Category Archives: Money

Companies In Mirror Are Closer To Bankruptcy Than They Appear !

Objects In Mirror Are Closer Than They Appear

OBJECTS IN MIRROR ARE CLOSER THAN THEY APPEAR

This article will be of interest to anyone replacing the rear view mirror in their General Motors (GM) or other vehicle, whether you are purchasing a replacement mirror from GM SPO, Gentex, Donnelly, or another manufacturer.

Installation information is included for Do-It-Yourselfers (DIY), including wiring harness connector pinout data.

Perhaps the most valuable tip we can give to a vehicle owner planning to purchase a replacement mirror is COMPARE PRICES !

The U.S. government can throw as many billions of dollars at General Motors as they wish, but they’re unlikely to change the fundamental problems at the automaker. Problems that have brought what was once a cornerstone of the American economy to the brink of extinction, dependent on a government bailout for it’s survival.

GM is not competitive for many reasons. They are hobbled by high labor costs. They lag in innovation, particularly in the area of electric and hybrid vehicles. In our opinion, they can’t compete with Japanese auto manufacturers on quality (or perceived quality) or customer loyalty. They’re certainly not competitive on pricing when compared to aftermarket parts suppliers. For most vehicle repairs, we think you’ll spend a lot less, and get a better job done at a private garage, then you would at a GM dealership. This might come as a shock, but in our opinion, Mr. Goodwrench isn’t.

As we’ve stated previously, we believe that their new vehicle warranty isn’t worth the paper its printed on. And GM seems to follow pricing policies usually associated with companies that sell hammers and toilet seats to the Pentagon.

Case in point…

Our GM vehicle was built with an auto-dimming electrochromic rear view mirror. Some rear view mirrors in late-model vehicles are marvels of modern technology, containing On-Star controls, handsfree cellphones, compasses, thermometers, back-up camera displays, garage door openers and other gadgets. But our mirror is just an auto-dimming mirror, with none of these other bells and whistles (see this NY Times article on these “bells & whistles”). On most of the auto dimming mirrors that we’ve seen in GM vehicles, after a few years of service, the magic liquid inside tends to leak out of the mirror. This either renders the dimming feature inoperative, fogs the mirror, or leaves it with an uneven or blotchy reflective surface.

For the past few years, the liquid crystal stuff (or whatever the chemical is) in our mirror has been leaking out, increasingly producing areas on the mirror’s surface that are either always clear or always dark. We finally decided to replace the mirror.

We checked with our friendly GM dealership’s parts department. They quoted us a price of $284.00 for a replacement rear view mirror, excluding the cost of installation.

Almost $300.00 for a rear view mirror ? Sounded awfully expensive to us, so we started to look at aftermarket mirrors. Virtually all American cars use a standard “wedge” type glass mount. The mirror attaches to a glass-mounted “button”, which hopefully stays attached to the windshield when you remove your old mirror from the vehicle.

Our search for a replacement mirror lead us to products manufactured by two predominant manufacturers of automotive mirrors, Donnelly (now called Magna Donnelly?) and Gentex (see company info). It seems that Donnelly sells exclusively to automotive manufacturers (OEMs), and not to the automotive aftermarket. Gentex sells to OEMs (probably the vast majority of their business), but they also sell their products to aftermarket suppliers (in our case, through a distributor named Mito Corporation).

We ended up purchasing a brand new, in the box, Gentex electrochromic rear view mirror that is virtually identical to our vehicle’s original mirror, for under $70.00, including shipping ! That’s less than a quarter of what General Motors wanted for a replacement mirror.

When you consider the fact that GM certainly pays much less for mirrors than the RoutingByRumor Corporation does, that probably equates to a markup of 400%, 500% or more.   What word best describes that sort of profit margin ?  “Criminal”  might be a bit too strong.  How about egregious.  How about unconscionable.  How about stupid ?  How many businesses that try to fleece their customers are able to stay in business ?  It certainly seems to indicate that GM doesn’t make their money selling cars.  They make their money (or at least they did) by selling parts and service;  Service that we’ve never been very impressed with in the first place.

The only caveat is that we had to replace the wiring harness connector that powers the mirror, because the Gentex mirror uses a 7-pin connector, while our original equipment Donnelly mirror used a 3-pin connector (our vehicle does not have auto-dimming external mirrors, and the Gentex mirror we installed does not have a temperature or compass display). But replacing the connector was a quick and easy procedure. The hardest part was getting the old mirror off of the windshield. Maybe it helped that we popped our Stevie Nicks album “The Other Side Of The Mirror” into the CD player while we installed our new mirror. To quote Stevie, “This is me talking to you. This is me talking to ya”.

The Gentex mirror we purchased came with very limited hookup information. We found the following pinout data on the Web, and we’re guessing that this information will apply to all Gentex mirrors that use a 7-pin connector.

JST "VH" Series Housing (8-pin version shown)

JST "VH" Series Connector Housing (8-pin version shown)

If you’re trying to figure out what type of connector Gentex (and Donnelly) use on their mirrors, our research indicates that the 7-pin Gentex harness connector (as well as the 3-pin harness connector on our original Donnelly mirror) are “VH” series connectors, from JST Manufacturing. Their U.S. website is at www.jst.com. View JST’s data sheet for the VH series connectors here. These connectors (and the necessary crimp terminals) are available from Digi-Key.

We’re not sure if the wiring color coding is standard on all vehicles, so we would be more concerned with the function associated with each pin on the connector (pin numbers are molded into the connector housing on the wire-side of the connector, but you might need a magnifying glass to read them).

WARNING: Before you begin working on your mirror’s wiring harness, we strongly suggest that you either pull the fuse(s) that protect your accessories (ACC, RAP, ACC1, ACC2, etc., depending on your vehicle), as well as the fuse that protects your backup lamps. In lieu of pulling the accessory fuse(s), remove your key from the ignition and open a door to deactivate the Retained Accessory Power (RAP) circuit, if present and utilized by the mirror. If you really want to play it safe, disconnect your vehicle’s battery, following your vehicle manufacturer’s recommended procedure (for your safety). This will prevent you from blowing a fuse, should you inadvertently short or ground a lead while working on your mirror’s wiring harness.


PIN # …. HARNESS WIRE COLOR …………. FUNCTION

. 1 …………….. WHITE …………………………. +12v (SWITCHED B+)

. 2 ……………. BLACK …………………………. CHASSIS GROUND

. 3 ……………. LIGHT GREEN ………………… FROM BACKUP LIGHT CIRCUIT

. 4 …………….. GRAY …………………………… TO AUTO DIM OUTSIDE MIRROR

. 5 …………….. PINK …………………………….. TO AUTO DIM OUTSIDE MIRROR

. 6 …………….. DARK GREEN/WHITE ……… TEMPERATURE PROBE

. 7 …………….. BLACK/WHITE ……………….. TEMPERATURE PROBE

Notes:

At a minimum, you must connect pins 1 & 2 (+12V & ground) for your auto dimming Gentex mirror to operate.

Not all Gentex mirrors or all vehicles will utilize all pins, but we believe pins 1 – 5 should be functional on all Gentex mirrors. If your experience differs, please let us know by posting a comment to this article.

Pin 3 is used to clear the mirror when the vehicle is placed in reverse. (DO NOT connect pin 3 to ground, since this will blow a fuse (or possibly damage your mirror) when you put the vehicle into reverse gear.)

Pins 4 & 5 are used to control outside mirrors on vehicles equipped with auto-dimming outside mirrors.

Pins 6 & 7 are used on mirrors that incorporate a temperature display. If a temperature probe is connected, either lead from the temperature probe can be connected to either pin.

Of course, your best source of information is your vehicle manufacturer, or the manufacturer of your new mirror. The above information is believed to be correct, but we take no responsibility for its accuracy.

A Volt-Ohm meter is an indispensable tool for any installer, and we recommend that you use one whenever working on your vehicle’s electrical system.


In our opinion, the auto-dimming feature of the Gentex mirror performs as well as, or better than, our original equipment Donnelly rear view mirror, even taking into account how it operated when our vehicle was brand new. We saved more than $200.00 by not buying the mirror from GM, and probably much more than that, if the dealership would have installed the new mirror for us. The Gentex mirror we purchased appears to be manufactured in the U.S.A. (see this article about their Zeeland, Michigan plant & headquarters buildings), and came with a three-year warranty. We said the Gentex mirror “appears” to be made in the USA, because the only indication we were able to find was the letters “U.S.A.” on the carton label in 2-point type. Not “Made In U.S.A.” or “Assembled In U.S.A.”. Just “U.S.A.”. We’re left to guess that Gentex may be embarrased to admit where the mirror is manufactured. If their products are indeed made in the USA, why don’t they state that fact prominently on the carton, with “MADE IN U.S.A.” clearly visible, like they are proud of it !

We always welcome the opportunity to buy products made in America. We think that buying American made goods, and supporting American workers, is the best way to repair the failing U.S. economy. The U.S. Government’s economic stimulus plans certainly won’t do that.

Let’s hope that if we should ever have to file a warranty claim with Gentex or Mito (their aftermarket distributor), that they honor their warranty better than General Motors has, on the numerous occasions that we’ve had problems with GM products.

As an aside, here’s an article we stumbled upon about another Gentex product, designed to solve one of nighttime driving’s most annoying and dangerous problems.

So the question we are left to ponder is this… Why does General Motors think it can gouge consumers for replacement parts ? If you said “because they’re General Motors”, think again. In our case, they couldn’t. And when you consider the fact that they are teetering on the verge of bankruptcy, begging for federal bailout money, it’s clear to us that their policies, including their pricing policies, are a failure. All of the GM dealerships that have gone belly-up, and those who continue to struggle to survive, in an American new car market that has all but evaporated, are testament to their failed business model. And of course, the decrepit U.S. economy doesn’t help either.

Ya know, our mention of Stevie Nicks’ album “The Other Side Of The Mirror” is quite appropos, because when our GM dealer gave us their price for a new mirror, we suddenly recalled the advice that Alice received from the Mad Hatter… “Better run for your life”.

– Routing By Rumor Continue reading

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Bloomberg Hits The Nail On The Head Regarding Economic Stimulus Plan

NYC mayor Michael R. Bloomberg

NYC mayor Michael R. Bloomberg

There was a piece on the radio this morning which discussed New York City Mayor Michael Bloomberg‘s comments about any future economic stimulus plans. Unfortunately, our searches for his comments have come up empty, but we’re guessing that he made these remarks yesterday. If we’ve misquoted Mr. Bloomberg, our apologies. We are going on our recollection of what we heard on the radio this morning.

Mr. Bloomberg (his middle name is “Rubens” – how many of you knew that?) said that the first round of economic stimulus checks the government mailed out amounted to a program that allowed Americans to go buy Chinese-made widescreen TVs at Circuit City. We couldn’t agree more. In fact, if you’ve followed RoutingByRumor, you know that we have said that the first round of economic stimulus checks amounted to little more than a subsidy for Middle East Oil producing countries, big oil and China, Inc. (You can rest assured that no matter how low the price of oil goes, no matter how much demand drops, that ExxonMobil will continue to post record profits in the quarters and years ahead.)

Franklin Delano Roosevelt

Franklin Delano Roosevelt

Mr. Bloomberg said that any future economic stimulus program should fund infrastructure projects, which would be similar to what the United States undertook to help lift the country out of The Great Depression. President Franklin Delano Roosevelt‘s Works Progress Administration (WPA) created almost eight million jobs between 1935 and 1943. Just as importantly, this New Deal agency built highways, bridges, schools and other public works projects across America that still serve our nation today. New York City has more than it’s share of crumbling infrastructure, and like other American cities, would benefit greatly from a modern-day WPA.

Mr. Bloomberg has been critical of the Federal government’s economic stimulus plan in the past. In fact, he’s been against it all along. Last February, he said the then-proposed first round of economic stimulus checks were “like giving a drink to an alcoholic”.

Athough not in relation to the current debate on future economic stimulus spending, Mr. Bloomberg appeared before lawmakers on Capitol Hill this past June, in his capacity as co-chair of Building America’s Future.   He gave this testimony about the need to invest in infrastructure projects.

At a time when there’s more layoffs in the news every day, and the scope of those job cuts are getting wider and wider (today’s news brought word of Citibank planning 10,000 job cuts worldwide), we desperately need a government program that will give American families more than fleeting relief. We need a program that will keep the economic stimulus money the government spends here at home, instead of it being an indirect subsidy for China, which doesn’t benefit American families one bit. Walmart is doing very well, thanks to American families desperate to stretch their income. There is no need to provide Americans with stimulus checks they can take to Walmart, to buy more Chinese made goods. We’ve read that something on the order of 80% of the goods on the shelves at Walmart are made in China.

There’s slim chance that outgoing President George W. Bush will try to implement a program that will put Americans to work while also rebuilding America’s infrastructure. Our hope is that President-elect Barack Obama will seize the opportunity to lift America out of hard times by proposing a program styled on Roosevelt’s WPA. If Washington is going to spend billions of more dollars in an attempt to prevent an economic collapse, doesn’t it make sense to spend it on projects that will benefit America for generations to come, while keeping our money here at home ?

– Routing By Rumor

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Circuit City Stores Files For Chapter 11 Bankruptcy Protection

This morning, Circuit City filed a bankruptcy petition (see bloomberg.com article), In Re Circuit City Stores Inc., 08-35653, with the U.S. Bankruptcy Court for the Eastern District of Virginia. If you’ve been following this blog, you won’t be surprised by today’s filing. Circuit City has had one foot in the grave for a while now (see our article from last week). See additional coverage of this story by Forbes, The Associated Press, The New York Times, Barron’s and Reuters.

The Richmond Times-Dispatch reported that last Friday, up to 800 employees at Circuit City’s corporate headquarters (more than a third of the workers there) received pink slips.

Circuit City owes well over half a billion dollars to suppliers including Hewlett-Packard, Samsung, Sony, Zenith, Toshiba, Garmin and Nikon. With bankruptcy looming, more and more vendors have refused to extend credit to Circuit City. With today’s filing, we’re pretty sure their ability to obtain terms from vendors is now pretty much non-existent. It probably also ensures that the New York Stock Exchange will de-list Circuit City, as they have already warned, if their share price doesn’t make a sustained recovery to above $1.00 a share. In early trading today, Circuit City shares have lost more than 90% of their value, falling from a lofty $0.12 per share when the market opened, and now sitting at an embarrassing two pennies a share (but that’s at least twice as much as we think its worth, so you could say its overvalued).

11/11/2008 Update…

Well, that didn’t take long. The latest milestone on the devolution of Circuit City has occured. Circuit City shares have been delisted from the New York Stock Exchange (NYSE), and are now trading on the Pink Sheets.  With all these pink slips and pink sheets, maybe pink is Circuit City’s new color.  Circuit City is now what is referred to as a “penny stock”. That light you see at the end of the tunnel just may be the oncoming Best Buy Express. Click here to get a quote on Circuit City shares (CCTYQ.PK)

Things have gone steadily downhill for Circuit City since they made the absolutely brilliant business decision in March of last year, to fire 3,400 of their most experienced employees. Consumerist.com has posted
this excellent timeline of Circuit City’s decline, titled “How Circuit City Came Undone”, which shows their declining stock price in relation to various events in their demise. The graph looks a lot like a ski slope. It’s the sort of thing they’ll probably use in business schools, when teaching a course in how to destroy a successful company.

Perhaps the saddest part of this modern day Greek tragedy is the fact that the executives who were the architects of this debacle earned millions of dollars for their role in the company’s failure. Perhaps the new scrutiny that the country’s economic meltdown is focusing on executive compensation will cause the directors of corporations to hold their executives responsible for the bad decisions they make. Here’s a suggestion… Instead of simply lavishing millions of dollars in company stock on executives, how about adding the condition that they won’t be vested unless there is a certain number of quarters of future growth. For instance, Mr. CEO, that five or ten million dollars worth of company stock won’t be yours unless the company makes money over the next two years. No more “take the money and run”. For too many corporate executives, it has been a game of “heads I win, tails I win”.

Given Circuit City’s history and reputation, the decrepit state of the U.S. economy, and the competition that exists in the consumer electronics space (especially from competitors Best Buy and Walmart), we think it’s a safe bet that Circuit City will never emerge from bankruptcy, and that’s, as Martha Stewart would say, “a good thing”. Last week, they announced the closing of many of their stores, and we wouldn’t bee surprised if more closings follow before the end of the year.

Coming at the beginning of the holiday shopping season, the closings and the bankruptcy filing might attract some bargain hunters, but let’s be honest… Who wants to make a major purchase from a retailer who may very well not be around, should you need to return an unwanted or defective purchase. It pretty much goes without saying that anything purchased at a going-out-of-business sale is sold as-is, no returns, no refunds. Caveat emptor.

We’re going to go out on a limb here, and make the following prediction; Circuit City’s Chapter 11 bankruptcy will become a Chapter 7 filing (liquidation) within six months, perhaps much sooner. Check back here to see how our prediction fares.

– Routing By Rumor

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One Foot In The Grave At Circuit City

With just three weeks to go before most of the nation’s retailers enter their busiest time of the year, Circuit City stores have announced their latest brilliant plan. They are closing 155 of their locations, spread across 28 states (Reuters and Associated Press, 11/03/2008). The going-out-of-business sales at these locations will reportedly start tomorrow, November 5th. This is the latest bit of bad news from the nation’s #2 electronics retailer, which has had mass layoffs, sales declines, and received a lot of negative publicity in the last few years (see our previous articles about Circuit City’s problems, here, here, here and here).  With the closing of these Circuit City locations, thousands more Circuit City employees will join the ranks of the unemployed.

This should be viewed as an emergency amputation, as opposed to a pruning. When you have a healthy core, but too much growth in the branches, you prune, to keep the rest healthy. When there is systemic disease that causes necrosis at the periphery, you amputate. Other large retailers that have been proactive in difficult times tend to close just a handful of their worst performing locations, and they’ll do it after their peak selling season. Retailers that make ill-timed cuts, and who do it with an ax instead of a scalpel, tend to suffer from poor management or a lack of management. They usually don’t act until it’s too late. We believe the current debridement occuring at Circuit City falls into this category.

The fact that Circuit City could not wait until after the holiday selling season to close these stores speaks volumes about just how bad things are at the Richmond, Virginia-based electronics retailer. Indeed, with a stock price that has traded as low as 17 cents a share in recent days, and notification last week from the New York Stock Exchange that their stock is subject to de-listing, things can’t get much worse. Some of their suppliers, fearing that Circuit City is on the verge of bankruptcy, are refusing to ship merchandise to Circuit City unless they are paid cash up front. Consumers, hard hit by the recession, and disgusted with Circuit City, are spending any money they may have, elsewhere. Even with the announced closings, some analysts are predicting that Circuit City will be forced to liquidate or file for bankruptcy by January.

As bleak as things are at Circuit City, you still hear people saying that they are exploring “strategic alternatives” (see Business Week, 11/03/2008). We will submit to you that when you’re on the verge of bankruptcy, sales have dried up, vendors are demanding cash, your stock price is measured in pennies rather than dollars, you’re forced to close hundreds of stores, and the nation is in the grip of a deepening recession, you don’t have any “strategic” alternatives. The choices seem to be declaring bankruptcy now, or trying to hang on a little longer and declaring bankruptcy a few months from now. If Circuit City is pinning their hopes for survival on having a banner Christmas season, they’re in for a terrible shock. Even relatively healthy retailers are bracing for a dismal end to a dismal year, and the U.S. economy doesn’t seem poised to roar back to life anytime soon.

Circuit City’s woes spell opportunity for it’s competitors. It appears that the nation’s largest electronics retailer, Best Buy, will likely snap up some of the locations being vacated by rival Circuit City.

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Have You Driven A Ford… Lately ?

Well, if you have, better check your tires.

Or your tires’ valve stems, to be more specific. Those are the rubber and brass stalks that you connect an air hose to, when inflating your tires. See this article about the problem (Detroit News, 10/22/08). Here’s an investigation by WCVB-TV in Boston, which claims there may be up to 30 million potentially defective valve stems in use. Who is responsible for all this ? Blame August Schrader, at least indirectly.

WCVB-TV)

A valve stem exhibiting cracking (photo: WCVB-TV)

FoMoCo, or The Ford Motor Company, the automobile manufacturer that gave America what this Wikipedia article calls “the barbecue that seats four”, the exploding Ford Pinto of the 1970’s, is back in the news because of another possible safety problem.

It seems that at least 1.05 million 2007 model year Ford vehicles, including a dozen different Ford models, may have been assembled with Chinese-made rubber valve stems that are falling apart after about a year of use. Apparently, Shanghai Baolong Automotive Corp. (a subsidiary of Topseal Auto Parts), the Chinese company that made them for Ford, might have had a quality problem which allows the rubber to dry out and crack after being exposed to the atmosphere for a few months. The National Highway Traffic Safety Administration (NHTSA) has been investigating the problem since at least early September, meeting with Ford officials on Sept. 10. The NHTSA has asked Ford for information about the valve stems, but is not requiring a response from Ford until early next year.

Ford has acknowledged complaints from vehicle owners, but would not say how many reports they have received involving possibly defective valve stems. They have also said that they don’t think it is a safety issue. Well, if you’re not a driver of, or a passenger in a Ford vehicle, we would probably agree with them.

Here’s a report sent to the NHTSA by a Massachusetts company that looked into the valve stem problem. From reading their report, which contains comments from affected vehicle owners, it would appear that the company, Safety Research & Strategies, Inc. of Rehoboth, Massachusetts, was retained by the NHTSA to look into the problem, but we are not certain that this is the case.

It’s never a good thing when your valve stems decide to let loose while you’re traveling down the highway at 65 MPH. Come to think of it, there’s probably never a good time for your tires to suddenly go flat. For the sake of anyone traveling in a Ford vehicle, hopefully any leaks will be minor, and will be noticed before causing a catastrophe.

The bean counters at Ford that decided they could save 2 cents (or whatever) on each valve stem if they bought them from China, must be mighty proud of themselves. Now, at a time when the American automobile industry is already hurting big time, Ford may end up having to spend tens or hundreds of millions of dollars to recall more than a million vehicles, to replace parts that cost a few pennies each. Then there’s the public’s loss of trust, which will probably cost them much more than that. Smart. Real Smart.

We don’t mean to single out Ford for what may be foolish cost cutting. We’re sure the entire American auto industry is guilty of similar bad decisions.

Despite the fact that you can see and touch the valve stems to inspect them, if large numbers of vehicles require valve stem replacement, it will be a logistical and financial nightmare for the companies involved. It will require removing all of the tires from the vehicle, including the spare, dismounting the tires from the wheels, removing and replacing the valve stems, remounting the tires on the wheels, balancing all of the wheels, and then reinstalling them on the vehicle. There’s no shortcuts to the process. And where do you get five million high quality valve stems in a hurry ? Tire shortages are another possibility, if valve failures or recall campaigns result in large numbers of tires being replaced as a result of the problem.

In addition, if defective, damaged or worn tires are present, we would think that remounting them on a vehicle could pose a liability issue for Ford or any other company doing the recall(s). Telling an owner that brings in their vehicle for a set of no-charge replacement valve stems that they will have to spend six, seven or eight hundred dollars for new tires is sure to create big problems, even if it’s absolutely true and necessary. And with the economy the way it is, you can bet there are plenty of Americans riding around on tires that have seen better days.

If Ford ends up recalling more than a million vehicles to replace the valve stems, it will be interesting to see where the replacement parts come from. Will Ford have learned a lesson, and use American made valve stems, or will they just buy a couple of million more Chinese valve stems? Nothing would surprise us.

It also wouldn’t surprise us if this potential problem is not limited to 2007 model year vehicles, or to vehicles manufactured only by Ford. It might even involve any vehicles that have had new tires installed in the last few years, since tire dealers will normally replace the valve stems when installing new tires.

That hissing sound you hear coming from your garage just might not be a snake, after all.

– Routing By Rumor

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Hanesbrands Ships Even More American Jobs To China !

..And some people wonder why the American economy is on life support.

Hanesbrands, Inc., the North Carolina based clothing manufacturer best known for their Hanes, Champion and Playtex brands, has given up on more American workers. Two weeks ago, they announced the elimination of more than 8,000 jobs, or 12% of their payroll, and the closing of nine plants in five countries. The job cuts will include 1,300 workers in North Carolina alone. If you’re looking for work in China, you’re in luck. But if you’re looking for work in North Carolina, tough luck. Hanesbrands expects to hire 2,000 employees in China by the end of the year. They’re also building a new textile fabric plant in Nanjing, China.

What wonderful news for the American economy !

Hanesbrands is giving up on workers in Central America as well, including Costa Rica, El Salvador and Honduras. Apparently, not even low paid workers in these countries can compete against China. While it looks like most of these jobs are going to China, the company also said they will be moving production to plants in Vietnam and Thailand. It’s probably just a coincidence that these may be some of the worst countries on earth, in terms of worker exploitation (see “Secrets, Lies and Sweatshops“, Businessweek, 11/27/2006).

Al Norman over at The Huffington Post has written an excellent piece about Hanesbrands’ abandonment of American workers. He puts the blame squarely on retailers like Walmart, and the consumers that flock there looking for cheap goods. In fact, he calls Walmart “the travel agent for Hanesbrands”.  Also check out our article from last December, “The Walmartization Of America“.

Take a look at Hanesbrands’ CEO Richard A. Noll’s total annual compensation at Forbes.com. We would have less of a problem with the top management at a company receiving obscene levels of compensation if they were able to provide employees with secure jobs, and pay them decent wages. We’ve read opinions that most all CEOs at U.S. corporations are good, decent, intelligent people, and we trust that Mr. Noll fits that profile. But when large numbers of your employees are getting pink slips, and you are closing many of your factories, it seems to us that the pain should be shared by the most highly compensated employees at the company. If top management doesn’t see fit to spread around the pain, then the company’s directors should address the issue. Come to think of it, if Hanesbrands’ manufacturing is moving to low-cost places like China and Vietnam, perhaps their CEO position should move there also, to be closer to their workers. You could probably find a very capable CEO in Ho Chi Minh City, who would take the job for about 50 cents a day.

Do you think it’s possible for someone like Mr. Noll to comprehend the impact of the plant closings on an employee who has spent their entire career in a North Carolina textile factory, and is now told that their job is being sent to China? If you do the math, it would seem that if Mr. Noll and other executives at Hanesbrands took a modest cut in their annual compensation, Hanesbrands could afford to keep at least one of their North Carolina plants open, and many of their loyal employees on the payroll. It would sure be interesting to hear some of their soon-to-be-jobless employees’ opinions on the subject. Obviously, making tons of money is nice, but at some point, doesn’t the voice of reason (or perhaps conscience) tell you what the morally right thing to do might be ? Dining on Prime Rib is nice, but we would have trouble swallowing if we were surrounded by people who were starving to death. It’s also all about loyalty, which seems to be in terribly short supply in the American workplace, in the executive suite, as well as on the factory floor.

We believe, and we’ve written previously, that the loss of jobs and manufacturing capacity in the United States is at the root of our current economic woes. The withering stock market, the banking and real estate crisis, the credit crunch, the decrepit state of the U.S. auto industry and the weak U.S. dollar are all symptoms of an economy decimated by companies who have abandoned the American worker, in search of profits in places like China.

You know, those cheap Hanes socks, underwear or other garments at your local department store may not be the bargains they appear to be. Actually, you might not be able to afford the type of bargain that Hanes is offering !

Let’s say that you’ve had it with companies that have moved their manufacturing to China. This mom did, and she decided to boycott all Chinese-made goods for one year. She is a reporter, and wrote about her quest, in “A Year Without China: One Mom’s Fruitless Quest To Boycott China”. Her experience is quite interesting, and includes a futile attempt to avoid Hanes products made in China.

Last week, we were reading the New York Times, when an ad practically jumped off the page at us. With the title “Even The Rope We’re Hanging Ourselves With Is Made In China”, it echoes our feelings about what is wrong with the U.S. economy. A play on Lenin’s quote “The capitalists will sell us the rope with which we will hang them”, to be sure, but also very true with regard to the state of the U.S. economy.

The “rope” ad is from an organization we had never heard of, called The Institute For America’s Future. We urge you to visit their website at www.ourfuture.org. They are warning America about exactly the same things we’ve been writing about; the trade deficit, the exporting of American jobs, the loss of manufacturing capacity, and the dependence on foreign oil.

Doctor Bush and his band of merry economists can throw 700 billion band-aids at the problem, but that will have little effect. The patient is hemmorhaging, and unless the source of the bleeding is addressed, all the band-aids in China (or all the tea in China) won’t save the patient. President Bush has recently resorted to his emergency “fireside chats” with the American public, making his morning televised appearances to try and reassure the nation in the face of the economic meltdown. We think we can safely say these little pep talks have done nothing to calm Wall Street, or reassure the man on the street. They are too little, too late, from an American President who really doesn’t seem to get it.

And look at the $85 billion bailout of AIG, a company in such bad financial shape that they could afford to squander close to a half-million bucks on an “executive retreat” at a California resort, just days after lawmakers signed off on their bailout. But then, when your rich uncle is writing you a check for $85 billion, that hotel tab probably looks like pocket change. Talk about laughing all the way to the bank. It’s like giving a few bucks to a homeless person begging on the street, who then uses your money to hire a limo to take them to the welfare office. If AIG’s behavior isn’t criminal, it certainly should be.

And of course, when Robert Willumstad, the Chief Executive at AIG (he lost his job a day after the federal bailout was announced) is hauled before lawmakers on Capitol Hill, and asked to justify the squandering of money on a “retreat” at a California resort, which included $23,000 spent on spa treatments for AIG employees, he understandably pleads ignorance, telling the House Oversight and Government Reform Committee that he was “not familiar with the conference”.

In the last week or so, we’ve witnessed what historians will refer to as “The Stock Market Crash Of 2008”. The crash, proceeded by the economic epidemics of layoffs, home foreclosures and bank failures would seem to indicate to reasonable people that the U.S. economy, at the very least, is in a recession. In response to the crumbling economy, the U.S. government has taken unprecedented action to shore up banks, insurance companies and investments such as money market mutual funds. Yet, the Bush administration cannot bring themselves to using the “R” word. The Bush administration is in denial.

Good luck to the presidential candidate who will inherit this mess 100 days from now. Whichever candidate that happens to be, we think their first order of business, their top priority, must be to bring American jobs back to America, and to address the trade deficit and our dependence on foreign energy.

– Routing By Rumor

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Quote Of The Day: Ben Bernanke

Henry Paulson, Ben Bernanke, and Christopher Cox testifying before the Senate Banking Committee on Tuesday (photo: Dennis Cook/AP on msn.com)

And no, despite any resemblance, that is NOT a photo of the Three Stooges. A definite case can be made, however, that Mr. Bernanke is surrounded by “speak no evil” and “see no evil”.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, SEC Chairman Christopher Cox and Federal Housing Finance Agency Director James Lockhart testified today before the Senate Banking Committee, about the Bush administration’s $700 billion financial industry bailout plan (see Associated Press article).

As incredible as this sounds, Mr. Bernanke told lawmakers that “you risk a recession with higher unemployment and increased home foreclosures unless you act“.

Risk a recession ?

Could someone tell us what they’re smoking down there in Washington?

What planet is Mr. Bernanke living on ?

If we’re not in a recession, then perhaps the U.S. economy will simply skip the recessionary phase, and just sublime directly into a depression (we’re awfully damn close). We suppose that would be more energy efficient.

We’re kind of surprised that Mr. Bernanke could be so out of touch with average Americans that he doesn’t realize what horrific shape the economy is in. He has spent most of his career in academia, so the isolation of the ivory tower could have something to do with it. And while he has a net worth in excess of $1 million, he earns less than $200,000 a year as Fed Chairman. With the cost of living in the DC area, that’s probably not enough to live a real lavish lifestyle. So, you would think that even if he isn’t your average working stiff, and he probably hasn’t lost his home to foreclosure or gotten a pink slip lately, he would appreciate just how much the average American family is hurting because of the R-E-C-E-S-S-I-O-N.

Does Mr. Bernanke really believe that a recession is still only a threat at this juncture? It makes us wonder if there might be something in the water in Washington that could be affecting the judgment of our nation’s leaders. On the other hand, he might be under considerable pressure to sing the company song, even if he disagrees with the lyrics. It does beg the question; just how bad must things get before the Bush administration acknowledges we’re in a recession. Would they ever admit it under any circumstances ?

If we’re not in at least a recession (or worse), why is the economy on life support, and why are all of these banks, investment houses and insurance companies going belly up ? And why are the markets so unstable, with one-day 400-point drops on the Dow becoming commonplace, and oil shooting up $20 in a day. And why are so many companies laying off thousands of employees each ?

If this ain’t a recession, what is it ?

A correction ?

A mild downturn ?

A slight dip ?

Turbulence ?

A pre-recession, kind of bumpy ride, but not quite a recession sort of thingy ?

A __________________. (fill in the blank with your own description)

As far as Mr. Bernanke’s warning of “higher unemployment and increased home foreclosures”, you mean it could actually get even worse than it is now ? Really ?

Something to look forward to, huh ?

– Routing By Rumor

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