Call center firms seem to come and go in East Texas. Athens has one for awhile, and it left. Jacksonville had one for awhile, and it moved off. Recent new call centers have moved to Rusk, and now Jacksonville. The Rusk group has much of its personnel, ownership, and management in India. The Jacksonville group has the majority of its personnel, investors, and corporate headquarters in the Phillipines. The Jacksonville center company provides services to major corporations like A T & T and Dell Computing, but only has one year contract committments from any of those firms, so their revenue and jobs get a chance to stay or go each year those agreements get renegotiated.
The Rusk operation has 55 employees at this time according to the Rusk Cherokeean Herald, not 20 as some local Jacksonville business types think. The current employment of the new Jacksonville operation is unknown at this time, but they promised 400 local jobs in return for the lucrative up front money and tax abatement package they were given by JEDCO and the city.

The group from the Phillipines, eTelecare Global, watched their stock go from $12.50 to $4.00 this year, and announced second quarter earnings less than half their goal...and they predict that the rest of the year profits will suffer, blaming high start up costs for Jacksonville and another new center...
They spent a huge sum attempting to purchase part of AOL, but did not complete the transaction after spending millions on the activity...

Now, on September 19, like so many other Jacksonville employers have done....the principals of the eTelecare business are selling the corporation off to Phillipine investors, with the owners taking their big dollars on the way out. The sell out announcement was in the financial press, but this information does not seem to have interested, nor attracted the attention of the JEDCO or City folks that would be expected to monitor and report on the health and stability of their economic development. Remembering how the charcoal plant was locally started, sold off, and closed down after a fire, never to come again and the then JEDCO President insisted they were going to rebuild all the while, how Lastra sold off and closed, how Astroaire sold off and closed, etc etc....without any warning to the local employee base or community....one hopes that this new venture has some "stickiness" to it given the high hopes of everyone to replace all the lost jobs from ADR. It is serious business to find, attract, and secure solid new corporate businesses to relocate in East Texas. All the area towns are fighting over the same companies....and sometimes they miss the important points in their competitive zeal....do these corporations have stable ownership and a solid reasoning as to WHY they would choose to relocate locally....not just taking a big financial attraction package, but fundamentals about the town that will secure the business. Jacksonville spends about a million dollars a year of sales tax dollars on JEDCO stuff. It should expect consistent and quality results.

It would be nice to have JEDCO show some results . Every where you look there are empty buildings . Probably more soon after the financial crisis

The more that "local" business is part of large external corporations with publically traded stock and the demand for better and better financial results each and every quarter, the more vulnerable the "local" operation and employees are to shut down and lay off.

The goverment reaction to gas prices was the ethanol bill which diverted corn crops from food and into fuel, based on the government subsidizing with huge funding, the ethanol business. Result, food prices shot up with removing corn from food supply. Also feed costs for meat producers shot up. Now...look at Pittsburg headquartered Pilgrim's Pride....big big trouble now. The tried to keep cost down with illegal alien employees...got caught, had to replace them. Now, they are hung with lower demand for expensive white meat breast foods priced out of the reach of many families, and the cost of feed for chickens out of sight due to the ethanol debacle. This is what happens as rural towns become subject no non locally owned and managed business....and when local businesses use illegals for labor (watch out lumber and related East Texas businesses!!!) and to increases in components of their product like the grain increase...or fuel increases...or higher taxes....and higher healthcare benefit costs.....

Thu Sep 25, 2:26 AM ET



(Reuters) - Chicken producer Pilgrim's Pride Corp (PPC.N) expects a significant fourth-quarter loss because of high feed costs, weak pricing and demand for breast meat, along with the negative impact of hedged grain positions, it said on Thursday.

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The company's statement came a day after its shares fell as much as 40 percent to a five-year low on credit worries before being halted.

Pilgrim's Pride also said it does not expect to comply with a covenant under its principal credit facilities for the fiscal year ending September 27, 2008.

The company said it believes it has reached an understanding with its lenders to waive temporarily the fixed-charge coverage ratio covenant through October 28, and to provide continued liquidity under these facilities during the same period.

The Pittsburg, Texas-based company said it expects to comply with all other covenants by the end of this year.

U.S. meat companies' stock has suffered as investors worry that credit may be harder to get in the deepening financial crisis.

The companies have been hurt this year largely because of high prices for feed and fuel. Chicken companies, in particular, have struggled because prices for breast meat, a key revenue producer, have been weak.

Also, concerns about the U.S. economy have led some analysts to believe that consumers may shift to less expensive foods.

Shares of Pilgrim's Pride closed down 38 percent at $6.37 on the New York Stock Exchange on Wednesday.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Paul Bolding)

If the country enters a serious recession, consumer products such as Dell Computers, AT&T phones and services, and the like will decline rapidly, and with those declines, pressures will be placed on any services they have outsourced, such as to eTelecom....the reason they outsourced was to make it much easier to shut down contracts without incurring employee lawsuits and severence expenses.

The Tyler Paper finally wakes up and notices the Pilgrim's Pride crisis. And after Jeff Austin III stated in the paper that everything is ok here....maybe the bank is ok...but East Texas is going to feel this crisis too.

Sunday, September 28, 2008
National Financial Crisis Has Definite Impact On East Texas

Roy Maynard

It's big and scary -- a $700 billion bailout of the nation's financial institutions, in hopes of staving off a recession, or worse.

(ROY...IT IS A MARKET MELTDOWN AND DEPRESSION....NOT A RECESSION THAT IS AT RISK)


"Our entire economy is in danger," President Bush said on Thursday. "Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold."


But what does it mean to us? Do failures on Wall Street really affect East Texas that much?


The answer is yes -- both directly and indirectly. How?


Remember that the current financial crisis is really a credit crisis. That's how it began -- with bad loans. Lenders and mortgage brokers invested heavily in "sub-prime" mortgages, home loans for people with credit or income problems. These loans promised big profits, but they were very, very risky.


The risk was spread out among the companies insuring the loans, such as AIG, and investors who backed the loans with various financial instruments hoping to cash in on the housing boom.


So when the housing bubble popped, banks and other firms found themselves sinking under the weight of these bad loans. They now have little or no credit to extend. And that's a serious problem.


"The choking up of credit is like taking the lifeblood out of an economy," Federal Reserve Chairman Ben Bernanke told Congress last week.


Now, my grandfather would disagree -- he saw borrowing money as a form of voluntary servitude.


But the economic reality is that people and businesses need credit at times.


There's an example very close to home. Pittsburg-based Pilgrim's Pride is a company in trouble.


"Pilgrim's Pride Corp. said Thursday it expects to report a 'significant loss' in its fourth-quarter and is so sagged by debt it may not meet the terms of its loan agreements," the Associated Press reported on Friday.


The biggest problem is the high cost of animal feed -- mostly corn, which has tripled in price in recent years. High fuel prices have also hurt, and there's a temporary oversupply in the marketplace.


On Wednesday, the chicken-producer's stock shares fell by 38 percent.


What the company needs now is capital. Fuel prices are going down and demand for chicken will inevitably go back up. But Pilgrim's Pride needs some cash to keep it going until it can get some relief.


But with credit so tight, what's the company to do? It has already laid off 2,300 workers from its North American facilities. Now it's talking about selling off some of its assets.


This is a locally based company that employs 54,900 people. If there's no infusion of capital, plants could begin to close. And the effect would spread to the local firms that supply Pilgrim's Pride and the local businesses that depend on those paychecks.


The big bailout continues to take shape. Congress is meeting through the weekend to try to hammer out an agreement. But it's not something that matters only to Washington politicians and to Wall Street financiers.


It matters here.

No joke....all auto dealers depend on bank credit to allow them to stock automobiles to sell. All grocers depend on bank credit to finance food purchases for distribution. All petroleum distributors rely on bank credit to support purchase of gasoline and propane for their sale and distribution. All retail stores rely on bank credit to cover their merchandise costs from purchase thru sales receipt.

No credit...no merchandise...no jobs for employees.

This is like the thing floating in the punchbowl. And it does not matter who gets elected President, nor what party is in charge at the moment.

WHY?

Likely Jacksonville affect of credit crunch and market meltdown.

A great many Jacksonville citizens have, over the years, purchased small rent houses and porperty for the purpose of rental income production to suppliment their incomes, or to create "passive" (non labor) incomes to support their lifestyles. Virtually all folks living in large houses and living well, own rentals in Jacksonville. They purchased these houses that were built in the 1940s and 1950s as two bedroom one bath, small houses inside the city limits. Those houses were the norm at that time. As folks died off, their estates sold these houses to locals who were eager to buy them up cheaply, and the local banking and savings institutions were happy to loan money for the purchases of these properties, to locally strong and respected citizens. The issue that made them so attractive was the ability to right off depreciation and expenses against taxes due from the citizens primary income,( their jobs), the easily available mortgage money for them to buy these houses, and the fact that no new houses were being constructed for lower income and rental only families. This guaranteed rental income, with low tax appraisal values for run down and older homes, made for a great way to make money in a place where even the highest wages paid to employees require two incomes for a family to live well and comfortably. Additionally, the rental units would provide income after retirement, and could eventually be sold off to other rental property owners when the first purchasers wanted their money out of the rental businesses. But...the low income renters have to make a living in order to pay rent. And therefore, there have to be jobs for low and unskilled labor for the usually renters to make money at...and since most of the rental units are not maintained and modernized by the owners....who wants to PUT MONEY INTO these properties...they are not to live in...just to rent out....so, as long as Jacksonville and the area has jobs in Prisons, Hospitals, lumber and pallet operations, agriculture, and yardwork...then there will be plenty of renters. Therefore, these owners want to KEEP a lot of low skilled and unskilled people living and coming into Jacksonville. Then, in addition to jobs that did not pay locals very much, there became a new source of renter. The immigration wave of legal and illegals coming to the US from Mexico, where there were NO JOBS...so they would work for ANYTHING. And they have to live SOMEWHERE....filling up junk mobile homes, and often living several families or workers to a house. And these folks labor was exciting to the local unskilled labor employers...they worked cheaper than the US Citizens...BUT....if the economy that purchases pallets to ship airconditioner units, or refrigerators and washers and dryers stops selling goods to consumers, they stop buying pallets. And without consumer money buying plants and fresh vegetables and doing landscaping with credit crunch going on....the agriculture jobs dry up, and the unskilled labor with no ties to the community just leave. Now, the local owners that owe money on the mortgages of these rental units have to keep paying on the mortgages, and the ever increasing bite of school and city taxes as well....but they have no income coming in....unless they reduce the rent, and now, the unrepaired properties get to be home to even lower on the income scale people...like drug dealers and crack houses. While all this goes on, if the renters bail out of Jacksonville, then the schools go from overcrowded to under utilized. With smaller student population, the State and Federal money for the schools gets smaller, forcing the layoff of teachers and administrators. In Jacksonville, many of those jobs are the second job of two job families...that have bought the rental houses. Without the second income, the mortgage and tax payments cannot be made without renters. The City and Schools and Banks have trouble collecting their tax and loan money... Without renters, the WalMart and Brookshire revenues go down, and less goods are stocked for the community to purchase, and fast food, used automobiles, and rent-to-own funiture businesses go into the tank. The services of check cashing, wire funds transfer to Mexico, and bill paying services close down.

Get the picture....Jacksonville's income is propped up with low income renters and spending at Discount City, WalMart, etc. With lower populations of needy renters, the Government agencies that also provide good jobs to two job families in Jacksonville lose their funding and are not needed as much...so all social services agencies get their field offices sent over to Smith County.

And that is Why.

Excuse me, but that is too much to read at one sitting. Gives me a headache.

Please explain, I don't understand.

By the way, you are a headache.