Dean Barber

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A Workers’ Story

In Uncategorized on August 31, 2014 at 12:52 pm

This is a pretty crazy story, one that I may not fully grasp. But it’s still important for us to try. My hunch is that there are some lessons to be learned here.

Appropriately, it happened or concluded nearly on the eve of Labor Day, in which we celebrate the American working man and woman.

Make no mistake about it, this is a workers’ story, one that is “unprecedented in modern U.S. labor history,” according to Thomas Kochan, professor of management at MIT’s Sloan School of Management.

Christopher Mackin at Rutgers School of Management and Labor Relations echoed that sentiment saying, “This is unheard of in corporate America.”

The Summer of Market Basket

So there you go, this is an odd story but maybe not so much when you reflect more upon it. For the “Summer of Market Basket” was not a labor strike in the traditional sense.

That’s because there was no union involved. What’s more, white-collar managers of a 71-store supermarket chain in New England found themselves protesting alongside blue-collar workers they supervised.

So that in itself makes it strange. But it became much more so when non-unionized employees, vendors and customers, too, of Market Basket banded together to protest the firing of company CEO Arthur T. Demoulas and a shift in corporate strategy that would benefit owners at the expense of a loyal workforce.

Think about that for a moment – workers walking off the job, risking their own jobs for that of their boss. Talk about putting it all out on the line.

To be sure, the striking workers who demanded that “Artie T.” be returned to his position as CEO, did so out of their own financial interest. He subscribed to a business model of keeping prices low and compensation and benefits above average. (Starting salaries for full-time clerks are $4 higher than Massachusetts’ minimum wage.)

A Personal Touch

But there may be more to it than that. There were stories of Arthur T.’s phone calls to workers, attending their relatives’ funeral services. One store manager told of how he came to her dying husband’s bedside at the hospital, and thanking them both for their service to the company.

In doing so, he gained an almost mythical hero status among the workers, as they truly believed that he cared about “his employees.”

Now I’m not sure if that personal touch can be taught in a business school, although maybe we should try. Because in the end, employees, which should be considered the greatest asset of any business, will be loyal to a management that is loyal to them.

To Give is to Receive

The loyalty factor actually comes to play in corporate site selection, to which I serve in a consulting role. Companies want less turnover and a loyal workforce as it adds stability and efficiency at the workplace. But again, to be the recipient of loyalty, a company must give it as well.

That’s my big takeaway. People matter and companies should damn well treat them like that, as it makes ultimately good business sense. I only wish more executives in Corporate America and Wall Street could get that into their heads.

An aside. This past week, my wife was among a small group of employees who had lunch with the company CEO. She works for a Japanese-owned company and he was predictably so Japanese. But she found him very nice and thought he took a genuine interest in the lives of “his employees.” She came home very upbeat about the company and her role in it.

Guess Who Won

Oh, but back to Market Street. You should know that the workers won. Market Basket’s board of directors last week approved the reinstatement of Arthur T. as CEO. His cousin, Arthur S. Demoulas, and his allies agreed to sell their 50.5 percent stake in the company to Arthur T. and his allies, who own 49.5 percent. The price was more than $1.6 billion, which puts the value of the chain at about $3.2 billion.

So ends one of the strangest labor actions in American business history, with the sole demand of the workers, from top management to the lowliest clerks, being met.

So the workers are the heroes of this story. They took on and triumphed over those Wall Street analysts who would criticize companies that choose to pay employees well and build a loyal customer base rather than just maximize shareholder returns.

Two Competing Philosophies

Thankfully, there are good companies out there who have consistently proved that they can provide good jobs, products and services, and good profits and long-term shareholder returns by treating all stakeholders fairly and with the respect they deserve. Costco and Southwest Airlines are examples that come to mind.

And then there are the others, dominated by senior corporate executives who choose to enrich themselves at the expense of their workforce and their customers. I tell you that is not a sustainable business practice and there will be a reckoning if you continue such short-sighted policies.

While Market Basket may be unique in the annals of labor history, people are getting fed up. And believe me, I am no proponent for unions. None was needed here.

Capt. Jack Understood

I am in the process of reading one incredible book right now – “Empire of the Summer Moon.” It’s about the rise and fall of the Comanches, probably the most powerful Indian tribe in American history. Much of it is set where I live in North Texas.

In the course of the book, I came across the exploits of Jack Hayes, arguably the greatest Texas Ranger of all and the one person whom the Comanches really feared.

Hayes taught his rough bunch of hard-drinking, knife fighters that they would more likely stay alive by adopting the Comanche style of fighting on horseback. And despite leading rangers into pitched battle, he had a reputation of keeping them alive.

“He was extremely cautious where his men’s safety was concerned, and almost motherly in his care of them when they were wounded.”

Consequently, they would follow him to hell and back. And frequently did.

So a first rule of management, one that Jack Hayes instinctively knew and one demonstrated by Arthur T. Demoulas at Market Basket, is to take care of your people. If you do so, they will respond in ways that will surprise even themselves.

Yes, the workers are the heroes. On this Labor Day. On all Labor Days.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

If you liked what you saw here, invite me to speak at your next meeting.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

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My Pet Peeves

In Corporate Site Selection and Economic Development on August 23, 2014 at 7:39 pm

I’ve been in Costa Rica this past week on business believe it or not. So here’s a reblog of a past post that you may find of interest.

Barberbiz

I always welcome the opportunity to meet with economic developers when they come to the Dallas-Fort Worth area to call on site selection consultants. If my schedule permits, I’m with you.

Sometimes those invitations come via email and sometimes by phone calls. It matters not to me which way I am initially contacted, although email follow-up will be requested so that I don’t have to tie a string around my finger.

But how people want to be communicated with is a personal preference. And when you are engaged in business development, it is something to take note of and even document.

I recently finished making a slew of appointments with aviation/aerospace/defense industry contacts in Southern California. I noticed that I was far more effective by using a combination of LinkedIn messages/phone calls than I was by email.

If someone has more than 500 LinkedIn contacts, that is a pretty good…

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Cool in the North Country

In Corporate Site Selection and Economic Development on August 17, 2014 at 6:49 am

DULUTH, Minn. – “Supposing is good, but finding out is better.”

So wrote Mark Twain, a statement that should serve as a working motto for all corporate site selection consultants or anyone with a curious mind.

I came here to find out. And I left with some distinct impressions. Should I ever return to Duluth on behalf of a client company in the search of an optimal location for future operations or in any other capacity, I will undoubtedly learn more.

Peter Drucker said it most aptly when he declared, “My greatest strength as a consultant is to be ignorant and ask a few questions.”

That’s why I try to do. Finding out really is better.

Deep in the Woods

Still, I did not foresee actually driving over bear scat in an all-terrain four wheeler as a part of my familiarization tour of Northeast Minnesota last week.

We ventured deep into the woods on a beautiful day looking at what ostensibly was or could be a site for a data center. Owned Lake County to the north of Duluth, this secluded 120-acre tract had been repossessed for unpaid taxes.

But both Tim Comerford, an energy specialist and senior vice president with New Jersey-based Biggins Lacy Shapiro & Company, and I agreed that what we were looking at was in reality a big piece of woods and not yet a viable site.

It might become a viable site for a data center, but it’s not there yet.

Recognizing the Truth

Our host, Brian Hanson, president and CEO of APEX, the regional economic development organization, seemed to appreciate our input.

“Looks like we’ve got some work to do,” he said, climbing behind the wheel of the ATV that would take us back to a dirt road. At a meeting later that day in Duluth, Hanson referred to the site.

“There are some serious issues that we have to deal with at that site, but that is why we are doing this. (Hosting site selectors.) We’re not just going to talk about the issues, but get the documents and get the work done.”

Tim and I were lucky enough to be assigned by the Minnesota Marketing Partnership to Northeast Minnesota. Other site selection consultant were assigned to other regions of the state.

We immediately recognized that Hanson was a seasoned professional who not only had a deep understanding of his community but a proponent of regionalism and playing nice with others to get things done.

The Importance of Research

Most importantly, Hanson, whose company-member funded organization represents seven counties in Northeast Minnesota and three counties in Northwest Wisconsin (population 400,000; 280,000 in the MSA), recognized the importance of research to his organization’s success in industrial recruitment.

Research is used in two ways – as a way to assist a prospective or existing company looking at investing in the region and also in determining a targeted approach to recruitment.

On point one: “We’re focused on the investment and the business case, which often means helping the company fill in blanks – what’s it going to cost, what can I expect with labor costs and taxes with a facility in our region. We help fill in those blanks so that they have a compelling business case and can make an informed decision on whether to invest.”

On point two: “We need to know is going on in our region, know what we need and understand the trends. Research enables us to connect to our member companies and gives us a targeted approach and not a shotgun approach.”

A Good Win

Hanson said research was the key to identifying and contacting 25 aviation MRO (maintenance, repair and overhaul) companies to fill the void left when Northwest Airlines pulled out of a 189,000-square-foot repair facility in 2005.

“And we talked to all of them. At one trade show, we had eight appointments with MROs, but that involved hundreds of hours of research.”

Eventually, Oklahoma City-based AAR Corp. showed interest in the building that had sat empty for seven years and was costing the city the tune of $15,000 a month to heat and maintain.

As a skilled workforce was vitally important to the company, the community tried something a bit different – a two-day job fair before the company actually committed.

“We said that if you agree to put your name on it, we’ll have a lot of people there show up. And that was exactly what happened,” Hanson said.

The community reached out to aircraft mechanics in a three-state area and about 325 attended, with about the same number sending in resumes. At a dinner after the first day, a senior AAR executive told local economic developers, “We’re in.”

AAR now employs about 300 people at its facility in Duluth.

Let’s Make a Deal

A former boss once told me, “A good idea without money is still just a good idea.”

So when I come across an economic development organization that is flush with money and eager to make something happen, I cannot help but to take note.

By most accounts, the Iron Range Resources & Rehabilitation Board, a state agency insulated with independence, can sink as much if not more financial resources into a project than the Minnesota Department of Employment and Economic Development (DEED).

IRRRB has $148 million in the bank dedicated to the economic development. Its funding source is a $2.50 cents per ton excise tax on iron ore mined in the Mesabi Iron Ore Range, a narrow 100-mile band that traverses the northeast part of the state.

But it’s only in a jurisdictional area in NE Minnesota where IRRRB can make its full weight felt. Still, no other region of the state has anything like an IRRB, which I liken to a regional economic development organization on steroids.

Said Commissioner Tony Sertich, which oversees the agency: “We have money, and we want to make a deal.”

Earlier this year, IRRRB provided $21.2 million in funding to Segetis Inc., a company that makes plant-based solvents that are petroleum substitutes and which plans to build a $105 million plant in Hoyt Lakes, about 60 miles north of Duluth.

“Segetis is on the leading edge of the biochemical economy and will add value to our timber and forest products economy,” said Sertich.

Resources and Manufacturing

Timber, water, iron ore – all were clearly evident to me from the air and from the ground during my tour of Northeast Minnesota. Space does not allow me to elaborate on each of these resources with any depth.

I will say that the historic connection between the iron ore mines, which produce a lower grade ore called taconite, and Duluth remains intact with ore boats up to 1,000 feet in length, referred to as “lakers,” coming in and out of Duluth harbor with great regularity. It is a sight to see on the largest freshwater lake in the world.

We toured Joy Global, a manufacturing plant that came on line in 2012, in the town of Virginia, which builds earth moving equipment for the nearby mining industry.

We also toured Cirrus Aircraft, a cutting edge aviation manufacturer that incorporates a parachute in the design of its aircraft. The company says 95 lives have been saved as a result. It is based at the Duluth International Airport.

Despite the fact that I don’t much care for traveling in small aircraft, I actually began to like the Cirrus that transported me from Minneapolis to Duluth and back. There is a passion at Cirrus about their planes that is hard not to notice and respect.

Beers from the North Coast

And finally let me say that there is a passion about beer in Minnesota, which is I find wholly commendable and a sign that the people here, about one-third of whom in Duluth are of Scandinavian ancestry, are a most civilized breed.

When I first spoke to Brian Hanson on the phone prior to my trip, I told him in response to his questions that I hoped to eat fresh lake fish and sample the local craft beer. Being the ever boastful Texan, I said, “You know, we have 13 craft beers here in the Dallas-Fort Worth area.”

His response was low-key and modest, typical of people from the North Country. “Yes, we have eight.”

Dallas-Fort Worth area has a population 6.5 million. Duluth — 86,000. Go figure.

Indeed, Fitger’s Inn, where I was staying, had been the site of a brewery since 1885. Beer was still being made on the premises.

At nearby Canal Park Brewing Company, I met brewmaster Badger Colish, who gave a wonderful tour of “Gus,” the company’s 15 barrel, three-vessel brewing system that produces a “Northcoaster” style of delicious brews.

I sampled the Nut Hatchet Brown, which won a silver award at the 2014 World Beer Cup. T’was mother’s milk to me.

Badger and I soon discovered that besides enjoying beer, we are both Martin guitar aficionados, so a brotherhood was formed then and there. I wish I could have stayed longer.

The Coolness Factor

All of this confirmed in my eyes that Duluth is one cool town, as the young hipsters were in evidence. And there is a lot to be said for that.

Yes, it is true. Minnesota does have some competitive issues regarding both taxes and permitting. In its 20014 State Business Tax Climate, the Tax Foundation ranks Minnesota 47th – just above New York, New Jersey and California.

But if you have a cool place, a place where young people want to live, well, that’s your future pipeline to talent. And smart businesses will tune into that.

So Duluth is cool. (How can the hometown of Bob Dylan not be?) Minneapolis is also cool. This is confirmed by Outside Magazine, which recently ranked both cities as top 10 cities for outdoor recreation.

But Duluth, with 6,834 acres of city parkland, 178 miles of wooded trails, and 16 designated trout streams, came in as No. 1.

“In Duluth, you know you’re alive,” says Don Ness, the 40-year-old mayor.

Brian Hanson said he is on his mountain bike hitting the trails multiple times a week. And Brian is not young, which demonstrates there is hope, even for oldsters like me.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

If you liked what you saw here, invite me to speak at your next meeting.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

The Center of the World

In Corporate Site Selection and Economic Development, Uncategorized on August 9, 2014 at 9:43 pm

NEW YORK – Even when I am on vacation, I cannot escape my role as a location investigator, a place sleuth. Delving into how and why a place works in the way it does is what I do as a consultant for both companies and economic development organizations.

A vacation, therefore, is never going to be a simple outing, and especially so when I am visiting what I believe is one of the most complex places in the world. Suddenly, I found myself on a mission, which is par for the course in New York, where everyone is on a mission of some sort.

As the most-populous city in the United States, with an estimated record high of 8,405,837 residents as of 2013, more people live here than in the next two most-populous U.S. cities (Los Angeles and Chicago) combined

Not surprisingly, this is a tough place. A crowded place. A noisy and chaotic place. An expensive place. A very diverse place. And in so many ways, New York is and remains, as filmmaker Ric Burns termed it in a 2001 documentary, the “Center of the World.”

I had been to New York on business before, but this was the first time that I was able to really explore it. My wife and I were there for a week.

The American Dream Lives

In front of the National Museum of the American Indian, formerly the Alexander Hamilton U.S. Custom House, I spoke to a man from Sierra Leone from the West Coast of Africa. He had been living in New York for the past 15 years. For him, this country and this city represented freedom and opportunity to build a purposeful life.

“There is no place better on Earth,” he said. “No place.”

In his eyes, the American Dream, which had nothing to do with home ownership or even building great wealth, was far from dead.

Today, about about 37 percent of the city’s population is foreign born, but no single country of origin dominates in that regard. The 10 largest sources of foreign-born individuals in the city as of 2011 were the Dominican Republic, China, Mexico, Guyana, Jamaica, Ecuador, Haiti, India, Russia, and Trinidad and Tobago. Based on the many languages that I heard uttered, I think ran across every one of these groups.

But that didn’t bother me in the least. No, I see our diversity as a continuing strength and in keeping with an American tradition of essentially creating and molding a group of new Americans to follow their dreams.

In his Letters from an American Farmer (1782), J. Hector St. John de Crevecoeur writes, in response to his own question, “What then is the American, this new man?” I think I met him in New York.

A Reminder of Who We Are

Yes, New York has its Wall Street, the financial district of the city and home to the New York Stock Exchange, the world’s largest stock exchange. But there is another story here, one I find just as compelling, of immigrants, reminding us just who we really are.

For we should never forget that New York was the first place where many of our ancestors first set foot on American soil. Some would eventually venture away from the city and settle into the interior. But New York was their starting point, their launching pad for a new life in a new country.

Christian Friedrich Martin is a prime example. He arrived with his family in New York in 1833 from Austria, eventually moving to Nazareth, Pa., where in 1839 he established a guitar making shop. Martin guitars are still made in Nazareth today. (At the Metropolitan Museum of Art, my wife and I happened upon an exhibition of mostly 19th century Martin guitars. As an owner of two Martins, I was just enthralled.)

But many of the newly arrived would stay in the city and find a neighborhood where they felt most comfortable around their fellow countrymen of origin. Said immigrant Patrick Murphy, “New York is a grand handsome city. But you would hardly know you had left Ireland.”

A decade later, many of Murphy’s compatriots would join the Union army after literally stepping off the boat. Lured at the prospect earning $13 a month, thousands would die in a strange land called Dixie. The 69th New York State Volunteers flew a green flag with a golden harp on it, symbolizing Ireland.

The Great Shifting

During our many travails around the city – by foot, cab, bus and subway — the ethnicity of neighborhoods was still apparent – Little Italy, now a tiny fragment of what it once was; Chinatown, home to the largest enclave of Chinese people in the Western Hemisphere; a Greek enclave in Astoria in Queens, and an ultra-orthodox Satmar Jewish community in Williamsburg in Brooklyn.

Many if not most of these neighborhoods are losing their ethnic identities with gentrification, which translates into he or she with the most bucks takes home the marbles.

This shift toward wealthier residents and/or businesses and increasing property values is one of the bigger stories that I picked up during our week-long stay in New York.

Gentrification happens with increased investment in a community by real estate developers and local government, thereby spurring more business growth and lower crime rates. This is generally a good thing.

But gentrification also leads to poorer residents being displaced by wealthier newcomers, thereby changing the character of the neighborhood. Gentrification “has become shorthand for an urban neighborhood where muggings are down and espresso is roasted,” wrote New York Times reporter Andrea Elliot.

Harlem would be an example. New York’s most iconic black neighborhood, no longer has a stigma urban decay, is experiencing another rebirth, reflected in new restaurant hot spots like Red Rooster Harlem and The Cecil, where we had our best meals.

Census data maps show significant drops in the African-American population in Harlem, largely because long-time residents are being priced out of the neighborhood. Between 2010 and 2011, the median housing prices in central Harlem jumped by over 18 percent, the Times reported.

But gentrification has been happening all over the city, making the once affordable neighborhoods, like the Meatpacking District, Greenwich Village, Soho, not longer affordable except to the wealthy.

Rent City

According to census data prepared by the sociology department at Queens College, there are about 582,000 rentals in Manhattan, as opposed to 165,000 owned units, meaning rentals make up 78 percent of the total.

New rental projects coming onto the market are rare. Land costs have skyrocketed in the last few years, to the point that prime Manhattan sites can go for $850 a square foot.

With rents of $3,000 a month typical for a one-bedroom apartment, recouping an investment could take years. For most real estate developers, building pricey condos and selling them for a hefty $3,000 a square foot is the better bet.

But despite the high cost of living, immigrants from all over the world continue to flock to New York, with the Bronx probably the most affordable of the five boroughs. But even there, where graffiti adorns many buildings, high rents have some locals packing up and leaving.

Rich and the Richer

As a global hub of international business and commerce, it should be of no surprise that New York has the highest density of millionaires per capita among major U.S. cities in 2014, at 4.6 percent of residents. It is also home to the highest number of the world’s billionaires, higher than the next five U.S. cities combined.

The city is a major center for banking and finance, retail, world trade, transportation, tourism, real estate, media, advertising, legal services, accountancy, insurance, theater, fashion, the arts, you name it and it’s probably here.

And while economists talk of the demise of manufacturing in the city, there are companies who are engaged in manufacturing, driven by technological advances that shrink the size of manufacturing equipment. Indeed, about 14,000 residents of the Bronx are employed in manufacturing.

Silicon Alley

Home to hundreds of tech startups, the tech sector continues to expand in Manhattan and Brooklyn. I stood on the sidewalk outside Chelsea Market, gawking at 111 Eighth Ave., Google’s New York City headquarters, wondering what the heck was going on inside there. Nobody came outside to tell me.

Google bought 111 Eighth Ave., a 3 million-square-foot office building, just more than two years ago, paying almost $2 billion.

Since the recession ended five years ago, New York has added more tech jobs than any city with the exception of San Francisco. The tech sector is now a major part of New York’s economy–by some counts the amount of venture, angel, and private equity cash poured into New York has grown from $799 million in 2009 to about $3 billion in 2013.

In the last four years, the city added 25,000 tech jobs — up 33 percent. The sector, responsible directly or indirectly for 291,000 jobs, is now 7 percent of the city job market, behind health care at 16 percent and retail at 8 percent.

Lunch Atop a Skyscraper

A favorite photograph, one that I never tire looking at, is Lunch Atop a Skyscraper (New York Construction Workers Lunching on a Crossbeam). You have probably seen this black-and-white photograph, which depicts 11 dusty construction workers, mostly immigrants, eating sandwiches and smoking cigarettes, as they casually sit nonchalantly on a crossbeam 840 feet above New York City streets.

The photo was taken on September 20, 1932, during the height of the Great Depression, on the 69th floor of the RCA Building, now called the GE Building. According to archivists, the photo was staged to promote the opening of the skyscraper, but nevertheless those were real ironworkers who were part of the construction project.

There is something about that photograph that harkens the American experience. And while they are white men, of European extraction, a similar photograph could be taken today of men and women at work of different races from other parts of the world who are here because they believe in America and the opportunities that they see here.

I wonder sometimes if we can see what they can see. New York, despite all its foibles, continues to say, “Yes, you can,” probably more so than any place in America. And for that we should be thankful.

Sociologists now largely disregard the term “melting pot,” as being outdated and inaccurate. I don’t have the academic background to argue with them, but I would think that immigrants and their descendants would want to adapt and assimilate to their new surroundings in order to prosper.

In his 1905 travel narrative The American Scene, Henry James writes about cultural intermixing in New York City as a “fusion, as of elements in solution in a vast hot pot.”

My hope is that the pot stays hot, thereby keeping New York as the Center of the World.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

If you liked what you saw here, invite me to speak at your next meeting.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.