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29 April 2012

It is about jobs, honey....

I am currently in Batavia, a small town in the northwest New York State, in the city of Buffalo. I am here as a consultant, implementing manufacturing technology solutions for a Milk Processing Plant being set up here in Batavia.
There is a palpable level of excitement in the air in Batavia as this is the first manufacturing plant to be opened here in a number of years. Over the last few years, many of the companies in Batavia closed shop and moved to nearby cities of Buffalo and Rochester (both cities about 40 miles from Batavia, but in opposite directions).
Genesee County, the area where Batavia is located, is an agricultural land area and the place is dotted with a number of Farmers and supply of milk is in abundance here. That is one of the reasons why Alpina is setting up its manufacturing facility here.
I spoke to the taxi driver on the way from office to my home. "The new plant will change the economy of Batavia. It has been a long time since we had a manufacturing industry here." he told me.
Mrs. Anderson, the chef at a nearby coffee shop where I drink my tea from, told me that all of Batavia is already planning for this new facility.
"A friend of mine is milk farmer, and he has already purchased new cows. We are all thankful for you that you are starting up a company here in Batavia" she mistook that I was an employee of Alpina by  looking at my 'Alpina' overcoat. There was genuine gratitude in her eyes.
"I hope you will put in a word for my husband. His name is Brian Anderson. He has applied for one of those openings they advertised for the plant. I hope you will be able to help me" she looked at me hopefully.
I couldn't disappoint the poor lady. I promised to her that I will do my best.
(Of course I did. I spoke to my friend, who is the recruitment manager about Mr.Anderson. I hope Mr.Anderson will get the job).
The talks in the last few days give me a different perspective of America. while in India, I used to wonder why there was lot of discussion about jobs here. How can jobs suddenly disappear, since people will have need for some of the stuff being produced?, I used to think. How can a whole economy go to recession, I used to wonder.
It turns out that my understanding of pure capitalism was incomplete.Despite me having multiple MBAs and my MBA thesis being on Macro Economics.
You see, American economy can be compared to a tap which is fitted to a Water Tank. The higher the level of water in the tank, the more the pressure of water in the tap. As the water level in the tank lowers, the water pressure in the tap decreases.
It is a one-to-one relationship and a direct co-relation between water level and water pressure.
The american economy is similar. Despite all the global big names that we associate with America, a significant part of American Economy still rely on small businesses. As the economy start to move downward, these businesses start downsizing and once the economy is in recession, these companies close shop leading to high levels of unemployment.
The link between economy and jobs is similar to water level and water pressure. In India the situation is different because Government is one of the major job providers here. So even when the economy goes into recession (Indian economy is anyway not large enough to go into recession and in addition, we have a growing middle class with appetite for goods and services, which shores up the economy) there is a certain level of 'Job Stickiness' in India. The concept of Government jobs is not much visible in US, jobs are mostly in private sector, small businesses. The economic relationship between employee and employer is taken for granted. There is no concept of employee loyalty or Organizational Loyalty in US. Jobs are dependent on the strength of economy
As economy goes up, new jobs get created, and vice versa, pure and simple.
This means that in the small towns of US, opening of a new business is always a good news. In addition to direct jobs, the town benefits due to the ancillary jobs being created. 
And setting up of a new plant is always a welcome news for people like Brian Anderson....

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