- Original Poster
- #1
Last night, I read an article from the Harvard Business Review entitled "Seven ways to fail big". Here's an excerpt.
Pillowtex was an old-time company that manufactured pillows, comforters, and towels. It grew steadily for decades - largely through acquisition - and by 1995 reached annual sales of almost half a billion dollars. In 1994, however, the United States began to phase out quotas on imports. Other companies immediately began outsourcing production to developing countries so they could compete with low-price imports, but Pillowtex redoubled its acquisition efforts, hoping that efficiencies from scale would give it an edge. The company's SEC filings from the late 1990s barely mention outsourcing as an option, instead highlighting the $240 million that Pillowtex spent on new, efficient machinery for its US plants in 1998 alone. Two bankruptcies later, the company shut down in 2003 and was liquidated. Although part of the company's rationale for keeping manufacturing in the United States was to protect American workers, 6,450 lost their jobs. The layoff was the largest in the history of the US textile industry.
At these forums, I read all the time how some business owners will never outsource; they want to keep jobs in Britain. The harsh reality is, though, that this can lead to more British jobs being lost. We need free trade to boost exports, but that means cheap imports. To compete, we really must outsource work to developing countries to control costs; it's the best way to protect British jobs.
Pillowtex was an old-time company that manufactured pillows, comforters, and towels. It grew steadily for decades - largely through acquisition - and by 1995 reached annual sales of almost half a billion dollars. In 1994, however, the United States began to phase out quotas on imports. Other companies immediately began outsourcing production to developing countries so they could compete with low-price imports, but Pillowtex redoubled its acquisition efforts, hoping that efficiencies from scale would give it an edge. The company's SEC filings from the late 1990s barely mention outsourcing as an option, instead highlighting the $240 million that Pillowtex spent on new, efficient machinery for its US plants in 1998 alone. Two bankruptcies later, the company shut down in 2003 and was liquidated. Although part of the company's rationale for keeping manufacturing in the United States was to protect American workers, 6,450 lost their jobs. The layoff was the largest in the history of the US textile industry.
At these forums, I read all the time how some business owners will never outsource; they want to keep jobs in Britain. The harsh reality is, though, that this can lead to more British jobs being lost. We need free trade to boost exports, but that means cheap imports. To compete, we really must outsource work to developing countries to control costs; it's the best way to protect British jobs.
