One plant saved, one shuttered; local economy makes winning argument

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Dayton’s Goodman Daikin manufacturing plant is being closed by its Japanese owners. (Photo WDEF News 12, wdef.com)

Dayton’s Goodman Daikin manufacturing plant is being closed by its Japanese owners. (Photo WDEF News 12, wdef.com)

By David Tulis

Allan Jones of Cleveland, Tenn., earns millions in a payday loan business that gives him enough capital to rescue a sinking clothing maker in his hometown. His recent buyout of Hardwick Clothes is a picture of how local economy works as a rescuing and salvific idea.

Local economy in Bradley County or any other part of the world favors near over far, small over big, personal over corporate, simple over complex and physical over abstract. Before we look at Mr. Jones’ buyout of Hardwick, let’s argue for local economy in the negative — by seeing how national economy works. Let’s fly west over the Tennessee countryside to the neighboring of Dayton, in Rhea County

This pleasant college town is home to a plant owned by Goodman Daikin Industries, a Japan-based manufacturer of air conditioning units. Today Dayton is mourning that Goodman is closing its plant where as many as 600 people work. Suffering the same blow in a Jan. 6 announcement is a larger Goodman Daikin factory in Fayetteville, Tenn., west of Chattanooga just north of the Alabama border. Altogether, nearly 2,000 souls rely on paychecks from the two HVAC plants. Goodman was founded in Texas in 1982 and was sold for F$3.7 billion to Osaka-based Daikin Industries Ltd. in 2012.

George Thacker, the Rhea County executive, and chamber of commerce officials are grievously disappointed as are hundreds of family members.

But before anyone sheds tears, it’s important to see that plant closures are often essential. The marketplace is controlled by focus on one’s customer and rational self-interest. Owners and managers are tasked with making their business sustainable, and the key measure of that is profit. The heartlessness of closing a factory and throwing people out of work in pursuit of profit is only apparent. No one runs a plant to provide jobs. Owners serve the profit of customers first, owners and shareholders second, and workers lastly.

Goodman’s Tennessee plants lack capacity for production of newer cooling system models. “We are physically out of space in our manufacturing facilities,” spokesman Rex Anderson of Goodman tells TV12, “and the new facility will give us more efficiencies we can pass on to our customers; we will have a single facility instead of multiple facilities.” The new HVAC models must be built because they are as much as 34 percent more efficient than conventional American systems, according to a 2012 U.S. department of energy study. “Variable refrigerant volume” units are well below 10 percent of the U.S. market, but Daikin’s CEO, Takeshi Ebisu, says intense advertising will increase demand among price-conscious Americans.

The local economy alternative

George Thacker is the top Rhea County government official. (Photo WDEF News 12, wdef.com)

George Thacker is the top Rhea County government official. (Photo WDEF News 12, wdef.com)

Please read the rest of my essay at Chattanoogan.com

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