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Hardware Silicon Valley Feels Economic Pinch
Shane McGlaun (Blog) - December 1, 2008 11:02 AM
Print E-mail del.icio.us 51 comment(s) - last by TheSpaniard.. on Dec 4 at 4:55 PM
Layoffs are becoming more frequent in the Valley

It's no secret that many companies are languishing in the current economic climate with profits falling and worldwide demand for products drooping. Technology firms are among some of the hardest hit around the world.

Reuters reports that the soft economy has finally begun to be felt in Silicon Valley, the hotbed of the IT and technology industry, as job loss increases. Layoffs have begun taking place among companies and employees based in the Valley and more layoffs are expected to come.

Some may see these layoffs as being similar to what happened in the Valley after the dot com bubble burst in 2001 and 2002. Reuters quotes Stephen Levy, director of the Center for Continuing Study of the California Economy saying, "In 2001, we (Silicon Valley) were the epicenter, we were the cause. Now it's a world-wide recession event."

The unemployment rate in Santa Clara County where Silicon Valley is located rose to 6.9% in October, up 0.4% from September due to layoffs. The 6.9% unemployment rate is above the national average, which is 6.5%. Despite being above the national average, the unemployment rate in the county is still less than California's statewide unemployment rate of 8.2%.

The layoffs will continue with almost daily announcements from the Valley of more job cuts. Firms big and small are feeling layoffs with companies including Sun Microsystems, Applied Materials, and smaller firms like Tesla Motors among those making cuts.

Tesla Motors makes the all-electric Tesla Roadster and its employees were informed of layoffs via a blog post. According to consulting firm Challenger, Gray, & Christmas technology firms have cut 140,422 jobs up to October 31. That represents a 31% increase compared to all of 2007.

Analysts predict that 2009 won’t be much better for tech firms with a recent survey of more than 500 top technology executives finding that 40% planned further job cuts in the next six months.

Jeff Hocking from recruitment firm Korn/Ferry International said, "Companies just aren't sure what the next six months are going to look like, so we're seeing companies cancel searches, withdrawing offers."

Hocking also added that the current climate in Silicon Valley is making it more difficult for firms to poach employees from other companies. He also says that clean-technology firms are a bright spot in the gloom and continue to have success recruiting executives.

A VentureSource study found that venture capital investment in renewable energy has increased 71% from the previous quarter, despite the economic downturn worldwide. At the same time, investments in the IT industry have dropped by 10%.

Levy echoes the findings of the VentureSource study saying, "Venture capital is holding even and probably in the intermediate term poised to grow with all the alternative energy (investment)."

During the dot com burst, Santa Clara County lost 200,000 jobs, a full 20% of its job base leasing to an unemployment rate of 8.4% that year for the county. At least companies and employees aren’t facing job loss on the same scale as 2002, despite more job cuts coming for 2008 and 2009.

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Controversial thought
By JasonMick (blog) on 12/1/2008 11:19:36 AM , Rating: 5
But rather than just throwing money at the screwed up banking and financing industry ($119B USD for AIG?!?) why not spend just a small fraction of those billions to help support actual American industry that's producing something, like Silicon Valley electronics, bio-tech, or Michigan's automotive industry??

It seems a shame that politicians on the Hill will callously toss hundreds of billions at banks, but won't even lift a finger as the basis of the U.S. economy is failing.




RE: Controversial thought
By DASQ on 12/1/2008 11:27:41 AM , Rating: 5
I'm honestly far more concerned about the financial industry than some of the things you list there...

And Michigan's auto industry? There is no saving that. Just let that pig bleed out, other animals will fill the void with greater efficiency. Sorry for the guys who are losing jobs, but you are just working for the wrong guys, plain and simple.


RE: Controversial thought
By Spivonious on 12/1/2008 11:28:21 AM , Rating: 2
Because companies that screwed up deserve to go bankrupt?

I don't agree with the Wall Street bailouts either, except maybe for Fannie/Freddie, since they held about 60% of all mortgages in the U.S.

We can only hope that the new Congress coming in is a bit smarter about these sorts of things.


RE: Controversial thought
By Regs on 12/1/2008 2:50:34 PM , Rating: 2
And lets hope they educate the naive and sometimes stupid people that elected them.

And I meant that for both parties.


RE: Controversial thought
By phxfreddy on 12/1/2008 11:49:47 AM , Rating: 4
Subsidize = first step in socializing a business.........and in effect ruining it.

Want to save a business? DO NOT SUBSIDIZE IT !


RE: Controversial thought
By Tsuwamono on 12/1/08, Rating: -1
RE: Controversial thought
By jimbojimbo on 12/1/2008 2:36:38 PM , Rating: 3
Why would you respond with "Your dumb" to a comment? You may as well have said "Me dumb, yoo stupider." YOU'RE an idiot for saying someone is dumb and making YOURself look like an idiot instead.


RE: Controversial thought
By Ringold on 12/1/2008 7:07:53 PM , Rating: 3
A long term low interest government loan.. is a subsidy. Broadly, anything that gives an unfair advantage to a company by the government can be called a subsidy. Americans get pissed when European countries toss EADS (Airbus) such loans, why? Because it's trade distortion.

As for student loans, any economist can tell you at least part of the cause of inflation in college tuition prices is the subsidies governments give to student loans. Low interest rates, due in part to implicit government backing of Fannie and Feddie, also we now see helped inflate housing prices.

He's not the one that needs to be picking up books. :P


RE: Controversial thought
By Mitch101 on 12/1/2008 11:55:23 AM , Rating: 4
Bad business models should fail and not be given handouts.

The top GM CEO received a 16 million dollar bonus.
http://www.usatoday.com/money/economy/2008-04-25-1...

I wouldn't say it was a job well done.


RE: Controversial thought
By Chadder007 on 12/1/2008 12:33:52 PM , Rating: 2
Similar to what I was thinking. Give them business, not bailouts. Just handing the companies money won't move inventory or keep people who need jobs working.


RE: Controversial thought
By TheSpaniard on 12/1/2008 1:44:35 PM , Rating: 2
the federal government does give them business every year.

Police cruisers, official vehicles(all of the fleet used by governmental offices). all of them are either Ford, Chevy, or Dodge.


RE: Controversial thought
By JonnyDough on 12/1/08, Rating: -1
RE: Controversial thought
By Regs on 12/1/2008 3:36:09 PM , Rating: 5
What?

Remington, Barrett, BAE, General Dynamics, Lockheed Martin.....


RE: Controversial thought
By JonnyDough on 12/2/2008 7:17:53 PM , Rating: 2
Ever hear of Northrop Grumman?


RE: Controversial thought
By TheSpaniard on 12/4/2008 4:55:46 PM , Rating: 2
on an aside this also applies to all NON-confiscated undercover cars


RE: Controversial thought
By BigPeen on 12/1/2008 4:49:48 PM , Rating: 2
You obviously don't understand how the economy works. We're not just "throwing money" at AIG to enrich shareholders or whatever conspiracy you envision. FYI, Banks ARE the basis of the U.S. economy. You can't have business if business has no access to loans and capital.


RE: Controversial thought
By Ringold on 12/1/2008 7:16:38 PM , Rating: 2
Exactly. People have distorted, 1970s views as to what the "real" economy is. Hooray for government education, I guess.


RE: Controversial thought
By benx009 on 12/1/2008 10:07:41 PM , Rating: 2
True, but banks really should be the only exception, and, in being so, should have far greater regulation that other forms of American commerce. The whole basis of the American business model is that companies should be able to fail, no matter how big they are, and no matter what majority of a market they compose. All this talk of bailing out the auto industry seriously screws that whole concept up big time. Let 'em fail, it's not like there aren't smaller auto companies who will know how to market their products responsibly. I mean, if you're going bail them out, might as well spend taxpayers' money on bailing out telecommunications too... Heck, who knows, even Walmart might come crying at the government's door eventually....

Whatever happened to good ol' capitalism?


RE: Controversial thought
By JonnyDough on 12/2/2008 7:19:23 PM , Rating: 2
Nobody understands the economy, that's why we still have economists writing books about it.


RE: Controversial thought
By Chipper Smoltz DT on 12/1/2008 10:33:20 PM , Rating: 2
The government simply can't save all those companies, they have to choose which is most vital to the economy. I don't believe that these tech companies will recover soon as most of consumer spending will be focusing on the basics or the "needs" and not the "wants" or the luxuries or non-needs.

Even if they wanted to rescue alot of companies that are in a bad state, these companies mostly banks and insurance companies are the main source of capital and debt funds for operating expenses (banks) for most small and medium enterprises that comprises most of the businesses in America. If these banks continue to not lend, then it would be devastating even for the big companies out there. There will still be lay-offs no matter what happens.

As it is, the bail-out is nice coz if you help the banks, you will help the companies and the small and medium enterprises to thrive and to continue to exist.

Maybe there will come a time in the future where there will be companies or small and medium enterprises that do not make use of debt or leverage when it comes to their operations or cash flows. It would be nice if they become self-sufficient coz as it is they will be burned if the banks would tighten their lending terms.

So the need for self-sufficiency will prevail soon... maybe the concept of debt or leverage right now is what's being changed or this tried and true concept of "leverage" that has existed for lots of years now has proven to be not good especially during hard times.

Coz everything is based on some future that no one really knows what will happen with the case of debts and leverages. But everything is unpredictable - the effect of which can now be seen with the economy in the US and other countries. So maybe in a way, being in "debt" is not always good.


For the clueless, do your homework !
By Beenthere on 12/1/2008 12:06:05 PM , Rating: 2
The loans that the auto industry are requesting, are loans they would have been able to obtain through the normal banking system, had it not collapsed due to mis-management and financial greed. The clueless media keep calling these LOANS, a bail-out, when in fact they are no bail-out at all. These loans are no different than any other loan that has to be repaid.

The ignorance displayed by grand standing politicians and American's who don't understand that if any of the Big Three go under, all American's will pay and pay dearly, in addition to millions of Americans not associated with the car companies losing their jobs.

It's easy to make foolish comments when you have no clue about business or the economy nor the pain and suffering we will all endure in a depression. Ill-informed people, too lazy to educate themselves can expect to be punished by a long economic depression as never seen before in history.

It's time for U.S. citizens to get off their collective azzes and support the rebuilding of our economy before it's too late. Ignorance won't save your sorry butt from a depression and the loss of your job.




RE: For the clueless, do your homework !
By Bateluer on 12/1/2008 12:35:35 PM , Rating: 4
How exactly is loaning billions of dollars of tax payer money to an industry that refuses to change with the times and that continues to bleed money regularly going to change anything? It will only postpone it for a short time, then they'll be back begging the tax payers for a handout. The term bail out is a poor term, because they are essentially loans. GM, Ford, etc will need to pay them back, but the catch is that they are not making money because nobody is buying their cars. They are not delivering what consumers want and its killing them.

The US automotive corporations need to file for chapter 11 bankruptcy like every other business. Filing for Chapter 11 does not mean they will go under. It means they will remove the bad contracts, restructure their management, etc. Some plants and factories may be closed, but this would be vital for the long term health of the corporation.


RE: For the clueless, do your homework !
By FITCamaro on 12/1/2008 1:37:06 PM , Rating: 2
Union wages and health care costs are what is killing GM and Ford. Sales are down for everyone right now. And the talk of GM and Ford going out of business certainly hasn't helped their sales. Despite it being a lie regardless of whether the bailout happens.

GM's and Ford's cars right now are on par with Honda's and Toyota's. It's their increased cost of labor and other fees keeping them from being able to compete on price. And if they were actually making money from cars they could spend more on R&D for them.


RE: For the clueless, do your homework !
By Gzus666 on 12/1/2008 2:28:05 PM , Rating: 3
Well, they aren't on par with Honda or Toyota in quality, that is just untrue. Having worked on all of them, I can tell you that for a fact. It really comes down to piss poor engineering and bad response to problems. It took Ford around 5 years to fix the problem with spark plugs shooting out of their modular V8 heads.

Problem was simple, they didn't have sufficient threading into the head to hold the plug on higher cylinder pressures. The problem was usually compounded by a high mileage, carbon filled engine that is used for towing, putting it under higher strain and increasing the compression and heat.

If Ford didn't have their head crammed up their ass, they could have done a quick retooling on the line, done some sort of recall and fixed the whole situation rather quickly. Instead they just ignored it and let people get that bad taste in their mouth.

We are talking the best selling vehicle they make by a huge margin and they go ahead and piss the customers off. They are doing the same crap with their new engine, plugs are seizing in the head at low mileage and breaking off in the head, fun, fun.

Chevrolet is better with engines now, but they surely took forever getting there. Hell, lets take the 1500 truck, the 5.3L engine family leaked like no tomorrow. They had an issue with intake gaskets leaking quite frequently because of a design flaw and they waited forever to finally fix it with a revised part.

Also the 4L60E transmissions in those trucks had poorly engineered sun shells which were too flimsy. Under any heavy load or after a reasonable period of time, they would explode and take the rest of the tranny with it. The revision was a relatively cheap part that just involved beefing it up slightly and it was never a problem again.

How about Chevrolet window motors and regulators? Some of the biggest piles of crap conceived, yet they still haven't updated them.

Chrysler, well, they are just complete junk, so no need to go into their follies.

I could literally write a book on the stupid problems with Fords, Chevys and Chryslers. Granted I have owned GM vehicles all my life till my most recent purchase, but I just got sick of fixing their garbage. The problem is they use the in warranty failure numbers to compare quality.

If you have ever worked for a Japanese car company, you would see that the customers of those are quite a bit more picky and have had a high standard set for what the car should be like. You get a ton of squeak and rattle or little stupid trim stuff warranty claims. GM, Ford and Chrysler on the other hand, you get lots of crazy crap, but on those charts, all failures are considered 1 failure, no matter what it may be.

Not to say they haven't changed, cause they have gotten better over the years, but they do it so slowly and haphazardly that it just doesn't help their image at all. If they engineered a better car, renegotiated with their unions and retooled management, they could easily become some of the best cars out there.


RE: For the clueless, do your homework !
By FITCamaro on 12/1/2008 2:55:44 PM , Rating: 2
My 87 Camaro's power window motors were the factory originals and still worked fine when I sold the car in 2004. Albeit a bit slow sometimes. But I can live with it taking 10 seconds to roll up the window.

And all the things you've mentioned are things that were fixed in recent years.

As far as renegotiating, they have. But they can only do so much when their work force threatens to walk. They need to just suck it up and tell the unions "Fine. Walk." Then hire and train new workers that aren't in the union. It will mean a short term stop of production. But I'll bet when those union workers start to see their jobs being taken by others, they leave the union and go back to work.

And while I generally agree with you on Dodge, my parents have an 04 Hemi Durango that's been pretty much trouble free. They had a few minor issues that were fixed under warranty but nothing major.


RE: For the clueless, do your homework !
By Gzus666 on 12/1/2008 3:29:21 PM , Rating: 5
Well, I had a 79 Trans Am, a 90 Camaro and a 02 Trans Am, all of which suffered from slow windows caused by tweaked regulators and motors that were junk. The old ones kept running, slow as hell. The 02 motor gave out thanks to a poorly designed regulator. Factor in that you have to drill out a bunch of rivets cause they are too cheap/lazy to put in screws and you get a piss poor design that sucks to fix. They also had a problem with piss poor wiring. Rather than make a separate circuit for the 2 windows, they piggy backed them so the motors would be underpowered and run like hell.

You are correct, most of the things I mentioned were fixed(besides the spark plugs breaking off on the new 3 valve Ford engines), but how long did it take? When I worked for Toyota, they released the Sienna vans, they had an issue after the first few months of a possibility of the radiator and the power steering hoses leaking. They had this corrected within a few days of when they discovered the problem on the line and then issued a recall for the affected vehicles. They also stop the line immediately and make the needed fix so they aren't putting vehicles out knowingly with problems.

This is the difference. The Japanese companies have an image to uphold and they just bite the bullet and fix it. It was rare to see a serious issue on a Toyota because they fixed them so quickly. American companies have always had the ignore it and maybe they will go away mentality, which gives them a terrible name.

I loved my 02 Trans Am, I really did. If it wasn't for the gas prices going through the roof for a while and the fact that everything started falling apart (window seals leaked water pretty heavily, rear end was about to explode and needed a 12 bolt badly, window motors dying, headlight motors taking a dump, radio was flaking out, door panel cracked, which is extremely common cause of a piss poor design and just general electrical gremlins I hate tracking down on my daily driver) I probably would have kept it. The car was fun, fast and handled quite well, especially after some modifications.

I agree, they need to just bite the bullet and either let them go or they need to renegotiate. But honestly, it isn't just unions killing them, it is horrible engineering and keeping up with customer demands. They say unions add $2k to each car, is that really what is stopping everyone from buying American cars? Do you think if they drop $2k from the price all of a sudden everyone will dive their cars? It won't happen. People want quality from a large purchase and will pay a bit more to get it.

I love a lot of American cars, but they are just out of touch with the world. I still drool at Corvettes, the new Challenger and Camaro look amazing! The Mustangs look pretty good as well, but I was never crazy about them anyway. The new Dodge Challenger weighs more than the one from the 70s, are they insane? The new Camaro is going to be a tank as well. The Shelby Mustang is a boat on wheels. They need new engineers it seems, cause the ones they have suck. Their designers are good, but their engineers suck.

As for the Durango, be glad they didn't get one of the early new Hemis, they were bending push rods at the drop of a hat. They tend to make decent V8/RWD vehicles and their power trains are usually quite solid. Honestly though, ask most Chrysler techs and they will tell you the engines made by Mercedes were way better than anything Chrysler put out.

Other problem is when they get a bit old, their cars fall to pieces inside and out. I have never seen anything like it, but they have outside mirrors falling off, trim pieces dropping, interior pieces just completely falling apart. It was dumbfounding to see honestly.


RE: For the clueless, do your homework !
By FITCamaro on 12/1/2008 4:17:48 PM , Rating: 2
Agreed that todays muscle cars (save the Corvette) are WAY to heavy. My GTO is about 3750 lbs. Which isn't too bad. But my 87 Camaro was 3300 lbs. But we can thank increased safety and emissions standards for a lot of that. But also today's muscle cars are being marketed to those who bought them in the 60s and 70s. People who now not only want a big V8, but comfy seats and a quiet interior. Would be nice if they sold a stripped down model. The Challenger is nice with its 425 hp. But at 4200 lbs, my GTO with only 25 hp less would probably spank it since its nearly 500 pounds lighter (dunno what the Challenger's gearing is like though).

My dad has a 02 Trans Am WS6 Collector's Edition. Around 35,000 miles on it. Definitely not his DD. Is holding up pretty good so far. But weather stripping is one reason why I don't like t-tops. Sure they're cool, but in the long term, they're more trouble than they're worth.

No cutting $2000 off the cost won't necessarily end their trouble. But cutting $500 off the price and spending the extra $1500 on increased quality to solve a lot of those minor issues (which add up to big ones) will. I agree with you on the windows being tied together.


RE: For the clueless, do your homework !
By Gzus666 on 12/1/2008 4:32:11 PM , Rating: 2
Yea, but do you really see them spending that $1500 on fixing the vehicles? I have a feeling it will just end up in the hands of the upper management anyway. It isn't the quality of the parts that is the problem, it is just the way they engineer them. Just dumb crap that would cost little to nothing to fix but they just ignore or don't notice.

I think the greatest change would come from better employees in general, that I think we can all agree on. Everything from their poor quality assembly line workers to their junk engineers to their terrible management, they really just need to be cleansed.


RE: For the clueless, do your homework !
By FITCamaro on 12/2/2008 5:58:28 AM , Rating: 2
Ok but they engineer them that way to save costs any way they can. A dollar here and there adds up when you're talking about several hundred thousand vehicles. With the money they'll save, they won't have to penny pinch in every little place.


By Gzus666 on 12/2/2008 9:07:22 AM , Rating: 2
Sometimes yes, sometimes no. It really depends on what they are doing. Would adding more threads to a head really cost more? Would it cost more to make the intake properly? Most of the fixes would cost nothing in the first place. On top of that, if they do it right the first time, they don't have to worry about fixing tons of them under warranty which costs lots of cash. On top of that it costs more in their reputation and their image with customers. The biggest cost hit they get is in their image and that is clear by talking to most regular people who talk badly about American vehicles.


RE: For the clueless, do your homework !
By theapparition on 12/1/2008 4:28:49 PM , Rating: 2
I'll agree to every single one of your points in this post and the previous one, with the exception of one. That the foreign cars do anything much differently.

Window motors in GM suck. The rivets suck. Leaving a 10 bolt designed for a 70's Monza in a 4th gen F-body is unexcusable. Although the leaky intake gaskets in the 5.3's was only valid for a 1/2 model year.

Ford modulars shooting spark plugs, similarly, is unexcusable.

Chrysler is chrysler, so buy one knowing you are going to throw it away.

However, all of my collegues with imports also have problems. Steering problems, braking problems, leaking problems, burning oil problems, etc.
However, for all thier problems, they give a pass to the foreign manufacturer and rake the domestic one over the coals.

Data supports my own observations. Toyota, GM and Ford are leading many catagories in repairs and initial quality. Mercedes and BMW are dead last in most reports, but no one seems to complain about them. What about "Legendary" Honda reliability? Just so-so in most recent reports, yet owner surveys rank them closer to top.

Placebo effect, plain and simple. The thought is that foreign cars are more reliable, and reguardless of the data, owners will say whatever they need to make that true in their mind.


RE: For the clueless, do your homework !
By Gzus666 on 12/1/2008 5:10:15 PM , Rating: 2
Oh, trust me, I can sit and tell you problems with Toyota, Honda and many other Japanese companies, but I will tell you with the utmost hands on certainty that it pales in comparison to the domestics and even more so with the European vehicles. All vehicles can leak depending on how you take care of them, I have seen a 250k mile Toyota Avalon that was barely worked on (we had the complete work history, the guy kept up with it pretty religiously) and about the worst thing he had go bad was some small leaks.

What people don't realize is that not changing your oil properly can cause most of these leaks in the engine, similar problems from other fluids as well. Oil contains additives to keep seals soft, if you don't change the oil frequently enough, they can harden and start to leak. It was rather rare that I saw a soft seal leaking, usually they came out in chunks or cracked while pulling them they were so brittle. Also lack of oil changes can cause build up in crankcase ventilation systems which cause a build up in pressure in the case and cause seals to literally blow out.

The difference here is if you have ever replaced a Japanese window motor, you would see that it is almost a joy by comparison to an American vehicle. Changing seals and re-timing engines is a delight to their American counterparts. I have yet to see Toyota suspension joints wear out, their springs last forever, their shocks rarely need replacing, their bushings usually last a long time and their suspension is generally easy as hell to remove. Can the same be said for American vehicles? Not in the slightest. I have seen a Toyota CV joint with an exposed boot that had clearly been that way for at least 15,000 miles or more, covered in dirt and sand and wasn't clicking at all. I cleaned the joint, re-greased it put a new boot on it, no problems. This also can't be said of American vehicles.

It all comes down to poor engineering, with a nice retool, those companies could definitely do some serious competing. If it sounds like I'm being overly critical of American car companies, you should hear what I have to say about European car companies, they are truly the worst of the worst.


RE: For the clueless, do your homework !
By FITCamaro on 12/2/2008 6:04:59 AM , Rating: 2
How one maintains a vehicle will determine how reliable it is. I fear for my life in many cars owned by girls I've dated. They don't care about the car and think they just have to change the oil. My last girlfriend had a noise coming from her brakes that she refused to get checked out.

I have seen 200k mile Chevy's still going strong with minimal issues. I have seen 2 year old Lexus's burning oil (and visibly so). Certain things will break no matter how well you care for your vehicle. But chances are if you maintain it properly, it'll serve you for a long time trouble free.


By Gzus666 on 12/2/2008 9:27:44 AM , Rating: 2
Right, that was my point for the most part, but there are a lot of problems that aren't because of maintenance. Problem is if you took that same Lexus and Chevy and maintained them the same, you would be looking at far more frequent and expensive breakdowns on the Chevy.


By Gzus666 on 12/1/2008 5:28:45 PM , Rating: 2
Oh and I forgot that the 5.3 and other engine family intake gaskets were pretty common for years, much longer than 1/2 a year. The TSB covered about 10 years and like 4 or 5 different engines if I remember correctly (it has been a while since I have seen it, but I know it spanned a large gap with lots of affected engines).

More examples of these silly problems would be case half seals leaking and head bolts pulling out of the block on Northstar engines for Cadillac. Or the constant water pump leaks, crossover pipe leaks, etc. GM just has so many expensive and silly problems that could be fixed with simple engineering changes it is sickening.


RE: For the clueless, do your homework !
By Regs on 12/1/2008 7:03:20 PM , Rating: 2
Bull sh** and you know it. I've seen and met these so-called union workers that people think make 150,000k a year (73 an hour). They live in 2 bed room homes with 5 kids out in the middle of the "sticks". They live out in the "sticks" because the local and state government can't tax the manufactures and actually use the money to build-up the towns without fear of running the manufactures out of the state or country. Too late?

These statistics are cherry picked numbers are exaggerated so that people can coup with demonizing only a specific group of people. You can't demonize EPA regulations to save animal life and our precious environment, you can't demonize the health care system that's going down the toilet with inflation and litigation con-artists, you can't demonize the impotent morons voted by a "majority" in congress, or you can't demonize the CEO's making 9.5k per hour (that will one day trickle down to the middle class *sarcasm*) all at once!

I guess we can't blame that world demand for these cars have gone down because people just don't have the money or buyer power anymore. We consume more than we produce, and it's become a global epidemic - simple as that. You want to blame some one? Blame your 300 lbs neighbor who does nothing to help his community, works 2 hours of his 8 hour work shift, and collect disability when he feels that his is over worked. If he gets fired then maybe he can always file suite against McDonalds for his obesity. This is of course an exaggeration of the truth - some times.

For instance, I work for a fortune 500 pharmaceutical company. I am more than happy to admit to you that our company has not produced the quality of medication or product that we should be producing for our customers, and especially at the rate we are consuming revenue for R&D. Cost savings and down sizing means nothing when the work force you have is simply not putting out the quality of product that they should.

Though if you want to blame the Union for one thing, it's the burden of litigation. Imagine replacing a union laborer with a extremely efficient robotic system or even looking at a larger scale, moving a facility to a more robust and efficient plant in a different state. Can you imagine the legal ramifications of this to both the employer and union? Unlike Toyota that can remain versatile and keep inventory small when needed because the use of non-union labor, a company like GM would likely be stuck in court fighting over it for years getting sucked dry by lawyers in the mean time and scrutinized heavily by the public for it.

There seems to be a birth of a new motto in the USA recently, and that's wanting more for less. It does not exist. The economy is based on the exchange of goods and services. If you're not giving, you're not exchanging and the economy recedes. It's becoming a 10 year trend when greed and gluttony takes hold - when we turn envious and resent our neighbors for them having more than what we have. Through suffering and turmoil we then realize the wrong of our doing and our economy begins to grow again. It's rather fascinating when you think about it.


By Gzus666 on 12/1/2008 7:37:04 PM , Rating: 2
Sad but true. More for less, it is really stupid the way they do it and sooner or later it is going to catch up to us all. What does it matter if we have cheap goods if all our wages are down and unemployment is high cause of the cuts they had to make to have low prices?


RE: For the clueless, do your homework !
By Ringold on 12/1/2008 7:46:49 PM , Rating: 2
quote:
Bull sh** and you know it. I've seen and met these so-called union workers that people think make 150,000k a year (73 an hour). They live in 2 bed room homes with 5 kids out in the middle of the "sticks".


The union generally screws the young people, the UAW is for the old worker and only the old worker. When they were in front of Congress last, they were up there bragging about hammering down younger employees pay.

The workers that are crushing GM, Ford and Chrysler aren't those people, they're the 20-30+ year veterans who, like a certain aunt of mine, gets paid ridiculous amounts of money to pull parts off shelves in a warehouse. Meanwhile, 20 and 30 year olds work next to her doing the same job for $15/hr.

And she does not live in a 2 bedroom home in the "sticks." She has a summer home, north of probably 2500 square feet, and rents a winter home, both in nice neighborhoods. She does have a second investment home that sounds like your example, a 2 bed room home, but it's a rental property. Also not in the "sticks."

Unfortunately, there are thousands like her. I thought it's been made pretty clear in the media that the problem was a "legacy" problem; ie, the old workers that the unions have had in the door for decades, and retired workers. Not the younger ones. Equally unfortunately, with so many like her around, the numbers aren't cherry picked; Toyota, Honda and others simply don't have any employees like that, and therefore really do have much lower costs.

quote:
There seems to be a birth of a new motto in the USA recently, and that's wanting more for less. It does not exist.


It does exist. It's called productivity gains. We had a huge boost in the 80s/90s for example as IT allowed workers to do more with less time/resources. Getting more for less is a cornerstone of growth and capitalism. We've been doing it since we first started improving our first attempts at agriculture how ever many thousands of years ago..

And this 10 year cycle.. This also isn't new, or novel, or even in some ways interesting just in so far as it happens. Economies expand beyond their sustainable rate of growth, then contract slightly to get back on track, to simplify it greatly. The only interesting aspect this time is how the financial issues have made this one deeper than most. In fact, if anything is unusual about recent times, its that post-WW2 recessions have become shorter, fewer, and further in between!


By Gzus666 on 12/2/2008 9:24:31 AM , Rating: 2
quote:
It does exist. It's called productivity gains.


Right, but these are brought about by efficiency. I believe he was speaking about the request for more for nothing. Examples would be when they want a network administrator to do system administration, desktop support and be the janitor. Same goes for anything else, they want everyone to do 10 jobs that are tied closely, but should be done by separate people. This then leads to all the job areas suffering.

I mean, what next, doctors have to be their own anesthesiologist, nurse and cleanup crew to save some money? If a job becomes more efficient, fair enough, but if they just want to save a buck by making someone do everything for the same pay of course, it is a joke. That is what he was referring to I'm sure, as I see it all the time.


By Ringold on 12/1/2008 7:29:27 PM , Rating: 3
quote:
The loans that the auto industry are requesting, are loans they would have been able to obtain through the normal banking system, had it not collapsed due to mis-management and financial greed. The clueless media keep calling these LOANS, a bail-out, when in fact they are no bail-out at all.
I'm sorry, but you're repeating Detroit's propaganda. Their credit ratings are such that the vast majority of bond mutual funds would shun them, and every intelligent junk bond fund manager would probably steer away from them as well (unless he expected a government bailout). Detroit is bleeding money, and banks are not charities. Go ahead. Look at their credit rating. That has nothing to do with the credit environment, it just relates to their (failing) business, their ability to ever repay the bonds. The current consensus is roughly translated as "snowball chance in hell" without a bailout.

If we want to "rebuild" our economy, we need more people with college degrees, and not soft-ball liberal arts ones, as well as fewer preconceived notions as to what jobs should be created. Old industries must eventually fade away as we move forward through history, get used to it. Structural change is perpetual. Do you still have to make your own pottery in order to have a plate to eat on?


Ugh
By archcommus on 12/1/2008 12:56:41 PM , Rating: 2
What a lame time to be graduating college. I have a B.S. in computer engineering, I hope I find work.




RE: Ugh
By TheSpaniard on 12/1/2008 1:47:15 PM , Rating: 2
go back into school

find something to get a degree in that will help you and avoid this mess for another 4 years!

extra debt but you will be more qualified when you come out into a market that may very likely need you then!


RE: Ugh
By xti on 12/1/2008 2:14:18 PM , Rating: 1
agreed. stay in school as long as you can. join a frat or something as a tertiary backup plan. its nasty and depressing being in a cube all day only to wonder if your next.


RE: Ugh
By Ringold on 12/1/2008 7:59:11 PM , Rating: 2
Another 4 year degree? Eh, I'd say instead a Masters, thats 2-3 years. If we really think it would take 4 years, then why get another 4 year degree when you can get a PhD? Not everyone can do that level of work, but those that can, why not?

I've been looking through jobs in my own field a bit.. and based on the job openings for PhD's (I don't have one, I'm just observing) its hard to tell there is a recession at all.


RE: Ugh
By TheSpaniard on 12/2/2008 10:09:29 AM , Rating: 2
well... I don't know what a computer degree would be but yes a PhD is exactly what I am doing to avoid this economy


first to get fired?
By Dreifort on 12/1/2008 12:02:09 PM , Rating: 2
Is the pic of the chooped meat because the first ppl to get fired will be the companies hired chefs that fixed catered meals for the companies employees?




RE: first to get fired?
By BruceLeet on 12/1/2008 2:20:50 PM , Rating: 2
*Straight face* followed by an exaggerated "WELLp!"

...everyone has their own interpretation to images, I guess


RE: first to get fired?
By piroroadkill on 12/2/2008 4:36:24 AM , Rating: 2
Yeah, I'm sure he thought goatse was a masterpiece


Greed - skewing of pay at the very top
By crystal clear on 12/2/2008 6:02:05 AM , Rating: 1
I.T. & Technology companies in the USA have over the years outsourced just everything from R&D to manufacturing to even simple jobs like those in CALL centres to countries like INDIA & CHINA.

They did this under the convinient excuse to cut cost in order to remain competetive & remain profitable.

In reality the CEOs wanted to cut cost to increase the company profits for huge/ever incresing-salary raises, bonuses,stock options,loans + other perks & compensations packages for themselves ,also to buy back company shares to increase share values & gave out higher dividends to keep shareholders happy, etc etc.

The etc etc includes everything that cannot be linked to their slogan- "to cut cost in order to be competetive & remain profitable".

The compensation earned by the top five corporate officers are atleast 15% & more of their firms' total profits.

To summarize the unemployment situation in the USA-

They the corporate officers exported JOBS in their thousands to India/China & at the same time imported cheap labour from India.

Blaming the recession/credit crisis/finajncial crisis etc will not help solve the unemployment crisis.

Solution-

Bring JOBS back to the USA.

How ? ... punish the outsourcers with punitive taxes & reward those who create & bring jobs back to the USA with tax breaks.

Exporting countries to the USA should be asked to agree to buy USA products & services etc in return to match their export figures in $.

These are just examples but the point is to create jobs & stop the flow of jobs out of the USA.




By Chipper Smoltz DT on 12/2/2008 7:31:19 PM , Rating: 2
You cannot just simply take those jobs back that the US has outsourced to other countries coz in a way, it would help the economy of that country and the US economy as well.

We agree on one thing - that is, they do it to cut down on costs making that company reduce its operating expenses thus making it able to deliver their products or services at a lower price. It would help the US economy in one way too. By doing this, US people could hopefully buy cheaper products (if they were manufactured or done in another country). Why? Because most of the expenses that were incurred by the company that produced that product or service is cheaper than if it was produced in the US.

So if the costs in making that product were lower then they would be able to sell it at hopefully lower prices also in the US compared to their competitors. Besides, most of the companies their in the US see outsourcing as a viable business strategy if they could do anything to cut down on costs. These expenses or costs saved could translate to more income or more cashflow for further expansions or they could hopefully create more jobs in the US or other countries or become more competitive by bringing a cheaper product or service to the US citizens as a whole.

Besides helping other countries through outsourcing is something good as most US owned companies have products or services that are located in these same countries as well. With the earnings from these jobs, most of the people of that specific country would spend or consume products from the US owned company as well providing them income for future expansions and so that in turn, they could create more jobs in that country or in the US.

What I'm trying to say is that - outsourcing is good because of all of what I've said.

Although I get your point that most of the profits are earned by the top officers of a company, but are these true for most US companies? And if so, do you think it's right coz they ultimately make the hard and tough decisions on how to run the whole company and thus making it more profitable and in a way they help in maximizing shareholder value which will ultimately help people in buying these companies stocks or shares - if they have any - thus creating more earnings options - thru the stock market - for people there in the US?


Article picture
By Howard on 12/1/2008 10:37:39 PM , Rating: 2
That isn't cutting the fat. That's cutting the beef! Or is that an subtle indication of what the author feels about the layoffs? ;)




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