As the year winds down I wanted to look back at what, for me, where the 3 major local news events of 2007. They all seem to have one thing in common; we will still hear plenty about them in 2008.
So without further ado, part one of my 2007 review trilogy:
Philip Morris closes it's Concord manufacturing plant.
On June 26, 2007, Altria, The parent company of cigarette-maker Philip Morris, announced it will close its Cabarrus County factory by 2010. The production of 57 billion cigarettes will already be moved out of Concord by the end of 2008.
The 2.4-million square foot plant is the County’s third largest employer with about 2,500 workers.
Philip Morris paid nearly $5 million in taxes to Concord in 2006, so besides the massive loss of jobs in our area there will also be a significant impact on the city’s budget. Philip Morris is also a big contributor to local charities and arts projects.
The chance of finding another manufacturer that employs upward of 2,500-2,600 people paying the kind of wage that people at the cigarette plant are currently earning, apparently about about $29 per hour on average, is almost non-existent.
An idea that you often hear is that the site, instead of having one big factory on it, might be home to a future business park with a big group of small to medium size businesses. There don't seem to be any concrete plans yet that I know of.
Altria plans to get $174 million for the sale of their buildings and huge parcels of land on both sides of Highway 29. I'm hoping that they don't sell off every square foot of the massive 2,000-acre Philip Morris site for future development, but that the County and/or City manage to reserve part of the space for a big public park or nature preserve on this huge piece of land. But with our local crop of politicians who seem to only worship the almighty growth I might be hoping for a bit too much.
You don't have to worry about Philip Morris. Don't believe for a minute that they had to close the Concord plant because they're in some financial trouble or they're losing a lot of business.
Philip Morris USA made $4.6 billion in profits in 2005 alone.
The CEO of Altria Group makes $37 million a year.
Friday, December 28, 2007
2007: Back to the future (1)
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22 comments:
Don't believe for a minute that they had to close the Concord plant because they're in some financial trouble or they're losing a lot of business.
What I heard was that could potentially lose a lot of business - particularly in Europe. By moving production there, they get around many of the EU's restrictions.
So, if we had more free trade - we might still have the PM plant. Kind of a different line than your guy for congress has been selling of late.
If they move production to Europe, then why are they saying that they hope to give all the folks working in Concord a new job in Virginia? Are they going to make the same amount of cigarettes there with a much bigger group of workers? Guess they won't have to work very hard then...unless of course they're going to up production in Virginia and they just wanted to add a few hundred million to the billions in profits they're already making by consolidating their factories. But no, multinationals wouldn't do that, they only have the well being of all their workers in mind.
And when it comes to more free trade, if you think that Hayes is all for that I'm guessing you haven't heard him talk about China the last few years. You see, after it turned out that all the posturing about trade with Central America was total baloney and everyone saw what Hayes really is and was, Bush's little lapdog, he just switched his rhetoric to China. Of course that's just all posturing as well, because at the same time the lead tainted toys just kept flooding in and I'm sure that when Bush calls again he'll just flip right on over. bow wow!
If they move production to Europe, then why are they saying that they hope to give all the folks working in Concord a new job in Virginia?
I'd like to see a reference to the article where they promise a job in Virginia to all of the workers.
And when it comes to more free trade, if you think that Hayes is all for that I'm guessing you haven't heard him talk about China the last few years.
He isn't selling nativist tripe like your guy and Edwards are that the jobs in Pillowtex were lost because of NAFTA.
"He isn't selling nativist tripe like your guy and Edwards are that the jobs in Pillowtex were lost because of NAFTA."
Actually "your guy" said that exact thing or at least made the link between NAFTA and the closing of pillowtex in Kannapolis:
"What does CAFTA sound like? NAFTA ... Every time I drive through Kannapolis and I see those empty plants, I know there is no way I could vote for CAFTA."
Of course 2 weeks later he was casting the deciding vote that let CAFTA pass. Talk about a flip-flopper.
"I'd like to see a reference to the article where they promise a job in Virginia to all of the workers."
Your wish is my command. They don't say all but "most". In that statement Altria says they need most employees from Concord moved to Virginia because they are going to increase production there.
So they need most employees from Concord and they're going to increase production in Virginia.
They must not be losing too much of a market share then no?
The reason they close Concord and move a part of the production to Europe is because one of the most expanding markets for cigarettes is in Eastern, former communist, Europe and it is of course a lot cheaper for Philip Morris to produce the cigarettes close to where they are going to be consumed. So don't make it look like it's the fault of anti smoking campaigns that the Concord plant is closing, like Robin Hayes does, but be honest and give people the real reason: A big multinational wants to make a few hundred million in extra profit on top of the billions they are already making.
Actually "your guy" said that exact thing or at least made the link between NAFTA and the closing of pillowtex in Kannapolis
But he made the right decision in the end.
CAFTA is good for the parts of the 8th district economy that are growing (services, advanced manufacturing, etc.). There are no trade restrictions that will help the parts that are dying (textiles)
Trade restrictions cost jobs, if you don't believe me. Well...
it is of course a lot cheaper for Philip Morris to produce the cigarettes close to where they are going to be consumed.
Not quite. If so, we wouldn't have most of our stuff made on the other side of the world.
PM risks market share by not having production in Europe largely because of trade restrictions in Europe.
PM made a business decision that was in response to trade policy. And this is the important point, if we elect Democrat protectionists - like Edwards and Kissell; our markets will be less open to foreign goods. That will close foreign markets to our good and services; and that will be bad for the economy not just here - but across the world.
The implications of trade restrictions go beyond CEOs of multinationals, there are many farming communities across that world that would flourish if we would phase out our trade barriers and subsidies when it comes to agricultural products.
As for China, their economy is still very centralized which makes immediately opening up to them much more dangerous overall than opening up to the economies in Latin America. In addition to that, China has been involved in wholesale currency manipulation.
So, it's a little more complicated than slogans and sob stories of plant closings.
Alright, I'll tell a friend of mine who's been working for Philip Morris all his life and now has to pack up his whole family and move to Virginia to keep his job, that you think this is just a sob story and it's just a price we have to pay for the almighty free trade. I'm sure he'll agree.
Sorry Thierry, but I never read where your friend had the right to work at doing whatever he wanted to, wherever he wanted to. While the BCT Union has a REALLY strong contract, I doubt it's in there.
You're forgetting that your friend DOESN'T have to move anywhere he doesn't WANT to.
And you can really thank Edwards and his buddies at the Trial Lawyers Lobby for the drastic reduction in US smoking. This is just a nasty side effect of liberal nanny state.
Furthermore, I love hearing folks with little responsibility complaining about how much people with extremely heavy responsibility make for a living.
IF you had to decide whether to keep your billion dollar company economically viable by moving or losing market share by staying I doubt you'd be willing to risk your job and the jobs of thousands of others for 10 bucks an hour. It's called market based compensation... Something that doesn't exist in the union your friend works in...
Sorry Aaron, I have no clue why you're bringing up a union. I never said anything about my friend belonging to a union and I'm sure a union didn't decide to close the Philip Morris plant.
I'm sure by now we all know how much you hate unions, but that's not what this post is about.
You're right, my friend doesn't have to move if he doesn't want to, he'll just lose his job if he doesn't.
And yes it's of course the liberals fault that Philip Morris is closing, because they're the only ones that say smoking kills. Blaming the closing of Philip Morris on Edwards is the same kind of logic I could use to blame Robin Hayes for the thousands of people that die every year because they smoke.
You seem to miss the whole point of the discussion. My whole point is that Philip Morris does not have to be closed for Altria to remain an economically viable company. I'm sure that Altria themselves won't even say that their company would be in trouble if they didn't close the Concord plant.
I'm saying they're closing the plant in order to make a few hundred million more profit on top of the billions they're already making.
Which bring us to your allegation that i seem to have a problem with people being paid more if they have more responsibility. I don't have a problem with that at all.
The problem I have is that all reason seem to be lost in the compensation of some of these CEO's.
If they're really just paid on the basis of their responsibility, can you then explain to me why the salary of the President of the United States is $400,000 a year, plus some expense accounts, and the salary of the CEO of Altria is $37 million a year?
Last time I checked Altria didn't control any nuclear weapons...
Happy New Year!
Alright, I'll tell a friend of mine who's been working for Philip Morris all his life and now has to pack up his whole family and move to Virginia to keep his job, that you think this is just a sob story and it's just a price we have to pay for the almighty free trade. I'm sure he'll agree.
The point - that you're missing - is that if trade were freer: he wouldn't have to move. It's trade restrictions in Europe that motivated PM to move.
Also, my family has had to move numerous times and I travel extensively because of work situations - so, I don't consider that a sob story.
"It's trade restrictions in Europe that motivated PM to move."
The point that you're missing is that it's not.
They're hoping to move most of their employees from Concord to Virginia and they're significantly increasing production there. Conclusion: they must not be moving too much to Europe. Unless you're going to say that they're is an increase in smoking now all of a sudden.
Actually, one of the reason's they are moving their employees is exactly because they are exporting the manufacturing of foreign markets to those foreign countries. The Concord PM plant was manufacturing for both domestic sales and exports.
Hence they are moving the Concord Domestic manufacturing to Virginia and the Export manufacturing to the foreign country. So yes, they will increase production in Richmond and Yes, they will produce in wherever they're moving to in Europe but no, there hasn't been any increase in smoking.
Furthermore, unless your friend is in management he is in fact in a union. That's all they have there in terms of Craft Employees.
"I'm sure a union didn't decide to close the Philip Morris plant."
Actually, when they ask for wages 300% higher than those of non union companies in the same industry and benefits paid for from day one until the day you die and lest we forget the pension program in addition to a 100% match for 401k AND 24 paid vacation days per year then yes, actually a union can do a damn good job of forcing a company to export production to foreign countries.
The sad thing is that none of the employees have any say in it. It's left up to Union presidents in cushy offices with 30 years time in to decide whether the employee is willing to take a 3 dollar an hour pay cut in order to keep his job.
As for the Edwards thing: Well Robin is a douchebag but he has never actually sued to get smokers the right to kill themselves. Edwards buddies have sued the tobacco companies for over 500 billion dollars in the past 12 years when there has been a warning on the box since the early 70's. Add to that the increasing anti smoking lobby that wants it made illegal to smoke in your own house and you can see why the comparison makes more sense.
Trial Lawyers+Stupid People+ Stupid Juries= Frivilous Lawsuits being won=decrease in domestic smoking= increased incentives for US cigarette manufacturers to move operations overseas (Where there is a bigger, less restrictive and less litigious market)
Robin Hayes=Dumbass.
Sure,both equations are logical but what does the latter have to do with Concord PM?
As for your comparison to the president and CEO's: Companies MAKE money and the Government Takes and Spends money. That's the biggest difference. There is no need for government to be competitive, streamlined or effective. Because unlike a private company, if you don't pay for their services, they can have you incarcerated.
Careful Thierry, you keep making connections like that you're liable to end up a libertarian like me!
short snappy response:
Yes he's in management and the highly unlikely union example you gave doesn't have anything to do with Philip Morris, so there's the end of that union discussion.
"It's left up to Union presidents in cushy offices with 30 years time in to decide whether the employee is willing to take a 3 dollar an hour pay cut in order to keep his job."
It's left up to CEO's in cushy offices to decide whether the employee is willing to uproot his wife and kids and leave friends and family behind in order to keep his job.
And the comment that "the anti smoking lobby wants it made illegal to smoke in your own house", is just ridiculous. "Those people" just have a problem with running the risk of dying by being forced to inhale someone else's smoke.
Just like its not illegal in this country to own a gun, but it's just a little bit illegal to kill somebody else with it.
Let's rephrase that one paragraph to:
It's left up to CEO's in cushy offices to force an employee to decide whether he is willing to uproot his wife and kids and leave friends and family behind in order to keep his job.
They're hoping to move most of their employees from Concord to Virginia and they're significantly increasing production there. Conclusion: they must not be moving too much to Europe. Unless you're going to say that they're is an increase in smoking now all of a sudden.
Maybe I'm too optimistic; but ff they can teach dolphins algebra - liberals can learn economics.
Demand for cigarettes in Europe is going up creating a growing market
Demand for cigarettes in the US is going down that's a shrinking market.
There are barriers to the growing market in Europe to cigarettes produced outside of the EU. Therefore, PM will put future production in Europe.
In response to the shrinking demand, PM is reducing their supply in the US by consolidating their production to Richmond.
There's not a one-to-one relationship between the number of workers and the number of cigarettes produced; but PM is consolidating their production to one facility to save domestic production so it can put capital in foreign operations.
This strategy is enabled - in part - due to trade restrictions in Europe.
Is PM doing this to increase profits? You bet.
You wouldn't want to work for an organization that doesn't try to grow and respond to the market - regardless of the convenience of never locating...just ask any Pillowtex worker.
"Maybe I'm too optimistic; but ff they can teach dolphins algebra - liberals can learn economics."
You're too optimistic.
Just like I was too optimistic trying to teach conservatives to have emotions.
Emotionalism is just the liberal equivalent of castration.
Seriously, you're making these comparisons as though if the CEO had taken a 20% pay cut everything would have been fine and they could have kept the plant here. Maybe if they'd eliminated their dividend they'd be able to save even more money. Sure the employee's retirement savings would've tanked but hey, we don't concern ourselves with the big picture. Just what's obvious to the blind, deaf and mute.(Oh and my 5 year old)
Sorry, but I was just joking there! :)
My five year old has watched the entire Free to Choose series on DVD. She knows better!
Seriously though,
Maybe the Maintinence guys could've taken a 20% pay cut and only made 25 bucks an hour then the same utopian system would be possible. Maybe your friend could've offered to sell back his stock at 10 cents a share and then they could've re-sold them at market rate to make some money. But neither happened. So here we sit.
I'll leave you with this: I know lib's love to bash "corporations" but the word "corporation" is just a legal term that indicates the type of company it is and it's legal liability. It's all people. The Share Holders, The Employees and the Customers are all people. So when you're trash talking the "corporation" your really trashing the people who make up the corporation...
It's fun to put a blanket over something and bash it with a shovel but it's less fun to take the blanket off and reveal that what you're bashing is your new car...
Just like I was too optimistic trying to teach conservatives to have emotions.
Thierry, nobody is saying that PM moving is a good thing for Concord or anyone in it. The fact of the matter is it's reality and we all have to deal with it.
As far as plant closings go, the circumstance are milder than the string of bad news coming from the Big Three during my formative years in exile in Detroit and it's a better deal than the "Gone in 60 Seconds" circumstances that the Pillowtex workers got. Your friend is getting a relocation package - the Pillowtex workers had to fight to get a portion of what they were owed.
We don't always get to make decisions from emotion.
Aaron,
I didn't know you were a communist. The employees owning the corporation?? When did that happen?
I though you didn't like unions, and they just organize employees. Having employees own a corporation seems to go a little further than that. Ask any worker at Philip Morris if he feels he owns part of the company and I'm sure he'll ask you what you've been smoking.
All I wanted to point out is there's not just a big, but an enormous gap between the income of a regular employee and the income of the CEO of a multinational.
There should of course be a difference in pay, and it might even be big. But to me it looks like all reason has been lost when it comes to CEO pay, severance packages etc.. and I'm pretty sure that a majority of the population would agree with me on that.
No matter what their PR firm says, I'm sure that the CEO of Altria didn't even think for a minute about what the closing of the plant in Concord meant for this area and his employees. He might have been worried how the decision looked to the general public from a publicity standpoint, but I'm very sure he wasn't the least bit concerned about the "little people".
Which brings me to the emotion point I was making.
I'm not saying that business decisions should be based totally on emotions, but I'm saying that emotion should play a part in decisions like this, even if it's a small part.
Right now I'm sure they don't play ANY part.
That's what I believe and no you can't make me believe otherwise.
That's what I believe and no you can't make me believe otherwise.
Are you quoting Plato?
I'm very sure he wasn't the least bit concerned about the "little people"
Do I believe that the CEO of my company cares about me personally and frets over my well-being specifically?
No. He's got people who do that to an appropriate level.
I think it's a bit ridiculous to believe that everyone needs to care about your every need in any organization.
The PM news is bad for a lot of people; but it could be worse. We'll get a lot more worse news if we make decisions to "protect" markets by building barriers instead of becoming more competitive in the world market.
But, I'd love to hear how we can "feel" our way out of that situation.
"Are you quoting Plato?"
No, I'd be more likely to quote Pluto.
"I'm pretty sure that a majority of the population would agree with me on that."
I'm sure they would. Like you, they've drank the "Zero Sum- It's not my fault" koolaid. The reality is that the homeless guy and the factory worker just didn't plan on being a CEO when they were kids. Hell, I'm in that group but I don't get huffy about what someone else makes for a living. That's the mainstay of the democrat party: Get "poor" folks pissed off at rich folks.
"but I'm saying that emotion should play a part in decisions like this, even if it's a small part."
It no doubt did play a small part. If the CEO and BOD runs the company into the ground then everyone's out of a job. If they post 30% losses then the retiree's and soon to retire folks get shafted by having no pension and a 401k worth less than their investment.
It's fun to put the blame on invisible legal titles and "mean" CEO's but yes, the people do own the company. The stock holders own it. Find me a PM employee who doesn't own any stock and I'll shake his hand. You won't find one. If you want a larger say, buy more shares. That's all there is to it.
Communists don't own anything. There are no property/individual rights. The communist countries like to use the word "people" in their logos and stuff but if the employees decided to take a day off of work a bunch of jack booted soldiers would take them out back and shoot them.
It would however be interesting to see a company truly run by it's production line employee's though. I'd give it 6 months before they went out of business.
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