Storage Blockhead Say hello to Wilbur Ross, "King of Bankruptcy" and the likely next US Secretary of State for Commerce – the man charged with implementing President Trump's promise to bring home the jobs stolen by cheap labour countries using free trade policies.
Suppose he has his minions look over the storage industry, what will they see? Two US companies ruling the disk drive universe with disks made abroad. US Intel making storage controller processors. Flash and DRAM made abroad, with Micron and Intel having a flash foundry in the UK. And many storage software operations with coding done in India or Israel or eastern Europe, and contract manufacturers employed to build disk arrays outside the US.
What will Wilbur Ross's minions do then to help bring the jobs home and have US-owned companies staffed by US workers exporting US-made products?
Let's imagine Wilbur's head bootlicker calls a meeting with the two Steves, Milligan of WDC and Luczo of Seagate. He might say they are heroes for dominating the disk drive industry but they're job killers for making the damn things abroad. "US labour is too expensive," they could say.
The minion says: "We're gonna slap an import tax on disk drives because while you're importing disk drives you've exported jobs, and we'll set it high enough so US labour isn't expensive any more."
"You'll kill thousands of jobs in Thailand, the Philippines and China," the two Steves reply.
"We don't care. Those guys don't vote for US politicians or pay US taxes and the countries are too weak to do anything about it. Where's China gonna buy its disk drives from? Nobody else makes them anymore but you two and Toshiba, and Toshiba is too small to matter. I want 60 per cent of your labour force to be in the USA by 2020."
"But US taxes and energy costs are too high," the Steves will say, and the deal-making starts.
Steve Luczo leaves, Steve Milligan remains and Micron CEO Mark Durcan and Intel boss Brian Krzanich step in.
"OK, guys," says chief flunky. "We import too much flash and you, Steve Milligan, are making it abroad with those San Disk and Toshiba fabs. I want them brought to the USA. If Mark and Brian can do it at Boise then so can you."
So Steve says: "But the raw materials are abroad and labour costs are cheaper over there and we need to protect against earthquakes and tsunamis and other disasters."
And the minion replies: "Do I have to spell it out? If Mark and Brian can do it in Boise than so can you. So gimme a plan because an import tax hammer is gonna come down on you and Samsung and SK Hynix."
"But, but," Steve says, "prices will go up."
"Watch my lips," says the minion. "If Micron and Intel can do it in Boise... then so can you. Gimme a plan.
"Now, about DRAM. What'll it take to set up a DRAM fab here in the US?"
Meanwhile, another Ross lackey asks storage software businesses: "What's wrong with our coders?"
"They're too expensive," comes the reply, "because they all want to live in San Francisco condos."
"Rats to that," says the henchman, "not if they're living in a New Orleans trailer park, or Atlanta, or Austin or some place else right now. I don't care about the startups – they're too small – but you big guys, you at Dell, HPE, IBM and NetApp, we wanna see more code written in the US. Gimme a plan. Gimme a US-based software development centre with 500 jobs and we'll talk about tax breaks. Because, otherwise, we're gonna have to do something about all those jobs you've exported..."
Another peon talks to storage companies who have metal bent abroad, and storage components assembled inside them to build disk/flash arrays manufactured outside the USA. "Enough already," they say, "we have import taxes ready to hit this stuff. Bring it back home."
"But it's more expensive here," they wail.
"Look guys," the minion explains, "unemployed rust belt workers can't buy stuff, and cost you and me with social security benefits, and they vote. What part of that don't you understand? If you pay 'em then they can buy stuff, and businesses sell 'em stuff, and businesses then have to buy your stuff to operate. Geddit? So prices go up, a little. So you sell more anyway. Get with the programme bozos. You don't want the Donald tweeting about you, do you, like really?"
Isn't it likely that such conversations are being imagined up and down the length of the storage industry. Free trade and cheap offshore labour forces have helped build the present day storage industry. But millions of US workers and families with McJobs or no jobs and struggling ex/middle-class, white-collar people aren't benefitting and now feel they have a voice.
It's as if every US business is operating inside a Trump casino now, and the chips are going to fall in new places. No one will want to bet against the house. Not while the Donald is fresh into the presidency and licking his tweet-dribbling lips in a target-rich environment.
Look out for bringing-the-jobs-back-home announcements from storage companies, and others too of course, as 2017 progresses, and they seek early tax break advantages before the taps start drying up. Wilbur Ross rules, OK? ®