Offset

I made it to Bucharest this afternoon as planned.

Tomorrow morning I'm meeting with the Romanian Offset Agency (a department in the ministry of finance). Offset is one of the more unique responsibilities I have as a program manager. I could write a book on the complexities of offset, but the basic gyst of it is that since a country (in this case Romania) is giving contracts to foreign companies (in my case a US company), the foreign company is responsible for investing a certain amount in the Romanian economy to "offset" the money being given to the foreign company. The concept is great, however, the implementation is loaded with so much bureaucracy in some places that I question the actual economic impact of some of these programs. The rules vary from country to country and I've heard that The Netherlands and the UK have laws which are conducive to investments that would actually benefit the economy, but in Poland and Romania, you have to negotiate very specific projects and associated values of those projects. In most cases, we do things like open a maintenance center with a local company, or transfer cable manufacturing to a local company. In Poland, we actually outsource a product from a local engineering firm, but if a project doesn't fit into a very specific "bucket" the government isn't interested in it, even if it would create jobs, etc.

I think everyone who does business internationally should negotiate an offset contract for the experience of it. You basically have no leverage in the negotiation and you have to convince these offset agencies (who are independent from our end user groups) that a project is worth a given value or will create a specific tangible economic benefit, without much data to actually back up some of those claims. They are not incentivized to agree to anything because they're an independent agency, not a customer. You are almost 100% dependent on your relationship with these people to get them to agree to approve the projects that your company wants to do - which is why I always stop in and see these folks whenever I'm in town, even if it's just to say hi and update them on the status of our offset execution. I've found that meeting face to face with these people goes a long way toward building trust with them.