Wednesday, August 11, 2010

The business model struts its stuff

A longtime car dealership in Bend sold out recently and, as always, is portrayed as a "win-win" in the local media.

This is not a defense of Bob Thomas' Chevrolet-Cadillac-Honda dealership, which began operations in 1916, but rather a cautious appraisal of the buyer: Lithia Motors.

Bob Thomas was touted as a family-run, local dealership.

Lithia is family run and is based in Medford, Oregon, but it is publicly traded and has a corporate mindset with 84 dealerships in 12 states.

I talked with some employees of Bob Thomas and they said they were given about two-weeks' notice that Lithia was buying out Thomas for $4.7 million and that they could lose their jobs immediately.

Well, they didn't lose their jobs, although they were quite aware of Lithia's reputation for wielding the ax when buying out dealerships.

Still, they know their jobs aren't secure. We're talking about employees who have devoted more than 20 years of their lives to this dealership.

The daily newspaper wrote about Lithia Motors recently and the reporter used this phrase to describe the changes Lithia has gone through during The Great Recession: "Cutting employees and improving operations ..."

Well, the local daily has cut employees for years while hiring new workers, who are then axed in a continuing revolving door that shoos out experience in favor of desperate college graduates.

A word to the wise at Lithia: You have a year to find another job. After a year, your days are numbered. And, we all know the "opportunities" out there at car dealerships. It's like the "opportunities" out there in the newspaper business.

In other words, start looking for another line of work.

The corporate world is quite simple and bloodless.

Their are three entities involved in a corporation: the stockholders, the customers and the employees.

I mention the last two for comic relief.

The only thing that matters in a publicly-traded corporation, and what the CEO's pay is based on, is the stock price.

Everything is subservient to stock price, even the premise for which the corporation exists.

The customer and whatever the corporation sells to that customer are irrelevant to the stock price at the end of the day. Corporate executives are paid by how well the stock performs, not on how well the employees deliver a sound product to satisfied customers.

And, as we've seen, the stock price can be manipulated in a multitude of ways that have nothing to do with how well the corporation creates its products or how well it treats its customers.

As for the employee, you are completely and utterly expendable. You are meaningless in a corporation.

If the corporation fires you for no reason and, in utter despair, you commit suicide, the corporation profits because it took out life insurance betting that you would kill yourself.

Get used to it. It's as American as apple pie.

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