CEOs playing the blame game
It's OK for executives to sound off against the government -- if they deliver the goods regardless.
We all know that Washington, D.C., has become the enemy of business. Its pro-labor orientation, its insistence on more regulation (including environmental rules that are expensive to comply with) and its regular bashing of businesses like banking and tourism (think Vegas or the private jet industry) hurt new hiring and business formation.
No one can fault business people for grousing about how Washington has become a big impediment to corporate profits. But does that mean everyone has the right to blame Washington for weaker returns? Does it mean that chief executive officers should be sounding off about Washington headwinds on their conference calls?
First, I never mind hearing it. When so many leftists are demanding that big businesses hire more people here, you want execs to point out that when Boeing (BA) decided to build a new plant in a state that's not that hospitable to unions, South Carolina, the National Labor Relations Board went after it with hobnail boots.
Can you blame companies for wanting to build factories overseas to contain labor costs rather than subject themselves to the government's attempts to help unions organize?
If President Barack Obama believes part of his job is to help unions organize at a time when businesses are trying to figure out where to expand, you have to expect, at a time of tremendous globalization, that the new plants will be built in countries more hospitable to the best returns on investment. It's business, not patriotism, speaking. No goodness of the heart either -- not with public shareholders.
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I especially don't mind when execs who triumph despite the government sound off about it. You had to admire Steve Wynn, an old Democrat who built Wynn Resorts (WYNN) into the greatest casino company on earth, when he criticized the government for driving his expansions elsewhere. I got a kick out of it when he praised the Communist Chinese for being more capitalistic than our own country's regime.
I also like companies that say they make money despite Washington's predilections, as PPG's (PPG) terrific CEO Chuck Bunch said Tuesday night on "Mad Money."
But I am not comfortable with someone like David Farr, the CEO of Emerson (EMR), who has missed earnings projections for three straight quarters, sounding off on Washington as one reason business isn't as good as it should be. I think you lose your standing to carp if you haven't executed well, and Emerson has certainly executed poorly compared with others in its cohort.
Don't get me wrong. I thought Farr made sense in his warnings about what's wrong in Washington. But I want to know what's wrong at Emerson. When you blow the quarter away, not only do you get bragging rights, but you get grousing rights. However, when you don't meet expectations, the complaining just doesn't sit well with me.
If Farr crushes the numbers next time, I won't mind hearing that the government is in the way. Until then, the whines feel like alibis to me. Steve Wynn, sound off all you want. David Farr, save it for when you're winning.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network’s sites.
Follow Cramer's trades for his Charitable Trust.
> contain labor costs rather than subject themselves to the government's
> attempts to help unions organize?
A big resounding YES. That kind of short term thinking is beyond foolish. Driving their own customers into poverty and then wondering why business is so bad... that's what today's executives are doing.
Not that it's a surprise. Back when I was in college what struck me most was the intellectual chasm between students of hard sciences and business majors. We put the dimwits in charge, now we get what we deserve.
Cramer, close up shop, you're through. You said yesterday or the day before to go on a buying spree, just before the market fell off a cliff that has been clearly been coming via technical analysis.... or at least the risk has been there and has now come true.
Are you delivering the sheeple's money to your hedgie buddies, or are you just bipolar? My guess is both.
You're done, my friend.
I agree with Cramer in part, but would go further. It is fine for management to make "gobs" of compensation; BUT let them pay respectable taxes. Since we are currently in 2 wars, I wonder what they would say about the level of taxes during WWII--90% as I recall reading.
Perhaps unions can be abusive, but who else is there to stick up for the working persons?
Fortunately we have a President who is doing his best to right a bad situation, but I question his efforts to "carry water on both shoulders".
Hopefully all of us can retain our "day jobs" in these troubled times.
GALL
@ Seattle
Cramer lost his cred in late 2008 when he declared the recession over just as it was getting started; then during the same time he called a 'buy,buy,buy !' on Bank of America
when it was starting to come back , ignoring its bad mortgages, and the purchase of Countywide. B of A's stock price hasn't gone anywhere. Heck. I'm an amateur and knew enough not to make statements like that.
I want our corps. to do swimmingly well, both here and abroad. I want them to innovate instead of just sitting back and holding onto cash. Where is the leadership in that? We have real problems in this country, but where are the solutions? All those entities who were bailed out... Where is their contribution now, after all those record profits? When do they repay their debt and show some responsibility to the entity that gave them a hand up (big government/we the tax payers).
What have they done to break the cycle of this jobless "recovery". How have they invested to lay the groundwork for a better future, for their own company, which by extension could benefit this country and its citizens?
We need to challenge our children. The parents have obviously grown musty and lost their clever edge.
Liberals in government and unions forced businesses out of the country and now want to steal money from people that worked hard to earn it. The basic problem is many in this country did not take care of their careers, skills and finances and now want to use someone else as their excuse. Why do you whine about how much money someone else makes? (It is actually very greedy). If we took every penny from the top 2% of wage earners it would not make a dent in the deficit. If we did, their would be someone else to rob next, how about grandma and grandpa?
Apparently is seems there are people here that believe a company should break even at the end of the year. Corporation and for that matter anyone sell their products for what people are willing to pay for them. If you were to buy a product and could get it cheaper and just as good somewhere else, where would you buy? You wouldn't buy just because it is from your own country or your own neighborhood.
They tried that in the Great Depression and put the whole world into a Greater Depression and eventually the Second World War.
To keep companies here in America, we need to lower the money they give to the Gov't to less than what other countries are offering them as taxes. Some countries will actually co-sponsor a company just to have the jobs. How can a Corporation here in America compete with that when we have one of the highest Corporate Tax Rates in the World?
Hi Jim,
I do not disagree with you very often, but I might on this one. Here is why...I think the negative affect of the Obama administration goes beyond just the specific regulatory and anti-business actions taken. The mere existance of this type of admininstration cast a dark cloud over the entire economy (and to many is downright scary). This cloud is like "dark matter" recently discovered in space...you cannot see it but you know it is there.
Steve
Cincinnati
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