Free Markets, Free People

business climate


Is Atlas shrugging?

Of course what I’m about to cite is an anecdote.  It is hard to claim there’s a trend.   And we don’t even know if the threat was carried out.  On the other hand, we also don’t know how many times the thought process and decision voiced here have been silently made by people who have the ability to hire and expand, but just don’t see the hassle being worth it.   And, of course, it doesn’t help that what they’re trying to do is demonized at every step.

The story told below takes place in Birmingham, AL.  I love B’ham – spent years and years doing business there.  It’s like a second home.  Birmingham was once the “Pittsburg” of the South, with a huge and flourishing steel business.   Of course that’s gone now, at least most of it.   One of the reasons Birmingham was the Pittsburg of the South was because the state had both iron ore and coal deposits.   And one of the major coal mining regions is a county just north of Birmingham named Walker County.

Here, from the David McElroy blog (via The Conservatory) is Ronnie Bryant:

He operates coal mines in Alabama. I’d never heard of him until this morning, but after what I saw and heard from him, I’d say he’s a bit like a southern version of Ellis Wyatt from Ayn Rand’s novel. What I saw made an impression on me.

I was at a public hearing in an inner-city Birmingham neighborhood for various government officials to get public input on some local environmental issues. There are several hot topics, but one of the highest-profile disputes is over a proposal for a coal mine near a river that serves as a source of drinking water for parts of the Birmingham metro area. Mine operators and state environmental officials say the mine can be operated without threatening the water supply. Environmentalists claim it will be a threat.

I’m not going to take sides on that environmental issue, because I don’t know enough to stake out an informed opinion. (With most of the people I listened to today, facts didn’t seem to matter as much as emotional implications.) But Ronnie Bryant wasn’t there to talk about that particular mine. As a mine operator in a nearby area, he was attending the meeting to listen to what residents and government officials were saying. He listened to close to two hours of people trashing companies of all types and blaming pollution for random cases of cancer in their families. Several speakers clearly believe that all of the cancer and other deaths they see in their families and communities must be caused by pollution. Why? Who knows? Maybe just because it makes for an emotional story to blame big bad business. It’s hard to say.

After Bryant listened to all of the business-bashing, he finally stood to speak. He sounded a little bit shellshocked, a little bit angry — and a lot frustrated.

My name’s Ronnie Bryant, and I’m a mine operator…. I’ve been issued a [state] permit in the recent past for [waste water] discharge, and after standing in this room today listening to the comments being made by the people…. [pause] Nearly every day without fail — I have a different perspective — men stream to these [mining] operations looking for work in Walker County. They can’t pay their mortgage. They can’t pay their car note. They can’t feed their families. They don’t have health insurance. And as I stand here today, I just … you know … what’s the use?

I got a permit to open up an underground coal mine that would employ probably 125 people. They’d be paid wages from $50,000 to $150,000 a year. We would consume probably $50 million to $60 million in consumables a year, putting more men to work. And my only idea today is to go home. What’s the use? I don’t know. I mean, I see these guys — I see them with tears in their eyes — looking for work. And if there’s so much opposition to these guys making a living, I feel like there’s no need in me putting out the effort to provide work for them. So as I stood against the wall here today, basically what I’ve decided is not to open the mine. I’m just quitting.Thank you.

Whether Ronnie Bryant actually did what he said isn’t known – but his frustration is clear and his decision as stated, warranted.

The question is how many Ronnie Bryant’s are out there right now?   How many are tired of the demonization, the taxes, the hassles, the bars government and environmental groups erect that make business difficult if not impossible to conduct?  How many have faced men and women with tears in their eyes because they can’t pay the mortgage or feed their family, but know that hiring them would actually be more difficult and costly than just continuing as they are now, or, as Bryant claims, just decide not to open a business because of the intrusion, over-regulation, demonization and the increasing level of obstacles put in the way of business?

That story, at least to me, is a stunning and telling example of the anti-business culture that has been created and nurtured within this country.   This isn’t some apocryphal or fictional example to demonstrate a point.   This is a man listening and deciding that it just isn’t worth it to open a business that would bring in 125 jobs, consume 50 to 60 million in consumables a year (downstream jobs) and, of course, mean tax revenue to both the city, county and state. 

But coal is unpopular.  It is demon coal.   So an industry that powers the nation and generates the electricity that the complainers in the audience and the government bureaucrats there will use when they go home is trashed in a meeting along with business in general.  And a man who could offer something critically needed – jobs – makes the decision that in the climate he observed, it’s just not worth it to open a business up.

How many times in how many local meetings like the one described in Birmingham is there a Ronnie Bryant who just says, after listening to all the trash talk, ‘screw it, I’m not going to bother to open a business’?

Atlas Shrugging – something our lefty friends said was fiction.  

Given today’s business climate, it seems more like a self-fulfilling prophesy, doesn’t it?

~McQ

Twitter: @McQandO


Temporary worker hiring outlook dismal

One of the things economists watch to try to gauge the job market is how the temporary worker market is doing.   Many times a rise in temp workers signals businesses are gearing up for more permanent hiring as the economy gains steam.  The opposite is many times also true.   And, unfortunately, it appears that this particular indicator isn’t giving us the warm fuzzy feeling  we hoped it would:

Last month’s fall in the number of temporary workers could herald continued weakness in the job market.

The total number of temporary employees placed by staffing agencies dipped by 12,000 last month and is down 19,000 the past three months, the Bureau of Labor Statistics reported Friday.

Now perhaps 3 months can’t be considered a “trend”, but it is pretty darn close.  And it parallels the news we’ve been getting about unemployment and the economy in general.

Temporary workers, however, could be the most telling signal. The number of contingent workers started growing in fall 2009, about six months before the broader job market began to emerge from the recession. From September 2009 to March, employers added nearly 500,000 temporary workers.

Roy Krause, CEO of SFN Group, a top staffing agency, says temporary placements for white-collar jobs in accounting, computers and legal remain strong. But those for lower-skilled light industrial, clerical and certain call-center jobs — which accounted for most of last year’s growth — have slowed. "They tend to be more sensitive to economic conditions," he says.

An example:

Chemical maker Arkema of Philadelphia employed about 150 temporary workers earlier this year. But it trimmed that total by about 50 in April and May as the weak economy prompted it to cut its 2011 forecast, Vice President Chris Giangrasso says. Arkema, he says, will likely not add this year to its permanent staff of about 2,500 in North America.

Key point – “weak economy”.  He had enough growth last year to warrant hiring temp workers but not full time staff.   Now he doesn’t even have enough business to warrant 2/3rds of the temps he hired and had to let them go.

That weakness in the economy continues to linger because, as we’ve noted any number of times, of the unsettled business climate.  And that’s something government could do to help the situation – back off regulation, taxes and interference (*cough* NLRB/Boeing*cough*) and stay out of the way.   It seems, though, that doing so is just not in this administration’s genes.

And so the negative indicators continue to pile up while the President of the United States and a complicit media attempt to make bad guys out of the GOP as they hold the line against economy crippling tax increases.

Go figure.

~McQ

Twitter: @McQandO


Top 10 cities with the most pink slips and the 5 worst states to do business in

What do they have in common?  Well, you tell me (but my guess is onerous taxation, over-regulation and an anti-business climate).  Here are the cities that have lost the most jobs recently according to the Daily Mail?

  1. Los Angeles, California, 17,393 workers
  2. New York, New York, 14,312
  3. Chicago, Illinois, 7,835
  4. San Francisco, California, 5,117
  5. Riverside, California, 4,852
  6. San Diego, California, 4,382
  7. Philadelphia, Pennsylvania, 2,747
  8. Seattle, Washington, 2,601
  9. Sacramento, California, 2,467
  10. Pittsburgh, Pennsylvania, 2,205

OK, you say, LA has a lot more jobs to lose than say, Montgomery AL.   True and understood.  But, there’s more.  Take a look at the states in which you find the job losses.  Now peruse the list of the “best/worst states to do business in”.

Bottom 5?

46 Michigan

47 New Jersey

48 Illinois

49 New York

50 California

All deep blue states.  If you’re wondering, PA comes in at 39th just ahead of OH, WV, HI, CT and MA and behind MS.  Yeah, that’s right, MS.  Everyone’s 50th state in most every other comparison.  WA was 34th.

Contrast that with the top 5 states  – TX, NC, FL, TN and GA.  All red, all right to work states, all southern states.  Draw your own conclusions.  By the way, the ratings of the “best/worst states” came from a group of people who ought to know and be able to make such a determination as it relates to business.  The rankings are the product of surveying 550 CEOs.

And, as they indicate, it isn’t rocket science needed to attract and keep businesses in a state:

Business leaders graded the states on a variety of categories grouped under taxation and regulation, workforce quality and living environment. “Do not overtax business,” offered one CEO. “Make sure your tax scheme does not drive business to another state. Have a regulatory environment and regulators that encourage good business—not one that punishes businesses for minor infractions. Good employment laws help too. Let companies decide what benefits and terms will attract and keep the quality of employee they need. Rules that make it hard, if not impossible, to separate from a non-productive employee make companies fearful to hire or locate in a state.”

That, in my estimation, is the primary difference between Texas and California, and why Texas is booming and California is drowning.

Food for thought.

~McQ

Twitter: @McQandO