There is a long way to go before U.S. society understands basic economic fundamentals in Lean terms. Carrier, the heating and cooling equipment subsidiary of United Technologies is back in the news after reversing course on offshoring jobs to Mexico.

The offshoring was reported to save $65 million per year. No doubt that used a conventional accounting approach, which highlighted savings from wage differences and obscured in fixed costs elsewhere the additional expense from currency risk, transportation, a less experienced workforce, and damaged good will. There is no incentive for managers to have those reflected in the savings calculation – their bonuses and the bonuses of those to whom they report reflect the savings they state they generate.

A senior equity analyst with investment banking firm Jefferies, Howard Rubel, stated that keeping the jobs in Indiana is an earnings loss of two cents per share – which is roughly 0.3% of anticipated earnings. At least Carrier and the investment banking community are clear about their priorities.

Here is Robert Reich’s assessment. “Memories are short but the economic fundamentals remain the same. Wall Street is breathing down companies’ necks to cut costs, and the labor savings in Mexico is too great.” Clearly “Wall Street” does not understand how the properly applied principles of “Continuous Improvement” and “Respect for People” create value far exceeding 0.3% of a company’s earnings. If it did the United Technologies stock price would have been hammered after the February 10 outsourcing announcement. Instead it rose 15% in the following two weeks.

Respect for People specifically; and in general Lean thinking, Lean management, and Lean performance have a long road ahead if the U.S. is to realize a healthier society and economy.

A link to recent New York Times reporting on this story is here.