David Pouffle, of the Obama campaign, sent me this graph Tuesday. It shows monthly job growth from December 2007 to January 2010, with the Bush administration in red, and the Obama administration in blue.

It certainly looks encouraging, as if we're going to see net new jobs being created really soon now. I'll certainly cheer if that happens.

On the other hand, it's not like December 2007 (when we actually had some job growth) was any great shakes. Our national population is growing at a rate of 0.9% per year. That's the overall population, not the working-age population, but my point is, we need to have growth in jobs in order to stand still.

#1 In Manufacturing

We're still the #1 country in the world, in manufacturing. That surprises me; I had thought we had lost leadership to China or India. We definitely have lost market share. We now import more food than we export, and much of our exports are products from company like Caterpillar and Cincinnati Milacron - we're selling other countries the machinery to compete more effectively with us.

One thing that would help is if we retooled our factories with the latest computerized capital goods. That would be painful because shutting down production to remove the old equipment and install new equipment would mean layoffs while it's happening. It also means loss of production, which the companies probably can't afford. What they would do is to build new factories, and then shut down the old ones - and if you're building a new factory, you probably want to move far enough away that you can hire a brand-new labor force, young, vigorous, and healthy.

That's not necessarily a smart move. You probably recognize the Eckrich brand name. Peter Eckrich & Sons made hot dogs, baloney, and other cold cuts at a factory on Osage Street in Fort Wayne, Indiana, and then grew to have a number of other factories. The factory at headquarters was poorly designed, with old equipment, and an aging labor force that commanded higher wages than the other factories.

Union Busters

The management at Eckrich was staunchly anti-union, and companies like that end up with forceful union leaders. The UFCW plays hardball as well. In order to justify holding down wages in union negotiations, the Eckrich management kept transferring the most profitable products in the Osage plant to other facilities, and bringing in the low-volume less profitable in.

The problem is, when it comes to cold cuts, moms don't shop for the products so much as they restock the product. If a product tastes good, everybody in the family scarfs it down, and if it's not so appealing, they don't. Products get less appealing as they age, and if the last hot dog in the package hangs around forever until it is fed to the family dog, mom isn't really eager to buy that brand again. When dad goes to make himself a sandwich during halftime, and he yells to mom, "Hey, hon, we're out of honey ham again", she makes a note to herself to buy more, soon.

One way to get better tasting cold-cuts is to follow the doggoned recipe. The workers at the Osage plant were older workers who took pride in their work. If you talk to people who work in food factories, they often tell you not to eat what they produce. The folks that worked at the Osage plant, however, almost universally refused to eat any other brand. They were careful when they measured out spices, careful when they monitored temperatures in the smokehouse, careful when they clocked processing times.

Keeping It Clean

The other difference was they were scrupulous about sanitation. All meat processing plants have a USDA inspector on duty, demanding that sanitary measures are maintained, but in some plants, it's a game trying to sneak product through that didn't meet standards. At the Osage plant, the UFCW workers had their own ideas about sanitation, and "good enough" for the USDA wasn't good enough for them.

Now, the other thing about cold cuts is that it doesn't matter how good the first hot dog or the first slice of baloney tastes, but how good the last one is, and sanitation plays a big pant there, because if you don't eat the cold cuts immediately, they will taste less and less appetizing as they age. The less sanitation there is in the factory, the faster the meat ages.

So Eckrich would have a product that wasn't selling too well, and they'd move it into the Osage plant because it wasn't too profitable, and they could tell the union that they couldn't afford big raises, but those damnable workers would start making a better-tasting product that lasted longer, and before you knew it, they'd start selling a whole lot more of that product, and raking in the dough.

And despite the higher health-care costs of the older workers at the Osage plant, despite the best efforts of management to move the most profitable products to satellite plants and move dogs into the old headquarters plant, the Osage plant remained the most profitable plant they had.

Lionel, Too

This isn't the only example of a highly-experienced labor force being a bargain. I'm familiar with this example because my late first wife, Em, was close friends with the president of the UFCW local. There have been other examples of this in the business press, however. For instance, the Lionel train folks closed down their rustbelt factory, and moved production to Mexico, only to move back a year or two later. That low-cost Mexican labor was killing them, because modelers didn't want to buy the crap the inexperienced workers were capable of producing.

I suppose I should mention that Donald Eckrich was the president of Peter Eckrich before it was purchased by Beatrice in 1972, and he rose to be president of Beatrice in 1979. When Beatrice chairman James L. Dutt tried to milk more money out of existing brands by cheapening products, Donald Eckrich disagreed - and "resigned" from his job in 1982. In what was thought to be an act of retribution, the Peter Eckrich firm was merged into Swift-Eckrich-Butterball, with the Swift managment - who had previously bankrupted their own firm - in charge. The Osage facility, headquarters, plant and all was sold.

In 1984, Eckrich products were only distributed over the eastern half of the US, but they claimed to be the best-selling hot dogs, and second only to Oscar Mayer in baloney, or perhaps it was second in hot dogs and number one in baloney. I doubt that's the case any longer. They reformulated the products to replace beef and pork with cheaper turkey, and they no longer taste particularly good; many of their products disappeared entirely from the market. The business was sold in 1990 to ConAgra, which in turn sold the business to Smithfield Foods.

Other Bloggers On Related Topics:
Butterball - ConAgra - David Pouffle - Eckrich - jobs - Kohlberg, Kravis, Roberts - Lionel - manufacturing - Oscar Mayer - Smithfield - Swift - UFCW