Financial topics

[Trevor]

In all honesty, I think we're going to have to hit bottom before we learn any financial self-control. Right now, it seems like we're deliberately blinding ourselves to what's happening. Granted, many probably won't be able to pay down all their debts, but even reducing them would go a long way towards stability after the crash. Old habits are hard to break, I suppose.

[Higgenbotham]

Another piece of the puzzle is Asia. I don't believe that American manufacturers will be able to make much more headway into Asia before they get squashed. That in and of itself is not a reason to think that the advertising and public relations industry (or more correctly their revenues) will nearly disappear, though.

The reason I am watching Wisconsin is because Walker may be a trend setter and he may be giving directives like the one I mentioned. In order for my assumptions about advertising to be correct, Walker has to be a trend setter. They were unable to recall him in Wisconsin but Wisconsin is not America. At least, not yet.

[Trevor]

I've heard a few of the jobs that were previously shipped to China have come back. It's not nearly as profitable as it once was. China's economy is much larger, and their instability is growing. For outsourcing, you need a stable country, which is one of the reasons why most have refused to invest in Africa.

Speaking of China, they seem to be where we were back in 2006. Their bubble is just beginning to pop, but very few have realized the full ramifications of it.

[Higgenbotham]

The reason I am watching Wisconsin is because Walker may be a trend setter and he may be giving directives like the one I mentioned.

In fiscal 08 and 09, just over $15 million was appropriated for tourism marketing in Wisconsin. That number has now fallen to $9.9 million. With that has come a significant drop in economic impact and our ability to attract more visitors. In fact, between the drop in tourism marketing and the recession, our industry lost 16,000 jobs in 2009 from 2008. We hope we’re on the rebound.
The state’s tourism industry – including the Tourism Federation of Wisconsin, the Wisconsin Association of Convention & Visitors Bureau and the Wisconsin Hotel & Lodging Association over the past several months have again advocated for $15 million per year for the purpose of marketing our state.
In the new budget you’re now considering, the Governor has proposed a stepped up allocation for marketing with an additional $1.191 million in fiscal 2012 and an additional $2.344 million in fiscal 2013. This will get us closer to the $15 million target and enable us, again with effective marketing, to generate greater tourism dollars for Wisconsin and enable us to better compete with our Midwest neighbors. While we understand the current budgetary pressures in state government, we strongly believe that this increased marketing appropriation will deliver a strong ROI.
Part of our ability to get us closer to that $15 million is the Governor’s recommendation to transfer the Wisconsin Arts Board to the Department of Tourism.

Testimony of Department of Tourism Secretary Stephanie Klett
2011-2013 Biennial Budget Bill, Assembly Bill 40 & Senate Bill 27
Joint Committee on Finance
March 29, 2011

[aedens]

H, things are moving quicker than we wish to admit. Some articles are seeing zirp as it truly is. Bonds are the utilimate short for intent in the proxy realities we are in. You surmised correctly the leveling process we had trended for decades. Tail risk we note in the private sector will be remembered as small is beauty. This will entail market basket or commodity bundle being augmented as we speak or so I gather from supply side analysts. To be blunt populate 3 rings and cluster groups of them. Shock rings as the inward motion generates shock energy. Imagine the process and pressure to energy transmissions imploding say like the MENA mechanisms we are seeing. Kind of beyond words and only seen in the minds eye of crushing effects. We are just seeing our markets evolve into the entropic nature of its currect trajectory into socialist apathy. Collasping into itself since policy is only reality of design. If you check the boxes as we have the list is rather long and growing. Education is a weapon, whose effect depends on who holds it in his hands and at whom it is aimed. We all know who that was and just trend its effects. The first three rules will never change in Capital. State allows, Capital decides to hedge location and size, and last the consumer decides all if they have any subtance inside at all.

We hope we’re on the rebound. Big canvas to wish at the moment IMO.

update: just got back from a long ride on the bike. Never and I mean never have I seen as many tax sales, for sale and condemned in our metro area.

[Higgenbotham]

Steady march of private label

Retailers are competing directly with those brands with their own private label offerings.

In the US, for example, private label accounts average nearly 23% of unit sales and just over 18% of dollar sales, according to Symphony IRI Group's annual review of the consumer products sector for 2010. In other highly developed markets, private label share is even higher, the UK and Germany for example.

However, recession recover has affected consumers spending habits. Overall, across consumer products goods categories, private label's share of unit sales fell by 0.5 percentage points in 2010, according to Symphony IRI, although its share of dollar sales increased by 0.2 percentage points.

Yet, we don't expect this dip to signal the end for private label spending.

Private label share is the highest in the grocery segment. Retailers there plan to increase market share.

Historically, private label penetration has been lower in emerging markets than in the developed world. However, it is set to increase as global retailers with their own brands move to emerging markets.

Manufactures' response – investment and innovation

Consumer products companies are increasing advertising to help their brands.

But as consumers continue to see value in private labels, manufactures face pressure to do more than the usual advertising to support their brands.

http://www.ey.com/GL/en/Industries/Cons ... bel-growth

There could be cliff effects as consumer products advertising becomes untenable.

[Reality Check]

I've heard a few of the jobs that were previously shipped to China have come back. It's not nearly as profitable as it once was. China's economy is much larger, and their instability is growing. For outsourcing, you need a stable country, which is one of the reasons why most have refused to invest in Africa.

Assuming for a moment that a significant number of jobs are returning from China, where they are returning to is highly relevant to determining why.

The Media in the United States, before the most recent government statistics showing a dramatic decrease in manufacturing jobs in the U.S., was pushing the concept that a small reversal in the constant reduction in Manufacturing jobs in the United States that has been taking place in the United States for decades.

Many believe the Media's heavy coverage of this slight reversal was driven more by the Media's desire to help Obama get re-elected than the scale of the reversal, but in any event many stories were broadcast showing "new" manufacturing jobs in the United States.

My recollection is that most of these stories covered public college-business partnerships employing a few dozen or a few hundred people to fill critical niche jobs.

I do not recall any cases where large companies were re-opening huge manufacturing plants where 10,000s of thousands, or even thousands of people were now working doing jobs that had previously been moved to Asia or Mexico.

There were some cases where stimulus money very briefly created a few hundred jobs for a few months in the United States.
Here is article demonstrating one such brief success: http://www.lvrj.com/business/amonix-clo ... 01626.html

In all the above cases huge government subsidies funded by over a Trillion dollars per year in deficit government spending were responsible for what appears to be a very limited and very temporary increase in manufacturing jobs in the United States.

[thomasglee]

Just a quick note to thank you two for some insightful analysis. It is some interesting reading (and quite depressing at the same time! )

[Higgenbotham]

Another piece of the puzzle is Asia. I don't believe that American manufacturers will be able to make much more headway into Asia before they get squashed.

New global challengers are moving center stage

Competition is increasing as global players and local companies begin sharing the emerging markets playing field.

In response, consumer product companies from emerging markets are developing global ambitions.

http://www.ey.com/GL/en/Industries/Cons ... -intensity

[OLD1953]

Ok, here's thousands of jobs gained by "reshoring".

http://beta.fool.com/tdalmoe/2012/04/05 ... ring/3414/

However, GE has been one of the major companies leading the charge to bring manufacturing jobs back home to the U.S or 'reshoring'. Since 2009, the company has created 13,500 new jobs in this country with 11,000 of them in manufacturing. Overall, the United States has added 429,000 factory jobs in the past two years, barely replacing a fifth of the jobs lost during the recession.

************************

Reshoring is taking place for three reasons, twenty years of stagnant wages in the US middle class combined with 20 years of 15% annual wage increases in China have produced a huge shift towards wage parity, rising global instability leading to fear of losing plants due to war and a shift in China towards an anti capitalist sentiment. Most don't seem to realize that the bulk of Chinese "owned" businesses and factories are in fact operating illegally, and the Chinese authorities are beginning to pull the economy back to its Communist origins. All three of these factors are highly likely to contribute to further reshoring over the next two decades.

And it's very important to keep in mind, the jobs lost have been in housing and allied industries primarily, while factory jobs themselves are now a growing segment, not a shrinking one. Factory production is a slow way to get out of a hole, but it's a fairly stable one.