Large U.S. magazine publisher outsourcing to India (RANT)

[Spike89]

Advanstar, a major Business-to-Business magazine publishing and conference company is going to lay off virtually all of its Duluth production workforce and outsource the art and creative tasks to India. I worked for Advanstar back when it was fresh out of bankruptcy and newly split from harcourt brace jovanovich. I still have friends working for the company.

The history of Advanstar over the past couple decades is a horrific example of corporate bumbling and counter-productive banking and investment regulations. I've lost count of how many "owners" have taken over the company in the decade or so since I left, it happened 4 times while I was there (counting Advanstar's acquisition of the publishing company I worked for). Each time the company's debt load went up, the new owners would try and cut costs in a way that wouldn't immediately cut revenues and then try and sell the company to yet another investment group before the cuts could hurt revenue. An example of how this works is putting a freeze on new computer purchases...any large business can stop spending on infrastructure for a while, but if you wait too long, you'll probably have to spend more to catch up than you would have spent had you invested regularly--not to mention the losses directly tied to the frustration and downtime employees had to deal with.

When that shell game got old, investors began selling off pieces, essentially parting out the company. What is totally maddening is that some of the products/magazines go back to the 1800s, many were quite profitable, almost all turned a profit if they weren't asked to pay for the accumulated debt (which was NOT really debt, but the aggregated equity that each successive owner had pulled out of the corporation through the years).

Advanstar is a shell of what it once was, and it has much more to do with corporate investment and accounting tricks than any shift in the publishing business. I just wish they'd outsourced management to India back in the late 1980s--maybe then they wouldn't feel the need to screw over the workers now.

[glinda]

1. Have been to Duluth many many times and am sad to hear this. How many jobs will

be lost?
This is sadly what has happened over and over again yet no laws or incentives are put into place regarding these sorts of business shell games and taking businesses offshore. It is not the time to be giving more tax cuts to businesses wither. I think the moral imperative would be to demand that when a business takes it work outside the Country that it be the last Company looked at in giving work to. I do not know how this can be enforced but maybe by "taxing" the work that comes back into the Country. thereby making it cheaper to stay in the US.

[Spike89]

11. I heard it will be somewhat more than 100 layoffs n/t

[onethatcares]

2. from the sound of it, this is a classic example of

screwing the other guy before you get screwed. Typical capitalist system once over.

[Spike89]

13. Exactly, but they don't screw each other

It's the business that is being "invested" in that gets screwed, and of course, the people working for that business.

[Cleita]

3. Maybe the IRS should start demanding income taxes from employees of

American companies overseas even if they aren't American nationals. Maybe that could sour the punch these corporate bottom line executives are drinking. All these jobs going overseas are cutting into the income tax revenue of the US Treasury.

[virgogal]

6. Tariffs.

[Cleita]

8. You aren't going to get tariffs as long as the corporate lobbyists are

running Washington. This could be a back door way of making this business practice impractical for them.

[virgogal]

9. I know,but I keep hoping.

[lxlxlxl]

4. bought by an lbo firm...

sorry to hear your news...ive been let go because of corporate restructuring, not to india, and understand how frustrating it is. hope you dont blame india...doesnt seem like you do honestly.

i read about how advanstar was purchased by Veronis Suhler Stevenson basically an LBO firm. a product of the 1980s junk bond games that has destroyed this country

im still waiting for someone to explain clearly what all of this has done. in the 80s the wall st and private equity people decided they could pool together money and takeover any company they didnt like, or who they thought who's labor could be destroyed so the people at the top could take home more money. that was intentional, delusional that it wouldnt wreck the economy, and all done in the name of greed.

but i dont think people realize that this just started recently. sure capitalism existed in its already troulbesome form prior, but what we have since then is just insanity. literally economic cannabilism of companies in this country for an increasingly smaller group of people's bottom line.

sorry to rant. there is more i feel like going into -- the easy money from the fed that some people got to continue these practices, the phony language these buyout people to promote their 'better business' bullshit, and the role of international capital in domestic businesses (works both ways)

anyways...most company executives ive met are full of shit assholes from positions of privilege. they will do fine and probably never deserved to run the company to begin with...but you know that...

[Spike89]

12. Nope, India isn't to blame.

As you said, the blame goes to the corporate environment and the equity fund ownership that isn't actually interested in the business. They operate under exactly the same premise as an aggressive "house flipper", but take it to extremes. They see an "undervalued" company, but it, slap on some paint, duct tape the leaks in the plumbing, throw in a shiny cheap appliance or two, then sell it to another LBO for a tidy profit.

The second LBO has to work a little harder, they see the plumbing is copper and the doorknobs are brass and decide to sell them for scrap and install some temporary PVC pipes and tin door knobs. Then they sell the house as "newly retrofitted!" to another LBO.

By the time this happens a few times, even the soundest business ends up as nothing but a shack with a huge mortgage. Each successive LBO has taken equity, so they are all fine, but the tenents (the workers) of the house have gotten nothing but successively worse working conditions. Eventually, they can't all work there any more.

You nailed the junk bond situation...that is exactly how HBJ got into trouble originally--they basically loaded up on junk bonds in the 80s. When those imploded in the late 80s, the CEO literally jumped off (he jumped from the top of the headquarters building). The business went bankrupt and Goldman Sachs took over. Coming out of bankruptcy, the company went on an acquisitions binge and bought up the company I worked for among others.

Outsourcing wasn't the problem, just the latest stupid, "quick fix" in the death spiral.

[leftstreet]

5. Wait till all the medical billing/ins claims get completely outsourced

But we can't have single payer cuz "it would put sooooooo many people out of work" !!!!11111

:rofl:

[Cleita]

7. I think it already is being done.

I talked to a representative of my Medi-gap insurance a month ago who had a rather strange accent even though he said his name was Barry.

[leftstreet]

10. Yep. The International 'outsource' community is thrilled

Business Bonanza
31 Mar, 2010 13:18:05

Indian outsourcers eye bonanza from US healthcare bill
NEW DELHI, March 31, 2010 (AFP) - Indian outsourcing firms are banking on a business bonanza from US President Barack Obama's landmark healthcare reform as cost pressures prod insurers and hospitals to become more efficient.

The 940-billion-dollar US healthcare bill, passed in March, will extend health insurance coverage to 32 million Americans over the next decade and require insurers and medical care providers to cut costs substantially. "The influx of newly insured represents a big, exciting opportunity for the industry," Ananda Mukerji, chief executive officer of Firstsource Solutions, which was an early outsourcing mover in the US healthcare market, told AFP.

http://www.lbo.lk/fullstory.php?newsID=2017150403&no_view=1&SEARCH_TERM=35

[glinda]

14. Someone should do a study in numbers of how many US jobs would be gained

by bringing back positions to the US.
Greed is killing this Country.