Bloomberg reports that Emerson Electric, the massive $21 billion manufacturing conglomerate, is raising the white flag and moving offshore.
Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas.
“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.”
Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in “best-cost countries” up from 21 percent in 2003, according to slides accompanying his speech.
Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said... “We as a company today are putting our best people, our best technology and our best investment in these marketplaces to grow,” he said. “My job is to grow that top line, grow my earnings, grow my cash flow and grow my returns to the shareholders. My job is not to shrink and roll over for the U.S. government."
Farr's complaints echo a private missive I received in July from a veteran M&A specialist.
My clients are all entrepreneurs having built successful businesses with sales of $5 million to $50 million. My prospective buyers are typically companies with sales of $50 million to $200 million. Every one of these companies (buyers and sellers) today shares these common denominators:
1. Their businesses are down 10, 20% or more.
2. They have either laid off staff or have reduced hours to 4-day weeks trying to keep key staff.
3. They have reduced their own salaries and in many cases have implemented “cross the board” salary reductions.
4. They (for the first time in their lives) have no ability to forecast beyond 4 weeks.
5. They see nothing good on the horizon that would benefit them re: sales, cost reduction, efficiency, etc.
...My hope is to at the very least to try to sell these 5 businesses [information redacted]... Prospects are slim. M & A deals are down (depending on the source) anywhere from 60% – 80%. I used to receive 20 – 40 inquiries from buyers every week. I now receive a handful a week.
...Any private business owner would be insane to sell his business now. He will be hit with excess taxes and so many unknown consequences. Do you know that part of the “Cap and Trade” bill includes a provision that if you sell your house, it must conform to new “green standards” which reportedly could cost a seller many thousands of dollars? How many unknown consequences are built into a 1,300 page bill that no one has read?
Any future seller prospects that I encounter, I will urge them to continue operating their business and take from the business everything that they can legally do for as long as they can. They are far better off. It is quite likely that I will have to revisit some of my existing clients and tell them the same thing... something that I dread.
I am so outraged as to what is happening to our country. This is no longer a political issue [because] we will all lose. We are all casualties of the new paradigm. There will be many more as we continue into a morass that will take generations to recover, if we can. Be it “Cap and Trade”; government-run health care; TARP; bailouts; “stimulus”; business takeovers, etc.; our future is being controlled by bureaucrats and politicians who never, ever, ever ran a business and knew the “gut-check” of filling out and paying their “941’s”.
How could they know how to create a job? Throwing billions at states and municipalities with payoffs to unions, lobbyists and partisan sectors? Sadly, the worst is yet to come with job losses, cost increases, inflation, etc. Just look at the job numbers released today.
Forgive my blathering. I went through the 50’s, the 60’s, the price restrictions and gas shortages of the 70’s, the 22% interest rates into the 80’s, the many frustrations of the 90’s, etc. They all pale in comparison to what we face now. Whether it’s “tea parties”, a realization by the silent majority of what is happening, or some miracle that stops this ongoing disaster, I hope and pray for an awakening. I think we can make it and I only hope that my children and grandchildren are as fortunate as we were to continue to have opportunities.
The Democrats' plans are succeeding. They want to reduce our 'carbon footprint', presumably to stop the current spate of warmal colding. They want to eradicate private industry and private employment. As for proof, consider their serial attacks on doctors, the health care industry, the coal companies, the pharmaceutical companies, the oil companies, the refiners, you name it.
Who could possibly hire in this environment? The economy is flat on its back because Obama and the Democrats put it there; and their policies continue to suck the life out of the most productive members of society. And those members will continue to abandon ship.
If you're looking for relief in the unemployment numbers, don't hold your breath.
Hat tips: InstaPundit and Mark Levin.