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OM in the News: U.S. CEO to France: “How Stupid Do You Think We Are?”

February 22, 2013

titan“How stupid do you think we are?” With those choice words, writes The New York Times (Feb.21, 2013), Maurice Taylor, CEO of American tire manufacturer, Titan International,  touched off a furor in France as he responded to a government plea to take over a Goodyear factory slated for closing in Amiens, France. “I have visited the factory,” said Taylor. “The French work force gets paid high wages but works only 3 hours. They have 1 hour for their breaks and lunch, talk for 3 and work for 3. I told this to the French unions to their faces and they told me, ‘That’s the French way!’ ”

Taylor’s assessment quickly struck a nerve in France, where concerns about declining competitiveness have led economists to ask whether the nation is at risk of becoming the next sick man of Europe. But Industrial Minister Montebourg released a letter calling the executive’s comments “extreme” and “insulting,” adding that they pointed to a “perfect ignorance” about France. French media outlets also minced no words. “Incendiary!” and “Scathing!” were just a few of the terms replayed in French newspapers. And the head of France’s main labor union wasted no time in weighing in, saying Mr. Taylor belonged in a “psychiatric ward.”

“Goodyear tried for over 4 years to save the Amiens jobs that are some of the highest-paid, but the French unions and the French government did nothing but talk,” said Taylor. “Titan is the one with the money and the talent to produce tires. What does the crazy union have? It has the French government.” He said his company would seek to produce cheaper tires in India or China, where he said Titan would pay the workers less than 1 euro an hour, and then sell the tires back to the French. He predicted that Michelin, the French tire maker, would not be able to compete with lower prices and would have to halt production in France within 5 years. “You can keep your so-called workers.”

Discussion questions:

1. How does France rank in the Global Competitiveness Index (see Table 8.1 and www.weforum.org)?

2. Relate this discussion to the major location decisions listed in Chapter 8.

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