Home Depot moving white-collar jobs overseas

Image via WikipediaU.S. figures show American companies have slashed labor costs by moving millions of manufacturing jobs to China. A new trend involves many companies moving higher-paying, white-collar positions overseas too. Many American corporate call centers now are in places like the Philippines and technical jobs are in India. One example is Channel 2 parent company Cox Media Group, which uses overseas call center for some customer service questions.

Now, U.S. firms are quietly moving high-paying accounting, finance and human resource jobs offshore. National labor statistics reveal that in the past 10 years, American companies have slashed 2.9 million jobs in the United States. At the same time, they have created 2.4 million jobs for people overseas.

Local companies, like Home Depot, are among them. The company built an international chain from one store in Atlanta. Now it's moving white collar jobs offshore.

Channel 2 Action News has reported in recent years that Home Depot has laid off thousands of workers, including hundreds at its worldwide corporate headquarters in Vinings in Cobb County. At the same time, it's hiring hundreds of workers thousands of miles away.

Georgia Labor Department records show Home Depot has moved jobs from Vinings to India. Companies usually keep outsourcing details a secret, but two Home Depot executives taped a testimonial posted online for the outsourcing company in India now is handling some of their accounting functions. More...

"I am tired of the cheerleading by the mainstream press"

Cheerleading

Jeff Harding

I am tired of the cheerleading by the mainstream press where they see every positive sign as a sure sign of recovery and every negative sign as “unexpected.” Every article I read on new data from the Wall Street Journal or Bloomberg is the same–with mind numbing regularity. Worse is that they always find some economist to give them a positive quote to the effect that we are “turning the corner” or “the recovery is self-sustaining.”

Here are some examples from recent news. These aren’t cherry-picked:

Wholesale inventories rose by 0.6% in January; sales increased 0.8 percent, the 11th consecutive increase.

WSJ: “far above expectations.” The title of their article was “Wholesale Inventories Surge.”

Bloomberg: “larger than anticipated.” Bloomberg always likes to line up some optomistic economist: “’Firms are seeing more reason for optimism in the outlook and are looking to build inventories to fill future sales growth,’ said Zach Pandl, an economist at Nomura Securities International Inc. in New York.”

It sounds good but here is the reality if you look at inventories vs. sales ratios:

Don’t you have to have sales to spur inventory? This chart was right in the Commerce Department report which they all saw.

Initial jobless claims rose by 18,000 for the latest reporting week of April 3, up to 460,000.

WSJ: ” jobless benefits rose unexpectedly last week.”

Bloomberg: “More Americans unexpectedly filed claims for jobless benefits …” They like to get someone who is bucking the report to make us feel better and it’s either Home Depot or Caterpillar: “Home Depot Inc., the largest U.S. home-improvement retailer, is adding store jobs for the first time in four years as it expects a rebound in sales, Chief Executive Officer Frank Blake said.”

More on the unemployment situation later.

A lot of retailers reported good sales in March (Saks + 12.7%; Gap + 11%; TJ Maxx + 12%; Target + 10.3%; Macy’s + 10.8%; Nordstrom + 16.8%; Kohl’s + 22.5%). This is good stuff.

WSJ: “Shoppers opened their wallets even wider than expected in March.” Here is their rosy economist: ”‘It’s a blow-out month, the biggest monthly increase we’ve seen since we began tracking monthly retail sales in 2000,’ said Ken Perkins, president of Retail Metrics.”

Bloomberg: “Gap, Saks Lead Largest Monthly Sales Gain in a Decade.”

OK, this is pretty fair reporting. But it’s not a blow-out. Look at this one-year time frame chart which shows PCE, personal savings, transfer receipts (payments from the government), and disposable personal income:

Looks pretty flat to me. While the transfer payment numbers aren’t as current, you should know that they account for 20% of personal income.

Job Openings in US decrease to 2.72 million in February (- 4.6%). They fell for the first time in three months. There are more than 5 people vying for every opening, up from about 1.8 when the recession began in December 2007.

WSJ: They didn’t even report this.

Bloomberg: I have to admit they didn’t gild the lilly here. But they again mention again that Home Depot is hiring “for the first time in four years.”

One in five US jobless–20%–are unemployed after a year according to a new Pew study.

WSJ: Again they missed this story.

Bloomberg: Kudos. They reported this fairly because it was Pew’s data. They did mention that 162,000 new jobs were added in March.

162,000 jobs added in March. Of those, 48,000 were government workers, many related to the U.S. Census. These aren’t real “economic” jobs. See my article: “Unemplyment Remains Unchanged in March.”

WSJ: “created jobs at the fastest pace in three years.” Their headline was: “Employers Added Most Jobs in Three Years in March.” They noted that YoY that employment down another 1.8% and unemployment rate unchanged at 9.7%. Toward the end they mentioned that the broadest measure of unemploment (U-6, Marginally Attached Workers) was up from 16.8% to 16.9%. And at the very end they note that average hourly earnings (wages) for workers declined 0.1%.

Bloomberg: Pretty much the same. Instead of Home Depot adding jobs, this time they used another favorite, Caterpillar as an example. Funny, they forgot to mention that wage earnings declined, again. Both articles quote economists who think things are getting better.

Institute for Supply Management’s index of non- manufacturing businesses (services) rose to 55.4 from 53 in the prior month. This is another good sign, especially if looked at in isolation.

WSJ: ”‘It looks like the recovery is definitely here in the service sector,’ said Adam York, an economist with Wells Fargo Securities.”

Bloomberg: “higher than anticipated.” “’The recovery is looking increasingly self-sustaining,’ said James O’Sullivan, chief economist at MF Global Ltd.”

Private-sector jobs in the U.S. dropped by 23,000 this month. This ADP report was at odds with the BLS numbers which showed employment gains.

WSJ: “The news rattled investors and economists who had expected March would show a gain in payrolls.” Economist Joel Prakken, chairman of Macroeconomic Advisers said the ADP report didn’t include any weather rebound or census hiring and that the numbers were reasonable.

Bloomberg: “Companies in the U.S. unexpectedly cut payrolls.” They also blamed it on the weather and quoted Mr. Prakken as well. They again cited Caterpillar as a company that is hiring.

Personal spending (PCE) increased by 0.3% in February, but personal income was flat and savings were lower. PCE is really weak overall. No one connected the dots that said consumers had to resort to savings to make purchases. See my article: “Consumers Draw Down Savings For Personal Consumption.” PCE is really weak overall.

WSJ: They reported the facts. They didn’t make a note of the connection between a rise in PCE and a decline in savings.

Bloomberg: “Consumer spending in the U.S. rose in February for a fifth consecutive month.” “’Considering the circumstances, this is a fine performance with the job market still not strong,’” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.” They noted that savings declined as a result of spending and declining wage earnings.

Oh really?

Sprint, Pfizer, Home Depot, Caterpillar, Philips Electronics slash 60 Thousand Jobs

Yesterday US News and World Report calculated that Sprint, Pfizer, Home Depot, Caterpillar, and Philips Electronics slashed 60 Thousand Jobs.

Job Cuts Get Brutal: Sprint, Pfizer, Home Depot, Caterpillar
The job loss tally so far today: 54,500. Cuts are coming across industries as further weakness in the economy keeps major employers slashing away. On the same day it agreed to buy rival drugmaker Wyeth, Pfizer said it would cut 15 percent from its combined workforce (that's a bit less than 19,500 jobs). Meanwhile, Caterpillar is faring poorly in the global recession. It's cutting its workforce by 20,000 including 11 percent of its workforce, or 12,000 jobs, and 8,000 contractors. Home Depot, a lingering victim of the downturn in both consumer spending and housing, said it would slash another 7,000 jobs as it shutters its high-end EXPO business. And finally, Sprint Nextel is eliminating 14 percent of its workforce, or 8,000 jobs. Update: Add another 6,000 to the tally above. Philips Electronics is cutting too.

Top 15 Franchise Failures

Katie Adams

The recession has hit franchise owners particularly hard, with the Small Business Administration (SBA) reporting record loan default rates for 2008-2009. According to the SBA, individuals who took on SBA loans to finance a franchise had a 43% higher failure rate than in 2007. In total, those franchise losses cost the SBA $93.3 million last year - nearly 170% higher than the year before. Since 2004, franchise loan defaults have increased by nearly 10% (from 3.1% to 13.4%), highlighting that franchise owners have had an increasingly difficult time making a successful go of their new ventures. Sorting through the 2009 Franchise Coleman Report we were able to determine the franchises that had the highest SBA loan failure rates in 2008.

1.Noble Roman's Pizza
Billing itself as "The Better Pizza People," this Indianapolis-based franchiser has had a tough time selling that proposition to customers. While the company reported a 30% net income increase in Q1 of 2009, Q2 total revenues were down more than $500,000 from the comparable period in 2008. Maybe that's why 53% of all owners with SBA loans defaulted in 2008.

2.PJ's Coffee and Tea Café
PJ's Coffee and Tea Café started out as a small business in New Orleans 30 years ago and only recently began selling franchise rights across the south, southeast and southwest. It might want to stick to Cajun country - 50% of the franchisees failed on their SBA loans last year.

3.Super Suppers
At the height of the market, working families expanded their spending to include luxuries such as cleaning services, lawn services and even assemble-your-own dinner services. Super Suppers jumped on the concept and its franchise growth was exponential between 2005 (40), to 2006 (152), and 2007 (206). However, the growth stalled with no new franchise owners coming on board in 2008, and existing owners with SBA loans began failing at a quick pace - 42%, to be exact, in 2008.

4.Figaro's Italian Pizza
Figaro's has been in business for 28 years, but most of its franchise owners aren't likely to reach that same anniversary. One-third defaulted on their loans, unable to grab enough of the industry's $32 billion in annual revenues.

5.New York NY Fresh Deli
Perhaps it was the low single-site franchise fee ($17,500) that attracted new business owners, but it was low revenues that led to closed doors. Thirty-one per cent defaulted on SBA loans in '08.

6.Amazon Café
This franchiser offers smoothies, wraps, salads, soups, juices and more, but apparently not enough more to keep all operators in business. Thirty per cent failed in 2008, and more than 52% have defaulted on their SBA loans since 2000.

7.Simple Simon's Pizza
Simple Simon's grew from one store in Tulsa to a network of 220 restaurants nationwide since 1982. However, nearly 30% of store owners who took on an SBA loan to finance the start-up have defaulted. Perhaps selling pizza isn't quite so simple after all.

8.Snip-Its
The Snip-Its children's hair salons ranked 30th on the Franchise Times' 2007 list of 55 fastest growing franchises, but two years later that growth has stalled. Thirty per cent of store owners with SBA financing failed to repay their loans in 2008.

9.U Build It
Seeking to grab a share of the market that made Lowe's and Home Depot household names the U Build It franchise offers owners an opportunity to serve as "construction consultants" for DIYers interested in building or renovating their own homes. But when the housing market collapsed, it shouldn't come as a shock that 27% of their franchisees reneged on their SBA loans.

10.Bellacino's Pizza
If you're a Facebook user, you can become a Bellacino's Pizza "fan." Unfortunately 26% of Bellacino's owners that took on SBA financing couldn't get enough regular fans to stay current on their debt payments. That number closes in on 30% dating back to 2000.

11.Blockbuster Video
While Blockbuster was able to fend off brick and mortar competitors, it has struggled to maintain market share since Netflix and Redbox changed the rules of the game. In 2008, one in four store owners with SBA loans failed to repay their debt; that number jumps to a sobering 38% since 2000.

12.Pizza Factory
If this list proves anything, it should be that entrepreneurs might do well to avoid pizza franchises. Twenty-four per cent of Pizza Factory owners took a pass on repaying their SBA loans in 2008, and that number jumps to 43% if you look back to 2000.

13.Pro Golf
With a rising unemployment rate, workers aren't knocking off early to hit the links. Perhaps that's what led to 24% of Pro Golf franchise owners defaulting on their SBA loans. But the fact that 64% of all owners have failed to repay their loans since 2000 makes you think that perhaps the business model is the real news, not the recession.

14.Conoco Service Station
While ConocoPhillips Company is a Fortune 500 company, its service center franchise owners (more than 3,100 operate under the Conoco, Phillips 66 and Union 76 brands) are struggling. More than one in five (22%) have defaulted on their SBA financing commitment.

15.Keva Juice
Keva's product isn't a "blendsation" everywhere. Twenty-two per cent of these smoothie store owners didn't raise enough revenue to repay their SBA loans last year; more than one in four (26%) have defaulted on their loans since 2000.

Conclusion
The moral of this story? If you're going to take on an SBA loan to finance your franchise, take a close look at which fellow entrepreneurs failed before you face the same fate.