Jim Whitt, Contributing Editor

I Remember When
I know this never happens to you but I caught myself talking back to the radio while driving down the road the other day. Some talk-show host was railing about the outsourcing of jobs by U.S. companies to foreign workers. The usual suspects were calling in, throwing gas on the fire. Their complaints followed the same old pattern. Wal-Mart is evil and we should keep American jobs at home. Then the host asked, “Who will buy our products when we no longer have any middle class in America?”

On the surface this sounds like a logical argument — if we send jobs overseas because labor is cheaper, then Americans will be out of work or forced to take lower paying jobs, and then no one will be able to afford our products. The problem with his reasoning is this — history has proven him wrong. Jobs have been going oversees for a long time and guess what? The current U.S. jobless rate is 5.4 percent. The fifty-year average is about 6 percent. Somebody keeps buying our products and somehow we keep adding new jobs to replace the ones that leave.

Fact and logic were no deterrents to the host. He went on to say that companies should be willing to pay American workers more and keep the jobs at home. He didn’t consider that if your costs are higher than your competitors’ it might be hard to stay in business. He must have overslept the morning his college professor covered that in Econ.101.

One of the problems with the “America First” mentality is a failure to understand that we are in a global market. The world doesn’t end at our borders. The host lamented the fact that some radiologist in India can read our X-rays because of broadband Internet. Well, that Internet runs both ways. We publish a weekly e-zine with subscribers around the world. Those subscribers have access to our Web site. That means we run an international business from right here in Tulsa. People can email us and hire us to consult and speak. We just received an order for 100 books from Nigeria. I say hooray for international trade! I don’t want anyone limiting our ability to do business beyond our shores.

That Internet has been pretty good to a couple of U.S. companies — Yahoo and eBay. Both are celebrating their 10th anniversaries this year and both have more than $3 billion a year in sales. Let that soak in for a minute. Ten years. $3 billion. Both rode the dot-com wave to the top and survived the dot-com bust. Both were founded by young entrepreneurs.

Their stories are not unlike those of some young entrepreneurs 100 years ago. Tulsa was just a sleepy cow town until Robert F. Galbreath and Frank Chesley noticed oil stains on a limestone formation while camping out on Robert and Ida Glenn’s farm south of town in 1905. Galbreath took a sledgehammer to the rock and oil literally oozed from the limestone. It wasn’t long after that the “Glenn Pool” field was producing more oil than the entire state of Texas. It was one of many such Oklahoma oil fields that would make Tulsa the undisputed “Oil Capitol of the World.”

Frank Phillips, a barber from Iowa, came to Oklahoma in 1903, prospecting for black gold, and hit the mother lode. It was the famous Burbank oilfield in Osage County that made “Uncle Frank” — as he was known to his employees — a multimillionaire. Uncle Frank went on to that great oilfield in the sky in 1950, but his company carried on until 2003, when it merged with Conoco. Based in Ponca City, Conoco was formed when Marland Oil merged with the Continental Oil Company in 1928. Like Frank Phillips, E.W. Marland owed much of his fortune to the Burbank Field. After the merger, ConocoPhillips joined the energy exodus across the Red River and moved their headquarters to Houston. This move which involved what used to be the two crown jewels of the Oklahoma oil industry, unofficially marked the closing of a glorious era. The Oil Capitol mantle that Tulsa had so proudly worn for so many years was unceremoniously passed on to its Texas cousin.

The dot-com success stories of the 21st century are much like the oilfield success stories of the 20th century. The founders of Yahoo and Phillips Petroleum made their fortunes in different industries at different times in history but shared this one very important trait — they were pioneers. What kills organizations — and entire industries — is the death of the pioneering spirit. It’s when they rest on their laurels or, worse yet, want to turn back the clock. In a recent issue, the Tulsa World looked back at the impact the oil business had on Tulsa and Oklahoma over the last 100 years. Riley Wilson, who was the World’s “oil editor” from 1956-1984, lamented the fact that Tulsa let Houston take the Oil Capitol crown, saying that city leaders didn’t fight hard enough to retain the industry that built Tulsa. They lost the pioneering spirit.

Let’s apply these lessons to the U.S. beef industry. The greatest threat to the U.S. beef industry is not foreign competition. It is not big conglomerates. The greatest threat to the U.S. beef industry is US. If we have the attitude that competition is a threat that means we no longer believe we can compete. This can be psychologically debilitating and leads to economic paranoia. In the 1970s and ’80s economic paranoids were worried that Japan would dominate the U.S. It never happened. They’re not worried about Japan anymore — they’re worried about China or India. That’s the problem with economic paranoia — there’s always another boogeyman hiding in the closet just waiting to jump out and get you.

If the beef industry is to survive and thrive, it will not be the result of protectionist policies. The USSR couldn’t hold back the power of free market capitalism. Ukraine, a former Soviet Bloc country, just elected Viktor Yushchenko, a pro-west capitalist, defeating the Russian-backed Viktor Yanukovich. The Ukraine people have had a taste of freedom and they don’t want anything to do with anything that might move them back to any semblance of communism. And protectionist policies are a close cousin to communism. Free market capitalism will win out in China just like it did in the USSR. And as their standard of living rises, they will do more business with us. A rising tide lifts all boats. The fundamental laws of economics will dictate where business goes and flows. The consumer still decides who wins in a free market economy.

The future always has and always will belong to the pioneers — those who look forward and refuse to look back. It matters not whether your business is oil, beef or buying and selling over the Internet. There are always new frontiers to conquer. I wonder — who will be the pioneers of the 22 nd century? And 100 years from now, I wonder what organizations and industries will have gone by the wayside. Yes, people will look back, shake their heads and mourn their passing. I can hear them now, “I remember when…”

Please e-mail comments to Jim Whitt jim@whittenterprises.com

Cargill Animal Nutrition is proud to sponsor the “Whitt and Wisdom” column which offers business management and leadership advice from management consultant Jim Whitt. Cargill is an international provider of food, agricultural and risk management products and services.