That's crazy. China loves to replace parts with "equivalent materials." My employer has been spending the last 3 months resolving Chinese QC issues with metal fabrication such as ignoring critical tolerances or broken welds. Considering how devastating it would be for a carabiner or ice axe to fail in the field it would be hard for me to trust outsourced manufacturing.
It's everything. Literally everything. It's what I believe is going to hold up Chinese manufacturing, regardless of how much better it is now compared to the 90's or early 2000's.
As another example - Jorgenson Pony clamps were made in Chicago until they closed down (like 15 years ago). They're the gold standard for woodworking clamps. Solid as a rock. The company announced they were re-making clamps. In China. At the world's largest clamp making plant.
They're garbage now. Materials are cheaper. The QC is nowhere near as good as they used to be. The price is more, even adjusted for inflation, than what they were when they were Chicago made - because people are buying the trusted brand name and getting burned for it.
It's just sad. I can't imagine that I would ever trust something like climbing gear to outsourcing. No thanks.
This is highly rational behavior for hired CEOs — you’re there for 5-10 years and paid based on stock price, so it’s in your best interest to sell shoddy products under the venerable brand name in the highest quantities possible, and cash out before the market discovers that your brand name is worthless (cf all of the venerable kitchen brands like All-Clad and Wusthof that now have Chinese junk lines).
This is why the father to son family business model may prove more enduring.
I doubt any CEO's compensation is tied to anything beyond five years; and, I bet even terms at five years are sparse limited to a few giant names who have to (like Tim Cook) otherwise the stock price would collapse and that's it.
I'd like to add: there is no incentive for it either, shareholders want returns NOW, and so they want CEOs to act in their interest NOW. Most shareholders aren't looking at their "ownership" stake with compassion for employees at the company, or any form of responsibility to other stakeholders, but solely for their own bottom line.
>there is no incentive for it either, shareholders want returns NOW, and so they want CEOs to act in their interest NOW.
Many of the biggest shareholders are major pension funds with 30 to 50 year time horizons. They absolutely do NOT want "returns NOW" with the implicit assumption that future quarters don't matter.
They absolutely do NOT want "returns NOW" with the implicit assumption that future quarters don't matter.
That is true but it is also true that they can’t risk waiting 30 years only to find their investment is worthless. Hence the insistence on quarterly reporting.
I know this is the received wisdom, but as a shareholder, I emphatically do not want this. I want long-term value, as I am a long-term investor. I hate that I have to watch out for shady things like this and adjust my holdings accordingly.
I always thought this was a weird definition of "rational". If you're already rich, which I assume most hired CEOs are, why is prioritizing money over people a more rational decision? Is that money going to change their life in any meaningful way? Is it any less correct to say it's in their best interest to stop working as soon as they have enough money to live comfortably for the rest of their life, to minimize stress and maximize lifetime?
I understand that it's rational behavior for someone driven exclusively by money, but that's an important qualification. Most people are not money robots, so they aren't given these jobs.
It's the corporate structure. The CEO either grows the year over year profits or he gets punished/fired by the board. Boards pick CEOs based on a history of delivering growth at any cost (this is one of the irrational decisions, they should prioritize long term growth over short term, but they rarely do). This in turn provides a strong incentive to CEOs to make bad long term decisions if it means short term gains, because they either won't be around to see the eventual collapse (having moved on to another CEO position) or else they take the long term plan and get fired by the board for not providing enough growth (or worse, reduction).
But it shouldn't be a strong incentive, right? Getting fired from a CEO position is fine, you're almost certainly set for life. I understand this is sort of a circular argument, because anyone who doesn't buy into this incentive structure won't be hired as CEO, but my point is that somebody who is willing to go along with this system isn't really behaving rationally in the normal sense of the word.
> If you're already rich, which I assume most hired CEOs are, why is prioritizing money over people a more rational decision?
Generally, a non-founder CEO is a ferociously competitive person--probably to the point of being pathological. They often "play poker" in situations where there is very little upside to doing so.
Great salespeople are often the same way, they simply can't turn it off.
You are asking a leopard to change his spots after he has started eating the antelope.
I understand, I just don't think we should describe that behavior as "rational". In casual conversation, the word means "sensible, logic-driven decisions that any person with good judgement would take". Here we're describing behavior driven by a particular niche, unnatural rationale, and pretty much any behavior can be explained that way.
I really dislike this kind of reasoning. Saying this is "highly rational" is saying the only value is money. Everything else can be set aside if it leads to more money. Even if people get hurt or worse using shoddy equipment. There is no place for empathy, at a sociopathic level. I'd think that a few millennia of civilization would give more value to notions of altruism, honesty, not constantly trying to scam your fellow man.
This is a sort of "Ayn Rand'ian" rationality in which the only thing that matters is what you're getting out of the deal independently of how devoid of empathy your worldview is.
The way it's been explained to me is that it's proportional to how much money you're spending. If you think you're getting a great deal from the Chinese, then the Chinese think it's reasonable to rip you off.
Whereas a manufacture in another country might say: "For that little money, I won't do the job.", in China the answer is more like "For that little money, I'll do the job [but I'm going to rip you off, and for how little you're paying, you should already know you're going to get ripped off.]"
Unfortunately I don't have more details; it's something I heard a few years ago from a Chinese coworker. He was explaining that quality products can be produced in China, but you have to pay for that quality just like anywhere else. And it happens that when American companies outsource to China, they're often looking for the cheapest bidder.
It’s also crazy given China trade talks right now. Seems like at least something to postpone a year or so. Or maybe they already feel they have the shutoff options covered.
