The Obama Economy

In anticipation of policies promised by President-elect Barack Obama, Phoenix-based Honeywell is packing some of their bags and heading to Mexico and the Czech Republic. The Arizona Republic is reporting that 700 manufacturing jobs are heading to a more business-friendly environment starting in the 2nd quarter of 2009.

One of the key points made in the ‘s report seems to give an indication that Honeywell is making these changes as a preventative measure to avoid the likelihood of a Democrat-controlled federal government imposing higher taxes – especially on corporations:

The announcement came two days after Barack Obama, who has promised to take a hard line with companies that move manufacturing jobs overseas, was elected the 44th U.S. president.

We hate to be an “I told you so” but this is what corporations and their employees can expect as an Obama-Pelosi-Reid Triune affronts American industry with more regulations and increase cost of business.


Comments

  1. So, I guess the previous 10 months of job losses in 2008 was also due to Obama, because CEOs across the United States were able to hop in their time machines and see who would win the election?

  2. Businesses flee nations with anti-business policies. Who could have guessed?

    Command Economies always look good on paper. Too bad all our jobs are in the real world.

  3. How would moving jobs overseas help them avoid higher taxes? I could see the argument if they shut their doors and left the USA completely, but by doing this they will not benefit from the tax cut that is supposed to be offered to companies who create and keep jobs here.
    Also from the article: “In February, Honeywell moved 420 aerospace jobs overseas. In June, more jobs were lost when it sold its Phoenix-based hardware-distribution business.”
    So to follow up on The Klute’s question, how does one explain those moves that took place well before Nov. 4th?

  4. Put your economics “thinking cap” on please. Business do not pay taxes. They either shift that expense to the consumer or cut expenses. In this case, Honeywell’s board of directors anticipate higher taxes and therefore are preparing to address that expense by reducing payroll expenses and shifting those jobs elsewhere for cheaper labor. Don’t blame Honeywell’s board of directors. Their sole interest is to keep this company alive, to survive, and hopefully make money. Otherwise, what’s the point in keeping the doors open. The business climate is going to change under an Obama Administration and the entire business world knows it and is making efforts to adapt.

  5. My husband works at Honeywell. DSW is absolutely correct. In order to survive and turn a profit, Honeywell has to cut expenses now. Many people associate Honeywell with thermostats, fans and oil filters and don’t realize that virtually all of the Honeywell sites in Arizona work under the aerospace or defense divisions. A large portion of Honeywell $$ comes from DoD contracts, either directly or indirectly. So besides anticipating the higher taxes under an Obama administration, they are well aware that defense spending will be slashed and this will affect countless jobs at places like Honeywell, Raytheon, Boeing, etc. Liberals who talk about “creating jobs” are thinking about jobs they are familiar with…community organizers, government jobs, social workers…they forget about whole segments of the workforce like aerospace because they don’t know anyone who works in that field. 99% of Honeywell Aerospace employees are Republican, and with good reason.

  6. “Don’t blame Honeywell’s board of directors.”

    Of course not, DSW. Never blame the board of directors. Never, ever blame the decision makers – the people in control who fail to see past their own noses and prepare. Always shift the blame to someone else. In this case, someone who’s not even in control of the government yet.

    Don’t you get it? We tried it your way. Bush and the GOP controlled the legislative and executive branches for 6 of the last 8 years. If they failed, through their action or inaction, their inability to articulate why robber-baron capitalism was so freakin’ awesome, it is their fault. They cannot, and will not, escape their culpability.

  7. Klute,

    It’s easy to take shots at boards of directors (not to be confused with CEO’s) when you’re ideology is based on class envy. But I’m sure if you were chosen to sit on the board of directors you would be gravely concerned about keeping the doors open in a hostile business climate and especially if hundreds if not thousands of good hard-working employees would lose their jobs.

  8. Klute, the “robber-baron capitalists” WILL escape “their responsibility.” American consumers and employees will not.

    It’s hard for Dems to stick it to “The Man” when he’s lounging on a patio in Dubai. I’m sure Dodd, Frank and Emanuel’s buddies from Fannie and Freddie will also be enjoying their new oceanfront villas.

  9. DSW,

    Does anyone have any responsibility for anything any more? It is the board of directors, with the CEO’s job, to preserve the company. That means they 1. be reactive to changes, and thus be unprepared, or 2. have foresight, and plan ahead. The company I work for spent the last few years anticipating an economic downturn. As a result we have a couple hundred million cash on hand and no debt as of the earnings call 2 weeks ago. Our business is directly related to the service industry, specifically T&E. We should be tottering on on the edge, and we’re not. This is called “good business sense” and I give credit to the CEO, CFO, board, and others.

    I know the conservative slavish loyalty (pre-2008) to George W. Bush and his philosophy has precluded any notions of accountability and responsibility in looking toward our executives and their decisions, so I’ll forgive it for now. But come on…. I’m not taking shots at the board of directors – I’m asking them to do their damned jobs properly.

  10. Klute, the “robber-baron capitalists” WILL escape “their responsibility.” American consumers and employees will not.

    And you care about this why? Nothing in the last eight years has shown that the GOP gives a damn about responsibility, and in fact thinks giving these people more benefits is the best thing EVAR. Rising tide! Trickle-down! Everybody wins! Put it all on red!

    The happiest thing about this election is we’ll finally see the complete discredting of supply-side.

  11. Klute,

    You said,

    “Does anyone have any responsibility for anything any more? It is the board of directors, with the CEO’s job, to preserve the company. That means they 1. be reactive to changes, and thus be unprepared, or 2. have foresight, and plan ahead. The company I work for spent the last few years anticipating an economic downturn.”

    1. Honeywell is being reactive to change.
    2. Honeywell has the foresight and is planning ahead by cutting their payroll expenses. They are obviously anticipating that the already occurring economic downturn will be exacerbated by a Democrat-run Congress and Obama Administration.

    Let’s hope that the cash on hand that your company has is enough to weather the coming storm.

  12. “confused”

    Re: “How would moving jobs overseas help them avoid higher taxes? I could see the argument if they shut their doors and left the USA completely, but by doing this they will not benefit from the tax cut that is supposed to be offered to companies who create and keep jobs here.”

    Correct me if I’m wrong, but don’t U.S. companies get a tax credit for paying foreign taxes?

    And don’t forget that while 0bama is going to give tax breaks for corporations that move jobs back to the U.S., he’s going to tax corporations to pay for national health care. How he is going to tax and give tax breaks at the same time is yet to be seen.

  13. I read the article. Nowhere does anyone at Honeywell claim they are moving manufacturing because of the results of the Presidential elections. This appears to be a connection the reporter is trying to make but it is unclear why.

    They do state they are moving because of the current economic downturn. Truth be told, I am sure this was in planning anyway as they clearly want to move to countries were workers are paid much, much less than what then what workers are paid in the US – probably in the ballpark of 2 or 3 dollars per hour in Mexico.

  14. To use a baseball analogy – runners on base left on base when the new pitcher comes in count against the pitcher who just left – economy has been going into the tank for the past 18 months – the audience is booing the new pitcher…

  15. Could this be why the nation was fed up with the GOP?

    From Curious Capitalist this morning:

    October’s budget deficit bigger than the deficit for all of 2007
    Posted: 07 Nov 2008 03:16 PM CST

    The deficit for the 2008 fiscal year, which ended Sept. 30 was $455 billion, the Congressional Budget Office reported Friday. And the estimated deficit for the month of October? $232 billion!

    That’s if you count the Treasury’s bank capital injections on a cash basis. Use the CBO’s present-value calculation and October’s deficit drops to $134 billion. That’s still kind of a lot.

  16. Still (and probably forever) out of touch. . .

    No post at all on yesterday’s dismal unemployment numbers. Nothing on the shocking news about the American auto industry yesterday or on Thursday’s horrifying retail sales numbers.

    You just don’t get it, do you?

    The hyper-partisanship era is over. We are in an economic mess. Blamestorming may make you exorcise more of your spite and bitterness (resentment proved not to be a very good election strategy, did it?) but people of both parties and differing ideologies should come together and trade solutions.

    You offer no solutions, just blame. From my vantage point in the real world of New York City, it’s clear how pathetic the mindset behind this post is.

    Arizona is a hopeless backwater.

  17. kralmajales says

    Honeywell is likely reacting to a state that is in the toilet because of the way this legislature and the right has governed. Our infrastructure here is shot, we are living in dustbowl, no one wants to send their kids to schools that are in the lower quarter of national funding.

    I agree with Klute, you can’t possibly think or believe that the reason jobs are leaving this country is because of Democrats? YOu are total fools. This is exactly what your party favors and has always favored. Yours has always been corporate loving, suck upping, bunch of K Streeters that give break after break and subsidy after subsidy to business.

    By the way, whoever got all angry about govt. money being slashed to defense contractors ought to revist their rhetoric about American socialism. It aint Obama folks…Bush and the GOPers have handed the largest part of the budget over to companies for years…it IS socialism…it IS GOP socialism. Don’t whine if it starts to look a little more like a market.

  18. “YOu are total fools. This is exactly what your party favors and has always favored. Yours has always been corporate loving, suck upping, bunch of K Streeters that give break after break and subsidy after subsidy to business.”

    Nothing like a dose of Obamian Hope and Unity to start off your day!

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