Caterpillar says health care bill would cost it 100M

[spidey07]

In the 4th quarter of 2009 Caterpillar made 232 million in profit. So they probably make a billion in profit per year. PROFIT

Right. So that makes this 100 million number MUCH more significant. It's brutal for a company to drop profit 10% year over year. The normal result is significant cost saving initiatives to make sure they meet analysts/executive profit goals.

Why do leftists not understand basic business?

 

[Throckmorton]

Profit bad, Hulk smash?

You missed the point... Try again.

 

[IndyColtsFan]

You're being purposefully obtuse or you really are just that stupid.

Let's say you make 100 grand a year and your expenses are 95K a year. Government just sent you a bill payable immediately for 10K.

What you gonna do? Pay it and cut expenses elsewhere like the permanent expense of an employee.

EXACTLY. Let's say you have a pool of employees who aren't direct revenue generators -- positions such as IT, R&D, Accounting, etc. If you get hit with a new expense, guess what you do? You trim expenses:

"Hey Mr. Network Engineer, we just laid 5 of your coworkers off. You need to pick up the slack."

This happens all the time.

 

[Throckmorton]

Right. So that makes this 100 million number MUCH more significant. It's brutal for a company to drop profit 10% year over year. The normal result is significant cost saving initiatives to make sure they meet analysts/executive profit goals.

Why do leftists not understand basic business?

I think rightists don't understand business. If they make a billion in profits, and really do lose 10% of that, what that means is it makes no sense to assume they'll lay people off. They're still making a profit, and that's thanks to the employees.

 

[Throckmorton]

EXACTLY. Let's say you have a pool of employees who aren't direct revenue generators -- positions such as IT, R&D, Accounting, etc. If you get hit with a new expense, guess what you do? You trim expenses:

"Hey Mr. Network Engineer, we just laid 5 of your coworkers off. You need to pick up the slack."

This happens all the time.

Why wouldn't they do that anyway to expand their 1 bil profit to $1.1 bil?

 

[Hacp]

Why wouldn't they do that anyway to expand their 1 bil profit to $1.1 bil?

I already answered your question.

Ok you are confusing something here. Lets say you have two work forces. Work force A and work force B. They both cost the same to hire, so it makes no difference to the company whether it hires from pool A or pool b. Suddenly, the cost to hire work force A rises by 100 million. Now, it is more desirable to hire work force B.

 

[theeedude]

You're being purposefully obtuse or you really are just that stupid.

Let's say you make 100 grand a year and your expenses are 95K a year. Government just sent you a bill payable immediately for 10K.

What you gonna do? Pay it and cut expenses elsewhere like the permanent expense of an employee.

Not if cutting that employee costs you $15K in lost profit.

 

[IndyColtsFan]

I think rightists don't understand business. If they make a billion in profits, and really do lose 10% of that, what that means is it makes no sense to assume they'll lay people off. They're still making a profit, and that's thanks to the employees.

The goal for businesses is to grow profit -- quarter over quarter. Simply having a profit isn't usually "good enough" for our good pals on Wall Street.

 

[spidey07]

The goal for businesses is to grow profit -- quarter over quarter. Simply having a profit isn't usually "good enough" for our good pals on Wall Street.

Guess what happens when earnings per share are negative or flat?

 

[nonlnear]

I think rightists don't understand business. If they make a billion in profits, and really do lose 10% of that, what that means is it makes no sense to assume they'll lay people off. They're still making a profit, and that's thanks to the employees.

It's not that one camp or the other is misunderstanding anything. It's that reducing a hundred million dollar analysis to a sound bite inevitably degrades the meaning of any ensuing conversation.

What you are saying is perfectly true if we are talking about the state simply taking $100million and saying "it's ours". Appropriating a lump sum changes very little for a business's decisions unless they are highly leveraged. However that is clearly not what Caterpillar is facing. The hundred million was an annual estimate of the total change in their variable costs. That means it will VERY significantly affect their operational decisions.

It's not clear from the article if that was a static or dynamic analysis though, so I don't want to say too much more. (That is partly why I haven't jumped into the discussion about particulars.)

 

[IndyColtsFan]

Guess what happens when earnings per share are negative or flat?

I'm sure our resident "experts" will chime in with an answer.

 

[IndyColtsFan]

What you are saying is perfectly true if we are talking about the state simply taking $100million and saying "it's ours". Appropriating a lump sum changes very little for a business's decisions unless they are highly leveraged. However that is clearly not what Caterpillar is facing. The hundred million was an annual estimate of the total change in their variable costs. That means it will VERY significantly affect their operational decisions.

EXCELLENT summation and one I am sorry to say I didn't make in my own posts. Lump sum vs. a $100 million bump in their ANNUAL costs is a huge difference.

 

[werepossum]

Caterpillar stock is probably up because analysts are predicting another layoff. For some reason, laying off employees seems to be the equivalent of printing money for stock prices, even though presumably those employees were once net assets to the company and therefore the company may be expected to produce less value without them. You can bet that some Caterpillar employees are right now looking at ways to cut costs, and outsourcing and layoffs are two big ways to do that. I'm sure there are also some very nervous Caterpillar employees right now, too, as not every plant and/or assembly line may be profitable at this new, higher cost of doing business in the USA.

This thread is an excellent example of progressive thought, though - if a company has profits, government should take some. If it still has profits, then government should take some more, the idea being that Caterpillar doesn't need a billion dollars a year profit. (From each according to his means, to each according to his needs.) After all, the Magic Cupboard theory of progressive economics tells us that the well of corporate taxes never goes dry and never leads to unpleasant consequences.

 

[Acanthus]

You can see the consequences of the status quo.

Clearly something needed to be changed.

 

[shadow9d9]

Right. So that makes this 100 million number MUCH more significant. It's brutal for a company to drop profit 10% year over year. The normal result is significant cost saving initiatives to make sure they meet analysts/executive profit goals.

Why do leftists not understand basic business?

Americans' health should not be profit based. Especially not when the "profits" claimed by these companies are after fancy accounting and outrageous executive pay/bonuses.

Rightists are good on business? They set up the 2008 world economic collapse...

 

[IndyColtsFan]

Americans' health should not be profit based. Especially not when the "profits" claimed by these companies are after fancy accounting and outrageous executive pay/bonuses.

Rightists are good on business? They set up the 2008 world economic collapse...

Earth to Shadow....Earth to Shadow: we're talking about Caterpillar. You know, the company that builds things like bulldozers, etc? Are you now claiming that private companies with no connection to the health care industry should go in the red to provide health care to their employees?

 

[ShawnD1]

Caterpillar stock is probably up because analysts are predicting another layoff. For some reason, laying off employees seems to be the equivalent of printing money for stock prices

Seems very counter-intuitive. Generally layoffs mean the company is facing hard times. A strong company has lots of projects going on at one time and is always looking for more people. A company in horrible financial shape (AMD) will layoff workers and talk about minimizing loss.

This thread is an excellent example of progressive thought, though - if a company has profits, government should take some. If it still has profits, then government should take some more

Because their business wouldn't work without the government in place. The government owns the power and water infrastructure in my city. Try cutting the water and power supply of a Walmart and see how many people shop there. I drive on government roads to get to Walmart. Walmart would not get my money if those government roads were not there since I don't feel like walking 10 miles to save a nickel on razor blades.

 

[LTC8K6]

Wal-Mart pays taxes, and fees, and water and power bills, and fees to connect to the water and power supply, etc. Lots and lots...

 

[Tom]

i support the health care bill. i also think Cat is a great asset to the USA and Im sure the president does too.

so hopefully they're incorrect or if they are then it shpoulg be addressed

 

[werepossum]

Seems very counter-intuitive. Generally layoffs mean the company is facing hard times. A strong company has lots of projects going on at one time and is always looking for more people. A company in horrible financial shape (AMD) will layoff workers and talk about minimizing loss.


Because their business wouldn't work without the government in place. The government owns the power and water infrastructure in my city. Try cutting the water and power supply of a Walmart and see how many people shop there. I drive on government roads to get to Walmart. Walmart would not get my money if those government roads were not there since I don't feel like walking 10 miles to save a nickel on razor blades.

I agree with the first, it certainly seems counter-intuitive to me as well. Although laying off workers improves the balance sheet, it's not generally a sign of a healthy company. I agree with the second to the extent of funding the infrastructure which the government provides, but we are now seeing a progressive assault on the private sector (to which Obama himself referred as the enemy) whereby progressives feel free to take as much profit as they want (which is typically all of it) to fund whatever programs they want.