There is something happening in the heartland of America. It started as a minor business ripple, and has the potential of becoming a huge economic tsunami. It’s what I call "business nationalism." The angst created by this country’s Great Recession has many Americans shaking their heads and wringing their hands. Many are beginning to look in the mirror and realize that they, the American consumer, are just as culpable for much of the ills that have besieged this nation since the fall of 2008.
The epiphany is simple: American jobs are lost every day because the American consumer sells out his or her country to save a few nickels and dimes on a Chinese BOGO deal at a Wall Street big-box store. When unemployment is less than 4%, it’s all about saving money; however, at the current unemployment rate of 8.5% (or more), it becomes all about jobs for you and your family. The "Made in America" label is being asked for more than at any point in the last two decades. Each week, you see stories about consumers demanding only American-made products.
There is also a political attitude shift toward business that can’t be ignored. In America, there’s an issue that is uniting neo-conservatives, ultra-liberals and all flavors in between: The absolute hatred of large Wall Street companies and banks. Most Americans have a very negative view of the large Wall Street firms and banks; and, for the most part, agree their greed created the near collapse of the economy. There’s a belief by many that investing in Wall Street is really no different than playing black on a roulette wheel in a strip resort, but at least in Las Vegas the game is fair.
In my view, "business nationalism" is a collision of these two factors: The American consumer’s desire for Made in America coupled with the bitterness toward large national Wall Street firms. If this new business nationalism were to really take hold, the old business models and paradigms would be tossed on the ash heap. Instead of just price, service, and quality, the American consumer would demand that businesses meet a patriotic duty to their nation and locale.
Chinese Model in Jeopardy
The huge Wall Street firms have billions (if not trillions) of dollars invested in the Chinese business model, which appears to be very flawed and saturated with inherent risk. I understand there will be many who disagree with my analysis, but I’d like to point out that there were a lot of MBAs on Wall Street who missed the 2008 bust because they failed to look at the facts in the clarity of common sense. In 2006, this columnist warned that Florida and this industry were heading toward a meltdown because everything was based on "funny money."
The saber rattling between the United States and China is currently like two butter knives clinking together in dishwater. However, in December, the Chinese finished their first aircraft carrier, Varyag, which sailed out of the port of Dalian. Now, the Chinese have more than just a butter knife. Most American defense strategists and politicians view the Chinese military threat as a growing one, and the Chinese seem to be emboldened by their new military toys. It seems the Chinese are beginning to understand that real military power brings world leadership.
Eurasia Review said of the Chinese military threat, "The U.S. Defense Strategic Review 2012 approved by President Obama emerges as a game changer in Asia Pacific strategic dynamics and places U.S.-China relations at strategic crossroads with far reaching implications. It is a manifestation of United States seriousness to come to grips with The China Threat, a seriousness which the United States was ducking so far."
Added to the Chinese military expansion, there is the problem of the world’s largest population, which is just beginning to savor the sweet taste of freedom through the Internet and expanded consumerism. Never have so many people been poised at one time for revolt.
The dirty little secret about Chinese manufacturing is that Chinese companies are doing business in a capitalist world with a labor force from a communist system. The reason why factories in China can accommodate what American manufacturers would view as unreasonable times and productivity is because China’s workforce is shackled in communist chains with very few labor or pay restrictions. It is hard to envision the Chinese government keeping a lid on a Chinese freedom movement that could make the Arab Spring look like a warm snap.
In my view, the most dangerous and riskiest business model in today’s market is the one in which an American company relies on China for its products and manufacturing. Because of Chinese military adventurism coupled with the tenuous state of an oppressed people who are yearning for freedom, the relationship between America and China is one international incident away from a Cold War status. There is a growing disdain for China by the American worker and consumer, and the inevitable miscalculation by Chinese leadership, either militarily or domestically, with its people could make the words "Made in China" poisonous.
It is easy to envision that within 10 years the Chinese could become America’s chief adversary in the same order as the old Soviet Union. There are a lot of companies who are banking their entire future on a stable China, which--in my view--is a sucker bet. Smart companies should start hedging their bets on American-made products.
Buy American. Buy Local
As one of Lake County, Fla.’s oldest business’s, Ro-Mac Lumber & Supply enjoys almost 70 years of relationship building with the community. Many of our customers do business with us because we are local, and the company is a reflection of its belief in supporting local business. The talk among many in our customer base reflects a group that want to buy American-made products from local companies. In fact, in just the last three months, our company has been approached by four different contractors who made it clear they want to buy only American products locally. Innumerous times over the last year, I’ve been told by customers the sweetest words you can imagine: "I want to buy everything from you." In my view, this stems directly to the Wall Street disdain.
The chorus has grown so loud that we developed a unique "Buy American-Buy Local" community program in conjunction with our local radio station, WLBE-790 AM, and our Political Action Committee, Citizens for Better Government. Through the PAC, a newsletter was sent out to more than 1,000 people and has been shared on Facebook more than 50 times. Ro-Mac Lumber devoted one of its "Around the House" radio shows solely on the topic of "Buy American-Buy Local", and WLBE runs continuously through the day commercials touting the need to buy American and buy local.
More importantly, this program has brought together local businesses in different scopes of work for a common purpose. Ro-Mac Lumber developed a "Buy American-Buy Local" graphic and distributed static cling window decals and lapel pins to small businesses throughout Lake County. In addition, the huge Ro-Mac Lumber/Daily Commercial Spring Building and Remodeling Home Show in March has incorporated the theme "Buy American-Buy Local." Our movement is getting real local traction in Lake County, and we feel there are thousands of other communities in America that could be benefit from such a cause.
Can it Help You?
There are countless numbers of local independent building material dealers just like Ro-Mac Lumber who have deep ties within their local community. Also like Ro-Mac, many of these companies over the years have been knocked around by the larger national players, but the business culture is moving away from the large national companies and their shelves stocked with Chinese-made products. Americans really want to buy American, and they also want to buy local. It is up to independent businesses to begin marketing themselves in that fashion. There’s no doubt in my mind most Floridians would rather do business with a company based in Leesburg, Fla., that specializes in American-made products than a national big box store hawking Chinese-made trinkets.
There may be a perfect business storm happening to large companies and some may not realize the squalls have already begun. Disdain for Wall Street companies, a new business nationalism, and an implosion of the Chinese model, could very quickly slant the playing field for smaller, independent companies.
There is one other key factor that may come into effect. Many vendors are tired of the use and abuse they get from the big box operations, and you may see a developing trend: single-market pricing. It’s already occurring in the drywall industry. Many building material manufacturers and vendors now understand that pull-through marketing has its own peril because contractors are demanding special deals and pricing that can get completely out of hand; just ask the drywall manufacturers. Level market pricing will lead to greater profitability of the manufactures while getting independents back in the game.
The program idea and graphic were created by Ro-Mac Lumber, but its concept is free to anyone who desires to have it. If you are interested in obtaining information on the program, where to order Buy American-Buy Local window decals and lapel pins, or an image of the graphic, please e-mail me at email@example.com. If you are a local independent dealer, realize you have a powerful message that is now being heard by the America people.
Don Magruder is CEO of Ro-Mac Lumber & Supply, Inc. of Central Florida and he is a former Chairman of the Board of the Florida Building Material Association. Magruder is also a two-term President of the Southeast Mississippi HBA and a former Associate Vice-President of the Lake-Sumter County HBA.