Boss Life (18 page)

As I'm leaving, the project manager introduces me to a young man who has been sitting quietly in a corner. I'll call him The Manager. He is in charge of Al Reyami's woodworking facility, which builds custom furniture and millwork, including all Al Reyami's conference tables. We will be direct competitors for this job. The meeting was set up for him to present his own ideas for the table, but he was never asked to speak. I apologize to him for taking the limelight. He is very gracious and says that he is quite impressed with my work.

With a few hours to kill before flying to Kuwait, I ask The Manager whether he would be willing to show me his factory. I half expect him to say no, since a tour will reveal the strengths and weaknesses of his work, but he's flattered to be asked and says that we can go there immediately.

The factory is thirty minutes away. The Manager arrives just ahead of us and dashes inside. We scurry from our car after him—every second in the blazing sun is torture. The office we arrive at is tightly packed with cubicles, each with multiple workers. The Manager explains, “Engineering staff area. All are working on projects.” I ask The Manager how many workers he has, and he tells me about two hundred, give or take a few. Two hundred! That's a pretty big operation. He tells me that he has 3,750 square meters, about 40,000 square feet. My own shop is 33,000 square feet. I have fifteen workers. Sam's factory, similar in size to Al Reyami's, has thirty-six workers.

He runs through a long list of their products: millwork (woodwork that is attached to a building, like custom paneling, doors, and trim), furniture (chairs, accessory pieces, and cabinets, some upholstered), and tables (dining and conference). It would be tough to find a comparable operation in America, producing such a wide range of products under one roof. Our factories tend to be much more specialized. If someone asked me for upholstered work, I would sub it to an upholstery shop, and they would send table work to me. This specialization means that my workers get really good at a narrow range of tasks, which helps amortize the cost of their training. It's difficult to make money in America if your workers are switching gears all the time. They can never develop a competitive level of skill and efficiency. So you must compensate with low wages, which don't buy you a worker who knows several trades. It just doesn't work.

The Manager's workers all come from India and are hired on a contract basis. He pays a competent bench hand about a dollar an hour. A typical skilled cabinetmaker in the northeastern United States will make about forty-five hundred dollars a month, not including taxes and benefits. For that money, I could hire at least ten decent Indian laborers. I currently have five bench cabinetmakers, who together (should) build between $180,000 and $200,000 a month worth of product. Replace them with fifty good guys for the same price and we'd churn out huge amounts of work.

We arrive at a balcony looking down on the main shop floor, a space as large as my entire shop.

I can see many workbenches, relatively few machines, and a lot of guys out there. I count them: forty-six workers visible. There might be more, as I can't see all the first floor. Compare that to how many people I have in a comparable area: five. The Manager tells me that they're producing all the furniture and millwork for an embassy in Ghana. We descend to the shop floor. It's easily 100 degrees there. Many workers have towels wrapped around their heads to catch sweat. They move at the measured pace of workers accustomed to a long day of physical labor.

The machinery is simple and cheap but of decent quality. The number of tools I see is maybe a third of what's on my shop floor, and they have at least forty-six workers, and we have only five. I have multiple copies of all my tools so that none of my people have to waste a second waiting for someone to complete an operation. My yearly labor cost would buy me a new shop full of tools every six months, so having extra machine capacity is well worth it to me.

Their work quality is good, but they're doing it in a different way than we would. They're using cardboard templates, and all the parts are being hand cut and assembled. We used to do things this way ten years ago, before we got our CNC machine. This factory doesn't have one.

I notice that lots of workers are just standing around, doing nothing, generally near someone who is doing work. Are they apprentices? Helpers? I give the phenomenon a name: the Stand-Around Guy. An example: three workers surround one who is cutting a part with a hand saw. As the end of the part swings near them, the Stand-Around Guys gently touch it, as if to steady it. When it moves away, they drop their hands back to their sides. They're pantomiming real work, adding no value whatsoever. Sometimes the ratio of primary worker to Stand-Around Guys is astonishing. I see six guys using a jointer to trim a panel that weighs less than a hundred pounds. One worker could do this, but in my shop, our CNC machine would cut the panel to exactly the right size, and the whole operation would be unnecessary.

We pass through different areas: assembly, sanding, finishing, a carving station, and an upholstery shop. I see Stand-Around Guys everywhere. I also see some very skilled workers—one guy is cutting intricate veneer patterns with a knife (we use a fifty-five-thousand-dollar laser to do this), and another is carving beautiful flowers (we buy carvings from Indonesia). The upholsterers are doing a nice job, and the finish on the furniture pieces is of good quality.

I can't ask The Manager why so many of his guys are unproductive—it's kind of a rude question. I'm also afraid to ask whether this factory is profitable. I have one number to consider: The Manager told me that he'd charge about thirty-three thousand dollars for the BigOil table. We can make it for about forty-five thousand, but it will be a very different product. With our CNC cut parts, assembly and installation will be much faster and easier. The Manager's table will require a lot of fussy handwork. Before we got our CNC, we had spent huge amounts of time fitting top pieces to each other. After we got the CNC, our time for making complex tabletops dropped by more than 40 percent. Adding a sophisticated sanding machine dropped build time another 20 percent.

It's time to go. We thank The Manager and leave. What a nice guy. I would hire him in a second. Instead, I have to compete with him. His willingness to show me his operation tells me two things: first, that he's proud of it, and second, that he's not worried about me as a competitor. He has some huge advantages. He's local, so he doesn't have to sprint to meet the deadline. And he'll be around after delivery to take care of any problems.

On the way to the airport, I consider what I would do if I were running his factory. I'd identify the fifty most productive guys, double their wages, fire the rest, and spend two-thirds of the money saved on better machinery. That sounds pretty brutal, but it's what has happened in every factory in America—the ones still operating, that is. The alternative for American managers is to take production overseas. And many of them have done that.

The Manager was a smart guy, so he must be aware of the American manufacturing paradigm: buy fancy machines, use skilled workers, and operate with as few of them as you can. Why doesn't he do it this way? One advantage of his model is lower initial investment. His machines didn't cost much. And he can lay his guys off whenever he feels like it, cutting his operating costs drastically. That's a nice option for riding out slow patches, as long as he's sure of getting a new set of workers whenever he needs them. He told me that his guys get their training in India and that there's no shortage of people with the skills he needs.

Another thing his model has over ours: lots and lots of jobs. His factory gives two hundred workers a place to go every morning, a way to feed their family, and the pride of making good work. I would guess that the Stand-Around Guys are his B- and C-level performers, who wait for the moment the factory needs a large number of workers, irrespective of their skills. What does the future hold for B- and C-level workers in America? I don't have any on my shop floor. And the next generation of robots may take out all my A-minus guys, too. The end point of our trajectory is the elimination of people in factories. My biggest marketing struggle is convincing people that our product, which incorporates a lot of hand labor, is worth the extra money. I could come up with tables that require less labor, and sell them for less money. They would be crappy and cheap. A lot of companies have already taken that route, so I'd be entering a mature market where my product is a commodity. Without very deep pockets, I can't compete that way.

—

I
'
M IN MY
HOTEL
in Kuwait at midnight, but too jet-lagged to sleep. At eight-thirty a.m., I meet my minder from the Commerce Department in Kuwait. He's a short, cheerful man named Fordham Mathai. He was born in Kuwait to Indian parents, which means he is forever barred from Kuwaiti citizenship. He's a great admirer and now employee of the United States of America. In contrast to Bahar O'Brien, he's delighted to see me and makes me feel confident that I will succeed. Over breakfast, he reviews our schedule. The firm whose inquiry started my odyssey, back in February, is missing. Fordham says that he could not establish whether they are reputable, so he has left them off the list. Not to worry; he has found many companies eager to meet me.

Approaching Kuwait City from the south, I see its striking, futuristic skyline. We pass a commercial district that Fordham tells me dates to the 1960s. Companies selling similar goods are clustered together: tire shops, auto repair, fabrics, vegetables. It's a pattern that predates the Internet and presumes that all shopping is done in person. Customers can walk away from one deal and quickly find another. Merchants live and work as neighbors and agree on appropriate price ranges. It works as long as they all have similar costs and are selling to local people. When I started my business, there were several similar districts in Philadelphia. North Third Street was dominated by machinery dealers, and South Fourth Street had a long row of fabric dealers. The Internet and rising real estate prices decimated both clusters. Suddenly these businesses were forced to compete across a national market. Machinery is pretty much a commodity—one can buy the same tool from any number of dealers. The ones who prospered mastered the Internet, carried large inventories, and had easy highway access. The Philadelphia businesses were stuck with cramped, expensive real estate, in a neighborhood that couldn't accommodate full-size tractor-trailers. They couldn't carry enough inventory, and shipping was difficult and expensive. Only a single sandpaper supplier remains on North Third, surrounded now by boutiques and coffee shops. I know the owners well, and they've told me that they're still alive because they own the building, they got a Web site up early, and their product is small enough to ship by UPS. The fabric dealers have put up a better fight, because people still want to put their hands on material before they buy. And bolts of fabric are easy to ship, and a lot of inventory can be placed in a small space. But the dealer that I favored, Brood & Sons, closed up when the two brothers got too old to work and couldn't find a buyer. The fabric business relies on people who know how to sew. Why bother to make your own clothes when they come so cheap from Bangladesh? And why reupholster that sofa you got from Mom when you can spend less for a new one at IKEA?

We arrive at the first stop of the day: a high-end residential furniture dealer. The shop is filled with expensive furniture made by old, established American companies: dark woods, shiny finishes, lots of carving, brass work, overstuffed upholstery, and gilding. Very different from the spare, featureless look that architects love. Fordham and I are greeted by Kipson Jaja, the son of the founder. He serves us tea, and after pleasantries, I give him the spiel. When I finish, he sighs and tells me that I should have been here ten years ago. Back then, his company furnished the many new government buildings in Kuwait. Now that that work has been completed, he is furnishing only private homes. He promises to keep me in mind. More handshakes, promises to keep in touch, and we depart.

The next stop is in a run-down area dominated by auto body shops. Our target's store is filled with office furniture made in China. We are directed to a second-floor office. Inside we find the boss, a very busy man. He's got a lit cigarette in one hand, a cell phone in the other. Something is upsetting him, because he's yelling into the phone in Arabic. Seeing us hesitating at the door, he waves us in and points to a sofa. He ends the call with a curse, I presume, and snaps the phone shut. “I am Kamil,” he declares, as if daring us to argue with him. “You. Sit there.” He directs me to a low stool in front of his desk. I put my laptop on his desk, screen facing him, so that I have to bend over to advance the slides. I start my pitch, and he says nothing while he watches, furiously puffing on the cigarette. I've been presenting for maybe a minute when his secretary arrives with a thick sheaf of papers. She's stuffed into a tight skirt/loose blouse combo. And she's no shrinking violet. She pays no attention to me or Fordham, but addresses Mr. K in a stream of Arabic, delivered in an angry tone of voice. She drops the papers onto his desk and starts pointing to places he needs to sign, while keeping up a rapid commentary. She's leaning over his shoulder, and I can see straight down her shirt. I stop my presentation, speechless. Kamil looks up from the papers and glares at me. “Keep going.” So I do. He lights another cigarette. This pause brings the secretary's volume up another level. She has at least a hundred pages in her hand, and many need signatures. I decide to simply get through this as fast as possible. Then Kamil's phone rings again, and he holds it with his shoulder, yelling into it, while alternating more signatures with puffs on another cigarette. The secretary never stops talking, nor does she stand up. The view is unavoidable. The only cover she gets are the clouds of smoke that Kamil blows in my face.