Summation of CEO responses to lack of hiring, 25 words or less: It Must Really Suck To Be You

[Amerigo Vespucci]

With consumers slow to spend, businesses are slow to hire



CEOs aren't ready to hire yet

Profits are up and companies have cash, but executives don't see American consumers opening their wallets for years to come.

By Neil Irwin
Washington Post Staff Writer
Saturday, August 21, 2010

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/20/AR2010082005165.html?hpid=topnews

CHICAGO -- Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments -- the missing ingredients for a strong economic recovery.

Many Democrats say the economy needs more stimulus. Business lobbyists and their Republican allies say it needs less regulation and lower taxes.

But here in the heartland of America, senior executives say neither side's assessment fits.

They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis.

Across the industrial parks and office towers of the Chicago region, in a more than a dozen interviews, senior executives said they see Americans for years ahead paying down debts incurred during the now-ended credit boom and adjusting spending to match their often-reduced incomes.

"It's a different era," said Daryl Dulaney, chief executive of Siemens Industry, which has 30,000 U.S. employees who make lighting systems for buildings and a wide range of other products. "Our hiring and investment decisions have to be prudent and reflect that."

Executives see little evidence that the economy is slipping back into recession. But they describe a business environment in which sales come in fits and starts and their customers can't predict what they will want to buy in the future.

"In the past, our customers had more long-term vision on what they're going to need," said Bill Larsen, president of Larsen Packaging Products in Glendale Heights, Ill. Now, he said, "they don't know what they're going to need and when they're going to need it."

Larsen's company sells boxes and other packaging materials to all types of companies, so its sales closely reflect overall economic activity. Those sales have been swinging widely from month to month.

When companies decide whether to hire workers or invest, say, in a new factory, this kind of volatility and uncertainty about future conditions makes for a strong disincentive.

During the first half of this year, capital expenditures by business have been a bright spot in the economy, growing at more than a 20 percent annual rate. But executives say little of this reflects expanded capacity. They say firms are spending primarily to replace equipment they had held onto longer than usual last year to conserve cash.

David Casper, who heads commercial banking at Harris Bank, which has more than 300 branches in the Chicago area, estimated that the firm receives three loan applications from businesses looking to replace outdated equipment for every customer seeking to expand productive capacity.

[Jkid]

1. Found the real reason why they don't want to hire people

It actually cost money in the short-term. They do not care about the long term prospects.

I suggest a use it or lose it clause for any corporate welfare project.

[Amerigo Vespucci]

2. I've posted the same thing recently...

...a few days ago I posted a story on the $12 billion...TWELVE BILLION...schools have received from the government. Part of the rationale in giving this money was that it would be used to hire teachers. In the article I posted, some schools are holding on to the money to cover any potential deficits in 2011. One administrator quoted in the article called that "the responsible thing to do."

My feeling is that if a company suckles at the government teat for hiring funds and then refuses to hire, they should be required to pay back every penny within a clearly specified time frame.

[Orrex]

3. When I worked for a big corporation...

we were told at least two or three times per week that payroll was the single biggest expense that the company had to face. The clear message was that we were all liabilities, even those of us who made less in five years than the high-level managers made in a single year's bonus.

The second biggest expense was the payment of commissions to clients who'd signed contracts with the company do to exactly that.


In combination, the clear message was this: the company would be doing much better if we didn't have to pay our clients or our employees.

[daylan b]

5. As an employer you do that

to show employees how much they have invested in them and how important they are. Their communications team sucked some serious donkey balls if that's the message that came across to the employees.

[Orrex]

7. LOL

I suppose you're right, but the message never came across that way--and I've spoken with dozens of (now former) coworkers who had the same impression.

It was a lot like the mobsters in old Hollywood serials: "Nice place you have here, Orrex. It would be a shame if something happened to it..."

[old mark]

4. I recently read an interview with a CEO who stated his next new employees

are now in 6th grade...he sees NO future for those now laid off - they are too old, have to many liabilities (insurance, health and retirement)and lack the latest education. Most employers interviewed are installing more modern plant equipment needing fewer but more skilled workers, many with computer and electronics skills as well as maintenance people...I gathered that many now out of work will never work again at least not at good jobs...

We need something like the old WPA/CCC to get money in people's pockets again...
Private industry bailed on the US.

mark

[Orrex]

6. You highlight an excellent point

Trickle-down zealots invariably make the argument that money should be given to the wealthy because the wealthy are the ones who create jobs.

As you point out, the wealthy--corporations, in this case--are using their money not to create jobs for workers but to render those workers permanently obsolete.

There is only one entity with the scope and reach to create an effective jobs program, and it sure as hell ain't Walmart...

[old mark]

8. The vaunted Private Sector (you know - where all the jobs come from

according to the GOP) has taken our TARP money and is sitting on it, or using it to replace laid off workers with machinery.
Obama talked about starting great building programs to rebuild our infrastructure, create green energy and such - we really need all of that and we have millions desparate for work...doesen't anyone in Washington make a connection there?

Why is it that WE can understand this and they are still stumbling around in the dark?

Is the Obama administration really that stupid?

mark