Crystal’s profits drop by 32 percent but still near record high
December 5, 2012 at 6:47 pm in Grand Forks Herald
MOORHEAD, Minn. American Crystal Sugar saw its net proceeds slump by almost a third for its 2012 reporting year, although it posted its second-highest payments to beet growers in history. Continue Reading
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Jeff, you still aren’t getting your job back. Maybe one of the truck stops in Grand Forks is hiring, you can fill the sugar containers on the tables.
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Jeff says “I would fire whoever was responsible for locking out the Union. ”
You could start by talking to the union. They keep voting no for returning to work.
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This entitlement menatality will ruin the country. Leading the charge…Unions. Perfect example, this union.
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“Yup-those replacement scabs were sure a great idea.”
Jeff, perhaps you ought to give credit for the “replacement worker concept” to who’s really responsible for its implementation. Do you think companies WANT to jump through the hoops they have to jump through? If YOU were the employer, and your employees didn’t want to work for what you offered, how would YOU like it if your hands were tied in this manner?
Or….would THAT situation be conveniently *different* somehow?
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Exactly why is that OK? I am not being facetious or rude. Both side declared war. One side won. Both sides were hurt. One side won. Both suffered irreparable harm. One side won.
ACS has absolutely no reason to change their present course. In fact, if they did change their course there is a good chance Jeff would get his wish and the higher brass would lose their job. Too much time, talent, and treasure has been wasted to do anything other than stay the course.
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Last year, sugar prices were as high as 59 cents a pound. This year it’s 38 cents a pound. Do the math Jeff before you lay blame.
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Let me help you with that Jeff. .59-.38=.21 .21/.59=.35 Sugar prices dropped over 35%, but profits only dropped 32%.
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It appears to me that the company is getting this done without the workers who walked off their jobs. They now have people in those positions who want to work. Those crying outside the gates don’t have a job to come back to.
Do you expect the company to fire employees so the workers who threw a temper tantrum and stormed off their job hoping to hurt the company back with open arms? If you walk off a job, then badmouth the company, your future with the company is over. Why is this so hard for some to understand?
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I know people who have crossed too, and they say it’s never such a clean, efficient, and enjoyable place to work.
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I’ll believe what I’m reading in the paper, that they’re making as much of a profit with replacement workers as they were with union workers. What I have a hard time believing is that the union got 100,000 signature for their petition. That’s about 1 out of every 3-4 adults on both sides of the river. I have a hard time believing 25%+ back the union.
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I’d guess it was the petition off the website. The site the AFL-CIO has been promoting to all other unions. I’d guess the signature come from all over the US and even overseas. It might even be possible to sign multiple times. With >16 million union members in the US, 100,000 is a pretty small number. Good publicity stunt though. Had to expect it was going to happen.
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Heck I signed the online petition. Look me up. “Heywood Jablome from Fertile/Climax”
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So what you’re saying is that management came down and walked each employee out the door then turned around and filled those positions with untrained replacement workers. That doesn’t sound like a very good business plan. Did they make the signs for the union members to hold up too?
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Every time they voted no, they voted not to work.
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Gussy and bob, I searched the commodity markets and can only find a high of 29.74 and low of 21.84 cents per lb in 2011 and a high of 24.02 cents and a low of 19.9 cents for 2012. The mean price for 2011 would be somewhere around 25 cents and the mean price for 2012 would be somewhere around 22 cents. Where are you getting 59 cents compared to 39 cents?
Hot debate. What do you think?
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The difference is between unrefined (raw) sugar which often is limited quantity of dump sugar and refined sugar. Though such small amount was even sold for over .50 lb. by who, idk.
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The price difference between raw and refined is often the cost of having to transport and get it refined and get it to specs. Not very cost effective. Mexican sugar often does not made grade, must be further refined for most uses. Mexican sugar is not white, it has same color as what we call remelt sugar. We already have the cheapest sugar here of any developed country. Sugar on shelves is cheaper in US than in Mexico and much cheaper than Russia or Europe.
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Patty Hearst is that you???
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Jimmysags, I just read the SEC filing. I don’t think you are reading it correctly. The report indicates that ACSC increased its line of credit, but it doesn’t appear that ACSC actually accessed any significant portion of that line of credit. Increasing the available line of credit does not mean they took the money, it just means it is available if they want to utilize it. The report provides the following: “There was no outstanding balance with CoBank, ACB as of August 31, 2012.”
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Go read the 10K report from 11/8. The increase in debt year-over-year was from $128.6M in 2011 to $128.4M in 2012. Short-term debt went from $66.2M to $110.6M. Is this a $44M increase in debt? Their accounts payable increased $21M, so this could be where half of the short-term debt coming from.
The total Current Liabilities is up from $313M to $320M.
I think you are reading things wrong if you are concluding that Crystal is in big trouble.
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Wrong Jimmy. Paying your monthly loan would mean you have no PAST DUE balance. You would still have an oustanding balance because your loan is not paid off. Outstanding balance = amount currently owed on a debt. Argue with me I dare you. I am an accountant.
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The union forces have been saying for two years that ACS did this in order to break the union. While I disagree, I will give them their point and make one simple observation:
They have succeeded. The next logical question is: why? The answer will only be found in one place – the mirror.
Poor decision making from the get go has resulted in what was once a vibrant example of what is right with American Labor, being turned into a mockery.
Like the GOP in the last election, you can make all the excuses you want, and continue to blame everyone but yourselves; but at the end of the day you lost. If you need a refresher of what Americans think of losers, check the internet cartoons featuring the Detroit Lions.
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You can dislike facts all you want. My guess is gussy’s figure is what the packaged sugar is selling for and he conviently took the high from january of 2011 and compared it to the low of 2012. An average true market price of the product gives you a better representation of the profit margin.
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Google “Midwest Wholesale Refined beet sugar prices”. This is the market that ACSC sells into. 3rd quarter of 2011, $57.00, 3rd quarter of 2012, $40.48. Down 29%. Down 14% at 2nd quarter. Down 7% at 1st quarter.
Lots more data there. Draw your own conclusions.
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What is the measurement that market uses?
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Oops. My fault. The units are in “cents per pound”. The data in the spreadsheet is shown as xx.xx and I assumed it was dollars per houndred-weight or something like that. Just move the decimal point to the left two places and everything is ok.
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Agreed: protectionism is anathema to a free market. Yet, every time I remind people of this I get shot down quicker than an over amorous jr high kid. Seems we in the northland are all about less government … except when it comes to agriculture, military bases, and big public works projects
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What agricultural products aren’t subsidized by other countries that we trade with? It’s not an even playing field out there for the US now is it. Check it out Ron, maybe a senior in high school taking economics class could help you.
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Before you go there gussy, GM was not killed by Toyota because the Japanese protected their market. GM died because Toyota was not only cheaper, but better.
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Please keep in mind FN, my view in this particular case is an observation. You want label me? Fine. What I stated is the way it is. I am intrigued by the news that Sweden has the best quality of life in the world today. Is Socialism scary to Capitalism or the reverse? A blend of both would work in a Democracy.
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Sugar is NOT a subsidized crop. It is the ONLY NO COST PROGRAM to the government.
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Thank you for the info mike.
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Gussy, the question is not about subsidizing your product. The question is why are we subsidizing a product that cost 40 to 45 percent more than the rest of the world. The point of a subsidy is to reduce it’s cost so it is affordable for consumers.
http://articles.latimes.com/2012/jul/06/business/la-fi-sugar-program-20120706
http://www.cato-at-liberty.org/u-s-sugar-program-means-higher-prices-and-short-supplies/
http://sugarreform.org/why-reform/costs-of-the-sugar-program/
Hot debate. What do you think?
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1. U.S. sugar farmers receive zero subsidy. It is a “no cost to the taxpayer” program. The system works by limiting excessive imported sugar which keeps prices stable.
2. The world price of sugar being quoted above is for raw sugar. Raw sugar is brown, huge granules that have excess molasses and don’t bake well. To bring it to the U.S. market you need to buy it, ship it to the U.S., refine it from its raw state to white sugar, package it and distribute it. A $.20 world price doesn’t mean much to grocery stores in our region.
3. Look around the world for cheaper grocery store sugar. You won’t find it in Canada. You won’t find it in Mexico. You won’t find it in Europe or Japan. If our sugar program is so screwed up, why do Americans get a better deal than most of the globe?
4. If you can create a fair market for world sugar where all governments provide no support systems, U.S. sugar farmers would do very well and the price of a bag of sugar would go nuts. And, truth be told, democracies would fall.
5. It is a worthy goal to reduce agricultural supports worldwide. The trick is to avoid unilateral disarmament. If the U.S. sugar industry disappears, we will be paying more for sugar.
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With what stores are charging for the candy bars, it would make no difference anyways, but you would see a major problem with all the bakeries and homes to get sugar that is needed. It is used in many products, a must in breads to get yeast to work. There is no backup sweetener to sugar.
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Very well said taco, If the U.S. industry went under, I estimate sugar prices will go up in this country to a range of .75 to .90 cents a pound. Too many are too naive to see that world sugar is dump sugar and is of limited quantity.
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World raw sugar is low quality on purpose. It is produced as a low grade high impurity product for shipping purposes. It is not meant for human consumption. This allows for cheaper shipping, raw sugar can be transported in bulk container ships with disregard for contamination. Once the sugar is at its destination it is filtered and refined into white table sugar for human consumption. Shipping refined sugar overseas would not be economically viable.
Edible raw sugar is much the same as white refined sugar. Edible raw is still refined, it is left with a molasses coating and crystal size is allowed to be big and irregular.
If you look into US consumption of Sugar you will find that we as a population consume more sugar than is produced domestically. Meaning we are a net importer of sugar. Mexico being the largest supplier. The US isn’t dumping sugar, the USDA is allowing foreign sugar to enter the country on a limited scale. You are correct that if the government would allow the imports of sugar to go unchecked it could drive the cost of sugar down. This is how the sugar program is “no cost” there is no direct cost to the taxpayer. Sugar prices are held higher based on the amount of products you buy containing sugar. If you don’t want to support this you can simply not buy anything containing sugar. Taxes you pay don’t benefit the sugar price support. So technically there is no subsidy of sugar, price support by limiting the supply of sugar.
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Ron, in response to your comment “If the world sugar is such a poor product, why does the government need to control the price of american sugar? Wouldn’t the free market prefer. a high quality product? The us government is already dumping high quality sugar below market price to control the market. If the program was eliminated woulnt this excess supply of quality suar actually drive down sugar prices?”
Refined sugar is refined sugar. The “world” ships raw sugar as it is much more economical. This is basic economics and how sugar is shipped all over the world. To take advantage of economies of scale this type of business practice has been used for many years and is proven to be the best practice. If it was purely a question of contamination than there are acceptable approached to shipping, it is more about profit margin and smart business practices. Even all the sugar that is imported into the US is raw sugar and refined domestically. With the exception of Mexico based on their proximity can ship refined sugar profitably.
The government is controlling the amount of imported sugar (raw or refined). This gives an artificial demand curve hence raising the price of domestic sugar. This is were the price control comes into play and how the sugar program can benefit the farmer and not put an absolute burden on the taxpayer. If you don’t like it don’t buy sugar.
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My previous posts were more to inform you of how things work. You can research these things and find them to be true, I did.
If you were to go to most any other country in the world you will find that sugar is much more expensive than in the US. The US is one of the most efficient sugar producers in the world (Look it up, I did). If other countries are not as efficient why are they still in business, because the farmers/producers are given subsidies. Yes, actual money payouts to cover the cost of making sugar or raising beet/cane. So these countries are burdening every last citizen with some sort of tax to benefit the farmer. Comparatively in the US instead of mandating that you directly help the farmer you can decide buy not buying products that contain sugar.
Finally, please lay out where the holes are in the facts that I have stated. If you would like to debate the issue, which it appears, list for me the holes and contradictions. Your arguments and focus tend to shift as statements and facts are presented. Please pick the topic and stick to it.
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Contradicting oneself and/or having gaping holes in your arguments has never stopped you from posting things yourself Ron. You end up reframing a fairly large percentage of the things you get questioned on.
“Post now, think later” has *kind of* been your modus operandi since this all began. You have gotten better though, so it must have donned on you at some point that when you toss stuff out there someone might step up and question you on it. Like I told you months ago, I wish someone was compiling all of these posts, from all of these ACS threads into a book. Some of the stuff you’ve come up with along the way would amuse even you, I’m sure.
My apologies for swerving this thread off topic, but the “gaping holes in arguments large enough to drive a bus through”, and “self contradictions” that you made note of, struck me as particularly amusing….considering that it was you making those observations.
Which workers were you talking about when you mentioned layoffs?
And I know I’ve asked this before, but why the interest in the sugar program now? It seems like a lot of the “anti-sugar program” folks became “anti-sugar program” folks when the union suddenly found itself in jeopardy because they weren’t automatically going to be in on the “sugar program action”.
I asked before if anyone had done any Googling to see if they could find any info from the union decrying the evils of the sugar program that preceded the lockout, and got no replies.
Why do you suppose that is?
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“Scott, I knw you love the union topic and would do anything to steer this topic back in that direction”
I guess I must have missed it when you pooh-poohed everyone else that brought up the union lockout thing in this same thread.
Or…maybe you didn’t, and your reply pooh-poohing my post was merely a dodge since YOU mentioned layoffs and I asked you about the layoffs YOU mentioned.
At any rate, I’ll take this as a lesson in “Ron’s thread topic protocol”. When Ron brings something up in a post, thou shalt not ask about it…lest he accuse you of “steering” the thread away from the topic.
*wink*
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American sugar is of high quality. Import sugar quality is of no concern. Contamination is of no concern. World sugar is shipped int he “raw” for economics which means that once refined in the US it is the same cost structure as domestic sugar.
The government doesn’t inflate the sugar price, they limit the amount of imported sugar allowed to enter the country. They attempt to balance the amount consumed by the amount needed. Thus not flooding the market with sugar.
You seem to think that by allowing as much sugar into the market as wanted the price of sugar wouldn’t go down, it would. In the short run the profits would be fine but within 6 months the price of sugar would go down and sales would be at the forfeiture level. So no I don’t think there would be enough profit in sugar to sustain a profit.
Now if you were to tell me that all other competing countries would not subsidize or restrict the amount of sugar they could import/export and the playing field was level, the US could compete, they would dominate.
So now convince me that this can and will happen. Convince me that with out a sugar program US sugar companies/Farmers can compete in the world market.
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I agree it is time to take a long look, but I go back to the same argument as in my last post. Level the playing field and the American farmer will be able to compete, dollar for dollar, no subsidies on either side.
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Are you referring to me when you say “Scott”? It gets confusing, because you answer questions I never asked, while simultaneously dodging the ones I did ask……
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The government spends trillions, but they don’t spend $4B on the sugar program. If that is what you meant, then go back to your links and re-read them.
Some facts for consideration:
1.) US consumers consume about 10 million metric tons of sugar per year. A metric ton is about 2205 lbs. Of that, about 7 million metric tons is grown domestically.
2.) If the “higher price due to limiting imports” results in an $0.18 increse per pound for refined sugar, then this costs CONSUMERS about $3.5B per year (matches the data in Ron’s link #1). That also assumes all of these costs are passed on to connsumers.
3.) At $0.45 per lb, sugar costs about $0.001 per gram. Look at the nutrition label on a product. All of the refined sugar will be listed under sugars (but not all sugar will necessarily come from refined sugar). Divide the sugar grams by 10 and you have the maximum cost of the refined sugar for that item. Divide again by 2 and that is what they’d save if the price of sugar was cut in half. For a Hershey’s chocolate bar and most any other candy bar, 20-30 grams of sugar, so the potential savings is $0.01 to $0.015 per candy bar. I don’t think this is enough to change anyone’s buying and eating habits. Instead, the higher cost is causing candy making to be more expensive in the US, putting those businesses at a competitive disadvantage.
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I should have been more clear. 20 grams of sugar is 2 cents, 30 grams is 3 cents. So in a typical candy bar, a maximum of 2-3 cents of sugar. In a jar of JIF peanut butter, 10 cents. Note: there are other ingredients that would contain “sugars”, other than just refined sugar, so these are high estimates.
Sorry for not explaining that after dividing by 10, the costs would be in cents.
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Mike S. says “… the higher cost is causing candy making to be more expensive in the US, putting those businesses at a competitive disadvantage.”
At a competitive disadvantage to whom? Where would a candy company move to to find cheaper sugar? Nowhere in North America and nowhere in Europe. Candy companies that move to Mexico are looking for cheap labor, not cheap sugar. This brings the conversation full circle to the cost of providing union jobs. BCTGM should go to Mexico where collective bargaining would have more value. Here is an idea: send Steve Bertelli, Mark Froemke and John Riskey to negotiate with the cartels of Mexico.
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I assume they are in Michigan this week fighting alongside their brothers and sisters to keep Michigan from becoming a right-to-work state.
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If you believe the first link that Ron provided (LA Times), they are moving to Canada. I haven’t researched to see if that is true or not. I’d expect that they’d spin things to prove their point, but I’d also expect that there is some grain of truth in what they say. Few people put bold-faced lies down in print (outside of this blog of course
).
From 5 minutes of google searching and looking at serveral sources, I’d say with confidence that REFINED SUGAR prices are cheaper in Canada, not by a little but by a lot. Whether that has led to candy/food companies moving to Canada, I don’t know. I did find that the Canadian market for sugar has NOT been increasing, meaning that any company that moves there hasn’t been so large that they have made in impact on the amount of sugar used.
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Mike S., here is what my Google search turned up. Don’t bother driving to Canada for cheaper sugar. http://www.sugaralliance.org/images/stories/charts-graphs/chartsgraphs12/Developed-Countries-Average-Retail-Sugar-Prices-24-Higher-Than-USA.pdf
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OTS
On further review you appear to be more correct than me. I get very contradictory info but more recent info points to high prices in Canada since only two companies control the whole market.
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” but I am against an actual price fixing that artificially inflates the price of a commodity”
How do you feel about artificially inflated compensation package numbers that were arrived at by, well….your guess is as good as mine?
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How many of you people who disliked my link actually read the entire article?
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Me. And that’s 4 minutes of my life that I will never get back. I now get comfort from the fact that you and I disagree. Price fixing? Phantom government spending on a no-cost program? Give me a break.
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Another good question would be how many of the people that automatically “like” your posts, (because of the “side” you’re on and nothing else), have taken any time whatsoever to determine whether or not a given post has any merit…
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…that was for Ron by the way.
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When Lifesavers moved from my home state of Michigan to Canada the company said it was due to the high cost of sugar in the US. Later they admitted the real reason was to drop the union in order to lower wages. They also cut costs due to the fact Canada has universal healthcare. Sugar played a small role in this but was used as the scapegoat.
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