Another GM plant shut down... The summer of job recovery indeed

[Svnla]

http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=2012208300305

Over 1,000 employees are out of jobs. That does not included hundreds of local folks that depend on GM business such as catering, supplies, clean up, restaurants, real estate, etc. In its glory days, that plant had over 3,000 hourly and salaried employees.

We spent BILLIONS to rescue GM and from BO administration and many posters in here, I thought things like this would not happen. There would be plenty of "shovel ready" jobs with good pay and benefits. Yup, must be Bush fault..again, right guys? <sarcastic>

 

[boomerang]

If they're going to make those mileage requirements that the Obama gang think are attainable solely through the passage of legislation, there will be a whole lot more plants closing. You can't have trucks in your lineup and meet that average.

 

[mafia]

Yup and the Mexican factories are booming. Corporations are corporations, its all about the money.

 

[mshan]

"Consumer Spending on the Mend

This week, we got three pieces of data that suggested the May/June slowing in reported retail sales was indeed some type of statistical fluke (http://video.cnbc.com/gallery/?video=3000103065&play=1). First, the consumer spending estimate in the second-quarter GDP report was boosted from 1.5% to 1.7%. Interestingly, this report also suggested that some of the well-known weakness in retail spending in the second quarter was offset by the best performance in consumer services since 2006, with services growing a remarkable 2.6%. So in the second quarter, consumers were spending, just not at stores or car dealerships. The services sector is about twice as large as the goods-related categories.



July Comprehensive Consumption Data Rebounded Sharply From June's Loss

Then, the official consumption report for the month of July affirmed what various retail reports had already hinted at--namely that consumption of goods bounced back sharply. Inflation-adjusted total spending increased by 0.4% in July following a 0.1% decline in June and flat results in May. Although a meaningful portion of the increase was from goods, the service sector grew by 0.3%, which is still better than it had been earlier in the recovery.



Preliminary Same-Store Data Suggest a Strong Back-to-School Season (August)

Company-reported, same-store sales results for August showed that the back-to-school season was a success. One metric that I use, the International Council of Shopping Centers, reported that August sales jumped 6.0% (less drugstores), which was way above expectations of 3%-4% growth and July's growth rate of 4.6%. Retail Metrics and Morningstar's retail coverage list showed similar levels of improvement and outperformance versus expectations.



Retailers' August outperformance was exceptionally broad-based.

In Retail Metrics' database only one company, Wet Seal (WTSLA), performed below expectations. Nordstrom's (JWN) led the pack, increasing 21%, aided by a shift in its huge anniversary sale that depressed July's results. Gap's (GPS) sales increased 9%, while discount retailers Ross Stores (ROST) and TJX (TJX) both increased 8%. Even Target (TGT) and Kohl's (KSS), which have struggled this year with midrange consumers, saw sales increase in the 3%-4% range and exceeded expectations.

August is a great month for retailers to get good results. Unlike July, August is one of the more important months of the shopping calendar. The back-to-school season ranks second in overall importance to retailers, behind only the winter holiday season, and accounts for about 10% of all retail sales for the year.

There May be More Good Consumer News Ahead

Weekly data suggest that there might be more good news ahead. The weekly ICSC data was also bullish for the latest week and has now bounced sharply off of its bottom. The five-week moving average has increased to 2.9% (its normal band is 2.5%-4.0%), its fourth weekly improvement in a row. The only potential negative is that the more comprehensive government retail sales report for August will continue to be affected by consumers putting off smartphone and computer purchases as they await new products from Apple (AAPL) and Microsoft (MSFT) (due in September and October). Slow television sales could impinge on the more comprehensive numbers, as well.

Likewise, keep in mind that reported retail sales have appeared to be highly volatile recently with recession-like declines followed by boom-like gains. Weather and seasonal adjustments are doing some serious damage to these normally highly reliable retail sales reports. As much as I loved the July and August data, I surmise that they were probably over-reported, just as the May/June period was under-reported. The truth probably lies in the middle of these two extremes. Nevertheless, we are clearly not on a one-way down elevator that many had feared.



Consumer Income and Consumption Reports Show That Consumers Have More to Spend

I was very pleased to see continued improvement in consumer incomes, which should in turn lead to more spending in the months ahead, according to the government's official report on income and expenditures for July. Both overall wages and a more comprehensive measure of income that includes dividends, rents, and business income, and takes out taxes, were up sharply month to month. Year-over-year numbers continued their recent pattern of steady improvement.

Both inflation-adjusted wages and incomes have improved an astounding five months in a row. Wage growth has now moved in line with spending. Looking at the monthly data, wage growth was awful in the beginning of the year as higher gasoline prices eroded incomes. Perhaps sensing that the gasoline price move was temporary, consumers continued to spend at a healthy pace in the first quarter. Then they at least tapped the brakes in the second quarter, and income growth sharply outpaced spending. Now based on what we have seen in July and August, consumers seem to be in a better mood to spend--and they have the cash to do it.

Employment Report on Deck Next Week

The biggest news next week is the employment report for August. The market is expecting a little payback from an unexpectedly strong report for July. Expectations are for payrolls to grow 120,000 in August compared with the 163,000 we saw in the prior month. Slightly lower initial unemployment claims during the period, a modestly better seasonal adjustment factor, a better retail environment, and more housing starts over the past several months make that estimate seem just a little cautious.

On the other hand, the month of August 2011 and August 2009 were disasters for the employment report. Recall that last year the initial report for August showed no job growth at all (that was later revised to 52,000 private sector jobs added). Also adding a bit of caution is shifting auto industry summer shutdowns that probably helped the July report and will hurt the August report. The July auto employment number looked about 20,000 above the consistent trend of the previous four months. So that means the auto sector could take 20,000 or even more off of the August report. After August, I suspect job growth for the rest of the year to average 160,000-180,000 people per month. That's enough to keep the economy moving at 2% or more but not much help in reducing the ranks of the employed (which total about 13 million).

Auto Sales Looking Up for August

On Wednesday, the auto industry reports August sales, and the expectations are that they will move up from 14.1 million in July to 14.3 million in August. This would mark the third month in a row with sales above 14 million units on a seasonally adjusted, annual rate basis. That would be up considerably from last year's tsunami-affected 12.1 million units. According to recent statements from TrueCar.com, incentives are near the lowest levels of the year, yet sales are moving along at a decent pace. The auto industry (along with Boeing's (BA) massive ramp-up) is a major reason our manufacturing sector is faring better than the rest of the world."

The Consumer is Back in the Driver's Seat: http://news.morningstar.com/articlenet/article.aspx?id=566547

Bloomberg says American Paychecks Growing at Fastest Pace in 5 Years: http://forums.anandtech.com/showthread.php?t=2263109&highlight=mshan+bloomberg

Second Half Acceleration?: http://www.morningstar.com/cover/videocenter.aspx?id=566277

GDP on a population growth adjusted basis: http://forums.anandtech.com/showthread.php?t=2267369&highlight=mshan







(Even if Wall Street / stock market stagnate or decline, hopefully Main Street can continue to improve).

 

[Smoblikat]

I bet obama blames bush for this one too

 

[jackschmittusa]

Svnla

An isolated incident does not constitute a trend. If id did, the first casualty in a battle could be portrayed as "losing the war".

Anything good to say about all of the plants that are still operating?

 

[Svnla]

mshan, you missed a few links/sources such as these: (and they are government or liberal ones)

http://data.bls.gov/timeseries/LNS14000000 = high unemployment rate (officially)

http://money.cnn.com/2012/08/31/news/economy/low-wage-jobs/index.html?iid=HP_LN = low wage jobs are everywhere

the economy is adding jobs these days...but most of those positions pay pretty poorly.

http://www.cnbc.com/id/48858760 = Jobs with low pay

http://finance.yahoo.com/news/1-2-graduates-jobless-underemployed-140300522.html = 1 out of 2 college grads are unemployed or underemployed

 

[mshan]

By education attained: http://www.bls.gov/web/empsit/cpseea05.htm (unemployment rate for someone with a college education is 4.1%)


By sex / race: http://www.bls.gov/cps/cpsaat07.htm (unemployment rate for a white man with a college education is 3.9%)


It is minorities and those who didn't even complete high school who still probably truly feel this is indeed The Great Depression again.


Plus you have to remember that a lot of seniors have stayed in workforce much longer than usual (stock market crash under Bush put serious dent into their retirement savings) and they are taking some jobs that youth would normally get.

"The aging boomer isn&#8217;t just attempting to garner income via portfolio selection and asset mix but also through the labour market as they either come back in or extend their work life. Even if some of us dream about becoming a paid consultant in our golden years, the reality is the re-entry of boomers into the work force is a case of having to, not wanting to. It is what is essential to retire with dignity, not some desirable lifestyle change.Employment for those 55 and up have risen to new all-time highs this cycle while everyone else is languishing nine million below the 2007 peak. This is not just about shifting demographics either because this is the only age cohort that has not seen an erosion in its participation rate or in its employment to population ratios.

There are a few side effects from the bulge in employment for the 55-and-up segment of the population. One is that by not leaving the workforce as they have done in the past &#8212; going for early retirement &#8212; they have created a backlog of unemployment among the youth."


(start on page 26 http://www.scribd.com/fullscreen/95616173?access_key=key-c47v8djek10b7231s3y)

edit: IIRC (specifically, it was a comment I heard in passing on tv), increase in average workweek (2 hrs.?) from the Bush to the Obama presidencies would be equivalent to another 2 million jobs (if employers hired new workers instead of working current ones more). Temporary workers are apparently becoming a larger (permanent?) part of employer's workforce, too because it allows them to ramp up or down faster in response to demand.

 

[Thump553]

Looks like that plant just built Hummers and large trucks. Other GM plants are adding workers and adding shifts-some of them are even back to running 24 hours a day now. Sounds like the free market is doing its job.

 

[Charles Kozierok]

We spent BILLIONS to rescue GM and from BO administration and many posters in here, I thought things like this would not happen.

You thought that because GM was saved they would never close down a plant again?

You obviously know very little about how business works. That would explain your confusion/outrage here.

 

[OrByte]

I can understand why the republicans want the economy to fail...

 

[conehead433]

Big deal. Make what the people want. They no longer need buggy whips so a plant closes. They apparently felt it would not be profitable to re-tool the plant to make other vehicles. Last time I checked Obama wasn't running GM.

 

[mshan]

Morningstar analyst's take on GM:

"Although the "Government Motors" stigma is likely to hang over General Motors Company for several years, we think GM's car models are of the best quality and design in decades. The company is already a leader in truck models, so a fully competitive lineup combined with a much smaller cost base leads us to think that GM will be printing money as vehicle demand recovers.

We think GM's earnings potential is excellent because it finally has a healthy North American unit and can focus its U.S. marketing efforts on just four brands instead of eight. The most critical cost-saving measure was setting up a voluntary employees' beneficiary association (VEBA) for the retiree health-care costs of the United Auto Workers. This move saves GM about $3 billion a year; other benefit concessions and plant closings have drastically lowered GM North America's break-even point to U.S. industry sales of about 10.5 million vehicles, assuming 18%-19% share. The actual point varies based on mix and incentive levels. We think the normative demand for U.S. light vehicles is about 16.1 million-17.3 million units, so we expect GM to report excellent earnings growth as vehicle demand comes back during the next few years.

Dramatically better pricing has helped GM to be profitable at volume levels that would have meant billions in losses a few years ago. The Buick LaCrosse, for example, was recently selling for about $7,800 more per unit than in 2009. Simply put, GM makes products for which consumers are willing to pay more than in the past. GM no longer has to overproduce in an attempt to cover high labor costs and then dump cars into rental fleets (which hurts residual values). It now operates in a demand-pull model where it can produce only to meet demand and is structured to break even at the bottom of an economic cycle.

We think the largest threat to profitability is Europe, which has been losing money for a long time. Previous restructuring moves, such as closing the Antwerp plant and buyouts, have not been enough, so GM announced an alliance with struggling French automaker Peugeot in March (GM now owns 7% of Peugeot). The two firms created a purchasing venture with $125 billion in annual buying power. Although the alliance will bring GM more scale in Europe via purchasing and shared vehicle parts and platforms, management acknowledges that additional European restructuring is needed. Capacity must be better utilized or reduced, but union issues make plant closures nearly impossible. We expect GM Europe to remain unprofitable for at least a few more years."

http://analysis.morningstar.com/analystreport/ar.aspx?t=GM&region=USA&culture=en-US (you have to be Premium member to read full report)

 

[nobodyknows]

I can understand why the republicans want the economy to fail...

SOME Republicans want the economy to fail. SOME, not ALL.

 

[dmcowen674]

Another GM plant shut down...

http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=2012208300305

Over 1,000 employees are out of jobs. That does not included hundreds of local folks that depend on GM business such as catering, supplies, clean up, restaurants, real estate, etc. In its glory days, that plant had over 3,000 hourly and salaried employees.

We spent BILLIONS to rescue GM and from BO administration and many posters in here, I thought things like this would not happen. There would be plenty of "shovel ready" jobs with good pay and benefits. Yup, must be Bush fault..again, right guys? <sarcastic>

Awesome

Good to see the south sharing the pain :thumbsup:

 

[Bitek]

Looks like that plant just built Hummers and large trucks. Other GM plants are adding workers and adding shifts-some of them are even back to running 24 hours a day now. Sounds like the free market is doing its job.

+1

republicans are for the free market until it happens to them.

 

[marincounty]

If we had president Romney all the GM plants would be closed.

 

[Svnla]

Svnla

An isolated incident does not constitute a trend. If id did, the first casualty in a battle could be portrayed as "losing the war".

Anything good to say about all of the plants that are still operating?

An isolated incident? What about the GM plant in Wisconsin? But of course BO administration blamed on Bush. Can't blame Bush on this one.

Anything good? Check GM share price lately since the bailout? The market has spoken. And how many BILLIONS GM is still owing to the tax payers?

Looks like that plant just built Hummers and large trucks. Other GM plants are adding workers and adding shifts-some of them are even back to running 24 hours a day now. Sounds like the free market is doing its job.

Colorado and Canyon are LARGE trucks? ROTFLMAO.

You thought that because GM was saved they would never close down a plant again?

You obviously know very little about how business works. That would explain your confusion/outrage here.

Where did I say that? Nice try to spin and put words in my mouth. Funny how you "forgot" to mention the rest of my comment about plenty of shovel read jobs and summer of recovery.

I know very little? So many years of my own experience at manufacturing/automotive plants for Fortune 100 company (both in the office and on the assembly lines) don't count? I had been at that plant and I do know more than a few folks that worked there. How about you? No offense to you but &#8220;Bitch...Please&#8221; = perfect fit here.

Big deal. Make what the people want. They no longer need buggy whips so a plant closes. They apparently felt it would not be profitable to re-tool the plant to make other vehicles. Last time I checked Obama wasn't running GM.

Wasn't BO administration brag about how they saved GM? So where is the bragging now?

 

[Svnla]

mshan - you can spin all you want but the bottom line is this (Not my opinion but facts).

Majority of Ameicans believe the US is moving in the wrong direction = http://www.rasmussenreports.com/pub...ood_of_america/right_direction_or_wrong_track

Economy is top concern for Americans = http://www.rasmussenreports.com/public_content/politics/mood_of_america/importance_of_issues

Romney favored as candidate to fix the economy = http://www.marketplace.org/topics/e...pollster-romney-favored-candidate-fix-economy

Funny how BO administration did not ask you lately about"are you better off now than 4 years ago?" and "how is the economy?".
What ever happens to "It's the economy, stupid"? LOL.

 

[Thump553]

Synla: You mean the Janesville plant that closed ONE MONTH BEFORE Obama took office? I got that far in your post before I realized you were just going to be regurgitating widely known GOP talking points that are factually false (or more plainly put, bald faced lies).

New GOP motto-We wrecked it, you tried to fix it while we used 100% of our efforts to block you every step of the way. America should give us a chance to finish the job of liquidating the American economy.

 

[Svnla]

Synla: You mean the Janesville plant that closed ONE MONTH BEFORE Obama took office? I got that far in your post before I realized you were just going to be regurgitating widely known GOP talking points that are factually false (or more plainly put, bald faced lies).

New GOP motto-We wrecked it, you tried to fix it while we used 100% of our efforts to block you every step of the way. America should give us a chance to finish the job of liquidating the American economy.

As I said, can't blame on Bush on this one. My OP was and still is about the GM plant in Shreveport, LA which shut down forever in August of 2012.

As I said, BO administration brag about how they saved GM, why not a peep about this plant? Hope and change/summer of recovery/plenty of shovel ready jobs indeed. If you take credit for the good stuffs, at least man enough to take credit for the bad stuffs too.

And nice try to spin/paint/implied me as GOP because I am far from D or R and my rather spare (comparing to some of you guys) posting history in P&N proves it.

 

[PingviN]

It's Obama's fault that GM sucks as a business?

 

[dmcowen674]

If we had president Romney all the GM plants would be closed.

Correction

They would be closed in the U.S. but re-opened in China

 

[mshan]

Hi OP:

I believe you are citing opinion and perception, not underlying reality.

Most people (i. e. those with full time jobs and are not fearful of losing their job now) are probably better off than they think they are (and yes, I recognize this statement is my opinion and assessment). Almost seems like we are back to 2007, but without the froth of excessive easy money and the credit / housing bubble.

Also remember that 5% unemployment was not real in a sustainable sense, because it was built upon things like building 1 million more home per year than market demanded (stealing demand and jobs from future), plus non-sustainable trickle down demand funded by taking out illusory equity from home and spending it elsewhere (http://political-economy.com/wall-street-money-never-sleeps/)

 

[dmcowen674]

I had been at that plant and I do know more than a few folks that worked there.

Wasn't BO administration brag about how they saved GM?

So where is the bragging now?

Awwww

Rich Republican southerner butt hurt it happened to him and his buddies



The only reason it got the Shreveport plant was the promise of cheap labor over the north.

The Saturn plant in Tennessee closed too.