These 29 Michigan Corps generated Total Pretax Earnings in 2011 of $31.7 bil, up a very robust 23% over 2010. And such Total Pretax Income in 2010 of $25.8 bil was up an off-the-charts 180% over 2009 Pretax Loss of $39.6 bil.
And to give a complete update, these 29 Michigan Largest Corps had their Total Pretax Income in the 1Q 2012 decrease by 1% over the 1Q 2011, going from $8,636 mil in the 1Q 2011 to $8,556 mil in the 1Q 2012.
And to give a complete update, these 29 Michigan Largest Corps had their Total Pretax Income in the 1Q 2012 decrease by 1% over the 1Q 2011, going from $8,636 mil in the 1Q 2011 to $8,556 mil in the 1Q 2012.
This is clearly a massive total earnings growth deceleration.....180% in 2010, 23% in 2011, and 1% decline in 1Q 2012. Something is clearly deteriorating here in Michigan, just as it is in Wisconsin, Ohio, Pennsylvania and in other US States.
I excluded Corps in the Development Stage, and ones generating losses for many years.
One thing I wasn't quite aware of is just how badly a handful of Michigan's larger Financial Institutions were just devastated by the financial meltdown.
Included in the 29 Largest Michigan Corps below is Detroit-based Ally Financial, which has generated earnings in the most recent two years. But in 2009, it generated a Pretax Loss of a monstrous $6.9 bil, mainly due to a Provision for Loan Losses of $5.6 bil.
And check out these three other Michigan Financial Corps, which I didn't include in the 29 Largest Michigan Corps below, because they had losses every year since the financial meltdown.
| Citizens | |||
| Flagstar | Republic | Capitol | |
| Bancorp | Bancorp | Bancorp | |
| HQs | Troy | Flint | Lansing |
| National | National | ||
| SEC Industry | Savings | Commercial | Commercial |
| Institution | Banks | Banks | |
| Pretax Loss Before Goodwill Impairment | |||
| …..in millions of dollars | |||
| …..2011 | (181) | (14) | (61) |
| …..2010 | (373) | (276) | (212) |
| …..2009 | (442) | (279) | (246) |
| …..2008 | (423) | (146) | (83) |
| …..Total all 4 Years | (1,419) | (715) | (602) |
| Provision for Loan Losses | |||
| …..in millions of dollars | |||
| …..2011 | 177 | 139 | 41 |
| …..2010 | 426 | 393 | 148 |
| …..2009 | 504 | 323 | 159 |
| …..2008 | 344 | 282 | 82 |
| …..Total all 4 Years | 1,451 | 1,137 | 430 |
Just reviewing the above numbers, it seems to me that these three Michigan Financial Institutions might not have been helped as much, or as quickly, as the either the Auto Industry, or the Big US Financial Institutions which were deemed "Too Big to Fail". And the same goes for many of the smaller banks. And frankly, the same also goes for all of the underwater home owners.
Also, I don't think it is good for a State's economy to be so tied to one industry. Of the 29 Michigan Largest Corps, nearly half of them, or 13, are in the auto industry. And even more significantly, the Total Pretax Income in 2011 of these 13 Michigan Corps in the auto industry was $ 22.3 bil, or an overwhelming 71% of the Total Pretax Income of all 29 Largest Michigan Corps. Just imagine how horrible Michigan's economy would be right now if the Obama Administration had not wisely turned the Auto Industry around.
This distinction between 2010 earnings growth and the earnings growth in both 2011 and the 1Q 2012 is particularly salient since there was a major switch in Michigan political party control between 2010 and 2011, which was precisely what also happened in Wisconsin, Ohio and Pennsylvania.
In 2010, Michigan's Governor was the remarkably talented, very effective Jennifer Granholm, a Democrat, and its State House was in Democratic control.....just like in Wisconsin, Ohio and Pennsylvania.
On the other hand, in 2011 and in the 1Q 2012, Michigan's Governor was a Republican and its State House was in Republican control.....just like in Wisconsin, Ohio and Pennsylvania.
Michigan's Democratic members of the State House numbered 65 of the total 110 in 2010, but only 47 of the total 110 in 2011 and in the 1Q 2012.....the same loss of Democratic majority that occurred in Wisconsin, Ohio, and Pennsylvania with the 2010 election.
Nationally in 2010, the US House was under Democratic control. But in 2011 and in the 1Q 2012, the US House was under Republican control.
Michigan's Democratic members of the US House numbered 8 of the total 15 in 2010, but only 6 of the total 15 in 2011 and in the 1Q 2012.....the same loss of Democratic majority that occurred in Wisconsin, Ohio and Pennsylvania with the 2010 election.
Let me first show below here the headquarters location and SEC Industry of each of these 29 Largest Michigan Corporations.
| Michigan Largest Corps | Michigan HQs | SEC Standard Industrial Classification |
| Ally Financial | Detroit | Finance Lessors |
| American Axle | Detroit | Motor Vehicles Parts & Accessories |
| BorgWarner | Auburn Hills | Motor Vehicles Parts & Accessories |
| Chrysler | Auburn Hills | Motor Vehicles & Passenger Car Bodies |
| Compuware | Detroit | Services: Prepackaged Software |
| Con-way | Ann Arbor | Trucking |
| Credit Acceptance | Southfield | Personal Credit Institutions |
| Delphi Automotive plc | Troy | Motor Vehicles Parts & Accessories |
| Dominos Pizza | Ann Arbor | Wholesale: Groceries |
| Dow Chemical | Midland | Plastics, Materials, Synthetic Resins |
| Federal Mogul | Southfield | Motor Vehicles Parts & Accessories |
| Ford Motor | Dearborn | Motor Vehicles & Passenger Car Bodies |
| Gentex | Zeeland | Motor Vehicles Parts & Accessories |
| GM | Detroit | Motor Vehicles & Passenger Car Bodies |
| Herman Miller | Zeeland | Office Furniture |
| Kellogg | Battle Creek | Grain Mill Products |
| Lear | Southfield | Motor Vehicles Parts & Accessories |
| Masco | Taylor | Millwood, Veneer, Plywood |
| Meritor | Troy | Motor Vehicles Parts & Accessories |
| Penske Automotive | Bloomfield Hills | Retail: Auto Dealers & Gas Stations |
| Perrigo | Allegan | Pharmaceutical Preparations |
| PulteGroup | Bloomfield Hills | Operative Builders |
| Stryker | Kalamazoo | Surgical & Medical Instruments |
| Syntel | Troy | Services: Computer Programming Services |
| TRW Automotive | Livonia | Motor Vehicles Parts & Accessories |
| Valassis Communications | Livonia | Services: Advertising |
| Visteon | Van Buren Township | Motor Vehicles Parts & Accessories |
| Whirlpool | Benton Harbor | Household Appliances |
| Wolverine WW | Rockford | Footwear |
And now let me show the Pretax Income (PTI) or Pretax Loss of each of these 29 Largest Michigan Corps in the most recent three years, along with their earnings growth in the two most recent years.
| Complete | Solid | ||||
| Republican | Democratic | ||||
| State | State | ||||
| Control | Control | ||||
| PTI(L) | PTI(L) | ||||
| % | % | ||||
| Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | |
| mils $s | mils $s | mils $s | |||
| Michigan Largest Corps | |||||
| Auto Industry | |||||
| Ford Motor | 8,681 | 7,993 | (2,067) | 9% | 520% |
| GM | 7,253 | 5,541 | (24,473) | 31% | 130% |
| Delphi Automotive | 1,506 | 944 | (1,129) | 60% | 233% |
| TRW Automotive | 1,188 | 1,041 | 140 | 14% | 749% |
| Chrysler | 932 | (513) | (8,095) | 282% | 112% |
| Borg Warner | 766 | 478 | 18 | 60% | 4156% |
| Lear | 616 | 449 | (229) | 37% | 369% |
| Visteon | 371 | 318 | 169 | 17% | 120% |
| Penske Automotive | 248 | 189 | 123 | 31% | 102% |
| Gentex | 244 | 203 | 96 | 20% | 154% |
| Federal Mogul | 241 | 179 | (55) | 35% | 538% |
| Meritor | 159 | 76 | (52) | 109% | 406% |
| American Axle | 138 | 119 | (297) | 16% | 146% |
| Total all 13 | 22,343 | 17,017 | (35,851) | 31% | 162% |
| Non-Auto Sectors | |||||
| Dow Chemical | 3,917 | 2,677 | (422) | 46% | 1028% |
| Kellogg | 1,732 | 1,742 | 1,684 | -1% | 3% |
| Stryker | 1,686 | 1,729 | 1,624 | -2% | 4% |
| Perrigo | 451 | 309 | 206 | 46% | 119% |
| Credit Acceptance | 296 | 253 | 229 | 17% | 29% |
| Valassis Communications | 196 | 167 | 101 | 17% | 94% |
| Wolverwine WW | 169 | 143 | 86 | 18% | 97% |
| Dominos Pizza | 168 | 139 | 80 | 21% | 110% |
| Compuware | 155 | 157 | 213 | -1% | -27% |
| Syntel | 154 | 134 | 135 | 15% | 14% |
| Con-way | 148 | 36 | 45 | 311% | 229% |
| Whirlpool | 131 | 735 | 356 | -82% | -63% |
| Herman Miller | 103 | 35 | 99 | 194% | 4% |
| Ally Financial | 67 | 1,139 | (6,909) | -94% | 101% |
| Masco | 22 | (43) | 126 | 151% | -83% |
| PulteGroup | (69) | (579) | (1,412) | 88% | 95% |
| Total all 16 | 9,326 | 8,773 | (3,759) | 6% | 348% |
| Total all 29 | 31,669 | 25,790 | (39,610) | 23% | 180% |
Because there was such an incredible difference in total earnings growth of these 29 Michigan Largest Corps under Solid Democratic State Control (+180% in 2010) and under Complete Republican State Control (+23% in 2011 and -1% in the 1Q 2012 ), I decided to check out smaller Michigan Corps, which file with the SEC, in order to see if this same pattern holds, as it also did in Wisconsin, Ohio and Pennsylvania.
Thus, I found 24 Michigan Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of more than $20 mil in any of the most recent three years, and which weren't included in the 29 Largest Michigan Corps. Thus, these 24 Smaller Michigan Corps also did not have Pretax Income or Pretax Loss of more than $100 mil in any of the most recent three years. I used a income threshold of $20 mil in order to be sure to get a sufficient number of companies to reach a solid conclusion.
Now to the results of these 24 Smaller Michigan Corps.
The Total Pretax Income of these 24 Smaller Michigan Corps increased by a superb 38% in 2011 as compared with 2010. But that was nothing compared to what happened in 2010, where the Total Pretax Income in 2010 increased by a totally off-the-charts 7282% over 2009.
This earnings growth pattern divergence of these 24 Smaller Michigan Corps was consistent with the earnings growth pattern divergence of the 29 Largest Michigan Corps. And Michigan's earnings growth pattern divergence was precisely what also happened in Wisconsin, Ohio and Pennsylvania.
Thus clearly, Michigan Corps of all sizes performed substantially better in 2010 under Solid Democratic State Control than in 2011 under Complete Republican State Control......just precisely what happened in Wisconsin, Ohio and Pennsylvania.
It is pretty clear to me that in 2010, a Democratic President, coupled with a US House and a US Senate both in Democratic hands, and also coupled with a US State Governor and US State Legislature both in Democratic hands, did wonders for corporate earnings growth in that year. With this political structure, economic stimulus, both much needed business income tax stimulus and wise, carefully-vetted investment spending, can occur on a robust scale.
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 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 the 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 Republican control with the 2010 election, coupled with certain US States like Michigan, Pennsylvania, Ohio, and Wisconsin, also switching from Solid Democratic Control to Solid 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 more than three 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 must initiate the legislation on this critically needed Business Income Tax Reform. And what have they done so far? Absolutely nothing. I'm not kidding. On the other hand, if the US House was under Democratic control, 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 Republicans in the US House 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 more than a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the 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 Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.
Given the magnitude of the above Michigan corporate earnings growth numbers in 2010 vs. those subsequent to 2010, it is clearly in the economic interests of Michigan Corporations of all sizes and all Michigan citizens for a return to the 2010 days, when corporate earnings were on a complete upward tear. And the same goes for Wisconsin Corporations of all sizes and for all Wisconsin citizens. And the same also goes for Ohio Corporations of all sizes and for all Ohio citizens. And the same goes for Pennsylvania Corporation of all sizes and for all Pennsylvania citizens. And frankly, the same goes for all US Corporations of all sizes and for all US citizens in all US States.
While substantial US job creation doesn't necessarily result from substantially higher corporate earnings, I can clearly tell you one thing.....lower corporate earnings will undoubtedly result in a significant loss of US jobs. When corporate earnings absolutely tanked in late 2008 and in 2009, corporations were very quick to dramatically cut US full-time employees. And to give a recent illustration, when Hewlett Packard recently announced down earnings, it also announced it will be cutting 27,000 jobs, or 8% of its workforce. And Ohio-based Procter & Gamble, just recently taking a $452 mil Restructuring Charge, has to mean a significant loss of US jobs. And I have seen so many large Restructuring Charges made by Corporations, such as Michigan's Dow Chemical, in their 1Q 2012 Earnings Statements, made in the same quarter where their earnings growth has fallen off the cliff.
In deriving Pretax Income for these 24 Smaller Michigan Corps, I start with Audited 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.
First, here is the HQs and SEC Industry for each of these 24 Smaller Michigan Corps:
| Michigan Smaller Corps | Michigan HQs | SEC Standard Industrial Classification |
| Affinia Group Intermediate Holdings | Ann Arbor | Motor Vehicle Parts & Accessories |
| Amerigon | Northville | Motor Vehicle Parts & Accessories |
| Asset Acceptance Capital | Warren | Short-term Business Credit Institutions |
| Chemical Financial | Midland | State Commercial Banks |
| Cooper-Standard Holdings | Novi | Motor Vehicle Parts & Accessories |
| Kaydon | Ann Arbor | Ball & Roller Bearings |
| Kelly Services | Troy | Services: Help Supply Services |
| LA-Z-BOY | Monroe | Household Furniture |
| LINC Logistics | Warren | Arrangement of Transportation of Freight & Cargo |
| Macatawa Bank | Holland | State Commercial Banks |
| Meadowbrook Insurance | Southfield | Fire, Marine & Casualty Insurance |
| Mercantile Bank | Grand Rapids | State Commercial Banks |
| Neogen | Lansing | In Vitro & In Vivo Diagnostic Substances |
| Rofin Sinar Technologies | Plymouth | Electrical Machinery, Equipment & Supplies |
| Saga Communications | Gross Pointe Farms | Radio Broadcasting Stations |
| Spartan Motors | Charlotte | Motor Vehicle & Passenger Car Bodies |
| Spartan Stores | Grand Rapids | Wholescale: Groceries & General Line |
| Steelcase | Grand Rapids | Office Furniture |
| Taubman Centers | Bloomfield Hills | REITs |
| Tower International | Livonia | Motor Vehicle Parts & Accessories |
| Trimas | Bloomfield Hills | Metal Forgings & Stampings |
| Universal Forest Products | Grand Rapids | Sawmills, Planning Mills |
| Universal Truckload Services | Warren | Trucking |
| X Rite | Grand Rapids | Photographic Equipment & Supplies |
And below here is the Pretax Income (PTI) or Pretax Loss of each of these 24 Smaller Michigan Corps in the most recent three years, along with their earnings growth in the two most recent years.
| Complete | Solid | ||||
| Republican | Democratic | ||||
| State | State | ||||
| Control | Control | ||||
| PTI(L) | PTI(L) | ||||
| % | % | ||||
| Change | Change | ||||
| Total | Total | Total | 2011 | 2010 | |
| PTI(L) | PTI(L) | PTI(L) | vs | vs | |
| 2011 | 2010 | 2009 | 2010 | 2009 | |
| mils $s | mils $s | mils $s | |||
| Smaller Michigan Corps | |||||
| Cooper-Standard Holdings | 97 | 63 | (32) | 54% | 297% |
| Taubman Centers | 96 | 78 | 95 | 23% | -18% |
| Rofin Sinar Technologies | 87 | 46 | 15 | 89% | 207% |
| Steelcase | 82 | 51 | (31) | 61% | 265% |
| Trimas | 80 | 56 | 3 | 43% | 1767% |
| Affinia Group Intermediate Holdings | 79 | 58 | 24 | 36% | 142% |
| Kaydon | 70 | 82 | 72 | -15% | 14% |
| Chemical Financial | 60 | 31 | 12 | 94% | 158% |
| Kelly Services | 58 | 33 | (95) | 76% | 135% |
| Meadowbrook Insurance | 54 | 81 | 73 | -33% | 11% |
| Spartan Stores | 52 | 53 | 42 | -2% | 26% |
| LINC Logistics | 39 | 36 | 16 | 8% | 125% |
| Neogen | 35 | 27 | 22 | 30% | 23% |
| LA-Z-BOY | 30 | 43 | (41) | -30% | 205% |
| Tower International | 28 | (8) | (94) | 450% | 91% |
| X Rite | 27 | 2 | (28) | 1250% | 107% |
| Universal Truckload Services | 26 | 21 | 8 | 24% | 163% |
| Saga Communications | 21 | 26 | 13 | -19% | 100% |
| Amerigon | 20 | 12 | 1 | 67% | 1100% |
| Asset Acceptance Capital | 20 | (10) | (26) | 300% | 62% |
| Universal Forest Products | 15 | 29 | 39 | -48% | -26% |
| Mercantile Bank | 10 | (13) | (47) | 177% | 72% |
| Macatawa Bank | 6 | (17) | (72) | 135% | 76% |
| Spartan Motors | 1 | 10 | 20 | -90% | -50% |
| Total all 24 | 1,093 | 790 | (11) | 38% | 7282% |
