Wednesday, July 27, 2011

The Job Creators

Portrait of a West Michigan "job creator". Company goes through hard times in the Great Recession...

As the office furniture industry grows again following a deep downturn in 2009 and early 2010, restructurings made the Grand Rapids-based Steelcase more “fit” today to compete in a global economy and better enables the company to invest in new product development and pursue emerging markets.

“It helped us navigate through the last recession and had us fit for where we need to be now,” Hackett told shareholders this morning at the company’s annual meeting.

Tell us Mr. Hackett, how did you "restructure" your company?

The latest restructuring move started in January, when Steelcase announced plans to shut down three factories, including its Kentwood East seating plant, and move the work to Mexico. The closing will eliminate 750 jobs, including 400 in Kentwood.

But that's not fast enough for some folks.

One shareholder, who also identified himself as a Steelcase employee, noted that the company, the global leader in industry sales, lags competitors in profitability, despite all of the restructuring of the last decade.

“I’m just wondering how long this goes on before really affecting our bottom line?” he asked.

Ah, the smell of insatiable greed in the morning. The AP brings us the entire picture:

Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009, according to Sum and other Northeastern researchers.

In the same period after the 2001 recession, wages and salaries accounted for 15 percent. They were 50 percent after the 1991-92 recession and 25 percent after the 1981-82 recession.

Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during those first 18 months. That's compared with 53 percent after the 2001 recession, nothing after the 1991-92 recession and 28 percent after the 1981-82 recession.

What are those corporations doing with all that money? Like the example above, they are taking those profits to "emerging markets".

— U.S. corporations are expanding overseas, not so much at home. McDonald's and Caterpillar said overseas sales growth outperformed the U.S. in the April-June quarter. U.S.-based multinational companies have been focused overseas for years: In the 2000s, they added 2.4 million jobs in foreign countries and cut 2.9 million jobs in the United States, according to the Commerce Department.

— Back in the U.S., companies are squeezing more productivity out of staffs thinned by layoffs during the Great Recession. They don't need to hire. And they don't need to be generous with pay raises; they know their employees have nowhere else to go.

— Companies remain reluctant to spend the $1.9 trillion in cash they've accumulated, especially in the United States, which would create jobs. They're unconvinced that consumers are ready to spend again with the vigor they showed before the recession, and they are worried about uncertainty in U.S. government policies.

Obviously, more tax cuts are in order here.

Yes I'm being snarky. Just wondering when supply-side economics will finally be discredited once and for all.