Taking Stock: Manufacturing advice

Dear Mr. Berko:
I’ve been reading your column for more than 10 years. I own my own business, which I built from scratch, and have never felt the need to write to a columnist before. I am writing to you because you seem to understand the dynamics of the economy, because I trust your opinions and because you don’t hedge your answers. You are a straight shooter. I don’t have a college degree, but I’m well read and understand economics, politics, corporate America and the American worker.

I own a manufacturing plant that employs 28 people, and during the past three years, we’ve been struggling to stay above water. Most employees have been with me more than 11 years, and I’ve not laid off an employee since I started this business 23 years ago.

Now my CPA is telling me that I must reduce my payroll by three employees because revenues are declining (4 percent last year and more than 4 percent this year so far) while my costs have risen by 6 percent and are certain to rise even more next year. And during the past two years, I’ve had to reduce my prices to stem the drain on our sales volume. The first two employees I will lay off will be my two sons, but it’s really going to hurt me to pink-slip a 43-year-old man who has been with us six years and has a family of six whom I know personally.

Please help me understand this economy and where you think we’re headed in this economic cycle. Tell me that if the government says the economy is improving, how is it that small-business revenues are still declining? How can the government say that unemployment is improving when the unemployment rate stays at 9.5 percent? How can the government tell us that the housing market is getting stronger when there are a record number of unsold home on the market? How can retail sales improve when consumer savings have tripled? How can consumer confidence be stronger when so many more people are out of work?

When Washington brags that bank interest rates are below 1 percent, why must a friend pay 11.5 percent on a farm machinery loan? If we are in a recession, why have my business costs gone up? What’s wrong with this picture? And finally, if the stock market is doing so well, why is the company pension plan is down by 4.8 percent this year?

Thanks for reading my letter. I really don’t expect an answer, but at least I got this off my chest, and I actually feel better, but I’m still mad.
R.S., Syracuse, N.Y.

Dear R.S.:
Since March, I’ve been receiving a trickle of letters like yours. And your letter, which I had to shorten considerably, superbly sums up the 30 or so similar letters I received since then. And I suspect that millions of Americans are wondering about what you’re wondering about, too. And that’s scary. But you write very well and should post a copy to your Congressman, which might make you feel better, too.

But frankly, I don’t think he gives a flying freckle.

Now, my response may sound glib, but it’s logical and valid. We know that lying is a sacrament among a larger number of politicians. Then it follows that we will get the same fluff and fuddle from the White House that we get from our congressman. So whenever you hear a member of the administration tell you how much things are improving, consider the source.

Meanwhile it’s not the government’s fault that your pension plan isn’t doing as well as you want it to — that’s the responsibility of your broker. But considering the market, your account has done a lot better than most.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate Web site at www.creators.com.
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