samedi 4 novembre 2017

Dividends VS Life? (Part 1)


(Blog n°4)

  
In France, the unemployment rate reached 9,6% in the first semester 2017 (Institut National de la Statistique et des Etudes Economiques, 2017). Since the unemployment touches even more the unqualified parts of the population, every worker who loses his job will have difficulties to find a new place in the society. Therefore, when a factory closes for whatever reason, workers often organize strikes, afraid to lose their jobs. For example, this happened during the last presidential election: Whirlpool decided to relocate a washer factory from Amiens to Poland.

The relationship between this kind of event and the reflection around finance is determined by the mediatic cover. Indeed, when Whirlpool announced its decision, the press always reminds the turnover of the company and the benefits it made during the year before the relocation (Le Monde, 2017). The goal of this is to point out systematically the fact that a company destroys jobs in France even though it makes good money. Thus, the company is presented as the bad guy and the workers as the common people fighting for their jobs. From the point of view of people losing their revenue source and perhaps a huge part of their life for some of them, this vision is relevant and true: the money earned by the company can and must be used to keep their factory working.

The interest is that in that case ethics and human lives appear to be joggled by the financial history. However, the relevance of the comparison maid by French journalists must be discussed. Indeed, they seem to claim that a company that creates value must use it to keep its factories where there are (in that Whirlpool case at least).

From the company point of view, this relocation has no link with the profit maid or the turnover. Relocating is a cost management decision, not an accounting decision. The profit maid by a company cannot be an argument against such a relocation. Simply because if the organization does not optimize its costs, it will be eliminated in the long run.

To this can be argued that they could use the profit maid to compensate the loss implemented by the costs of the French factory. Additionally, the use the companies make of their earnings can seem unreal from a worker point of view. For example, Whirlpool paid 294 million of dollars to its shareholders in 2016. Such amounts of money not invested in the company can only anger the humble people losing their jobs. They worked to create this value for the company. But the organization decides to keep the money and to fire them because it is still not enough.

Beyond the dichotomic vision of the different stakeholders in that case, the questions of the core of a company’s goal is raised.



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