Niptuck MD
plutocrat-in-training
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I hope this post can help those that have physical businesses across different countries. I am writing this as an individual that has done business and carried out projects across Southeast Asia, America and Western Europe.
I remember one of the most memorable speeches given at a summit was by Wadih many years ago about mitigating different cultures and working with different types of people from different regions of the world. Without being redundant, I can share a few of my trials and tribulations about what I have dealt with. Again these are my experiences, not stereotypes and can be taken in a neutral manner.
Lesson # 1 (location- India)
Lesson Learned: Murphys Law will always take into affect in these types of countries.
Scenario: While working as a consultant for BMW, they were setting up plants and OEM supplier warehouses and production houses across northern and southern india. There are so many variables that they did not take into consideration and thus caused skyrocketing costs. They assumed that permits and construction would (apart from the usual third world red tape beauracratic stuff) be handled in a reasonable fashion (albeit taking longer in time) but little did they know that governments and local politics in the world largest ¨democracy¨ change like Kim Kardashian changes boyfriends/husbands... More people have to be cajoled (paid off) in order to get shit done pronto. Also india is a very ¨day-labourer¨ type of society where low skiled labor is plentiful and needs to be handled in a different manner.
They (Munich HQ of BMW) failed to research and spend enough time in the various states and localities in order to really figure out how to best utilize the labour pool in india. India is an up and coming manufacturer but they do not possess the precision and pinpoint skilled labour in automobile manufacturing unlike the likes of south korea, japan or germany. Automation is there but still in its infancy (a long way to go) but they are moving ahead thanks to german and japanese and korean expats setting up systems of improvement and quality control there.
They are trying, and are good for mostly basic to mid level assembly line processes (mounting components to the chasis of vehicles etc). More advanced and in depth engineering and design has to be done in Europe or America and then the plans and CAD drawings need to be sent and then worked from that route in order to avoid costly rework expenditures.
Moral of the story: ALWAYS DUE YOUR DUE DILIGENCE. (especially when dealing with countries with questionable governments and sluggish and lethargic beauracracy) The fault will always be on your side. No excuses. If you dont know the terrain, hire someone that knows it well. Think of the example of Edmund Hillary (first man to conquer mount everest) he would not have been able to do so without his trusty nepalese sherpa Tenzing Norgay.
Lesson #2 (location- Al-Jubail, and Riyadh Saudi Arabia)
Lesson Learned: When in Rome.. do as the romans... (may be the only play here when €€€ is on the line)
Scenario: While setting up sub- facilities for SABIC (a major chemical corp), it involved a long winded rendezvous with corporate types and foremen and plant managers from various backgrounds within the arabic and asian worlds. Obviously the top corporate execs were Saudi but the mid level types and site managers where from Iraq, Kuwait, Lebanon, India, Pakistan, Morocco and even America and Germany. Talk about mixing oil and water! Dealing with men (yes only men in this scenario), from various nations within the middle east and gulf was quite a challenge. One had to find common ground and focus on the big picture which was the project. Everything leads to the project and what needs to be done. Egos were definitely a problem here and I had learned a lot about people management. No MBA programme ever could possibly teach you how to get the Iraqi plant manager to agree with the pakistani supply chain leader etc etc. You have factions within these subgroups that creates a dichotomy as well because for the most part, from Morocco to Iraq they understand MsA or modern standard arabic (if they needed further clarification from the english norm) but when you deal with workers from sri lanka, india, bangladesh, pakistan, indonesia you are dealing with 5-10 different languages and various levels of inconsistency in terms of the understanding of english. There are obviously varying levels of comfortability amongst groups of individuals and being social creatures that tend to stick together with what we know best, language effects all of that... Again, when overseeing a diverse bunch, its better to have a person (or yourself) speak in their language (majority) to help gain a solid ground from the getgo in terms of morale. Leadership is tested in the same way the USSR dealt with when attempting to rule over a diverse group of nations. How do we get all these people to work together in a cohesive and synergistic manner? You focus on the end goal. The print, the plan the building whatever it is. You always get them to focus on what their purpose is. Their purpose is to make sure the task gets accomplished on behalf of the company. They have a duty to put their work and skills before their heritage, backgrounds, etc etc.
A good example of this is when Nelson Mandela had to learn Afrikaans in order to speak with the apartheid govt in order to get what he wanted which was ultimately equal rights...
Lesson #3 (location - USA/Mexico)
Lesson learned- just because it makes sense in theory doesnt mean it will in practice
Ever since the signing of NAFTA, all of the american car manufacturers have shifted bases to mexico (and for logical reasons) However where the issue became extremely problematic was after the bailouts of chrysler and GM in 2008, in which quality control took a major dip due to the sudden movement of these factories in order to satisfy their bailout money stipulations.. Consumers began to question (and even till this day) whether or not it was worth giving 80 billion to two companies that were severely bleeding 'red' while the economic turmoil continues to hit the midwest through the shutting down of plants due to the harsh realities of economics. Those plants ended up being built and transferred down south to mexico, venezuela and brazil. However differences in skilled labour are night and day between these countries. America has had a solid foundation in manufacturing historically since World war 1, but expecting to just move a system (that took decades in the making) and expecting THAT system to work overseas was just plain foolish. In theory, labor costs and shop rates will always be a race to the bottom of the barrel. It is literally the only way for these too big to fail industries (think airlines, automotive, steel, private non govt construction etc)to make good pft margins.
However, the moral of the story is that TALENT is a real thing and skilled labour is and will for the interim be something that cannot be easily replaced (full on automation has not yet developed into a profitable manner for certain companies (excluding BMW, Mercedes)
The millions upon millions of dollars spent by dodge chrysler and GM on rework and quality control could have been avoided if they had assessed their talent pool beforehand but hey, when you have someone like the govt willing to bail you out, and you have had a track record of getting into deep debt and almost bankruptcy (yes chrysler had to be bailed out twice before) what are your options? Last minute, shoot first ask questions later types of events. In this case, outsourcing quality control back to america and germany to deal with problems at the production level.
Moral of the story- Talent should not be taken granted and a good system or plan is essential when moving operations overseas in places where there are different standards of quality and training. (in this case vocational training).
These are just a sample of many stories that may be of use to aspiring business owners.
I remember one of the most memorable speeches given at a summit was by Wadih many years ago about mitigating different cultures and working with different types of people from different regions of the world. Without being redundant, I can share a few of my trials and tribulations about what I have dealt with. Again these are my experiences, not stereotypes and can be taken in a neutral manner.
Lesson # 1 (location- India)
Lesson Learned: Murphys Law will always take into affect in these types of countries.
Scenario: While working as a consultant for BMW, they were setting up plants and OEM supplier warehouses and production houses across northern and southern india. There are so many variables that they did not take into consideration and thus caused skyrocketing costs. They assumed that permits and construction would (apart from the usual third world red tape beauracratic stuff) be handled in a reasonable fashion (albeit taking longer in time) but little did they know that governments and local politics in the world largest ¨democracy¨ change like Kim Kardashian changes boyfriends/husbands... More people have to be cajoled (paid off) in order to get shit done pronto. Also india is a very ¨day-labourer¨ type of society where low skiled labor is plentiful and needs to be handled in a different manner.
They (Munich HQ of BMW) failed to research and spend enough time in the various states and localities in order to really figure out how to best utilize the labour pool in india. India is an up and coming manufacturer but they do not possess the precision and pinpoint skilled labour in automobile manufacturing unlike the likes of south korea, japan or germany. Automation is there but still in its infancy (a long way to go) but they are moving ahead thanks to german and japanese and korean expats setting up systems of improvement and quality control there.
They are trying, and are good for mostly basic to mid level assembly line processes (mounting components to the chasis of vehicles etc). More advanced and in depth engineering and design has to be done in Europe or America and then the plans and CAD drawings need to be sent and then worked from that route in order to avoid costly rework expenditures.
Moral of the story: ALWAYS DUE YOUR DUE DILIGENCE. (especially when dealing with countries with questionable governments and sluggish and lethargic beauracracy) The fault will always be on your side. No excuses. If you dont know the terrain, hire someone that knows it well. Think of the example of Edmund Hillary (first man to conquer mount everest) he would not have been able to do so without his trusty nepalese sherpa Tenzing Norgay.
Lesson #2 (location- Al-Jubail, and Riyadh Saudi Arabia)
Lesson Learned: When in Rome.. do as the romans... (may be the only play here when €€€ is on the line)
Scenario: While setting up sub- facilities for SABIC (a major chemical corp), it involved a long winded rendezvous with corporate types and foremen and plant managers from various backgrounds within the arabic and asian worlds. Obviously the top corporate execs were Saudi but the mid level types and site managers where from Iraq, Kuwait, Lebanon, India, Pakistan, Morocco and even America and Germany. Talk about mixing oil and water! Dealing with men (yes only men in this scenario), from various nations within the middle east and gulf was quite a challenge. One had to find common ground and focus on the big picture which was the project. Everything leads to the project and what needs to be done. Egos were definitely a problem here and I had learned a lot about people management. No MBA programme ever could possibly teach you how to get the Iraqi plant manager to agree with the pakistani supply chain leader etc etc. You have factions within these subgroups that creates a dichotomy as well because for the most part, from Morocco to Iraq they understand MsA or modern standard arabic (if they needed further clarification from the english norm) but when you deal with workers from sri lanka, india, bangladesh, pakistan, indonesia you are dealing with 5-10 different languages and various levels of inconsistency in terms of the understanding of english. There are obviously varying levels of comfortability amongst groups of individuals and being social creatures that tend to stick together with what we know best, language effects all of that... Again, when overseeing a diverse bunch, its better to have a person (or yourself) speak in their language (majority) to help gain a solid ground from the getgo in terms of morale. Leadership is tested in the same way the USSR dealt with when attempting to rule over a diverse group of nations. How do we get all these people to work together in a cohesive and synergistic manner? You focus on the end goal. The print, the plan the building whatever it is. You always get them to focus on what their purpose is. Their purpose is to make sure the task gets accomplished on behalf of the company. They have a duty to put their work and skills before their heritage, backgrounds, etc etc.
A good example of this is when Nelson Mandela had to learn Afrikaans in order to speak with the apartheid govt in order to get what he wanted which was ultimately equal rights...
Lesson #3 (location - USA/Mexico)
Lesson learned- just because it makes sense in theory doesnt mean it will in practice
Ever since the signing of NAFTA, all of the american car manufacturers have shifted bases to mexico (and for logical reasons) However where the issue became extremely problematic was after the bailouts of chrysler and GM in 2008, in which quality control took a major dip due to the sudden movement of these factories in order to satisfy their bailout money stipulations.. Consumers began to question (and even till this day) whether or not it was worth giving 80 billion to two companies that were severely bleeding 'red' while the economic turmoil continues to hit the midwest through the shutting down of plants due to the harsh realities of economics. Those plants ended up being built and transferred down south to mexico, venezuela and brazil. However differences in skilled labour are night and day between these countries. America has had a solid foundation in manufacturing historically since World war 1, but expecting to just move a system (that took decades in the making) and expecting THAT system to work overseas was just plain foolish. In theory, labor costs and shop rates will always be a race to the bottom of the barrel. It is literally the only way for these too big to fail industries (think airlines, automotive, steel, private non govt construction etc)to make good pft margins.
However, the moral of the story is that TALENT is a real thing and skilled labour is and will for the interim be something that cannot be easily replaced (full on automation has not yet developed into a profitable manner for certain companies (excluding BMW, Mercedes)
The millions upon millions of dollars spent by dodge chrysler and GM on rework and quality control could have been avoided if they had assessed their talent pool beforehand but hey, when you have someone like the govt willing to bail you out, and you have had a track record of getting into deep debt and almost bankruptcy (yes chrysler had to be bailed out twice before) what are your options? Last minute, shoot first ask questions later types of events. In this case, outsourcing quality control back to america and germany to deal with problems at the production level.
Moral of the story- Talent should not be taken granted and a good system or plan is essential when moving operations overseas in places where there are different standards of quality and training. (in this case vocational training).
These are just a sample of many stories that may be of use to aspiring business owners.
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