Archive for October, 2008
October 28th, 2008
Here’s the story again about Corporate Taxes and how one candidate wants to raise them even further…from my previous blog.
While taxes are one element of a companies costs, it does have some bearing on what a company does regarding the location of manufacturing.
So what’s the story about corporate taxes? Are they too high or too low? Compared to what? How about compared to our our international competitors? So I did a little investigation from internet sources and here’s what I found:
A corporation will pay anywhere from 25% to 39% income tax depending on their taxable income. For example, if the income is $50-75,000 then the rate is 25%; if income is between $100-335,000, then the rate is 39% and drops to 35% if income is $18 million or more.
Then there is state taxes on corporations and in Illinois it’s a flat rate of 7.3%.
So for example, a small-medium manufacturer in the Rockford region making between $110-335,000 net income will pay 39% plus 7.3% or 46.3% of it’s income.
Don’t forget the Federal FICA rate on payrolls of 15.3% and State Unemployment Insurance of 3.4% of payroll. This amounts to 18.7% taxes on your payroll in our region.
Of course, many corporations own their own buildings and property and guess what, they pay taxes on that as well, I won’t even hazard a guess on that one….
I won’t include sales taxes that individuals pay for goods they purchase; in Europe they call this VAT.
So for our example, the corporation pays 46.3% tax on its income and 18.7% tax on it’s payroll.
I looked at the data from Wikipedia and here are a few examples of countries that are competitors to us:
China: Corporate: 25%; Payroll: 0%
India: Corporate: 30-40%; Payroll: 0%
Germany: 29.8% (ave.); 0% Payroll
Mexico: Corporate: 29%: Payroll: 0%
Ireland: Corporate: 12.5%; Payroll: 16.75%
UK: Corporate: 21-28%; Payroll: 23.8% (National Insurance).
As Wikipedia advises, these are guidelines, but it does make you think:Â should we raise taxes on corporations?
October 28th, 2008
The government Monday pledged to support labor-intensive enterprises and small- and medium-sized enterprises (SMEs) to protect jobs amid the global financial meltdown.
“The current global financial crisis has affected China’s employment situation, particularly export-oriented businesses,” Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, told a news conference.
“The government will help create jobs by encouraging development of labor-intensive industries, small- and mid-sized businesses, private companies and the service sector.”
Yin said the nation has formulated policies to bail out enterprises, including:
Increasing bank loans and raising export tariff rebates;
Working out favorable taxation, financing and other policies to encourage start-ups;
Providing more vocational training for laid-off workers to increase their chances of re-employment;
Establishing a pension system in rural areas and expanding the urban pension system to cover rural migrant workers.
Yin said the registered jobless rate for urban residents stood at 4 percent by the end of September, the same as the end of last year.
Experts said the result was commendable, given the challenging economic situation this year.
“It means that the country’s economy is still growing fast enough to generate jobs,” said Wang Dewen, an expert with the Institute of Population and Labor Economics affiliated to the Chinese Academy of Social Sciences.
The economy created 9.36 million jobs in the first three quarters, and another 4.09 million laid-off workers were re-employed, figures show.
The efforts include helping more than 1 million laborers from areas hit by a massive earthquake on May 12 in Sichuan province find new jobs.
Yet the registered urban unemployment rate, which excludes the vast majority of more than 200 million migrant workers, “far from reflects the true gravity that China faces in its job market”, Wang said.
The global credit crisis has taken a heavy toll on China’s export-oriented SMEs, which are magnets for rural migrant workers, he said.
Figures from the National Development and Reform Commission show that 67,000 previously profitable SMEs collapsed during the first half of the year. And two-thirds of the labor-intensive textile enterprises are facing restructuring.
In Dongguan, Guangdong province, half of the toy makers have closed down.
Those enterprises are major engines fueling employment in China, creating about 70 percent of new jobs every year, said Ding Dajian, an expert at the School of Labor and Human Resources at Renmin University of China.
“The collapse of such enterprises inevitably means grave job prospects for migrant workers,” said Ding.
Source: China Daily
October 28th, 2008
I got to thinking; when demand for products or services reduces, it is usual to see that business have reductions in workforce, i.e. layoffs. So with the election next week and no matter who wins, what are all these talkers, writers, comedians and gabbers going to do? What will they talk or write about? Their services will no longer be needed.
So will there be workforce reductions?
Maybe they could start making something and create new jobs!
October 28th, 2008
I went on a weekend trip using I-90 and O’Hare this past weekend and did my informal “recession watch” as I’ve done before. Mid-morning and mid-afternoon car travel. I again was amazed at the car and especially truck traffic in both directions on both days. Surely, if we really had a recession, wouldn’t the traffic be noticeably reduced?
The United terminal at O’Hare airport also seemed busy as in the past. I’ve done my share of driving in the past up and back to O’Hare, so I think I have a little experience in this observations.
So if we are in a recession, shouldn’t these indicators tell some of the story?
Or are my rose colored glasses in need of replacement?
October 27th, 2008
The local Institute of Electrical and Electronics Engineers (IEEE) chapter hosted Electric Motions Systems and its E-Plus bicycle at their monthly meeting. It is a fascinating unit with the front hub housing the battery and an electric motor in the rear hub. The unit travels easily at 15 MPH for a 30 mile range. See a picture at http://www.wrex.com/Global/story.asp?s=9118449. Joe Etminam, a professor at Rock Valley College will demonstrate the unit at this month’s Venture Club meeting at the EIGERlab on Wednesday, October 29, at 7:00pm. There is no charge but seating is limited. You can register by email to vclub@eigerlab.org or calling Laura at 815-965-3522.
Many opportunities exist in our region for alternative energy systems. Not only to use them but to manufacture them as well. A sort of double whammy for our lifestyle. Electric Motions Systems is seeking additional manufacturing capability and Rockford is a natural choice to explore. Energy systems are not a stranger to local companies. High density power systems are a flagship of Hamilton Sundstrand. Woodward provides the speed controls for all types of power generation systems. Motor systems are produced by Danaher Motion.
October 23rd, 2008
I’ve been observing and listening…when a restaurant closes, is it because of the “R” or is it because the service or food just didn’t hit market requirements?
When the Malls are empty on the Big Sale Day, is it because of the “R” or is it because of stuff made in…you know…over there? Or is it because of fashions of clothes that simply are not appealing to shoppers?
If toys aren’t selling like there’s no tomorrow, is it because of the “R” or is it, well, you guessed it.
Get the idea?
October 23rd, 2008
I got to thinking about the numerous quality problems of products made in China, you know, baby’s milk, lead in toys, etc. and some of the manufacturing that I’ve heard returning from there and from Europe. With a growing unemployment of people especially from Wall Street, the banks, and yes even from the auto sector, maybe a rebirth can be accomplished.
I mean, what if these people were to get together, pool their monies, and start new manufacturing companies here in the Rockford Region and bring back some of the production back home? Wouldn’t that be great?
We have all the resources locally to help them. Far fetched?
October 23rd, 2008
Despite the doom and gloom of some sectors of the economy, there are some sectors that still remain buoyant. One of them in the manufacturing sector is on the lookout for new employees!
Yes, Ingersoll Machine Tools is hiring machinists, CNC machinists and programmers, maintenance and field service and assemblers. They are also looking for apprentices. Look here for more details.
Ingersoll
October 23rd, 2008
“The strong balance sheets of manufacturers, along with their increasingly competitive cost structures, will make them more attractive for investors.The strong balance sheets of manufacturers, along with their increasingly competitive cost structures, will make them more attractive for investors.”
See the rest of the story here…http://www.industryweek.com/ReadArticle.aspx?ArticleID=17512
October 22nd, 2008
One of our manufacturing strengths in recent years has been the export market. I’m sure many of our local manufacturers sell their products or services to customers who export. maybe some of you, like me, export directly as well as sell to customers who in turn export. So between direct exports and indirect exports (selling to customers who export), watching what is taking place in other countries and you own customers will keep you on the leading edge of market intelligence.
A look at Foreign Trade data from the Bureau of Census; see link… http://www.census.gov/foreign-trade/statistics/highlights/top/index.html you can see how much exports have grown and how dependent we have become. From 2004 through 2007, they’ve increased by 42%; year to date through August 2008 over August YTD 2004, they’ve grown by 67%. Yes, 2008 is in for another record year.
Our Top 6 Export Markets are (in order) Canada, Mexico, China, Japan, U.K. and Germany. So far this year they make up 50.6% of the value of all exports of Goods from the U.S. You can bet that our local manufacturers are also in a high range to these same countries.
Watching this is one thing, doing something about it is another matter.
Me, I’m going to increase my market share by taking it away from my competitors.
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