Speaking at the DPA Safety annual buyers conference on April 26th my presentation is titled “State of the Industry.” Yes, quite the loaded presentation, filled with statistics, opinion, fact and of course personal interpretation.

I was challenged to keep this presentation fairly void of any additional controversy, or added opinion. Hard to do when talking about the economy.

As I began my research for this presentation my first stop was to the Price Waterhouse Coopers – PWC website to review the Manufacturing Barometer Report.

A very interesting report surveying the largest manufacturers in the US, with Global reach. Outlook for 2012 – Positive with “Concern.” and Investment in M&A with a Global priority.
Translation, yes the economy is growing, they like it, they are benefiting from agreeable tax incentives and they plan on expanding outside of the US and buying up business to grow.

But… concern there will be inflation, which will cut into their newly adjusted higher profit margins.  Profit margins increased on average of 18%. Primarily due to worker reduction, wage reduction and other supply chain cost savings mechanisms

And, “concern” of lack of skilled workers. What? so you cut the jobs, reduce the wages, cut benefits and now we have a jobs skills disconnect?

Prediction – They will have to pay higher wages as the job market recovers and workers continue to be retrained.

My next stop was to the BLS – Bureau of Labor Statistics.

Nothing like getting a good dose of reality. Here you can run every type of report when it comes to labor, employment, unemployment, layoffs, accidents, injuries and fatalities. It is a marketing mecca for safety and data mining.

Factoid: Manufacturing and Construction Jobs were impacted hardest when the recession hit in 2008. Although our financial crash happened on September 28th, 2008 with a 778 point and 1.2 trillion loss in value on a single day. However, when you read the BLS “tea leaves” jobs began to decline in January 2008 in larger numbers before the 28th. We just didn’t know it because so much was already in the pipeline. In fact, most safety distributors I spoke to in 2008 had record sales. Best year ever.


Continuing down my path of research I than chose three major companies to contrast the current State of the Industry against and compare the FACTS of employment and allocation of Stimulus funding. I am only showcasing manufacturing at this time and will delve into the effects of Stimulus money in other sectors of the economy on later blog posts.

The companies I chose best represent our Safety Economy and tie directly into investment either directly or indirectly from the government.

The companies chosen for evaluation are:

1) UPS. Nothing tells a success story like reviewing the number of packages shipped by UPS in the past year.The 2012 Outlook is MODEST with MIXED Results. Shipments are up and profits are at record levels.

Read UPS 2011 Annual Report Here

One reason things are good: Global Expansion. One also must ask oneself, if Obama is against business, why would he open up even more trade to the world?

Personally my opinion on trade is again a complicated answer. My overall concern is having an out of balance trade policy which benefits more of the Global, multinational business and ultimately harms a Made in America, create jobs in America approach. This discussion will no doubt continue. Bottom line. I am pro-American Jobs.

Investing to Grow
“We believe in the power of global trade to drive
economic growth and improve living standards, and
were heartened in 2011 that the United States passed
three free trade agreements with South Korea, Colombia,
and Panama. UPS continues to invest in its global
portfolio of customer solutions to support the rapid
growth of trade and cross-border commerce.” (see page 7)

As we begin 2012, growth in the Euro zone and Asia is slowing, while the United States economy is improving at a modest rate.Our expectation is for mixed economic growth around the world in 2012. Overall we expect global economic expansion to be slightly weaker than 2011. In spite of the macro outlook, UPS expects another record performance, with earnings per share in a range of $4.75 to $5.00. That’s an increase of 9 to 15 percent over 2011 adjusted* earnings of $4.35. (see page 9)

2) GE – GE Works. Being that Jeff Immelt was appointed the Jobs Czar position by President Obama and GE is one of the largest companies in the world (next to Apple), I thought this might be a good place to start to see how the economy is going from the GE Works point of view.  After all, GE Works is the message in their commercials and annual report.

May I just say that nothing says “Obama is against big business” than appointing Big Business into the Jobs Czar spot.

I suppose he could have appointed a professor of business from some fancy school like Harvard, which would clearly get a lot of people worked into some kind of frenzy. After all, he too was a professor and all professors are elitists. This must also mean Robert Gates, prior Defense Secretary, now Chancellor of the College of William & Mary in Virginia is in this elite category.

GE buys a lot of safety supplies and their procurement benefits our industry with far reaching affects. So I endorsed this appointment with cautious reserve.

My reserve is this; GE is a huge benefactor of indirect and direct government contracts through defense, jet engines, railroads (Amtrak), Ecomation – Wind Turbines and Medical Technology (VA) through the new Affordable Care Act – Health Reform – “Obama Cares”.

GE Healthcare division will receive millions in funding to develop software to automate our countries health care systems.

GE Capitol received billions in TARP funding and was able to borrow at 0% from the Federal Reserve, buying our Treasury Notes and earning 2% interest on our free money.  GE Capitol lends those dollars back out to business (no doubt generating jobs) and makes a pretty penny on the whole transaction. Think of it this way.

You go to the bank and the bank lends you endless amounts of money at 0%. You turn around with that free money and buy US Treasury notes which pay at 2% or more. Boom, your free money just made 2%. But, you than take that free money and you lend it to your buddy down the street and you charge him 10% interest or even more if he uses your credit card.

For borrowing money at 0% you just made huge profits. All made possible by US Tax payers and the FEDS ability to print gobs of dollars.

Pretty good stimulus package for business if you ask me.

And finally, Energy Incentives – Remember those Tax Incentives for Energy, if not, Check out the Spreadsheet here “Recovery_Tax Benefit Information“.

GE Renewables – either directly or indirectly the Stimulus has huge dollars allocated to renewable energy grants. Wind Turbines specifically as it relates to GE.

My opinion on all this spending has many nuanced answers.
1) GE created some jobs. Mostly out of the US. But jobs all the while.
2) GE provided incomes to at least 3 safety distributors that I know of.

My self-serving interest towards safety is evident and small business was supported. Which means that families had jobs and owners made money. When owners make money, they invest in their business. Whether it be into another employee, a new computer system, a new building or new warehouse equipment. Everything that owner invests in, creates or supports existing jobs. Albeit some may be jobs outside the US,  but an American worker will deliver that equipment, go through American Warehouses and be Supported by the Logistics of an American Worker. Those workers buy goods and services in the local economy, educate their kids in the local economy, buy a car in the local economy and the local economy is strengthened.
This is how an Economy works, whether you like the process or not. Whether all the jobs are Made in America, or Serviced in America. In nearly all instances, as it relates to our smaller Safety Economy, our local Safety dollars stay right here in America. I personally don’t know anyone that has offshore bank accounts just yet that claim to be a safety distributor. I can’t say the same for the suppliers who most definitely benefit from our generous trade policies.

In all of this, let us not forget where the Economy was created. Government created this specific demand. They created every job along the way. Indirectly and directly in harmony with business through Stimulus, Tax Incentives, Tarp and Free Money administered with great profits through our lovely banking and financial system.

Which by the way, cratered our economy and the world’s economy. They literally were laughing all the way t the bank, it was legal , they got with it and they could care less if they do it again. The worlds biggest bank heist of all time. Live On Occupy Wall Street. Give em’ hell!

So, yes, Government Does Create Jobs and so did Stimulus!

Download the Entire GE 2011 Annual Report Here

Download GE 2011 Business Overview Here

I looked throughout the report to see an actual number of US jobs created by GE. I found one such snipet.  In future posts I will expand on the amount of jobs created overseas.

It is also important to “connect the dots” between stimulus money, Free Federal Reserve Money and Tarp Money to the investments that GE has made. We have funded the expansion of their global economy with very attractive public funding at low or zero percent interest rates. So reading that only 1300 jobs were created is a bit disappointing, don’t you think? If they had created more jobs, I would expect to find that statement in their report.

EXCELLENCE  – America needs investment to stay
competitive, create jobs and drive economic
opportunity. GE is investing more than $1 billion to
transform the appliances we make, leading to
the creation of 1,300 U.S. jobs. By combining
design and production in one site and using lean
manufacturing, we’re able to bring better products to
market faster and more cost-effectively, reflecting
the world-class competitiveness of our U.S. facilities.

3) Finally I looked at Johnson Controls, a Milwaukee Based company that is a leader in battery technology and recipient of Dept. of Energy (DOE) grant dollars to develop alternative energy sources. ie: Batteries for Hybrid cars.

Johnson Controls is benefiting from DOE grant funding from Energy Stimulus Funding Grants. Commonly known as LEED Certification to buildings.

They also are recipients of the largest single grant of 2.4 billion dollars from the Stimulus bill to push development and mass-production of electric vehicles and batteries in the United States. Their share 300 million dollars.

Forty-seven other recipients, including General Motors, lithium-ion battery maker A123Systems, Honeywell International Corp. and Navistar Inc., shared in the grant money from the U.S. Department of Energy. It was the largest investment of its kind in advanced battery technology for hybrid and electric cars.

Read more here

In choosing Johnson Controls I am showing another “connection of the dots” to Stimulus money, connecting directly to manufacturing, thus creating growth and recovery.

These investments take time to implement and ultimately benefit the economy as a whole, but I am safe to say that Hybrids and Electric cars are here to stay and the citizen of the US are finally going to benefits from this technology.

Long overdue, as Europe has been far more visionary and strategic in this area. Anyone that travels to Europe knows that gas prices have been at 8 dollars per liter for years. They had no choice but to change their thinking to renewables. Unfortunately the US has been late to the party. But finally, we are at the party. Lets hope we are not thrown out for bad behavior.

Read more on Johnson Controls 1st Quarter Earnings Here

So, how did my presentation go…. don’t know yet. At the time of this posting I am still polishing my presentation. I have to decide how far down the Stimulus to Manufacturing path I want to go. It may make some of my colleagues uncomfortable.

You see in safety our entire industry is based on a single mandate – Regulations that make companies buy stuff from us. It is wonderful, there are laws that mandate companies comply with the standards which translates to dollars for us. Safety Glasses, Safety Gloves, Respirators – all the stuff your employee must be given at the expense of the employer. You gotta love it.

Where did I hear that Government can’t mandate anyone to buy something they don’t want?

The Safety Industry is the beneficiary of natural disasters, man-made disasters (BP Oil Spill), Terrorist Attacks (911). In fact, Safety is still benefiting from the Department of Homeland Security, the largest expansion of government in 50 years. Thank you George Bush.  Safety loves the EPA, Safety loves the Army Corp of Engineers, Safety Loves the Department of Defense, Safety loves, absolutely loves the GSA, Safety loves Border Patrol, Department of Justice, ICE, the CIA, FBI, Department of Health and Human Services (remember Antrax scare, 3M sold 8 million respirators in a matter of days)  And finally, the  Military and War. We benefit from every branch of Government spending

One thing is clear…the Economy is recovering with a Modest Rating, but recovery is happening. Big Business knows it, they are benefiting from all the dollars thrown at this problem. You cannot deny that the strategies of the recovery are working. Oh there will be those that point out the fraud, waste, and redundancy. Most definitely this is happening.  But so is 4 Trillion in uncollected legitimate tax revenue.

Yes, you heard me right. The IRS reports 4 trillion in uncollected tax revenue a year. Their collection rate is 85%. That means 15% of all Americans are underpaying or evading taxes. These people are not W-2 workers. They have their tax deducted from their checks and sent to the IRS automatically.

We are talking about 15% of people that have “other income”, capital gain and investment incomes. All sitting in offshore and swiss bank accounts.

For more reading on the Swiss, check out the $780 million fine to UBS (United Bank of Switzerland) over not  disclosing the names of tax evaders.

Read more here

This again is another post on another day.

This should be an interesting presentation, one I am sure will bring lots of controversy, opinion and all out negativity. But, hey, that is what I do and everyone knows I speak my mind. I challenge them to set me straight.

Stay tuned.