Thursday, October 15, 2009

Home Insurers Drop Chinese Drywall Policies

The cost of poor Chinese quality manifested yet again in America. Homeowners with toxic Chinese drywall had their claims denied. Insurers then canceled or did not renew their policies.

The homeowners have little recourse since neither the Chinese manufacturers nor the Chinese government are likely to respond to any lawsuits or reimburse them for the defective drywall.
This is the same China that refused to honor derivative commitments. It's also the country that executes bureaucrats for poor quality. I believe that goes against one of Dr. Deming's 14 points for Quality:

Drive out fear.
Knowledge requires no visas. But neither does ignorance and the Chinese have it in spades. But don't worry, The Carlyle Group will ride to the rescue, at least in the area of Chinese infant formula, which has its own toxic, deadly history. Carlyle's press release states:

As part of the agreement, Carlyle will bring resources to further strengthen Yashili’s management expertise, enhance R&D capabilities and create a world-class quality control system. Specifically, these measures include:
  • Recruiting an experienced Chief Quality Officer (CQO) to assume supervision and oversee implementation of product quality control protocols;
  • Strengthening quality control measures under the guidance of a newly-formed Food Quality and Safety Advisory Committee (FQSAC), composed of leading international and domestic experts

Yashili may want to check Carlyle's spotty quality record. Affiliate LifeCare Hospitals lost 24 patients after Hurricane Katrina. While HCA charted medical helicopters to evacuate patients, Carlyle let patients swelter in a toxic stew for up to five days. The Bush Lessons Learned Report was inept in its failure to mention these deaths.

Vought Aircraft Industries failed to adequately capitalize a joint-venture building portions of the Boeing 787 Dreamliner. They were the major factor in the now two year delay in Dreamliner production, so much that Boeing bought out Vought's interest to keep the project from falling further behind.

SemGroup, a staid energy pipeline company, imploded from forward looking contracts. SemGroup's billions in hedges went bad, forcing Carlyle to hand the firm over to debt holders. There was no mention of derivatives in SemGroup's SEC filings.

Carlyle's "world class quality control" must be part of the race to the bottom, alongside worker pay/benefits, taxes and regulation. Exempt are executive incentive pay, PEU profits, and political donations.

Profound knowledge is sorely lacking, while greed and ignorance abounds.