CABL Forum - Thanks To All-What and Where did This Industry

This is a little long winded so you might want to get a cup of coffee to read this.

I got into the industry in 1963, so I might know a little something about what I am talking about. When I started, the CATV amplifiers were made of vacuum tubes where you needed 120-volt outlets at every amplifier location. The equipment then progressed to transistors, chips and ICs to the generation of line equipment you are most familiar with today. In the early days believe it or not, this really was a self-help industry, someone taught me, I taught you, and you passed your knowledge down the line to the newbie. It was a good industry, we didn’t make a lot of money but we had fun doing what we did. Then the big builds hit the big cities and CATV really became big business. The old school philosophy I practiced when I got into management was to not accept the lowest bid on a project nor accept the highest bid, but some where in there was a number where we could get the job done that wouldn’t break the budget and the contractors could pay their people a decent wage and make a profit. Sounded like good business sense to me, being fair to the people who were helping you make your business profitable.

All sounded good until…someone (probably in senior finance) said we, as a manufacturer need to make more money. So manufacturing slowly started moving away building CATV equipment in Mexico, Taiwan, China and so on. Got to keep those stockholders happy you know. Some of the operators (probably folks also in senior finance) said WOW; look at the manufacturers, do you think we can do the same thing by lowering our expenses? The largest expenses in any service organization are under the headings “Salaries” and “Contract Labor.” Oh, I notice you see where this is heading. Well, operators can impact the expense line by merging their systems and eliminating job duplication (downsizing). My, look at the cash flow line jump up every time we do that! As for our “Contract Labor” expenses, just tell all the contractors “there will be a 40% reduction in prices paid to them take it or leave it. And, if they decide to take us to court remind them we don’t do business with contractors we are in litigation with.” Also let’s deal with smaller companies with lower overhead, we can get the same work done for much less money, in fact, if we deal with individual contractors, we can get the work done at the same salary rate they would make if they worked in-house.

Wait, here’s an even better idea, let’s just deal with just one prime contractor and let him deal with all the sub-contractors paying them in-house prices. And then we can increase our profit margins by another 10% using a little thing called “Retainage.” That way the work will get done at 90% of the agreed contract rate well under budget. And you know we can find problems with anybody’s work no matter how good they are. And if it goes to court, by the time the scheduled court date arrives, we’ll first make an out-of court offer to settle for fifty cents on a dollar. And if it looks like we may still have to pay the retainage, so what, we collected interest on it for the last year or so. Isn’t that great and the operator doesn’t have to pay FUDA, SUDA, SocSec, vehicle insurance, vehicle expense, liability insurance, overtime, etc, etc., while we watch these guys fight each other over the work. In regard to the holdouts, as the controlling entity, all we have to do is stick to our basement prices until these guys are starving and their pride will drive them to give in. Proud people these sub-contractors! Wanting to feed their families rather than file bankruptcy. It has become the business nature of today’s greedy corporations to take advantage of this condition to please their shareholders. Got to pay those dividends you know. So here we are, sub-contractors struggling to survive all in the name of a few greedy people at the top. You know whom I mean. Those folks who get multi-million dollar bonuses every time they lower your prices by a few percentage points and increase cash flow by a few percentage points. The same people who are guaranteed bonuses by reducing staff levels while getting the same amount of work done for less money. And let’s outsource the call centers to India, China, and Argentina so we won’t have to pay those skilled Americans inflated salaries. Wow, look at that, shareholders are happy, Wall Street is happy, upper management is extremely happy. So let’s see, as the scheme of things predict, there will eventually be an upper class, a lower class and the middle class will be eliminated or simply put, there will be the Haves, the Have Nots and no Halfways.

Oh yeah, I was in management when I was told, “You either get cash flow to 66% or we find someone who will.” I couldn’t do it without ruining people’s lives so I moved on. Became a contractor I did and met up with the “find someone who will” folks. We don’t need to name them; they are the same people we all know working at their JOB (Just Over Broke). The folks just like you and I, doing what they are told to do, knowing they are about two paychecks away from unemployment, bankruptcy or God forbid, becoming a sub-contractor. The guys and gals who swallowed their pride, continued to work inside and who learned to hide their feelings so they can survive another day. Probably some of them might even try to get drunk or high at night in an attempt at escapism; I drank to escape. And here we are folks, living in the year 2005, probably just one step away from 1929. I hope not. So tell me, history does not repeat itself. Oh, I sign my name so that the big boys can take shots at me and maybe sue me for slandering their business practices. Imagine getting sued for exposing the new American business practice standard, “Screwing the Middle Class For The Purpose of Greed”. I’m not worried, I can backup everything I have written.

Bless You All,

John Dawson

INSTALLATION

CONSTRUCTION / TECH

OFFICE / OTHER

Thanks To All-What and Where did This Industry