Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Fri Jun 06, 2008 2:11 am Post subject: Re: Let the layoffs begin
Quote:
50% Interest
In September, as Pee Wee's revenue fell, Petrovich and his partner, Steve Kraut, borrowed $100,000 through Community Bank of the Bay in Oakland, Petrovich said. The bank got the money from Advance Restaurant Finance, a San Mateo, California, company that specializes in loans to restaurants. Under the loan's terms, Pee Wee's had to repay $150,000 in a year, making the interest rate 50 percent. The restaurant still owes $106,000 on the loan, according to the court filing.
Such loans aren't unusual, said Brian Garrett, president and chief executive officer of Community Bank, which he said has worked with Advance for four years.
``The interest rate is a reflection of risk, and this is an industry that needs quick access to capital,'' he said. ``When a freezer breaks down, they need to get it fixed right away.'' As for the rate, he said, ``I don't hold a gun to their head.''
The loan helped, Petrovich said, though not enough. The restaurant remains open with 51 fewer items on the menu and four fewer servers than during the housing boom, said Kathy Kraut, who owns half the company with her husband, Steve.
``The ball goes down as fast as it goes up,'' Steve Kraut said.
Posted: Fri Jun 06, 2008 11:06 am Post subject: Re: Let the layoffs begin
An interesting aside to the GM shutdowns: a year or so ago I read an article describing the most profitable vehicle made by GM. I'm not sure if I remember correctly but I think it said this model generated more profit than all the other GM models combined. It's a tiny 4 cylinder station wagon made and sold in China. And it's selling like the proverbial hot cakes.
Interesting potential loop: GM sells more and more little cars in China - China requires more and more gas to fuel all these cars - oil prices rise and rise - GM can't sell it's big US vehicles - GM closes more plants in the US - GM becomes most profitable car maker - GM retirement accounts holding GM stock have tremendous growth -
GM workers take early retirement because they are going to loose their jobs anyway -
Posted: Fri Jun 06, 2008 5:07 pm Post subject: Re: Let the layoffs begin
I never understood this push to "boost sales" after laying off lots of managers. I thought the point was to be profitable at any size. Who cares what your gross sales are? Net profit is all that matters to anyone who knows Business 101.
Posted: Fri Jun 06, 2008 5:10 pm Post subject: Re: Let the layoffs begin
ROCKMAN wrote:
An interesting aside to the GM shutdowns: a year or so ago I read an article describing the most profitable vehicle made by GM. I'm not sure if I remember correctly but I think it said this model generated more profit than all the other GM models combined. It's a tiny 4 cylinder station wagon made and sold in China. And it's selling like the proverbial hot cakes.
Interesting potential loop: GM sells more and more little cars in China - China requires more and more gas to fuel all these cars - oil prices rise and rise - GM can't sell it's big US vehicles - GM closes more plants in the US - GM becomes most profitable car maker - GM retirement accounts holding GM stock have tremendous growth -
GM workers take early retirement because they are going to loose their jobs anyway -
Hmmp....who knows?
BTW, I never understood how the Trucks/SUV were so profitable for GM since 90% of the buyers never bought them for cash. Can anyone explain to me how that works?
Posted: Mon Jun 09, 2008 1:55 am Post subject: Re: Let the layoffs begin
Serial_Worrier wrote:
I never understood this push to "boost sales" after laying off lots of managers. I thought the point was to be profitable at any size. Who cares what your gross sales are? Net profit is all that matters to anyone who knows Business 101.
Size in the automotive business is a competitive necessity, not a competitive advantage. Some small boutique firms can survive by only building a few luxury, sports cars by hand, but their price tag is $250.000 and up. If you're going for mass market, you need a diversified portfolio.
Toyota may not want to compete in the N. American large truck market, but it cannot afford to give that segment up by default to their competitors. Why? Because if that segment has been profitable, while, say, they are selling their Prius line-up at a loss or next to no profit, then their competitors can use those profits to leverage their way into other line-ups.
The same reason why large car makers cannot afford to ignore the Chinese or Indian market. You either fight them in their market or eventually you fight them in your own home market.
One interesting case study on strategy and marketing is the way that Honda leveraged their success in small motor cycles to break into the N. American and European markets at a time when their competitors did not take them seriously. You might find it somewhere on the web if you try googling Harvard Business Review Honda Case Study. Otherwise you would need a subscription. Also google Porter's Five Forces Model.
Although not perfect thePorter Five Forces Modelis useful when thinking about alternative energy development and its competitiveness. Say GE's ability to compete with Vestas in the wind turbine market versus spending those resources in gas turbine technology.
Strategy is knowing what not to do, however, I feel that a sustainable competitive advantage, and therefore profits, also stems from operational excellence that I think is a function of these factors:
Quote:
Image
Reliability
Thinking with customers
Relationship
Knowledge
Price
Quality
Flexibility
Speed of execution
Speed of problem solving
Innovativeness
Resources
Source: modified from Moenaert & Robben from STEM
I think it is clear that looking at the N. American automotive market that the Big Three have been on a dead end street for quite a long time. It is going to be very hard to re-invent themselves now. With or without peak oil that is the ultimate external threat to their business model. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Joined: Jun 18, 2004 Posts: 804 Location: Western North Carolina
Posted: Mon Jun 09, 2008 2:58 pm Post subject: Re: Let the layoffs begin
Quote:
BTW, I never understood how the Trucks/SUV were so profitable for GM since 90% of the buyers never bought them for cash. Can anyone explain to me how that works?
SUV's were more profitable than cars for this reason at least. They are, or were, primarily developed from existing truck chassis. Basically they took 1/2 ton pickups and put full bodies, leather interiors, and called it a luxury car. The cost of developing these "new" product lines was miniscule compared to what it cost to develop a new line of cars. No or very little re-tooling was required to produce them in extant pickup truck assembly lines.
The other thing that made them wildly profitable was the clever marketing to soccer/security moms and insecure males. They sold them as the ultimate go anywhere, in any condition, vehicle that could "win" in any collision. People, and it always amazed me, would pay near $50k for a loaded suburban/escalade that was running on technology that a 50's mechanic would be familiar with. Studies done on these vehicles pretty conclusively proved that they were not as safe as advertised. Lack of crush zones implied that crash energy would be transferred either to the other car in the accident, or the occupants of the SUV. High center of gravity made accident avoidance a major hazard at speeds above 35mph etc.
Full frame, solid rear axle with leaf springs. Nothing complicated like independent suspension, crush zones, or advanced materials.
In fairness, the later models of family truckster did start to implement some car-like improvements, such as the re-designed Expedition and Explorer from Ford (can't remember which year they came out) with independent rear suspension systems, crush zones, etc.
So, overpriced, low tech, and built in factories that were already there and building half-ton pickups, on which the most profitable models were based.
Posted: Mon Jun 09, 2008 5:31 pm Post subject: Re: Let the layoffs begin
I hope by reading these posts that you were "ready" for this? (as ready as possible that is!) We can all learn to live on less. Thrift as an alternative lifestyle can be fun and adventurous!
My company, which two months ago was setting sales records, is now, suddenly on the edge of bankruptcy.
All mgmt are taking a 20% salary cut effective today including me. Oh boy. I guess that's better than a 100% cut, LOL.
We are a mid-sized injection molding company employing about 300 folks. We mold stuff for BMW, Mercedes Benz, Husqvarna, Electrolux, Wix and others.
Our business dropped suddenly, and of course oil prices have driven all costs of doing business through the roof.
Mass layoffs are right around the corner here methinks.[/quote]
Joined: May 07, 2008 Posts: 452 Location: Chaska, MN
Posted: Mon Jun 09, 2008 9:37 pm Post subject: Re: Let the layoffs begin
I am (or was) a landscaper in the Minneapolis suburbs. I usually get a few months off from December to the end of March because it's too damn cold to work. Well this year the snow is long gone and I've only worked 3 days so far. The whole industry is dead. Landscaping = Luxury = No Work for me.
Posted: Mon Jun 09, 2008 10:12 pm Post subject: Re: Let the layoffs begin
biofuel13 wrote:
I am (or was) a landscaper in the Minneapolis suburbs. I usually get a few months off from December to the end of March because it's too damn cold to work. Well this year the snow is long gone and I've only worked 3 days so far. The whole industry is dead. Landscaping = Luxury = No Work for me.
Sorry to hear your situation biofuel13, I know of a couple landscaping companies in my area that are facing tough times. Business was great during the housing boom with new yards and building galore but now their businesses are stuck with maintenance jobs and very little new work coming in. On top of that fuel costs.
What I wonder is how many of the job loses in this industry are for true americans or if they're limited to migrant workers?
Joined: Jun 18, 2004 Posts: 804 Location: Western North Carolina
Posted: Tue Jun 10, 2008 5:04 am Post subject: Re: Let the layoffs begin
I've read this here:
"A recession is when your neighbor loses his job, and a depression is when you lose yours".
My neighbor worked 21 years at the company I work for. She was laid off last time they went through hard times, which was in 05. In this area, the recession began in earnest back in 05. Much of the industry that was located here, including textiles and furniture, has moved out of the country leaving many skilled people working in retail (talk about a shitty job), and has increased the competition for the few remaining 'good' jobs. Our work force is highly trained, dedicated, and efficient. Yet we still cannot compete with Asian molders. Ahh, the wonders of free-trade and globalism!!!
BRILLIANT!!!
A further discussion with a veteran manager at my company last night let me in on a few other insights. He said that we were not able to pass on our real cost increases. The only thing we've passed on to the customer is material price. Even then, we've lost business from a major customer this month due to that. Well that and they're going bankrupt themselves because they cannot pay us increased prices, nor can they charge their customers more.
He said that (and I think he's 100% correct) that most companies as of yet, are not passing on their cost increases. I agreed and said, "who's going to pay $6000 for a Husqvarna riding lawnmower?". Which is probably close to what is would cost if everybody in the production chain raised their prices to reflect real costs. Which is about double what they sell for right now.
The real effects of the oil price increase we've seen in the last 12 months are starting to percolate through the system finally. I think the pain is going to increase greatly at the retail level. Thankfully I don't need to buy much in the way of non-consumables. I bought most of that stuff when my money was still worth something.... Thank you PO.com!
At least my debt is at a minimum compared to 4 years ago! All that's left is my wifes student loan and my mortgage.
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