atlasman

Why Were Markets Up 7% Yesterday?

Heads we win, tails you (tax payers) lose. Isn't that what got us in this mess?

GE's Immelt Thinks for Himself: U.S. Not Shifting to a Service Economy

I agree, concentration of mfg in to a few high-tech industries is not a good thing. I just do not believe Washington has the stomach to make the necessary changes to make basic manufacturing profitable in the US. The end result is what we see today, small wealthy upper class and a large number of low wage retail workers. Taking from the wealthy and redistributing to the lower class is not the answer either. You got to understand and fix the economics to solve this problem.


On Mar 14 11:56 AM Howard Richman wrote:

> Boeing is currently being targeted by China. If we don't start balancing
> trade soon, we'll lose their commercial aircraft manufacturing business
> soon. See my commentary:
>
> seekingalpha.com/artic...

GE's Immelt Thinks for Himself: U.S. Not Shifting to a Service Economy

Howard -

Actually, both camps are probably right wrt to US manufacturing. I saw a chart a couple months ago showing manufacting steadily increasing in dollar terms over the last decade. However, anybody with a heart beat has seen manufacturing leave the country over the last two decades. In my home state the textile and furniture industry has all but left decimating the local economy. I personally have been involved with high-tech assembly factories leaving since the 90s. That is how I knew about Intel's situation. This apparent disconnect is due to manufacturing getting more and more concentrated in fewer companies and industries. Boeing skews the data the most.

Some people rationalize this by saying US doesnt want these lost manufacturing jobs. US only wants extremely high-tech manufacturing. This is absolutely not the case. If you knew the people that worked on the line you would be heart broken by this change. These people made a reasonable middle class living making $12-25/hour in assembly plants and are now making $7-10/hr in Walmart.

The good news is that these jobs can be brought back if the economics improved. The bad news is the politics of these changes would never happen. First, labor costs would have to be brought down which means no unions. Second, taxes for hiring workers would have to be reduced. I have never understood why business owners have to pay taxes to hire people. Lastly regulatory and other hidden taxes would have to be reduced so no more Sarbanes Oxley. There are other feel-good laws that do more harm than good but I will leave that fight out of this thread.

This problem can be solved, but not by the liberal policies being pushed by Obama and crew. More taxes, carbon taxes, and higher union costs only take a bad situation and make it worse. This is purely a business issue. Education has nothing to do with it. We have the people who have the desire. Unfortunetly no matter how hard you try, the business case just does not work.

GE's Immelt Thinks for Himself: U.S. Not Shifting to a Service Economy

Taken from the Intel Media Kit:

"The company has six assembly and test sites worldwide and is building a seventh, all of them outside the U.S. Assembly and test sites outside the United States are located in Shanghai, China; Chengdu, China; San Jose, Costa Rica; Kulim, Malaysia; Penang, Malaysia; and Cavite, Philippines. An assembly and testing site in Ho Chi Minh City, Vietnam, is under construction."

Now do you honestly think more funding for the US education system, bad as it is with its unionize work force, is the root cause of Intel outsourcing 100% of their assembly and test factories? Or perhaps do you think it is due to all of the direct and indirect costs associated with operating them within the US. Focus on relieving the financial burden of operating a factory in the US and you will solve this problem. I bet if you work hard enough, you can come up with a rationale for why it is Bush's fault.


On Mar 13 10:12 AM Tim Miles wrote:

> Atlasman:
>
> I am glad that you agree with many of my points. In fact, many experts,
> several of them who run manufacturing firms like Intel, are on the
> same page. Not to mention the Council on Competitiveness.
>

GE's Immelt Thinks for Himself: U.S. Not Shifting to a Service Economy

As someone who has participated in the manufacturing sector for a couple of decades, I respectfully disagree. Here are my counter points to your arguement:

> 1. Inadequate funding of U.S. innovation (basic research)over the past 8 years;

I would have taken this seriously if you had not thrown in the "past 8 years". Can't you Bush haters leave it alone. this article is about manufacturing, not innovation so I will leave this deabte to another article. Needless to say I believe innovation is fine (PS - I worked for AT&T Bell Labs and know something about innovation)

> 2. Neglect of U.S. science and math education;

Actually I agree with you here. It really has nothing to do with manufacturing, but feel free to grind away with you ax on this subject.

> 3. $1 trillion plus spent on the Iraq War that could have gone to funding the above 2 items;

Actually, this money would have been better put to use not borrowed from the Chinese in the first place or given back to the tax payers. You really have an ax to grind.
>
> 4. U.S. immigration policy which is leading to a "brain drain",particularly of those people we have educated in the best universities in the world at taxpayers expense;

Agree with you but has nothing to do with US mfg issues. There are plenty of talented people that can operate US factories, just not a good business case to justify their use.

> 5. U.S. addiction to foreign oil which has led to an outflow of U.S. wealth to many countries that hate us (and even support terrorism)
> and,until a decline in oil prioes over the past 6 months, significantly
> increased production and transportation costs for U.S. manufacturers.

Actually, this cuts both ways. For some industries higher transportation costs improves their economics by making it more expensive for competing stuff to be shipped from across the globe.

> Atlasman and others can complain about a prospective carbon tax and
> card-check laws. However, U.S. manufacturers are already paying
> for CO2 emissions in their healthcare costs. The attack on the card-check
> law by the U.S. Chamber of Commerce is bogus because the proposed
> legislation does not prohibit the secret ballot.
>
> By the way, Americans ahould not allow the current "cheap" oil to
> lull them back into a sense of complacency as the oil lady in the
> American Petroleum Institute's TV ads seeks to do. We all have a
> lot ot worry about, including U.S. manufacturers. Here are a few
> troubling developments: reported Chinese stockpiling of oil and efforts
> to gain control of foreign petroleum resources; China and India's
> increased demand for energy in the future; and the advent of peak
> global oil production.


I do not disagree with some of your issues, but they really have nothing to do with the problems of US mfg. Perhaps you should spend some time studying finance, or better yet work for a manufacturer and you will better understand the real issues. I only complain because I actually do care and want full employment and even want to contribute to full employment by hiring people, but not if it is unprofitable. That is how capitalism works. If you do not like it, study socialism.

GE's Immelt Thinks for Himself: U.S. Not Shifting to a Service Economy

So lets make it more difficult to be a competitive manufacturer in a global economy by passing a carbon tax and card-check laws. There are reason why the US is not a competitive manufacturer, and most of them can be traced to Washington.

Bernanke's Call for Better Regulation

Sounds like he wants to be reappointed whenever his term expires. It really is surprising how political the Fed has become.

Five Predictions for This Market

Kruser - Please check your math. The tax increase will be over 10%. Add to this all of the other unnecessary hurdles thrown in the way of entrepeneurs and it becomes the straw that breaks the camels back for some. You may not like it, but it is the reality.

If Obama really wanted to get out of this thing, he would hold an "entrepeneurs summit and poll the best and brightest for the top 10 reasons they are not starting businesses these days and undo them. I My list includes SOX, Options treatments, Overly burdensomeTax system, burdensome frivolous lawsuites. Sadly neither Obama nor any of his inner circle have run so much as Quickie Mart so I really expect no progress.

I will end my rant with this question, how has loading all of the tax load on the top earners worked for California?

Five Predictions for This Market

PG - I am sorry but your 3rd point is incorrect. I know too many entrepeneurs that are pulling back because of Obamanomics. There are few things harder and require more effort than starting and running a small business. The idea that they are going to be punished for the effort is more than some of them can stomach.