Archive for November, 2008
November 19th, 2008
Congressman Don Manzullo today proposed several new strategies Congress can pursue to ease America’s credit crunch, strengthen our economy and create jobs without sticking taxpayers with the bill. Manzullo offered his suggestions during a Financial Services Committee hearing called to discuss the state of the U.S. economy.
Manzullo, who opposed the $700 billion taxpayer bailout of Wall Street in favor of several proven free-market alternatives, said one strategy — accelerating the domestic manufacturing tax deduction — would give our companies a cash infusion they could use to sustain and create new jobs in America.
The American Jobs Creation and Economic Stimulus Act of 2008 (HR 5101), which Manzullo authored with Rep. Dan Lipinski (D-IL) earlier this year, would speed up the domestic manufacturing tax deduction to give manufacturers a larger tax break on the goods they produce in the United States. The tax deduction – which Manzullo helped create in 2004 – currently provides a 6 percent tax rate reduction for manufacturers on the goods and services they produce in the United States. The tax rate reduction is scheduled to increase to 9 percent by 2010, but the bill would accelerate the phase-in to 9 percent retroactively to Jan. 1, 2008.
“This legislation gives our manufacturers an extra 3 percent cut in their tax rate immediately that they can use to sustain and create jobs in America,” Manzullo said. “It also provides a greater incentive for our manufacturers to keep jobs in the United States and actually bring some jobs back from overseas because they would pay a 9 percent tax premium on any work they send offshore.”
Manzullo supports several other free-market strategies to strengthen our economy, including:
- Allowing companies to repatriate their overseas profits back to the United States tax free for one year if the money is used to pay off distressed debt or support business expansion or job creation.
- Suspending the capital gains and recapture taxes for two years to encourage Americans to invest in America and encourage corporations to sell unwanted assets and acquire the capital they need to sustain and create jobs.
- Allowing companies to carry-back losses an additional two years, generating a tax refund and immediate capital.
- Directing the Securities and Exchange Commission to suspend the mark-to-market regulatory rules until the agency can issue new guidelines that will allow firms to mark these assets to their true economic value.
- Reducing the corporate tax rate from 35 to 15 percent.
November 18th, 2008
I saw this in China Daily and while I don’t like to see any new graduate having problems getting their first job, I thought this would be of interest to those wondering how one of our competitors is dealing with the present economic situation.
“Layoffs and a shrinking job market have forced fresh graduates to lower their expectations of finding good jobs, some visitors to a national job fair said Tuesday.
The job fair, organized by the Ministry of Human Resources and Social Security, began in Tianjin on Sunday and will travel to several major cities for two weeks. The fair offers information on more than 520,000 vacancies for graduates.
Luo Fengming has already realized the difficulty of finding proper employment, although he will major in computer science and technology from the Beijing Institute of Technology next year. So he began looking for a job in September, 10 months before his graduation.
“The deteriorating economic situation has forced me to lower my expected monthly salary from 4,000 yuan ($588) to 2,000 yuan,” he said.Luo has submitted his resume to more than 50 companies and taken a dozen written exams in the past two months. Despite that he has not met with success.
The global financial crisis has made it difficult for graduates to find good jobs, Xinhua quoted Vice-Minister of Human Resources and Social Security Zhang Xiaojian as having said. But “it’s important for social stability that graduates’ are helped to get jobs,” Zhang said.
Though some job seekers are more confident of success than Luo, they have lowered their expectations, too.
As Dong Fangzhao, a postgraduate in English from Beijing Jiaotong University, said: “I know I’ll find a job in the end because my master’s degree is relatively advantageous. But I wouldn’t demand a high salary because of the economic situation.”
About 6.1 million students will graduate from universities and colleges next year and will join some 800,000 of this year’s graduates to look for jobs, said Meng Xianghong, an official of the ministry’s National Center for Human Resources.Besides organizing job fairs, the ministry will encourage graduates to start their own businesses, and guide those who decide to do so, he said.
“To build confidence among university graduates, we will provide them counseling on job-hunting and set up a database of unemployed graduates,” Meng said.
The center’s figures show employers at the national job fair are targeting majors in 10 subjects such as business management, electronics and information, economics, mechanics and foreign language.
There is some good news, too. When famous companies such as Citigroup and Motorola are slashing jobs, many domestic enterprises are shrugging off the economic downturn, with some even hiring more staff.
Red Yellow Blue Education Institution (RYBEI), a Beijing-based early education organization, said it needed about 1,000 graduates in 2009, twice as much as this year, because it plans to open 70 kindergartens around the country.
“The global economic downturn has had no obvious impact on us till now. But I think it could affect us in the future,” said Zhong Manwei, in charge of RYBEI’s human resources department.
Zhao Zhen, HR official of Beijing DHC Digital Technology Corporation, too, said the company would recruit more graduates than last year at the national job fair when it travels to Beijing next week.”
November 18th, 2008
“Lawrence Summers and Robert Rubin, both senior economic advisers to President-elect Barack Obama, called for substantial fiscal stimulus, signaling a potential willingness in the incoming administration to act aggressively to boost a flagging economy.The two former Treasury Secretaries were speaking at The Wall Street Journal CEO Council, a Washington gathering of top corporate executives and policy makers. They joined the current Treasury chief, Henry Paulson, on a stage to debate tax policy, fiscal stimulus and responses to the financial crisis.” Excerpted from WSJ Nov. 18th.
If there is another give-away, there should be strings attached…like…the money must be spent on American made products, not stuff made in other countries. It is misleading and unproductive to give money to anybody so they can buy stuff made somewhere else. See my earlier post “Recession”
Target the money to American made cars, increase export incentives for companies that export their products (China is doing this as part of their stimulus), spend it on infrastructure like roads, bridges, etc. Maybe some should be borrowed to Blago so he can release the approved funding for Illinois infrastructure!
If another stimulus is to be passed, it should be targeted for U.S.A manufactured products; this is a way to create JOBS!!
November 15th, 2008
My wife and I decided to check out one of the biggie retail stores located the Cherry Vale Mall today, Saturday. Wow, I wondered as we drove into the parking lot around 11:30 a.m. It was jam packed and I had to park and walk from the northern edge of the lot to get inside.
Now granted, this was a big sale day but I had to fight my way inside past customers loaded with large shopping bags filled with their purchases. Amazing, I asked one of them…where’s the recession?
As I made my way through the men’s department looking for something made in the U.S.A., all I could find were articles made in China, Viet Nam, India, Indonesia, Nicaragua, Dominican Republic, Thailand, Bangladesh and Cambodia. That included suits, jackets, shirts and shoes! Not one article from the U.S.A. Of course, toys and electronics were all made in China.
Disgusted, we went for a bite to eat in the food court and nary a free table was available and lines were behind every food vendor. Where’s the recession? I asked another departing patron as I quickly sat down to secure a set for us.
As I left the mall, I thought, what we need is a good old fashioned consumer revolution, demanding that we start getting stuff made here. If all consumers, like my wife and I, refused to buy this stuff, maybe somebody would get the message.
So do you think any more stimulus will cause our economy to get better? Well, it will only cause more stuff made somewhere else and make retailers get healthy but I don’t see how it will add many news jobs. Isn’t this what these stimulus packages are supposed to do?
A good old fashioned revolution may be the only way to create jobs!
November 14th, 2008
In this third chapter of lessons from Eclipse, the topic of “What are the Issues We Must Think About” Once again, good research, networking and learning about them will better prepare us for the venture into the Global Business world. So here goes:
1. How do you plan to go to market….Joint Venture, Sales Agent, Establish your own office or acquire an existing business.
2. Financial issues include…currencies/exchanges, taxation, repatriate profits, reporting of results,
3. Intellectual Property Protection…how to do this so you don’t create competition,
4. Logistics…shipping products, documentation, freight methods,
5. Product Design/Specifications…do you need metric, or other local standards,
6. Documentation…catalogs/brochures n the local language,
7. Employee Travel…how much, what cost, how frequently,
8. Expat/Inpat/Local management…where do you get management,
9. Governance…how will you manage a remote business,
10. Local Laws…employment, contracts, safety, codes, product certifications; better get local counsel,
11. IT Infrastructure and Security…global networks require global security,
12. Company Culture…best described as “One Company, One World, One Voice”
13. How to Manage Globally…how will you stay on top of these businesses.
Whew, enough to frighten away many small companies! But if you start with a targeted location, think through these steps, get to know someone that is already selling into that market and you will go a long way in shortening the learning cycle. It’s not as difficult as it looks.
As I was told one day many years ago in Italy…”Life is a Risk”.
Why not have fun along the way?
November 13th, 2008
WASHINGTON - In response to the credit crunch, today SBA’s Acting Administrator Sandy K. Baruah announced important loan program changes to help the agency’s lending partners increase access to capital for small
businesses.
First, an interim final rule allowing new SBA loans to be made with an alternative base interest rate, the one month LIBOR rate (London Interbank Offered Rate), in addition to the prime rate, which was previously allowed. In the past 60 days, both the prime and LIBOR rates have not yet returned to their historical relationship-of roughly 300 basis points between the two rates. The mismatch between the rates is squeezing SBA lenders out of the
lending market, since their costs are based on the LIBOR rate.
“This change will help more small businesses obtain capital to grow their businesses and create new jobs,” Baruah said. “By allowing both rates, SBA is making its programs more flexible, increasing opportunities to access capital and giving both lending partners and small business customers more options to meet their needs.”
The second change allows a new structure for assembling SBA loans into pools for sale in the secondary market. The enhanced flexibility in loan pool structures can help affect profitability and liquidity in the secondary market for SBA guaranteed loans, especially with the current market conditions. Because the average interest rate is used, these pools are easier for pool assemblers to create, thus providing incentives for more investors to bid on these loans.
“The challenge small businesses face today is not the cost of capital, it is access to capital,” said Baruah. “Interest rates are at historically low levels meaning money is inexpensive, yet lenders aren’t lending and borrowers aren’t borrowing. This indicates markets are frozen due to liquidity concerns. This interim final rule is an important step to reenergize the lenders to make SBA- backed loans and will help open the gateway of capital for entrepreneurs.”
“SBA moved quickly on these changes after consulting with small businesses, lending partners and other government agencies,” said Eric R. Zarnikow, SBA’s Associate Administrator for the Office of Capital Access. “We’re confident these solutions will help free up capital so lenders can continue to make SBA-backed loans.”
By addressing market issues that were impeding the funding streams for both lenders and small businesses, SBA is making capital more available to America’s small businesses. The SBA will be issuing additional technical guidance to lenders in the coming weeks relating to the implementation of these important changes.
For more information on the interim final rule or to share your comments, visit www.regulations.gov. To learn more about SBA’s guaranteed loan programs visit www.sba.gov.
November 13th, 2008
While the debate goes on about whether the government should bail out GM, I’ll weigh in with my opinion.
Yes, the industry has made many mistakes and I blame management for the majority of them. Many jobs are at stake when you add in all the suppliers and service organizations.
GM has expanded into key growth markets like China and Russia and also committed major blunders, including a costly alliance with Italy’s Fiat SpA, heavy use of margin-eating sales incentives, a push by its finance arm into subprime mortgages and a turnaround plan that was based on steady truck sales and left the company vulnerable when gas prices soared.In the meantime, the foreign companies are building new plants in the U.S. and taking market share from the “Big Three”
Maybe GM, Ford and Chrysler should sell off all their foreign owned companies and ventures and focus strictly on the North American market. If you can’t be successful in your home market, why play in somebody else’s yard?
Fix the U.S. market and forget the rest until you’re healthy.
Sometimes “bigger, more” isn’t the answer.
November 13th, 2008
Just saw this on OEM News, an e-mail newsletter….further supports my earlier blogs about GM, Ford and Chrysler!
Toyota Begins Venza Production in Kentucky
$350 Million Investment Leads to New Vehicle Production at Georgetown Plant
11/10/2008
November 10, 2008 - Georgetown, KY - Team members from Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) along with company officials and community leaders celebrated the official launch of the Venza, Toyota’s new, versatile five-passenger vehicle.
Venza couples the styling and comfort of a passenger car with the flexibility of a sport utility vehicle (SUV), to give customers a stylish alternative to the traditional sedan.
“It’s always exciting to launch a new product,” stated Steve St. Angelo, President of TMMK and senior vice-president of Toyota Motor Engineering & Manufacturing, North America (TEMA). “For Toyota to select TMMK as the production site is a real tribute to our team members and the experience of working side-by-side with our design and engineering groups has been very valuable.”
All aspects of Venza’s engineering and design were targeted specifically for the North American market, where it will be sold exclusively. Venza was primarily engineered at Toyota Technical Center in Ann Arbor, Mich., and designed at Toyota’s Calty Design studios in Newport Beach, Calif. and Ann Arbor. Venza will be exclusively assembled at TMMK.
TMMK has the capacity to build about 70,000 Venzas annually. The plant’s manufacturing flexibility allows the Venza to be built on the same assembly line with the Camry, Camry Hybrid and Solara convertible. More than 30 Kentucky-based suppliers will supply parts for the Venza including seats and glass components. Venza’s overall domestic content is approximately 70 percent.
TMMK is Toyota’s largest plant in North America employing about 7,000 team members with the annual capacity to produce 500,000 engines and vehicles.
Toyota (NYSE:TM) established operations in North America in 1957 and currently operates 13 manufacturing plants. In addition, new plants are under construction in Ontario, Canada and Mississippi. There are more than 1,700 Toyota, Lexus and Scion dealerships in North America which sold more than 2.9 million vehicles in 2007. Toyota directly employs over 43,000 in North America and its investment here is currently valued at more than $21 billion, including sales and manufacturing operations, research and development, financial services and design. Toyota’s annual purchasing of parts, materials, goods and services from North American suppliers totals more than $30 billion per year.
Toyota currently produces 11 vehicles in North America, including the Avalon, Camry, Corolla, Matrix, Sienna, Solara, Sequoia, Tacoma, Tundra, Venza and the Lexus RX 350. When production begins in Ontario and Mississippi, Toyota will have 15 manufacturing plants with the annual capacity to build approximately 2.2 million cars and trucks, 1.49 million engines and 425,000 automatic transmissions. For more information about Toyota, visit www.toyota.com.
November 12th, 2008
China’s government on Wednesday announced a slew of measures, including approval of infrastructure projects and a further rise in export rebates, in a wide-ranging attempt to stimulate the economy and stave off the effects of the global financial crisis.
The State Council, or cabinet, approved projects with a combined investment of more than 200 billion yuan (29 billion U.S. dollars), designed to help boost domestic demand and offset slowing exports.
At executive meeting presided over by Premier Wen Jiabao, State Councilors agreed to raise export rebates on more than 3,700 items — mainly labor-intensive, mechanical and electrical products and other items vulnerable to weakening overseas demand – from next month, the third such move in the second half.
The infrastructure projects included a gas pipeline from the northwestern Ningxia Hui Autonomous Region to the southern economic hubs of Guangzhou and Hong Kong, at an investment of 93 billion yuan.
State Councilors also approved the building of the Guangdong Yangjiang nuclear power plant and the expansion of the Zhejiang Qinshan nuclear power plant at a combined cost of 95.5 billion yuan.
Another 17.4 billion yuan would go to water conservancy projects in regions of Xinjiang, Guizhou and Jiangxi and civil airports in north China’s Inner Mongolia Autonomous Region and east China’s Anhui Province.
The 300-billion-yuan reconstruction central government fund dedicated to 51 hard-hit areas in Sichuan, Gansu and Shaanxi provinces would provide the main financing for the May 12 quake zone.
The forestry industry, ravaged by the severe winter weather at the start of the year and the earthquake, would receive support for restoration by 2010. “Proper subsidies” would be given to forestry workers to help rebuild their damaged homes.
Councilors called for “protective prices” on the purchase of damaged bamboo and lumber and urged financial institutions to give favorable support or write off bad loans due to disasters in the sector.
The measures followed a massive stimulus package worth 4 trillion yuan (570 billion U.S. dollars) unveiled on Sunday.
China’s economy slowed sharply in the third quarter because of slowing exports and investment growth. Gross domestic product was up 9 percent from the same period last year, compared with 10.1 percent in the second quarter and 10.6 percent in the first quarter.
The package would finance programs over the next two years in 10 major areas, including affordable housing, rural infrastructure, water, electricity, transport, the environment, technological innovation and rebuilding after disasters, most notably the May 12 earthquake.
China will start work on new airport infrastructure worth 250 billion yuan (36.6 billion US dollars) in 2010, the nation’s top aviation official said on Wednesday.
Total investment in airports under construction this year is expected to reach 100 billion after the launch of additional new projects and will double next year, Li Jiaxiang, head of the Civil Aviation Administration of China, told Xinhua.
The agency will increase investment on projects mainly in the southwest this year, Li said, without providing any figures.
The spending is part of the 4 trillion yuan stimulus package unveiled by the State Council, or cabinet, on Sunday to spur economic growth.
The agency planned to kickstart construction of airport infrastructure in large cities including Chengdu, Xi’an and Guangzhou and more than 40 other mid-sized cities in 2009.
It also planned to build new airport facilities in Shanghai, Wuhan and Nanjing and more than 20 other mid-sized cities in 2010.
China had 152 civilian airports as of the end of 2007. The number will reach 190 in 2010 and 244 in 2020, under a government plan released early this year.
Source: China Daily
November 11th, 2008
Now here is a way to spend the stimulus money AND create JOBS. Just think if Illinois could take advantage of the federal money already approved and put it to better use!! Blago needs to approve a Capital Plan and not lose the Federal match!!
Here’s what China is doing…source: WSJ, Nov. 11, 2008:
“As more of the world falls into financial turmoil, China is hoping that an infrastructure spending spree can help sustain its long record of expansion and rising prosperity.
Much of the $586 billion stimulus package China unveiled this week will go toward building highways, railroads and airports. Already, according to official estimates, infrastructure spending had been increasing by an average of 20% annually for the past 30 years — a tried and true engine that has helped power the Chinese economy’s explosive growth.”
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