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It’s Not a Good Year in Gadsden, Alabama

Where the Rubber Meets the Road in the Obama Economy

Less Energy Demand Means Less Work For Gadsden, AL (HT: Gadsden Times)

America has yet another reason to grow tired of Barack Obama’s failed economic policies. On the same day he released a new campaign ad entitled “Tires,” Goodyear Tire and Rubber Incorporated seems to have cracked an axle. As the travails of President Obama’s failed government corporatism hit home, I read the following from The Gadsden Times.

According to press reports, the plant in Danville, Va., has announced that 55 employees will be laid off, and the plant in Fayetteville, N.C., closed for a week in August for an inventory adjustment.

A Local Unionist explains what has happened to workers in Gadsden, Alabama as Mein Obama continues to fail miserably at making the trains run on time.

It will be a partial work schedule,” he said. “We’ve been pretty fortunate in the Gadsden plant, coming through the worst recession since the Depression,” he said. “Up until this year, we’ve been hiring, working overtime, but this year the economy’s caught up with us.”

He lays it on pretty thick on behalf of his preferred candidate, but here’s what has happened to tire production in Gadsden, Al.

1) Gas prices have more than doubled since President Obama has taken office. Where I live and drive, they have gone from $1.46 to $3.63. As a result of similar price increases across America, demand for Finished Motor Gasoline in Thousands of Barrels per Day, has been in steady decline in recent years.

2) The higher price of shipping goods mean that people do a whole lot less of it. Federal Express is trending downward this fair morning as they missed their expected earnings per share by $0.30 or a miss of nearly 20%.

3) Meanwhile General Motors continues to maunder forward in a zombie-like fashion towards its next inevitable bankruptcy. Having taken billions of dollars in USG money and invested it in foreign factories, GM is now doing to Europe, what Goodyear Tire and Rubber is doing to Gadsden, Al. Analysts predict over 20,000 layoffs just a scant two years after the USG bailed their foreign operations out with US taxpayer money.

4) With gasoline prices up and demand down. With over the road shipping and freight performing below industry estimates and with automobile manufacturers losing taxpayer money hand-over-fist, it should shock nobody that US tire production capacity has gone down by 4.5%. This is what happens when your nation follows an energy policy that involves necessary increases in energy prices.

So our current administration has deliberately made energy cost more. As a result of this people use less of it. As any 1st year physics student can tell you, there is a direct, positive correlation between the amount of energy used and the amount of work that can be done. As any 1st year economics student can tell you, there is a direct correlation between the demand of a product and the number of workers a firm can afford to pay.

As energy is made more expensive, less work can be performed. As less work is performed, fewer workers are therefore needed. Gadsden, Alabama’s Goodyear Tire and Rubber Plant is where that particular patch of rubber just met the road. It’s not as good year as many factory workers hoped in Gadsden, Alabama.

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