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What Happens To Stock Prices After Layoffs
Submitted by Daniel Drew of Dark Bid
What Happens To Stock Prices After Layoffs
Increasing synergies. Downsizing. Staying nimble. Cutting back. Restructuring. What do all these corporate buzzwords have in common? They're all bullshit explanations for why you're about to lose your job after years of commitment to the company.
As the market climbs higher and higher, and we approach the ultimate privatization of all capital, it seems like the corporate propaganda is actually true. Maybe layoffs are making companies more efficient, and this creates shareholder value. The foreigners and the robots can replace us, and the shareholders will be better off.
A case study of two of the largest conglomerates in America defies the message that the American worker is no longer needed. Consider General Electric and Honeywell. The International Business Times recently published an article called, "At General Electric Company, Workers Struggle To Find Footing As Shareholders Reap Windfalls." GE threatened to close its capacitor plant in upstate New York. They said the only way they would keep the plant open was if the workers agreed to a pay cut from $28 to $11. The United Electrical Workers wouldn't agree to that, so GE closed the plant and moved it to Clearwater, Florida. At the new plant, there is no union, and GE can pay their employees low wages.
Meanwhile, GE buys back billions of dollars of its own stock, and CEO Jeff Immelt makes millions. Adam Hartung of Forbes called GE a case of "total leadership failure." Ironically, Immelt is on the board of directors at The Robin Hood Foundation. Because nothing says "Robin Hood" like underpaying your employees and keeping the money for yourself. He is also the Chairman of The President's Council on Jobs and Competitiveness. Immelt knows all about jobs and how to get rid of them. GE has eliminated 16,000 positions in the United States since 2008.
At Honeywell, things are different. CEO David Cote wrote an article in the Harvard Business Review about his company's "no layoff policy." Instead of laying people off during the 2008 crash, they furloughed their employees to spread the pain around equally. This actually used to be standard corporate policy. Peter Cappelli, author of "Why Good People Can't Get Jobs," said,
Until 1985 the U.S. Bureau of Labor Statistics didn't even have a category for permanent job loss. Until then the assumption was that if a company laid you off, it would rehire you when the economy picked up. That changed during the 1981-1982 recession.
By avoiding layoffs, companies can sidestep the cost of constant turnover. The whole process of hiring and firing is much more expensive than one would think. Less churn is better for everyone. A look at the 10-year stock performance of GE and HON is evidence of this. General Electric lost 21%, and Honeywell gained 164%.
For Cote, it's personal: He used to work at GE until Jack Welch, the former CEO, told him he would not be his successor. Now, with fair labor policies and an outperforming stock price, Cote has the last laugh.
However, just when you start to trust a corporation, this happens:
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The American worker is absolutely required! (To vote for the hapless politicians who permit these awful economic and social policies to continue!.
And the poorer the worker, the easier his/her vote is bought
I have long held that either senior high school students or college freshman should be required to take a course on starting and operating their own small business.
Demystifying the process, from spotting ideas to investigating the opportunity, to what papers need to be filed to establish the business entity, the different types of
business models such as a brink and mortar operation versus, say, specialty foods out of a step van in Manhattan, to patenting an idea, etc...
Teach them that it is far better to be The Man, instead of Workin' for The Man.
Even something as simple as buying flats of fruits and veggies at a farmers market in the country and reselling it on the side of the road in the suburbs (with a peddlers
license, of course), a hot dog stand outside of a hardware store (with their permission for a cut of the gross), starting an online business etc...
Just a little instruction and guidance is all it takes to get many potential entrepreneurs launched.
The earlier these notions are instilled, the better.
In the end, there are options.
There are always options.
Agree with your point, but they don't want to enable anyone forreals...
I hung out with my kollege roommate last night, and one of the things we talked about was the worthlessness of kollege resources. We went to UC Davis, home of pepper spray cop and rich-parents hippies. My sister went to UT Arlington in Texas, and I recently got a chance to visit for the graduation. Their library had a 'Fab Lab', where you can go pay for raw materials and use resources like 3D printers, laser cutters, CNC machine, etc. to make things. I asked how their EE/CE engineering department compared, in terms of available resources. Turns out there's nothing resourceful in the engineering building. Go figure. Regardless, I was really happy to see a 'Fab Lab' in total, accessible reach to the commoner.
My experience with utilizing kollege resources was miserable. We designed a PCB for a senior project and I was hand-soldering all the components. Needed a nice Metcal soldering station to get the work done - something only available in one lab in the EE department for one class, and you gotta kiss ass and beg for permission to use it. We did. One day the professor motherfucker walks in and starts bitching at us - the only two people in the otherwise empty room, doing real productive work. Told us to get out.
In short, my little tale is meant to provide an example of how 'they' don't want you to actually make and do things in the scope of 'curriculum', and face it - that's what the majority of the people are there for - to follow a 'curriculum' and get 'educated'. They'll stuff you full of 'theory' that may or may not be true, and that's 'education'. Fuck that noise - go out and do real shit.
If your IQ is under 110, you're probably better off working for The Man. Most people lack the intelligence and self-motivation to start a business, and not every value-add can be broken into pieces small enough for a single person or family business to handle.
If you bring non-family into the business, government comes in with them, and then you might as well just turn yourself over to the authorities.
it doesn't take brains to start a successful business. it takes problem solving skills, organization skills and good sales training(nothing happens until something is sold). salesman are never the brightest. it doesn't take a lot of brains to be organized and solve problems. case in point. one of my favorite pieces of advice came from an old school wholesaler who attributed his success to the 3% rule. what is the 3% rule? in his words, "you buy something for 1% and you sell it for 3%." not much for brains but he lived in a big house.
I am calling this article's author out. I work as a contractor for a different company at a Honeywell site and YES THEY LAYOFF people. This has been true for at least 7 to 8 years.
Isn't Jeff Imelt President Zulu's Job Czar?
Speaking of GE's Jack Welch, he was just another high level corporate bureaucrat until he fixed GE's PCB (polychlorinated biphenyls) pollution problem in 1976. GE had illegally dumped carcinogenic PCBs in the Hudson River for decades from its Schenectady plants and GE faced a clean-up cost in the hundreds of millions of (1976) dollars. Peter Berle, the NYS Environmental Commissioner then, wanted to force GE to clean up the PCB wastes contaminating the Hudson River. Carey fired him, there was money to be made from GE to stall the clean-up by dredging PCB contaminated sediments of the Hudson River. A stall that lasted for two decades. The Hudson River still isn't really cleaned up of PCBs today. An estimated 137 tons of GE PCBs ended up on the floor of the river, concentrated in slow moving spots where the poison leached into the water and the food stream. Everyone has forgotten about this Jack Welch corruption except Weitz & Luxenberg, a law firm that was trolling for clients who worked at the GE plants then and are suffering from PCB exposure illnesses now (GE's PCB chemical operation them was linked to Monsanto). Those GE PCBs that spilled ino the Hudson River shut down the Hudson's striped bass fishery for 30 years, a fishery in operation for 300 years. Naturally, there was no news coverage in New York of Carey's corruption and Welch's probable payoff to Carey. After leaving office, Carey worked as a lawyer for buisinesses with environmental problems. I wonder if GE, with Welch as CEO, was his first client.
What Happens To Stock Prices After Layoffs
They go up. What else these days with the FRB buying and money a printing.
That is true. Stawk Prices generally increase after a massive round of layoffs. But this is HISTORICALLY the case.
It has nothing to do with the Fed buying up toxic bonds and issuing more debt.
It signals that a company is intent on becoming more productive and limiting labor costs to weather slowing Market conditions.
That Dilbert Cartoon is the truth. Why does a company need that which is deadwood, those employees that are not essential to the daily operations of the firm?
The Bottom Line is the bottom line...profitability, market share and competitiveness.
Inherently nothing is wrong with that as long as it is done ethically.
The socialist will scream that it is unfair. But real capitalism works.
In fact keeping nonessential staff is unfair to the stockholders, the customer, and especially to the non essential employees who will ultimatly be laid off as it provides them with a false sense of security and permanence.
The author has taken one story, that of Honeywell and GE, to make a case for that which is untrue. There are many other reasons for Honeywell's successes and GEs failures. It is not directly due to layoff policies.
I'd argue that the non-essential people are the financial geniuses that focus on making (fake) paper profits churning wall street paper as opposed to making profit with traditional (real) goods and services. A big part of that, that can't be glossed over indefinitely via bogus employment #'s, is having consumers with money to actually buy things.
As part of my own effort to eat healthier, I no longer dine at establishments large enough to employ MBAs.
That is why you should not dine out at ANY restaurant.
Chances are that the waiter is an MBA.
Or a geologist.
"Chances are that the waiter is an MBA."
I frequently eat at the bar. The chances are even higher. But who in management listens to the bartender?
"The Bottom Line is the bottom line...profitability, market share and competitiveness. Inherently nothing is wrong with that as long as it is done ethically. The socialist will scream that it is unfair. But real capitalism works." --Tall Tom
Neither socialism nor capitalism has any defense against corruption. "Real capitalism works"... yes, at microeconomic scales over the short run, until it is inevitably replaced with crony capitalism. The Austrians -- who at least seemingly stand on firmer intellectual ground than the Keynesians -- love to decry crony capitalism, and bellow out the need for a restoration of real markets with honest price discovery... except what they're ignoring is that cronyism is inescapable in such a system.
When an entire culture is founded on an ethos that celebrates material prosperity and profit drive above all other imperatives, no one should be surprised to see capitalism invariably devolving from idealized to bastardized states. The corporatocracy is populated with individuals who are simply better at "real capitalism" than the typical Main Streeter; that is, they understand the principle that truly underlies capitalism: COMPETITION IS A SIN.
"COMPETITION IS A SIN"
Only when you attain a size sufficient to stifle it. Capitalism works until until you are big enough to hire the M&A sharks to to turn you into a monopoly or buy your own government.
The corporatocracy is populated with individuals who are simply better at "real capitalism" than the typical Main Streeter; that is, they understand the principle that truly underlies capitalism: COMPETITION IS A SIN.
At that point it is no longer capitalism. You wrote that it devolves into a bastardized state. Yes it can.
It does not have to. But until it devolves into something which it is not then it is not inherently evil, is it?
"(Capitalism) does not have to (devolve into a bastardized state)." --Tall Tom
The same can be said for socialism, yet these idealized models of capitalism and socialism never play out macroeconomically over longer time horizons. Look at our own history, as colonial mercantilists begat the robber barons, who in turn begat the welfare-warfare crony capitalists. The creation of the Federal Reserve -- the manifestation of which took almost a century and a half of persistent ethical erosion within our elected leadership -- was a very natural extension of real world capitalism. The big fish eat the little ones, themselves one day being eaten by still larger fish.
Tall Tom, you -- and presumably the majority of ZHers -- insist capitalism isn't intrinsically prone to corruption, yet history only shows us the opposite. The capitalist mechanism, like its socialist counterpart, always becomes corrupt, as it should according to the very premise of perpetual profiteering. Since reality doesn't take place on paper, let's be real and acknowledge that capitalism has nothing to do with propagating modes of production that efficiently allocate scarce resources and minimize deadweight loss. The purest state of competitive advantage is the one in which competition is eradicated entirely, so when guys like Peter Schiff and David Stockman continually exhalt the virtues of free markets while complaining about the Fed's macroeconomic distortions, they're deliberately ignoring that the very creation of the Fed itself was a perfect expression of the essence of capitalism.
"The capitalist mechanism, like its socialist counterpart, always becomes corrupt"
And why pray tell is that? Only one reason; in any governmental or economic system ever created, there are a small number of psychopaths who are willing to rob, murder, or bribe whoever is necessary to further their personal agenda and thus increase their share of the pie. Any governmental or economic system that does not embody a method to systematically root out and destroy such individuals will eventually fail. The founding fathers clearly did an inadequate job in this respect, although their efforts survived several generations and created one of the most prosperous societies in history.
This libtard horseshit about man being intrinsically good is a complete fucking fraud because the libtards are and have been supported by those same morally devoid psychopaths to maintain their cover.
What happens to student loans after layoffs ?
" This is robosigning 2.0 "
http://www.bloomberg.com/news/articles/2015-06-04/the-student-debt-collection-mess
We should have seen this coming.
Thanks
Kaiserhoff, I am logged in with the chat client...No video available at the moment...
Yeah, I didn't intend to do that. For some reason you still can't see my posts.
Nothing coming up on public chat either. I'll send a note to the monitors.
Corporations can do as they wish, but they can also expect cheering crowds all the way to the gallows. Employees have become merely replaceable parts in a machine and the replacement parts are cheap Chinese knock-offs......
Corporations get alot of blame for doing what they are designed to do: generate profit. Nowhere does it say they need to be ethical. I'm also not surprised that they would try to push government to act in their favour. It's in their DNA, that is what they are designed to do.
The cause of America's poor shape is DC and the politicians, who are supposed to be looking out for the people, allowing themselves to be corrupted. They are the ones that are supposed to control corporate greed yet instead they are the ones that are allowing it to continue and bending over backwards for corps to screw over America, just so they can make a buck or set up their post gov careers.
People blaming corporations is as ridiculous as the guy who blames the man his wife, in this case the gov, just fucked for her cheating on him.
The idea behind ethics is that it wins in the long term.
The problem is that it's hard to verify, people can claim this or that should be done for "ethics" but can't be verified at all for twenty years, and the net present value of that is a lot smaller even if it turns out to be true. So only the big ethical items tend to be agreed upon, and even those not by everyone. Even though in principle it's a strong argument. One of the best modern examples of this is intellectual property like trademarks, patents, and copyrights and China, that basically lacked most of the laws and lacked all of the enforcement. Lacking any way to enforce their names anyway Chinese companies have no reasons to put the investment into high-quality products, that would only be knocked off by cheap imitations anyway, losing sales to the pirates. So they had a race to the bottom and Chinese citizens prefer US-named products even so, in the hope they live up to their names and aren't knock-offs. China is slowly and grudingly learning this lesson. Maybe.
I remember when they had business plans for several years out, now it's quarter to quarter and stock price rules...
Generate profit or generate value?
They are not the same thing and profits based on leverage and cheap money don't last.
Profits can be made while killing the company.
Does GE make anything any more? I would never buy anything made by GE. Once I signed up for a JC Penney credit card to get a discount at Christmas. We kept it as a low limit card to be used on the internet. As it turned out the card was actually issued by GE. What a disaster. I paid it off every month. They put holds on the payments for three weeks after they took the money out of my bank account and their customer service was awful. We got in the habit that as soon as we got someone on the phone we asked for a supervisor and then asked for the controller of the division. He was the only one with any sense and the only one that could do anything. The lower levels were apparently paid to ignore you and lie.
So, we got rid of the card after about two years.
I had a Macy's card for about 20 years. In 2008, I got a notice that Macy's had sold their card business to shittybank. The card went in the shredder that day.
Companies went off shore to reduce costs, and to take advantage of less regulations. In many ways the movement of the free market. Now there is no US income from real production. And with QE destroying any productive capital investment do not expect the US to become productive in a very long long time.
emerging markets always have "knock off" products until they master production and quality, then they become the master. Japan good example.
Look at past laws that congress enacted at the request of major corporations to enable tax advantages for moving offshore. A lot of their cheap labor wouldn't be so cheap otherwise....
The only way to reduce this trend, and it won't happen as the average American is to soft too deny him or herself something they "want", is to really boycot these companies that rake millions if not billions for the select few while people are getting thrown out of a job or working for hand to mouth wages.
Yes, there will be more people losing jobs for awhile while the top echolons fight back, but after awhile they will realize a little money is better than no money and start paying workers and thinking about them for a change instead of snooping to see if they are smoking cigarettes or weed or having a drink in their homes in non working hours.
Churn? Don't worry about churn! There's no rehiring.
What about the recent layoffs of Americans, replaced by H-1B and L-1 immigrants? The jobs are still there, just not for Americans. The H-1B love the $11/hr, and the L-1 love about half that, not even covered by minimum wage! Disney, SCE, Fossil. And that's just this week's list.
Trying to reduce complex issues into simple soundbites is usually an exercise in complete futility.
Tax and trade policies obviously have a lot to do with this. In addition, labor laws make it very difficult and, in certain cases, virtually impossible to fire dead weight employees without facing the payment of large sums of money to lawyers and years of effort. Layoffs are the only way to throw this chaff out-- by bundling them in with other people the company might actually prefer to keep.
This is not to say that corporate policies are by any means enlightened, but merely that there are many actors in the drama. Few of whom care about anything other than themselves and satisfying their immediate wants and desires even if it is at the expense of their eventual prosperity.
Hilsenrath blames stingy workers with crappy jobs (or no jobs) for being a drag on the economy. Yet I'm sure he supports TPP that will amount to a klepto-corporate union against the sheeple. In the new global corporate model employees are mundane and a nuisance.
Is this the same Honeywell that employs 127,000? And they are laying off 40? This deserves a post?
Couple of things jump out at me here:
"Until 1985 the U.S. Bureau of Labor Statistics didn't even have a category for permanent job loss. Until then the assumption was that if a company laid you off, it would rehire you when the economy picked up. That changed during the 1981-1982 recession."
This one ~screams~ for further explanation - specifically as to the importance of the time frame of '1981-1982 time frame'... What tectonic shift in the U.S. corporate/labor market took place in or about the early 1980's, that continues in earnest to this day? Anyone...?
The 2nd is this one:
"The Robin Hood Foundation."
The home page with a nice big splash of a poverty (?) stricken Black woman and her child - i.e., Blacks being synonymous with poverty... Does the paternalism/soft-racism simply go right over the heads of Black people - as if they are incapable of wiping their own ass without some do-gooder foundation helping them, when in fact their approach does nothing but enslave them further...?
I know that the term has a "branding problem". But what this country -and I would argue almost all countries- needs is a strong dose of economic nationalism. That sounds better than "national socialism". But the two are very nearly the same. Keep in mind that it was not Nazi Germany's domestic programs that posed a threat to mankind. To many, even here in America, they were an inspiration.
Back in 1910, Theodore Roosevelt outlined a program to continue the advancement of the United States as a great economic power, but with provisions that would ensure that the common citizen would participate fully in all the benefits of such progress. He called it the "new nationalism". TR was the most popular politician across the country in 1912; but the Republican Party elites rejected his populism. To this day, there are very few Republican politicians who would even dare associate their political views with those of TR.
When the cost of doing business includes so many Government paws in your pocket...
BTFATH!
Everyone knows that Immelt is a PoS, since he has been buddy, buddy with Obomber and says that the US should be more like China.
Sure, the US should be more like China if the government occasionally executes CEOs.
Who needs a job when you can take out a 2nd mortgage and invest it into stawcks?
Fuck it....Call My Job... https://www.youtube.com/watch?v=izx5YZfCgB4&list=LLBurIPj98LmRSRISVG4jDq...
Daniel Drew has the economic acumen of a flea
If your competitor has a labor cost advantage, all other things equal, you will get crushed if you don't match it.
Which is why we needed and immigration reduction and enforcement. This would have protected us in America.
That ship, however, has sailed.
Welfare has enabled the American worker to be the frog in the boiling pot.
Thay terk are jerbs!!!