Twofer Tuesday Business

First up is the RollingStone’s Matt Taibbi take down of the New York Times’ Thomas Friedman, who likely has no clue how the average American citizen lives their daily lives. Friedman, likely the wealthiest journalist in the country, is an unabashed proponent of globalization that sees the world divided into two factions, those that like the trend towards the globalization of the world’s economy and those that don’t.

The problem for Friedman being the entire topic is far more complicated than simply painting the opponents of globalization as election year losers (think Bernie Sanders supporters and soon Trump’s). To understand where I’m going with this you must first read Taibbi’s piece because the price of globalization is inequality (income, political and other) along the decimation of the United States middle class. These built in inequalities drove the Brexit vote and no doubt plays a role in the thinking of both Trump and Sanders supporters, which I’m going to illustrate with a picture a reader sent me a while back:

Reader Submitted Photo of the Royal Dutch Shell Special Projects Office in New Orleans, Louisiana. Desks that were once occupied with college educated engineers have been empty for well over a year
Reader Submitted Photo of the Royal Dutch Shell Special Projects Office in New Orleans, Louisiana. Desks that were once occupied with college educated engineers have been empty for well over a year

Those that follow Slabbed’s twitter timeline have witnessed our coverage of the downsizing of the New Orleans RDS office, which I’m getting from a very well placed source. Shell has not exactly made a secret of what they are doing downsizing its New Orleans office but you can’t view what is happening now through the same lens used to examine previous oil patch bust layoffs. Here is an edited comment from Slabbed’s source on the current happenings in NOLA at RDS:

Shell had approximately 2,000 employees in the CBD at One Shell Square 2 years ago. Now, it’s about 700. 200 more are slated to leave by the end of the year.

So we have a 75% reduction in headcount in high quality white collar jobs at RDS NOLA including the various contractors. A clue follows for those that subscribe:

Shell ‘re-scoping’ at Vito ~ Upstream

“Vito” until recently was known by that name but it is now been code named “Polaris” with the engineering now handled by the Houston Texas contractor Jacobs Engineering Group (rather than in New Orleans) but the engineering will not necessarily be done in Houston Texas:

Jacobs Awarded Contract From Shell in Bangalore, India

PASADENA, Calif., Dec. 6, 2011 /PRNewswire via COMTEX/ — Jacobs Engineering Group Inc. (NYSE: JEC) announced today it has received a contract from Shell India Markets Private Limited to establish an integrated organization with Shell Projects & Technology for its Project Design office in Bangalore, India.

Officials did not disclose the contract value, however, noted the contract duration is five years with provision for further extension.

The integrated project design organization expects to deliver a full range of engineering and design services for onshore upstream (oil and gas) and downstream major capital projects, mainly in the Middle Eastern and Far Eastern regions. The new organization aims to blend the strong technical and engineering design capability held by Shell and Jacobs, while optimizing the best work processes and tools of both companies.

Once upon a time a college education was the main ticket to gain admittance to the new economy. Now highly educated engineers are losing their jobs to highly educated and (cheaper engineers) in India. This is one of the costs of globalization and it is caused by the ruthless search for efficiency by businesses maximizing their profits. Its what business does but it carries a human cost that unabashed proponents of globalization have largely ignored beyond lip service. Inefficiency carries a cost but its true that inefficiency can also mean jobs.

Next up is the topic from where Slabbed derived its name, insurance. With the benefit of hindsight we can now determine who was right, Former Florida Gov Charlie Crist and Florida Citizens Insurance or Haley Barbour-Mike Chaney-Jim Donelon – Wall Street Journal Editorial Board. I’ve give you a hint folks Slabbed backed the winner in Former Gov Charlie Crist, a rare politician that actually gave a damn about his fellow citizens (subscription required):

The Insurance Industry Has Been Turned Upside Down by Catastrophe Bonds ~ Leslie Scism and Anupreeta Das

True competition instead of a anti trust exempted racket is a bitch, just ask Warren Buffet:

Citizens Property Insurance Corp., run by the state of Florida, used a mix of cat bonds and conventional reinsurance to buy $3.9 billion in coverage last year, up 20% from 2014. Citizens also paid less: about $282 million in 2015, compared with $304 million a year earlier.

Such savings are a boon for Florida residents such as Greg Truax of Tampa. When he opened this year’s policy-renewal package from Homeowners Choice Property & Casualty Insurance Co., he saw that his premium had fallen 5.7% from a year earlier, saving him $233.

Dulce Suarez-Resnick, an agent at NCF Insurance Associates in Miami, says lower rates have been a “lifesaver” for clients rebuilding their finances following the financial crisis and recession.

Sawgrass Mutual Insurance Co. has cut the annual premium on Ms. Suarez-Resnick’s own house by $484, or 15%, since 2013. “Thank God the rates started to go down to make it more affordable,” she says.

The bottom line here is when the insurance Chicken Littles were chirping the loudest back in 2008, Florida Citizens retained some risk (backed by the full faith and credit of the State) and now is able to securitize those risks by directly tapping into the overall capital markets and as a result wind policy holders in the riskiest state to insure against Hurricanes are seeing lower rates. I do not look for Mississippi or Louisiana to capitalize on the overall trend except indirectly as re-insurers have had to take less profit in order to compete against the cheaper capital currently available in the overall markets. Those wanting additional background can find it here.

If you’re in the Mississippi Windpool feel free to chime in about your current annual premium in comments.

4 thoughts on “Twofer Tuesday Business”

  1. “Its what business does but it carries a human cost that unabashed proponents of globalization have largely ignored beyond lip service. Inefficiency carries a cost but its true that inefficiency can also mean jobs.”

    That’s some real short term thinking. If the business remains inefficient, a new competitor shall emerge. Maybe the new competitor will be based solely in India or China where it has no moral imperative whatsoever to employ Americans at all in any aspect. That new business will clearly out-compete the local business “doing the right thing” by being inefficient or more likely, being compelled into inefficiency by law and regulation set by know-nothing do-gooders. Sooner than later the entire local business runs out of capital, beating down by the new competitor and then shuts the door. Poof, no more business at all. Kind of like a bunch of manufacturing companies that no longer exist. But hey, they did the right thing…But in the end, there is still no jobs. So short term or long term, it does not matter. Global competition is not a choice. It is a reality. 20 years ago India and China barely had roads now they have everything necessary to compete. Sucks doesn’t it. The hard choice Americans cannot seem to make these days is that to survive, we’ve got to eliminate the do-gooders making the rules and get out of the remaining industries’ way. There will be casualties, but also survivors. If we continue with this government-control first direction, it will be all casualty.

  2. Great post and so true. A business in the USA has forced expenses that other locations around the world do not come close to demanding.Until we lift some of the regulatory burdens and reduce corporate taxes things will not change.With technology most can operate in better environments where costs are much lower.The world is now much smaller and available due to this. Manufacturing is liquid, can flow to areas that are more receptive and will continue to do so as long as the USA does not change the destructive policies in place.

  3. Screw those secretive, outsourcing bloody bast*rds…..

    Drive to an ExonMobil station instead….

    Good luck to the US petroleum engineers when they try to communicate with those Indian engineers…..

  4. Far too long ago I posted on Slabbed, a commentary regarding the need for judicial overhaul. (And not unexpectedly, for my outspokenness, like Slabbed, I’ve been crippled by the corrupters –but I’ll never cease lawful efforts toward judicial reform –especially exposing what I know and can prove.) Social unrest and “inequalities,” courtroom judges and politicians undisclosed entanglement in aiding and abetting information technologies that combines businesses, people, and governments (through lawful as well as unlawful means) is not something to disregard –regardless of a person’s economic status. While inequality and unfairness was for too long perceived as the misfortune of indigent people, TOTALITARIANISM [that includes: courts that refuse to apply Rule of Law, exclusion from economic opportunities, business “Shake Downs”, and unfair competition associated with “Third Sector” operations] are examples of how the middle class become similarly situated as indigent people
    Such realities, predominantly emanating from Judicial / Political corruption is why it was imperative to post this: “In Protest of Judicial \ Political NONPROFIT RACKETEERING via Class Action “Cy Pres” and Disaster Funding –SOURCE OF: Totalitarianism, Unfair Competition, Inequity, Disintegrated Communities, Deceptive Trade Practices, Violence –and more” @
    Here are some excerpts:
    “Under color of official right, federal judges Samuel Maury Hicks and Mark Lane Hornsby obstructed exposure of Sarbanes-Oxley NONPROFIT illegalities and frauds. (CLICK this link to see list of NONPROFITS:
    The Robert T. Stafford Disaster Legal Services –42 U.S.C. § 5182 appears to be the primary tool for nonprofit pilfering of government provisions and funds, and for outrageous unscrupulous exploitation of classes of disaster victims . . .
    . . .illicit nonprofit activities involving scores of legal professionals (including courtroom judges) and their allies, pertaining Stafford Act disaster funding and class action settlement CyPres awards, occurs through the United Ways (Louisiana) and the Louisiana State Bar Association Young Lawyers Division’s Barristers for Nonprofit Boards
    . . .since it was BP’s litigation that led us to our Cy Pres discoveries, we now emphatically concur that BP’s contentions about unreasonably unfair CyPres awards is justified. Overwhelming evidence shows BP settlement money linked certain judges, law firms and associates.
    As consequences of disparities and exploitation such as these by legal professional with superior skills and inside knowledge over disaster victims and unsuspecting citizens, church members, communities, etc., as to ‘the games these people play’, it’s not hard to recognize how defendants in class action lawsuits unwittingly are enabling social violence, poverty, and inequality when those defendants fund nonprofits that are engaged in fraudulent operations. Put plainly, it is not hard to see how “windfall” CyPres settlement money can become utilized for laundering for profit and not for profit businesses and “foundations” controlled by legal professionals inclusive of judges and law firms appearing in their courts –especially by means of “partnering with,” and “collaborations,” and undetectable White Collar “Passthrough grant” frauds.
    preponderant “outreach” methods and targets for these types of legal profession-controlled nonprofits and foundations created with or from CyPres settlement money and government contracts evolve around “At-Risk Youth” and their families, nursing homes, and government agencies –especially after a Presidentially-declared disaster affords the American Bar Association’s confederations with HUD and the Federal Emergency Management Agency(FEMA) to take advantage of 42 U.S.C. § 5182 while pretending to aid certain classes of disaster victims.

    **ENTIRE post and exhibits at:

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