Category: Business

Fire the Corporate CEOs

Corporate America has failed. (Which managers or economists were standing up to say America is going in the wrong direction?)  The proof is the decline of the economy of the entire world.  It is a decline that was started by America’s leading corporations.  This decline did not start in 2008.  It started decades ago when U.S. manufacturers decided that they did not need to respond to Japan’s companies who had determined to define their products as the quality alternative.

 

The astonishing rise of quality products in Japan was the result of William Edwards Deming, an American, whose quality control ideas were largely ignored by the United States manufacturing community until the 1990s.  The consequence of Japan’s pursuit of quality products resulted in the success of Toyota, Honda, Canon, Panasonic, and a plethora of other quality conscious companies throughout the Far East and southern Asia.

 

Our nation went from being a creditor country to a debtor.  To counteract the decline of America’s manufacturing supremacy our government, in conjunction with the finance industry, determined that easy credit was the tool of choice to promote capitalism.  It is a philosophy that has worked well for at least 30 years.  Both government and business told Americans to just keep buying everything and everything will be OK.  The idea was that every kind of investment will continue to grow in value forever as long as we all keep spending.

 

A simple proof of this philosophy occurred after the 9-11 attack in New York City.  Alan Greenspan, chairman of the Federal Reserve, lowered interest rates (2.5% to 1.75%).  President George W. Bush told everyone to keep buying everything.

 

Where were the managers of our corporations as all of this was happening?  They were making millions of dollars for themselves.  Bernie Madoff and others like him bought into the idea that the value of everything would never go down.  The idea was It’s a never ending pyramid scheme!   CNBC documents the philosophy on it’s program House of Cards.  This program tells the frightening reality.  An unapologetic, unremorseful Alan Greenspan drove me wild.  

 

US
Saturday, February 14th  7p | 10p ET
Sunday, February 15th  9p ET
Monday, February 16th  8p | 12a ET
Sunday, March 1st  Midnight ET
Sunday, March 15th  9p ET

ASIA
Monday, February 16th 8p | 11P SIN/HK
Tuesday, February 17th 4a SIN/HK

Australia
Monday, February 16th 10p AEDT
Tuesday, February 17th 2a | 7a AEDT

 Now we are in the ditch.  I do not know all the answers.  Clearly our smartest people do not know the answers either.  For starters I suggest we fire all the top managers in all the companies that are asking for federal bail outs.   “Yes we can” and we should.

Government Spending to Jolt the Economy –

“What we’ve got here is a failure to communicate!” “We won!”

  

I heard John Cronyn (R-Tx) on the floor of the Senate just prior to voting against the stimulus package say “We cannot spend our way into properity.” He was echoing John Stossel of ABC’s 20/20 who wrote a similarly titled column posted on Real Clear Politics.  Many other conservative Republicans have repeated those words but none have offered an alternative.  Of course this all followed on the heels of Rahm Emanual’s appearance on Meet the Press.  Obviously there are two schools of thought.

 

The American people have spoken when they elected Barack Obama president and sent large numbers of Democrats to Congress.  Of course this is a big gamble.  Yes there are doubts about whether the stimulus bill will jolt the economy.  Republicans had their chance and their ideas did not work.  I have lots of misgivings about the Democratic stimulus package.  Where are the alternative ideas?

Greed is the Problem

What in tarnation is a board member to do with all of those “new fangled” securities that are so goldang hard to understand? That is the essence of Jack Welch’s Welch Way column in BusinessWeek posted on January 14, 2009.

  

 

The wealthy of America don’t get it!  The rest of us are fed up!  It’s not just the people on Wall Street.  It’s the economists, the managers of the big corporations, the people who manage our government entities and everyone else that have “life styles of the rich and famous.”  All of them have taken advantage of the free enterprise system but few have participated in making America and the world a better place.

 

The eight CEOs of the largest banks and investment houses in the country looked totally foolish at a televised House committee hearing today.  These were the leaders of Wells Fargo & Co., Morgan Stanley, The Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., State Street Corp. and the Bank of New York Mellon.  None of them were apologetic about receiving outrageously high pay as their banks were losing money.  Despite claiming to be experts in their field none could explain how they had been unable to see the credit crises they had created.

 

Jack Welch defended corporate CEOs and boards in his BusinessWeek column How Much Blame Do Boards Deserve? contending, “Unfortunately, even boards with sound judgment didn’t stand much of a chance against the newfangled financial instruments that sparked this crisis.” He writes in this column “board members are only at a company “one or two days a month and are composed of individuals who also hold demanding full-time jobs.”  He says Shareholder activists expect too much from board members.  So why do so many board members receive pay of $100,000 or more per year?

 

The Peanut Corporation of America was reported to have knowingly shipped contaminated food.  The owners and managers refused to testify to a congressional committee and sight their rights under the 5th amendment of the Constitution.  They take the position that it only cost nine deaths and sickened 600 people.  From an Associated Press report, “The company’s internal records show it “was more concerned with its bottom line than the safety of its customers,” said committee Chairman Henry Waxman, D-Calif.”

 

The real issue is the wealthy protecting their fifedoms.  Neither stock holders, employees, nor government have any control over their behavior.  The irreconcilable excuses of executives in finance, auto manufacturing, and other industries will ultimately result in more government control.  However their power will not diminish significantly and they will continue to be spearate from mainstream America.  This is all the result of the laissez-faire philosophy laid out by President Ronald Reagan when he said “government is the problem.”  That president was wrong.  Greed is the problem.

Relying on the FDA

There is no way anyone can know the source of the ingredients of the foods they eat.  We must rely on the FDA to ensure safety.  Simply put that agency has failed.  There have been numerous food scares during the past few years.  Mad Cow Disease was followed by salmonella in spinach, peppers and tomatoes.  The issue of salmonella tainted peanuts  is not new.  A few years ago the contamination was in Peter Pan Peanut Butter. 

 

Now the contamination is in dry-roasted and oil-roasted peanuts, granulated peanuts, peanut meal, peanut butter and peanut paste.  This situation has evolved into a criminal investigation by the FDA and the Justice Department at the Peanut Corp. of America facility in Blakely, Georgia.  The problem is the cavalier attitude of the people involved.  The peanut company and even the town mayor have the attitude that they can get away with their behavior.

 

Blakely Mayor Ric Hall said, “We’re in hot water. When they found salmonella in spinach, peppers and tomatoes, people said they would never eat them again, and guess what? We’re right back in there eating salads. I think the same thing will happen with peanuts.”

 

Is the relaxing of FDA inspection part of Bush administration laisseze faire policies?  There is nothing on the internet to support that idea.  Still the number of incidence during the past eight years does make me suspicious.  Ot would take a thorough investigation by a news investigating organization.  60 Minutes, the Tribune Company, or the Washington Post should research inspection records.

Obama Outreach

Clearly there are flaws in the Obama Recovery and Reinvestment Act.  Then again what law was ever perfect?  President Obama is not receiving the bi-partisan support he had wanted. 

 

If you watched any of the Sunday morning political talk shows the question of coming together for the good of the country was clearly kicked aside.  The Republicans want to show that their opinion matters so they are taking a contrary position even if it is irresponsible. The Democrats have an overwhelming majority in the House and a near filibuster proof majority in the Senate.  The President has taken the next step by going directly to the public.  He sent me and everyone else on his email list an email entitled “What recovery means for you.”

 

Here is the body of that mail

The economic crisis is growing more serious every day, and the time for action has come.
Last week, the House of Representatives passed the American Recovery and Reinvestment Act, which will jumpstart our economy and put more than 3 million people back to work.
I hope to sign the recovery plan into law in the next few weeks. But I need your help to spread the word and build support.
It’s not enough for this bill to simply pass Congress. Americans need to know how it will affect their lives — they need to know that help is on the way and that this administration is investing in economic growth and stability.
Governor Tim Kaine has agreed to record a video outlining the recovery plan and answering questions about what it means for your community. You can submit your questions online and then invite your friends, family, and neighbors to watch the video with you at an Economic Recovery House Meeting.
The stakes are too high to allow partisan politics to get in the way.
That’s why I’ve consulted with Republicans as well as Democrats to put together a plan that will address the crisis we face.
I’ve also taken steps to ensure an unprecedented level of transparency and accountability. Once it’s passed, you will be able to see how every penny in this plan is being spent.
You can help restore confidence in our economy by making sure your friends, family, and neighbors understand how the recovery plan will impact your community.
Sign up to host or attend an Economic Recovery House Meeting and submit your question for the video now:
Our ability to come together as a nation in difficult times has never been more important.

I know I can rely on your spirit and resolve as we lead our country to recovery.

Thank you,

President Barack Obama

P.S. — If you can’t host or attend an Economic Recovery House Meeting, you can still submit your questions for Governor Kaine and then share the video with your friends and family this weekend. Learn more here:

http://my.barackobama.com/recovery 

 

 

 Paid for by Organizing for America, a project of the Democratic National Committee — 430 South Capitol Street SE, Washington, D.C. 20003. This communication is not authorized by any candidate or candidate’s committee.

 

Highly respected economists on both the right and the left have stated that the government needs to implement a stimulus package very quickly.  Representative Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said the bill was designed to help people who have been damaged in the economic meltdown as well as stimulate the economy.  His words, “I never saw a tax cut fix a bridge. I never saw a tax cut give us more public transportation. The fact is, we need a mix.”

 

Republicans would do well to support this plan even if it’s not perfect.  The alternative could easily mean another Great Depression.

Bonuses – We Have No Shame

The average Wall Street bonus was $112,000.  That includes everyone from clerks to the top paid executives.  It’s Theirs and They’re Not Apologizing.  That is the report in the New York Times.  Those of us who are not part of that Wall Street crowd are probably socialists.  That is their message.

 

The Washington Post reports “A senior executive may have a base pay of $200,000 to $300,000 but make another $2 million to $10 million in bonuses, a portion of which may be in company stock.”  There is no wonder that President Obama called those bonuses shameful.

 

Not one of those high paid people has appeared on any television show to justify their pay let alone the bonuses.  The reason is apparent.  The executive boards and the managers of these companies are all part of the same group and they control the compensation packages.  They do not care what the rest of us think.  The problem for them is that they have asked for government bail outs.  The wealthy capitalists are inviting the controls they do not want.  They seem to think that those calling for more reasonable pay are “socialists.”  As unemployment rises, house values fall, and businesses close will that that word be a sufficient barrier?  I doubt it. 

 

Read my column And You Thought You Were Wealthy for more information about America’s rich.

An Alternate Career – Call It Plan B

My parents were correct when they pushed me to obtain a college degree.  The fact that I was a graduate did enable me to stay employed all of my life.  One day as I drove to a vendor, I heard Rush Limbaugh talking about having a job that could not be out sourced.  He pointed out that service jobs would always be needed and they would require someone to visit a home or a business to be completed.  There is always a need for plumbers, electricians and other services.  I took his observation to heart and found something to do that requires my services on site.  I am a notary public and prepare legal documents for my clients.

 

 

Just today I found this article posted on Careerbuilder.com.

By Rachel Zupek, CareerBuilder.com writer

 

In a perfect world, we’d all earn more money than we’d know what to do with. But, in such tough economic times, we have to be realistic.

 

The truth is, while earning an abundance of money would be ideal, those earning the average national income or even slightly above it, should consider themselves lucky.

 

It’s hard to feel lucky, however, when than the national mean average salary is $42,504 per year, according to the National Compensation Survey. It might not seem like much, but these days, it’s more than enough — or at least it has to be.

 

That’s why we’ve compiled a list of jobs that pay around the average, in the $40,000 range. If you can’t find a job earning enough to keep you comfortable for the rest of your life, at least you might find something to keep you comfortable for the time being.

 

Here are 10 jobs in various trades that earn around or more than the national average, and the industries with the highest levels of employment for each profession — aka, the places with the most jobs.*

1. Graphic designers design or create graphic layouts for books, magazines, newspapers, Web sites and other commercial or promotional needs.**

Qualifications: A bachelor’s or an associate degree

Industries with most job openings: Specialized in design services, publisher of newspaper, book, periodical and directory publishers, advertising

Salary: $40,000/year*BLS.
** Job descriptions provided by CBSalary.com and the BLS.

2. Precision instrument repairers fix and maintain watches, cameras, musical instruments, medical equipment and other precision instruments.

Qualifications: A high school diploma, in some cases post-secondary education.

Industries with most job openings: Professional and and supplies merchant wholesalers; electronic and precision equipment repair and maintenance; electronics and appliance stores.

Salary: $41,498/year

3. Medical and public health social workers offer patients and families psychosocial support to help cope with chronic, acute or terminal illnesses. They can also suggest caregivers, and counsel and educate the patient on his or her illness.

Qualifications: A bachelor’s degree, sometimes an advanced degree; state licensure.

Industries with most job openings: General medical and surgical hospitals, individual and family services, home health-care services.

$43,056/year

Salary:

4. Kindergarten teachers (except special education) teach young children basic science, music, art and literature, and encourage physical, mental and social development.

Qualifications: A bachelor’s degree from a teacher education program and a state teaching license.

Industries with most job openings: Elementary and secondary schools; child day-care services; individual and family services.

Salary: $43,394/year

5. Plumbers, pipefitters and steamfitters put together, install and fix pipelines or pipe systems that carry water, steam, air and other liquids or gases.

Qualifications: Training in career and technical schools and community colleges, apprenticeships and on-the-job training.

Industries with most job openings: Building equipment contractors; nonresidential building construction; utility system construction.

Salary: $44,866/year

6. Dietitians and nutritionists plan diet requirements and determine nutritional needs for clients; manage meal programs and oversee meal preparation.

Qualifications: A bachelor’s degree and state licensure, certification or registration.

Industries with most job openings: General medical and surgical hospitals; nursing-care facilities; outpatient care centers.
$45,001/year

Salary:

7. Reporters and correspondents report and convey facts about newsworthy events to an audience via newspaper, magazine, radio, television or Internet.

Qualifications: A bachelor’s degree in journalism or mass communications is preferred, but some other majors are OK; internships are preferred.

Industries with most job openings: Newspaper, periodical, book and directory publishers; radio and television broadcasting; other information services.

Salary: $45,115/year

8. Bailiffs maintain the order and security in a courtroom and escorts jury members outside the courtroom to prohibit interaction with the public.

Qualifications: They vary by employer, but most require a high school diploma or equivalent, and some also require some college education or full-time work experience.

Industries with most job openings: Local government.

Salary: $47,502/year

9. Respiratory therapists administer respiratory care and life support to patients with breathing problems and other cardiopulmonary disorders, under the supervision of a physician.

Qualifications: An associate degree is the minimum educational requirement, but a bachelor’s or master’s degree may be important for advancement; state licensure.

Industries with most job openings: General medical and surgical hospitals; specialty hospitals (except mental or substance abuse); nursing-care facilities.

Salary: $48,033/year

10. Architectural and civil drafters prepare detailed drawings of architectural and structural features of buildings used in civil engineering projects like highways, bridges and public works.

Qualifications: Employers prefer applicants who have completed post-secondary school training in drafting, which is offered by technical institutes, community colleges and some four-year colleges and universities.

Industries with most job openings: Architectural, engineering and related services; residential building construction; nonresidential building construction.

Salary: $49,429/year

* Salary data according to the most recent National Compensation

Survey, December 2006 – January 2008, provided by the

Rachel Zupek is a writer and blogger for CareerBuilder.com. She researches and writes about job search strategy, career management, hiring trends and workplace issues.

More Restrictions of Trade

I wrote about Competition is Dying in America! on August 31, 2008.  The merger of two multi-billion dollar companies is just another example of corporations gone wild.

 

No.1 drugmaker Pfizer (NYSE: PFE) is buying No. 12 Wyeth (NYSE: WYE) for $68 billion.  Along with this buyout will be the elimination of an estimated 20,000 jobs and a reduction in competition.

 

Wyeth is a profitable company that saw its net income essentally flat between 2007 and 2008.  The company has nine groups of products including Advil and Centrum.  Pfizer has experienced a 90% drop in income.  It is the maker of Viagra and Detrol.

 

So exactly how does this merger improve Pfizer’s situation?  It doesn’t.  The merger does not cure its Lipitor revenue losses and it does not put more new drugs into the pipe line according to industry experts.

 

There is no doubt about the elimination of jobs and reduced competition.  The Business Pundit says, “Now you can buy your Advil, Centrum multivitamins, Preparation H, condoms, Lipitor, and Viagra from Pfizer. I can see their new logo  now: We have the whole body covered.”  I ask what happened to anti trust and monopoly laws?

 

 

A complete discussion of competition law is in Wikipedia.  A summary of U.S. anti-trust three elements as follows:

  • prohibiting agreements or practices that restrict free trading and competition between business entities. This includes in particular the repression of cartels.
  • banning abusive behaviour by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others.
  • supervising the mergers and acquisitions of large corporations, including some joint ventures. Transactions that are considered to threaten the competitive process can be prohibited altogether, or approved subject to “remedies” such as an obligation to divest part of the merged business or to offer licences or access to facilities to enable other businesses to continue competing.

 

I doubt the Obama administration will limit these kinds of mergers.  Lobbyists still hold sway over government.  The media (newspapers, radio and television) ought to shine a beacon on these activities.

 

March 9, 2009

Update: more of the same M&A nonsense continue unabated.  This link to another web site supports my views

American Recovery and Reinvestment Act of 2009

This plan will spend an astonishing amount of money.  The proposed law provides significant details on the various expenditures.  I skimmed through the entire 258 page document.  It is reasonable to expect many changes before final passage.  Considering the fact that many companies are closing their doors and putting thousands out of work (Circuit City employed 34,000 people), there is no option unless we want to follow the follow the Herbert Hoover model and let totally free capitalism function without government interference.

 

According to MSNBC this is a summary of the expenditures

$295 Billion

For Food Stamps/Unemployment/Green Jobs

$275 Billion

For Tax Relief

$170 Billion

For State Medicaid/Education

 $85 Billion 

For Infrastructure Projects

$825 Billion

TOTAL

 

Then again who borrows more money to get out of debt?  Perhaps food stamps and unemployment insurance are the only two items that should be approved.

Free Trade Is Not Free!

World wide free trade is a wonderful concept.  The theory goes something like this.  If we reduce trade tariffs everyone benefits from lower costs and a rising tide of trade is profitable for everyone.  Unfortunately it does not work so well in the real world.

 

Superior Industries International is a wheel manufacturer based in Van Nuys, California (a suburb of Los Angeles).  The company has just announced the closing of its manufacturing facility in Van Nuys.  They will be laying off 290 people from March through September as they close the facility.  At its peak at that facility there were over 1,200 employees.  The company does have three manufacturing facilities in Chihuahua, Mexico.

 

This is not the first company to relocate its manufacturing to Mexico.  Price Pfister, a kitchen and bath faucet manufacturer had a manufacturing facility in Pacoima, California (another suburb of Los Angeles) that employed 1,300 people.  The company’s manufacturing facility was moved to Mexicali, Mexico.

 

Technicolor had two manufacturing facilities in the United States.  They manufactured compact discs (CDs) and DVDs.  One was located in Camarillo, California and the other in the Charlottesville area of Virginia.  Each employed over 750 people.  Both were closed.  Manufacturing now occurs in Guadalajara, Mexico.

 

In all three of these situations the manufacturing facilities employed people at wages that paid for their homes, cars, and put food on the table.  The loss of those jobs is just a few examples of the impact of NAFTA and the idea of free trade.  Of course no one meant for this to happen.  Somehow American genius was supposed to devise new jobs for all of those lost to Mexico.

 

Corporations couldn’t be happier with NAFTA and other free trade agreements.  After all, in their view, it’s the bottom line (net income) that counts.  There is no concern for the welfare of the individual or for the United States well being.  The reason is that it is not corporate America.  The big businesses are world wide.  Borders are meaningless.

 

Will the new administration in Washington change this?  I doubt it.  I hope I am proved wrong.