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More Jobs Shipped Out Of The Country: Ford Moves All Small Car Production To Mexico

ford-assembly-line-photo-by-gilly-berlinWhat is going to happen when America finally doesn’t have any manufacturing jobs left at all?  On Wednesday, we learned that Ford Motor Company is shifting all small car production to Mexico.  Of course the primary goal for this move is to save a little bit of money.  This hits me personally, because my grandfather once worked for Ford.  He was loyal to Ford all his life, and he always criticized other members of the family when they bought a vehicle that was not American-made.  When I was young I didn’t understand why making vehicles in America is so important, but I sure do now.  By shipping jobs overseas, we are destroying jobs, we are destroying small businesses and we are destroying our tax base.  If we want to be a wealthy nation, we have got to make things here, and hopefully we can get the American people to start to understand this.

In 1914, Henry Ford decided to start paying his workers $5.00 a day, which was more than double the average wage for auto workers at the time.

One of the reasons why he did this was because he felt that his workers should be able to afford to buy the vehicles that they were making.  This is what he wrote in 1926

“The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”

These days Ford is going in the complete opposite direction.  Pretty soon, Ford won’t be making any more small vehicles in the United States at all

Ford is shifting all North American small-car production from the U.S. to Mexico, CEO Mark Fields told investors today in Dearborn, even though its plans to invest in Mexico have become a lightning rod for controversy in this year’s presidential election.

Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States,” Fields said.

Could Ford keep jobs in America?

Of course they could.  During the second quarter of 2016, Ford reported a net income of 2,000,000,000 dollars.

But if they move production to Mexico they can boost that profit just a little bit higher.

Shame on them.

Needless to say, Donald Trump is quite upset about this move by Ford.  This was his response

“We shouldn’t allow it to happen. They’ll make their cars, they’ll employ thousands of people, not from this country and they’ll sell their car across the border,” Trump said. “When we send our jobs out of Michigan, we’re also sending our tax base.”

And he is exactly right about all of this.  We can’t afford to lose more good paying jobs, we can’t afford for the middle class to shrink any more than it already has, and we certainly can’t afford our tax base to continue to deteriorate.

We may think that we can live on borrowed money indefinitely, but that is going to catch up with us in a major way at some point.

Sadly, Ford is not the only auto company doing this.  Just like Ross Perot once predicted, there is a giant sucking sound as good paying auto jobs leave the United States and head to Mexico

Ford isn’t alone. Fiat Chrysler Automobiles said earlier this year it will end production of all cars in the U.S. by the end of this year as it discontinues production of the Dodge Dart in Belvidere, Ill. and the Chrysler 200 in Sterling Heights, Michigan.

In recent years, automakers that include General Motors, Honda, Hyundai, Nissan, Mazda, Toyota and Volkswagen have all announced plans to either expand existing plants or build new ones in Mexico.

The bad news for American workers won’t end once all of our manufacturing jobs are gone.

Today there are millions of Americans that make their living by driving, but the revolution in self-driving vehicles threatens to make large numbers of those jobs obsolete.

Ford, General Motors, Tesla, Google, Apple and a whole host of other big corporations have been feverishly working on this technology, and many of the tests have gone very well so far.

Once this technology starts being rolled out on a widespread basis, the job losses could be absolutely staggering.  Just consider the following numbers which come from Wolf Richter

  • 1.8 million heavy-truck and tractor-trailer long-haul drivers in 2014, expected to grow 4% a year (BLS), with a median pay of $40,260 in 2015. At this growth rate, there will be 1.94 million long-haul drivers by the end of this year.
  • 1.33 million delivery truck drivers in 2014, expected to grow 4% a year (BLS), with a median pay of $27,800 in 2015. They’re picking up and/or delivering packages and small shipments within the city or region, driving a vehicle of 26,000 pounds or less, usually between a distribution center and businesses or households. At this growth rate, there will be 1.44 million drivers by the end of this year.
  • 233,700 taxi drivers and chauffeurs in 2014, growing at 13% annually (BLS). They earned a median pay of $23,510 in 2015. One in five worked part time. This doesn’t – or doesn’t fully – reflect the “rideshare” drivers working for Uber, Lyft, and the like.
  • “Over 500,000” rideshare drivers are estimated to ply the trade in the US. It’s a high-growth sector: the number of Uber drivers in the US doubled in 2015 from the prior year to 327,000. Half of them worked 15 hours or less per week.

In order to have a thriving middle class, we have got to have middle class jobs.

Unfortunately, big corporations have become absolutely obsessed with finding ways to eliminate expensive American workers by sending jobs overseas or by replacing them with technology altogether.

The elite will always need people to cut their hair and wait on them at restaurants, but those aren’t the kinds of jobs that can support middle class families.

As I noted yesterday, for the first time ever the middle class in America has become a minority and poverty is on the rise all over the nation.  The long-term trends that are eviscerating the middle class are accelerating, and there doesn’t appear to be any quick fix which will turn things around dramatically any time soon.

So the middle class is going to get smaller and smaller and smaller, and that has dramatic implications for the future of this country.

12 Signs That The Economy Is Really Starting To Bleed Oil Patch Jobs

Oil Rig Texas - Public DomainThe gravy train is over for oil workers.  All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips.  There are even some people that I know personally that this has happened to.  The economy is really starting to bleed oil patch jobs, and as long as the price of oil stays down at this level the job losses are going to continue.  But this is what happens when a “boom” turns into a “bust”.  Since 2003, drilling and extraction jobs in the United States have doubled.  And these jobs typically pay very well.  It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing.  The middle class is struggling mightily as it is.  And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy.  So if you think that it is tough to find a good job in America right now, you definitely will not like what comes next.

At one time, I encouraged those that were desperate for employment to check out states like North Dakota and Texas that were experiencing an oil boom.  Unfortunately, the tremendous expansion that we witnessed is now reversing

In states like North Dakota, Oklahoma and Texas, which have reaped the benefits of a domestic oil boom, the retrenchment is beginning.

“Drilling budgets are being slashed across the board,” said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s Bakken oil patch.

Smaller budgets and less extraction activity means less jobs.

Often, the loss of a job in this industry can come without any warning whatsoever.  Just check out the following example from a recent Bloomberg article

The first thing oilfield geophysicist Emmanuel Osakwe noticed when he arrived back at work before 8 a.m. last month after a short vacation was all the darkened offices.

By that time of morning, the West Houston building of his oilfield services company was usually bustling with workers. A couple hours later, after a surprise call from Human Resources, Osakwe was adding to the emptiness: one of thousands of energy industry workers getting their pink slips as crude prices have plunged to less than $50 a barrel.

These jobs are not easy to replace.  If oil industry veterans go down to the local Wal-Mart to get jobs, they will end up making only a very small fraction of what they once did.  Every one of these jobs that gets lost is really going to hurt.

And at this point, the job losses in the oil industry are threatening to become an avalanche.  The following are 12 signs that the economy is really starting to bleed oil patch jobs…

#1 It is being projected that the U.S. oil rig count will decline by 15 percent in the first quarter of 2015 alone.  And when there are less rigs operating, less workers are needed so people get fired.

#2 Last week, 55 more oil rigs shut down.  That was the largest single week decline in the United States in 24 years.

#3 Oilfield services provider Baker Hughes has announced that it plans to lay off 7,000 workers.

#4 Schlumberger, a big player in the energy industry, has announced plans to get rid of 9,000 workers.

#5 Suncor Energy is eliminating 1,000 workers from their oil projects up in Canada.

#6 Halliburton’s energy industry operations have slowed down dramatically, so they gave pink slips to 1,000 workers last month.

#7 Diamondback Energy just slashed their capital expenditure budget 40 percent to just $450 million.

#8 Elevation Resources plans to cut their capital expenditure budget from $227 million to $100 million.

#9 Concho Resources says that it plans to reduce the number of rigs that it is operating from 35 to 25.

#10 Tullow Oil has reduced their exploration budget from approximately a billion dollars to about 200 million dollars.

#11 Henry Resources President Danny Campbell has announced that his company is reducing activity “by up to 40 percent“.

#12 The Federal Reserve Bank of Dallas is projecting that 140,000 jobs related to the energy industry will be lost in the state of Texas alone during 2015.

And of course it isn’t just workers that are going to suffer.

Some states are extremely dependent on oil revenues.  Just take the state of Alaska for instance.  According to one recent news report, 90 percent of the budget of Alaska comes from oil revenue…

But oil is also a revenue source in more than two dozen states, especially for about a third of them. In Alaska, where up to 90 percent of the budget is funded by oil, new Gov. Bill Walker has ordered agency heads to start identifying spending cuts.

Sadly, it looks like oil is not going to rebound any time soon.

China, the biggest user of oil in the world, just reported that economic growth expanded at the slowest pace in 24 years.  And concerns about oversupply drove the price of U.S. crude down another couple of dollars on Monday

Oil declined about 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

U.S. crude, also known as West Texas Intermediate or WTI, settled 4.7 percent lower at $46.39 a barrel, near its intraday bottom of $46.23.

There is only one other time in history when we have seen an oil price crash of this magnitude.

That was in 2008, just before the greatest financial crisis since the Great Depression.

Many believe that we are now on the verge of the next great financial crisis.

I hope that you are getting ready.

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

Boom Goes The Dynamite - Public DomainIf you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer.  As I write this, the price of U.S. oil is sitting at $45.76 a barrel.  It has fallen by more than 60 dollars a barrel since June.  There is only one other time in history when we have seen anything like this happen before.  That was in 2008, just prior to the worst financial crisis since the Great Depression.  But following the financial crisis of 2008, the price of oil rebounded fairly rapidly.  As you will see below, there are very strong reasons to believe that it will not happen this time.  And the longer the price of oil stays this low, the worse our problems are going to get.  At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before.  So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead.  Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008.  You can see both crashes on the chart below…

Price Of Oil Since 2006

If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.

But that didn’t happen, did it?  Instead, we plunged into the deepest recession that we have seen since the Great Depression.

And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.

Already, we are seeing oil rigs shut down at a staggering pace.  The following is from Bloomberg

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.

The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.

But that was just the beginning of the carnage.  61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.

For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs.  Just check out what is happening in Texas

A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.

Unfortunately, this crisis will not just be localized to states such as Texas.  There are tens of thousands of small and mid-size firms that will be affected.  The following is from a recent CNBC report

More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.

A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”

If the price of oil makes a major comeback, the carnage will ultimately not be that bad.

But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.

That would mean a junk bond crash unlike anything that Wall Street has ever experienced.

And as I have written about previously, a stock market crash almost always follows a junk bond crash.

These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.

Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.

At this point, industrial commodity prices have hit a 12 year low.  I am talking about industrial commodities such as copper, iron ore, steel and aluminum.  This is a huge sign that global economic activity is slowing down and that big trouble is on the way.

So what is driving this?  The following excerpt from a recent Zero Hedge article gives us a clue…

Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.

Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).

Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.

Unfortunately, starting in mid-2014, it did in a big way.

This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.

Once again, much of this could be avoided if the price of oil starts going back up substantially.

Unfortunately, that does not appear likely.  In fact, many of the big banks are projecting that it could go even lower

Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.

“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”

OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this.  Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

The oil producing countries in the Middle East seem to be settling in for the long haul.  In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”

Never is a very strong word.

Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?

Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.

It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…

Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.

Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.

They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.

The fundamentals for the price of oil are so much worse than they were back in 2008.

We could potentially be looking at sub-$50 oil for an extended period of time.

If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.

So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.

Will The Bottom Fall Out? 15 Signs That Layoffs And Job Losses Are Skyrocketing

If you still have a good job, you might want to hold on to it very tightly because there are a whole bunch of signs that unemployment in the United States is about to start getting worse again.  Over the past several weeks, a substantial number of large corporations have announced disappointing earnings for the third quarter.  Many of those large corporations are also loaded up with huge amounts of debt.  So what is the solution?  Well, the favorite solution on Wall Street these days seems to be to lay off workers.  In fact, it is almost turning into a feeding frenzy.  Since September 1st, we have seen more job cuts announced than during any other two month period since the start of 2010.  These announcements represent future layoffs and job losses which are not even showing up in the unemployment numbers yet.  So needless to say, things don’t look very promising for the end of 2012 or for the beginning of 2013.  If this race to eliminate jobs becomes a stampede, will we see the bottom fall out of the employment market?

If you are concerned about whether or not you will still have a job 12 months from now, you might find the numbers posted below to be quite alarming.  We have not seen layoff announcements come this fast and this furious since the gloomy days of the last recession.

According to Bloomberg, job cuts are well ahead of the pace set last year…

North American companies have announced plans to eliminate more than 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.

So what happens if the economy really starts sliding rapidly and this loss of jobs becomes an avalanche?

Can the U.S. economy and the American people handle another major economic downturn?

Some of the biggest names in the business world have announced job cuts in recent weeks.  The following are 15 signs that layoffs and job losses are skyrocketing…

1. Dow Chemical has announced that it will be closing about 20 plants and will be letting about 2,400 workers go.

2. Colgate-Palmolive has announced that they will be eliminating about 2,300 jobs.

3. DuPont has announced plans to eliminate about 1,500 jobs.

4. Ford has announced that it will be eliminating 6,200 jobs and will be reducing production capacity in Europe by 18 percent.

5. Hewlett-Packard announced last month that they plan to eliminate 29,000 jobs.

6. Chip maker AMD has announced that they will be getting rid of about 15 percent of their workers.

7. Sony has announced plans to reduce their workforce by about 2,000 workers.

8. Electronics manufacturer Sharp reportedly plans to eliminate 11,000 jobs.

9. Engine maker Cummins Inc. has announced that they plan to get rid of about 1,500 jobs by the end of 2012.

10. Earlier this month Applied Materials announced a plan that will eliminate up to 1,300 jobs.

11. Zynga (known for making video games for Facebook such as FarmVille) has announced that they are reducing their workforce by about 5 percent.

12. Lattice Semiconductor has announced plans to eliminate about 13 percent of their jobs.

13. Alcatel-Lucent recently announced a plan to eliminate more than 5000 jobs all over the globe.

14. Siemens AG has announced that the number of positions being eliminated may reach 10,000 by the end of the year.

15. Banking giant UBS plans to eliminate up to 5,000 jobs.

Please keep in mind that these job cuts do not show up in the unemployment numbers yet.  When big corporations announce the elimination of jobs, it often takes a while before those job losses actually take place.

Sadly, I believe that this is just the tip of the iceberg.  I am convinced that the layoffs and the job losses are going to get a lot worse.

In fact, 2013 is already shaping up to be a very difficult year for the economy no matter how the election turns out.

Those of you that read my articles regularly already know that our economic system is becoming increasingly unstable.  We could literally plunge into another major recession at any moment.

Not that we need any more economic trouble.  Tens of millions of American families are having to fight tooth and nail just to make it from month to month right now.

There aren’t enough jobs and the middle class is rapidly shrinking.  Even if you do have a job, that does not mean that you are doing okay.  About a quarter of all jobs do not even pay enough to lift a family of four above the poverty level, and entry level wages for those with just a high school education have been steadily declining over the past 40 years.  If you doubt this, just check out this chart.

So what is going to happen if we do have another avalanche of job losses like we saw back in 2008 and 2009?

Will even more of us end up dependent on the government?

We are told that we are in the midst of an “economic recovery”, but the number of Americans that are dependent on the government just continues to soar.  In fact, at this point it is at an all-time high.

If the economy is getting better, then why does the number of Americans on food stamps just keep going up?  To get an idea of just how massive the food stamp program has become, just check out this infographic.

One of the most frightening things about the possibility of another major economic downturn is the loss of hope that it could bring.

At this point, most Americans still believe that things will get better eventually.

But what is going to happen when large segments of our population lose all hope?

How desperate will they become?

When people become desperate, they tend to do desperate things.

Just check out what happened to a family down in Woodstock, Georgia the other day.  They had just lost their home to foreclosure, and they were getting ready to move out.  So they posted an ad on Craigslist for people to come over and get some things that they were planning to get rid of.  What happened next is a glimpse into the kind of desperate behavior that we may see during the next major economic downturn…

Their online post was just a well-meaning ad for a giveaway in their driveway outside the small house, a giveaway scheduled to begin at 10 a.m. Wednesday.

But big crowds showed up and ended up taking practically everything inside the house, too.

Wednesday night, Michael Vercher walked 11Alive’s Jon Shirek through his family’s almost empty soon-to-be former home.

“Well, when we got to the house, I mean, pretty much — this,” he said as he stepped from the foyer into the living room.

Their home — ransacked, ravaged, raked over.

Almost everything inside — gone.

My wife and I once used Craigslist quite a bit, but incidents like this make one question the wisdom of inviting strangers to come to your home.

Sadly, the truth is that society is rapidly decaying, and the worse unemployment becomes the more desperate people are going to get.

So what do you think about all of this?

Do you have any stories that you would like to share?

Please feel free to post a comment with your thoughts below…

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