These 69 Michigan Corps improved their Total Pretax Earnings by a massive $73.2 bil in the most recent two years, going from a Total Pretax Loss of $40.7 bil in 2009 to a Total Pretax Profit of $32.5 bil in 2011. Whew!
Of these 69 Michigan Corps, the 13 that are directly in the Auto Industry contributed $58.2 bil of this Total $73.2 bil Profit Improvement in the most recent two years. The Big 3 Auto Companies were the major earnings improvement beneficiaries.....General Motors up $31.7 bil, Ford up $10.7 bil, and Chrysler up $9.0 bil. And nearly all Republicans still stubbornly contend that the Obama Administration's rescue of the Auto Industry was a very bad idea.
The Michigan Non-Auto Sector Corps with the largest profit improvement in the most recent two years were Ally Financial, up $7.0 bil, and Dow Chemical, up $4.3 bil. And Ally Financial clearly has a connection with the Auto Industry.
So, clearly the Largest Michigan Corps have done just great on the profit front in the most recent two years. But what about the Smaller Michigan Corps?
Well, of the 69 Largest Michigan Corps, there are 36 of them which generated Pretax Income or Pretax Loss of at least $10 mil in any of the most recent three years, but at the same time, did not register Pretax Income of Pretax Loss of more than $100 mil in any of the most recent three years.
These 36 Smaller Michigan Corps had their Total Pretax Income grow by $1.2 bil, or by an incredibly off-the-charts 1,542% in the most recent two years.
Michigan citizens should be extremely proud of the operating performance in the most recent two years of their superb Michigan companies, of all sizes.
And clearly, the Obama Administration has created an economic environment in the past two years that has permitted these Michigan Corps to flat out flourish.
Also, both Michigan members in the US Senate…..Debbie Stabenow and Carl Levin.....what a strong duo Michigan is blessed with…..have been a great help in fostering the operating success of these fine Michigan companies…..what successful fighters these two are.
And the following Michigan members in the US House…..John Dingell, John Conyers, Sander Levin, Hansen Clarke, Dale Kildee and Gary Peters…..have all been strong advocates for these fine Michigan companies.
But a second story here are the earnings results by year.
It is just incredible how much better the total earnings improvement of these 69 Largest Michigan Corps was in 2010 over 2009, when the US House was under Moderate Democratic control, than it was in 2011 over 2010, when the US House was under Very Conservative Republican control, with Vice Presidential Candidate Paul Ryan and Eric Cantor leading the Uncompromising, Very Conservative Republican Movement, which has such an extremely low approval rating in the eyes of US citizens.
These 69 Largest Michigan Corps had their Total Pretax Profits improve by a massive $66.6 bil in 2010 over 2009, when the US House was under Democratic control, which is 10 times their Total Pretax Profits improvement of $6.6 bil in 2011 over 2010, when the US House was under Uncompromising, Very Conservative Republican control.
And unfortunately in the first half of 2012, when the US House was still under Uncompromising, Very Conservative Republican control, the Total Pretax Profits of these Largest Michigan Corps have declined, and declined by quite a bit.
And it's the same pattern of substantially better earnings improvement for both Smaller and Larger Michigan Corps, when the US House was under Uncompromising, Very Conservative Republican control.
The 36 Michigan Corps with Pretax Income or Loss of at least $10 mil, but at the same time, with Pretax Income or Loss of less than $100 mil, had their Pretax Earnings grow by 1,036% in 2010 over 2009, when the US House was under Democratic Control, which was 19 times the 54% earnings growth in 2011 over 2010, when the US House was under Uncompromising, Very Conservative Republican control.
So why is it that these Michigan Corps did so much better in 2010 than they did in both 2011 and in the first half of 2012? I think you need to look at the political situation.
In both years, the President was the same.....a Moderate Democrat.
However, the US House was under Uncompromising, Very Conservative Republican control in both 2011 and the first half of 2012, but under Democratic control in 2010.
Also, the US Senate had a lower Democratic majority in 2011 than it did in 2010.
And the State Governors and State Legislatures, all across the country, were clearly more Very Conservative Republican in 2011 than they were in 2010.
So clearly, there was a substantial shift nationally from Moderate Democratic control in 2010 to Very Conservative Republican control in 2011.
How could this change in political control make such a huge difference in Michigan State company earnings?
It is pretty clear to me that in 2010, a Moderate Democratic President, coupled most importantly with a US House in Democratic hands, but also having a US Senate in Democratic hands, and further with having more State Governors and State Legislatures in Moderate Democratic hands, did wonders for corporate earnings growth in 2010. With this political structure, economic stimulus, much needed targeted individual income tax cuts, very targeted business income tax stimulus and wise, carefully-vetted US Government investment spending, can occur on a robust scale. And this very strong economic stimulus was in full throttle starting in the 4Q 2009, and did Corporations ever reap the benefit of this by generating exceptionally strong profits.
The worse thing that can happen after a financial meltdown, and near depression, is a US government that just waits for the free markets to correct themselves.....a laissez-faire approach, so favored by so many Republicans. Fortunately for the country, the exact opposite to that wisely happened in 2009 and 2010.
But then in 2011 and the first half of 2012, the US government was unfortunately forced into a laissez-faire economic approach, due to an uncompromising Very Conservative US Congress stopping nearly every economic initiative of the Obama Administration. The focus of the US Congress was almost singularly on austerity, when the improving, but still clearly struggling, US economy was shouting out for more economic stimulus, wisely designed.
Thus, things stopped to a walk on the US economic front when the US House switched to Uncompromising, Very Conservative Republican control with the 2010 election, coupled with the US Senate Democratic majority rule being significantly reduced, and with many US States switching from Moderate Democratic Control to Very Conservative Republican Control.
Case in point is Business Income Tax Reform, which the Obama Administration strongly supports, and which nearly all Republicans say they are behind. If the President's Framework for Business Income Tax Reform, presented about six months ago, is strengthened by the US Congress and passed, I am pretty certain that all of the US economic problems, including US real GDP growth, US unemployment, US underemployment, and the US Deficit....would all be substantially improved, and on an ongoing sustainable basis over the long run.
However, the US House Ways and Means Committee, chaired by Michigan Republican Dave Camp, must initiate the legislation on this critically needed Business Income Tax Reform. And what have they done so far? Pretty much nothing of substance. I'm not kidding. On the other hand, if the US House were under Democratic control, and thus chaired by the highly effective Michigan Democrat Sander Levin, I am pretty certain that this Business Income Tax Reform would have gotten out of the US House Ways and Means Committee by now and been placed on the US House Floor.
Instead, the Uncompromising, Very Conservative Republicans in the US House, led by people like Paul Ryan, Eric Cantor, Dave Camp and Fred Upton, are focused on attempting to pass an extension of the much lower Bush income tax rates on the wealthy, which increases the US Deficit by roughly a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the Uncompromising, Very Conservative Republicans in the US House shows that they are clearly unfit to be reelected, due to either their gross incompetence on US economic issues, or to their only be interested in governing for the top 1% of the country.
On the other hand, when the President is a Moderate Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.....and did US businesses ever profit from this. And so did the US stock market, which has doubled in the most recent three and a half years. Corporate earnings drive stock prices.
So, just who are the losers from this lack of action on drastically needed US economic initiatives by these Republicans in the US House? Well, it's not just the unemployed, the underemployed, the dwindling middle class, and the people trying to get into the middle class. US Businesses were also big losers, by having their earnings growth substantially decelerate in 2011, and even more dramatically so in the first half of 2012.
So, how does the country get out of this horrible economic pickle?
Well, in Michigan, citizens would be best to elect the very effective US Senator Debbie Stabenow, as well as all of the Democrats running for US House seats. Then with President Obama and a US House under Democratic control, I think you will see wise legislation quickly passed which will spur both job creation and US business profits.
If the Uncompromising, Very Conservative Republicans remain in control of the US House, there will be gridlock, and the US unemployment rate will remain above 8% for an extensive period of time.
And if Mitt Romney is elected President and with both the US House and US Senate also in Republican hands, I think you will see the US unemployment continually creep up, and average in the low double-digit percentages for the last three years of Romney's presidential term. Why? Because Romney's economic plan does absolutely nothing to create US jobs, and there are more than 130,000 new people added to the available US workforce each month.
In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairments, and Gains and Losses on both Debt Retirements and Asset Dispositions.
I use Pretax Income rather than After-tax Net Income, since so much of the change in effective income tax rates just happens due to financial engineering.
I excluded Corps in the Development Stage, and ones without significant enough Total Revenues.
Below here is the Ongoing, Core Pretax Income (PTI) and Pretax Loss (PTL) of these 33 Largest and 36 Smaller Michigan Corps for each of the most recent three years, along with the related percentage changes, as well as the dollar profit improvement in the most recent two years.
|HQs||mils $s||mils $s||mils $s||2010||2009||2009||mils $s|
|Michigan Largest Corps|
|Borg Warner||Auburn Hills||766||478||18||60%||2556%||4156%||748|
|Visteon||Van Buren Township||371||318||169||17%||88%||120%||202|
|Penske Automotive||Bloomfield Hills||248||189||123||31%||54%||102%||125|
|Total all 13 Auto Industry Largest Corps||22,343||17,017||(35,851)||31%||147%||162%||58,194|
|Dominos Pizza||Ann Arbor||168||139||80||21%||74%||110%||88|
|Citizens Republic Bancorp||Flint||(14)||(276)||(263)||95%||-5%||95%||249|
|Tecumseh Products||Ann Arbor||(72)||(25)||(102)||-188%||75%||29%||30|
|Total all 20 Non-Auto Sector Largest Corps||9,032||8,116||(4,812)||11%||269%||288%||13,844|
|Total all 33 Largest Corps||31,375||25,133||(40,663)||25%||162%||177%||72,038|
|Michigan Smaller Corps|
|Taubman Centers||Bloomfield Hills||96||78||97||23%||-20%||-1%||(1)|
|Rofin Sinar Technologies||Plymouth||87||46||15||89%||207%||480%||72|
|Affinia Group Intermediate Holdings||Ann Arbor||79||58||24||36%||142%||229%||55|
|Spartan Stores||Grand Rapids||52||53||42||-2%||26%||24%||10|
|X Rite||Grand Rapids||27||2||(28)||1250%||107%||196%||55|
|Universal Truckload Services||Warren||26||16||8||63%||100%||225%||18|
|Saga Communications||Gross Pointe Farms||21||26||13||-19%||100%||62%||8|
|Asset Acceptance Capital||Warren||20||(10)||(26)||300%||62%||177%||46|
|Universal Forest Products||Grand Rapids||15||29||39||-48%||-26%||-62%||(24)|
|Agree Realty||Farmington Hills||15||15||15||0%||0%||0%||0|
|Isabella Bank||Mt Pleasant||12||11||9||9%||22%||33%||3|
|Mercantile Bank||Grand Rapids||10||(13)||(47)||177%||72%||121%||57|
|Monarch Community Bancorp||Coldwater||0||(11)||(10)||100%||-10%||100%||10|
|RAMCO Gershenson Properties Trust||Farmington Hills||0||(5)||10||100%||-150%||-100%||(10)|
|United Bancorp||Ann Arbor||0||(7)||(11)||100%||36%||100%||11|
|Rockwell Medical Technologies||Wixom||(21)||(3)||(6)||-600%||50%||-250%||(15)|
|Total all 36 Smaller Corps||1,096||711||(76)||54%||1036%||1542%||1,172|
|Total all 69 Largest Corps||32,471||25,844||(40,739)||26%||163%||180%||73,210|