Backlash to austerity

[LCHIEN]

Pratt and Whitney, maker of jet engines, today announced they would lay off 1000 workers or approx 10% of their employees due to falling orders for business jets.

See, there's the backlash for telling companies and executives to stop using their corporate jets.

[germdoc]

Of course there's an effect of austerity. However, my take on this is that makers of high-end or "luxury" items were gonna suffer anyway. The fact that everyone from Congress to the milkman are critical of the executives who might purchase their services gives them an excuse.

In this economy everyone suffers. Economically it would make more sense to "give" the money from rich executives--which many of them weaselled out of their employees and shareholders over the years--to their workers, who would spend it at WalMart and BestBuy, etc.

See http://www.washingtonpost.com/wp-dyn...020602794.html

In any event, it's hard to justify a business-as-usual approach for the executives when there are millions of workers being laid off. Tough break for everyone.

[cabinetman]

The fact that everyone from Congress to the milkman are critical of the executives who might purchase their services gives them an excuse.

Actually the transportation problem started many years ago...I haven't seen home delivery of milk in those glass bottles with the paper cap since the 50's.
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[jackellis]

I'm not a fan of big executive pay packages unless the executives produce exceptional results (Lou Gerstner's IBM rescue, for example).

Of course there's an effect of austerity.

Among wealthier folks, I think the problem is a general lack of confidence, where people are afraid of running out of money. They still have plenty. Our savings are diminished, but they have not totally evaporated.

In this economy everyone suffers. Economically it would make more sense to "give" the money from rich executives--which many of them weaselled out of their employees and shareholders over the years--to their workers, who would spend it at WalMart and BestBuy, etc.

Instead of forcing executives to give money away, how about making them spend it? We hear about the greedy execs but many of them are not so greedy, especially those that own and run their own companies, and there are hundreds of thousands of them.

In any event, it's hard to justify a business-as-usual approach for the executives when there are millions of workers being laid off. Tough break for everyone.

Well I'm still trying to spend as much as I can afford. My little airplane (old, dog-eared and on track to become an antique this year) has to be inspected every year in order to be legally flown. I thought about grounding the airplane to save money. Wife said no. In fact, continuing to fly the airplane puts money in the pockets of the little store where I buy charts and supplies, the airports I buy fuel at, the mechanic who inspects it and his ten or so employees, the fellow who does my flight reviews. Is flying myself around a luxury? Probably so. Does it help keep other people employed? Absolutely!

I realize there's a big difference between a tiny airplane and a corporate Gulfstream, but the truth is that Gulfstream keeps a lot more people employed than I do.

[jking]

I realize there's a big difference between a tiny airplane and a corporate Gulfstream, but the truth is that Gulfstream keeps a lot more people employed than I do.

I understand the initial reaction people had upon learning of Citibank's (I think it was them) new corporate jet they were pressured to not take delivery of. But, I think ultimately, it was a bad decision to force them to do so. Mainly for the reason that taking delivery of the jet probably would have helped the economy because someone built the jet, & now they basically have to eat the cost.

[Grampy122]

[QUOTE=jackellis;394923]I'm not a fan of big executive pay packages unless the executives produce exceptional results (Lou Gerstner's IBM rescue, for example).


Cookie man's rescue plan was to lay people off. Before his plan no one had been layed off.

[germdoc]

Yet another voice:

http://www.washingtonpost.com/wp-dyn...021501256.html

[JR]

[quote=Grampy122;395706]

Cookie man's rescue plan was to lay people off. Before his plan no one had been layed off.

Who is cookie man?

[jackellis]

Who is cookie man?

Lou Gerstner was the CEO of Nabisco before he took the top job at IBM. He did lay a lot of people off at IBM, but lots of people were going to lose their jobs anyway if the company had to be split up in a bankrupcty or liquidation, and IBM was pretty close to failing at the point he entered the picture.

My wife spent 30 years at Big Blue and we still have a fair bit of our net worth tied up in IBM stock. They trained her to be a programmer in the days when there was no such thing as a computer science degree, no Visual Basic, few debugging tools, and certainly no PCs. LOML agreed with many of the changes Gerstner made but admits it was hard for her to adapt so she was very happy when she finally retired.

My opinion of course, but Gerstner did more than lay people off. He changed the culture from one of entitlements to a meritocracy. Hopefully he was able to cut way down on the bureaucracy and infighting and general corporate BS, which I heard about frequently at the dinner table. He certainly steered IBM away from its almost exclusive reliance on hardware. His half billion dollar payday represented about 1/2 of one percent of the increase in IBM's market value over that time. As a stockholder, I'm happy with that outcome.

[cabinetman]

Who is cookie man?

Lou Gerstner was CEO of Nabisco for a while.
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[JR]

I get it now. IMHO, to say that Gerstner's plan "was to lay people off" is oversimplification on the highest order. Gerstner's reengineering of IBM is perhaps the foremost example of corporate leadership in our time - perhaps ever.

JR

[jackellis]

Yet another voice, this time from someone who knows high finance, Carl Icahn:

I started reading that article and then had to stop. IMHO Carl Icahn is a hypocrite plain and simple. This is the same guy who (largely unsuccessfully) pressured Time Warner to leverage up and buy back stock. The same guy who bought TWA and then couldn't run it. The same guy who earned his billions as a corporate raider rather than as a corporate builder.

I'll agree with just about anything Warren Buffett has to say. Carl Icahn is a self-serving, hypocritical snake.

[germdoc]

Icahn may be a controversial, but like Warren Buffet he seems to be focused on the bottom line pure and simple. TWA and Time-Warner were both in dire straits before Icahn came along, in fact TWA courted Icahn to "rescue" them.

In any event, just because he's a hypocrite doesn't mean he's wrong. Rereading the article I can't find anything I disagree with. Warren Buffet has been similarly critical of American business management: http://www.reuters.com/article/busin...31767220080207.

What these independent operators seem to have in common is a distaste for the good ole boy practices of the masters of finance. Buffet is quoted as saying, "Ceos don’t need ‘independent’ directors, oversight committees or auditors absolutely free of conflicts of interest. They simply need to do what’s right.”

[master53yoda]

I agree with Gremdoc. Buffet deals with what is really there, that is why he is successful.
If you hide from the facts and operate against the facts then you will lose. If the facts call for short selling then short sell, if they call for being long then be long regardless of who it affects, that is free enterprise that this country was built on.
If you choose to ride on the companies graces then expect to share the good and the bad when it comes.
The alternative is to take control of your financial future instead of letting others control it. That is what operates the free enterprise system, and what Warren Buffet works with.

i guess the puts me in the hypocrite line

[crokett]

[quote=Grampy122;395706]

Cookie man's rescue plan was to lay people off. Before his plan no one had been layed off.

Extreme oversimplification and patently false. Many many people were laid off before he arrived. In 1992-93 at least 5000 people were laid off in the Hudson Valley area alone. Close to 100k were given walking papers world-wide in the early 90's. Many of theme were before Gerstner arrived.

Among the many other things that Gerstner did was change the culture of IBM from one of entitlement (both internal and external) to one where IBM was much more willing to change as needed. See the sale of the PC Company as an example - although it did not occur under his watch the culture change that allowed it, did. He also recognized the value of services and IT integration and started what has become IBM Global Services, now accouting for just north of 50% of IBM's revenue.