Thursday, May 30, 2019

Moving Away from China. Staying Away from Slavery. Clearing Due Diligence




The current trade disputes with China have caused a growing number of businesses to look for other manufacturing sources. While some are setting up new deals in other Asian countries, a number of companies are looking at non-traditional locations.

One of the emerging areas is West Africa. Why? Low-cost labor, good natural resources, reasonable shipping costs and schedules, and low risk of government tariffs. Put it all together and it can make sense to move manufacturing to these places that you may never have heard of.

Of course, many of these countries are relatively undeveloped and offer their own set of challenges. These include political instability, security risks and – and this seems almost inconceivable in 2019 – slavery issues.

Yep, slavery.

Some estimates suggest there are more than 40 million slaves around the world. These are victims of human trafficking, forced labor, forced marriage, sexual exploitation, etc. And one of the worst areas for this is West Africa.

How does this impact American businesses? There is a new due diligence item that is showing up in business transactions: sellers must now confirm their international manufacturing sources are not using slave labor. Not only in West Africa, but in South Asia, South America, and even former communist countries in Europe and Asia. This confirmation is also being required of businesses who supply their products to the US government and other large institutions that must validate the legitimacy of their products. It’s no longer good enough to claim a product is green – now it must be ethically defensible on all fronts.

And before arrogance sets in that this could never happen in the good ‘ole USA, it’s good to remember the Agriprocessors meatpacking plant scandal in Postville, Iowa. About 10 years ago it was discovered that a kosher meatpacking plant was being staffed by more than 400 illegal workers from Central America who were victims of child labor in prohibited jobs, sexual and physical abuse by supervisors, nonpayment of regular and overtime wages, denial of immediate medical attention for workplace injuries, workplace safety issues, etc. While it wasn’t slavery, it may have been close.

Monday, May 19, 2014

Sometimes I Need to Laugh -- Part 1

There are moments when there is nothing better than to be able to smile and laugh. At those times I look for assistance. Here are a couple of examples from Memory Lane.

https://www.youtube.com/watch?v=92YQbNLnh_Q

https://www.youtube.com/watch?v=zuFnrvMyxcY

I'll post more as I think of them.

Thursday, May 1, 2014

An Old Bigot May Be Crazy Like A Fox

First things first: If Donald Sterling said all those heinous things (and I think he did since the NBA probably did a good job of verifying it really was him on that recording) then he should be considered to be an 80-year-old piece of scum. There is no excuse for him.

Now let's move on to the second topic: It all may be part of a larger plan that has nothing to do with racism but everything to do with money.

When the story unfolded there were a few inconsistencies that are still unresolved. If this man is a bigot then why would he have invested in an NBA franchise? Why would he have not been exposed as a racist during more than 30 years of owning the team? And why would his alleged mistress be a woman of mixed race? Of course there could be plausible answers to each of these questions (for example: he saw a good value in buying the team and it overshadowed his racial views, his prejudice wasn't found out because everyone assumed he wouldn't have bought the team if he had such beliefs, and the need for female companionship was so powerful he could go against his own grain).

The inconsistencies are joined at the hip with several other issues in the life of Mr. Sterling: He is going through what appears to be a nasty divorce. His wife appears to be cut from the same cloth as him sharing similar histories of litigation, racial insensitivity, and personal profiles that seem to place the almighty dollar at the center of their respective worlds. On top of this is the issue of age and whether the judgment of this octogenarian is suitable for American society in 2014.

BTW, now is a good time to re-read the first paragraph of this posting. None of what was just written is an excuse for what he said.

However, what he said, how it was released, when it was released, etc., may indicate that it is all a set-up.

Why? Because this man may not really care what anyone thinks of him, whether he will continue to own the Los Angeles Clippers, or even if he has to pay a fine of $2.5 million to the NBA.

My suggestion is that he has done all of this so he can sell the team for as much as possible.

The Clippers have always been a stepchild in the world of professional sports teams in Southern California. The Lakers were everyone's favorite team with magnetic stars, a storied history of championships, and a never-ending parade of celebrities following them from front-row seats. The Dodgers, Angels, Kings, and even college teams have had more passionate fan bases than the Clippers. The bottom line is that an ugly girl doesn't get as many suitors as a prom queen.

Because of his divorce -- and maybe his estate planning needs -- I believe Donald Sterling was getting ready to sell the team so he could pay off his wife and move on with his life. But he was not going to get a high price unless he built up the Clippers' fortunes. This process started a few years ago when he began spending money to sign better players and a competent coaching staff. Their record improved and they are now playing in the post-season. This is a reversal: prior to 2010 the Clippers had only reached the playoffs in four seasons (out of 29) under Sterling's ownership. Since that time they have made the post-season each year. A sports franchise's value will usually increase during these periods since good performance signals increased attendance and revenues. This pattern of building up a business prior to sale is actually quite common among many industries.

So it's good news for Donald Sterling. But it's not enough for someone with a history of being motivated by greed. It's one thing to fetch a good price. It's another thing to sell at the top price.

Getting the top price can happen due to a variety of factors. One of the most obvious is luck -- the right buyer comes along at just the right time. Another is to create a strong desire among multiple bidders. In the case of the Clippers there normally would be good interest among prospective purchasers, but not necessarily strong interest. And certainly not scorching desire.

So what does an owner do to create rabid attention among potential buyers? He creates publicity. In this case he reverses logic by creating a perception that the franchise not only needs a new owner, it also needs a savior who can redeem the franchise from an evil owner.

This is the move of a man who doesn't care so much about his own reputation. Instead, he cares about making as much money as possible so he can use the proceeds to pay off his wife.

A signal of what this means can be found in the media coverage. News reports suggest the sale price could be $800 million to $1 billion. That is a difference of $200 million. Not a trifling amount even to a billionaire. And certainly an amount that can help reduce the pain of divorce in California -- a state which has laws that structure divorces to be an equal division of assets between the former spouses.

By creating the headlines Donald Sterling may be creating a bidding war since potential buying groups are springing up each day. His gain? Hundreds of millions of dollars. His loss? A reputation that he doesn't really cared about.

Finally, if this speculation is true, then keep in mind his former alleged assistant/girlfriend/mistress by also be an accomplice. After all, she didn't release the recording until after the playoffs started. And even though there is a lawsuit between him and her, the gain Sterling receives from the increased price of the Clippers could be used as part of his settlement with her.

Yes, he is scum. Yes, he is greedy. Yes, he may be crazy like a fox.

Friday, December 30, 2011

A Dark Society Viewed from Space

A few days ago Slate.com brought up an interesting article on North Korea written last year. It became timely again because of the death of Kim Jong Il, the country's leader, and the ascension of his son to take his place.

The article was written by Christopher Hitchens, himself recently passed. In the article North Korea's true status was eloquently and frankly described. It's not a pretty picture. The most stark demonstration of the country's limited economic wealth was reference to a satellite picture taken at night.  It shows the Korean peninsula, with both countries outlined. South Korea is pockmarked by lighted regions that make it look like it is suffering from an extreme case of the measles. North Korea, however, is almost complete darkness. Only one small area of light appears.

For many years we have heard that North Korea can't feed itself. Now we see that they also don't even have the resources to turn on the lights.

http://img216.imageshack.us/img216/8351/1207koreaelectricitygrikf0.jpg

Wednesday, December 14, 2011

GEEK ALERT: Photography at the Speed of Light

The New York Times reports that scientists have been able to photograph a laser beam as it moves forward. This requires shutter speeds equivalent to one-trillionth of a second. The implications for data gathering and analysis are extraordinary.

http://www.nytimes.com/2011/12/13/science/speed-of-light-lingers-in-face-of-mit-media-lab-camera.html?_r=1&hpw

Thursday, September 8, 2011

"I've just been fired."

Relax. I didn't say this.

These were the words of just-dismissed Yahoo CEO Carol Bartz. It was a stunningly frank admission of her status. And it was e-mailed to all of Yahoo's 13,400 employees.

Sometimes the truth hurts. In this case it is unknown if this will hurt Bartz, or Yahoo, or both. Some observers give her credit for candor. Others see it as being selfish since it may hurt those same employees by putting her (former) company under more pressure.

What do you think? Is this better than saying someone has left their job "to pursue other opportunities" or some other excuse? Or is this the start of a new era of executive transparency?

For more on this please see today's New York Times.  http://www.nytimes.com/2011/09/08/technology/carol-bartzs-blunt-e-mail-on-firing-raises-issues.html?_r=1&hpw