Dr Pepper Snapple has Banner Year, Then Cuts Workers' Pay

Last Updated Aug 19, 2010 11:06 AM EDT


Time was when most executives thought Henry Ford was smart. After all, Ford was the father of the modern assembly line and the Model-T revolutionized American industry. Ford also paid his workers higher than the prevailing wage, because then they could afford to buy cars.

Today's CEOs think Henry Ford was a chump. Case in point: Larry Young, the CEO of the Dr. Pepper Snapple Group. In 2009, DPS made $555 million in profit and has never been in better financial shape. Young's strategy going forward: cut the pay and benefits of the company's factory workers.
The workers Young has targeted make Mott's products (as in apple juice) and are located in upstate New York, a region that's been hit hard by the great recession. Young is justifying the cuts on the grounds that they will bring the plant "in line with local and industry standards" according to a PR weasel quoted in the New York Times.

No doubt that's true. The workers at the Mott's plant are unionized and are being paid more than other workers elsewhere. However, rather than celebrating that fact, Young apparently sees the higher pay as an opportunity to save some money.

Henry Ford must be rolling over in his grave.

Before going any further, let's be clear about one thing: Larry Young is a blithering idiot. To prove this, here's an excerpt from his "corporate responsibility" letter posted on the DPS website:

As we strive to build better communities, we've set clear goals in every area of corporate responsibility, from environmental sustainability to workplace safety. These goals draw a clear line in the sand for us as a company, and we're confident that we can cross it with the full commitment and efforts of our employees.
Now, anybody with half a brain knows that a "line in the sand" means a line that's NOT supposed to be crossed. So, if (as is probably the case) the reference to "crossing the line" is just careless biz-blab, Young is an idiot for signing and posting the letter.

On the other hand, maybe he wasn't kidding. Maybe DPS's "corporate responsibility" strategy is to set standards and then promptly violate them. (That would explain the pay cut, eh?) If so, signaling to the world that your standards are worthless in a "corporate responsibility" letter is equally idiotic.

So Larry Young is an idiot, Q.E.D.

And he's a highly compensated idiot.

According to SEC filings, in 2009 Young received a combined salary and stock awards of over $6.5 million a year. He also receives a free automobile for both business and personal use, an annual allowance for financial planning and tax preparation, and the right to "travel by corporate jet (chartered or company-owned) for all business and personal air travel." As an extra perk, the company even pays Young an extra $150,000 "to cover the taxes accruing to Mr. Young as a result of this benefit."

This is the guy who thinks that it's unreasonable for a factory worker to earn $19 an hour.

Where is the outrage? Where is the anger?

It's just not there. We've been so accustomed to overpaid CEOs that lavishing this particular idiot with $6.5 million and a tax-free corporate jet merely seems like business as usual.

Instead, the reaction of many people, specifically people who've been hypnotized by the myth of free trade, will be to blame it on the union. Sadly, many people simply don't make the connection that our moribund economy is largely the result of decades of outsourcing and consequent union-busting that have turned America from the manufacturing capital of the world into a nation of the unemployed and underpaid.

I've gotten dozens of emails from sales professionals who are really struggling to make their numbers. They tell me that buyers aren't buying, even in the B2B sector. Well, I'm not surprised, because even B2B products and services are ultimately dependent upon B2C sales (someone has to buy the end product) and B2C sales are in the toilet because people can't spend money that they don't have.

Don't get me wrong. For those of us who know how to hustle, bad economic times mean big opportunities. For example, one of the reasons that Sales Machine is so popular is that the number of sales professionals is growing proportionately to other workers because companies are struggling to make their numbers. Never before has sales training and sales talent been more important.

But I wonder how long it can last. A large segment of the American public is so stupid that they think that a government run by big business is "socialism" when of course it's the exact opposite. They don't seem to realize that, under our current governmental system, the inevitable result of business-oriented legislation is either deregulation that favors big businesses or government regulation that favors big business.

And by "big business," I'm not talking about the workers and middle managers who actually make a big company successful and get a few crumbs from the table as a result. I'm talking about top execs, like Larry Small, who get obscene compensation and then royally screw the people who made them successful.

The United States of America is being run by overpaid idiots like Larry Young and their stooges in both political parties. That's the real reason so many sales professionals are struggling to make their numbers.
  • Geoffrey James

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