Overcapacity Stalls New Jobs in U.S.

[NNN0LHI]

http://story.news.yahoo.com/news?tmpl=story&cid=68&ncid=716&e=17&u=/nyt/20031018/ts_nyt/overcapacitystallsnewjobsinus

CINCINNATI — Much of the public outcry over America's failure to generate jobs has focused lately on a surge in the outsourcing of work to China and India. But another dynamic closer to home is weighing on job creation — the slow process of working through a glut of boom-era investment that continues to litter the economy with underused factories.

Procter & Gamble, for example, has been dumping its weakest brands and the plants that produce them. At its Ivorydale industrial complex here, in Procter's hometown, the company has sold factories that make Crisco shortening, Olean fat substitute and Ivory soap to three manufacturers, each with plans for squeezing efficiencies from the operations. Hiring more workers is the last item on their agendas.

"As long as there is extra capacity available in manufacturing, there is going to be room to move work around among companies without having to add workers," said Thomas A. Kochan, a labor and management expert at the Sloan School of Management of the Massachusetts Institute of Technology.

That is true with a vengeance today. Not since the severe recession of the early 1980's has capacity use in manufacturing stayed so low for so long, government data show. Production as a percentage of total capacity fell precipitously in the aftermath of the last recession, which ended in 2001, and 23 months into the recovery, the upturn has still not come. On average, manufacturers are using less than 73 percent of their capacity.

more

[realFedUp]

1. Maybe we don't need 50 brands of toothpaste.

That R & D money went a long way in the 90's...

[The Zanti Regent]

2. Yeah it went a long way out of the US and into offshore tax shelters

Idiots are too stupid to see they are planting the seeds for a Marxist revolution here in the US...

[CO Liberal]

3. It's Overcapacity Because People Can't Afford Stuff.....

...when they're out of work, thanks to the assholes working in the White House.

[NNN0LHI]

4. Ding, ding, ding! We have a winner here n/t

[kodi]

6. the real back story is bush called for tax cuts to increase investments

when people heard bush talk about how tax cuts would increase investment and this would result in jobs no one ever asked "invest in what would result in what jobs?"

obviously capital investments in manufacturing would be one place for the money to go, but there hasn't been such need in the chemical industry for a decade or more.

what P & G did is what all major US chemical companies have been doing for 3 decades.

the EPA started to tighten regulations 25 years ago. this caused chemical manufacturers who were vertically integrated right thru to the consumer to divest in chemical plants and "toll" chemical out to specialized companies who were the ones responsible for the manufacturing site and the envirnomental consequences.

this reduced risk, lowered overhead and allowed the chemical companies to concentrate on research and sales and marketing.

now and again, some idiot CEO goes out and buys his supplier or customer (this happened with bf goodrich, who btw is run by idiots) but usually the company suffers because the integration of the component missions is so screwed up, and subsequently pieces of the company go back on the sales block.

just figure, no colorant, dye or pigment is made in the USA anymore (or western Europe), but there are tens of millons of pounds of these chemicals sold and used in the USA and Europe each year by companies who have them made in china or india to spec, and then resell them...just like P & G does with soap.

and the reason it is done is that it is cheaper. china has virtually no environmental regulations, civil court system to bring suit for damages to chemical problems, or labor unions to impact costs.


and oddly enough, dennis kucinich understands this the most when he talks about international trade and the need for some sort of equity in the aforementioned cost factors amongst trading nations.

[mbperrin]

7. But gosh, doesn't that mean

that the f***ing Bu*h tax cuts which he said would make the rich invest in new plants into a completely useless exercise if true and a total bullshit lie if not?

OH NOOOOOOOOOOOOOOOOOO.............

The pResident is a liar!!!!!

(But he and his ugly friends are still rich, ain't they?)

[kodi]

8. i've been in the chemical industry for 30 years, we all knew it was a lie

the investment money went to china and india.

the jobs went there too.

[NNN0LHI]

9. As a retired automaker my experiences with tax cuts for corporations...

...are that the automakers will take their tax giveaway (and I will call it a giveaway because I have never known on any of the big three automakers actually ever having to pay taxes to begin with) and purchase new equipment alright. But they will more than likely be buying mostly automation equipment. The type of equipment that put people out of jobs rather than increasing jobs.

Don

[cmd]

16. Correct again

When will the light bulb go on? You have to have money to buy the products the companies produce. Why would someone invest in a company that has no market? Trickle down economics evaporates before it hits the ground.

[mhr]

5. Don't Underestimate The Impact of Outsourcing

From an earlier post.
------
Hi All,

Stephen Roach explains a puzzling economic question in his latest report
linked below.

How has the US economy shown productivity growth while creating so few
jobs?

As Roach explains in his Morgan Stanley report, outsourced American jobs
make remaining American workers look more productive because the
outsourced overseas labor is not counted as a labor input into American
corporations.

Per Roach, the US economy would have created millions of new jobs by
this point in a typical recovery. However, by utilizing overseas labor,
corporations save money and look profitable while preventing domestic
job creation and stifling economic recovery with lost domestic wages.

In essence, the corporations have the best of both worlds, increased
profits and growth while American workers are idled, bereft of income.

For those that have forgotten, Bush supports the loss of good American
jobs overseas.

Enjoy
------
http://www.morganstanley.com/GEFdata/digests/20031017-fri.html#anchor0

Global: Imported Productivity

Stephen Roach (New York)

America’s fabled productivity miracle continues to be a key underpinning
for much that is special about the US economy. With productivity in the
nonfarm business sector up an astonishing 6.8% sequentially (annual
rate) in 2Q03 and 4.1% on a year-over-year basis, it’s hard to deny that
something quite extraordinary is going on. As I see it, what’s special
is an increasingly powerful global labor arbitrage between domestic and
foreign labor input that has given rise to a surge in offshore
outsourcing. The result is a jobless recovery built on an increasingly
tenuous foundation of “imported productivity.” The real issue is whether
this new strain of productivity enhancement is sustainable. I have my
doubts.

On the surface, there’s no denying the unique character of this
productivity-led recovery. In the first six quarters after the US
economy officially bottomed in 4Q01, nonfarm business productivity has
recorded a 6.7% cumulative increase. That’s the fastest six-quarter
post-recession rebound since that which occurred after the recession
ending in 4Q70. Equally impressive, however, is the extraordinary
shortfall in job creation that has occurred since the end of the last
recession in November 2001. Private nonfarm payrolls have contracted
about 1% (or 1.1 million workers) in the ensuing 22 months since that
cyclical trough. That stands in sharp contrast to gains of about 5%
recorded, on average, over comparable periods of the preceding six
business cycle upturns. In fact, had the current cycle conformed to the
prior-cycle norm, today’s job count would be fully 4.3 million workers
higher.

This same cyclical comparison allows us to calculate some hypothetical
productivity scenarios on the basis of alternative employment paths for
the US economy. If, for example, private nonfarm payrolls had traced the
path suggested by the earlier six-cycle norm, our calculations suggest
that productivity would have risen only 2.0% over the six quarters
ending 2Q03 -- less than one-third the pace actually recorded.
Alternatively, if hiring had closed only half the gap between the
current cycle and the six-quarter norm, our calculations would place the
productivity increase at 4.3% over the six quarters ending 2Q03 --
slightly more than one-third slower than published figures currently
indicate.

Snip ......

[alfredo]

13. Looks like all we are good for is

paying for bush's war with our money and our kids. they don't need us for our labors, they don't need us to buy their products as much as before. I guess when Bush and his friends bleed us dry, they can move on to some other country and bleed it dry.

[mhr]

15. That's The Plan Sam, Now Get in Line and Move on Along!

Sarcasm, not a personal slur.

[RUMMYisFROSTED]

10. <73% of capacity?

Ouch! Damn.

[AndyTiedye]

12. But Bush Has a Full Employment Plan

http://www.goarmy.com

Of course you get people shooting at you every day
because you are a foreign invader in their country,
the pay and benefits go down instead of up,
and you can never leave, but other than that...

[moondust]

11. Delete.

Delete.

[Gore1FL]

14. So we have a supply excess....

... sort of stupid to have an economic policy based on building up supply capacity.

That is the whole damned purpose of supply-side economics, afterall.