Can't Fix Stupid
Research for Online Investors

by John Dalt

10/19/10

A few months ago workers at an auto parts plant in Indianapolis voted down a new labor contract that would have kept the plant open.  They wanted to maintain higher retirement payments, and the right to transfer to another plant at the higher wage if their plant closed.  I thought, “That is what is killing the rust belt.”  Reports at the time were that 600 people would lose their jobs when the plant closed.

Last weekend workers in Wichita, Kansas rejected a new contract from Hawker Beechcraft.  The regular contract is not up until August 2011, but the company has an offer to move operations to Louisiana.

Kansas Governor Mark Parkinson met with company CEO Bill Boisture last week and worked out a package of incentives to keep the company in the state.  A union representative attended the meeting.  Keeping Hawker Beechcraft in Kansas hinged on negotiating a new contract with the union.

The company and union negotiators reached agreement on a new contract that cut base pay 10% and increased employee contributions for health insurance.  Union leadership endorsed the proposed agreement.  Saturday the rank-and-file union members rejected the new contract with 55% voting against the pact.  The Wichita Eagle carried the story, Hawker Machinists reject contract offer.

Hawker Beechcraft employs 7,000 people, 6,000 in Wichita.  One union member disavowed any responsibility for the fallout of having 6,000 union members collecting unemployment, “It’s not our fault, it’s corporate greed.”

According to the company’s website, Hawker Beechcraft presently occupies 5.5 million square feet of office and factory space.  2009 sales were $3.2 billion on 418 aircraft and military sales.  The company was started in Wichita by Walter and Olive Beech in 1932.

The Turbo Prop King Air 200

The company was sold to Raytheon in 1994 after the death of Olive Beech.  Raytheon learned the difficulties of general aviation and sold the company to GS Capital Partners (Goldman Sachs) and Onex Partners in 2007.

You would think people would be happy to have a high paying job when national unemployment is 9.6%, you would be wrong.  Make no mistake, a good job at 90% former pay is still a good job.

To quote a modern day philosopher “You can’t fix stupid.”

I am spending some time out of the office on Tuesday and Wednesday.  I need to travel to do some work with regulators on becoming a Financial Advisor.  Our reason for doing this is we have subscribers contact us to manage money for them.  We don’t want the problems of doing it illegally, so we are into checking off boxes.  We are looking for loopholes, as we can hardly stomach the idea of being licensed by government to do business.  As if it mattered.

To the mailbag:
Your Market Today e-letter today still has me laughing!! Thanks for sharing what you somehow find.--- subscriber C.H.

John’s reply:  You must have a healthy distrust of banks., or was it Kotok’s reference to Fannie Mae and Freddie Mac as sexually transmitted diseases?

Quote for the day:
Every man is a fool for at least five minutes of every day. Wisdom consists of not exceeding that limit.---Elliot Hubbard.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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