3/13/04 Malfunctioning
As is the weekend field trip custom, today’s will cover North Carolina, Georgia, Missouri, Utah, and the Bay Area of California. Before we leave, I think we might take a moment to remember our two U.S. soldiers killed early this morning in Tikrit, two soldiers killed on Thursday by a roadside bomb at Habbaniyah, and one soldier killed and two others wounded on Wednesday.
Our first stop is in Atlanta with the management of Delta Air Lines. The company had previously predicted a first quarter loss of $300 to $350 million. Yesterday the loss estimate was boosted to $400 million. Management stated about $47 million of the increase is due to higher fuel-related costs. They also disclosed that its pension plans are underfunded by $5.7 billion, up from $4.9 billion in 2002. It’s a good thing the stock market rallied in 2003. Can you imagine the underfunding had that not taken place? Do you think Delta is the only airline facing higher fuel costs and problems with pension plan funding?
Seasonal layoffs took a toll on January’s employment in North Carolina. A visit with the state’s Employment Security Commission indicated that unemployment rates rose in 89 North Carolina counties in January. It had been hoped that the state could dodge the seasonal pattern bullet.
We’ve been invited to Brookfield, Missouri. This is a north-central Missouri town of about 4,700. Becky Cleveland, Brookfield’s economic development director, is here to greet us. She stated “we had no idea this was coming, and I hate to say that. I don’t think the employees knew this was coming…the decision was probably made at a much higher level.” Scott Ocholik is here too. He is director of finance for DURA Automotive Systems. The news is not good. Scott stated DURA would begin phasing out the work force in a couple of months. The local facility makes brake cables and employs 250 workers. The plant will close. DURA will close other facilities. Scott explained the company has acquired new plants and is operating more efficiently. DURA has 90 plants, 30 of them in North America. DURA is the second-largest employer in Brookfield.
There’s Sarah Wilhelm, a fiscal policy analyst for Utah issues. She stated “there are 200,000 poor people in Utah. That’s officially poor.” There are another 400,000 Utahns who don’t earn enough to pay their living expenses, a combination of bills that include housing, medical insurance and food, according to the Utah Issues annual report—Poverty in Utah 2003. She reported that the problem is threefold: lower average wages, high housing prices, and large family sizes. The report was released yesterday and stated “almost one-fifth of Utahns do not have sufficient net worth to survive for three months without income.” According to the report, white-collar workers earned wages at a rate of 24% less than the national average. On the housing side, growth in Utah’s housing prices increased income levels by threefold in the 1990s. Between 1990 and 2000, those housing price increases of 104% led the entire nation. During that time, Utah’s average household income grew by 24%. The report indicated that 43% cannot afford “fair-market rent” on a two-bedroom apartment.
Christopher Thornberg, an economist with the UCLA Anderson Forecast, stated “these economies in the Bay Area are inter-linked. That black hole known as the Silicon Valley is dragging the whole area down with it.” The average job total for the East Bay during the December-February period was down 5,800 jobs from the September-November period. The same comparison for the Bay Area revealed a loss of 28,000 jobs. Over the past year, state and local government jobs eroded at a much faster pace than private-sector employment in the Bay Area. Public sector woes could present problems for the private sector. As Sung Won Sohn, chief economist for Wells Fargo Bank observed, “the government is one of the largest users of private consulting services. A number of business service companies depend on work from the government at all levels.”
I don’t want you to think that the U.S. is alone in its unemployment problems. Volkswagen, Thomas Cook, and Degussa plan to cut a combined 3,200 jobs in Germany. In February, Germany’s unemployment rate rose to 10.3%. Since Schroeder became chancellor in October 1998, the number of unemployed workers has risen by 190,000.
Yesterday, the Commerce Department stated inventories rose 0.1% in January, lower than the gains expected. In my opinion, the low level of inventories reflect a loss of confidence, a lack of ability to raise prices, and the desire for inventories to meet demand on a just-in-time basis.
The U.S. trade deficit for 2003 as a whole stands at a record high of $541.1 billion, up from $480.9 billion in 2002. Of course, it’s not a problem because foreigners keep investing in dollar assets. We can smile all the way to the deficit poor house.
Richard S. Foster is not a household name. He was deputy chief actuary for the Social Security Administration for 13 years prior to becoming the chief Medicare actuary I 1995. There is a link on the Knight Ridder website about Foster. In late January, he provided the White House with calculations on the cost of the proposed Medicare legislation. The Congress had been provided numbers estimated at no more than $400 billion. Foster indicated the law would cost $534 billion. He was directed by his boss to “cease responding directly to Congress.” It sounds a bit like ‘we have a problem Houston.’
Friday, March 12, 2004
3/12/04 Trading Down
Don Evans, Secretary of Commerce: “Job trends are very encouraging.”
According to figures released yesterday by the U.S. Department of Labor, Massachusetts lost jobs faster than any other state since employment peaked in 2001. The state suffered a 6.2% decline in jobs between January 2001 and January 2004, the highest rate in the nation and more than three times the national average drop of 1.7% for that period. In the past three years, employment fell by 20% in manufacturing, by 25% in information and telecommunication, and by 15% in the professional and business sector, which includes both high-end and low-end service jobs. Employment in New England declined 3.9% during the three-year period.
The Maryland Department of Labor, Licensing, and Regulation reported that the non-seasonally adjusted unemployment rate increased to 6.3% in January from 5.4% a month earlier as a result of colder weather and customary post-holiday reductions in staffing among some businesses.
The state of Michigan survey of payroll jobs showed a decline of 14,000 positions in January. It marked the fourth month in a row that payroll jobs have declined in Michigan. David Littman, chief economist at Comerica, stated “it underscores Michigan’s inordinate reliance on manufacturing compared with the nation, and how employers are super cautious, and are able to substitute machines for labor to stay competitive, not to mention their outsourcing and off-shoring.” During January, only Oregon’s 7.7% and Alaska’s 7.3% rates were higher than Michigan’s. Littman observed “I don’t look to see any improvement relative to other states for four to six months.” There are 336,000 unemployed people in Michigan. There are presently 720,000 factory jobs in Michigan, 25,000 below that of a year ago.
Revised data for December 2003 show that Pennsylvania had 47,000 fewer jobs than previously reported, according to an analysis of new government figures by the Keystone Research Center. Stephen Herzenberg, an economist and executive director of Keystone, stated “the promises made by the Bush Administration about new jobs look more and more like fantasy.” Since February 2003, according to the Pennsylvania Department of Labor and Industry, the state has lost 31,800 manufacturing jobs. Those jobs paid $42,852 a year. Leisure and hospitality paid $14,133 yearly. Education and health services paid $33,724. In this state there has been serious trading down in pay as manufacturing jobs are eliminated.
The Sheaffer pen factory was founded in Fort Madison, Iowa in 1905. France-based Bic owns Shaeffer, one of the oldest brands of writing instruments made in the U.S. As sales have declined, the plant has cut more than 1,500 jobs over the last 25 years. About 115 workers remain. Nearly all the remaining employees have at least 30 years of seniority. Within the next two years the plant will close. Bic is also considering closing a Connecticut plant that employs about 300 people.
Greenspan: “In all likelihood, employment will begin to increase more quickly before long.” Since the latest monthly numbers indicated no rise in employment, a gain of one person on the payrolls would be a giant leap forward for mankind. Greenspan and Evans bear a strong resemblance to the wazoo bird. I like the latter better, however. The wazoo bird goes about its ever-decreasing circular path without dispensing bullshit.
Union workers at American Axle, a large GM supplier, approved a four-year contract where new hires receive a lower wage than current workers do. You can expect to read about new hires receiving this type of wage package at Delphi and Visteon within the next two or three weeks.
Zhou Xiaochuan, governor of the People’s Bank of China, stated “we have been able to choke the oversupply of the monetary base and the excessive growth of credit.” It is rumored that Zhou will replace Greenspan as Fed chairman.
Frank Nothaft, Freddie Mac chief economist: “For the year as a whole, we expect long-term rates may be even lower annually than they were in 2003.”
Say it isn’t so. Greenspan stated yesterday that tax increases probably will be needed in combination with benefit cuts to close the Social Security funding gap. Maybe we could close 50% of the government agencies before cutting benefits and/or raising taxes.
Don Evans, Secretary of Commerce: “Job trends are very encouraging.”
According to figures released yesterday by the U.S. Department of Labor, Massachusetts lost jobs faster than any other state since employment peaked in 2001. The state suffered a 6.2% decline in jobs between January 2001 and January 2004, the highest rate in the nation and more than three times the national average drop of 1.7% for that period. In the past three years, employment fell by 20% in manufacturing, by 25% in information and telecommunication, and by 15% in the professional and business sector, which includes both high-end and low-end service jobs. Employment in New England declined 3.9% during the three-year period.
The Maryland Department of Labor, Licensing, and Regulation reported that the non-seasonally adjusted unemployment rate increased to 6.3% in January from 5.4% a month earlier as a result of colder weather and customary post-holiday reductions in staffing among some businesses.
The state of Michigan survey of payroll jobs showed a decline of 14,000 positions in January. It marked the fourth month in a row that payroll jobs have declined in Michigan. David Littman, chief economist at Comerica, stated “it underscores Michigan’s inordinate reliance on manufacturing compared with the nation, and how employers are super cautious, and are able to substitute machines for labor to stay competitive, not to mention their outsourcing and off-shoring.” During January, only Oregon’s 7.7% and Alaska’s 7.3% rates were higher than Michigan’s. Littman observed “I don’t look to see any improvement relative to other states for four to six months.” There are 336,000 unemployed people in Michigan. There are presently 720,000 factory jobs in Michigan, 25,000 below that of a year ago.
Revised data for December 2003 show that Pennsylvania had 47,000 fewer jobs than previously reported, according to an analysis of new government figures by the Keystone Research Center. Stephen Herzenberg, an economist and executive director of Keystone, stated “the promises made by the Bush Administration about new jobs look more and more like fantasy.” Since February 2003, according to the Pennsylvania Department of Labor and Industry, the state has lost 31,800 manufacturing jobs. Those jobs paid $42,852 a year. Leisure and hospitality paid $14,133 yearly. Education and health services paid $33,724. In this state there has been serious trading down in pay as manufacturing jobs are eliminated.
The Sheaffer pen factory was founded in Fort Madison, Iowa in 1905. France-based Bic owns Shaeffer, one of the oldest brands of writing instruments made in the U.S. As sales have declined, the plant has cut more than 1,500 jobs over the last 25 years. About 115 workers remain. Nearly all the remaining employees have at least 30 years of seniority. Within the next two years the plant will close. Bic is also considering closing a Connecticut plant that employs about 300 people.
Greenspan: “In all likelihood, employment will begin to increase more quickly before long.” Since the latest monthly numbers indicated no rise in employment, a gain of one person on the payrolls would be a giant leap forward for mankind. Greenspan and Evans bear a strong resemblance to the wazoo bird. I like the latter better, however. The wazoo bird goes about its ever-decreasing circular path without dispensing bullshit.
Union workers at American Axle, a large GM supplier, approved a four-year contract where new hires receive a lower wage than current workers do. You can expect to read about new hires receiving this type of wage package at Delphi and Visteon within the next two or three weeks.
Zhou Xiaochuan, governor of the People’s Bank of China, stated “we have been able to choke the oversupply of the monetary base and the excessive growth of credit.” It is rumored that Zhou will replace Greenspan as Fed chairman.
Frank Nothaft, Freddie Mac chief economist: “For the year as a whole, we expect long-term rates may be even lower annually than they were in 2003.”
Say it isn’t so. Greenspan stated yesterday that tax increases probably will be needed in combination with benefit cuts to close the Social Security funding gap. Maybe we could close 50% of the government agencies before cutting benefits and/or raising taxes.
Thursday, March 11, 2004
3/11/04 Economic Insecurity
Yesterday, Bush made his fifteenth visit to Ohio. He came to the City Of Cleveland to talk about small business. He talked about offshoring. What didn’t he mention? He omitted paying the National Congress exile group headed by Ahmad Chalabi about $340,000 a month for intelligence about insurgents and other matters. He failed to mention his proposed budget plan that cut funding for the SBA by $79 million. Ohio has lost 270,000 jobs since January 2001. Of those, 160,100 are manufacturing jobs. As of December 2003, there were 350,729 unemployed Ohioans. Since Bush took office, the state jobless rate jumped from 3.9% to over 6%. In the 2000 election, Bush won Ohio by 3.5 percentage points. The state has 20 electoral votes. No president has been elected without winning Ohio. Today, Bush will name a new manufacturing czar. It’s too little and too late. Why will Bush lose Ohio and the election? Robert Reich said it right on the money. He observed “economic insecurity-insecurity about losing jobs, losing pay and losing benefits- -is widespread.” The latest Zogby poll shows 21% of probable voters are afraid of losing their jobs in the next 12 months. With those earning more than $75,000, it jumps to 25%.
Bush and his cronies want you to believe only a few states are responsible for the loss of jobs. That is pure bullshit. When all the revisions are analyzed, only Alaska has provided more jobs. Let’s look at Georgia. The revisions came in yesterday. Atlanta had been highlighted as a city creating jobs. In 2003, the fifth highest population migration took place into the state of Georgia. The main attraction was job creation. Unfortunately, Metro Atlanta ended 2003 with 84,200 fewer jobs than first thought. Instead of creating 67,900 jobs, they actually lost 16,800 jobs. Georgia started 2003 with 3,903,300 jobs and ended the year with 3,899,800. It was originally thought that Georgia had gained 63,200 jobs in 2003.
It was reported yesterday that the federal government has stuck the states with a $29 billion tab. Of that amount, almost $10 billion was for enforcing the NO Child Left Behind education law and another $10 billion in providing education for disabled students. The National Conference of State Legislatures indicated that states will have to spend 6% of their general fund revenues in 2004 on federally mandated programs and 7% in 2005.
Following its purchase of FleetBoston Financial Corp, the Bank of America might cut as many as 11,000 jobs.
China has imposed a June 1 deadline on data encryption standards. Intel stated “we have been unable to find an appropriate solution that meets Intel’s product quality standards that follows the People’s Republic of China requirements. “ This would preclude Intel from offering Centrino products in China.
First we had JC Penney biting the bullet on Eckerd Drug. Now Target is moving towards disposing of Marshall Field’s and Mervyn’s. Penney has had a difficult time finding a buyer for Eckerd. Target won’t have a picnic in its search for a buyer and/or buyers.
Yesterday, a record U.S. trade deficit of $43.1 billion was reported for January. Part of the deficit can be blamed on rising oil prices. Another contributing factor was the 40% drop in meat and poultry exports since November 1993. Mad cow and avian flu can be the kiss of death, no pun intended. One additional factor was the drop in Boeing aircraft deliveries. The latter is a recurring theme.
In January, car sales fell 6.6%, their weakest performance in 7 years. However, there has been a pickup in recalls. Yesterday, Ford chimed in and recalled 1.3 million vehicles.
U.S. companies are generating greater after-tax earnings overseas. It was reported that, at the end of 2002, earnings kept overseas grew to $639 billion from an estimated $400 billion in 1999.
It was a little over six months ago that I wrote about Skype and its new Internet voice/calling service. Their website indicates 8.5 million users globally and 1.2 million users are added monthly.
Stan Greenberg, Democratic pollster: “When we look back in November, it will be disposable income as much as jobs which will determine the outcome.” As the markets moved yesterday below their December 31, 2003 closing prices, matters came into clearer view. Bush may not get Main Street but Wall Street had better get Main Street in a hurry. Economic insecurity leads to lower levels of consumer spending and less growth in the service sector.
Yesterday, Bush made his fifteenth visit to Ohio. He came to the City Of Cleveland to talk about small business. He talked about offshoring. What didn’t he mention? He omitted paying the National Congress exile group headed by Ahmad Chalabi about $340,000 a month for intelligence about insurgents and other matters. He failed to mention his proposed budget plan that cut funding for the SBA by $79 million. Ohio has lost 270,000 jobs since January 2001. Of those, 160,100 are manufacturing jobs. As of December 2003, there were 350,729 unemployed Ohioans. Since Bush took office, the state jobless rate jumped from 3.9% to over 6%. In the 2000 election, Bush won Ohio by 3.5 percentage points. The state has 20 electoral votes. No president has been elected without winning Ohio. Today, Bush will name a new manufacturing czar. It’s too little and too late. Why will Bush lose Ohio and the election? Robert Reich said it right on the money. He observed “economic insecurity-insecurity about losing jobs, losing pay and losing benefits- -is widespread.” The latest Zogby poll shows 21% of probable voters are afraid of losing their jobs in the next 12 months. With those earning more than $75,000, it jumps to 25%.
Bush and his cronies want you to believe only a few states are responsible for the loss of jobs. That is pure bullshit. When all the revisions are analyzed, only Alaska has provided more jobs. Let’s look at Georgia. The revisions came in yesterday. Atlanta had been highlighted as a city creating jobs. In 2003, the fifth highest population migration took place into the state of Georgia. The main attraction was job creation. Unfortunately, Metro Atlanta ended 2003 with 84,200 fewer jobs than first thought. Instead of creating 67,900 jobs, they actually lost 16,800 jobs. Georgia started 2003 with 3,903,300 jobs and ended the year with 3,899,800. It was originally thought that Georgia had gained 63,200 jobs in 2003.
It was reported yesterday that the federal government has stuck the states with a $29 billion tab. Of that amount, almost $10 billion was for enforcing the NO Child Left Behind education law and another $10 billion in providing education for disabled students. The National Conference of State Legislatures indicated that states will have to spend 6% of their general fund revenues in 2004 on federally mandated programs and 7% in 2005.
Following its purchase of FleetBoston Financial Corp, the Bank of America might cut as many as 11,000 jobs.
China has imposed a June 1 deadline on data encryption standards. Intel stated “we have been unable to find an appropriate solution that meets Intel’s product quality standards that follows the People’s Republic of China requirements. “ This would preclude Intel from offering Centrino products in China.
First we had JC Penney biting the bullet on Eckerd Drug. Now Target is moving towards disposing of Marshall Field’s and Mervyn’s. Penney has had a difficult time finding a buyer for Eckerd. Target won’t have a picnic in its search for a buyer and/or buyers.
Yesterday, a record U.S. trade deficit of $43.1 billion was reported for January. Part of the deficit can be blamed on rising oil prices. Another contributing factor was the 40% drop in meat and poultry exports since November 1993. Mad cow and avian flu can be the kiss of death, no pun intended. One additional factor was the drop in Boeing aircraft deliveries. The latter is a recurring theme.
In January, car sales fell 6.6%, their weakest performance in 7 years. However, there has been a pickup in recalls. Yesterday, Ford chimed in and recalled 1.3 million vehicles.
U.S. companies are generating greater after-tax earnings overseas. It was reported that, at the end of 2002, earnings kept overseas grew to $639 billion from an estimated $400 billion in 1999.
It was a little over six months ago that I wrote about Skype and its new Internet voice/calling service. Their website indicates 8.5 million users globally and 1.2 million users are added monthly.
Stan Greenberg, Democratic pollster: “When we look back in November, it will be disposable income as much as jobs which will determine the outcome.” As the markets moved yesterday below their December 31, 2003 closing prices, matters came into clearer view. Bush may not get Main Street but Wall Street had better get Main Street in a hurry. Economic insecurity leads to lower levels of consumer spending and less growth in the service sector.
Wednesday, March 10, 2004
3/10/04 Knowing, Consulting, Synthesizing, And Initiating
Meg Whitman, eBay CEO: “We’re a different company every three months.”
Howard Schultz, Starbucks CEO since 1987, sat on eBay’s board of directors for five years. He considers this tenure “the highlight of my business career.”
One cannot ignore the sheer numbers posted by eBay. Its founder, Pierre Omidyar, is a computer programmer. He test marketed AuctionWeb in 1995. Within two years, the company was renamed eBay and it had 300,000 users and 40 employees. Meg became CEO in 1998. Today, its revenues are closing in on $3 billion and its worldwide customers are approaching 100 million in number. About 20 million items are listed daily on its auction site. This company has a lot in common with Starbucks and Wal-Mart. The heads of the three companies remain down-to-earth. They are constantly accessible to others in their organization. Each has a community of customers. The customers have a say in the business because the CEO listens to their concerns, their issues, their wishes, and synthesizes and initiates changes. As Meg Whitman observed, “You have to have a sense of what issues are hot in the community. A cardinal sin is not knowing what the community’s concerns are. Even worse, initiating something here without consulting the community. The beauty of this business…is that when you ask 10 questions, you get 4,000 answers. So we do a lot of synthesizing. We are also trying to stay focused and continue to solidify our brand.” It sounds simple. It requires dedication and discipline. It’s been proven, however, that only a handful of companies can perform like this day-in-and-day-out. At the end of the day, the customer becomes a repeat customer. As Meg stated, “the experience people have with each other helps define your brand.”
Business Process Outsourcing (BPO) is not a new fad. It’s been around for decades. More than 30 years ago, Ross Perot’s EDS performed data center facilities management. Automated Data Processing has been in the payroll business for decades. Gartner Dataquest estimates that organizations around the world will spend about $128 billion in 2004 for BPO contracts. They figure the amount will double in 2005. In sum, it’s not a new business model. Like the Atkins diet, it took some time to gain followers.
The IBD/TIPP Economic Optimism Index fell 2 points in March to 54.5. In January the index was 60.6 and then dropped 4.1 points in February. Over the past few months the six-month economic outlook dropped 9 points to 53.6. Raghavan Mayur, president of TIPP, stated “with a nearly jobless recovery and the latest economic numbers tempering last quarter’s optimism, a drop in the index is understandable.”
Debt collection is very labor intensive. Like customer service, it is in the process of being outsourced. The largest debt collector in the U.S. is NCO Group. Presently, overseas facilities account for about 5% of the company’s debt-collection activities, stated Paul Weitzel, the CEO. He estimates that, within five years, at least 25% of NCO’s debt collection will be conducted abroad. The company has 50,000 customers and Weitzel stated “as long as clients want to cut costs and we can’t fill seats in the United States, you’re going to see this trend continuing.”
In the Washington DC metro area Giant Food and Safeway have begun negotiating a four-year contract with their 18,000 union workers. The two chains comprise 48% of the local market. The companies want pay cuts for new workers and fewer vacation days. The two companies pay their employees an average hourly wage of $16, including overtime pay.
Germany’s DIW economic institute cut its forecast for that country’s first quarter growth to 0.1% from 0.4%. They stated “the economy does not appear to be at the start of a noticeable recovery.” The government of Japan revised downward its fourth GDP growth to 6.4% from 7%.
According to the ICSU-UBS weekly chain store index in the U.S., the index fell 0.3% in the week ended March 6. This is the third straight week that sales have declined or remained flat.
Globally, this past year the market for Bluetooth equipped products nearly doubled. Similar growth is anticipated for 2004.
Last week, Footstar Inc. filed for Chapter 11 bankruptcy protection. Following the closing of 165 locations, the company will operate 352 stores. Prior to the closings, the company employed more than 14,000 people in 40 states.
Alan Greenspan: “The concern is not so much about Social Security. The outlook for Medicare, however, is much more difficult to assess.”
On Monday evening a five-year budget was approved by Akron school board members. About 180 jobs could be cut, including 132 teaching positions.
The Alliance@IBM has recently received information about IBM Global Services’ AMS organization’s plans to reduce professional salaries. Supposedly, the objectives of the program are to “classify employees in correct position code/band/job family”, and to “reshape the IGS organization to more of a ‘pyramid’ shape versus the existing ‘diamond’ shape.” Discussions are focusing on a 10% reduction in pay. Other forms of compensation will be affected as a result.
BB & T announced plans to cut 1,000 jobs. Volkswagen will cut 5,000 jobs.
According to the BLS, in December 2003, employer costs for employee compensation averaged $33.91 per hour worked in State and local government. Wages and salaries averaged $23.56 per hour, while benefits averaged $10.35. What benefits accrued to the taxpayers? Rising government employment represents a cancerous growth. Hopefully, outsourcing will hit the government sector, and soon.
Meg Whitman, eBay CEO: “We’re a different company every three months.”
Howard Schultz, Starbucks CEO since 1987, sat on eBay’s board of directors for five years. He considers this tenure “the highlight of my business career.”
One cannot ignore the sheer numbers posted by eBay. Its founder, Pierre Omidyar, is a computer programmer. He test marketed AuctionWeb in 1995. Within two years, the company was renamed eBay and it had 300,000 users and 40 employees. Meg became CEO in 1998. Today, its revenues are closing in on $3 billion and its worldwide customers are approaching 100 million in number. About 20 million items are listed daily on its auction site. This company has a lot in common with Starbucks and Wal-Mart. The heads of the three companies remain down-to-earth. They are constantly accessible to others in their organization. Each has a community of customers. The customers have a say in the business because the CEO listens to their concerns, their issues, their wishes, and synthesizes and initiates changes. As Meg Whitman observed, “You have to have a sense of what issues are hot in the community. A cardinal sin is not knowing what the community’s concerns are. Even worse, initiating something here without consulting the community. The beauty of this business…is that when you ask 10 questions, you get 4,000 answers. So we do a lot of synthesizing. We are also trying to stay focused and continue to solidify our brand.” It sounds simple. It requires dedication and discipline. It’s been proven, however, that only a handful of companies can perform like this day-in-and-day-out. At the end of the day, the customer becomes a repeat customer. As Meg stated, “the experience people have with each other helps define your brand.”
Business Process Outsourcing (BPO) is not a new fad. It’s been around for decades. More than 30 years ago, Ross Perot’s EDS performed data center facilities management. Automated Data Processing has been in the payroll business for decades. Gartner Dataquest estimates that organizations around the world will spend about $128 billion in 2004 for BPO contracts. They figure the amount will double in 2005. In sum, it’s not a new business model. Like the Atkins diet, it took some time to gain followers.
The IBD/TIPP Economic Optimism Index fell 2 points in March to 54.5. In January the index was 60.6 and then dropped 4.1 points in February. Over the past few months the six-month economic outlook dropped 9 points to 53.6. Raghavan Mayur, president of TIPP, stated “with a nearly jobless recovery and the latest economic numbers tempering last quarter’s optimism, a drop in the index is understandable.”
Debt collection is very labor intensive. Like customer service, it is in the process of being outsourced. The largest debt collector in the U.S. is NCO Group. Presently, overseas facilities account for about 5% of the company’s debt-collection activities, stated Paul Weitzel, the CEO. He estimates that, within five years, at least 25% of NCO’s debt collection will be conducted abroad. The company has 50,000 customers and Weitzel stated “as long as clients want to cut costs and we can’t fill seats in the United States, you’re going to see this trend continuing.”
In the Washington DC metro area Giant Food and Safeway have begun negotiating a four-year contract with their 18,000 union workers. The two chains comprise 48% of the local market. The companies want pay cuts for new workers and fewer vacation days. The two companies pay their employees an average hourly wage of $16, including overtime pay.
Germany’s DIW economic institute cut its forecast for that country’s first quarter growth to 0.1% from 0.4%. They stated “the economy does not appear to be at the start of a noticeable recovery.” The government of Japan revised downward its fourth GDP growth to 6.4% from 7%.
According to the ICSU-UBS weekly chain store index in the U.S., the index fell 0.3% in the week ended March 6. This is the third straight week that sales have declined or remained flat.
Globally, this past year the market for Bluetooth equipped products nearly doubled. Similar growth is anticipated for 2004.
Last week, Footstar Inc. filed for Chapter 11 bankruptcy protection. Following the closing of 165 locations, the company will operate 352 stores. Prior to the closings, the company employed more than 14,000 people in 40 states.
Alan Greenspan: “The concern is not so much about Social Security. The outlook for Medicare, however, is much more difficult to assess.”
On Monday evening a five-year budget was approved by Akron school board members. About 180 jobs could be cut, including 132 teaching positions.
The Alliance@IBM has recently received information about IBM Global Services’ AMS organization’s plans to reduce professional salaries. Supposedly, the objectives of the program are to “classify employees in correct position code/band/job family”, and to “reshape the IGS organization to more of a ‘pyramid’ shape versus the existing ‘diamond’ shape.” Discussions are focusing on a 10% reduction in pay. Other forms of compensation will be affected as a result.
BB & T announced plans to cut 1,000 jobs. Volkswagen will cut 5,000 jobs.
According to the BLS, in December 2003, employer costs for employee compensation averaged $33.91 per hour worked in State and local government. Wages and salaries averaged $23.56 per hour, while benefits averaged $10.35. What benefits accrued to the taxpayers? Rising government employment represents a cancerous growth. Hopefully, outsourcing will hit the government sector, and soon.
Tuesday, March 09, 2004
3/9/04 The Blue Dog Coalition And The Debt Limit
Richard Rahn, Discovery Institute senior fellow and Cato Institute adjunct scholar: “One reason for the slow employment growth has been the rapid growth in government spending. Some people think government spending creates jobs (the old Keynesian myth) but, in fact, government spending reduces more jobs in the private sector than it can create in the government sector. The reason is private sector jobs tend to be more productive than government jobs, and there is a considerable cost (ie, dead weight loss) when the government extracts monies from the private sector by taxing or borrowing to pay for the government jobs. Therefore, countries with large government sectors, like Germany and France, tend to have much higher unemployment rates than countries with smaller government sectors. Slowing the growth in government spending would speed job growth.”
The Blue Dog Coalition is a group of 36 moderate to conservative Democrats in the 108th Congress. One month ago, Charlie Stenholm of Texas, Blue Dog co-chair for Policy, stated “our nation is being threatened with an economic perfect storm consisting of record deficits largely financed by foreign investors, large and growing trade deficits, and the approaching retirement of the baby boom generation. Unfortunately, the president’s budget fails to prepare our nation to deal with these economic dangers. His budget leaves our nation with large structural deficits that will be on the rise after the 5 years budget window used by OMB, just as the cost of the baby boom retirement hits.”
Rep. Tanner (TN), co-chair of the Blue Dog Budget Task Force: “We cannot write a blank check for the Administration to raise the statutory debt limit and add to the burden on American taxpayers. The President and Congress owe it to future generations to return the government to the days of fiscal responsibility and budget stability.”
Rep. Loretta Sanchez (CA): “Raising our government’s debt limit will only further worsen our existing budgetary problems. If the average American were to continue to raise the limit on a personal credit card to accommodate overspending, we would call it ‘irresponsible.’ How can we justify the same action using the hard-earned tax dollars of those very same Americans?”
In June 2002, the debt limit was raised from $5.950 trillion to $6.4 trillion. In May 2003, the debt limit was increased to $7.3484 trillion. Last week, Brian Roseboro, U.S. Treasury assistant secretary, stated the present debt limit would be reached in June 2004. This is the first time in our nation’s history that a president will have asked the Congress to raise the debt ceiling in three consecutive years. A year ago at this time, Greenspan told the Congress they should consider doing away with the debt limit, and stated it “has never in my judgment been successful in doing what it is supposed to have been doing, namely constrain spending.” Roseboro agreed with this statement and O’Neill called the debt ceiling “an abomination.” Actually, the abomination is the administration’s strident disregard for this generation’s and future generations’ economic well being. Out-of-control government spending must stop. I recommend the debt ceiling not be raised. Bring the government to a halt. Make the Congress immediately cut back on expenditures. They can begin with salary cuts for all members of Congress and all members of the Cabinet and those working in the White House. They can reduce the size of staff members and assistants to those in Congress. The Atkins diet might be popular and it might promote animal fat and pork products as being healthy. That does not include government fat and pork. The latter will soon deliver hardening of the economic arteries for all Americans. I can hear the screams from all over the U.S. I am aware that not raising the debt ceiling risks theoretical default on what are viewed as risk-free U.S. Treasury securities. I hate to scare you, but our government is busted. It’s been the Bank of Japan that has purchased approximately $100 billion of U.S treasury bills and bonds during January and February of this year. They are funding this administration’s spending habit. They are funding our budget deficit. Our nation is in a negative cash flow position. If the U.S.A. were a common stock, no analyst would recommend it as a purchase. It would be deemed a speculative grade security. The Bank of Japan cannot be the economic savior for the U.S. every month. Here’s a warning for all believing otherwise. Japan’s machinery orders fell 12.2% in January, the biggest drop in more than 3 years.
For those who still believe in the tooth fairy, through the end of February, the IRS reported the average tax refund had only risen $94 to $2,230 from the prior year’s $2,136. The $94 should be erased quickly with $2 per gallon gasoline.
Year after year Clintwood, Va. and surrounding Dickenson County have the highest unemployment rate in the state. In 2001, Travelocity signed a six-year lease to operate a call center in Clintwood. About 275 employees were hired at $8 per hour and higher, plus benefits. Travelocity announced plans to leave Clintwood. A corporate spokesperson stated routing calls through India would save $10 million in the first year alone.
In a survey conducted by the National Federation of Independent Business trade group, only 13% of small businesses stated plans to hire, down from 17% in January. Small companies create most jobs. There are approximately 6 million small employers with about 50% of all workers. Rising health insurance costs have contributed to the damper on hiring.
Financial Times: “The U.S. has had a jobless expansion for more than two years. It will soon start to test the limits of its durability.”
Greenspan: “Overall, the household sector seems to be in good shape.” According to CardWeb.com, the average household credit card debt is $9,200. In 2003, personal bankruptcies rose 5.6% to 1.63 million. The average client seeking help from the National Foundation for Credit Counseling, the nation’s largest organization of nonprofit credit counseling agencies, has more than $15,700 in unsecured consumer debt and $30,000 in gross income.
According to the Nellie Mae National Student Loan Survey, almost 1 in 5 college and professional school graduates states career plans have changed because of student debt. In 1997, the average undergraduate came away with $11,400 in debt. In 2002, average indebtedness had risen 66% to $18,900 according to the survey. During the same time, graduate student debt increased from $21,000 to $31,700. For law and medical students the average debt is $91,700.
National Mortgage News reported yesterday that Des Moines-based Principal Financial Group is interested in selling its residential mortgage unit, Principal is the nation’s 11th-largest lender and, at the end of 2003, serviced $119 billion in loans. Early in 2003, they sold their retail mortgage operations. They have 1,500 employees.
Paula Ausick, SVP/Director of Brand Equities at Foote Cone & Belding, stated that, those who are politically opposed to Wal-Mart, are the second most frequent shoppers at their stores. She observed that “Wal-Mart isn’t considered a discount store to its customers. It’s become the definition of a regular, retail store. What’s more, Wal-Mart has established discount pricing as the retail price level. This has caused shifts in the retail landscape where ‘discount’ now means dollar stores rather than Wal-Mart.”
On 3/16/03 VP Cheney stated “we believe Saddam has, in fact, reconstituted nuclear weapons.” Jafar Dhia Jafar co-authored with Noman Saad Eddin al-Noamimi, a former director-general of Iraq’s nuclear program, a paper on the destruction of all banned weapons in Iraq. Yesterday, he stated “Saddam Hussein issued orders in July 1991 for the destruction of all banned weapons, in addition to the systems to produce them. It was carried out by the Special Republican Guard forces.” The two further stated “we can confirm with absolute certainty that Iraq no longer possessed any weapons of mass destruction after its unilateral destruction of all its components in the summer of 1991, and did not resume any such activity because it no longer had the foundations to resume such activity.”
ING economist Tim Condon stated “Thailand and India may overtake China as the region’s fastest-growing economies in 2004.”
Richard Rahn, Discovery Institute senior fellow and Cato Institute adjunct scholar: “One reason for the slow employment growth has been the rapid growth in government spending. Some people think government spending creates jobs (the old Keynesian myth) but, in fact, government spending reduces more jobs in the private sector than it can create in the government sector. The reason is private sector jobs tend to be more productive than government jobs, and there is a considerable cost (ie, dead weight loss) when the government extracts monies from the private sector by taxing or borrowing to pay for the government jobs. Therefore, countries with large government sectors, like Germany and France, tend to have much higher unemployment rates than countries with smaller government sectors. Slowing the growth in government spending would speed job growth.”
The Blue Dog Coalition is a group of 36 moderate to conservative Democrats in the 108th Congress. One month ago, Charlie Stenholm of Texas, Blue Dog co-chair for Policy, stated “our nation is being threatened with an economic perfect storm consisting of record deficits largely financed by foreign investors, large and growing trade deficits, and the approaching retirement of the baby boom generation. Unfortunately, the president’s budget fails to prepare our nation to deal with these economic dangers. His budget leaves our nation with large structural deficits that will be on the rise after the 5 years budget window used by OMB, just as the cost of the baby boom retirement hits.”
Rep. Tanner (TN), co-chair of the Blue Dog Budget Task Force: “We cannot write a blank check for the Administration to raise the statutory debt limit and add to the burden on American taxpayers. The President and Congress owe it to future generations to return the government to the days of fiscal responsibility and budget stability.”
Rep. Loretta Sanchez (CA): “Raising our government’s debt limit will only further worsen our existing budgetary problems. If the average American were to continue to raise the limit on a personal credit card to accommodate overspending, we would call it ‘irresponsible.’ How can we justify the same action using the hard-earned tax dollars of those very same Americans?”
In June 2002, the debt limit was raised from $5.950 trillion to $6.4 trillion. In May 2003, the debt limit was increased to $7.3484 trillion. Last week, Brian Roseboro, U.S. Treasury assistant secretary, stated the present debt limit would be reached in June 2004. This is the first time in our nation’s history that a president will have asked the Congress to raise the debt ceiling in three consecutive years. A year ago at this time, Greenspan told the Congress they should consider doing away with the debt limit, and stated it “has never in my judgment been successful in doing what it is supposed to have been doing, namely constrain spending.” Roseboro agreed with this statement and O’Neill called the debt ceiling “an abomination.” Actually, the abomination is the administration’s strident disregard for this generation’s and future generations’ economic well being. Out-of-control government spending must stop. I recommend the debt ceiling not be raised. Bring the government to a halt. Make the Congress immediately cut back on expenditures. They can begin with salary cuts for all members of Congress and all members of the Cabinet and those working in the White House. They can reduce the size of staff members and assistants to those in Congress. The Atkins diet might be popular and it might promote animal fat and pork products as being healthy. That does not include government fat and pork. The latter will soon deliver hardening of the economic arteries for all Americans. I can hear the screams from all over the U.S. I am aware that not raising the debt ceiling risks theoretical default on what are viewed as risk-free U.S. Treasury securities. I hate to scare you, but our government is busted. It’s been the Bank of Japan that has purchased approximately $100 billion of U.S treasury bills and bonds during January and February of this year. They are funding this administration’s spending habit. They are funding our budget deficit. Our nation is in a negative cash flow position. If the U.S.A. were a common stock, no analyst would recommend it as a purchase. It would be deemed a speculative grade security. The Bank of Japan cannot be the economic savior for the U.S. every month. Here’s a warning for all believing otherwise. Japan’s machinery orders fell 12.2% in January, the biggest drop in more than 3 years.
For those who still believe in the tooth fairy, through the end of February, the IRS reported the average tax refund had only risen $94 to $2,230 from the prior year’s $2,136. The $94 should be erased quickly with $2 per gallon gasoline.
Year after year Clintwood, Va. and surrounding Dickenson County have the highest unemployment rate in the state. In 2001, Travelocity signed a six-year lease to operate a call center in Clintwood. About 275 employees were hired at $8 per hour and higher, plus benefits. Travelocity announced plans to leave Clintwood. A corporate spokesperson stated routing calls through India would save $10 million in the first year alone.
In a survey conducted by the National Federation of Independent Business trade group, only 13% of small businesses stated plans to hire, down from 17% in January. Small companies create most jobs. There are approximately 6 million small employers with about 50% of all workers. Rising health insurance costs have contributed to the damper on hiring.
Financial Times: “The U.S. has had a jobless expansion for more than two years. It will soon start to test the limits of its durability.”
Greenspan: “Overall, the household sector seems to be in good shape.” According to CardWeb.com, the average household credit card debt is $9,200. In 2003, personal bankruptcies rose 5.6% to 1.63 million. The average client seeking help from the National Foundation for Credit Counseling, the nation’s largest organization of nonprofit credit counseling agencies, has more than $15,700 in unsecured consumer debt and $30,000 in gross income.
According to the Nellie Mae National Student Loan Survey, almost 1 in 5 college and professional school graduates states career plans have changed because of student debt. In 1997, the average undergraduate came away with $11,400 in debt. In 2002, average indebtedness had risen 66% to $18,900 according to the survey. During the same time, graduate student debt increased from $21,000 to $31,700. For law and medical students the average debt is $91,700.
National Mortgage News reported yesterday that Des Moines-based Principal Financial Group is interested in selling its residential mortgage unit, Principal is the nation’s 11th-largest lender and, at the end of 2003, serviced $119 billion in loans. Early in 2003, they sold their retail mortgage operations. They have 1,500 employees.
Paula Ausick, SVP/Director of Brand Equities at Foote Cone & Belding, stated that, those who are politically opposed to Wal-Mart, are the second most frequent shoppers at their stores. She observed that “Wal-Mart isn’t considered a discount store to its customers. It’s become the definition of a regular, retail store. What’s more, Wal-Mart has established discount pricing as the retail price level. This has caused shifts in the retail landscape where ‘discount’ now means dollar stores rather than Wal-Mart.”
On 3/16/03 VP Cheney stated “we believe Saddam has, in fact, reconstituted nuclear weapons.” Jafar Dhia Jafar co-authored with Noman Saad Eddin al-Noamimi, a former director-general of Iraq’s nuclear program, a paper on the destruction of all banned weapons in Iraq. Yesterday, he stated “Saddam Hussein issued orders in July 1991 for the destruction of all banned weapons, in addition to the systems to produce them. It was carried out by the Special Republican Guard forces.” The two further stated “we can confirm with absolute certainty that Iraq no longer possessed any weapons of mass destruction after its unilateral destruction of all its components in the summer of 1991, and did not resume any such activity because it no longer had the foundations to resume such activity.”
ING economist Tim Condon stated “Thailand and India may overtake China as the region’s fastest-growing economies in 2004.”
Monday, March 08, 2004
3/8/04 “Strong Economies Create Jobs”
John Challenger of Challenger, Gray & Christmas: “The fact is, we are going to have to get used to slow job creation in this country. While the politicians war over the number of jobs they expect to be created in the economy by the end of the year, the reality is that we will probably not see a true job market boom until the next economic cycle around 2008.”
Peter McTeague of RBS Greenwich Capital Markets was the top-ranked U.S. government debt strategist last year in Institutional Investor magazine’s poll. With job creation falling below the level anticipated by economists for the fourth consecutive month, coupled with the prices of consumer goods and services excluding food and energy only rising at a 0.7% rate in the fourth quarter, McTeague stated “this should drive home to people that the Fed’s not going to raise rates, certainly not at the pace or magnitude people expect.”
Sanjay Verma, head of government bond trading at Morgan Stanley, stated “the Fed is going to be on hold for longer than anyone expected.”
Warren Buffett: “Prevailing exchange rates will not lead to a material let-up in our trade deficit.”
After Brazil and Turkey, Argentina is the IMF’s third largest debtor, and the country accounts for 15.2% of the Fund’s outstanding credit.
Lee Kwang-ho of Hyundai Heavy Industries remarked “we have 180 ships on our order book. That’s enough to keep the yard busy for three years.”
Guo Shuqing, head of China’s State Administration of Foreign Exchange: “Our study shows that the impact of the exchange rate on the economy and employment has been over-exaggerated. China’s managed floating exchange rate system conforms to the realities of China and it will continue for a long time to come. Betting on an RMB appreciation is likely to (end up paying in) an enormous price.”
According to the Bureau of Labor Statistics, since 1999, Michigan has lost 195,000 manufacturing jobs.
Boeing creates 1.7 jobs per employee. Microsoft adds 2 jobs per worker. AT&T Wireless creates 1.5 jobs for each person on the payroll. Wireless workers on average received $73,400 in compensation in 2003. How many of the 5,700 AT&T Wireless employees in the state of Washington will be cut after their acquisition by Cingular? What will be the multiplier effect?
TeleTech Holdings recently told 790 employees in Topeka, Kansas that they’ll lose their jobs because of a contract that came to an end. A few days later they announced its call-center was closing. The company is not doing well. The Topeka call-center and customer service facility opened in 1999. The state of Kansas provided a $2 million training grant. TeleTech employs 28,000 worldwide. Topeka mayor James McClinton stated “in a town of 125,000, when 790 of them lose their jobs, that’s pretty tough.” These jobs in Topeka will end April 2.
According to an Ernst & Young study, Indian telecom operators could see a jump in revenues from $9 billion in 2002 to $25 billion in 2007. This would easily make India the second biggest telecom market in the world, stated Sanjay Mehta, Ernst & Young director. With weak land-line infrastructure, and often a 5 year wait for a land-line, the 1 billion plus population in India is an inviting market for the cell phone industry.
Yesterday, more than 300,000 chickens on Maryland’s Eastern Shore were destroyed in an effort to stem a fresh outbreak of avian flu. The poultry sector represents about a third of Maryland’s $1.4 billion-a-year agriculture industry. Sales of live poultry have been stopped at the state’s only two live-auction operations.
In a recent Herald/St. Petersburg Times Florida survey, a majority of voters believe the United States is “moving in the wrong direction” under Bush. More than half of Florida voters disapprove of his handling of the economy, and only 46% approve of his leadership in Iraq. Kerry holds a 49 to 43 percent lead in the poll. Diane Chisholm, 60, a Naples retiree and registered Republican stated “I know he (Bush) can’t create jobs, but he can create an atmosphere that creates jobs, and that hasn’t happened. He’s given us tons of promises, but he hasn’t delivered.” Fifty seven percent of the independents, as well as the same percentage of women, expressed they would vote for Kerry.
Alan Blinder, a Princeton University economist and a former Fed governor: “From an historical perspective, the lack of job growth is stunning, given what is happening to GDP.” He stated the risk of a consumer spending slowdown is “the biggest hazard to this expansion. Every month we go with labor income stagnating raises the hazard level.”
John Challenger of Challenger, Gray & Christmas: “The fact is, we are going to have to get used to slow job creation in this country. While the politicians war over the number of jobs they expect to be created in the economy by the end of the year, the reality is that we will probably not see a true job market boom until the next economic cycle around 2008.”
Peter McTeague of RBS Greenwich Capital Markets was the top-ranked U.S. government debt strategist last year in Institutional Investor magazine’s poll. With job creation falling below the level anticipated by economists for the fourth consecutive month, coupled with the prices of consumer goods and services excluding food and energy only rising at a 0.7% rate in the fourth quarter, McTeague stated “this should drive home to people that the Fed’s not going to raise rates, certainly not at the pace or magnitude people expect.”
Sanjay Verma, head of government bond trading at Morgan Stanley, stated “the Fed is going to be on hold for longer than anyone expected.”
Warren Buffett: “Prevailing exchange rates will not lead to a material let-up in our trade deficit.”
After Brazil and Turkey, Argentina is the IMF’s third largest debtor, and the country accounts for 15.2% of the Fund’s outstanding credit.
Lee Kwang-ho of Hyundai Heavy Industries remarked “we have 180 ships on our order book. That’s enough to keep the yard busy for three years.”
Guo Shuqing, head of China’s State Administration of Foreign Exchange: “Our study shows that the impact of the exchange rate on the economy and employment has been over-exaggerated. China’s managed floating exchange rate system conforms to the realities of China and it will continue for a long time to come. Betting on an RMB appreciation is likely to (end up paying in) an enormous price.”
According to the Bureau of Labor Statistics, since 1999, Michigan has lost 195,000 manufacturing jobs.
Boeing creates 1.7 jobs per employee. Microsoft adds 2 jobs per worker. AT&T Wireless creates 1.5 jobs for each person on the payroll. Wireless workers on average received $73,400 in compensation in 2003. How many of the 5,700 AT&T Wireless employees in the state of Washington will be cut after their acquisition by Cingular? What will be the multiplier effect?
TeleTech Holdings recently told 790 employees in Topeka, Kansas that they’ll lose their jobs because of a contract that came to an end. A few days later they announced its call-center was closing. The company is not doing well. The Topeka call-center and customer service facility opened in 1999. The state of Kansas provided a $2 million training grant. TeleTech employs 28,000 worldwide. Topeka mayor James McClinton stated “in a town of 125,000, when 790 of them lose their jobs, that’s pretty tough.” These jobs in Topeka will end April 2.
According to an Ernst & Young study, Indian telecom operators could see a jump in revenues from $9 billion in 2002 to $25 billion in 2007. This would easily make India the second biggest telecom market in the world, stated Sanjay Mehta, Ernst & Young director. With weak land-line infrastructure, and often a 5 year wait for a land-line, the 1 billion plus population in India is an inviting market for the cell phone industry.
Yesterday, more than 300,000 chickens on Maryland’s Eastern Shore were destroyed in an effort to stem a fresh outbreak of avian flu. The poultry sector represents about a third of Maryland’s $1.4 billion-a-year agriculture industry. Sales of live poultry have been stopped at the state’s only two live-auction operations.
In a recent Herald/St. Petersburg Times Florida survey, a majority of voters believe the United States is “moving in the wrong direction” under Bush. More than half of Florida voters disapprove of his handling of the economy, and only 46% approve of his leadership in Iraq. Kerry holds a 49 to 43 percent lead in the poll. Diane Chisholm, 60, a Naples retiree and registered Republican stated “I know he (Bush) can’t create jobs, but he can create an atmosphere that creates jobs, and that hasn’t happened. He’s given us tons of promises, but he hasn’t delivered.” Fifty seven percent of the independents, as well as the same percentage of women, expressed they would vote for Kerry.
Alan Blinder, a Princeton University economist and a former Fed governor: “From an historical perspective, the lack of job growth is stunning, given what is happening to GDP.” He stated the risk of a consumer spending slowdown is “the biggest hazard to this expansion. Every month we go with labor income stagnating raises the hazard level.”
Sunday, March 07, 2004
3/7/04 The Float
The float reflects the temporary cash reserves available for alternative use. As of the close of business on Friday, March 5, the Federal Reserve Bank headed by Alan Greenspan had a temporary float of $15 billion. Berkshire Hathaway, run by Warren Buffett and Charles Munger, had a float of $36 billion. Microsoft Corp., headed by Bill Gates, had a float of $56 billion. What does this all mean? I guess it has different significance depending on one’s frame of reference. For me, the float represents great importance. It signifies the daily lifeblood of an organization.
Bush: “The economy is getting stronger. We’ve overcome a lot.” Not your administration, yet. In this week’s poll conducted by the Chicago Sun-Times sister newspaper, 50% of those polled stated they are not better off today, and 39% believed the nation was in a recession. Kerry leads Bush in the Illinois poll by a margin of 52% to 39%.
Berkshire Hathaway will pay $3.3 billion in federal tax on its 2003 income, about 2.5% of the total paid by all U.S. corporations, wrote Warren Buffett. He stated “if only 540 taxpayers paid the amount Berkshire will pay, no other individual or corporation would have to pay anything to Uncle Sam.”
March 31 is the fiscal year-end for Japanese companies. The Bank of Japan will do all that is necessary to keep a lid on the upward valuation of the yen versus the U.S. dollar. They want to make year-end profits appear as strong as possible. Taking advantage of this concentrated month of March pro-dollar purchasing has produced some very satisfying currency profits over the years. It is highly predictable behavior during times of yen strength.
According to researchers at UC Berkeley’s Fisher Center for Real Estate and Urban Economics, 1 in 6 jobs in the Silicon Valley are at risk of being sent abroad. These economists estimate that 1 in 7 San Francisco jobs could be exported. They identified the following characteristics that put a job at risk of being outsourced: no face-to-face customer service requirement; the product created is mainly information; work is done via telephone and Internet; low barriers to setting up new facilities; little social networking required; and large differences in wages between locations. The researchers found 37 job categories ripe for being moved overseas. They include computer workers, insurance claim processors, radiology technicians, paralegals, customer service, and processing tax returns.
Carol Bartz, CEO and chairman of Autodesk: “When you can get great talent at 20% of the costs, it isn’t about waving the American flag. It’s about doing what’s right to have a good company.” Last fall, Autodesk announced it would cut as many as 650 employees. At the same time, the company was hiring at its new Shanghai development center. PeopleSoft recently stated an intention to hire 1,000 additional workers in India. Hewlett-Packard has increased staffing in India to 8,000. Oracle has hired more workers in India, and now employs 4,200 in that location.
Nanotechnology is viewed as one of the next great avenues for future innovation and hiring growth. Ron Hira, public policy professor at the Rochester Institute of Technology stated China is right behind the U.S. in terms of technical papers published on nanotech. He observed that, China’s cost advantages and knowledge, position it well to compete for nanotech jobs.
Zimmer Holdings is closing its Austin, Texas manufacturing plant. About 550 employees will lose their jobs when the hip and knee plant production is transferred to Zimmer’s plants in Indiana, Switzerland, and Puerto Rico. The company chose to close the Austin plant in an effort to streamline manufacturing costs.
Perdue Farms hopes to save money by closing a chicken processing facility in Defuniak Springs, Florida. The company wants to shift production to Georgia where its operations are more efficient. The closure will mean a loss of 392 jobs.
Vought Aircraft Industries is planning to close its Nashville facility, cutting 1,000 workers. The company has been consolidating operations at its Dallas headquarters.
Tampa, Florida-based Sykes Corp. has been opening new call centers overseas. They are closing their Pikeville, Kentucky call center and eliminating 341 jobs.
Northwest Airlines will close its remaining 25 U.S. ticket offices in late March. They are located in 16 cities in 16 states. The company has determined the city ticket offices are no longer cost-effective. Northwest did not state how many employees would lose their jobs.
Corporate cost cutting is here to stay. Closing operations, adding workers overseas, and increased innovation and competition from companies in other countries are all here to stay. Regulatory developments, partnerships, acquisition objectives, and defensive pricing strategies will affect the future competitive landscape and the ability to execute effectively and with excellence.
The float reflects the temporary cash reserves available for alternative use. As of the close of business on Friday, March 5, the Federal Reserve Bank headed by Alan Greenspan had a temporary float of $15 billion. Berkshire Hathaway, run by Warren Buffett and Charles Munger, had a float of $36 billion. Microsoft Corp., headed by Bill Gates, had a float of $56 billion. What does this all mean? I guess it has different significance depending on one’s frame of reference. For me, the float represents great importance. It signifies the daily lifeblood of an organization.
Bush: “The economy is getting stronger. We’ve overcome a lot.” Not your administration, yet. In this week’s poll conducted by the Chicago Sun-Times sister newspaper, 50% of those polled stated they are not better off today, and 39% believed the nation was in a recession. Kerry leads Bush in the Illinois poll by a margin of 52% to 39%.
Berkshire Hathaway will pay $3.3 billion in federal tax on its 2003 income, about 2.5% of the total paid by all U.S. corporations, wrote Warren Buffett. He stated “if only 540 taxpayers paid the amount Berkshire will pay, no other individual or corporation would have to pay anything to Uncle Sam.”
March 31 is the fiscal year-end for Japanese companies. The Bank of Japan will do all that is necessary to keep a lid on the upward valuation of the yen versus the U.S. dollar. They want to make year-end profits appear as strong as possible. Taking advantage of this concentrated month of March pro-dollar purchasing has produced some very satisfying currency profits over the years. It is highly predictable behavior during times of yen strength.
According to researchers at UC Berkeley’s Fisher Center for Real Estate and Urban Economics, 1 in 6 jobs in the Silicon Valley are at risk of being sent abroad. These economists estimate that 1 in 7 San Francisco jobs could be exported. They identified the following characteristics that put a job at risk of being outsourced: no face-to-face customer service requirement; the product created is mainly information; work is done via telephone and Internet; low barriers to setting up new facilities; little social networking required; and large differences in wages between locations. The researchers found 37 job categories ripe for being moved overseas. They include computer workers, insurance claim processors, radiology technicians, paralegals, customer service, and processing tax returns.
Carol Bartz, CEO and chairman of Autodesk: “When you can get great talent at 20% of the costs, it isn’t about waving the American flag. It’s about doing what’s right to have a good company.” Last fall, Autodesk announced it would cut as many as 650 employees. At the same time, the company was hiring at its new Shanghai development center. PeopleSoft recently stated an intention to hire 1,000 additional workers in India. Hewlett-Packard has increased staffing in India to 8,000. Oracle has hired more workers in India, and now employs 4,200 in that location.
Nanotechnology is viewed as one of the next great avenues for future innovation and hiring growth. Ron Hira, public policy professor at the Rochester Institute of Technology stated China is right behind the U.S. in terms of technical papers published on nanotech. He observed that, China’s cost advantages and knowledge, position it well to compete for nanotech jobs.
Zimmer Holdings is closing its Austin, Texas manufacturing plant. About 550 employees will lose their jobs when the hip and knee plant production is transferred to Zimmer’s plants in Indiana, Switzerland, and Puerto Rico. The company chose to close the Austin plant in an effort to streamline manufacturing costs.
Perdue Farms hopes to save money by closing a chicken processing facility in Defuniak Springs, Florida. The company wants to shift production to Georgia where its operations are more efficient. The closure will mean a loss of 392 jobs.
Vought Aircraft Industries is planning to close its Nashville facility, cutting 1,000 workers. The company has been consolidating operations at its Dallas headquarters.
Tampa, Florida-based Sykes Corp. has been opening new call centers overseas. They are closing their Pikeville, Kentucky call center and eliminating 341 jobs.
Northwest Airlines will close its remaining 25 U.S. ticket offices in late March. They are located in 16 cities in 16 states. The company has determined the city ticket offices are no longer cost-effective. Northwest did not state how many employees would lose their jobs.
Corporate cost cutting is here to stay. Closing operations, adding workers overseas, and increased innovation and competition from companies in other countries are all here to stay. Regulatory developments, partnerships, acquisition objectives, and defensive pricing strategies will affect the future competitive landscape and the ability to execute effectively and with excellence.
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