Corporate vampirism
The Globe and Mail carries an article on the high cash balances large North American corporations are carrying on their books.
Welcome to a new kind of economic recovery – one with a cash crisis of a different kind than the liquidity crunch that caused the recession three years ago. This is a crisis of spending, or lack of it. Some of the largest and most profitable U.S. corporations are collectively sitting on almost $2-trillion (U.S.) in cash and contributing little in the way of job creation.
Campbell Soup’s cash balance at the end of its fiscal third quarter is a pittance compared with the $91-billion held by General Electric Co., the $28.8-billion that decorates the balance sheet of Oracle Corp. or the $13.8-billion in the coffers of Coca-Cola Co. But the fact that Campbell’s cash, and the money held by scores of other big corporations, is for the most part sitting idle – and not being invested in growth or new jobs in the U.S. – underscores the fortress mentality that is gripping chief financial officers scarred by the 2008 liquidity crisis.
Dan Ammann, chief financial officer of General Motors Co., which has $33-billion in cash on the books, put it this way last week during a conference call on the auto maker’s second-quarter results: “I go back to our fundamental strategy here, which is we want to keep the fortress balance sheet.” GM has contributed to job creation, boosting employment in North America to 98,000 people as of June 30, from 96,000 on Dec. 31. But in a presentation on Tuesday that included a slide entitled “Fortress Balance Sheet,” GM said it will increase vehicle production capacity by 45 per cent over the next four years in the BRIC countries: Brazil, Russia, India and China. That will mean new employment in those countries, but not in the United States or Canada, both of which were singled out on another slide as high-cost manufacturing countries.
Am I surprised that the US and Canada are singled out as ‘high-cost manufacturing countries’? No, this is the price to be paid for having a standard of living which elevates most of the citizenry from living 12 to a room and having to dump a bucket down a public drain twice a day.
What is galling, is that these companies (especially the automakers), demanded our governments use public funds to help them stave off bankruptcy just a scant few years ago. GM is free to build their cars in whatever country they desire, but when you suck at the public teat, then be prepared to give back.
In GM’s case, the company is mooching off the taxpayers of Canada and the US. Time to end financing and corporate tax breaks for corporate welfare bums who cannot remember where their bread gets buttered. Frankly, the entire board and executive management of GM should be tarred, feathered and run out of North America.


