Smackdown at the Gladstone

Grocery Gateway and Real Programming for Kids founders and owners are my guests to the 6 Mayors' discussion tonight on "what can Toronto do for business?"
It will be interesting as Ford, Thomson and Rossi have all had the pain of running their own businesses and know the rock face it can be.
When I listen to Stephen Tallevei, founder of Grocery Gateway, talk about his uphill struggles with getting his online grocery store to succeed, you know why being invited in as a private equity partner is a privileged partnership. Elliott Knox, RP4K, runs thousands of programming courses for teens each year and he describes his last year as similar to climbing to the top of Hamburger Hill and sent me the link to the movie.
We will be at The Gladstone Hotel, redone by the architect firm,  Zeidlers, and it is unbelievably glamourous. Anyone can attend the talk and we must thank Globe & Mail for hosting such a worthy event.

Is China ending its relationship with Capitalism?

I am listening to the head of GE speak in Toronto at an off-the-record speech to my secret handshake club.
His remarks on China at a private function were disclosed last month and have continued to stir up debate about China and America's relationship. Here is a terrific comment in response to an article on China:

I've spoken with executives at American companies that tell me they have "their own factories" in China, and they seem proud of it. But then when I ask, "Doesn't the Chinese government own 51% of your factory?" they'll then say "Yes, well, err, that's the way they do things over there, but it's our factory!"  

Not really. Since we began on this road to globalization, that is, free and mostly unregulated trade, just about the same time that Chairman Deng was opening China to Western capitalism, China has played us for fools. We've taught them how to make everything we know how to make, from steel to computers, iPods to cell phones, giftware to American-style furniture, and all the fittings and components and add-on's as well.When we decided to invade Iraq, Congress and the Bush Administration decided to keep the costs off the books and out of the budget, so we borrowed as much as $200 billion each year from China and Saudi Arabia, and a few other countries here and there. This, at the same time we were running a trade deficit with both countries and had to borrow from them to be able to afford importing all those great things we buy from China and all that Saudi oil. So while we were forcing American businesses to set up factories in China that brought in labor from the countryside at a whopping $5/day for 60 hours/week (no labor unions in Communist China, I suppose), we were exporting our manufacturing base and all of our manufacturing technology to that country and in the process enriching the Chinese government with virtually every dollar we spent. Now we're in a so-called Great Recession in which we're having to face the fact that we've lost literally tens of millions of good-paying manufacturing jobs, and China is doing great, up 10% a year, raising its general wage to another whopping $6.50/day and building what will become the second strongest naval, air and armed forces in the world. Not to mention their advanced missile technology, which they'll sell to anyone with money to buy it.

We've been such chumps.
Of course, Obama says he has a plan to create great jobs that can't be outsourced. Nonsense. The Chinese are way ahead of us in wind and solar technology. They've taken their riches and put it into vast new infrastructure projects and research, and when we finally have the resolve to build those new highways or create that new electric grid it will be with Chinese machinery and technology.
The Republicans are no help either, as they don't seem to have a clue about how to create jobs. They just want to protect the banks and Wall Street so they have the money to win elections and make it easier for the rich to get richer while denying any help at all to everyone else.
I see no future for this country unless and until we confront the outsourcing of jobs to China head-on. Globalization doesn't work for us when overseas labor is so cheap. China doesn't play by the same WTO rules in any case. It's time to establish bilateral trade agreements with key trading partners under which they can't export to us very much more that we export to them. At the same time, we need to protect key industries that are vital to our national security, like steel, metal fabrication of all kinds, shipbuilding, electronics with military uses, on and on.
There's no other way out of the downward spiral of cheap goods forcing Americans out of work, so they have less money and have to buy cheap Chinese goods, which leads to more layoff's, and down we go to being a third world country. It's time someone in Washington, and in the media, had the courage to call a spade a spade. The loss of our manufacturing base is what's killing America and unemployment won't go down until we begin to restore it.

4 Worries for Owner Operators According to Private Equity

Private equity fund managers are in touch with the business operator/owners and report that the top issues keeping these business leaders up at night are:
1) Key employee retention
2)  Management Succession in the C and V suites
3) Customer retention
4) Operational efficiency

What do you think?

Entrepreneurial Businesses Drive Job Growth, says Harvard

Politicians are too likely to guess wrong about which industries are worth attracting. With job growth worrying politicians, Toronto City Hall may be tempted to chase big companies to take a tax break and set up shop.
"That's a misguided approach," says Ed Glaeser and Bill Kerr, Harvard.
Job growth and the big economic development coming from these new work roles is now proven to come from the successful incubation of "small, entrepreneurial employees--not a few big companies." Even adjusting for variables such as tax or industry, Glaeser and Kerr say, "the relationship between small firms and job growth rate stands."
Industries with smaller firms and more start-ups had faster job growth than an industry an industry in the city without a cluster of start-ups. So a gnat like cloud of small companies buzzing around larger companies will be far better suited to job growth.
According to Glaeser and Kerr, apparently large companies generate less job growth than these "gnat" sized businesses. Also, once a city establishes itself as entrepreneurial, it tends to be self perpetuating.
So Toronto needs to market itself as a City for Entrepreneurs.
A big thank you to The Globe & Mail for organizing a 6 Mayor Candidate Town hall on what to do for business.
Give your views on Facebook to:
Sarah Thomson
Rocco Rossi

4 Reasons Governments want to help Business

Business owners will be able to attend a town hall on how Toronto can help business. Thanks to the Globe & Mail for sponsoring the Sept 9th discussion with the 6 mayor candidates.

The economy has changed business as usual approach by government from city to country levels and encouraging a return to government involvement from puppet master to financial supporters of business. 

Four main forces are driving this revival of industrial policy. 

First is the weak state of the world economy. Governments are under pressure to reduce unemployment and stimulate growth: support for chosen industries is a way of saving jobs and helping local firms fight foreign competitors. 

Second, some countries, such as America and Britain, want to rebalance their economies away from finance and property. Along with older manufacturing, clean technology is emerging as a favourite direction. Nearly every large economy has plans to win global market share and create green jobs.

Third, emergency use of industrial-policy tools leads to demands for more. Mr Obama has responded to complaints that only big companies such as General Motors and AIG, an insurer, have enjoyed the state’s largesse by setting up a $30 billion small-business lending fund. 

Fourth, rich countries are responding to the apparently successful policies of fast-growing economies, notably China and South Korea.

Industrial policy remains controversial. Defined as the attempt by government to promote the growth of particular industrial sectors and companies, there have been successes, but also many expensive failures. Policy may be designed to support or restructure old, struggling sectors, such as steel or textiles, or to try to construct new industries, such as robotics or nanotechnology.