Latest from Issues and Ideas

Warut Sintapanon | Dreamstime
Bobby17 | Dreamstime
Nordroden | Dreamstime
Nightman1965 | Dreamstime
Anthony Baggett | Dreamstime
Pop Nukoonrat | Dreamstime
Noam Armonn | Dreamstime
Cargo loading, ship at dockside.

Principles vs. Pragmatism

May 23, 2022
Some global enterprises will ignore democratic principles regarding privacy or property, or financial obligations, to preserve access to local markets. That doesn’t make it a good business.

A Northbrook, IL, diecaster – Acme Alliance LLC – was named the winner of the 2021 National Metalworking Reshoring Award, recognizing its success in drawing new manufacturing orders from businesses that previously had been sourcing diecast parts from offshore suppliers. Readers will be familiar with this development in the business of manufacturing, though it’s likely their understanding, and probably approval, is based on the satisfaction it brings.

The whole idea of “reshoring” seems to be a reaction against so many of the problems that confront manufacturers: Reshored business rewards deserving metalcasters and other companies that have been denied an opportunity to compete against unscrupulous businesses that do not share the same obligations to treat their employees and communities fairly. Those who understand “reshoring” also approve of the implication that it is an overdue come-back to the insult that is unfair trade, and the follow-on outrages of intellectual property theft, financial tricks, and human rights and environmental violations that always seem to be coincidental.

In other words, to many of us “reshoring” is a reassertion of the principle that good business flows from good character. We may believe that – but it’s not often true.

According to Mauri Mendes, president of Acme Alliance-Lovejoy Industries: “In our business model, we use our worldwide manufacturing footprint to produce and deliver products to the regions where they are assembled [and used] by our customers. We truly believe being close to our customers is the most important strategy. We are seeing many large organizations switching their strategy by reshoring their supply chain.”

So, the diecaster is rewarded because reshoring is good business, not because it demonstrated some exceptional standard of citizenship. We trust that Acme Alliance is a good employer, a good neighbor in the places where it operates, and a good custodian of its shareholders’ equity, but being a good supplier is what earned this recognition.

The business culture that predominates in the so-called developed economies of North America and Europe operate in parallel with constitutional democracies. It treats industrial and commercial enterprises in largely the same way it treats individuals. Thus, the culture has long demanded that industrial and commercial enterprises conform to the standards of good citizenship. If they do not deal honestly with employees or neighbors, or customers or shareholders, the business will not last. The market demands that businesses adhere to democratic principles – and they do so because that’s the pragmatic approach.

Of course, standards change and sometimes a business will find it’s no longer welcome in the place it has operated for decades. A number of metalcasting businesses have found it easier to cease operations or relocate their activities because their neighbors no longer welcome their presence. Leaving is the pragmatic approach.

But even pragmatism is under some strain now, notably among the world’s largest and most influential businesses. These “global” enterprises adhere to local standards, and in some cases comply with anti-democratic or unsavory government practices because they want access to the business opportunities in those markets. If it’s pragmatic to ignore the democratic principles regarding individuals’ privacy or an organization’s financial obligations, some global businesses will do so without apology.

This is getting to be a difficult game. Since late February numerous organizations have found it necessary to cease their activities in Russia, acknowledging that an unprovoked military attack on a neighboring country violates their business principles. Exiting their Russian activities is difficult and expensive, but had these businesses been more sensitive to the risk of operating in a country without transparent financial activity, with coercive business practices and punitive standards of justice, the reversal would not have been necessary.

And there continues to be a problem for businesses operating in China – where supporting the prevailing principles not only compromises one’s record outside the country, but increasingly complicates efforts to establish reliable supply lines amid Chinese efforts to quell the resurgent Covid virus.

These exigent circumstances reemphasize that adhering to one set of principles is the most pragmatic approach to business, an approach that may or may not win awards but will keep customers returning.