American Roller CoastersTranslation (Novy Khozyain - New Owner, July, August, September 2000) The first visits of Kharkiv delegations to the U.S. started back in perestroika times, when in 1989, Cincinnati, Ohio, became Kharkiv’s American sister city. At that time those were mostly familiarization tours to demonstrate the good will of both parties concerned and their mutual desire to cooperate. Today, when friendly relations and cultural connections between the two cities have been established, business contacts come to the fore. In late 1999, the U.S.-based Center for Economic Initiatives in conjunction with the International Executive Service Corps held a competition among Kharkiv businesses for a chance to go to the U.S. to participate in study tours. Applications to take part in these competitions were accepted from companies that are directly involved in manufacturing packaging for the processing and food industry and whose leaders had attended a marketing course at the Kharkiv Regional Business Assistance Center. 2,500 individuals from more than 800 Kharkiv companies attended the training classes. The Center for Economic Initiatives, based in Cincinnati, was very demanding when selecting applicants. Associates of the Center, including our tour leader Dr. Belal Siddique and Mr. Leland Cole, President of the Center, carefully studied the materials provided by the applicants, explored the applying companies twice and learned about their structure, operations, marketing strategy and products. For this study tour they selected 13 companies involved in manufacturing, maintenance and repair of processing and food industry equipment, energy-saving technologies for the food industry, as well as packaging manufacturing. These included the following companies well known in Kharkiv: Ukragroservice, UkrNIIKhimmash, Orgstankinprom, Frunze Plant, Elektromash, Extruder, Molprom, TFK, Korvet, Vostok and Nargus. As a result, a group of 15 was formed to go to the U.S. New Marshall Plan I met one of participants in this tour, Mikhail Yefimovich SHVARTSMAN, Ukragroservice deputy general manager, and asked him to share his impressions about the study tour. - Mikhail Yefimovich, how did the idea for this project originate? - The Center for Economic Initiatives, which organized our tour, is a non-profit organization. Most Center associates work there part time. They are for the most part Americans of the older generation, well educated, with tremendous business experience. Each of them is a high-class professional in his area. When they had a chance to retire, just to take it easy and travel, they realized that they could not, and would not, be passive. Having formed a small group, they started thinking about planning their life in the future to put to best advantage their knowledge, to share the experience they had accumulated and also to learn about other countries and cultures. At that time the idea of another post-World War II Marshall Plan was conceived to fit the present-day post-Soviet countries. While studying archive materials on the subject, the Center associates discovered the interesting piece of information that one of developers and ideologues of the original Marshall Plan, Mr. James Silberman, was alive and well. The 300-year history of James’s family has been tightly connected with Ukraine. That is why the veteran of American economics became so fond of the idea created by the group of initiators. He not only shared with them the methodology of developing an economic assistance plan, but also supported this project in the U.S. government. As a result, the Center for Economic Initiatives obtained a grant from the U.S. government which has been used over several years to educate Ukrainian, Kazakh and Moldovan entrepreneurs about American business and to strengthen connections with these countries. - How was your study tour organized? - We spent 21 days in America and managed to visit 24 companies during this time. The program for our study tour was very intense, I would even say, physically challenging. We rode more than 5,000 km on American roads, visiting, on the average, two companies per day in different cities. We had a small cultural program during weekends. The [CEI] organizers gave us a chance to visit an elite club for Cincinnati businesspeople. There we received our certificates of program completion. We also visited the home of one of the Center associates - Mr. Daniel McKinney, an attorney. The program was so intense and full of impressions that we felt as if riding roller coasters. By the way, in the West, this famous attraction, which we also had a chance to experience, is known as “Russian hills.” - Was the whole tour financed by the Americans? - Yes, it was. The money involved is significant even by American standards. One day of our hotel stay - and we stayed at very good hotels - cost the organizers not less than $200 per person. Our group was the third this year, and two more are being planned. - It is known that Americans are a pretty calculating nation and they do not throw their money to the wind. What, in your opinion, guided the U.S. government when allocating funds for this program? - The grant was awarded by the United States Agency for International Development. From that fact we can derive the conclusion that its main objective is establishing friendly relations with the country, which as a part of the USSR in the not so distant past, was America’s strategic opponent. That recalls Germany right after the war. Besides, every American understands that any business, including international business, is based on personal relations. They are interested in helping Ukraine develop its economy and become an emerging market. Encouraging development of market relations in our country, the Americans are in fact preparing the soil for their investments and expanding the sphere of their political influence. Business Starts with a Smile - Every adult Ukrainian has a good understanding of what the Soviet influence is. What shall we expect from the American influence? How did the American way of life impress you? - I did not make a special study of the American lifestyle. I simply did not have time for that. But I can say that we covered a large distance, stayed at hotels in different states, met a number of different people of various levels - from clerks in supermarkets to top managers of companies with several billions of dollars in sales. Tons of impressions, but the main one is that Americans are very open and unusually friendly people. You meet someone’s eyes, and this person immediately smiles and says “Hi!” When that happens at a hotel or in a restaurant, one might think that that is a part of their job. But when you see it all the time, everywhere - on the streets, in the park, on a boat, at the office, you come to realize that cheerfulness and friendliness are national features of Americans, and not just social conventions. Even the police are friendly and gracious. - Did you feel any difference in attitude to “their own people” and foreigners? - No, Americans do not have any explicit disdain or prejudiced attitude to foreigners. It is very hard to figure out there who is their own and who is foreign, because America is a multi-ethnic country. At any rate, I did not feel any negative attitude. What I did feel was a patronizing attitude, from the position of somebody older. They are proud of achieving much, and they have really achieved a lot. That was what they showed to us. They have a great desire to share their experience and knowledge, but nobody talked down to us. - Did you see any unemployed people at the labor exchange - something our socialists are frightening us with? - Just the other way around. America doesn’t have enough labor force. Unemployment is only 3 percent. Unemployed are the people who do not want to work; most of them are homeless bums. But there are homeless bums in any country. Americans do not hide this problem. “Yes, we have that, too,” they say. Their homeless bums, just like in our country, rummage in the trash and feed on leftovers. The difference is that those leftovers are nicely packaged and are available not on a dump, but in elegant containers. Americans who wish to help the underprivileged donate money to organizations that are directly involved with this population group, which as a rule will use the donations to buy alcohol and drugs. Manual Laborers Are All Different - What can you say about the imperialist sweatshop system, exploitation of man by man and about all other propaganda-filled arguments of the communists? - Indeed, there is plenty of manual labor in America. For example, we visited a large family-owned farm growing vegetables and greens. This company with six million dollars in sales was amazingly similar, if we disregard their conveyers and modern packaging equipment, to our wholesale vegetable distributors under “developed socialism.” The same women and teenage employees, only there they were from Latin America, in high rubber boots, manually sorting vegetables, the same dirty, unskilled and monotonous work. The only difference is that the seasonal employees of that company earn 12 dollars an hour. For that money they can rent decent housing and buy food and clothing beyond the wildest dreams of our manual laborers. The seasonal workers live in a paid dormitory with TV and showers. The owner does not have enough funds to hire managers; that is why the farm is run by family members, five or six in all. As the owner was very busy and was not able to spend more than 15-20 minutes with us, our guides were his daughter and niece. These girls had professional knowledge of the process they were introducing us to. It was evident that they were ready to join the work at any stage of the technological process - from harvesting and sorting vegetables to managing the hired labor. In spite of the fact that this farm is a prosperous company by American standards, their profit is only two per cent of their revenue. Agriculture in America is low margin; it is not competitive in the world market. The government subsidizes it - firstly, to make sure that the land is taken care of; and secondly, to guarantee that their country is provided with domestically-grown food products. This way or another, hourly work is considered not prestigious in America, and Americans, with the exception of children and students, try not to do this kind of work. Those jobs are mainly filled by Latin Americans. - Is child labor legal in America? - I cannot say exactly starting from what age, but ten-or-so-year-olds deliver newspapers and pizza, vacuum carpeting at hotels and so on. Older kids work - especially in summer - on farms, at cafes and restaurants. It is explained not so much by economic reasons but by the fact that Americans are trying to prepare their children since childhood for an independent adult life. Even children from pretty wealthy families have part-time jobs. Parents provide all the necessities for the children, but the children have to earn their own money for recreation and entertainment. Join Middle Class - For the First Time - Our politicians, mass media and businesspeople keep complaining about the lack of the so-called middle class in our country. How does the U.S. fare in this respect? - Almost all hourly wage earners are considered low-income people in the U.S. There is a lot of such low-paying work. The average American income level is $40,000-$60,000 a year. Every American family keeps saving funds for their children’s education since their birth, because it is pretty hard to achieve anything in life without decent education. The dream of any immigrant is to become a representative of the American middle class, that is to own a house with automated household appliances, to buy a car for each family member, to provide expensive prestigious education for the children... Representatives of this class, as a rule, perform intellectual or managerial work. - How hard do these people work? - Not at a single company we visited did we observe “vertical races,” scandals, fuss and people “covered with foam.” Everything runs quietly, smoothly and, I would even say, lazily. To all appearances that can be explained by the fact that the American market is extremely well structured. This, in combination with effective economic legislation, ensures reliability and good measure for entrepreneurial activities. The plans and orders are fulfilled unhurriedly; the deadlines for these orders are established with some leeway. In spite of the fact that America is known to the whole world by its gigantic corporations, such as IBM, General Motors, Procter & Gamble, Philip Morris and many others, 85% of American business is made up of small companies with less than 20 employees. All the companies with sales from several million to hundreds of billions of dollars are united into a well-adjusted and well-interacting infrastructure, where competition does not create chaos, but enhances the established strict order at the market. - Going back to marketing issues, I would like to clarify what allows small companies to survive and where they get all their orders. - This is a very broad and important subject. Briefly, I can answer that all American companies practice division of work and cooperation. Food processing companies publish image-enhancing information in industry magazines and on the Internet and take part in trade shows. Farmers in winter collect orders, drive around and call around restaurants and stores. Most companies that hosted us during this study tour have multi-year histories, established images and sales markets. That is why they practically do not experience any problems with getting orders. - You are perhaps right: this is really a very interesting and extensive subject, worth a separate discussion. But we will do that in our next issue... Picture captions - Cleveland Rock-n-Roll Museum, Columbus city skyline, Cincinnati’s city symbol on main square. American Roller Coasters [Part II] (Novy Khozyain - New Owner, No 8 (10), August 2000) In the early 1990s, in our Motherland, there appeared a great number of new, hard-to-understand foreign words. “Sociology,” “management,” “marketing” sounded almost like an incantation. It appeared that as soon as we mastered them, our life would change for the better. There were crowds and crowds of students willing to study in schools and all kinds of courses offering the above-mentioned subjects. Naive but enthusiastic entrepreneurs paid from $30 to $100 for a month-long course in the named subjects. The results of this unanimous learning drive, however, turned out not so impressive. Life taught us once again that miracles do not happen! Crowds of market analysts with diplomas of various kinds ended up in approximately the same situation as, previously, crowds of engineers – that is, without jobs in their area. The foreign concepts are still not quite fitting within our Soviet heads, breeding pessimism and excuses of the type that “all that stuff is incompatible with our enigmatic Slavonic souls.” - The organizers of the marketing seminar and MTM Productivity study tours in the U.S. were complaining that it was pretty tough for them to select the participants for this project among Kharkiv companies. Even considering that all the training and the study tour were underwritten by the U.S. government. - I must say that initially our attitude to this proposal was pretty skeptical and somewhat mistrusting. Here in Ukraine, we got used to the practice that when something is being offered to you free of charge, it means, as a rule, that you will be cheated. But the Americans treated this project seriously, at a pretty high level. The study tour was extremely intense and useful. - As far as I know, even before this trip you treated marketing very seriously and professionally. As far as the lack of trust in marketing many other Ukrainian entrepreneurs feel, that is caused, in my opinion, by their unwillingness to change. Marketing is the science of compliance with market laws. The mentality of a Soviet industrialist assumes, however, that it is the market that has to be compatible with his products and adjust accordingly. For example, I happened to hear pretty often from various entrepreneurs that all their problems were caused by the drop in purchasing power of our community, and that the only way to change this economic situation is to pass “normal” laws. It did not occur to either of them that there exists at least one different alternative – lower the costs and, consequently, the prices. - I think that our marketing plan played not an insignificant role in getting invited by the Americans to participate in this project. We, as practice shows, have developed a sufficiently effective marketing strategy, which allows us to mass produce our products, without worrying who will buy them. Our processing equipment sells well. We achieved that by intricate simplicity and reliability, as well as by affordable and even low prices. - Every nation has concepts which are an organic part of its culture and mentality, that individuals literally absorb with their mother’s milk. Later on these concepts do not need any additional deciphering or detailed explanation. These concepts are very hard to assimilate for individuals from a different culture, which lacks adequate similar concepts. In my opinion, the concept of marketing belongs to this category – there is no exact translation of this word into Russian and certainly none into Ukrainian. The situation with the word “market” is even more interesting. In our city “Barabashka” [the largest open-air clothes market] proudly calls itself “the market,” and individual behavior at the market recalls a gypsy selling a stolen horse. Of course, everywhere and always the seller has been trying to sell high and the customer to buy low. To solve this contradiction, humankind invented both bazaars [farmers’ markets] and markets in general. Although the main slogans at the bazaar are “Keep your eyes open” and “Not caught, not a thief.” The civilized market has very different laws; there “the customer is always right!” - Market is the most important concept, rooted in the fundamental human function – providing for ourselves. As is known, over all human history only four main ways of supporting oneself were developed – self-sufficiency; theft or robbery; begging, asking for donations or alms; and, finally, exchange. Market is the structure where the process of exchange takes place. Depending on economic conditions, these or those participants in exchanges get to the top. In the modern capitalist society, the customers are at the top. That is why they dictate the conditions for exchange. This tendency is so stable that it constitutes an economic law which can be defined as “Customer needs are above everything.” Huge institutions provide studies of customers’ needs in the U.S. For example, at Borden Foods Corporation we visited a marketing research center which deals with both product development and customer research. We were introduced to the method of holding so-called focus groups. Using certain methodology, taking into account gender, age, ethnicity, social status of individuals and many other factors, they select a group of individuals, each of whom represents a certain class of consumers. For participating in research focus group participants get paid $40-50 an hour. The focus group gathers in a comfortable room, specially designed, equipped with a round table and a variety of office equipment, to discuss the qualities of would-be products. One of the walls in this room includes a one-way mirror, behind which sit experts from the [research] company. They most carefully follow the discussion and record all the details, comments, suggestions, responses and emotions of the participants. Simultaneously, the discussion is being audio-recorded and videotaped. The recordings are later analyzed by the Borden specialists. When a product is in the development stage (this company makes pasta and quick-to-fix sauces), more testing is conducted, this time to taste and finally check out the product. Each “expert” from the consumer group that has been invited is placed at a separate booth and is served products being tested through a special window. As in the previous case, the company employees are sitting on the other side of the mirror wall, watching what is going on, while dictaphones and video cameras are running. At the next stage the quality of product packaging is tested. A different laboratory provides a room surrounded by kitchens, equipped with all kinds of household appliances: gas and electric stoves, microwave ovens, etc. For testing, housewives are invited. They are invited to cook a certain product, using the company brand in a new packaging. Here a most detailed analysis is made of how these individuals would open the packages, how they would get out the product, how the packaging would be disposed of or where it would be placed... Only after dozens and hundreds of such tests and improvements the product would be launched. There are more than 10 different laboratories at this center, studying product storage and product performance in different situations... The budget of this center is about $11 million a year. One product’s development takes from one year to 18 months. Borden is a very large company with annual revenues of $7 billion, which makes it possible for them to spend a lot of money on product marketing. These expenses pay back. - I am far from thinking that unscrupulous sellers are only found in our country. It appears, there are plenty everywhere. But in the West the pervasive inclination to sell everything is seriously opposed by consumer rights’ groups and the unconditional presumption of consumer’s innocence, even when the latter is doubtful from the moral, ethical or religious point of view. As an example, in spite of fierce religious opposition, the market is striving to satisfy customers by offering condoms or cloned organs. On the other hand, consumer rights’ groups oppose sales of low-quality and unhealthy products. Because of these factors a strong balance is created, which is very difficult to break. Satisfaction of even the smallest customers’ needs is the first and most important commandment of any market-driven society. - The U.S. has a well-adjusted mechanism of protecting consumers’ rights. Firstly, the customers can protect themselves in a court. For example, I was shocked by a story of a woman who had bought a regular fast food meal and a cup of coffee at a McDonald’s. In the U.S. all fast food restaurants have drive-through windows, which allow drivers to make purchases without leaving their cars. She drove up, picked up her order, placed it in her lap and drove on, snacking on the way. In several minutes she had to brake suddenly. The coffee spilled onto her lap, and she got slightly burned. According to our stereotypes, she was to blame herself. Quite a different approach rules in America. This woman sued McDonald’s for their coffee’s being too hot and won her lawsuit, getting several million dollars as a compensation. Secondly, there is a system in place for product certification. American manufacturers are very interested in being not only checked by the regulatory agencies, but also by companies well known in the market. They would use the results of these inspections as a promotion vehicle. The certificates, nicely framed and under glass, are displayed not in the general manager’s office, but in the plant hall, next to samples of their products. Thirdly, product quality is guaranteed by its price. The more expensive the product is, the more value it has for the consumer. If a certain product costs a lot in the U.S., that happens not because of steep overhead, but because of the product’s high quality or attached warranty. - Let’s go back to the main subject of our conversation, that is, to marketing. Your trip was specifically dedicated to the study of marketing technologies? - Initially, I thought so too, because we studied marketing here, and, in general, that is one of my major spheres of interest. But the study tour turned out to be significantly more diverse and interesting. It was during the original Marshall Plan implementation in the ’50s, when American experts realized that lecturing European industrialists on transfer of progressive American business technologies did not yield the desired result. The practice of implanting consultants, market research specialists and economists into companies being reformed did not quite justify itself either, because very often their tips and recommendations ignored the national and political specifics and were rejected by the leaders of local companies. As it turned out, only trips and study tours at American companies allowed the European entrepreneurs to immerse themselves into the unusual – for them – reality of the overseas market with its marketing, product design and high productivity. - Can we say that, during the Marshall Plan, Americans used the popular immersion method of instruction? - They do not use this term, but probably that’s right. When an individual is taught how to swim, he is first instructed about the theoretical foundations of this process. Then he is shown how the others do it. But only after the individual himself gets immersed in water, swimming proper begins. I can say that something similar happened to us. Before this study tour all our group members had some idea of marketing. After we visited companies doing real work in the market environment, this abstract concept acquired flesh and blood and became so tangible that after coming home any of us can use the skills obtained there at our companies. Each study tour participant learned the skills he or she was missing. Some paid more attention to organization of sales, some were impressed with overall management, for some it was useful to take a closer look at planning and accounting. For me it was very important to confirm that the quality of our marketing strategy meets even high American standards. Moreover, I did not see some of the methods we use (such as telemarketing) at the American companies. - It is known that in 1995 a group of American specialists at the request of the Cincinnati-Kharkiv Sister City Project conducted an in-depth study of Kharkiv industries that, in their opinion, play a key role in developing our market economy. These specialists concluded that the economy of the Kharkiv region is beset by the following problems: difficulties with adaptation to new demanding conditions, the closed nature and isolation of our companies from the world market, a dangerously high level of industrial integration, lack of outside resources and an ineffective approach to improving productivity. Besides, weak points of marketing at domestic companies were pointed out: incompatibility of our packaging and labels to Western standards, insufficient knowledge of world practices of purchasing and sales. What do you think – what has changed since? How close have we gotten to the American market model during the five years of Marshall Plan implementation in Ukraine? - The Marshall Plan, within the framework of which our study tour was conducted, does not cover the whole of Ukraine. It is difficult to expect that it will produce quick results for all the Ukrainian economy. For those who have already participated in this program or are going to take part in the future, unique start possibilities are created. It looks like a trip in a time machine. Seeing how what you are doing now should look like in the future, studying the means of achieving this, means more for a smart person than money, buildings and facilities, i.e. all kinds of resources. Today it is useless to talk about our closeness to the American market model, because in Ukraine the market is only emerging and by and large is primarily the manufacturers’ market. At the same time, in the U.S., and in the West in general, the market is exclusively customer-oriented. Any manufacturer there has to think how the products it makes will be used. The example with McDonald’s and spilled coffee I have cited earlier demonstrates what kind of damage a company may incur when ignoring the specific features and characteristics of the consumers of their product. Most domestic manufacturers are trying to sell their products using the principle, “Out of sight, out of mind.” I cannot judge other Ukrainian companies, but our Ukragroservice, just like Americans, takes into account the specifics of our product usage by our customers, i.e. sources and quality of our raw materials, methods of selling our finished products, etc. In addition, we help our customers get their products certified. Probably, there are companies similar to ours in Ukraine, but there are certainly not enough. When this approach becomes dominant with most Ukrainian companies, we’ll be able to talk about emergence of a consumers’ market. The more such companies appear, the more structured the economic infrastructure of Ukraine becomes, which will inevitably result in rapid development of market relations. On the other hand, we have unique advantages which are non-existent in principle in the United States now. In the overwhelming majority of branches of the Ukrainian economy, the leading groups of companies have not been formed yet. The brands that will bring power and glory to Ukraine are only emerging. In America, all that is already in place, and nothing unexpected can happen. It is practically impossible to oust the leaders from the market. Here is the main conclusion: The main objective for those Ukrainian companies that want to survive and develop is to achieve a decent place in the leading group of companies in their specific market, be a part of the best 10, at minimum. If that does not happen over the next five or seven years, they would have to satisfy themselves with pitiful crumbs of no interest to the leaders. We are good students, and I am sure that Ukrainian products in the not-so-distant future will become known far beyond the boundaries of our country. It is mandatory to push forward into the leading group; that is one of main conclusions I made thanks to my study tour in the United States. It became both my personal objective and Ukragropservice’s objective. We are not going to waste our time because we do not want to remain a small regional company. Our aim for the next several years is to win the 35 percent of the Ukrainian market as allowed by our law. Interns Can Afford Only One Mistake... (Novy Khozyain - New Owner, #9(11), September 2000) by Mikhail Shvartsman One acquaintance of mine, after visiting the U.S. said, “I have made two mistakes. The first: I should not have gone there. The second: Once I did go, I should not have come back.” Really, there are grounds to be upset after all I saw in America. But another thing is also true. Along with a feeling of hurt because of our reality [life in Ukraine], I feel new optimism and confidence that we will be able to reach America’s development level. Everything we have seen causes us amazement and admiration. There was not a single incident, though, that confirmed that only Americans are capable of such achievements. That is why, for all our internship, we tried to learn and understand as much as possible, as deeply as possible. Myself, I have singled out several most significant aspects of life in American society. Socially, that is the level of Americans’ needs. Economically, their pragmatism and inventiveness. It is common knowledge that needs (requirements, wants, aspirations) are at the foundation of the motives compelling an individual to act. The more developed and healthy a society is, the higher the level of needs of its citizens. Americans have a high level of needs. That is different from our country. Not a single American is worried about his daily bread and has doubts whether his wages will be sufficient to buy food, to pay for his rent and utilities. The average income is such that it is impossible to spend it all for food only. At most companies we have visited, employees get from $12 to $25 an hour. Most Americans live in comfortable homes, located far from industrial zones and large cities. Nobody encroaches upon their property. Homes with armored doors and window grates, so common to our eyes, are a rare sight in the U.S. This fact is convincing evidence that citizens feel safe in their own country. The fundamental (basic) and at the same time most important needs of Americans – such as food, housing and safety – are completely met. If for a lot of us meeting these needs is the essence of our existence and greatest happiness, for them that is a matter of the past. Most U.S. residents take all that for granted. If Americans are well fed (by the way, in America there are a tremendous number of overweight people) and do not worry about their life and their property, what motivates them today? For them, different needs come to the fore – status, respect, understanding by others, self assertion, etc. At the Borden Company, we met an employee who comes from the former U.S.S.R. He has been living in the U.S. for more than seven years. He is a good specialist. His company is paying him a good salary – about $40,000 a year. He owns a house and two cars. His children go to a decent college. Any of us would consider this man happy, but I did not see happiness in his eyes. He was happy three years ago about what he had, but now he realizes that he has practically reached his ceiling and he does not have any growth potential in America. He will not be able to change his status, and he is destined to remain a good specialist with the salary of $40,000 a year. It is easy to find a job in the U.S., but to find a prestigious and highly paid job one needs to be U.S.-born and educated in an elite American university, graduates of which are willingly hired by all companies. Like Ukrainians, Americans are scared of losing their jobs (and these feelings are the same in intensity), but the reasons for this fear are different. Job loss for our citizen is a threat to his existence, but for an American it presents a threat to his status. He will find a new job without any problem, but hardly of the same or higher level. That is why Americans are working hard and intensely, but without fuss or overexerting themselves. I have never seen, in any of the companies, people either running or even walking fast. Everything there was so quiet and measured. Now I would like to speak about the pragmatism of the American economy and the inventiveness of people who create it. In general, there is a shortage of labor in the U.S. They do not have enough hands to manufacture everything in their own country. That is why Americans have to leave on their territory only manufacturers with the so-called high technologies, and displace the low-technology facilities to developing countries. This is the first example of American practicality. It is true that they have to pay for their high technologies: Their stores are flooded with goods made in China, Taiwan, Korea, Hong Kong, Malaysia, Argentina, Mexico, etc. These are clothes, footwear, radio appliances and many other consumer goods. For us finding souvenirs made in the U.S. presented a big challenge. We visited 24 companies, related in one way or another to the food industry. They are all different as to their capacity, annual sales and automation level. But in all of them I saw something typical for all American companies – pragmatic conduct of business. By this pragmatism I mean effective use of resources available, while maximizing the results. This is the criterion that defines what a particular company will look like. Let me illustrate this statement by using as examples several companies based in Cincinnati, Ohio. The B&J Machinery Company manufactures extensions for Italian machines making plastic bottles and closures for them. Usually this company sells about 15 machines a year. At their facility we did not see any super-modern equipment. Twenty-year-old milling machines, universal turning lathes, several CNC machining centers. We asked, “Why is your company equipped so modestly?” They answered, “For the products we make in a given number, that is the most efficient set of equipment.” The Jones Company develops and manufactures packaging machines of different types. Here the equipment is of quite a different class. At the tooling department there is a laser metal-cutting machine. The pieces there are machined only by CNC machines. Even on the fitting benches, computers are installed. There are no paper drawings; all the design is automated. We asked, “What is this caused by?” Their answer was, “Our company has to develop and manufacture machines according to individual orders. That requires very smooth production organization and high-precision equipment.” The Keebler Company makes cookies of seven types. For us it was like our biscuit factory. We saw a completely different approach to manufacturing, compared to the companies I described earlier. Seven completely automated lines with ovens more than eight meters long produce two million cookies a day. Given this volume, the automation is completely justified, in spite of its complexity and cost. It excludes the interference of the human factor and ensures high productivity. Twelve robotized loaders are used by the company. Without any human participation, they serve the seven production lines, pick up the packed pallets with finished products and haul them to an automated warehouse, which defies imagination. The cost of such a warehouse is three million. The payback period is two years. Twelve drivers/loaders earning $15 an hour have been let go. In this case too, the economic necessity defined the organization of manufacturing. The Hubert Company provides merchandising solutions for stores, offices, schools, etc. There wouldn’t be anything special about that if the company – in addition to interior design – didn’t provide acquisition and delivery of all the required materials. Twenty-three thousand diverse items from all over the world are in stock in the company warehouse, from baskets to store counters. The company receives up to 3,000 phone calls a day. That allows them to ship 1,500-2,000 orders daily. There is nothing like this company in the world. That testifies to the inventiveness and resourcefulness of American businesspeople. Another example of their inventiveness: Jungle Jim food store’s offering food from all over the world. Its design is incomparable. There are lots of beautiful and well-designed stores in the U.S, but Jungle Jim is the only store where you virtually visit different parts of the world and purchase food from all countries, including Ukraine. The size of the store and the amount of food available are amazing. A great number of Americans visit the store and are pleased to spend their money there because a trip to Jungle Jim turns into a miniature round-the-world trip. A characteristic feature of any American business is that they always have a certain “zest,” a technological know-how which imparts individuality, recognizability and quality to their products. The combination of satisfying various needs with inventiveness and pragmatism is especially vividly demonstrated by the American food service industry. A tremendous amount of food is consumed in the U.S. In cities, there is a plethora of cafes and restaurants, representing, as a rule, different ethnic cuisines. Especially popular are Italian and Chinese restaurants; but you can also have lunch at Mexican, Greek, Australian, Indian, etc. eateries. Each of these restaurants has a design of its own, its own approach to customers and marketing strategy, which ensures their one-of-a-kindness and popularity. In addition to McDonald’s restaurants, known all over the world, there is another very popular food service solution in America – the so-called buffets. One pays $6-8 at the entrance to a restaurant and then can design one’s own menu. On tables there are special containers with different foods – salads, meat, vegetables, fruit, desserts, and beverages. In most cases, each product group is represented by six or seven dishes or varieties. Everything is cooked very nicely and looks appetizing. Spices and dressings packaged in mini-packages or containers are available for all dishes. Customers help themselves and put onto their plates whatever appeals to them, as much as they can eat. They can make any number of trips. The variety is so extensive that it is impossible even to taste everything, let alone eating everything. Getting to such a buffet one can see a major difference between Soviet and American mentality. Americans never take more food than they can eat, and they always know what they want. We tried to get as much food as possible, as if to hoard it, although our groups members were far from poor. In many cities, such as La Porte [Ind.], there are round-the-clock family restaurants. Judging by everything, most residents there eat and socialize in restaurants of that kind. In such restaurants one can order a good and inexpensive (by American standards) dinner for $15-20. Taking into account the level of Americans’ salaries, it is more advantageous for them to eat out in restaurants and cafes, as opposed to spending time and effort on cooking at home. Besides, it would never occur to most Americans to store potatoes for the winter or can their own vegetables and fruit. All that, at any time of day and in incredible variety, is available inexpensively in the nearest supermarket. To the question, “When do fresh strawberries show up at your markets?”, in our country you will hear the answer, “In late May or June.” Any American will sincerely tell you “At five a.m.” Americans like to spend their time participating in all kinds of tours and picnics. That has become one of the typical features of their nation’s lifestyle. In America there are a tremendous number of parks, museums, attractions and different shows. It is practically impossible to visit all of them, but most Americans try to. Because their everyday life is automated and mechanized to the max, and consumer services are highly developed, people have enough free time to devote to their hobbies, entertainment and learning about the world. Gigantic and superbly designed museums allow them to learn about practically the whole world, without leaving their own state. During our study tour we visited two such museums in Chicago. The Field Museum exhibitions display flora and fauna, archeological findings, gems and minerals, as well as cultural achievements of the world. Even a cursory run through the museum took more than three hours. At the Museum of [Science and ] Industry we visited an impressive exhibit of spaceships, including the Atlantis. This museum has a wonderful auditorium for showing IMAX movies. This auditorium has a dome, which is the screen, and the patrons are placed in the middle of it. The projection envelopes the patron all around, which creates the impression that everything going on the screen is real. Especially impressive are the scenes shot from moving objects, for example, a plane or a cutter. Now that the first overwhelming impressions from this study tour have subsided, I come to understand the real reason for the “American miracle.” Their people, who are well fed and protected from all eventualities and have jobs according to their status, are open and friendly. They are capable of treating with respect not only themselves, but also others. They can perceive the problems of others as their own. We have people like that in Ukraine, too, but in America that is the rule, while in our country, the exception. And there is nothing surprising about that. We live at a much lower level of needs. We cannot afford to love our neighbor; we have to survive ourselves. That is why we have to develop our economy. That is why we have to create well-paid jobs. When that happens, when Ukrainian citizens are not concerned exclusively about food and safety, then there will be smiles on our faces and we will be treating each other with respect. There is a law that the needs of a higher level can appear and get satisfied only when the fundamental needs are completely met. The main idea of the Marshall Plan for Ukraine is to give people who are capable of making managerial decisions, a chance to experience and internalize this truth, supported by the whole American lifestyle. That allows me to perceive my trip to America as not a mistake but a revelation that changed my approach to doing business and to life in general.
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