Category Archives: Business

All One

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We who write editorials and particularly we who rant on blogs know in our hearts that we stand alone in the wilderness, baying at the moon. On the other hand one of my correspondents noted, “Six days and you have not opined via blog. You are a disgrace to the whole of blogdom.”

Alrighty, then. It is indeed Monday. Here it is.

Radio guy Josh Mothner ranted about one of my pet peeves this morning: our gummint in its infinite wisdom has decided to solve the credit crisis by … wait for it … borrowing money.

Sheesh.

I am not an economist. I do not even play one on television. It seems obvious to me, though, that our economists are a wee bit warped. The world economy is tanking because the American economy tanked. The American economy tanked because we lost faith in it. We lost faith in it because a bunch of bankers decided to rip us off. That bunch of bankers decided they could rip us off because we live on tomorrow. We live on tomorrow because we want that bright and shiny object right now. We want that bright and shiny object now because we’ve learned we don’t have to pay for it. We got into this mess by our own avarice.

When you borrow money against your house to pay off your credit card, sooner or later you have to sell your house.

$700 billion and climbing.

Not even Bill Gates and Warren Buffett together has that in their combined piggy bank. And we can’t just print it.

Oh. Wait. I know! We’ll issue more Treasury notes. We’ll borrow it!

Let’s see. The banks don’t have enough money to lend to their customers so their customers can buy more stuff from companies that depend on the banks to borrow money from.

So tell me again exactly where the $700 billion and climbing will come from?

Oh. Wait. I know! We’ll borrow it!

It is interesting that, in the middle of the borrowing fever, the number one radio advertiser on that morning radio show is … Rolex. Bright and shiny object anyone? Unfortunately nobody listens to Mr. Mothner, either.

I wish, Dick wrote plaintively, that someone other than the Man in the Moon took these brilliant analyses to heart. There is a chance for a curmudgeon like me, though. I found out today that I’m going to be Andy Rooney when I grow up. See, I’m already growing his eyebrows.

Toilet Paper

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The University of Vermont announced recently that it will “go green,” at least in the toilet paper department. The college has eschewed the once-beloved super puffy Charmin in favor of an unbleached, 100% recycled fiber product approved by the Forest Crimes Unit, a student group.

I have a long, personal history with toilet paper but not as long as my dad did. He went to work for Scott Paper Company right out of college, exactly one week before I was born. He toiled in Export Sales for Scott until 1968.

He was a company man through and through. We used ScotTissue and Scotties and even ScotTowels which are pretty bad paper towels. He once tore up a box of [Kleenex] he found in the home of a manufacturer’s rep who sold Scott products in Africa. Now, of course, Kimberly Clark owns Scott. Despite that, I still use ScotTissue because it is the most benign product for septic tanks. I like the price, too, although the size of the “squares” (they are actually rectangles now) gets smaller and smaller.

Scott Paper brought the first rolls of toilet paper to market. The company was founded in 1879 by brothers E. Irvin and Clarence Scott who specialized in producing paper for privies and later for toilets. At first they purchased paper and tissue from outside suppliers, then cut, rolled and packaged the paper.

Early Scott advertisements suggested that “over 65% of middle-aged men and women suffered from some sort of rectal disease.” Inferior toilet paper, the ads proclaimed, was responsible because “harsh toilet tissue may cause serious injury.”

Kids have no sense of history.

You, dear reader, may wonder why I wrote about toilet paper instead of the “bailout” this week. Simple. I thought I could avoid weighing in again on this (latest)(greatest) Congressional financial scam. After all, I’m not an economist. I’m not a national expert. I don’t even have a mortgage.

OK, that last is not entirely true but it is a small, fixed rate note with a good bank that is not in trouble. It has about 5 years left on its term.

One of the pundits said the Congress critters don’t want to “reward bad business behavior.”

Horse puckey. Congress critters do that all the time, for themselves and for anyone whose sphere of influence they inhabit. The bankers and other financial peeps lied, cheated, and stole. Period. Their actions–and this latest bailout–has put three generations of Harper magic in the crapper while said financiers walk off with the perfume. Writing about toilet paper makes more sense than anything else you see on teevee.

These kids have no sense of history, but I repeat myself.

Spinning the Entire Planet

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This column looks at media spin.

First, the backstory: ExxonMobil, the most profitable company in the history of mankind, made an $11.68 billion profit this quarter on the back of General Motors which lost $15.5 billion.

“America’s oil and natural gas industry earns less than many others…” That’s the televised gospel according to “the people who bring you oil and natural gas” (that would be API, the American Petroleum Institute).

Hello? Are they on the same planet you and I inhabit?

Oh. Wait.

The API planet spins backwards!

Naturally they do have statistics to back up their claim, shown in their television ad in the form of a handy bar chart of earnings per dollar of sales in the First Quarter, 2008:

Pharmaceuticals 25.9
Beverage and Tobacco 17.8
Computer Products 13.7
All Manufacturing 7.6
Apparel and Leather 7.5
Oil and Natural Gas 7.4
Food 5.0
Furniture 3.0

[In the interest of full disclosure, I own some ExxonMobil stock.]

CEO Rex Tillerson announced that my company is, out of the largest profit in corporate history, paying one of the smaller dividends (~2%) in corporate history. On the other hand, Mr. Tillerson buys back shares like mine with all their extra cash and raised my dividend a whopping nickle while the investment he makes in production and exploration plummets.

That stock buyback at about $80 per share sucked up some $8 billion of the quarterly profit. They bought $30 billion in stock last year and have (so far) reduced the number of shares outstanding by about 400 million shares. I can see no reason that it helps me when Mr. Tillerson takes the stock out of play. It helps someone, though. At the current rate, ExxonMobil will buy back all of its shares and become a totally private company in just 14 more years.

Huh.

Just to show I am not playing favorites, Royal Dutch Shell’s second-quarter earnings were nearly as high as Exxon’s with a profit of $11.56 billion. That was 33% higher than Shell’s profit of $8.67 billion in the same period last year. Shell is half the size of Exxon.

Wow. $11.68 plus $11.56 billion in three months. Profit. Just two companies.

Profit that usually goes to the shareholders.

API states it is the only national trade association that represents all aspects of America’s oil and natural gas industry. Their 400 corporate members are the producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies. They represent the largest major oil company to the smallest of independents. They spin the news for companies like ExxonMobil, Royal Dutch Shell, Chevron, and more. By the way, Royal Dutch Shell has a stock buyback program. Chevron has a stock buyback program.

ExxonMobil did beat its own record for the highest profits ever by a U.S. company but the $2.22-per-share profit announced still led to a $3 decline in the share price.

I originally thought that Mr. Tillerson might have wished API had not spun the profit as such a small number.

That wasn’t right.

Mr. Tillerson, unlike every CEO in American history, wants his stock price to fall. The lower the price and higher the profits the more stock ExxonMobil can buy back.

See how well spinning backwards can work?

Some Assembly Required

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My bank insisted the other day that I get new checks. They had changed their routing numbers in 1997 or so and really wanted me to spend my money with something that didn’t screw up their machinery.

They also wanted me to pay for the new checks but I declined. After all, I didn’t change the routing numbers.

They paid for the checks which arrived from Deluxe today.

I do most of my banking online so I write very few checks any more. Not only that, since all the banks were forced to accept colorful (and inexpensive) checks from sources like Checks-R-Us-In-The-Mail, I haven’t bought anything from Deluxe since about 1978. Taken together, I’m thinking the near-captive check printing operations like Deluxe are the buggy whip manufacturers of the 21st Century and that the days of even independents like Checks-R-Us are numbered. Imagine a wry grin at that. Our writer friend Alma in Washington state would thwap me.

Someone at Deluxe got the bright idea that they would save money by shipping the checks with a flattened box.

“Let the customer assemble the box and we’ll save money,” that Deluxe genius thought.

And it was so.

Understand that the cardboard pre-box had been printed, cut, folded, glued, and taped together by machines at the factory. Then the (flattened) pre-box and the little stacks of bound checks were bundled loosely into an envelope to be mailed.

I don’t see the savings.

After all, the cardboard pre-box could have been printed, cut, folded, glued, and taped together as a box shape by machines at the factory and the little stacks of bound checks could have been put inside the box!

I’m a mechanical engineer with an actual diploma and everything. I have built a boat from scratch and gotten it out of the barn. It even floats. I can put the top up on one of Carroll Shelby’s original Cobras. I can even program my VCR. I just spent half an hour folding and gluing and taping this darned box together.

Bean counters. Bah.

At least the couple of hundred checks they sent will likely last my lifetime. Or until the next routing number change.

America needs trucks

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I’m not a carpenter, but I do haul sheets of plywood. I’m not a garbage man, but I do haul trash to the dump. I’m not a yardman, but I do tow my broken down tractor around. I need a truck.

My op-ed in the Detroit Free Press was an open letter to Bob Lutz, Vice Chairman and general visionary of Global Product Development at GM.

Dear Bob Lutz, I wrote:

GM needs to lead the market. You can touch the real heart of America with GM innovation. If you can put a 30-m.p.g. truck in the showroom this year and build the new 35-m.p.g. truck for 2011, the rest of the product line would fly again. Read the entire op-ed here..

We’re dying here. GM has to do something.

So. Anybody know how to get to Mr. Lutz? If so, send him a copy, would you?