It’s Friday, and it’s time for another report showing rising unemployment. The nation lost 663,000 jobs in March, the fourth straight month in which job losses have topped 600,000. As a result, the unemployment rate jumped from 8.1 to 8.5 percent, the highest rate since 1983.
Wichita has had its own bad employment news this week, as Cessna Aircraft and Bombardier Aerospace announced more layoffs.
President Obama’s announcement Monday of a new level of government involvement in the management of corporate America “amounted to an inversion of the relationship that had helped define the rise of American manufacturing might in the 20th century,” David E. Sanger wrote in the New York Times. Obama’s message now seems to be that “what is good for America will have to be good enough for General Motors.”
Sanger noted that Obama’s pledge that the government would back up car warranties may have been a necessary step. “But,” he wrote, “it means that the government now is not only the ultimate guarantor of savings accounts and insurance policies — it will also cover that blown transmission.”
With so many financial firms in free fall, analysts and educators are wondering if business schools also need to reform, the New York Times reported. Critics say that some business schools are too detached from real-world issues, teach students to come up with hasty solutions to complicated problems, and produce graduates with a focus on maximizing shareholder value and only a limited understanding of ethical and social considerations.
Good for Cessna Aircraft Co. for going on the offensive to combat the public and political backlash toward business jets. It launches a national advertising campaign today urging executives not to put timidity into their business plans. A newspaper ad states that business jets aren’t about ego or artifice but about “availing yourself of the full range of tools to do your job.”
If Congress intends to rescue all Americans — and not just the banks, hedge funds and insurance companies that got us into this economic crisis — it needs to move quickly to pass the Employee Free Choice Act. In our report “Income and Inequality,” the Americans for Democratic Action shows how over the last decade the wages of 80 percent of American workers fell behind both inflation and the productivity gains their work won for corporate employers. Passing the Employee Free Choice Act would make it easier for millions of people to join unions and collectively bargain for a fairer share of the profits created by their work. Why would this stimulate the economy? Union workers earn 30 percent more than their nonunion counterparts, and are more likely to have employer-paid health care and pensions. Putting more money into the pockets of people who will spend it — who must spend it — is the best, quickest and most basic way to stimulate the economy. — Richard Parker, president of Americans for Democratic Action
By now, many people know that the so-called Employee Free Choice Act — also known as “card check” — would largely strip workers of the protection of a secret ballot vote in union organizing elections. What most people don’t realize is that the card check bill would also give the federal government the power to set wages, benefits and work rules for employers in a wide variety of industries throughout the economy. Under this bill, once a union is formed, employers would be under a strict deadline. If no agreement is reached after just 120 days, the matter would go to a federal arbitration panel, which would then write and hand down the union contract. That contract would bind both parties for two years with the same force as if it had been agreed to through full and fair negotiations, overturning more than seven decades of American labor law. It’s not labor law reform to permit government arbitrators who don’t know the business or the employees or the market to write labor contracts — it’s a prescription for disaster. — Thomas J. Donohue, president and CEO, U.S. Chamber of Commerce
You know the economy is wobbling when even Microsoft is laying off. Microsoft announced today that it will lay off up to 5,000 of its 94,000 employees over the next 18 months, including 1,400 people today. These are the first large layoffs in company history.
A Wichita woman wrote a commentary today’s Eagle complaining about how some retailers ask to see your receipt before you can leave the store. “Why do stores insult their customers by treating them like thieves?” she asked. She plans to keep walking when they ask her, and then sue for false imprisonment if they detain her.
This is actually an interesting legal question. It is OK if stores such as Sam’s Club ask to see receipts, because that’s part of their membership agreements. But other retailers are supposed to be able to show reasonable cause to suspect someone of being a thief. Refusing to show a receipt isn’t reasonable cause.
“Our financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain,” author Michael Lewis and David Einhorn, a hedge fund president, wrote in a commentary. These people, companies and agencies are supposed to apply pressure from outside the market to consider the longer term. But that’s the problem, they wrote: “The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.”
Why is this not surprising? Nineteen banks receiving taxpayer bailouts spent $32.4 million lobbying the federal government during the first nine months of this year, USA Today reported. Combined, these banks are receiving $159 billion in bailout aid. And they have no plans to stop lobbying. But as Kathleen Day of the Center for Responsible Lending noted: “It’s ridiculous that the perpetrators of this mess should be the people dictating to Congress how to get out of it.”
How does one reconcile the frightening news about the global economy with the upbeat forecast of 6,100 new jobs for 2009 heard at Tuesday’s Wichita Area Economic Outlook Conference? By recognizing that Wichita has its own unique strengths, including a roaring aircraft manufacturing sector with sizable order backlogs, and that it mostly sat out both the housing bubble and bust at the root of Wall Street’s woes. Wichita isn’t an island, especially when it comes to credit availability and energy costs, but cautious optimism seems in order. With a company such as FlightSafety International able to announce new plans this week to add buildings, simulators and 250 to 320 jobs at its Wichita facilities despite these uncertain times, Wichita is looking like a great place to ride out this financial storm.
Barack Obama represents Illinois, corporate home of Boeing. Even so, 62 percent of participants in a Wichita-area poll by SurveyUSA for KWCH, Channel 12, said they think a President McCain would be more likely than a President Obama to support Boeing’s bid to build the tanker. Those two-thirds apparently are willing to overlook McCain’s crusading against Boeing on the tanker-lease deal and that at least five of McCain’s former or current campaign officials lobbied the Pentagon and Congress on behalf of Airbus on the now-shelved purchase contract.
Boeing and Wichita caught a major break Wednesday when the Pentagon pushed back the rebidding on the $35 billion air-refueling tanker contract to the next presidential administration. Given the mishandled initial contract with European Aeronautic Defence and Space Co./Northrop Grumman and the controversy over the skewed specifications for the rebidding, as Defense Secretary Robert Gates said, the current Pentagon “can no longer complete a competition that would be viewed as fair and objective in this highly charged environment.” But what comes after this cooling-off period for rival bidders Boeing and EADS/Northrop Grumman? A clean and impartial rebidding overseen by President John McCain, who has employed Airbus lobbyists and seemingly taken EADS’ side in the past? How much longer can the current fleet of tankers be expected to fly safely? Kansas’ congressional delegation must remain dogged on this issue, to ensure that the next bidding process is not only fair but final.
Our Tuesday editorial argued that Wichita needs ordinance changes and stepped-up enforcement to crack down on rogue nightclubs. But as the Metropolitan Area Planning Commission considers Thursday whether to approve a proposed country music dance hall and tavern at Towne West Square, it needs to consider business rights, neighborhood concerns and another thing — that Wichita needs more nightlife, not less, if it expects to attract and keep young people.
Will no agency, court or lawmaker stand up for the right of Creekstone Farms Premium Beef of Arkansas City to make its own business decision about whether to test for mad cow disease? Apparently not, judging from the status of the company’s legal and regulatory fight to try to cater to its customers and guarantee that its product is mad-cow-free. The latest blow came last week in a federal appeals court decision that the Bush administration’s Agriculture Department has the authority to prohibit a meatpacker from testing all its animals for the disease. Now the case goes back to the district level. At some point, the principle of the free market should prevail over the heavy hand of the USDA.
As the results of a state audit on the impact of the state’s $1.3 billion investment in economic development since 2003 were presented to a legislative panel Tuesday, state Rep. Tom Sawyer, D-Wichita, asked a question worthy of debate: “What if we just lowered business taxes by $1.3 billion? Would that have more of an impact?” Of course, if Kansas hesitated to offer generous cash and tax incentives to business, other states wouldn’t hesitate to steal those companies and jobs away.
Wichita scored another big win with Wednesday’s announcement that Spirit AeroSystems will build the fuselage of the Cessna Citation Columbus in a new 375,000-square-foot factory in Wichita. Spirit estimates that the project and other new programs will create about 700 jobs. The final assembly of the airplane will be done by Cessna at its planned new plant in Wichita.
These new plants could have been built almost anywhere, and other states offer generous incentives to lure the work away. Kudos to the aircraft companies and to city, county and state officials for keeping this work in Kansas.
It’s encouraging that Hawker Beechcraft Corp. and Machinists union leaders have agreed on new contract terms. Here is hoping that union members also agree when they vote Thursday. The strike is in its fourth week, and a long work stoppage isn’t in the best interest of anyone — Hawker Beechcraft, its employees or the community.
Thoughts and prayers go out to the loved ones and co-workers of Jeff Hart, the Hawker Beechcraft worker who was struck and killed Monday morning on the way to a strike rally. As a letter writer suggests in today’s Reader Views, the driver of the pickup involved in Hart’s death deserves the community’s support as well. The tragedy illuminates the stakes and risks for workers, whose health care benefits ran out Aug. 4. And it provides another reason to hope the parties get back to the table soon, so the Machinists can get back to work.
My colleague J.D. Crowe has been sending shots across the bow of Boeing again. Why, er, yes, as a matter of fact, he does happen to be the cartoonist for the Mobile Press-Register, and Mobile is where the Airbus tanker would be assembled. Nevertheless, he’s doing a fine job of defending his local economy. But according to our article last week about the Air Force’s bidding process, the cards are still stacked in Airbus’ favor. And now Boeing is considering not bidding on the new contract.
T. Boone Pickens recently visited The Eagle editorial board, touting his plan to boost wind energy in the Great Plains. It’s a good plan that would bring economic development benefits to rural Kansas.
But one part of Pickens’ vision deserves more scrutiny: He has been buying up water rights in the Texas Panhandle and hopes someday to sell and ship groundwater via pipeline to thirsty cities such as Dallas and San Antonio, along the same corridor that he uses to ship wind energy.
As this BusinessWeek article observes, “Pickens owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already has, some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property.”
Pickens refers to oil a “finite resource.”
Water is a finite resource, too — and Pickens sees it as just another commodity to mine and sell. Is he trying to corner the market for the region? Would his water pumping further deplete water levels in the Ogallala Aquifer and affect western Kansas, which also depends on the Ogallala?
Boeing received a boost on its tanker bid last week when the House Defense Appropriations subcommittee, of which Rep. Todd Tiahrt, R-Goddard, is a member, imposed contract restrictions on the Pentagon that are favorable to Boeing. But the measure’s prospects in the Senate don’t look good, according to DoD Buzz blog. For one thing, Sen. Ted Stevens, R-Alaska, was supposed to be a “back-stop” supporter, but he has dropped his position as ranking member of the Senate Defense Appropriations subcommittee until his seven charges of corruption are settled. The blog also said: “Should such language get in somehow, Sens. John Warner, R-Va., and John McCain, R-Ariz., are likely to oppose it as the bill moves to the Senate floor.”
“I hope nobody thinks that Congress has done all, or even a large fraction, of what needs to be done,” columnist Paul Krugman wrote about the Fannie and Freddie bailout bill that President Bush signed. “This bill is the latest in a series of temporary fixes to the financial system — attempts to hold the thing together with bungee cords and masking tape — that have, at least so far, succeeded in staving off complete collapse. But those fixes have done nothing to resolve the system’s underlying flaws. In fact, they set the stage for even bigger future disasters — unless they’re followed up with fundamental reforms.”
A main, underlying problem, Krugman said, is that traditional banks have been pushed aside by unregulated financial players. He said that “financial regulation needs to be extended to cover a much wider range of institutions. Basically, the financial framework created in the 1930s, which brought generations of relative stability, needs to be updated to 21st-century conditions.”
General Motors was the corporate villain in the documentary “Who Killed the Electric Car?” It’s hoping to be the hero in the sequel.
After years of ignoring trends and losing market share on hybrid cars and green vehicles in general, GM has been racing to develop a plug-in electric car, the Chevy Volt.
It’s good to hear that GM is racing to do anything these days. U.S. automakers of late haven’t been known for their vision or sense of urgency — and they’re paying a steep price as the SUV market tanks.
Expectations for the sleek plug-in Volt have been sky-high. “The eyes of the world are now on the Volt,” John McCain told a GM crowd last week. “It’s the future of America and the world.”
But the Volt business plan is said to be shaky, with the car potentially costing upwards of $48,000, twice as much as its hybrid competitors. GM is seeking generous buyer tax breaks to offset the price.
And here’s a story about GM working out electricity infrastructure issues for the car, which is scheduled for release in late 2010.
Your thoughts?
“Fine by me. Sounds like a good idea.” — Former Vice President Al Gore, when asked by Tom Brokaw on “Meet the Press” whether there should be a surcharge on jet fuel for private aviation, which Brokaw said “leaves a very large carbon footprint”
Some are mourning the sale of iconic American brewery Anheuser-Busch to a foreign buyer, InBev of Belgium.
It’s a shame that the company is no longer American-owned. But with so many U.S. corporate giants gobbling up foreign companies and being gobbled up by them, is this latest example of corporate rebranding really anything new or shocking?
Take InBev itself— the Belgian company’s top management team is Brazilian. And Miller Brewing of Milwaukee was sold in 2002 to South African Breweries and is now SABMiller.
The Clydesdales, the Super Bowl commercials, the Busch family’s ties to St. Louis — Anheuser-Busch has long traded on its all-American image.
But this latest megasale only reinforces the point that the corporate world operates strictly on what is best for shareholders, not a particular community or nation.
Anyway, in my view, most of the American beer worth drinking is made by smaller craft breweries like Avery and Rogue and Boulevard.
