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Monday, May 31, 2010

Google Says it Helps Generate $54 Billion for Businesses and Nonprofits

LA Times

A report by the Internet giant says $14 billion of that economic activity is in California, where it is based. Critics say the report is an attempt to spruce up its image as it faces greater scrutiny.

Google Inc., hoping to burnish its image, said it helped generate $54 billion in business activity for companies, Web publishers and nonprofits last year.

More than $14 billion of that economic activity was in California, where it has more than 9,000 employees and has its headquarters, the Internet giant said in a report released Tuesday.

Google said it calculated the revenue generated by its search engine and the ads that run next to the results as well as the amount it pays to websites that run the ads and grants made by its nonprofit arm.

Few question that Google, like other major technology companies such as Apple Inc., has a huge ripple effect on the nation's economy. Google has also been a boon to small businesses that use its products to get noticed and to get customers.

But critics say Google is emphasizing its role in creating jobs and economic development to counter a growing perception on Capitol Hill that it abuses its dominant position in online advertising. Economic impact studies are commonly employed by technology companies campaigning for support in Washington and elsewhere. Microsoft Corp., for example, has done a few.

Google has come under increased scrutiny from lawmakers, regulators and privacy watchdogs. The Federal Trade Commission took six months to approve its $750-million acquisition of mobile advertising startup AdMob. Two recent developments also did not help Google's image: missteps with social networking service Buzz and collection of private data over WiFi networks.

"Google has lost control of its image. Some have started to position Google as the evil company," said technology analyst Rob Enderle, who has done consulting work for Microsoft and other tech firms. "Google is rolling out a marketing campaign to get people to look at them in a more balanced and positive way so they don't get pounded by politicians."

A spruced-up image is just as important in attracting investors, Enderle added. "People have trouble investing in a company that has a declining image," he said.

Google fell 9 cents to $477.07 in Nasdaq trading. Shares have declined 24% so far this year.

Google, which had $23.7 billion in revenue last year, is also facing intensifying competition from rival Internet upstarts such as Facebook Inc. and Twitter Inc. The report prepared by Google chief economist Hal Varian breaks down Google's economic effect in all 50 states and includes profiles of small businesses.

The company said businesses bring in $2 in revenue for every $1 they spend on AdWords, Google's online search advertising program. Separately, Google assumed that businesses get five clicks on their search results for every one click on their ads. Based on that, the company calculates that businesses get $8 in profit for every $1 they spend on AdWords.

Google said the estimates were conservative. California is the major beneficiary of Google largesse in part because the company has its headquarters in Mountain View, Calif.

Insurance Rate Hikes Hitting CA Small Businesses Could Hurt State's Recovery

LA Times
Small firms say they are curtailing plans for hiring and expansion amid rising insurance bills.

Small businesses in California are being hit this year with double-digit hikes in health insurance costs that could hurt the state's economic recovery as companies curtail plans for hiring and expansion to pay their insurance bills.

Five major insurers in California's small-business market are raising rates 12% to 23% for firms with fewer than 50 employees, according to a survey by The Times.

Similar increases are being felt by many small businesses across the nation, including those in Texas, Ohio and Florida — mainly the result of escalating costs for medical care and pharmaceuticals, insurers say.

In California, some small businesses say they are stunned by their latest insurance bills. Longtime customers of Blue Shield of California, for instance, are facing rate hikes as high as 76% after the insurer lost money on a handful of plans.

"We don't have that money," said Ann Terranova, a San Francisco financial planner who is dropping Blue Shield for herself and two employees after learning that their annual premium would jump to more than $19,000 a year from $11,000.

Financial pressures are also squeezing Tessier Cabinet Co., a 59-year-old family business in Montclair. Its president is reluctant to hire because of weak demand for his goods amid a 14% rate hike from Kaiser Permanente. "I'm ready to hang it up," Dan Tessier said.

Economists and small-business advocates worry that insurance costs — on top of taxes and rising wages —- will hamper the ability of small firms to expand and scare away new small companies. Analysts point out that small businesses are responsible for creating most new jobs in California and are key to its economic recovery.

"If healthcare costs and other costs go up, it's going to make it more difficult for small businesses to hire, and that lack of employment growth is going to be a drag on the economy," said Dennis Tootelian, director of the Center for Small Business at Cal State Sacramento. "Hiring is one of the most critical factors for getting the economy back on track."

Other experts believe higher costs could trigger an exodus of small firms.

"If they have the option, they will probably think of doing business somewhere else," said Esmael Adibi, an economist at Chapman University in Orange.

Small firms nationwide are struggling with the problem as they worry about what the effect of the new national healthcare law. It will impose billions of dollars in taxes on insurance companies and require mid-sized firms to provide insurance for workers or pay fines.

"They are very concerned that their costs aren't going to go down. They're just going to go up," said Stephanie Cathcart, a spokeswoman for the National Federation of Independent Business in Washington. "They're going to be paying new taxes, new fees. It's kind of a double whammy on them."

California insurers defend their rate hikes as sound and fair, saying they struggle to balance affordable rates with the need to remain competitive and turn a modest profit.

Blue Shield, for example, said hospital charges rose nearly 20% last year, while physician costs and pharmaceutical fees increased almost as much. Anthem Blue Cross also cited the cost of medical care in explaining its average rate hikes of 13% this year.

"We understand that one group that has been most hard hit by the economic downturn of the past few years is the state's more than 3 million small businesses, who we all rely on to be major contributors to our local economy," Anthem spokeswoman Peggy Hinz said.

"We want to be competitive in the marketplace, but we also want to take care of our members," Hinz added. "We work each day to do both."

The high cost of insurance has become an urgent concern nationwide as businesses and individual policyholders struggle with fast-rising rates. After a public uproar earlier this year, Anthem, California's largest for-profit insurer, canceled increases of as much as 39% on individual policies.

As in the individual insurance market, small businesses have little leverage to negotiate for lower rates or more comprehensive benefits, often electing skimpier coverage to counter rising costs.

Overall premiums for small firms in California rose 180% cumulatively over the last decade, according to the California Employer Health Benefits Survey. Larger firms' rates increased 146%.

Small businesses say 2010 is shaping up to be their most expensive year yet, leaving them with few good choices. They say they can pass charges along to employees, reduce benefits, cancel insurance programs or raise the price of goods — an option few are willing to entertain because of competitive pressures.

"They just don't have the profit margins to pay this cost," said insurance broker Scott Hauge, who heads Small Business California, an advocacy group. "It goes right to their bottom line. It's a killer."

About half of the estimated 6 million Californians working in small businesses get insurance through their jobs.

Among the major insurers who serve the small-group market, Aetna and Blue Shield are each increasing premiums 18% on average this year, although some Aetna customers who renew policies this summer will see increases of as much as 23%, the company said.

Kaiser, the state's largest HMO, is raising rates 12% on average. Health Net Inc. said its customers would see "low double-digit rate increases." UnitedHealthcare declined to release its rates.

Not all the rising costs are related to inflation. In some cases, insurers lost money because they priced plans too low and, as a result, are now introducing higher rates.

Blue Shield, for example, miscalculated the cost for three plans that pay all medical expenses once customers meet thresholds for out-of-pocket expenses. The San Francisco insurer is now raising premiums on California health insurance quotes as much as 76% for some small businesses.

"It turns out that people used a lot more medical care than we had anticipated," said Tom Epstein, Blue Shield's vice president of public affairs. "We need to increase the rates to cover the medical costs. We can't lose money on these products."

Many small firms say they feel a duty to provide health insurance, or see it as a necessary cost to attract qualified job candidates. Either way, they predict that a continued rise in their healthcare bills will dampen their prospects for recovery.

"Our margins will dwindle to nothing," said Bill Thomas, chief executive of U.S. Technical, an engineering firm in Fullerton. "It's the beginning of the end."

Hurricane Season Begins Tuesday with $5.8 Billion of Work still in Progress


More than $1.1 billion worth of construction on the levee system that rings the New Orleans region is finished and another $5.8 billion is under way as the curtain rises this week on a new hurricane season that many predict could be the most active since the grim Katrina-Rita year of 2005.

If forecasts are correct -- and that's always a crapshoot -- the cumulative effect of repairs, improvements and additions to 350 miles of levees, floodwalls and gates under the 159 finished contracts means that 2010 tropical storms will encounter a hardier system than the one that fell apart during Katrina almost five years ago, say numerous engineers familiar with the work.

"We're better off this year than last year. The system is already stronger and more resilient than at any time in history," said Karen Durham-Aguilera, the Army Corps of Engineers' Task Force Hope director ramrodding $14 billion in work to the federal Hurricane and Storm Damage Risk Reduction System, which was known simply as the Hurricane Protection System before Katrina exposed its grave deficiencies.

The overall rebuilding is far from complete. And until it is, the flood control system will still have gaps that would have to be plugged with giant sand bags and baskets, sheet piling or other materials able to hold back water.

More than 100 contracts remain to be awarded, including 16 that will be required to complete the new "100-year" level of protection that Congress authorized after Katrina. And of those contracts now in progress, some won't help at all until the 2011 storm season, but others will.

"There's a lot still to do, yes. But are we better off than ever before? Our engineers tell us absolutely," said Tim Doody, president of the Southeast Louisiana Flood Protection Authority-East overseeing levee operations in East Jefferson, St. Bernard Parish and the east bank of New Orleans. "And even though there's still a lot of work left to do, each passing day gives us a bit more protection.

"Having said that, it's important that everybody remember: We won't have 100-year protection until all the projects are finished next year or whenever the corps actually completes the work," he said.

"And even then, 100-year protection isn't nearly enough, so it will remain critical that residents go when the evacuation call is given," he said.

Post-Katrina urgency

More than 1,800 people died as a result of the Aug. 29, 2005, storm, most of them drowning in New Orleans when Katrina drove a record surge of water into the southeast Louisiana coast. Waves destroyed some levees, and in other cases floodwalls with no more than 8 or 9 feet of water against them collapsed.

As a result of that tragedy, Congress authorized about $14 billion worth of repairs and upgrades to the shattered flood protection system, the heart of which is upgrading it to provide "100-year" protection -- a misnomer because it has nothing to do with one storm blowing through each century. Instead, it's a flood event with a 26 percent chance of occurring in the life of a 30-year mortgage, according to the explanation favored by the American Society of Civil Engineers and other professional groups. By way of comparison, Katrina was generally considered to be a 396-year event, and it didn't even make a direct hit on the Louisiana coast.

In addition to building the 100-year system -- which is supposed to be in place by June 1, 2011 -- the money is also paying to repair drainage pumps and "stormproof" pump stations, to build "safe housing" for emergency personnel and to improve internal drainage.

Of the $14 billion, some $9 billion to $10 billion will be spent on actual construction, with about 50 percent or 60 percent of that going to 100-year projects. The other $4 billion to $5 billion goes to architects, engineers and other contractors engaged in pre-construction work, as well as the corps.

In some cases, a single finished project is expected to make a world of difference to nearby neighborhoods, even before the entire system is complete. To see one example, look no further than the West Bank of the Mississippi River, which had precious little protection when Katrina and Rita blew through.

"I truly, truly feel better about our protection over here," said Jerry Spohrer, special assisant to the president of the Southeast Louisiana Flood Protection Authority-West. "Our biggest area of jeopardy for years has been the east side of Harvey Canal, and essentially that work is complete. We're in great shape . even though we're not finished with everything.''

Great risk remains

Despite 32 completed contracts on the West Bank, 34 others are in progress and more than a dozen still not awarded, which means residents should remember there is still great risk, agreed Spohrer and the corps' West Bank area senior project manager, Julie Vignes.

Vignes identified the two most vulnerable spots as the eastern tie-in to Plaquemines Parish near Oakville and the massive western tie-in complex, both areas where no previous protection existed.

The eastern tie-in will link West Bank levees to the river levees in Plaquemines Parish. The Western Closure Complex will reduce the risk of surge for West Bank portions of Jefferson, Orleans and Plaquemines parishes. It will include the largest sector gate in the United States and the largest drainage pump station in the world.

The single largest contract awarded to date is the $1 billion-plus Inner Harbor Navigation Canal /Lake Borgne Surge Barrier to reduce the risk of surge damage to St. Bernard Parish and much of New Orleans. By the height of this storm season, the corps estimates that crews working around the clock will have completed more than 90 percent of the 10,000-foot-long barrier wall, its barge gate and tie-ins to the 100-year elevation. There will also be a cofferdam in place at the Gulf Intracoatal Water Way and Bayou Bienvenue.

"Although this is significant progress since last year and would help to reduce storm surge, it's difficult to quantify what level of protection the barrier will provide before it's complete," corps Col. Robert Sinkler said.

"We are better off there than we were last" year, he said, but for the six months of the 2010 hurricane season, the walls of the Industrial Canal will continue to be the primary defense against storm surges.

Once work is complete on this barrier and its companion Seabrook barrier -- where construction hasn't begun yet -- they should protect the canal from surges.

The corps is just now completing several million dollars worth of work to stabilize some more worrisome sections of the walls and to try and neutralize seepage in other areas.

Lakefront work stalls

Along Lake Pontchartrain, no contracts have been awarded yet to increase protection at Causeway Boulevard in Metairie or to build a taller, stronger floodwall to help protect Kenner and East Jefferson's western flank from surges out of Lake Pontchartrain. And because of concrete contractor disputes and other delays, work is only now starting on better surge protection for East Jefferson pump stations.

But the task of enlarging levees and replacing floodwalls, gates and ramps along most of the East Jefferson lakefront and the New Orleans lakefront is at or near the finish line.

Already, officials said 95 percent of the work along the New Orleans lakefront east to the Industrial Canal will be complete when the season opens. The project still in progress between the 17th Street Canal and Topaz Street will be protected with Hesco baskets if a storm threatens. Five new vehicle gates are due to be installed by mid-June, but Capt. Brock Schmidt said the old gates can be secured in place in the event of an earlier threat.

Although controversy continues over the best method of permanently protecting three New Orleans outfall canals, Sinkler said the interim gates and pumps installed after Katrina already provide 100-year protection.

By the peak of this season, corps section chief Brett Herr said, the enlargement of all East Jefferson lakefront levees should be complete to the 100-year level.

"That will give us a 100-year level of risk reduction all along the lakefront, except at Causeway and the Suburban and Elmwood pump stations," he said. "And that's significant improvement over last year."

Most of the big projects underway in St. Bernard and eastern New Orleans aren't expected to provide help this year.

In St. Charles Parish, Herr said 12 of 13 contracts required for increased protection are underway. Most of the system's 10 miles of levees had to be degraded so that new geotextile material could be laid, a method of increasing stability without enlarging the levee footprint.

He said the Louisiana concrete contractors are required to restore the degraded levees to the previously authorized elevation of 13½ feet by June 1, after which they'll continuing raising to 16½ feet.

Additionally, he said at least three floodwalls will be partially or entirely removed during this season, but he said contractors are required to drive sheet piling or use giant Hesco baskets to close the gaps.

Friday, May 28, 2010

Chinese Workers Strike, Halt Honda Production

BBC News

Honda has had to halt production at its four Chinese car assembly factories, because of a strike over pay at one of its China-based parts plants.

The Japanese company said talks were continuing to try to resolve the dispute at the parts facility in the southern city of Fushan.

The strike at the plant, which makes gearboxes and engine parts, started last week.

Honda said it hoped to resume production as soon as possible.
Resolution efforts

According to newspaper reports, the 1,900 staff at the parts facility want their monthly wages to be increased from 1,500 yuan ($220; £151) to 2,500 yuan.

"We are still trying to resolve the labour dispute with the help of the local government at the Fushan plant," said Honda's China spokesman Zhu Linjie.

Like most of the world's leading carmakers, Honda has enjoyed a big rise in sales in China.

It sold 219,514 cars in China during the first four months of this year, up 39% on a year earlier.

Honda runs three of its four car assembly factories in China as joint ventures with Chinese carmakers to supply the domestic market.

It has two factories in association with Guangzhou Automobile and one with Dongfeng Motor Corporation.

Honda's fourth Chinese factory makes its Jazz small car model solely for export.

Image-Conscious Youth Rein in Social Networking

Associated Press

What's that? A young college grad lecturing her elders about online privacy?

It might go against conventional wisdom, but a new report from the Pew Internet & American Life Project is adding fuel to the argument that young people are fast becoming the gurus of online reputation management, especially when it comes to social networking sites.

Among other things, the study found that they are most likely to limit personal information online - and the least likely to trust free online services ranging from Facebook to LinkedIn and MySpace.

Marlene McManus, 21, is among those young adults. On the job hunt since graduating from Clark University in Massachusetts, she's been "scouring" her Facebook page, removing photos that contain beer cups and any other signs of college exploits. She's also dropped Twitter altogether.

"I have to present a public face that doesn't have the potential to hurt my image," McManus says.

She has seen otherwise upstanding adults, well past their 20s, sharing compromising photos and questionable rants with too many people online. "I get embarrassed for these people and sometimes just want to shake them," she says.

In this instance, adults over the age of 30 might do well to listen. The Pew study and a mounting body of new research is showing that the very generation accused of sharing too much information online is actually leading the pack in online privacy.

The Pew study found, for instance, that social networkers ages 18 to 29 were the most likely to change the privacy settings on their profiles to limit what they share with others online. The percentage who did so was 71 percent, compared with just 55 percent of the 50- to 64-year-old bracket. Meanwhile, about two-thirds of all social networkers who were surveyed said they've tightened security settings.

The survey also determined that:

- about half of young people in that 18-29 bracket have deleted comments that others have made on their profile, compared with just 29 percent of those ages 30 to 49 and 26 percent of 50- to 64-year-olds. The numbers were similar when it came to social networkers who removed their names from photos that were tagged to identify them.

- When asked how much they can trust social networking sites, 28 percent of the youngest adults surveyed said "never." A fifth in the 30-49 bracket said that and just 14 percent of those ages 50 to 64 agreed.

The Pew report, which was released Thursday, was compiled from telephone interviews conducted by Princeton Survey Research International between Aug. 18 and Sept. 14, 2009, among a sample of 2,253 adults. The margin of error is plus or minus 2.3 percentage points.

Mary Madden, the Pew researcher who was the study's lead author, says the findings partly reflect the fact that young people have been using social networking longer than their elders, thus making them more experienced in dealing with its intricacies.

But she says young people also are at a point in their lives where, like McManus, they're looking for work and just starting to develop a name for themselves.

Consider also that the study found that a quarter of online adults said their employers now have policies about how they portray themselves online.

"Young adults have, in many ways, been forced to become experts in their own form of social revision," Madden says.

They're also an extremely "brand conscious" generation, says Fred Stutzman, a doctoral candidate at the School of Information and Library Science at the University of North Carolina who co-founded ClaimID.com, a free online identity management service that he now uses as a research project.

"Increasingly, it's the advice that young people get from counselors and elsewhere: 'You need to have your own brand and you have to watch that brand,'" Stutzman says.

He jokes that older people don't care as much because "if you've got a pension, you can pretty much say what you want."

There might be a bit of truth to that. The older you get, the less you have to worry about applying to college and attempting to move up the career ladder.

Stefanie Juell, a 28-year-old in Westchester County, N.Y., has become increasingly aware of this. So she recently opened an extra Facebook account after her supervisor and people she'd met through work started to friend her on her personal account.

"You don't exactly want to reject your supervisor," she says. "Nor do you want him or her to see everything that your friends write on your wall or the pictures that people tag of you."

So now, she uses that new professional Facebook account for her job in alumni relations at a small liberal arts college. In the evening, she shifts to her long-standing personal Facebook account, which has its security settings set as tightly as possible.

"It's important to separate," she says, "and to maintain a work-life balance."

Thursday, May 27, 2010

Another Suicide at China iPhone Maker's Plant

Yahoo News

A 10th employee of iPhone-maker Foxconn jumped to his death late Wednesday, just hours after the company's chairman promised to make life better for employees at the sprawling production site in southern China.

The company did not give details of the death but China's official Xinhua news agency reported Thursday that an initial police investigation indicated the 23-year-old man from northwest China had committed suicide by jumping from a seventh floor dormitory balcony.

Another employee at Foxconn's Shenzhen campus attempted to slit his wrists, but survived with medical attention, the Xinhua news agency said late Thursday.

The deaths have thrown a spotlight on the labor practices of Foxconn, a unit of Taiwan's Hon Hai Precision Industry, whose clients include Apple, Hewlett Packard and Sony Ericsson.

Apple and other clients have said they are investigating working conditions at Foxconn, which has some 420,000 employees at its base in Shenzhen and has come under fire for its secretive corporate culture.

Workers live inside the factory complex and churn out products for the world's leading computer and phone companies in round-the-clock shifts.

Taipei-based Hon Hai spokesman Arthur Huang confirmed the 10th death but denied reports on three Taiwan TV stations that another person, a young woman, had also jumped late on Wednesday, surviving with serious injuries.

Just hours before the latest reports, the usually media shy Foxconn Chairman Terry Gou had opened the company's sprawling facilities in Shenzhen to reporters and vowed to take sweeping action to prevent more deaths.

Gou made another trip back to the plant Thursday following the Wednesday media tour. Pictures on Taiwan TV stations showed him boarding his private jet.


All 10 of the deaths have been of young migrant workers, among the millions who leave the poor hinterlands of China for the boom towns of the south and east coastal areas in search of work and high wages.

Two others have been seriously injured after also jumping from buildings, in incidents that labor groups say expose the harsh working conditions at Foxconn.

Li Ping, secretary general of the Shenzhen municipal government, told a news conference Wednesday that the pressure of being away from home with little care from society was part of a complex set of factors underpinning the suicides.

He said the government was joining with police and Foxconn to consider a range of ideas such as building up sports and cultural facilities to improve the living environment, Xinhua reported.

The firm was training about 100 mental health counselors and installing 1.5 million square meters of netting, Xinhua said.

"Although this seems like a dumb measure, at least it could save a life should anyone else fall," Gou was quoted as saying.

In a report to clients, Bank of America/Merrill Lynch said that while the incidents would affect Hon Hai's image, they are unlikely to cause a significant impact on earnings, a view echoed by UBS, which noted that Hon Hai remains a "top-notch supplier."

Foxconn shares rose 4.2 percent in a Hong Kong market up 1.2 percent, having fallen to a seven-month low earlier this week. Hon Hai shares fell 0.4 percent in Taiwan, with the broader market up 1.1 percent.

In another sign of labor discontent in south China, Japanese car maker Honda said Thursday a dispute had shut down one of its parts plants, causing the closure of four car-making plants.

Costco's Profit Jumps as Sales Growth Speeds Up

The Globe and Mail

Costco Wholesale Corp. says its profit climbed 46 per cent in the fiscal third quarter as sales and membership revenue both rose.

Costco, the largest wholesale club operator in the U.S., says it earned $306-million, or 68 cents per share. That's up from $210-million, or 48 cents per share, a year ago. Revenue rose 12 per cent to $17.78-billion.

Thomson Reuters says analysts expected 66 cents per share and $17.63-billion in revenue.

The Issaquah, Wash., company says it gained $14-million from a reversal of a tax charge. A year ago it paid $34-million to settle a lawsuit.

Costco says sales at stores open at least a year grew 10 per cent. Excluding higher gas prices and changes in currency exchange rates, those sales rose 4 per cent.

Wednesday, May 26, 2010

Triumph Rides High as U.K. Bestseller takes on Harley Davidson

Guardian UK

Triumph Motorcycles has ridden the recovery in UK manufacturing to a victory over key rival Honda and is now setting its sights on American adversary Harley-Davidson.

The Leicestershire-based bike maker has revealed that booming sales in April made its brand the best-selling in Britain in the over-500cc sector, overtaking Honda. It wants to make that ranking permanent this year as it continues to increase its market share following record UK sales in 2009.

Chairman Lord Digby Jones says part of the boost has come from a strong yen, which has raised the prices of Japanese rivals in the UK market.

While the recession knocked back overall sales of new motorcycles and Harley Davidson motorcycle batteries by 20% in Britain last year, UK motorcycle production actually grew, according to the Motor Cycle Industry Association.

But beyond currency effects Jones also cites Triumph's strong brand, new products and a big push at domestic and overseas sales. Of the 46,000 bikes Triumph will make this year, just 9,000 will be sold in Britain.

"We really want to get hold of America," said Jones, former head of industry group the CBI. "We have launched the Thunderbird straight into the middle of Harley-Davidson's market and it has just been voted bike of the year in America, right in Harley-Davidson's backyard," he adds, referring to an award from a US magazine.

Twenty years since resurfacing from receivership, the manufacturer also has its eye on more sales in the Gulf, where the Prince of Bahrain has a Triumph, as well as in Asia more generally.

In Britain it is launching a string of upmarket dealerships, including one this month on home turf in Leicester.

"What we want to do is make Triumph number one in the UK market, year in, year out," says Jones.

Jets Owner Key in Bringing Super Bowl to NYC

NY Times

The idea for the New York area hosting an outdoor Super Bowl was hatched nearly four years ago, when the Giants and the Jets agreed to build a new stadium together in the Meadowlands. The Jets’ hopes for an enclosed stadium on the Far West Side of Manhattan had fallen through, even though N.F.L. owners had awarded them a Super Bowl that was conditional on getting the stadium built. So when the teams joined forces, the Jets’ owner, Woody Johnson, brought with him the pie-in-the-sky notion that the game should come to New York, anyway.

John Mara, a Giants co-owner, was not so sure. There had been sentiment for New York hosting a Super Bowl at Giants Stadium shortly after the Sept. 11 terrorist attacks, but that support had withered away. Johnson, though, was relentless, Mara said. Johnson is a relative newcomer to ownership, having owned the Jets for only 10 years, and he is viewed as the less influential owner in the forced marriage between the Giants, one of the N.F.L.’s flagship franchises, and the Jets.

But as he began to ask around the league about the idea, Mara was surprised to find enthusiasm for a game in the New York-New Jersey region. And so on Tuesday, with Mara wearing his father’s 1956 championship game ring for good luck, and with his fellow owners lured by the idea of playing the sport’s biggest game on the nation’s largest stage, the N.F.L. awarded the 2014 Super Bowl to New York-New Jersey, making the New Meadowlands Stadium the host of the first outdoor cold-weather Super Bowl in history.

“Why not,” Johnson said after the vote. “We play every other game in cold weather, rain and snow. Would I want to do it every year? Probably not. But 2014 sounds good.”

Even with a new $1.6 billion stadium, the New York area’s bid needed four ballots to gain the required simple majority of 32 votes in the secret vote. It beat out a proposal from Tampa, Fla., which pointedly emphasized warm weather in its bid.

The vote also represented an embrace of the New York region’s unique entertainment, promotional and financial opportunities. The proposal called for everything from a Super Bowl float in the Macy’s Thanksgiving Day parade to a party at Liberty State Park in Jersey City. But of more interest to a league bent on building revenue and an international audience is that the weeklong extravaganza would play out in the global news media and business capital, and in an area where 36 percent of the 20 million residents were born outside the United States.

“I do believe New York is a unique market,” Commissioner Roger Goodell said. “It’s the No. 1 market in our country and in many cases around the world. It will be a great experience for our fans and a great experience for the N.F.L.”

Those considerations clearly outweighed concerns by some owners opposed to a cold-weather game where snow could wreak havoc on a week’s worth of parties and planning, as well as on the outcome of the championship game. The New York-New Jersey bid included details about how many people with shovels could be deployed to dig the stadium out of snow and about plans to hand out seat and hand warmers to fans and have fire pits in parking lots.

During the presentation, the bid committee ran clips of cold-weather games and noted that weather did not deter millions of people from visiting New York to see the Christmas tree at Rockefeller Center or to celebrate New Year’s Eve in Times Square.

But the owners who worried that a vote for New York-New Jersey would create a precedent for other cold-weather cities were probably correct about the door having been opened. Minutes after the vote was concluded, the Redskins’ owner, Daniel Snyder, who has long wanted to host a Super Bowl, said he wanted to bring the game to the Washington area.

Washington, much like New York, would seem to be among the strongest candidates to get a cold-weather game because of its nonfootball attractions.

“I think New York will do a great job hosting it,” Snyder said. “We’re looking forward to hosting one in D.C., the nation’s capital. I think they’ll show what a big-time city like New York can do and we’ll show what a big-time city like Washington can do.”

Cold-weather Super Bowls are unlikely to become the norm, but the N.F.L. has made no promise that the New York-New Jersey game would be a one-time cold-weather event. According to the Pro Football Hall of Fame Web site, the coldest outdoor game in Super Bowl history was Super Bowl VI at Tulane Stadium in New Orleans in 1972, with a game-time temperature of 39 degrees. Super Bowl IX in 1975, also at Tulane Stadium, was 46 degrees.

And five other outdoor games had game-time temperatures in the 50s. According to the New York-New Jersey bid, the average high temperature in February is 40 degrees, with an average low of 24.1 degrees, and an average monthly precipitation of 2.7 inches.

The host committee must raise $40 million for the event. But estimates for the economic impact on the area range from $55 million to $550 million, the optimistic number proffered by the bid organizers.

The Giants and the Jets will not make any money directly off the Super Bowl, but the promise of hosting the game is likely to ratchet up interest among corporations for the multimillion-dollar naming rights for the new stadium. Interest slowed during the recession. And with four years of buildup, the floodgates for sponsorships and suite sales — which allow holders access to Super Bowl tickets — will probably increase.

But that was not on owners’ minds Tuesday. They are caretakers of the most aggressively hyped event in American sports and the bid promised more of that — a “season of events” to promote the game for a full year — than any other city could offer. The buildup to the vote alone generated more buzz than any other Super Bowl vote in history.

The Giants co-chairman Steve Tisch recalled how his father, Robert Tisch, who was a co-owner, loved attending Super Bowls and how he happy he was at his last one in Jacksonville, Fla., as his health was failing. Some of the support the bid enjoyed was a kind of homage to the Mara family, which enjoys deep respect from fellow owners for the contributions Wellington Mara, John’s father, made to the N.F.L. With a nudge from one of the newest owners, the old guard and the new have delivered a game that, in spectacle and perhaps in snow, could top anything the N.F.L. has seen before.

“We’ve come a long way since the Polo Grounds in 1925 when we used to hand out tickets,” John Mara said. “The league has come a long way and the sport has come a long way. It would have been a very proud moment for my father.”

Q&A: How Murad Stepped Up Its Supply Chain Efficiency

Multi-Channel Merchant

Murad needed help with its inventory management. The personal care products company about 18 months ago was running out of popular SKUs, which was disappointing its customers, and it had excess inventory on other items, which carried a hefty cost.

Enter Charles Jones, senior director, supply chain at Murad. After joining Murad in November 2008, Jones’ top priority was transforming the troubling warehouse situation. Multichannel Merchant caught up with Jones to find out how he resolved the warehouse/inventory problems at Murad.

Q: How did Murad get into trouble with its inventory, and what has been done to change that situation?

A: I’ve consistently observed one distinct area of supply chain which many small- to mid-sized companies have problems resolving: How to manage inventory during an unforecasted momentous spike in sales. This scenario can be exhilarating for sales if the inventory is readily available, but can often be disastrous if inventory and safety stock levels aren’t sufficient to support the increased sales.

What tends to happen is supply chain departments overcompensate for this increased demand by procuring inventory based on an unknown variable--sales forecast peak. Consequently, when sales stabilize and return to normal levels, inventory is already purchased and thus, excess inventory is created.

As with other companies, Murad experienced the same growth pattern. To mitigate future risks, we made several changes to our production planning and forecasting processes. We increased collaboration between our sales, marketing and operations department resulting in trending reports to proactively identify gaps in our supply and demand operation.

Q: Could you provide some specifics on the major turnaround in Murad’s operations and fulfillment you spearheaded in the past year?

A: Along with the existing management, we all decided both structural and process changes were needed to support the vision of the supply chain department. We changed our philosophy from commodity planning to brand planning. This enabled the supply chain group to effectively collaborate and support other internal departments.

In addition, we created strategic, tactical and contingency plans for all processes within the department. With each plan, we assigned a specific goal, created a timeline and benchmarked our achievements.

One of the primary tasks was to optimize our supply chain planning software by validating the data and creating realistic planning parameters. When we conceptualized our 180-day strategic plan, the first step was to verify the realism of our existing supply chain planning parameters and if they could support our goals.

Once we concluded the data integrity phase, we performed several real-time simulations, which involved sporadic supply and demand scenarios similar to those of every-day operations.

Q: How does inventory affect the day-to-day operations of the company? What needs to happen for things to flow smoothly?

A: In my opinion, inventory management is one of the single most contributing factors in the success or failure of a company. Murad supply chain department’s primary goal is to maintain an adequate supply of goods while minimizing inventory-carrying cost.

Maintaining sufficient inventory to adequately support sales while minimizing inventory-carrying cost are unfortunately competing goals and can be detrimental if not monitored. Although our ultimate goal is to satisfy and fulfill every order 100% complete, this would be very costly and unrealistic without maintaining an inordinate amount of safety stock inventory

On the other hand, it’s important for us to maintain our liquidity, which allows us to rapidly respond to market changes and invest when opportunities are present, creating potential growth. This can only be achieved if we do not constrain our cash flow by carrying excess inventory.

Last year, our supply chain team created balanced strategic goals that encompassed industry standard order fulfillment rates and competitive inventory carrying cost. After we implemented our processes, we maintained an order fulfillment rate of 98%-plus while reducing our inventory carrying cost by 27%, within a 12-month period.

In 2010, we anticipate reducing our inventory cost by an additional 25% while maintaining our high level of order fulfillment, resulting in a total inventory reduction of 52%.

Q: Can you explain what a just-in-time (JIT) system is, how it works and the specifics involved with the one you put in place at Murad?

A: The primary goal of JIT is adequately fulfilling customer inventory demands at the lowest possible carrying cost. This replenishment technique of warehouse distribution is a key factor of generating cash flow and often used when physical inventory space is limited.

Ideally, most companies--including Murad--have an interest of incorporating some type of JIT system within the operation. The driving factor of a successful JIT process is lead-time reduction and management.

Reduced inventory lead-times increase cash flow and allow the operations team to quickly react to escalating sales demand with techniques such as voice directed picking. When we implemented our JIT technique, reducing lead-times was our first priority. Supplier assistance and agreements were critical to our success.

Q: How challenging was it at first after the JIT system was in place?

A: Any time a new process is implemented, there’s an initial phase of learning and acceptance. It took about five months to reap the benefits of the new process.

During the infancy phases, we had several obstacles to overcome, which included the addition of key staff members to support the new automated storage and retrieval structure. Once the new staff got acclimated to the culture and the existing staff adopted the new techniques, we began to realize the satisfactory result

Tuesday, May 25, 2010

More Older Americans Start Own Businesses

USA Today

YOSEMITE, Calif. — After toiling for three decades in finance, it wouldn't be surprising if 65-year-old Patrick Althizer kicked back and lived off his savings and Social Security.

But with a spirit not ready for sedentary retirement — as well as college costs for two daughters — he veered off to a new career path: leading shutterbugs through the stunning waterfall areas of Yosemite National Park.

Althizer has embraced his new vocation with enthusiasm. He plastered decals that promote his firm, Photo Safari Yosemite, on the windows of his white Jeep Cherokee, networked with the folks who run local tourist attractions, and at his daughters' behest, joined Facebook to promote his firm, which takes tourists to the best photo-taking spots in the national park.

"I was a Navy photographer when I was younger — when I was in my twenties — (then) I got diverted into a finance career for about 30 years," he says. "When I was 64, I got out of the finance business and tried to figure out what I wanted to do when I grew up."

His answer: start his own business by pairing two of his passions — photography and exploring.

He joins millions of other Americans in ramping up a business at an age when many slow down. Folks 55 to 64 represented the second-largest jump in entrepreneurial activity by age (just behind 35- to 44-year-olds) from 2008 to 2009, according to an Index of Entrepreneurial Activity released last week by entrepreneur-focused group Ewing Marion Kauffman Foundation.

Other studies, such as a recent Global Entrepreneurship Monitor report, as well as data from the Bureau of Labor Statistics (BLS), also show an uptick in older folks becoming their own bosses.

The number of self-employed Americans rose to 8.9 million in December 2009, up from 8.7 million a year earlier, according to BLS data provided by outplacement firm Challenger Gray & Christmas. Self-employment among those 55 to 64 hit nearly 2 million, a 5% rise from the prior year. Self-employment for those 65 and older hit 939,000 — a 29% increase.

The rise has been fueled by factors such as the tidal wave of Baby Boomers who don't want to stop working, economic necessity triggered by the recession, and the rise in longevity, says Dane Stangler, a research manager at Kauffman.

"Americans are not only living longer but also living healthier longer, suggesting that those entrepreneurial 60-year-olds could be 2020's entrepreneurial 70-year-olds," he says.

Economic impetus

Slightly more than 2 million people 55 and older were looking for jobs in April — 52,000 more than in March, according to BLS data provided by the AARP Public Policy Institute. The unemployment rate for that age group, 7%, is lower than the 9.9% national average, but the demographic is often out of work for longer periods. (The duration of unemployment for older jobseekers rose from 38.4 weeks in March to 42.9 weeks in April.)

Nearly six in 10 older unemployed workers had been out of work for 27 or more weeks in April. At the start of the recession in December 2007, 23% of this group were out of work for that length of time.

A third of workers age 55 and older who were laid off in the past 12 months and did not find a job said they were considering starting their own business, according to a CareerBuilder.com survey taken in February and March. (CareerBuilder is jointly owned by Tribune, McClatchy, Microsoft and USA TODAY parent Gannett.)

Bryan Goodman, 53, decided to focus full time on his big-and-tall-man's clothing business after he lost his job as a manager at a Boston car dealership.

"For many years, I had been selling things causally on eBay, but when I got laid off and couldn't get another job, I decided that ... I could do this as a business," he says.

Economics also were a factor for 69-year-old Alan Friedman, to think big — very big — about his entrepreneurial route.

For decades, Friedman sold high-end antiques, but with the downturn, and some of his clients' tastes changing to more contemporary furniture, he decided to start a new venture called Transitions in Design in West Palm Beach, Fla.

"It's very difficult in the economy today, especially dealing in high-priced merchandise," he says. "In the last few years, I lost a good portion of my customer base."

He began to replicate iron furniture from the 1950s, which he was able to sell at more affordable prices. He also tapped into his own creativity and began to design large-scale bronze sculptures for individuals as well as municipalities.

Business hasn't been brisk, but Friedman says he's going to keep at it. "I need to make a living."

Non-economic factors play roles, too

Businesses born from older folks come about for many reasons. Sometimes, it's as simple as a major birthday lighting the entrepreneurial spark. Other times, it's serial entrepreneurs who can't squelch the urge to keep creating new firms.

"These milestones do hit people squarely over the head — it's the workforce equivalent of a midlife crisis," says Robert Litan, Kauffman vice president for research and policy. "They force you to ask the question 'What am I going to do for the rest of my life?' "

The idea of starting a new business can also come after a chance meeting with someone who has an interesting job or pastime.

A customer who bought a slew of dock lines from boating store West Marine inadvertently steered Thomas and Connie Betts toward a new profession. Thomas, an operations manager for the retailer, asked about the large purchase — and the customer said he was using the rope for his alpaca ranch.

"I said, 'What's an alpaca?' " recounts Brett.

But the more he learned about the mild-mannered animal, and the value of its soft fleece, the more interested he became.

He and Connie, ages 55 and 56 respectively, researched the animals and took classes on raising alpacas. They moved to the Hood River, Ore., area, where they had yearned to live, and started Cascade Alpacas of Oregon.

"It's been a lot of fun," says Connie. "We love our alpacas."

Not always smooth sailing

The Bettses are enjoying their business — and making a profit — but it took extensive effort to get to that point. Tom and Connie continued to work at different jobs so they had funding as they got the ranch going, and Connie still holds down a separate full-time job so they have extra money coming in.

"It sounds really simple to say 'I'm going to start my own business,' " says Deborah Russell, AARP director of workforce issues. "But it's a huge undertaking, and it needs to be taken seriously."

Russell says that making a vocation change at midlife comes with decision-making stress such as how to fund a venture without risking a retirement nest egg.

Entrepreneurs in their twenties and thirties have decades to make up lost money if a firm fails. But older owners simply have less time.

The Bettses said they mapped out several "worst-case scenario" situations when they decided to go ahead with the alpaca ranch. "With alpacas, it's not a get-rich-quick scheme. It can take years" to make a profit, says Connie. "We said, 'What's the worst that can happen, and can we live with that?' "

EBay seller Goodman says the financing issue has also been top of mind. He's dramatically cut back on living expenses to fund his venture, but is now thinking "Do I use my retirement money?"

The hurdles for older workers also go beyond the potential of losing retirement savings.

"Facility with technology is a big barrier for a lot of older people," says Kauffman's Litan.

Another obstacle for most older people is that they just don't have the stamina that they once had, Litan says. "It's true," says the 60-year-old. "I know it myself."

Some advantages exist

Yet, for all the pitfalls, signs indicate this is a good time for a more mature person to become a business owner.

Those seeking counseling can now choose from numerous online resources that target older entrepreneurs, such as the Small Business Administration's "50+" page (sba.gov/50plusentrepreneur) and the "Start Your Own Business" section of RetiredBrains.com, a site started by 75-year-old Arthur Koff when he was 68.

A plethora of information exists that small-business owners can glean from their peers — often by logging onto social-networking sites.

Many older entrepreneurs also have the advantage of having non-technology-related networks that were built up through years of face-to-face interactions, says Litan.

"Older people have a deeper social network than kids that just have 400 friends (online)," he says. "They have a real, live Facebook — these are people they can count on."

In addition, maturity comes with another big advantage: experience.

Nearly all the company founders surveyed in a Kauffman study released last fall said prior work experience was an important success factor.

Patty Tobin, 56, says her work in the asbestos removal field, as well as her time as a marketing consultant, greatly helped her in her jewelry venture.

"I know how to deal with banks, how to read a lease, how to hire people and how to manage people," she says.

She also says that a positive attitude — and a willingness to keep learning — have also been large factors in her entrepreneurial success.

Tobin says she "has no formal training in design or fashion," but once the environmental contracting firm she co-owned closed a few years ago, she began to experiment with jewelry design.

She first sold her wares to a boutique in her local Albany, N.Y., area, and has slowly expanded her business. Last fall, she opened a boutique in Manhattan, and a few weeks ago, she introduced her merchandise to buyers in Canada.

"You can teach an old dog new tricks if they're willing to learn, and I am," she says.
Self-employment by age

World Stocks Sag on Renewed Europe Fears

Yahoo News

Asian markets were also hit hard by reports that North Korean leader Kim Jong Il ordered his military to be on combat alert amid rising tensions on the peninsula.
World stock markets and the euro tumbled Tuesday on fears Europe's debt crisis will cause a prolonged slump in the region and weaken the outlook for global growth.

In Europe, Britain's FTSE 100 closed down 128.93 points, or 2.5 percent, at 4,940.68 while Germany's DAX index dropped 135.64 points, or 2.3 percent, to 5,670.04. France's CAC-40 sank 99.64 points, or 2.9 percent, to 3,331.29. Markets in Spain and Italy, both carrying high debt levels, both fell around 4 percent.

Wall Street tumbled too — the Dow Jones industrials average slid 153.72 points, or 1.5 percent, to 9,912.85 by early afternoon New York time, while the broader Standard & Poor's 500 fell 16.46 points, or 1.5 percent to 1,057.19.

The euro slid a further 0.5 percent to $1.2277 — heading back toward last week's four-year low of $1.2146.

News of a bank failure in Spain and the prospect of more painful austerity measures across the region renewed investors' worries about growth in Europe and its impact on major trading partners like the U.S., Japan and China.

"Traders are still struggling to find any real conviction to buy into the market and it could take some time for this sentiment to recover," said Anthony Grech, head of research at IG Index.

Once again, Europe's debt crisis was the focus of attention.

The Italian government was due to announce public sector spending cuts to reduce the deficit by euro25 billion ($31 billion) by 2012 in a bid to convince markets that the country can handle its high debt load. On Monday, the International Monetary Fund said Spain, which has already passed tough austerity measures, needed to urgently and radically reform its labor market while consolidating the banking sector.

European officials also remained downbeat.

EU Economy Commissioner Olli Rehn predicted Tuesday that growth in the 27-nation bloc won't top 1.5 percent and the jobless rate will stay close to current highs without reforms over the next five years. He called for greater flexibility for the services sector and the labor market.

Analysts said the coming days will be important for market sentiment — whether investors believe the European Union's $1 trillion rescue package for eurozone countries can avoid a rapid fall in the euro and protect countries from bankruptcy.

"The test for markets over the rest of this week is whether the panic can pass, and a more measured appraisal return," said Daragh Maher, currency analyst at Credit Agricole CIB.

He noted that while the euro is likely to continue to weaken, the EU rescue measures have addressed the main market pitfalls — by giving Greece time to cut its debt and guaranteeing eurozone countries against the risk of default — which should help stymie any sharp sell-off in the short-term.

In Asia, stock indexes were hit hard by the escalating tensions in the Korean peninsula.

A group in South Korea that monitors events in North Korea said Tuesday that Kim Jong Il last week ordered the military to get ready for combat, shortly after South Korea officially blamed his regime for the March 26 sinking of one of its warships that killed 46 sailors.

South Korean officials and other North Korea monitoring groups could not immediately confirm the report by Seoul-based North Korea Intellectuals Solidarity, which cited unidentified sources in North Korea. The Defense Ministry and the Joint Chiefs of Staff said they have not obtained any signs suggesting unusual activity by North Korea's military.

South Korea's benchmark stock index dropped as much as 4.5 percent before recovering some to finish 2.8 percent down at 1,560.83 — its lowest close in more than three months. The South Korean won slid to its weakest level against the dollar in more than 10 months before paring some losses.

Japan's Nikkei 225 stock average shed 3.1 percent to 9,459.89 as the yen's strength against the common European currency hammered exporters.

Hong Kong's Hang Seng index fell 3.3 percent to 19,019.21 while benchmarks in Australia and Indonesia also lost more than 3 percent. Stock markets in India, Singapore and Thailand were down more than 2 percent and China dropped 1.9 percent.

Crude oil for July delivery slumped $2.03 to $68.18 a barrel on the New York Mercantile Exchange, dragging Middle Eastern shares down sharply. Saudi Arabia's Tadawul exchange closed down 6.75 percent while Dubai lost 4.6 percent.

Exide to Boost Battery Capacity on Motorcycle Demand

Bloomberg / Business Week

Exide Industries Ltd., India’s largest maker of automotive batteries, plans to spend as much as 4 billion rupees ($88 million) to add capacity as demand for motorcycles outstrips the company’s expectations.

Exide, based in Kolkata, plans to boost motorcycle battery capacity by as much as 60 percent by April to cater to customers such as Hero Honda Motors Ltd., Managing Director T.V. Ramanathan said.

Motorcycle sales in India, the world’s largest two-wheeler market after China, surged to a record in the year ended March as economic growth and rising salaries encouraged Indians to increase spending. Demand for automobiles has helped Exide lift earnings by an average 92 percent in the past four quarters.

“Everyone underestimated the income transfer to rural areas,” Ramanathan said in an interview yesterday. The increase in the number of outsourcing centers in smaller cities is also helping create demand for motorcycle and motor scooter batteries from younger Indians, he said.

The company’s shares, which have risen 2.3 percent this year, fell 0.3 percent to 118 rupees in Mumbai at 1:47 p.m. in Mumbai. Exide in March raised about $119 million selling shares to institutional investors.

Exide’s fourth-quarter profit almost doubled to 1.35 billion rupees, sales increased 29 percent to 10.3 billion rupees.     “Right now they are operating at more than 90 percent utilization level, and looking at auto demand the expansion is needed,” said Vaishali Jajoo, an analyst at Angel Broking Ltd. in Mumbai. “They have a huge opportunity to grow as auto demand will continue to grow for the next five to ten years.”


India’s $1.2 trillion economy may expand 8.5 percent in the current fiscal year, Finance Minister Pranab Mukherjee said on May 13, spurring demand for motorcycles, scooters, refrigerators and homes.

The company, which sells the SF Sonic and Exide brands, expects to increase battery sales to original equipment manufacturers to 90 percent from 70 percent to improve its relationship with the companies, Ramanathan said. Direct sales to manufacturers are low in profitability, he said.

Monday, May 24, 2010

Avoid the Hard Sell, It's Bad for Business

USA Today / Steve Strauss

Q: Can I just suggest that small business owners avoid the hard sell? Nothing turns me off like that.— Camille

A: I couldn't agree with you more. We have all come across the hard sell business and salesman. Sometimes it works and sometimes it does not, and often it completely backfires. Case in point: For Mother's Day my daughters and I went shopping in a tea store in a nearby mall. Rather than entering the Zen-like atmosphere one would expect, it was if we entered Glengarry Glen Ross.

You recall that great film from the 90s, don't you? Originally a David Mamet play, the movie depicts a couple of days in the lives of some real estate salesmen. The corporate office sends in Alec Baldwin (definitely in his pre-Jack Donaghy days) and he has a peculiar motivational technique: He announces that everyone except the top two salesmen will be fired in the next week. Not surprisingly, the salesmen resort to heavy-handed, dishonest, and hard-sell tactics to get sales and save their jobs.

Well, that is what my daughter and I seemingly walked into in the tea shop. It was the boiler room of Earl Grey! No, that sampler is not good enough, the $100 one is what you want! That tea you just chose will "spoil" in 10 days if you don't buy this $40 tin to put it in! It was a strange experience, and yes, we left without purchasing a thing. But plenty of others remained.

It's actually easy to see why a manager would push hard-sell tactics on his or her minions: It's easy and can get short-term results. Fear is a mighty motivator and instilling it in one's sales staff can ensure that sales will get done.

But in actuality it is a very shortsighted strategy. Consider all of the downsides to the hard sell:

•Poorer quality sales:
  When you force someone into buying something they may not really want, what you are really doing is setting the business up for failure. What often happens is that later, when the pressure is off and customers consider the interaction and the products they purchased, they decide that they do not really want or like the product. They will return it or even cancel their credit card authorization. What the company is left with then is a faux-sale and a disgruntled customer.

•Disgruntled customers:
  Indeed, this is potentially an even worse problem. Customers who get products or services crammed down their throat don't usually stay customers for long. Feeling used and abused, they rightfully take their money elsewhere.

•Unhappy employees:
  The parade of bad outcomes keeps on coming. Aside from fake sales and unhappy customers, forcing the hard sell strategy on your staff often leads to low morale and high turnover.

People will only work in a high-pressure sales environment for a few reasons:

• They really need the job
• They like the money
• They thrive under pressure

Most people however, when forced to sell something they do not believe in, or sell something to people who are only marginally interested, will look for a new job that is not so morally compromising.

•Bad morale:  Between the high turnover rate, and selling stuff in questionable ways, the overall staff mood at the hard-sell workplace is typically very poor. Employees in such places don't believe in the company or the product and they often conspire against management, whom they perceive to be the enemy. This all in turn creates:

•A bad brand: It is hard to create a positive brand and stellar reputation when your employees don't like you and your customers resent you.

So please, do us all a favor and avoid the hard sell.

Today's Tip:
  Here's a nice offer: Capital One just announced the launch of Venture for Business, a premium rewards credit card offering small business owners double miles on every purchase. You get 5,000 miles for signing up and these double miles can be redeemed for travel (air fare, hotel room, rental car, etc.) cash back, gift cards, merchandise or charitable donations.

Sunday, May 23, 2010

One Month after Oil Spill, Why is BP still in Charge?

Associated Press

Days after the Gulf Coast oil spill, the Obama administration pledged to keep its "boot on the throat" of BP to make sure the company did all it could to cap the gushing leak and clean up the spill.

But a month after the April 20 explosion, anger is growing about why BP PLC is still in charge of the response.

"I'm tired of being nice. I'm tired of working as a team," said Billy Nungesser, president of Plaquemines Parish in Louisiana.

"The government should have stepped in and not just taken BP's word," declared Wayne Stone of Marathon, Fla., an avid diver who worries about the spill's effect on the ecosystem.

That sense of frustration is shared by an increasing number of Gulf Coast residents, elected officials and environmental groups who have called for the government to simply take over.

In fact, the government is overseeing things. But the official responsible for that says he still understands the discontent.

"If anybody is frustrated with this response, I would tell them their symptoms are normal, because I'm frustrated, too," said Coast Guard Commandant Thad Allen.

"Nobody likes to have a feeling that you can't do something about a very big problem," Allen told The Associated Press Friday.

Still, as simple as it may seem for the government to just take over, the law prevents it, Allen said.

After the 1989 Exxon Valdez spill in Alaska, Congress dictated that oil companies be responsible for dealing with major accidents - including paying for all cleanup - with oversight by federal agencies. Spills on land are overseen by the Environmental Protection Agency, offshore spills by the Coast Guard.

"The basic notion is you hold the responsible party accountable, with regime oversight" from the government, Allen said. "BP has not been relieved of that responsibility, nor have they been relieved for penalties or for oversight."

He and Coast Guard Adm. Mary Landry, the federal onsite coordinator, direct virtually everything BP does in response to the spill - and with a few exceptions have received full cooperation, Allen said.

White House press secretary Robert Gibbs was even more emphatic.

"There's nothing that we think can and should be done that isn't being done. Nothing," Gibbs said Friday during a lengthy, often testy exchange with reporters about the response to the oil disaster.

There are no powers of intervention that the federal government has available but has opted not to use, Gibbs said.

Asked if President Barack Obama had confidence in BP, Gibbs said only: "We are continuing to push BP to do everything that they can."

The White House is expected to announce Saturday that former Florida Sen. Bob Graham and ex-EPA Administrator William K. Reilly will lead a presidential commission investigating the oil spill. Graham is a Democrat. Reilly served as EPA administrator under President George H.W. Bush. The commission's inquiry will range from the causes of the spill to the safety of offshore oil drilling.

BP spokesman Neil Chapman said the federal government has been "an integral part of the response" to the oil spill since shortly after the April 20 explosion.

"There are many federal agencies here in the Unified Command, and they've been part of that within days of the incident," said Chapman, who works out of a joint response site in Louisiana, near the site of the explosion of the Deepwater Horizon oil rig.

Criticism of the cleanup response has spread beyond BP. On Friday, the Texas lab contracted to test samples of water contaminated by the spill defended itself against complaints that it has a conflict of interest because it does other work for BP.

TDI-Brooks International Inc., which points to its staffers' experience handling samples from the Exxon Valdez disaster, said the National Oceanic and Atmospheric Administration and the U.S. Fish and Wildlife Service helped audit the lab and approved its methods.

"A typical state laboratory does not have this experience or capacity," TDI president James M. Brooks said.

The company's client list includes federal and state agencies along with dozens of oil companies, among them BP, a connection first reported by The New York Times. TDI-Brooks said about half of the lab's revenue comes from government work.

Test results on Deepwater Horizon samples will figure prominently in lawsuits and other judgments seeking to put a dollar value on the damage caused by the spill.

Deputy Interior Secretary David Hayes, who traveled to the Gulf the day after the explosion and has coordinated Interior's response to the spill, rejected the notion that BP is telling the federal government what to do.

"They are lashed in," Hayes said of BP. "They need approval for everything they do."

If BP is lashed to the government, the tether goes both ways. A large part of what the government knows about the oil spill comes from BP.

The oil company helps staff the command center in Robert, La., which publishes daily reports on efforts to contain, disperse and skim oil.

Some of the information flowing into the command center comes from undersea robots run by BP or ships ultimately being paid by BP. When the center reported Friday that nearly 9 million gallons of an oil-water mixture had been skimmed from the ocean surface, those statistics came from barges and other vessels funded by BP.

Allen, the incident commander, said the main problem for federal responders is the unique nature of the spill - 5,000 feet below the surface with no human access.

"This is really closer to Apollo 13 than Exxon Valdez," he said, referring to a near-disastrous Moon mission 40 years ago.

"Access to this well-site is through technology that is owned in the private sector," Allen said, referring to remotely operated vehicles and sensors owned by BP.

Even so, the company has largely done what officials have asked, Allen said. Most recently, it responded to an EPA directive to find a less toxic chemical dispersant to break up the oil underwater.

In two instances - finding samples from the bottom of the ocean to test dispersants and distributing booms to block the oil - BP did not respond as quickly as officials had hoped, Allen said. In both cases they ultimately complied.

"Personally, whenever I have problem I call (BP CEO) Tony Hayward" on his cell phone, Allen said.

Wal-Mart Asks Suppliers to Cede Control of Deliveries


Wal-Mart Stores Inc., the world’s largest retailer, is seeking to take over U.S. transportation services from suppliers in an effort to reduce the cost of hauling goods.

The company is contacting all manufacturers that provide products to its more than 4,000 U.S. stores and Sam’s Club membership warehouse clubs, said Kelly Abney, Wal-Mart’s vice president of corporate transportation in charge of the project. The goal is to take over deliveries in instances where Wal-Mart can do the same job for less and use those savings to reduce prices in stores, he said.

“It has allowed our suppliers to focus on what they do best, manufacturing products for us,” Abney said in a telephone interview yesterday from Bentonville, Arkansas, where Wal-Mart is based. “With lower costs usually comes increased sales.”

Under the program, Wal-Mart is increasing the use of contractors, as well as its own private fleet of trucks, to pick up products directly from manufacturers and transport the goods to its distribution centers and stores. The retailer currently moves most goods only from its distribution centers to stores.

The plan allows Wal-Mart’s fleet of 6,500 trucks and 55,000 trailers to carry more per truck and improve on-time delivery rates, said Leon Nicholas, a director at consulting firm Kantar Retail. Wal-Mart would also have more sway in negotiating fuel prices, he said.

“They are reaching further back into the supply chain,” said Cambridge, Massachusetts-based Nicholas, who has spoken with vendors about the move. “It is an effort to ultimately reduce costs of goods sold, which will ultimately increase their gross margins. They believe they can ship and transport product more efficiently than the suppliers can.”

Cost Disconnect

The price cuts Wal-Mart is seeking are twice as much as the cost for transporting goods in some cases, said officials from two suppliers. In two instances, Wal-Mart asked for a 6 percent reduction in the price it pays for products based on its own cost calculation, while suppliers estimated the actual expense was equal to about 3 percent, the people said.

“There may be a disconnect when we walk into the room on what that cost might be,” Wal-Mart’s Abney said. “But we work collaboratively. As soon as a supplier shares the data, almost always those differences are quickly resolved.”

Abney said Wal-Mart has thousands of suppliers and he has taken part in talks with more than 100. Some manufacturers have already shifted their deliveries and associated costs to Wal- Mart, he said.

Lowering Expenses

One side effect of the plan is that manufacturers may face increased transportation costs on deliveries to other retailers as they lose scale, said Randy Huffman, a former Wal-Mart executive who now runs GBD 360, a Bentonville consulting firm that works with suppliers.

“That aligns with Wal-Mart’s taking cost out of the supply chain for their benefit and not their competitors,” he said. “Suppliers are going to have to apply that increased freight cost somewhere, so it’s more than likely it will be passed onto other retailers.”

Wal-Mart is looking to defray expenses after saying this week that sales at U.S. stores open at least a year fell for a fourth straight quarter. Mike Duke, who took over as chief executive officer last year, pledged in October that costs would rise slower than sales.

Since then, Wal-Mart has sharpened its focus on transportation expenses, escalating talks to take over trucking from suppliers this year, Abney said.

Wal-Mart gained 7 cents to $51.37 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 3.9 percent this year, compared with a 0.4 percent decline for the Standard & Poor’s 500 Consumer Staples Index.

Trucker Mike

The retailer has sought to offer goods like cereal and laundry detergent for less to lure shoppers back to stores, and lowering transport costs provides room to do that. The strategy is part of what Wal-Mart calls its “productivity loop” -- efficiency reflected in lower bills at the cash register.

The loop is already the theme of a national commercial, where a truck driver identified as Mike touts the system, saying packing fuller loads has cut fuel costs and retail prices. Last year, Wal-Mart truckers logged 749 million miles, or about 100 million miles less than in 2008, according to spokesman Lorenzo Lopez. That trimmed expenses by almost $200 million, he said.

A Wal-Mart truck coming from a distribution center in Bentonville to stores hundreds of miles away may pick up goods from manufacturers on the way home, said Don Lanham, Milwaukee- based director of consumer products at Clarkston Consulting.

“It’s efficient, economical and environmental to have fully loaded trucks, not empty ones,” said Lanham, whose firm advises suppliers to Wal-Mart and other retailers. “Those Wal- Mart trucks are all over the United States.”

Price Cut Pledges

Shoppers are seeing the benefits, with Wal-Mart pledging on May 18 to cut prices on 22 items families routinely purchase for an average savings of 30 percent.

As for the suppliers, they may have to give in even if their other transport expenses rise, given Wal-Mart’s status as the world’s largest retailer, said Vic Gallese, an independent retail consultant based in Fort Worth, Texas.

“The vendors might say, ‘My other overhead costs will rise,’” said Gallese, who has spent 25 years in the industry. “And Wal-Mart will say, ‘That’s your problem.’”

Manufacturing Feeds the Recovery, but Can It Persist?‏


As the U.S. economy began to show signs of life late last year, it was carried largely by an unusual leader: manufacturing. In terms of both output and new jobs created, U.S. manufacturers have posted strong numbers for several months running.

Yet with the mixed results of two regional manufacturing reports this week—the New York Federal Reserve's Empire State Manufacturing Survey and the Philadelphia Federal Reserve's Business Outlook Survey—it remains to be seen if the short burst manufacturing received from U.S. businesses cautiously re-entering the economy this spring will extend much longer.

"People had to restock shelves at some point," says Cliff Waldman, an economist for Arlington, Va.-based Manufacturers Alliance, (MAPI). "What has to happen now is real demand has to enter."

But Thursday's Philadelphia Fed survey, which covers factories in eastern Pennsylvania, southern New Jersey and Delaware, suggested that business demand remains tepid. Despite a slight increase in the survey's diffusion index of current activity—its most comprehensive measure of manufacturing conditions—certain line elements dipped, including an eight point drop in new orders.

"Domestic demand, while recovering, is not exactly a barnburner," says Waldman.

The Philadelphia Fed survey also revealed a softer-than-anticipated outlook on factory hiring. Manufacturing employment has been a bright spot in an otherwise bleak job market, adding 101,000 jobs since December 2009, according to the U.S. Bureau of Labor Statistics. While both the Philadelphia Fed and the Empire State survey, released Monday, recorded positive readings for May hiring, they also found future employment outlooks tied heavily to business demand. Forty-three percent of the Philadelphia-region factories who reported no present intention to hire further employees indicated uncertainty over product demand as the "most important" reason why they were keeping ranks trim.

As a sector whose share of the economy has only shrunk with each passing decade—manufacturing accounted for 11.5 percent of total GDP in 2008, versus 21.3 percent in 1978—its current performance is hard to appreciate when speaking in relative terms. Still, U.S. manufacturing remains a positive indicator for economists analyzing a nascent economic recovery.

Omair Sharif, an economist for RBS Securities, remains unfazed by any recent pullback in manufacturing's strong run for 2010.

"Philly and Empire reports still point to very healthy growth in the manufacturing sector," says Sharif. "[Both] show continued growth in factory activity in May, even if it is somewhat slower than it was in April. Because the reports run through the first half of each month, my sense is that some of the slowdown may have had to do with caution on the part of firms due to the escalation of the European debt crisis."

Global markets stretched and shaken by a historic economic downturn will likely continue to impact the fate of U.S. manufacturing. An Asian-led export rebound has had strongly positive implications for the sector, as booming Asian economies have stepped up their demand for American goods. Yet with shaky European markets threatening to unsettle business operations worldwide, manufacturing could take fresh hits just as quickly as it gains, leaving its progress caught in a murky middle.

"It's an uneven global recovery to say the least," says Waldman. "My best guess in manufacturing output growth is moderation."

Saturday, May 22, 2010

Cutthroat Competition at Heart of Ge-Mitsubishi Dispute

NY Times

Industrial heavyweights General Electric Co. and Mitsubishi are raising the temperature of a 2-year-old dispute claiming patent infringements and monopolistic behavior in the U.S. wind turbine market.

In a complaint filed in a U.S. District Court in Arkansas yesterday, Mitsubishi Heavy Industries accused GE of scheming to control the nation's wind power market. Through a series of "baseless claims of patent infringement," Mitsubishi said in its complaint, GE has successfully scared off potential Mitsubishi customers and discouraged well-capitalized foreign competitors from setting up shop in the United States.

"GE is attempting to kill competition in the marketplace to the detriment of U.S. consumers," said Mitsubishi spokeswoman Sonia Williams. "We anticipate damages will be in the hundreds of millions of dollars, and may be over $1 billion."

In a separate suit filed in Florida yesterday, the Japanese turbine maker accused GE of infringing on a critical Mitsubishi patent.

The Mitsubishi complaint is the latest in a series of claims and counterclaims unfurled by the two companies, made as competition increases in the U.S. wind market and as both companies roll out their latest high-capacity wind turbines. GE, Japan's Mitsubishi, Denmark's Vestas Wind Systems, Germany's Siemens AG and a growing crop of global industrial conglomerates are racing to get a permanent foothold in North America, where wind projects are grabbing a bigger share of electricity generation.

This grudge match started in 2008, when GE filed complaints at the U.S. International Trade Commission alleging Mitsubishi had infringed on GE wind-turbine patents. The U.S. ITC ended its investigation in January after finding Mitsubishi had not violated the patents, but it left the door open for further action. In February, GE then filed a suit in a Texas court accusing Mitsubishi of breaching the GE patents.

Japanese turbine maker claims it's been shut out

The dispute at the ITC attracted the attention of influential members of Congress with GE factories or headquarters in their states. Democratic Sens. Charles Schumer and Kirsten Gillibrand of New York, which is where GE Energy is located, and Republicans from Southern states wrote letters to the ITC warning that job losses would result if GE lost the patent case.

The dispute also continues to play out amid heated discussion about U.S. leanings toward protectionist policies and the capacity of global wind and solar companies to reach American consumers without expanding their U.S. manufacturing base.

In the complaint yesterday, Mitsubishi said that GE has a 70 percent market share for variable-speed wind turbines. As Mitsubishi tells it, once it entered the market in 2006 and secured lucrative contracts, GE "embarked on an unlawful scheme" to drive it and others out of the U.S. market.

Variable-speed windmills are designed for significant utility-scale power generation. They operate on a wide range of wind speeds when connected to the transmission grid. Mitsubishi also claimed that GE obtained a handful of wind-turbine patents through improper means and failed to disclose sources of information to the U.S. patent office.

"GE's unlawful scheme has worked," says the complaint. "Prior to the initiation of GE's first lawsuit against Mitsubishi, Mitsubishi had sales of approximately $2 billion a year of variable speed wind turbines in the United States. Since GE's litigation campaign began over two years ago, Mitsubishi has not sold a single variable speed wind turbine in the United States."

GE calls claims 'outrageous'

When GE filed a new suit against Mitsubishi shortly after the ITC ruling, Mitsubishi explains, "This, GE hoped, would prolong the period of uncertainty over Mitsubishi turbines in the U.S. market for the pendency of the second suit."

GE spokesman Daniel Nelson in an e-mail called Mitsubishi's antitrust complaint "meritless and outrageous."

"GE stands strongly behind the merits of its patent infringement lawsuits against [Mitsubishi] and will fight to protect its intellectual property," Nelson said, adding that the company intends to "vigorously defend itself" against Mitsubishi's charge of patent infringement.
Matt Kaplan, a wind analyst at Emerging Energy Research, said wind purchasers have been scared off by the potential for legal problems if they purchase turbines from Mitsubishi instead of GE. The market-level impact is there, but he said the complex patent infringement claims made by the companies are hard to parse.

"It shows that the market is very competitive," he said, "and that Mitsubishi does feel a real threat from GE patent issues."

Tempest in once-tranquil market

GE controls about 44 percent of the North American market for wind turbines and components, and Mitsubishi comes in a distant fourth. Still, Kaplan said, the Japanese manufacturing giant isn't to be toyed with, and neither is the line-up of significant global power players that want a piece of the U.S. wind market.

"GE's dominant lead over the market has made it difficult for companies to enter and steal market share," Kaplan said. "But Mitsubishi, a heavy industrial company, does have the ability to threaten GE."

Kaplan said the ITC ruling and its ability to push back against GE litigation is critical for Mitsubishi. The company plans to begin construction this year on a $100 million plant in Fort Smith, Ark., to build wind-turbine engines for the U.S. market.

While Mitsubishi's Williams said the project is still a go and could employ nearly 400 people, she acknowledged the drop-off in Mitsubishi wind contracts since GE's claims raised concerns about building the plant. She warned that the plant could sit idle "if GE's unlawful conduct continues."

According to the American Wind Energy Association, 15 companies sold large-scale wind turbines to U.S. customers in 2009, up from five companies in 2005. "The wind industry is increasingly in the hands of major industrial players," Kaplan said. "This is a clear shift from what we've seen in the past."

Companies interested in installing wind-power capacity in the United States haven't shied away from the market, Kaplan said, but the GE-Mitsubishi disputes have caused those companies to pause for a second and walk gingerly as they chooses their suppliers.