A Manufacturing Recovery – Not Bloody Likely

Manufacturing Created the Wealth of the 50’s, 60’s & 70’s
Pundits are carefully measuring US manufacturing activity and judging the current recovery by how many new manufacturing jobs are being created. They are misled. The prosperous middle class of years gone by, came from union jobs that paid very well and dragged up the salaries and benefits of other sectors. That era is DEAD.

The era of the middle class executive with the high expense account and house in the suburbs (mortgaged to the hilt) is gone, destroyed by the housing crash. That era is also DEAD.

Because of the ever increasing global economy, unions and suppliers of labor have lost their power. If a union job pays high wages, the manufacturing will move elsewhere. Unions are losing membership globally as manufacturing finds it easier to spring up anywhere and everywhere. It used to be that quality came from the USA, and other sources were suspect. No longer. Quality standards have moved globally and multinational companies ensure that their products meet exacting standards.

Judging the Economy by Numbers Means Relating Numbers to Manufacturing
The unemployment rate, at 7.5 percent, changed little in April 2013 but declined by 0.4 percentage point since January 2013. The number of unemployed persons, at 11.7 million, was also little changed over the month; however, unemployment  decreased by 673,000 since January. The numbers sort of indicate a moderate recovery or at worst, a stable economy. They are misleading.

Traditional and historical employment is not recovering. High paying labor jobs are not coming back. Middle class salaries are not growing. Low paying service jobs are growing in number.

The sector that is recovering strongly is in everything related to the internet and to instant communications and instant transactions. Many of these jobs are contract positions rather than salaried positions. Income for those working in this field is rising dramatically as demand for their services continues to climb and climb further. Investors should not be misled by reports and numbers that are not relevant to today;s economy.

Parts of the economy are exploding today, and parts of the USA are hotbeds of new and innovative start ups. You just can’t be misled by facts and figures calculated and complied by old and outdated criteria. The world is rapidly changing.

The World is Changing – Just Look Around
Have you been to MacDonald s lately, or to a supermarket? Chances are that the food server, or the bagger or the cleanup person, was older than you are. It used to be that kids, working for minimum wages, did these jobs for summer employment, or to pay for their schooling, and they were replaced by similar kids on a regular basis. No longer. Now a job is a job, and a wide range of people of all ages, nationalities and schooling need every one of these jobs, regardless of the rate of pay. A job is a job.

So relying on an economic recovery by measuring jobs is a highly  distorting exercise. Making $10.00 per hour does not put two cars in the driveway, or a three bedroom house in the suburbs. What is really happening is a seismic shift in the economy.

Cars, Dishes, and Furniture Cost Less Now
Used to be that you bought ‘quality’ goods because they would last, and you knew the cost of replacement would be higher in the future. That paradyme has shifted. Goods seem to be ever less expensive, Think about your auto – adjusted for inflation, it costs less now than before. So does a cheeseburger, linens, computers, software and most other things. Material things are more widely available and usually cheaper now, than they were. The highest growth business, regardless of the economy is the mass merchandiser with an eye towards value.

A new phenomena is the ‘plastics printer’. You create a computer design of a machine part, or a case, or a pen, or whatever and you email it to one of these Printers. The item is ‘printed’ out of plastic and out comes your ordered item at a fraction of what it would otherwise cost. The versatility of these printers is growing and the future is boundless.

People faulted Walmart for harming America, but Walmart is only one of the many changes coming to our society. Our society loves Walmart, and goods made in Bangladesh, or anywhere else that inexpensive quality goods are produced.

The Choice is to Recognize These Changes in Society and Invest Accordingly
The industries of the future, are more those that are related to communication, whether it be social networking, money transfers and instant transfer methods, on-line industries such as education, medicine, and anything else that allows this transformation of society to advance more rapidly.

We are in a world of change and that change is more related to instant communication than to anything else. Whether your choice is Facebook (our latest pick), or Microsoft’s attempt to merge its PC and Mobile networks, or Yahoo’s attempt to again climb to top spot, or those others that are now exploding in popularity, this is the world of the future.

Relying on old and useless statistics to make your investing decisions, is to fail to recognize the world around us.

We may or may not have positions in the securities we name under ‘Whats-Hot-or-Not’. Whether an investment is made in a particular security depends on many factors, including portfolio balancing, timing, cash and capital reserves, asset allocation and numerous other factors. Readers are advised to do their own research and decide in light of their own circumstances. Matters discussed contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied.


The views expressed are opinions and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds. This report is for information purposes only, and is neither a solicitation nor recommendation to buy or sell, nor an offer to buy or sell securities. We are not a registered investment advisor nor a broker-dealer in any jurisdiction. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data

By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.