Why the Private Sector Still Isn't Hiring

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Cheryl Merchant ... runs Hope Global, a Cumberland (R.I.) company founded in 1883 as a textile mill that now manufactures niche items like shoestrings for Timberland (TBL) boots, auto parts for Detroit, and weather stripping for home renovators. Situated on the banks of the Blackstone River, closely held Hope Global was slammed by the recession in 2008 and 2009, laying off 25 percent of its 590 employees and shutting operations in Detroit, France, Ireland, and Brazil.

Today, business is rebounding: Revenue in 2010 rose 10 percent, to about $50 million, after falling from about $55 million in 2008. Still, Merchant isn't ready to start hiring again. "I'm not going to bet on the economy," says Merchant, 47, Hope Global's CEO since 1999. "I'm not putting in people believing it's going to happen. It's got to happen first." Meantime, she's "taking care of the people who are here" by restoring a 5 percent pay cut and benefits such as paid holidays.

Merchant's attitude mirrors those of CEOs across the country.

...

If Merchant hires this year, it will be largely at Hope Global's plants abroad. She added 20 workers in Mexico in December. If the economy picks up, she hopes to open a plant in Shanghai to make knitted steel that's used to reinforce the rubber seals of car doors and trunks. "People ask me how I maintain an American company," she says. "We're not doing it with a wall around ourselves. We're doing it by being global."

And for now, that means hiring new U.S. workers isn't a sure thing. "We're very solid. The banks love us," Merchant says. "You start adding a bunch of headcount without the sales, and all you're doing is taking from your bottom line."

http://www.businessweek.com/magazine/content/11_04/b4212022530815.htm

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It will take a while before small business owners start spending risk capital. The latest news of oil exceeding $148/barrel in an already weak economy will have a damping effect on consumer spending overall. Energy costs will overwhelm any concerns over healthcare shortly as the EPA continues to shut down domestic production of coal and natural gas.

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Energy Surging into Producer Price Index Future

Since the Great Recession, the Producer Price Index (PPI) has been irrelevant. Whatever price increases occurred – the supply chain simply absorbed. Price increases for the most part were not passed on to the consumer.

In the December, 2010 PPI release there is a big slug of increased costs in the pipeline, energy (aka fuel for your car, boat, truck, train – and, for many, fuel oil to heat their house). Because margins are small in the distribution chain, this cost will end up appearing in the CPI. The headlines from the press release:

The Producer Price Index for Finished Goods rose 1.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.8 percent in November and 0.4 percent in October and marks the sixth straight rise in finished goods prices. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 1.0 percent, and the crude goods index increased 4.0 percent. On an unadjusted basis, prices for finished goods advanced 4.0 percent in 2010 after climbing 4.3 percent in 2009.

Three-quarters of the increase in the finished goods for the PPI are from energy. The PPI YoY increases have been in the 4% range for 2010.

The big price change this month in finished goods (other than energy) within the finished goods of the PPI were vegetables and fruits (up 15% to 23%) and eggs (down 16%).

http://marketplayground.com/2011/01/13/energy-surging-into-producer-price-index-future/

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from this morning...

A Business Roundtable survey of CEOs of large companies found that 45 percent plan to increase U.S. employment in 2011, while 18 percent would cut jobs. (In the 2009 fourth quarter, by contrast, only 31 percent said they'd increase U.S. jobs in the next 12 months.) But you can't always take CEOs at their word. What they do matters more than what they say. And there are some anecdotal signs that the bosses are putting some of the huge amount of idle physical and human capacity back to work.

• Ford, coming off one of its most profitable years ever, said that it would "add more than 7,000 new hourly and salaried jobs" in 2011 and 2012, including 1,800 at a plant in Louisville.
• Target on January 12 announced it would open 21 stores over the course of 2011.
• On January 7, aluminum giant Alcoa said it would fire up idled manufacturing units at three aluminum smelters in New York and Washington by the end of June, "creating approximately 260 new jobs through recall and hiring."

To be sure, plenty of big companies are still shedding jobs, as chronicled by the Web site dailyjobcuts.com. Borders and MySpace have been among the large employers to announce jobs cuts in recent days. But reopenings and expansion announcements are serving as an antithesis to the steady drumbeat of job cuts. The reason: higher demand for some crucial goods and services, from abroad and from home.

http://finance.yahoo.com/news/Are-Big-Companies-Finally-dg-568314080.html?x=0