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  • Ford to shift more production to Mexico  [View news story]

    No nerve was touched. I can assure you. It is ancient history my days at GM. I recounted to you and other readers what happened. If you want to refute it with links disputing it, I'll gladly read them.

    I am sure there are studies from Stanford, Harvard, Yale, etc business schools that document what happened. It was a classic case of what not to do.
    Feb 9, 2016. 02:38 PM | Likes Like |Link to Comment
  • Ford to shift more production to Mexico  [View news story]

    Please read my post below to Tdot. It will answer your assertion about middle management.

    As an additional riposte to your assertion about middle management not responding to sub par performance from union members, I can speak to that directly. As a former Distribution Center Manager in a teamster union environment, I can assure you disciplining members is more difficult than in a non-union setting. Terminating employees is also much more difficult. There are numerous instances that I received a union grievance or my managers and supervisors did. It is part of managing in a union setting. At the same time, because it is more difficult to write up an employee or terminate them doesn't mean that it can't be done.

    Would I've preferred not attend meetings with attorneys, shop stewards, union agents, local presidents? A resounding YES. I could discipline union members, however. I could suspend them for repeated warnings. And they were fired for repeated tardies, lack of attendance, poor work performance, fighting in the workplace, drug and alchohol abuse, etc. It requires management to care about the their site's performance, the workers that in their stead and by association their families that you meet at summer BBQs, Christmas parties, visit in the hospitals when one of yours has a stroke, suffers a heart attack, experiences cancer, etc. You have to care.

    If you don't care, you shouldn't be in management. You set the tone. Does it help to have union members on board with your philosophy? Most definitely. If they don't respect you and they perceive you are in only in it to get that next promotion, receive that next bonus, it won't work either. They will see right through it.

    As far as blaming teachers for our educatioanal fiascos you are failing to account for parents and children and adolescents in the equation.

    I agree that there are many teachers in NYC that are on paid furloughs per the last time I heard about it. This was about two years ago or maybe a little longer. And I agree that probably a large percentage of them should be discharged or forced into retirement if they have met retirement qualifications. I am not an apologist for bad work performance.
    Feb 9, 2016. 01:20 PM | Likes Like |Link to Comment
  • Ford to shift more production to Mexico  [View news story]

    I very much respect your opinion about F financials. You have no idea what happened on production lines in the late 70s at GM, however. I travelled extensively at multiple GM DCs and plants as a logistics manager and troubleshooter. Workers en masse did not sabotage the lines nor in warehouse settings. In fact, dealer feedback was overwhelmingly negative from only two to three plants. It wasn't the entire GM network. What dealers did report back was terrible quality from all plants, however. There was a myriad of reasons. Some were missing bolts, etc. Since management controls the quantity produced also, that is line time, quality will suffer when an assembly plant turns out one car a minute. Yes, that's right one care a minute. In the 70s every engineering study from GM's quality group strongly advised against this metric. So, if management is receiving negative feedback from their quasi customer, and the reasons why wouldn't they take action? Because they didn't a rat's posterior, especially when their own quality product engineers thought production at one a car a minute would not meet the metrics they thought would meet GM's stated goals.

    I will say that there was extensive drug and alchohol abuse. And again, I have to ask whose fault is that? Management because they turned a blind eye. How much abuse went on? If I had to ballpark it, I'd say 10% to 20%. I reported it on several occasions to the DC Manager and Asst. Plants Managers, identifying the persons that had liqour on their breath after returing from lunch, having dilated pupils, etc. but they wouldn't support my documentation. I was not the only manager and supervisor that also brought forth documentation. After repeatedly ignoring supervisors and managers constant documentation about worker behaviors first and second line management becomes apathetic.

    Other instances of employee alchohol and/or drug abuse was receiving a paycheck before lunch and never returning to work until the following Monday. How hard is that to monitor and resolve? It is not. It takes very little initiative but it does require that you care. To blame workers for management's lackadasiqual approach to quality, attendance, is wrong. And I can assure you the employees that cared didn't care after a while too. GM devolved into dysfunctional organization because of upper management. PERIOD.
    Feb 9, 2016. 12:51 PM | Likes Like |Link to Comment
  • China dips into foreign-exchange reserves by $99.5B in January  [View news story]

    Thank you for the exchange on different opinions. It was civil unlike many other conversations that occur on this site.

    This will be final riposte to you on this subject since we won't convince each other to change our minds.

    With that said, EBITDA is not subjective. It is actual numbers that anyone with basic math and successfully passed Accounting 1A course can understand. I, therefore, can't agree with your assertion about subjectivity with verbiage such as " since the 'excessiveness' is largely either undefined, highly opinionated or as a minimum, unquantified, I'm not sure whether this is a good thing or bad thing."

    I can't speak about all of the Chinese industry and how they became successful. I do know some stole much of the technology that they currently have as the US did with some of the technology from the Brits in the 19th Century.

    I would also add that the Chinese have one of the highest tariffs in the world and their mercantilist system reflects that. Again, it is similar to how the US became the manufacturing powerhouse it was at the end of the 19th Century and early 20th Century.

    A Chinese rising middle class that is larger or is almost as large as the entire US population also helps growth of their corporations.

    Debt has also contributed to their growth. Per David Stockman, in 1996 China had $1 trillion in debt but today it is $30 trillion. I would think that any country that has grown it's domestic debt that much would significantly grow.

    Another means of growing their industries is by investing in other country's infrastructure through debt and reserves and dictating that Chinese industries have to be the companies that equip, build, etc., due to China's largesse. Again, this is nothing new in world history. The US has done this for decades when we provided foreign aid with strings attached.

    For what it is worth, the Chinese culture IMO has historically been the dominant culture in it's region for centuries and most of recorded history. This is not due to luck, happenstance, etc.
    Feb 9, 2016. 09:07 AM | 1 Like Like |Link to Comment
  • China dips into foreign-exchange reserves by $99.5B in January  [View news story]

    You didn't mention their excessive debt of the purchasing companies. That was my main point. The other paragraphs that you discuss are not relavent until you discuss the debt problems because what you mostly discuss is in the past or investing abroad with more debt or reserves. I am very concrened that there debt is not sustainable in the very near future and the next two years. Almost everyone recognizes that China's increasing debt is not paying dividends anymore that is sustainable. Per my latest recollection for every 4 units of debt issued they are only receiving 1 unit in growth. How long can this last? The EBIDTA figures from the FT bring home this point with an exclamation point IMO.

    Secondly, China lacks transparency. Russia is more transparent the PRC per most commenters. The Russian CB, in fact, has been commended for holding the line as best they could considering the circumstances that they are in yet they maintain adequate reserves. Can China's PBOC claim the same credit worthiness?

    Mutliple reports from the Financial Times and the UK's Independent have commented on China's use of reserves as has commenters on SA.. I agree that no one definitely knows what China is doing with them and that is the problem because their country's governing style is opaque. People with access to Bloomberg terminals can conjecture based upon credit spreads, forward currency contracts, LIBOR, HIBOR, SHIBOR, etc. If you aren't concerned about China and it's mushrooming debt as well as how inept they have been trying to manipulate their stock and currency markets then that is your opinion. I am not so sanguine.
    Feb 8, 2016. 10:15 PM | Likes Like |Link to Comment
  • Ford to shift more production to Mexico  [View news story]
    And since management is responsible for setting standards as well as designing, implementing and ensuring quality control whose ultimate responsibility is it again?

    I worked at GM's manufacturing plant in Fremont, CA in the 70s. I also knew a Ford employee at their Milpitas, CA, which is approximately 20 miles south of Fremont so the labor pool is the same and the workers were UAW members. The Fremont plant was consistently the worst in quality. It almost always ranked last for GM assembly plants in the US. The Ford plant, on the other hand, produced quality vehicles and ranked as one of the better plants in Ford's USA manufacturing division.

    So what was the difference? Management.

    I can recall on several occasions as cars were assembled, the parts were defective or missing but the QA team was asked to let it slide by management. The cars were then flagged and were supposed to be reworked but oft times the reworks weren't done because replacement parts for the defective parts were also defective, didn't fit or couldn't be reworked by someone with only assembly line experience. So what did mangement do? Ship it to the dealer so they could fix it by trained mechanics. Is this any way to run car company? You be it is if it run by Mr.s Roche and Gerstenberg the CEOs when I worked at GM.

    I can also recall working for Toyota in the 80s at their distribution center in San Ramon, CA, which is north of Fremont. The parts at that time were largely shipped from Japan. Every container that arrived at the port and shipped via truck load to San Ramon was almost always 100% accurate to the DC. The workers in Japan were union. What was the difference? Management.

    As a former supervisor, manager and director for both manufacturers, distributors, and retail companies that had distribution centers, I can assure you management sets the tone, effects morale, and ensures quality. To say otherwise is only passing the buck.
    Feb 8, 2016. 08:29 PM | 2 Likes Like |Link to Comment
  • Ford to shift more production to Mexico  [View news story]
    Unions didn't "give" the middle market to Japanese car makers.

    Please review our trade deals starting after WW II and the terrible quality fo the Vega, Pinto, Corvair, et al that were produced at the behest of management.

    No one from the union told the Big Three to build crap cars then double down on their lack of marketing expertise and only build mid-size or big vehicles because those margins were where the real money was.
    Feb 8, 2016. 07:36 PM | 1 Like Like |Link to Comment
  • China dips into foreign-exchange reserves by $99.5B in January  [View news story]

    Many of these Chinese companies that are also SOEs and buying foreign entities across the globe have EBITDAs in the 15, 30 and even has high as the 50 - 60 range per the Financial Times. Kinder Morgan had an EBITDA at approximately 8 and markets were roiling.

    The only thing supporting these debt levels is the PBOC. How long can that last?

    Secondly, the IMF has strongly suggested that an economy the size of China ought to have $2.6 trillion in reserves to prevent currency issues and to provide an adquate cushion. Under these circumstances how much longer can China "invest" abroad. I put "invest" in quotes because much of the Treasury dilution and other reserves have been utilized to speculate in their equity markets, manipulate the offshore dollar and yuan.
    Feb 8, 2016. 07:27 PM | 1 Like Like |Link to Comment
  • 2016 NFL Super Bowl 50  [View instapost]
    Nattering Naybob,

    For what it is worth (maybe a cup of coffee at McDonald's) I'm on board with your pick and more importantly I will bet it today.

    My metrics place the kitty cats a 7 point favorite on a neutral field over the donkeys.

    I agree that the Broncos must run to have a chance. They must bleed the clock to keep the explosive Panthers off of the field as much as possible. Short passes by statue Manning have to be successfully executed as well. With that said, the Panthers know this also. Look for Carolina to stuff the run, force Manning into untenable passing downs. Manning is no threat today with the exception of his outstanding ability to audible. Carolina has throttled the best statue QB this year, namely Palmer and he could throw deep, which Manning can't due to father time. I would also argue that AZ's O-Line is much better than DVR's.

    CAR's O matches up very well with DVR's D. I am concerned that the starting center for CAR is listed as questionable, which may interfere with blocking adjustments on audibles, however. Due to Cam's athletic ability he should be elusive enough to escape the blitz or the conventional 4 man pass rush. Stewart will get some breakout runs but only in the 2nd half. DVR's run D is one of the best I've ever seen. It rivals Dallas' Doomsday and the Steelers D of the 70s. Denver's weakness if there is one is on pass D. Look for Cam to utilize all of his weapons including Stewart and Tolbert out of the backfield. They can't cover everyone all the time. Cam may throw a scud missle or two that gets picked off but given Manning's penchant to throw numerous duck balls, CAR ought to be able to weather a turnover because Manning may throw 3 or more.

    Special Teams: A nod to the Broncos on this one. Punts inside the 20 yard line show DVR has an edge. It is not overwhelming but enough to keep the Panthers backed up in their own territory should DVR cross the 50 yard line.

    Coaching: Edge to the Panthers. Kubiak and his staff vs Rivera and his, I have to give it to Panthers management due Rivera and staff's longevity with the players. They know their team's strenghts and weaknesses better than Kubiak and et al know their team's.

    I have a slight disagreement with you on Bellichik, however. And I want to preface my statment by categorically stating that he ranks with Lombardi, Chuck Noll, Tom Landry and Bill Walsh as one of the best coaches ever. With that proviso in mind, Bellichik has had on two occasions had brain farts in close games when Manning is the QB. The first one occurred on national TV in 2009. I'll quote from the Denver Post's Troy Renck: "Belichick's respect for Manning spawned a rare miscue. He elected to go for it on fourth and 2 from his 28-yard line rather than punt the ball to Manning. It backfired, leading to a Colts win. The decision remains an anomaly on Belichick's resume, but it makes sense that it involved Manning." The second brain fart occurred almost two weeks ago.

    On another occasion, and in a regular season game, NE had a huge lead with almost no time on the clock and they were about to kick the extra point. Bellichik in his wisdom inserted Gronk to block. Gronk broke his arm on the play in 2012 and ended up on the IR. NE lost to their arch rival, Baltimore that year in the AFC Championship game. Would Gronk have made the differnce? We will never know but I think he would've given the PATS a better chance to win. In the end, this makes Bellichik fallible. I would only wish that I was as fallible as Bellichick if I were a head coach in the NFL.

    I'v throrougly enjoyed your articles on the NFL playoffs this year and of course your continuing series missives about credit markets.

    If you bet the game today, best of luck.
    Feb 7, 2016. 12:39 PM | Likes Like |Link to Comment
  • It Starts: Junk Bonds 'Contained'  [View article]

    I am not doubting what you say about the FED and DB or a bank providing funding to Glencore at the FED's suggestion and ultimate protection in some form. It won't be the first time that the FED has bailed out TBTF banks or provided protection to banks for risky debt investments but could you provide a link of from independent sources?

    I'd be interested in reading the link.
    Feb 5, 2016. 09:41 PM | Likes Like |Link to Comment
  • How To Fight The Fed  [View article]

    May I suggest an alternative interpretation?

    Feb 4, 2016. 08:54 PM | Likes Like |Link to Comment
  • China stocks gain following another cash infusion  [View news story]

    The next big regional or world war won't be conventional for long. The "losing" side will resort to cyber IMO. Excess capacity by transferring from a butter or lack of butter economy to a guns economy won't do the trick either short or long term. Those days are long gone even if the combatting nation states stay conventional due to robots, AI, etc.
    Feb 4, 2016. 07:42 PM | Likes Like |Link to Comment
  • How To Fight The Fed  [View article]

    Please don't leave out the PBOC.
    Feb 4, 2016. 07:39 PM | Likes Like |Link to Comment
  • China stocks gain following another cash infusion  [View news story]

    The scary thing is that London, NYC, So Cal, and Miami high end property markets are detoriating too.
    Feb 2, 2016. 08:03 PM | Likes Like |Link to Comment
  • China stocks gain following another cash infusion  [View news story]
    I agree that many do not know that other countries also do what the Chinese do including US markets by our Treasury Dept and Federal Reserve. It is called the Plunge Protection Team.

    With that said, artificially stimulating equities in the short term only postpones the day of reckoning and it will make the correction only worst.
    Feb 2, 2016. 07:49 PM | 1 Like Like |Link to Comment