30 June 2005

On the phone to Honeywell

Last week, I wrote of Honeywell's plan for Census Adjustment by globalization here in this humble little space on the vast world wide internets. I emailed Jon Talton, business columnist for the Arizona Republilc, a copy of my article, of which the contents were primarily composed of the leaked information on future Honeywell labor plans. Well, today, Mr. Talton has published a column extolling Honeywell as a model of prescient business acumen. The headline is titled State Needs Foresight that Honeywell Has.

I read the article and reread it another three times, because it left me baffled and confused. At first glance, I really wasn't sure what the point of it was, as Talton seemed to dash around some salient truths, and appeared to be an attempt to dissemble in a less than noble PR manner. Well, then I figured, maybe this is just like one of those official wishy washy Arizona Republic editorials, where a great deal of verbiage is spewed out, but no stand is taken, or position announced in clear light. But, as a high tech professional, it was hard not to take offense at even the initial paragraph in Mr. Talton's piece.

An article in the Wall Street Journal this week deepened the paranoia among Honeywell employees in Greater Phoenix. In an interview with new aerospace CEO Robert Gillette, the Journal reported that the company plans to shift thousands of jobs, perhaps 5,000, to low-wage countries in Central Europe and Asia in the next few years.

Paranoia? Extreme, irrational distrust? Really? I worked as a programmer at Honeywell for a year and remember well my first day on the job where I heard the CIO proclaim on how his wish was to replace all the American programmers at Honeywell with cheaper offshore workers. The group that I worked saw its job function outsourced first to Mexico, and now India. It was broadcast overtly, that the desire was to move most all technical work to offshore locales. Thus, Talton's choice of the word paranoia is most interesting, or should I say becoming, as it's clear where his perspective lies.

More puzzling verbiage continued.

The rough ride that America faces from globalization has been rattling Arizona semiconductor and information-technology jobs for several years. The displacement usually came slowly in small job cuts and moves offshore. Now Honeywell is facing up to the implications of globalization, and Arizona will not be immune.

Honeywell has already announced that 225 to 235 jobs will be cut from its Deer Valley plant. So even if Arizona operations remain a vital part of the company, a lean-and-mean restructuring logically would mean fewer executive and middle-manager jobs here. That would continue a quiet trend of the state losing these high-paid corporate jobs, with their decision-making power, and failing to replace them.

Um, fewer executive and middle-manager jobs? How about a lot fewer engineering and programming jobs? An economy is not built upon the small numbers of executive jobs, or even the middle management jobs which inevitably get axed after so called globalization campaigns eliminate hundreds, if not thousands, of decent paying jobs that in turn fuel an economy.

Talton peppers his commentary with vague blurbs on keeping jobs, but then shockingly concludes his column with the nascent admonition on how other Arizona businesses, government and universities should be copying pages out of Honeywell's census adjustment playbook.

Keeping the jobs should be a priority, especially considering that Arizona is not attracting new Intels, Motorolas or Honeywells. We've also been failing to seed enough tech upstarts, much less grow them into the corporate leaders of the future.

I hope business, university and political leaders are already on the phone to Honeywell.

Ho, where, pray tell, do all these displaced professionals seek work then? Or are they simply added to the lower rungs of the labor pool, to compete for jobs at Wal-Mart and McDonalds, only to suffer the same fate of tragic displacement again, when advances in automation and robotics render those jobs obsolete?

Talton at times has written some lucid columns on the various states of economic affairs, but I find articles like this one to be incredulous. Especially when next week, I'll read a missive on education and how our youth are not pursuing careers in engineering and science. Duh, how can any informed writer not connect the dots between destructive hits to the job pool and motivation to study for a career in said fields of knowledge?

23 June 2005

Answers to many common Social Security-related questions

Social Security Q&A

Of particular interest (not that the other content was devoid of significance), was this piece on how other privatized social security schemes and 401K programs stack up to the existing social security setup.

Chile’s system is one that President Bush often mentions. His proposal is likely to be similar because one of his advisors, José Piñera, designed the system in Chile for the Pinochet military dictatorship. Under that government, workers were encouraged to opt out of the system of pension insurance and into private accounts. Over the past 25 years, the return on stocks in Chile has averaged over 10%—a higher return than we can expect in the U.S. stock market over the next 25 years. Yet, even with that extremely high rate of return, the average Chilean retiree relying on private savings will receive a benefit less than one-half as large as someone who had remained in the old system, and that benefit lasts only 20 years. If a retiree is "unlucky" enough to live longer than that, he will simply run out of retirement income. Those in the old system not only receive a higher benefit, but the benefit lasts as long as they live, and continues to provide benefits to their surviving spouse.

A recent survey shows that 90% of Chileans who opted for the private accounts wish they had remained in the old system. The only people who have benefited by the new system are the wealthiest top 2% of the population.

The United States’ Social Security system is the most efficiently run insurance program in the world, with overhead of only 0.7% of annual benefits; for every $100 paid into the system, $99.30 is paid out in benefits to retirees. In the British and Chilean systems, at retirement, workers convert their private accounts to annuities provided by private insurance companies. In the United States, overhead for annuities provided by private firms averages about 20%; for every $100 paid in, $20 gets siphoned off. And almost no annuities are indexed for inflation.

How can Americans not view this as a massive transfer of financial wealth to bankers and brokers, at the expense of American workers?

22 June 2005

Honeywell's Plan for Census Adjustment by Globalization

Against the backdrop of information technology job erosion, one of Arizona's largest employers is about to embark on an escalation of replacing higher priced American employees with lower cost foreign employees. Rob Sanchez has the nitty gritty, and I encourage all to sign up to receive his excellent Job Destruction Newsletter that is keeping tally on the assault of the American high tech professional.
Honeywell executives have decided that revenue spent for engineering must go below 15% of their total expenditures. In order to cut costs they will "globalize" their engineering departments. This globalization process will focus on cutting the cost of labor by using the following methods:
  • Replacing current Honeywell workers with L-1 visa holders. These L-1 visa holders will come mostly from Russia, Czech Republic, and India.

  • Whenever possible all positions in engineering and its support functions will be outsourced to overseas locations.

  • All new IT jobs will be required to be outsourced offshore.

  • No external hiring will be allowed, and transfers of employees within Honeywell will be discouraged until the job terminations are complete.

  • Open job positions will be "backfilled with globalized engineers at a lower cost." Managers that refuse to go along with this process will be replaced with more cooperative ones.

  • American subcontractors are currently being eliminated and replaced with foreign companies.

» read more

15 June 2005

A receipt comes out and the transaction is done

RFID tags are the future and this large scale adoption of the technology for retail sales is going to be replicated all over.
Pizza Pizza's rollout is the largest quick-service food segment application of RFID technology in North America, but it won’t be the last. Where consumer throughput and transaction speed are a must, and modest ticket averages are common, RFID appears to be the wave of the payment future — a wave that could grab a large share of the market from comparably slower forms of cashless payment, such as credit and debit cards.

"When you look at a line at a McDonald’s or Wendy’s, that extra 2 to 3 seconds saved per customer is very important," said Paul Barron, editor of Louisville, Ky.-based "And even though credit card companies are going to no-signature-required transactions, I think RFID is going to be the natural evolution of cashless payment … . It drives repeat visits and increases customer loyalty because people will go where it’s fastest."

I am surprised that supermarkets and retailers like Wal-Mart haven't already embraced this technology. It will eliminate jobs, as all that will be required is to move the cart forward and a detailed sales receipt can be forthcoming in a matter of seconds. All the personnel that will be required is monitoring of machine uptime (and a good bit of that task can be automated) and security.