U.S. Companies Abroad Live Too High On The Hog
Over the past two years, you have written much about U.S. competitiveness. One issue overlooked by top management of multinationals is controlling overseas administrative and personnel expenses. Unless this is improved, American companies will never be able to compete with the Japanese.
A good example is a U.S. computer maker with many employees stationed overseas. It sets up big offices with lavish decoration in high-rent cities such as Tokyo, London, Hong Kong, etc.
Japanese companies do not use as much office space per head as the Americans or Europeans. They do not need expensively decorated offices. Their officers do not waste company money on expensive living quarters. The typical excuse offered to head-office management by U.S. and European expatriates is that they need to uphold living standards comparable with those at home. This really does not stand up at all.
Comparable living quarters for middle management in other centers are located on the outskirts, just as in New York. Housing of comparable standards can be found on the outskirts of these overseas centers too.
It is particularly disheartening to see TV coverage of the "cold and homeless" in the U.S. and to read about multinationals laying off workers by the thousands who are getting paid only $30,000 to $40,000 per annum--while middle-management expatriates are living like the "rich and famous"--spending $100,000 or $200,000 a year just for housing. As for competing with the Japanese, a dollar saved is surely a dollar more competitive.