The Story of A Succesfull Medium Sized Company

Imagine a small metalworking business that started shortly after WW1 somewhere in Germany. Metalworking, as in making forms for the ceramics industry that the little town is known for. The business grew in the time between wars, it survived WW2 and continued to grow well into the second half of the 20th century. At that time a new market for metal forms began to emerge – injection moulded plastics. The family owning the business latched onto that new market in an ideal way that capitalism is portrayed, by investing in developing new know-how to give them an edge over the competition. And they succeeded, making a name for their company in the business that became a synonym for high quality, albeit at a high price. As a regional employer, the family business had a good reputation too, with some people literally working there from finishing school until retirement and earning wages well above average. It was said that at the end of each fiscal year, the door opened for new modern machinery and a new workforce.

Then came an international giant housed in the USA, interested in the know-how. And since the family no longer had an interest in actually running the business, they sold it to this giant wholesale. The plant became a part of a branch in this corporation, a branch that specialized in injection moulding. Things did not go well from that time on, although it still took decades to become really apparent. For one the prices for customers remained high, but the quality began to drop due to cut corners.

The international corporation had no real interest in keeping the know-how and employment local, despite saying the opposite. The wages were undercut by increasing working hours so in real terms they de-facto stagnated. It was still worth it to work at the company, but it no longer was a job to envy someone and some people started to leave – and as it is, the best ones were the first to go. Attempts to unionize to counter the slow squeeze were crushed by threats to ship the jobs to Eastern Europe and China, something that should not work in Germany but it did. And then the jobs were slowly shipped to Eastern Europe and China anyway. The know-how however is not so easily transferred, and since replacement workforce was no longer educated on-site and the older force started to retire or just leave, it started to get lost.

Then came a worldwide recession. The corporation started to cut corners again by firing thousands of employees worldwide, all the while the CEO and shareholders were despite the crisis earning more than enough money to keep these people employed and still be filthy rich (the CEO alone earned more than 150 (corrected typo) times more than an ordinary employee). The employees finally got fed up and unionized, for what it was worth. As it turns out, it was too late.

After the recession was over, the whole corporation was bought by another international corporation, this time housed in Germany. Things started to look brighter for a very short time since German corporations actually treat their employees better than American ones. But optimism did not last long. The purchase was driven by a desire to own one specific part of the corporation, and injection moulding and manufacture of metal molds were not it. So to offset the immense costs of the purchase, the whole branch was sold off, to another international company housed in the USA.

The new corporate owners swore day and night that they really, really wanted to keep the local businesses and nobody needed to fear for their jobs. There were even articles in local newspapers about how they project to grow the locally employed workforce at the plant I am writing about to more than double, over 400. Yet somehow the number of employees and contracts for this specific plant continued to only go down all the way to 60. At 60 the count stopped and the plant was finally closed, probably because with that few employees it was no longer feasible to actually make money in this business, not to mention that the know-how it took to assemble for half a century was at this point irrevocably lost.

Imagine all that. I do not need to imagine it, I lived through a significant part of the end of that story and I just a few days ago learned how it ended.


  1. Bruce says

    In essence, I think this is also the story of many such businesses in the USA as well. Thanks for writing it up.

  2. says

    @Bruce, dianne, this is unfortunately an all too common occurrence and it happens all the time. It is my opinion that international corporations should be forcibly dismantled and broken up into smaller units. As it is, whenever someone with a good idea emerges, they are either bought up or crushed or bought up and crushed. I am not going to directly write more here or confirm/deny any specific speculations about this sadly generic story.

    @GAS, I left that trainwreck years ago. A few days back I met a former colleague who filled me in on the finale, he was one of the last people to be laid off this year. Whether he will be OK I do not know. He is a skilled and certified operator of plastic molding machinery but that business around here is dwindling. Whether I will be OK depends, I know for certain that I do not want to work for an American corporation ever again. After my knifemaking business fails and I am forced to look for employment, this will limit my choices, but I am prepared to rather starve than work again for an American sociopathic greedy CEO who has more money than brain cells.

  3. says

    The new corporate owners swore day and night that they really, really wanted to keep the local businesses and nobody needed to fear for their jobs

    In the US we may even send a candidate for president out to pledge that the company will never shut down or be relocated, and to arrange a few tax breaks for the company’s management so that they get advantages when they sell the business for parts.

    It’s super funny how capitalists claim that capitalism is all about encouraging businesses to find good fits in interesting markets, grow, build, etc. But when the opportunity to throw everything they’ve built away and grab a bag of cash, I’ve noticed capitalists always go with a variation of “now look what you made me do…” and move on to the next thing. You know, like predatory wasps, or something.

  4. says

    That story sounds way too familiar. We’ve got the actual inventors of frozen pizza around the corner. They were a family run company, until the family decided it could do with the big money from Nestlé and without the hassle of running a business. I expect it to go down within the next decade.

  5. lanir says

    Had something similar happen to me around 6 years ago. It was my first experience with maximal capitalism. I knew something was weird because the CEO kept telling us that no one would lose their jobs but outsourcing the staff would make the company more efficient. I knew that wasn’t right -- the outsourcing company wasn’t running a charity service. Of course they laid us all off later, just like in Charly’s story.

    Next job I had to take when I was low on options. Low pay and the boss (also part owner) insisted I wasn’t worth what he was paying me while also insisting I manage his private websites on the company server. He had Fox News playing in his office all the time, too. Very annoying.

    Got my current job after ditching that one. Contract job. Only one capitalism mess so far. When it came time to renew the contract with the customer, the staffing firm wanted to actually lower my pay. They got too greedy and couldn’t meet retention goals so they lost the contract and the customer hired me back through a different firm -- ended with a small, not-quite-token raise.

    Capitalism sucks unless you have tons of money and no morals.

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