Millions in corporate welfare are seemingly insufficient to keep Adam's Hinkley Field doors open
By Curmudgeon
I imagine the news this morning that Adam Aircraft has shut down manufacturing operations in Ogden and is laying off its workforce is going to produce a fair number of "we told you so" posts, and probably some downright crowing in these parts.
Before that starts, I think it's worth remembering that this is not good news for Ogden and that a significant number of our neighbors are now without income, or much. The company, what's left of it, is being very close-mouthed about the long-term implications of the move, though a company spokesperson does concede "this is not good." Let's hope the delayed FAA certification of their new model [which seems to be the reason for the shut-down, or so the company says] gets straightened out and operations can begin again some months down the road.
That said, the shut down does raise some questions about the business judgment of both Utah state and Ogden city development officials, who recently approved millions of dollars in financial incentives to lure Adam Aircraft into expanding its manufacturing operations in Ogden.
And what say our gentle readers about all this?
Update 1/17/08 11:24 a.m. MT: More on this story from the Denver Post. It appears that Adam's problems are even more serious than the Standard-Examiner reported.
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36 comments:
Curm:
I agree, and was dismayed to see the headline this morning.
Worse, it was sourced to an "unnamed city official" which is just plain wrong. Adam officials have the right to make their announcement in their own time (as noted in the story, some employees have not been notified and will read this with their morning Post-Toastees).
Sometimes a reporter has a story so big, or the danger to a source is so great, that an "unnamed source" is the only way to get the story published. This was not one of those times. It is a crummy deal for Ogden, and crummy journalism besides.
dont forget the millions of dollars of tif paid to kemp to develop buildings for adams.
whos going to pay those monthly payments when kemp doesnt have a tenant. did the city loan money to the rda for those building and if so is ogden city going to write down the city loan to the rda for that project too.
certifying could take years. does the city really know where adams is in the process let a lone understand the process.
didnt harmer tell the city council that adams already had the certification in support of his argument to win approval from the council for the funding of the kemp and adams projects.
i feel bad for those employees affected by the action but just maybe we should blame the administration for jumping the gun on who the recruited. maybe the administration should have done more work on the front end of the deal to understand the specific market adams product adams fiancial capability and the certification process. maybe we needed outside help to evaluate these matters rather than godfrey and his inner circle of visionaries. they would have better understood the risk. maybe with that understanding the administration would have brought a different company in and that company would be still growing.
Well here's the first I told you so.
I pointed out that Adam was selling planes that were very similar to the competition, but were much more expensive and were behind schedule. That was what, a year ago?
They touted backorders, but their market share was only 5%.
Geez. Where does one find a company like that to short? It would have been easy money.
As far as being bad news for Ogden, please. The company was a zombie from the beginning. Now that it is dead Godfrey will have one less hole into which to throw RDA money.
This is good news after all.
A couple of other things, now that I'm already shooting off my big mouth . . .
The fact that the paper reported it before the company did is GOOD journalism. Why should they sit on a big story waiting for the company bigwigs to fiddle with their press release?
Yes, it's sad for the employees, but it's called "free enterprise". As important as it is that winners be rewarded, losers must be punished. As some are enriched, others are busted. It's how capital gets directed into the hands of those who will use it best.
The blade has cut both ways with me at various times. Hooray for free enterprise.
And next time, rather than letting state and city BUREAUCRATS pick and choose, can we just let the market, and market pricing work?
Had we done that, we'd be in the midst of companies that can stand on their own, not the economic basket cases the government nurses.
Take Ogden Chrome and Creative Welding - two long time successful businesses. They are run off, while non-viable businesses are favored. It's crazy. It's government.
All may not be rosey at Amer either:
Amer Sports announces next stage in plan to optimize the structure of its Winter and Outdoor business; winter sports equipment sales lower than expected in December
It's a cinch: Adam went belly-up because there's no prospect in sight for a gondola. Right, Short-Deck?
I can't help wondering if any of the Adam and Amer news was deliberately hushed up until after the election? Nah! That's just too nasty.
Britney, where are you?
It was run by Republicans. That is why it got shut down. Lazy Republican Administrators and lazy republican work force.
The nation's economy is falling into recession, people. We can expect more stories like these in the months to come.
Ex-lawmaker charged as terrorist conspirator
WASHINGTON - A former U.S. congressman and delegate to the United Nations was indicted Wednesday, accused of being part of a terrorist fundraising ring that allegedly sent more than $130,000 to an al-Qaida and Taliban supporter who has threatened U.S. and international troops in Afghanistan.
The former Republican congressman from Michigan, Mark Deli Siljander [R], was charged with money laundering, conspiracy and obstructing justice for allegedly lying about lobbying senators on behalf of an Islamic charity that authorities said was secretly sending funds to terrorists.
Danny:
Let me be clear. The error was not in reporting the story. It needed reporting.
The error was in using an "anonymous administration source" to support the story. A real reporter gets a tip from a source, then gets people to talk on the record based on his/her tip.
Only when two conditions are met can you go forward with an anonymous source: 1) no one will go on the record; 2) the story is so big that the public's "right to know" (as determined by the paper's editors) outweighs the perils of going with an anonymous source.
I don't see where the present article meets either of those standards. The Denver Post, a real newspaper, got it right.
Call me Curm today with all the posts ...
Note that there would have been little point in the SE holding the Adam Aircraft story for the benefit of the employees, or waiting for the company's higher priced help to get around to telling them.
RE: Today's Adam Aircraft "update".
So, they are looking for "funding" eh?
This happens all the time. A start up beings with lots of hype and big plans. Then, they run through the original investors' money way before they said they would and still have no product and therefore no money coming in, let alone profits. So they look for somebody else to invest in them. And on and on.
The scary thing right now is some of the companies scrambling for money these days are major NY money center banks. They are asking for the money from foreign governments! Think of it! These are the guys who are supposed to have the money, who are supposed to save the day in a panic, and they have to look outside the US for capital to cover their losses!
The days of easy money and easy loans are almost over. Here's a quote from the great Ludwig von Mises.
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
J. Spencer is right. This is the tip of the iceberg. And the over-leveraged Ogden RDA is the poster child. Rough seas ahead, people. Very rough.
Monotreme:
I was typing and didn't see your post. I see your point now, but I still disagree.
The purpose of a newspaper is to sell the paper. If they have what they think is a credible story, they should run it - especially if it's a headliner and will sell copies.
I really don't get you people sometimes. You talk about what kind of business should go here and there, but have no money to open your own. And you talk about what the paper should do and how it should do it, but you are not a publisher yourself, and have never been one.
Here we are facing a possible total economic collapse of the world's money system (to say nothing of our own city's $100 million in uncollectable debt) and the focus is on minor issues. (Note that with a collapse, and the way people have moved from the countryside into the cities in places like China provides a new and prime breeding ground for viral mutations and pandemics too.)
I suppose had I wanted to live in interesting times, I got my wish. I just hope I survive.
I do enjoy all you people, even if I often disagree.
Danny, glad I'm not the one that interjected the negativity today.
But now I'm here, Adam's was predictable. Without billions from Washington Boeing would be history. We have lost our ability to manufacture anything here, save pharmaceticals, because they have been granted a monopoly, by law, and don't have to compete globally, or even in our own hemisphere. Their profitability is protected by law, sweet.
The sad truth is that until the U.S. labor market sinks to the global lowest common denominator, we can't compete. (this may explain some veiws of the illegal imagration debate, it'll help speed up the fall) The real sad news I pose in a question. What can a country that can't produce anything and has lost it's agricultural ability offer the rest of the world? We make nothing and have even sacrificed the ability to feed our population.
Our politicians tell us we have to become a service economy in this information age, we can't eat or wear information. Our economic picture has been bogusly painted with far too much emphasis on the financial sector, as you point out, it's near collapse.
I saw a news clip of the disengenuous Mitt Romney speaking in Detroit to distraut ex auto workers, he told them just what they wanted to hear, in other words, flat out lied. I can't believe that a guy that capatolized so much by creating and promoting the stuff thats put us in this delema, could be in concideration for the White House.
His fortune was built on moving U.S. jobs and monies off shore.
Who pray tell has his life benefitted? Only himself.
Danny:
Ah, the old "naysayer" argument again. I am wounded, sir.
Look, as Brother Bob Dylan said, "you don't need a weatherman to tell you which way the wind is blowing."
Also, you are mostly wrong. While I haven't ever been a publisher (very few people have), I have been a working journalist.
You still miss my point. It's one of journalistic ethics. I will stack my version of journalistic ethics up against yours any day.
By the standard you set, I'm looking forward to seeing the headline "Danny Beats His Wife Repeatedly" on the S-E. Because, if all that is required is that what you call "news" sells newspapers, then we can forget about journalistic responsibility and just publish any old fantasy that anyone comes up with.
Thanks for your frenetic posts today Danny. I especially apprciated the von Mises quote:
"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
We're well down the road to the latter contingency, as we read the past ten days' news stories (and even one from today):
Inflation is now at a 17-year high
The price of gold bullion this week hit an all-time high
And today, Fed Reserve moron/chairman Bernanke announced his plan to "pump the failing economy" with even more interest rate reductions.
The message remains clear from the Fed. The mantra is "inflate or die."
Multi-digit inflation isn't far off on the horizon, people.
The atmosphere is a little bit gloomy on WCF today, although not without good reason.
Bill,
Permit me to bore once again with some comments.
I disagree that the US worker can't compete. On the contrary. The US worker is as productive or more than foreign workers. In fact, a little known fact is that more jobs have been IN sourced INTO the US than OUT sourced OUT of the US. Amazing no? But that sort of news doesn't sell papers or elect politicians.
Also, the US is still an agricultural powerhouse, with the world's highest crop yields per acre. Trouble is, Bush has diverted an astonishing 20-50% of some crops to ethanol production. Ethanol takes more energy to make than it provides, which is why the oil president likes it so much.
You are correct about the pharmaceutical cartel.
The problem is the money changers. All the economic growth during the Bush years has been due to added consumer debt. Bush hopes the Fed will keep slashing rates to postpone the reckoning to after he leaves, but it doesn't look like that will happen.
It's not the little American whose at fault. It's the leaders. It's always the leaders.
Monotreme:
Again you make points, but they are not relevant. (Don't get mad.) The point is, the story was TRUE! It's hardly unethical to run a TRUE story. As far as journalistic ethics, most consider that a contradiction in terms. Ethical journalism would be nice though, I agree. You're hired! Oh wait, I don't have a paper either . . .
Republicans, Democrats...how silly. The point is that Godfrey and Harmer were so anxious to show their business acumen that they didn't do any due diligence, and it appears that the state didn't either! Too many stars in the eyes of these bozos.
We give away money like drunken sailors on shore leave after a yr on the ship.
If we had a financial wizard with a key to the money box we'd all be in better shape.
One problem is that Harmer goes in and schmoozes the Council and gives them half truths and they buy it every time!
Like it or not, there is such a thing as journalistic ethics. You just couldn't prove it by the S-E.
Journalistic ethics is relevant here.
See: Society of Professional Journalists Code of Ethics.
"Journalists should...[i]dentify sources whenever feasible. The public is entitled to as much information as possible on sources' reliability.
"Journalists should...[b]e vigilant and courageous about holding those with power accountable...
"...[d]eny favored treatment to advertisers and special interests and resist their pressure to influence news coverage."
The S-E routinely fails on the last two of these simple standards when covering Ogden City administration stories.
The problem is that the SE isn't a REAL NEWSPAPER.
It's actually a daily J.C. Willey Ad, wrapped by sports & comics sections, and augmented by a few Godfrey propaganda pieces and crime stories.
Bill
Earlier on this thread you wrote:
"The real sad news I pose in a question. What can a country that can't produce anything and has lost it's agricultural ability offer the rest of the world? We make nothing and have even sacrificed the ability to feed our population."
How about work ethic? Ultimately the strength of any nation is based on it. That is why the US is slowly losing it in the global economy. Nobody wants to work, and if they do work they don't want to do a good job. We are raising a country of executives!
Incidentally there once was a country about 50 years ago in the very position you describe above. It was called Japan, it had virtually nothing to barter with the rest of the world except its National pride manifested in its work ethic.
Danny, about labor. I was refering that profits are derived from the ability to capatalize on how little you pay in relation to labor. All other parts represent fixed costs. Reduced labor costs are what make or break you. Until the global labor market has some assemblence of parity we'll find it impoosible to compete. See China, India and Latin America. Automation gave us a great advantage at one time, but all things equal, it reduced greatly the folks employed.
Danny, yield per acre hardly tells anything. What crops? How many acres have been removed, does the increased yeield offset lands taken out of production? What about the subsequent enviromental damaged caused in achieving these yields?
You sounded open to a Walmart coming in, next time your there check the label to see where it came from. All their own label comes from Mexico. Their beef and pork from Argintina, their seafood from China,not much of anything from the U.S. Popcorn, junk food and such. Things obese Americans will still pay a premium for.
Bill,
What you are doing is repeating misconceptions. As I said, Americans are highly competitive on the world market. If not so, and we had really lost all the net jobs the media claims, our unemployment rate would not be only 5%!
Would you believe a Toyota minivan has more American content than any other vehicle? Most Japanese labeled cars are made here, with a lot of US content. They can do it cheaper here, and better here, than in Japan.
And would you believe one of the world's top exporters - or perhaps the top - is Germany! Yes, high wages and all, Germany is a huge exporter of valuable products, especially the complex chemicals that are used - required - to make other products.
If you're talking about all the stuff in Dollar World, yes, it's Chinese. But the high value stuff is not Chinese. Remember, most of what is sold is not just the products you see, but the plastics, pigments, metals, and other things that go into them before they are assembled in Chinese sweat shops.
Also, regarding crops, the US is a huge - huge! - producer, and exports to the world. And since most of the US cropland is private, the owners actually take comparatively good care of it.
Yes, America and Europe are still great. The Chinese are ascendant but have a very long way to go. They will have many booms and busts along the way.
Oz is right, everybody wants to chase skirts and look at stock options for a living. But most of those dreams die, and people buckle down and work. Americans are hard working too.
The difference in perception is due to the difference in getting one's info from the popular press versus more reliable sources.
And this great economy is largely unseen and unknown by the public. It is one that people like Godfrey never know and never see as well, as they sit in meetings with leeches and sycophants trying to pry open the public purse.
That's why what works best is just to leave the economy alone. It works very well that way. It's bigger and more complex than anyone, or any group, can comprehend.
And no matter how bad it can sometime get, remember, it's all just part of how it all works. It's necessary, just like a fire purging the prairie of the clutter and sage so the new grass can spring forth in renewal.
If, as I suspect, the WCF world grows tired of me and my economic mumbo jumbo, may I suggest this author who is at least, more entertaining on the subject. He often has some interesting info in between the laughs too.
Click Here
(Assuming Rudi forgives the sin of temporarily redirecting to another site!)
With a struggling economy and possible recession on the horizon, I can think of no one I would rather see at the head of the Ship called Ogden, than our beloved Matt Godfrey.
He deserves to be in office when the ship sinks and the house of cards fall around him. The causee are because of his cavalier attitude of him and his band of advisors will not take advice, and live within our means.
Ogdens asset to liability ratio in the general fund has slipped from $5.26 in 1999 to $1.58 in 2007, according to the City CAFR reports over the past years. What that means is the City has $1.58 in assests for each dollar in liability, comparerd to $5.26 in assets to each dollar in liability in 1999.
Ogden's net general obligation debt per capita has more than doubled from FY05 to FY07. The FY 05 figure was $441.83 and the FY07 figure is $960.38. These are long term debt figures from the City CAFR.
Ogden City is dancing on thin ice too. Mayor G has not been very up front and honest with his constituents.
Suggested reading: Where have all the leaders gone- by Lee Iacocca.
danny
Thanks for the link! I have read The Mogambo Guru in some different financial publications - he is usually right on the money! (no pun intended)
"The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it."
Ya gotta love it!!!
utah state money for adams expires this sunday. thats 35 mil. without it there is no way adams is coming here even if they survive.
harmer do you really think were that stupid to believe you when you say trust me. there still coming.
btw i agree with dizgusted comments above.
Despite the fact that all the conversation during the RDA discussion were centered on Adams, in truth the Ogden RDA money does not go to Adams. It was granted to Kemp, their landlord. So, reguardless of Adams making it or not, Ogden's commitment of millions will be collected by Kemp.
On another note I hope WCF folks will support the Hof Festival at the fairgrounds today and tomorrow. I understand they will have a German Beer Garden there and good food. Funny as soon as it moves out of Ogden city (aka little kid land) they have beer for the adults and some fun activities.
Beer?! I'm there.
mmmmm Beeeeerrr
Anyone notice AmerSports had a 27% reduction in Dec. sales from last years figures. That is a disastrous loss of revenue and market share. I wonder if they can fulfill the bargain to create all the jobs that were contingent on getting the deal from the state. We'll see.
Recession is slowly engulfing the economy and this is just the beginning. The economy has been driven by the tremendous credit cushion everyone and every business exercises when things get tight hoping to make through to the next upswing.
Bill
You wrote:
"regardless of Adams making it or not, Ogden's commitment of millions will be collected by Kemp."
Kemp actually already collected the $2.5 million in question. It was done a couple of years ago by the magic of TIF Bonds that were issued, Kemp collected on them, and us Hoi Polloi get to pay the bonds back over the next twenty years! The real chicken shit part of the deal is that it was all done retroactively (after Kemp had already built the new building on his own dime) and very secretively by Godfrey, Kemp, Harmer and the rest of the usual suspects. A highly suspicious deal that doesn't fit anywhere close to RDA laws - yet was done anyway.
Nifty deal if you can get it! Non Friends of Matt need not apply however.
On the Adam situation - They are a class act with a lot going for them. I really hope they can get their funding back on track and be a long and valued member of Ogden's community.
Oz, you're refering to the 2.5 million for phase one. Last year they were granted another wad for phase two. To make things even more insane, there is a phase three yet to come.
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