Friday, June 10, 2011

NYT: Companies favor new machinery over hiring

Gannett spent $13 million on machinery and other hard assets during the first quarter, up from $9 million last year -- reflecting only recently a burst in capital spending since the economic recovery began that's coming in place of spending on new employees.

The New York Times reports on the trend in a new story this morning.

GCI's capital spending was flat until the first quarter. For all of last year, it totaled $69 million, barely changed from $68 million in 2009, according to filings with federal securities regulators.

The recovery began in June 2009. Since the start of that year, GCI has eliminated 9,000 jobs, or 21% of all, reducing worldwide employment to less than 33,000.

GCI didn't detail what it bought in the first quarter or last year. And COO Gracia Martore didn't forecast spending in the current quarter, ending in less than three weeks, when she spoke to Wall Street analysts during the first-quarter earnings conference call.

The NYT's Catherine Rampell, in a story that now leads the paper's website, writes: "Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people." With equipment prices dropping, and tax incentives to subsidize capital investments, these trends seem likely to continue, she says.

Her story continues: "Two years into the recovery, hiring is still painfully slow. The economy is producing as much as it was before the downturn, but with seven million fewer jobs. Since the recovery began, businesses’ spending on employees has grown 2% as equipment and software spending has swelled 26%, according to the Commerce Department. A capital rebound that sharp and a labor rebound that slow have been recorded only once before -- after the 1982 recession."

Related: GCI's first-quarter report to the U.S. Securities and Exchange Commission vs. the year-ago report.


  1. Dah, hubs!

  2. Where is all this money going, because I am stuck here with a 4-year-old old computer that is exhausting itself keeping up with technological changes. i know people still working with IE6, which now is three generations out of date, and next year Windows is rolling out Windows 8, which is likely to require computer updates to keep operating.
    But I have a question management needs to answer, and that is will the current version of that clunky Newsgate system work if they change the structure of Windows? Or will we have to buy a whole new Newsgate software suite. I think the latter, but then what do I know about technology.

  3. This is another reason America may not actually pull out of this recession, at least not in the way most people want us to. People can say that the recovery has begun, but what has really happened is lots of people with mid-range to high-range salaries have left the work force only to return to low-wage jobs. That's not a recovery. It's an adjustment.

    Because American companies are so bottom-line oriented and don't give a damn about the country as a whole, they will continue to cut people at every opportunity even if they aren't struggling. That does not bode well for the nation's future. Already 1 percent of people control percent of the money. Just wait until that latter number hits 75%.

  4. Jim, in the fourth graf, shouldn't the last number be 33,000, sted 33,00?

  5. 10:19 That is exactly what happens in recessions, as the economic downturns help rearrange corporate strategies and make corporations adjust to new realities. The secret for management is to ride the wave (or the dip), and I just don't think this management knows how to do that. I personally think the worst is over and we are in the phase of staggering to our feet once again after receiving a huge stomach punch. Now they have to find a new strategy to ensure they don't get attacked this way again. I don't want to participate in the hype about her, but that's why Maryam is important.

  6. The economy we are in in 2011 is the new normal. And it will stay like this well past 2012-2013. Jobs, or lack thereof, are a significant piece of the current state. But Americans will not enjoy a recovery or feel more stable until the housing market recovers. And we are a long, long LONG ways from that happening. So until it does, you will continue to see flat-line growth at best. This is the new America!!! It's not going to get any better than it is right now for quite some time!

  7. 11:15 No, I have every confidence that it will get better, simply because it always has. Yes there will be a very slow recovery, largely because the banking industry has not yet resolved the issue of what to do with all these foreclosed houses. We have yet to hear from Congress, which is considering other issues such as whether to continue the mortgage deduction for upper-income families.
    As bad as it looks, we got through it, and I think we now have to adjust to the new reality that the days of 20 percent profit margins in the newspaper business are gone. But if you look at the financial statements, you see this is still a profitable business, just not what it once was six years ago.
    The surprise from all this for me is McClatchy, which I didn't think would make it. Tribune has yet to sort itself out and sell off the pieces, and I count Lee as a goner. I don't invest in newspapers, so I have no interests in saying this.

  8. I don't know about machines, but there are plenty of tools working in the crystal palace. More every day.

  9. You are one of them, 12:59. A rusty, ineffective one, too.

  10. 12:59. How would you know, hammerhead?

  11. 9:20AM You're lucky, the one I use is from 2003

  12. Our reps have 20 lbs IBM's from roughly 1890.
    These things are dinosaurs to say the least. Real "World Class" if you ask me. In a time where we rely so heavily on technology (think GPC and everything being outsourced) we need technology that will keep up with that. It is impossible to work faster and smarter with crap equipment.

    Oh and if you want to make a presentation via PowerPoint talk about embarrassing. You haul this thing out - ask to plug into their outlet because the battery dies in 10 minutes. Then pull a cord out and plug into your blackberry and watch your dial up speed connection go. Quite impressive, right? Sure makes those clients believe your claims of being a leader in marketing, technology and information.


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