Forget construction jobs, here comes the REAL whammy

[Wild Cobra]

RG, in post #18, this may be true. However, you forget that the costs do get passed on to the shipping prices. Some situations pass the costs on better than others. To take all the loss to the truckers bottom line is wrong. If they cannot pass the costs along, then they are of a weaker part of the industry that will get harmed anyway by some other factor. If the do not pass the extra costs along, that is their bad business sense.

#19, yes, all these products cost more at the market point. We are now adding percentages of percentages. There is no radical increased. Retailers are exploiting the fact that shipping prices do rise by jacking retail prices up more than justified. If there is to be a windfall profit, I'd look at the retail level. Food prices for example have been on a step price over the years before transportation costs were rising. It's natural to shift blame.

[RandomGuy]

RG, in post #18, this may be true. However, you forget that the costs do get passed on to the shipping prices. Some situations pass the costs on better than others. To take all the loss to the truckers bottom line is wrong. If they cannot pass the costs along, then they are of a weaker part of the industry that will get harmed anyway by some other factor. If the do not pass the extra costs along, that is their bad business sense.

#19, yes, all these products cost more at the market point. We are now adding percentages of percentages. There is no radical increased. Retailers are exploiting the fact that shipping prices do rise by jacking retail prices up more than justified. If there is to be a windfall profit, I'd look at the retail level. Food prices for example have been on a step price over the years before transportation costs were rising. It's natural to shift blame.

Well, such increases have a snowball effect in terms of inflation.

All purchasers of labor of any kind, i.e. all businesses, have to pay their people a bit more to compensate for higher fuel prices, so there is one pressure on costs.

Energy rates, such as electricity, have experienced similar run-ups as oil, so there is another bit.

We all see the large refrigeration units in grocery stores, and those SUCK a lot of electricity in hot climates.

These increases are seen up and down the value chain. The farther you are from the source of the product, the more steps there are TO increase.

You want to make some money in the long term, buy some farmland on the edge of a sprawled city somewhere with some solid water rights. By growing and selling directly to people, you will be VERY cost compe ive as time goes on. Having a good chunk of land that can be used for renewable energy like a small dammed stream, or some wind/solar would be another big bonus.

[boutons_]

"all businesses, have to pay their people a bit more to compensate for higher fuel prices, so there is one pressure on costs."

In theory, yes, but most businesses will pass through and mark up their inflation costs to consumers without compensating their employess.

If businesses do increase their payroll to compensate employees for inflation, then that increase gets passed through and marked up to consumers. aka, wage-price inflation spiral.

Ever had a job that indexed your salary to annual inflation rate, currently at 3.5 - 4% ?

As employees get more expensive, businesses try harder to engineer their businesses to use fewer employees (destroy jobs) or use cheaper employees (destroy good paying jobs).

[Extra Stout]

"all businesses, have to pay their people a bit more to compensate for higher fuel prices, so there is one pressure on costs."

In theory, yes, but most businesses will pass through and mark up their inflation costs to consumers without compensating their employess.

If businesses do increase their payroll to compensate employees for inflation, then that increase gets passed through and marked up to consumers. aka, wage-price inflation spiral.

Ever had a job that indexed your salary to annual inflation rate, currently at 3.5 - 4% ?

As employees get more expensive, businesses try harder to engineer their businesses to use fewer employees (destroy jobs) or use cheaper employees (destroy good paying jobs).

OTOH, the weak dollar creates incentive to expand manufacturing in the U.S. for export and create jobs. The employees won't be able to afford the stuff they make, tho.

We're the new Mexico!!

[RandomGuy]

In theory, yes, but most businesses will pass through and mark up their inflation costs to consumers without compensating their employess.

Depends on the business.

Price inflation means that labor suppliers (i.e. everybody who works) will start demanding more wages. Price pressure will be everywhere, although with an economic slowdown, there will be a good chunk of slack in the labor market, but this is always a rather temporary condition.

Keep in mind that baby-boomers are getting set to withdraw a hefty portion of the labor supply from the market.

It will be interesting to see what effect this all has in 5-10 years.

[RandomGuy]

As employees get more expensive, businesses try harder to engineer their businesses to use fewer employees (destroy jobs) or use cheaper employees (destroy good paying jobs).

Up to a point. Businesses that can't attract people and have crappy corporate cultures tend to be poor perfoming ones.

Working people too hard, and getting "cheap" employees have very definite costs associated with them, and any good CEO knows this.

Yes, profits come first, but taking such an overly pessimistic view in this regard misses the wider picture.

Successful businesses strike a balance between hiring and keeping good people and those profits.

Hiring and keeping good people is a necessary, but not sufficient condition to long-term profitability. I have yet to see a really successful large corporation that DOESN'T take fairly good care of its workers as much as possible.

That doesn't mean, however, that social safety nets, like unemployment insurance, and other forms of "en lements" aren't needed.

[DarkReign]

You want a comprehensive, up to date bulletin of the auto industry?

http://detnews.com/apps/pbcs.dll/sec...ategory=AUTO01

and

http://freep.com/apps/pbcs.dll/secti...ory=Business01

No other input needed. It sucks, its getting worse and the UAW is a small percentage of the people being ed in this country because of it.

[Extra Stout]

You want a comprehensive, up to date bulletin of the auto industry?

http://detnews.com/apps/pbcs.dll/sec...ategory=AUTO01

and

http://freep.com/apps/pbcs.dll/secti...ory=Business01

No other input needed. It sucks, its getting worse and the UAW is a small percentage of the people being ed in this country because of it.

When Chrysler gets liquidated in the next two to three years, the remaining Big Two will get a temporary dead-cat bounce.

And it appears Mulally at Ford might actually have a clue.

[Extra Stout]

Ford purportedly is betting the farm on retooling its truck and SUV plants to produce Americanized versions of its European lineup of cars, like the European Focus and Focus Coupe, the C-Max, the S-Max, the Kuga, and the Transit van.

They are working to accelerate production of the subcompact Fiesta in Mexico.

I think this is the best chance for them to survive.

[DarkReign]

Ford purportedly is betting the farm on retooling its truck and SUV plants to produce Americanized versions of its European lineup of cars, like the European Focus and Focus Coupe, the C-Max, the S-Max, the Kuga, and the Transit van.

They are working to accelerate production of the subcompact Fiesta in Mexico.

I think this is the best chance for them to survive.

Absolutely. Its one of the more sound "ideas" Ive heard from the market. Ford has a lot of cash, so to speak. Moreso than GM and a uva lot more than Chrysler.

To re-tool their entire North American Truck/SUV operation is a daunting task. Even for a company that reports in the red, but still has a lot of cash on hand.

The sister company to the company I work for stands to benefit immensely from such a move. Theyre going to need duplicate, brand new lines of their existing subcompacts/economy vehicles.

But, I am slightly surprised to not have heard any new developments from the project engineers/salesmen from our sister company. Making a bold announcement like Ford did (and it is quite bold), one would expect them to move on this very quickly.

Still no word.

As an aside, it seems to me that Ford has the "better" long term view of things in comparison to global market conditions. Moreso than GM. I dont count Chrysler....like you said, they are only a couple years from liquidation (Im holding out hope, but thats definitely the track they seem to be moving down).

GM has embraced the global market beyond belief. GM is not an American company anymore, so dont feel guilty for not buying one. They are our largest customer (to the tune of 30 some-odd machines/lines a year) and not one those machines for the past two years have been installed on American soil.

Korea. France. Germany. China.

Gm is HQed in America. Beyond that, they define all that is wrong with the manufacturing model in this country.

[RandomGuy]

When Chrysler gets liquidated in the next two to three years, the remaining Big Two will get a temporary dead-cat bounce.

And it appears Mulally at Ford might actually have a clue.

You forget that Chrysler has some very deep pockets backing it. It is not publicly traded anymore, and that has some definite advantages when it comes to restructuring. I wouldn't be so quick to write them off.

Ford, on the other hand, is a step or two ahead of GM in terms of dealing with the reality of expensive gas. I agree Mulally seems to be on the right track. Look for another year or two of pain, then a return to profitability about when they project it will happen now.

It is a good time to sink some cash on a consistant basis into Ford stock. Short term you will lose during the pain period, but after a couple of years, when it returns to profitability and starts paying dividends again, you will be very glad you bought it on the cheap.

(note: RG does not own Ford stock. Yet.)

[DarkReign]

You forget that Chrysler has some very deep pockets backing it. It is not publicly traded anymore, and that has some definite advantages when it comes to restructuring. I wouldn't be so quick to write them off.

Hmmmm, it was my impression Chrysler did not have the cache of cash their compe ors do.

Again, it was my impression. I dont pretend to know much about Cerebus, but Im sure a quick google search could fix that. As it were, I am of the mind that Chrysler is reverting to its early 80s status, only this time without the bailout. Especially now that its privately owned.

Overall, I understand the labor gap between the world's auto companies is a major reason why the American companies are being -slapped in the market (and coincidentally on the balance sheet), but there has to be more to the story.

Im sure there is, and I dont pretend to know the inner workings of their business model, but I do know they are absolute snails when it comes to change. The suppliers to these companies have been feeling the sting for 15 years, yet they operated with a business as usual approach.

Is this the negative nature of publicly traded companies? The board(s) that sat in command during the late 80s and early 90s had to know the end was nigh, but chose to ignore and inflate. Full-well knowing the shift was imminent, they chose bolster their stock price at all costs and pass the buck to the next poor sucker.

I understand the CEOs and board chairs are ultimately beholden to nothing but the stock price, but if there had been a true leader in that timeframe to make the necessary changes then instead of now, the American companies would be flourishing instead of perishing.

Interesting to me what pride, resume' building and status quo can do to what was once considered "untouchable" companies.

[RandomGuy]

Hmmmm, it was my impression Chrysler did not have the cache of cash their compe ors do.

Again, it was my impression. I dont pretend to know much about Cerebus, but Im sure a quick google search could fix that. As it were, I am of the mind that Chrysler is reverting to its early 80s status, only this time without the bailout. Especially now that its privately owned.

Overall, I understand the labor gap between the world's auto companies is a major reason why the American companies are being -slapped in the market (and coincidentally on the balance sheet), but there has to be more to the story.

Im sure there is, and I dont pretend to know the inner workings of their business model, but I do know they are absolute snails when it comes to change. The suppliers to these companies have been feeling the sting for 15 years, yet they operated with a business as usual approach.

Is this the negative nature of publicly traded companies? The board(s) that sat in command during the late 80s and early 90s had to know the end was nigh, but chose to ignore and inflate. Full-well knowing the shift was imminent, they chose bolster their stock price at all costs and pass the buck to the next poor sucker.

I understand the CEOs and board chairs are ultimately beholden to nothing but the stock price, but if there had been a true leader in that timeframe to make the necessary changes then instead of now, the American companies would be flourishing instead of perishing.

Interesting to me what pride, resume' building and status quo can do to what was once considered "untouchable" companies.

Cerebrus is a private-equity firm that specializes in taking over unprofitable multi-billion dollar firms, taking them private, turning them around, and then selling them for a massive profit.

They have a LOT of access to capital/cash, and as full owners will force change down the gullet of Chrysler at a pace faster than a publicly traded company with a more independent board would ever really swallow, because Cerebrus doesn't have to answer to impatient stockholders.

I do agree about the fact that the American style of corporate management tends to be a bit short-sighted.

It does tend to be able to change though, and that can sometimes be just as important as having a long vision.

[Extra Stout]

You forget that Chrysler has some very deep pockets backing it. It is not publicly traded anymore, and that has some definite advantages when it comes to restructuring. I wouldn't be so quick to write them off.

The purpose of Cerberus' acquiring Chrysler was to let it go bankrupt and sell off the parts. It's a pure "strip & flip."

[clambake]

The purpose of Cerberus' acquiring Chrysler was to let it go bankrupt and sell off the parts. It's a pure "strip & flip."

agreed. MB's willingness to run made the eventual outcome easier to predict.

you don't take a lose like that unless the patient is terminal.

[RandomGuy]

The purpose of Cerberus' acquiring Chrysler was to let it go bankrupt and sell off the parts. It's a pure "strip & flip."

I don't think so. I remember hearing some stuff on this in NPR's marketplace when it was happening, and if my memory was correct, the intent was to shake it down, and take it public again.

I would have to go back and research that to be sure, though.

[Extra Stout]

I don't think so. I remember hearing some stuff on this in NPR's marketplace when it was happening, and if my memory was correct, the intent was to shake it down, and take it public again.

I would have to go back and research that to be sure, though.

As if they'd be honest. "Yeah, we're just here to kill the company. Its assets sold in pieces are worth more than the business itself. Everyone is going to lose their job. Don't you feel motivated?"

[RandomGuy]

As if they'd be honest. "Yeah, we're just here to kill the company. Its assets sold in pieces are worth more than the business itself. Everyone is going to lose their job. Don't you feel motivated?"

The easy way to settle this is to wait.

Either they chop it up and sell it in peices, as you theorize, or they don't and take it back public.

Want to make a friendly wager of a six-pack on it?

[RandomGuy]

They may indeed not be telling the whole truth, but big secrets like that don't stay secret long, and there is no credible whistleblower (or any whistleblower for that matter) that has come forward saying that the company will be chopped.

[RandomGuy]

Life is not being kind to GM:

GM drops to 53-year low, Goldman urges "sell"

DETROIT (Reuters) - Shares of General Motors Corp hit their lowest level since 1955 and dragged down the auto sector on Thursday after Goldman Sachs cut the struggling U.S. industry's largest manufacturer to a "sell" rating and warned it would have to raise capital.

While GM stock fell 12 percent to a session low of $11.21, shares of No. 2 U.S. automaker Ford Motor Co (F.N), which had its price target cut by Goldman, dropped almost 5 percent. Shares of auto parts supplier Lear Corp (LEA.N), downgraded to a "sell" rating by the brokerage, fell by almost 19 percent.

With the Thursday price fall, GM's market cap fell to less than $6.5 billion. The company has the smallest market cap in the Dow Jones industrial average (.DJI), of which it has been a component since 1925.

Talk about a kick in the nuts...

The Dow Jones Industrial average is down about 200 points on this and other data today.

Yikes.