2008 Gov Budget

I had a chance to watch the minister of finance deliver his budget proposal on the floor of the parliament and was not happy at all.

The new budget aims to help the poor and needy and provide a more equitable distribution of income. Sounds great, however, the government plan is flawed as it hopes to achieve this by linking civil servant's salaries with inflation. IMHO, a sure recipe for double digit inflation rates.

Here is how things would probably play out:

1) Government increases civil servant's salaries and minimum wage in correlation with inflation numbers from the previous year.
2) Private sector increase wages based on the new minimum wage and then some more to attract some of the people who might consider government jobs.
3) Commercial sector increases prices due to both increased labor costs and also to take advantage of the increase in the average Jordanian's income(due to the wage increase.)
4) At the beginning of the following year the inflation numbers on which the new wages are computed are higher because all wages(prices) went up and the cycle starts again at number 1

The other thing that I fear from linking wages to inflation rates is that we might lose our competitiveness, and this is already happening to some degree; a number of factories are being moved from the industrial area in Irbid to Egypt because of the significantly lower wages(more than 65% less in some cases.) We might also end up losing some touristic business as the cost for visiting jordan is a bit on the insane side(especially hotels)

In the long run the government can only slow this by not going ahead with its plans. In the long run we need to have industries that have a significant amount of technical knowledge that would not be available in countries that depend on low wages to increase the competitiveness of their goods like Syria and Egypt.

Tales of Jordanian Management

This series of posts will remind some people of the letters Scott Adams gets from various employees telling about management stupidity. Lucky for American employees, there is a Scott Adams to publish these letters.

The average Joe here has no outlet to tell about the idiotic management they deal with. So I decided to take it upon my self to report some of the idiotic behavior that I see on the ground while performing my job.

Tale # 1

This company is the largest company in it's field in Jordan with branches in Europe and in America. This company is having a hard time retaining engineers, because despite having double digit sales, and profit growth, this company has a "red line" when it comes to hiring new engineers and is willing to make them work day and night.

Tale # 2

Company X stopped purchasing of any none consumable goods for over 4 months because they have a new purchasing manager.

Tale # 3

Another company missed out on a special offer twice because the maintenance manager was busy with supervising the construction of a new office building and did not have time to sign a PO.

Tale # 4

An underling at a customer of mine tells me that her new boss would not sign any papers because he does not understand how things work. So in the mean time things are on hold.

Tale # 5

I revisited a customer regarding a product that I sell. My contact tells me that after he spoke to the owner, the owner was very surprised that they did not already purchase the product 1 year ago when I first offered it to them.

Then he tells me that they need a few weeks to revisit the subject, because they are too busy with their new plant.

Tale # 6

I visit a customer of mine. They tell me that they were visited by some foreign consultants who told them the same exact stuff I told them three years ago. And now they will consider making the changes. Duh.

Tale # 7

I am still waiting for a purchase order from a potential customer, because the the person who signs the PO has been traveling for the last three weeks. Mind you, this company sells in the millions.

Tale # 8

I call a customer over 3 times so that he would take advantage of a special offer for a limited period. Maybe two months after the special offer period expires, the customer wants to order, but first he asks if it is possible to give him a discount. Duh

The Total Cost of Stupidity

I have been visiting Jordanian industrial companies for the last 4 yrs now, trying to sell them high quality stuff that has very little running and maintenance costs over their life time. I did have an acceptable amount of success.

One of the of most frustrating things about trying to sell high quality/high cost stuff is the alien nature of the concept of total cost of owner ship to the owners and purchasing departments of most Jordanian business. So much so, I no longer bother to mention it. I might as well talk to donkeys or preach to monkeys or sing to the deaf.

By my own conservative calculations, businesses in Jordan could save millions of JDs if they started looking at the total cost of ownership.