In a message dated 1/18/2003 12:57:27 PM Eastern Standard Time, [EMAIL PROTECTED] writes:
BANKERS OF THE WORLD, UNITE!
>From a research note circulated in November by Morgan Stanley to its North
American clients.
At the risk of encouraging the ghost of Joe Hill to come back and haunt us,
we suspect investors should avoid heavily unionized industries today more
than usual. From a long-term perspective, unionized areas have not been
market-leading industries, and today heavily unionized industries stand
directly in whatever the opposite of the sweet spot is. Consistent with our
"buy the 800-pound gorillas" theme, nonunionized companies competing in
heavily unionized arenas probably stand to accrue large relative gains.
What does history suggest about investing in heavily unionized industries?
Avoid them. While the recent carnage in stock prices and brouhaha over
excessive options issuance has kept investor focus squarely on the
incredible shrinking tech sector, folks may be looking in the rearview
mirror when it comes to where risks lie today. Yesterday's options problems
in technology may be a lesser evil than tomorrow's pension and health-care
funding requirements in rust-belt industries. In all kinds of respects we
are living in a brave new world, but a decidedly old-world
phenomenon—unions— may weigh on some new-world issues in the year ahead.
Look for the union label . . . and run the other way.
This is not only an anti-union, but also a horribly shallow and erroneous piece of analysis from Morgan Stanley. First, the technology sector, by which I assume they mean telecoms as well, had many more problems than those they refer to as 'options problems' - like debt-bloated business models, lack of balance sheet transparency due to a plethora of mergers, inflated stock evaluations and deliberate fraud.
Aside from that, they are downright wrong about unions and telecoms. Actually, the least unionized companies committed the most fraud and lost the most value in the sector. The most criminal failures were staunchly anti-union. WorldCom was not unionized, Adelphia was barely unionized, and Global Crossing sold much of its unionized component from Frontier to Citizens Communications. The more unionized telecoms like the Bells, though they have other faults, fared dramatically better. Not only that, they did so without firing as high a percentage of workers.
Nomi
