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Too big to fail is just what we need

February 2, 2010

Time is running out on the #1 topic – creating jobs.  The Sunday papers and TV pundits are all finally agreeing on the same thing- this could be a jobless recovery through the next 4 years.  The stats are overwhelming in their magnitude.  One pundit said “we would have to create 150,000 net new jobs each month for 48 months just to lower unemployment to 9%”.  An article in the press says unemployment will increase before it comes down, through at least this year.  Driving by Port Elizabeth yesterday on the NJ Turnpike, I saw mountains of shipping containers, where 2 years ago not a single container or trailer chassis was in sight.  Nothing is coming in our out.

Contrast this to a picture on the front page of yesterday’s NY Times news section.  In full color there were 7 workers making wind turbine blades.  The very kind of work we can do here if it were not for the little fact that China is rapidly becoming the world’s leading supplier of wind energy parts. Same way we’re dependent on OPEC for oil, we could be dependent on China for wind turbines.  European companies are responding to the Chinese market by opening plants there, and I suppose GE and our suppliers could do likewise, but that does not help our unemployment situation back home.  The article also mentioned how Chinese state owned banks back these new ventures.  I’m not trying to say all of China’s new energy generation will be green, but I am trying to point out that vision, on the part of a people, a government and banks can rally a country to prosperity.

Vision on a grand scale can have immediate impact.  There’s an early stage maglev train project under development for a high speed line between Washington, DC and Baltimore, 40 miles away.  This project is estimated to provide 16,000 man-years of construction work and another 500 man-years of annual operation/upkeep. That doesn’t even include the rolling stock.  So the real way to bring down unemployment is not just by opening a few stores here and there and basically waiting  it out.  Our only way out of this is to put on our vision goggles and think big.

We need a national dialog on our next ‘man on the moon’, that huge scary, audacious goal capable of energizing the population.  Perhaps we can have a national focus on reversing pollution, or racing China for wind turbine leadership, just as long as it has two traits, 1- it’s a huge leaping goal, and 2 – the average person ‘gets it’ and feels it.  The list is long. It has to take on the form of an Industrial Policy, combining tax credits, education, financing by our banks/PE funds and most importantly, it has to have the status within our society formerly accorded hi-tech.  It has to be so important, it’s hands-off to our current political stalemate. The President’s new budget can be debated but one part is unfortunately clear – without ascribing blame, we’re in over our heads in debt and there are only a few ways out.  We can either hope and pray for some breakthrough political compromises (sure!) or hope for massive growth.  Since ‘hope is not a strategy’, we need to plan and execute.  The default path is to wane and I deeply fear that is the path we’ll take by doing nothing.

Moribund societies think in terms of former glories, limited current resources, structural unemployment-brain drains and their “proper place in the new order”.  They think small and personal and their overall society reflects this lack of vision.  We need to redefine ‘too big to fail’ to be a positive, constructive part of our new shared Industrial Policy.

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years experience reshaping companies, Operations and key initiatives. He can be reached at richard.eichen@growroe.com

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