthy products. Because of these
factors a strong balance is created, which is very difficult to break.
Satisfaction of even the smallest customers’ needs is the first and most
important commandment of any market-driven society. - The U.S. has a well-adjusted
mechanism of protecting consumers’ rights. Firstly, the customers can
protect themselves in a court. For example, I was shocked by a story of a
woman who had bought a regular fast food meal and a cup of coffee at a
McDonald’s. In the U.S. all fast food restaurants have drive-through
windows, which allow drivers to make purchases without leaving their cars.
She drove up, picked up her order, placed it in her lap and drove on,
snacking on the way. In several minutes she had to brake suddenly. The
coffee spilled onto her lap, and she got slightly burned. According to our
stereotypes, she was to blame herself. Quite a different approach rules in
America. This woman sued McDonald’s for their coffee’s being too hot
and won her lawsuit, getting several million dollars as a compensation.
Secondly, there is a system in place for product certification.
American manufacturers are very interested in being not only checked by
the regulatory agencies, but also by companies well known in the market.
They would use the results of these inspections as a promotion vehicle.
The certificates, nicely framed and under glass, are displayed not in the
general manager’s office, but in the plant hall, next to samples of
their products.
Thirdly, product quality is guaranteed by its price. The more
expensive the product is, the more value it has for the consumer. If a
certain product costs a lot in the U.S., that happens not because of steep
overhead, but because of the product’s high quality or attached
warranty. -
Let’s go back to the main subject of our conversation, that is, to
marketing. Your trip was specifically dedicated to the study of marketing
technologies? - Initially, I thought so too, because
we studied marketing here, and, in general, that is one of my major
spheres of interest. But the study tour turned out to be significantly
more diverse and interesting. It was during the original Marshall Plan
implementation in the ’50s, when American experts realized that
lecturing European industrialists on transfer of progressive American
business technologies did not yield the desired result. The practice of
implanting consultants, market research specialists and economists into
companies being reformed did not quite justify itself either, because very
often their tips and recommendations ignored the national and political
specifics and were rejected by the leaders of local companies. As it
turned out, only trips and study tours at American companies allowed the
European entrepreneurs to immerse themselves into the unusual – for them
– reality of the overseas market with its marketing, product design and
high productivity. -
Can we say that, during the Marshall Plan, Americans used the popular
immersion method of instruction? - They do not use this term, but
probably that’s right. When an individual is taught how to swim, he is
first instructed about the theoretical foundations of this process. Then
he is shown how the others do it. But only after the individual himself
gets immersed in water, swimming proper begins. I can say that something
similar happened to us. Before this study tour all our group members had
some idea of marketing. After we visited companies doing real work in the
market environment, this abstract concept acquired flesh and blood and
became so tangible that after coming home any of us can use the skills
obtained there at our companies. Each study tour participant learned the
skills he or she was missing. Some paid more attention to organization of
sales, some were impressed with overall management, for some it was useful
to take a closer look at planning and accounting. For me it was very
important to confirm that the quality of our marketing strategy meets even
high American standards. Moreover, I did not see some of the methods we
use (such as telemarketing) at the American companies. - It
is known that in 1995 a group of American specialists at the request of
the Cincinnati-Kharkiv Sister City Project conducted an in-depth study of
Kharkiv industries that, in their opinion, play a key role in developing
our market economy. These specialists concluded that the economy of the
Kharkiv region is beset by the following problems: difficulties with
adaptation to new demanding conditions, the closed nature and isolation of
our companies from the world market, a dangerously high level of
industrial integration, lack of outside resources and an ineffective
approach to improving productivity. Besides, weak points of marketing at
domestic companies were pointed out: incompatibility of our packaging and
labels to Western standards, insufficient knowledge of world practices of
purchasing and sales. What do you think – what has changed since? How
close have we gotten to the American market model during the five years of
Marshall Plan implementation in Ukraine? - The Marshall Plan, within the
framework of which our study tour was conducted, does not cover the whole
of Ukraine. It is difficult to expect that it will produce quick results
for all the Ukrainian economy.
For those who have already participated in this program or are
going to take part in the future, unique start possibilities are created.
It looks like a trip in a time machine. Seeing how what you are doing now
should look like in the future, studying the means of achieving this,
means more for a smart person than money, buildings and facilities, i.e.
all kinds of resources.
Today it is useless to talk about our closeness to the American
market model, because in Ukraine the market is only emerging and by and
large is primarily the manufacturers’ market. At the same time, in the
U.S., and in the West in general, the market is exclusively
customer-oriented. Any manufacturer there has to think how the products it
makes will be used. The example with McDonald’s and spilled coffee I
have cited earlier demonstrates what kind of damage a company may incur
when ignoring the specific features and characteristics of the consumers
of their product. Most domestic manufacturers are trying to sell their
products using the principle, “Out of sight, out of mind.” I cannot
judge other Ukrainian companies, but our Ukragroservice, just like
Americans, takes into account the specifics of our product usage by our
customers, i.e. sources and quality of our raw materials, methods of
selling our finished products, etc. In addition, we help our customers get
their products certified. Probably, there are companies similar to ours in
Ukraine, but there are certainly not enough. When this approach becomes
dominant with most Ukrainian companies, we’ll be able to talk about
emergence of a consumers’ market. The more such companies appear, the
more structured the economic infrastructure of Ukraine becomes, which will
inevitably result in rapid development of market relations.
On the other hand, we have unique advantages which are non-existent
in principle in the United States now. In the overwhelming majority of
branches of the Ukrainian economy, the leading groups of companies have
not been formed yet. The brands that will bring power and glory to Ukraine
are only emerging. In America, all that is already in place, and nothing
unexpected can happen. It is practically impossible to oust the leaders
from the market.
Here is the main conclusion: The main objective for those Ukrainian
companies that want to survive and develop is to achieve a decent place in
the leading group of companies in their specific market, be a part of the
best 10, at minimum. If that does not happen over the next five or seven
years, they would have to satisfy themselves with pitiful crumbs of no
interest to the leaders. We are good students, and I am sure that
Ukrainian products in the not-so-distant future will become known far
beyond the boundaries of our country. It is mandatory to push forward into the leading group; that is one of main conclusions I made thanks to my study tour in the United States. It became both my personal objective and Ukragropservice’s objective. We are not going to waste our time because we do not want to remain a small regional company. Our aim for the next several years is to win the 35 percent of the Ukrainian market as allowed by our law. Interns Can Afford Only One Mistake... (Novy Khozyain - New Owner, #9(11), September 2000) by Mikhail Shvartsman
One acquaintance of mine,
after visiting the U.S. said, “I have made two mistakes. The first: I
should not have gone there. The second: Once I did go, I should not have
come back.” Really, there are grounds to be upset after all I saw in
America.
But another thing is also true. Along with a feeling of hurt
because of our reality [life in Ukraine], I feel new optimism and
confidence that we will be able to reach America’s development level.
Everything we have seen causes us amazement and admiration. There was not
a single incident, though, that confirmed that only Americans are capable
of such achievements.
That is why, for all our internship, we tried to learn and
understand as much as possible, as deeply as possible. Myself, I have
singled out several most significant aspects of life in American society.
Socially, that is the level of Americans’ needs. Economically, their
pragmatism and inventiveness.
It is common knowledge that needs (requirements, wants,
aspirations) are at the foundation of the motives compelling an individual
to act. The more developed and healthy a society is, the higher the level
of needs of its citizens.
Americans have a high level of needs. That is different from our
country. Not a single American is worried about his daily bread and has
doubts whether his wages will be sufficient to buy food, to pay for his
rent and utilities. The average income is such that it is impossible to
spend it all for food only. At most companies we have visited, employees
get from $12 to $25 an hour.
Most Americans live in comfortable homes, located far from
industrial zones and large cities. Nobody encroaches upon their property.
Homes with armored doors and window grates, so common to our eyes, are a
rare sight in the U.S. This fact is convincing evidence that citizens feel
safe in their own country.
The fundamental (basic) and at the same time most important needs
of Americans – such as food, housing and safety – are completely met.
If for a lot of us meeting these needs is the essence of our existence and
greatest happiness, for them that is a matter of the past. Most U.S.
residents take all that for granted.
If Americans are well fed (by the way, in America there are a
tremendous number of overweight people) and do not worry about their life
and their property, what motivates them today? For them, different needs
come to the fore – status, respect, understanding by others, self
assertion, etc.
At the Borden Company, we met an employee who comes from the former
U.S.S.R. He has been living in the U.S. for more than seven years. He is a
good specialist. His company is paying him a good salary – about $40,000
a year. He owns a house and two cars. His children go to a decent college.
Any of us would consider this man happy, but I did not see happiness in
his eyes. He was happy three years ago about what he had, but now he
realizes that he has practically reached his ceiling and he does not have
any growth potential in America. He will not be able to change his status,
and he is destined to remain a good specialist with the salary of $40,000
a year.
It is easy to find a job in the U.S., but to find a prestigious and
highly paid job one needs to be U.S.-born and educated in an elite
American university, graduates of which are willingly hired by all
companies.
Like Ukrainians, Americans are scared of losing their jobs (and
these feelings are the same in intensity), but the reasons for this fear
are different. Job loss for our citizen is a threat to his existence, but
for an American it presents a threat to his status. He will find a new job
without any problem, but hardly of the same or higher level. That is why
Americans are working hard and intensely, but without fuss or overexerting
themselves. I have never seen, in any of the companies, people either
running or even walking fast. Everything there was so quiet and measured.
Now I would like to speak about the pragmatism of the American
economy and the inventiveness of people who create it. In general, there
is a shortage of labor in the U.S. They do not have enough hands to
manufacture everything in their own country. That is why Americans have to
leave on their territory only manufacturers with the so-called high
technologies, and displace the low-technology facilities to developing
countries. This is the first example of American practicality. It is true
that they have to pay for their high technologies: Their stores are
flooded with goods made in China, Taiwan, Korea, Hong Kong, Malaysia,
Argentina, Mexico, etc. These are clothes, footwear, radio appliances and
many other consumer goods. For us finding souvenirs made in the U.S.
presented a big challenge.
We visited 24 companies, related in one way or another to the food
industry. They are all different as to their capacity, annual sales and
automation level. But in all of them I saw something typical for all
American companies – pragmatic conduct of business. By this pragmatism I
mean effective use of resources available, while maximizing the results.
This is the criterion that defines what a particular company will look
like. Let me illustrate this statement by using as examples several
companies based in Cincinnati, Ohio.
The B&J Machinery Company manufactures extensions for Italian
machines making plastic bottles and closures for them. Usually this
company sells about 15 machines a year. At their facility we did not see
any super-modern equipment. Twenty-year-old milling machines, universal
turning lathes, several CNC machining centers. We asked, “Why is your
company equipped so modestly?” They answered, “For the products we
make in a given number, that is the most efficient set of equipment.”
The Jones Company develops and manufactures packaging machines of
different types. Here the equipment is of quite a different class. At the
tooling department there is a laser metal-cutting machine. The pieces
there are machined only by CNC machines. Even on the fitting benches,
computers are installed. There are no paper drawings; all the design is
automated. We asked, “What is this caused by?” Their answer was,
“Our company has to develop and manufacture machines according to
individual orders. That requires very smooth production organization and
high-precision equipment.”
The Keebler Company makes cookies of seven types. For us it was
like our biscuit factory. We saw a completely different approach to
manufacturing, compared to the companies I described earlier. Seven
completely automated lines with ovens more than eight meters long produce
two million cookies a day. Given this volume, the automation is completely
justified, in spite of its complexity and cost. It excludes the
interference of the human factor and ensures high productivity. Twelve
robotized loaders are used by the company. Without any human
participation, they serve the seven production lines, pick up the packed
pallets with finished products and haul them to an automated warehouse,
which defies imagination. The cost of such a warehouse is three million.
The payback period is two years. Twelve drivers/loaders earning $15 an
hour have been let go. In this case too, the economic necessity defined
the organization of manufacturing.
The Hubert Company provides merchandising solutions for stores,
offices, schools, etc. There wouldn’t be anything special about that if
the company – in addition to interior design – didn’t provide
acquisition and delivery of all the required materials. Twenty-three
thousand diverse items from all over the world are in stock in the company
warehouse, from baskets to store counters. The company receives up to
3,000 phone calls a day. That allows them to ship 1,500-2,000 orders
daily. There is nothing like this company in the world. That testifies to
the inventiveness and resourcefulness of American businesspeople.
Another example of their inventiveness: Jungle Jim food store’s
offering food from all over the world. Its design is incomparable. There
are lots of beautiful and well-designed stores in the U.S, but Jungle Jim
is the only store where you virtually visit different parts of the world
and purchase food from all countries, including Ukraine. The size of the
store and the amount of food available are amazing. A great number of
Americans visit the store and are pleased to spend their money there
because a trip to Jungle Jim turns into a miniature round-the-world trip.
A characteristic feature of any American business is that they
always have a certain “zest,” a technological know-how which imparts
individuality, recognizability and quality to their products.
The combination of satisfying various needs with inventiveness and
pragmatism is especially vividly demonstrated by the American food service
industry. A tremendous amount of food is consumed in the U.S. In cities,
there is a plethora of cafes and restaurants, representing, as a rule,
different ethnic cuisines. Especially popular are Italian and Chinese
restaurants; but you can also have lunch at Mexican, Greek, Australian,
Indian, etc. eateries. Each of these restaurants has a design of its own,
its own approach to customers and marketing strategy, which ensures their
one-of-a-kindness and popularity.
In addition to McDonald’s restaurants, known all over the world,
there is another very popular food service solution in America – the
so-called buffets. One pays $6-8 at the entrance to a restaurant and then
can design one’s own menu. On tables there are special containers with
different foods – salads, meat, vegetables, fruit, desserts, and
beverages. In most cases, each product group is represented by six or
seven dishes or varieties. Everything is cooked very nicely and looks
appetizing. Spices and dressings packaged in mini-packages or containers
are available for all dishes. Customers help themselves and put onto their
plates whatever appeals to them, as much as they can eat. They can make
any number of trips. The variety is so extensive that it is impossible
even to taste everything, let alone eating everything. Getting to such a
buffet one can see a major difference between Soviet and American
mentality. Americans never take more food than they can eat, and they
always know what they want. We tried to get as much food as possible, as
if to hoard it, although our groups members were far from poor.
In many cities, such as La Porte [Ind.], there are round-the-clock
family restaurants. Judging by everything, most residents there eat and
socialize in restaurants of that kind. In such restaurants one can order a
good and inexpensive (by American standards) dinner for $15-20. Taking
into account the level of Americans’ salaries, it is more advantageous
for them to eat out in restaurants and cafes, as opposed to spending time
and effort on cooking at home. Besides, it would never occur to most
Americans to store potatoes for the winter or can their own vegetables and
fruit. All that, at any time of day and in incredible variety, is
available inexpensively in the nearest supermarket. To the question,
“When do fresh strawberries show up at your markets?”, in our country
you will hear the answer, “In late May or June.” Any American will
sincerely tell you “At five a.m.”
Americans like to spend their time participating in all kinds of
tours and picnics. That has become one of the typical features of their
nation’s lifestyle. In America there are a tremendous number of parks,
museums, attractions and different shows. It is practically impossible to
visit all of them, but most Americans try to. Because their everyday life
is automated and mechanized to the max, and consumer services are highly
developed, people have enough free time to devote to their hobbies,
entertainment and learning about the world. Gigantic and superbly designed
museums allow them to learn about practically the whole world, without
leaving their own state.
During our study tour we visited two such museums in Chicago. The
Field Museum exhibitions display flora and fauna, archeological findings,
gems and minerals, as well as cultural achievements of the world. Even a
cursory run through the museum took more than three hours. At the Museum
of [Science and ] Industry we visited an impressive exhibit of spaceships,
including the Atlantis. This museum has a wonderful auditorium for showing
IMAX movies. This auditorium has a dome, which is the screen, and the
patrons are placed in the middle of it. The projection envelopes the
patron all around, which creates the impression that everything going on
the screen is real. Especially impressive are the scenes shot from moving
objects, for example, a plane or a cutter. Now that the first overwhelming impressions from this study tour have subsided, I come to understand the real reason for the “American miracle.” Their people, who are well fed and protected from all eventualities and have jobs according to their status, are open and friendly. They are capable of treating with respect not only themselves, but also others. They can perceive the problems of others as their own. We have people like that in Ukraine, too, but in America that is the rule, while in our country, the exception. And there is nothing surprising about that. We live at a much lower level of needs. We cannot afford to love our neighbor; we have to survive ourselves. That is why we have to develop our economy. That is why we have to create well-paid jobs. When that happens, when Ukrainian citizens are not concerned exclusively about food and safety, then there will be smiles on our faces and we will be treating each other with respect. There is a law that the needs of a higher level can appear and get satisfied only when the fundamental needs are completely met. The main idea of the Marshall Plan for Ukraine is to give people who are capable of making managerial decisions, a chance to experience and internalize this truth, supported by the whole American lifestyle. That allows me to perceive my trip to America as not a mistake but a revelation that changed my approach to doing business and to life in general.
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