« February 12, 2006 - February 18, 2006 | Main | March 05, 2006 - March 11, 2006 »
My latest in Slate, on the business of tabloids.
Posted by dan at 08:19 PM
David Enrich reports in the Wall Street Journal on the latest chapter in the long-running Sovreign Bancorp/Banco Santander/Relational Investors saga.
As the Securities and Exchange Commission staff nears a decision on whether to intervene in a controversial three-bank deal, the Spanish bank involved in that transaction has enlisted "America's mayor" to help sell the deal to regulators.Spain's Banco Santander Central Hispano SA hired former New York City Mayor Rudolph Giuliani's law firm, Bracewell & Giuliani LLP, to conduct "an independent review" of the deal, in which Santander is buying a roughly 20% stake in Sovereign Bancorp Inc. The study -- financed by Santander and conducted by Mr. Giuliani and Robert Clarke, the former comptroller of the currency -- concludes that the transaction will comply with all laws and regulations. . .
Bracewell & Giuliani's study largely echoes arguments that Sovereign and Santander's lawyers have been making for months. The firm yesterday sent the 97-page report to the SEC and other regulatory agencies.
Relational Investors LLC, the largest shareholder and loudest critic of Philadelphia-based Sovereign, questioned the objectivity of the study. "How can it be an independent view if [Santander] paid for it and we haven't been consulted," said Relational co-head Ralph Whitworth.
Posted by dan at 09:56 AM
Tom Friedman has been pushing the "China is way ahead of us in environmentally friendly fuel" meme. As Shai Oster and Patrick Barta report in the Wall Street Journal, not so much. The world may be getting flatter, thanks to China's growth. It's also getting dirtier.
TONGCHUAN, China – China's decade-long attempt to push natural gas instead of coal and oil is faltering amid soaring gas prices. The country's struggle to diversify its energy use could further damage its already degraded environment and put renewed pressure on international oil prices.Tongchuan, a city of 800,000 in central China, built a natural-gas distribution system in the late 1990s to combat its reliance on coal and battle smog created by its local cement factories. The pollution was so bad that Tongchuan couldn't be seen on satellite images, prompting China's then-leader to dub it "the invisible city."
Despite a significant improvement in Tongchuan's air quality, local leaders are planning a new plant and it is going to be powered by coal. They blame sharply rising gas prices. "We have plenty of coal, why don't we use it?" says Zhao Guanlong, the deputy director of the city's development and planning commission.
China has backed out of at least one multibillion-dollar deal to buy gas from overseas oil companies and other deals are in jeopardy. Plans to build more than a dozen terminals to receive gas shipments in liquid form are on hold. Chinese officials are discouraging new gas-related investments because they fear the terminals won't be fully utilized.
Meanwhile, in the 18 months through July 2005, the government approved 168 power plants, nearly all of which are coal-fired. In the past year, China has built enough coal-fired power plants to provide electricity to all of Italy, all but ensuring coal will remain a dominant fuel for decades.
If China's gas push had been more successful, it would have reduced the strain China places on world oil markets. China is currently the world's second-largest consumer of energy, after the U.S., and its needs are growing as the economy expands.
In 2004, Chinese oil imports surged 15% after electricity supplies ran low, a move that caught energy markets by surprise and helped spur the biggest jump in oil prices in a generation to more than $55 a barrel. With a more diverse energy portfolio that included natural gas, China wouldn't have needed to rely so heavily on oil. The current international price of more than $63 a barrel is in part due to Chinese demand. . . . .
Chinese officials said in October they expected sulfur-dioxide emissions, which are linked to acid rain, to rise 15% in 2005 from the year before. By 2025 it could surpass the U.S. as the world's largest emitter of the so-called greenhouse gases that are thought to contribute to global warming, according to John Beale, deputy assistant administrator for air and radiation at the U.S. Environmental Protection Agency.
The most embarrassing environmental mess occurred in November when a chemical spill in northeastern China's Songhua River flowed into Russia, damaging drinking supplies for millions of Chinese and Russians.
Posted by dan at 09:49 AM
Amy Chozick reports in the Wall Street Journal on another positive outcome from the slow embourgeoisement of Mexico: booming business in shopping malls in McAllen Texas. It's well worth the price of the paper to read the whole thing.
MCALLEN, Texas -- Hidalgo County, in the southernmost tip of Texas, is the poorest county of 250,000 or more people in the U.S., with nearly half its families living below the poverty line. Vendors hawk bootleg DVDs and homemade tacos out of the back of pickup trucks. Stray dogs roam the scrubland along highways.Hidalgo is also home to one of America's highest-grossing shopping malls, the sprawling La Plaza Mall of McAllen, Texas. Owned by Simon Property Group Inc., the nation's No. 1 mall developer, La Plaza features valet parking, trendy clothing chains like Abercrombie & Fitch Co. and Banana Republic, and high-end jewelers Swarovski and Helzberg Diamonds. La Plaza generates monthly sales of well over $450 a square foot, compared with a national mall average of $392. Next year, Simon, of Indianapolis, plans to open the 600,000-square-foot Palms Crossing shopping center a half-mile away. In nearby Mercedes, Simon is opening the $68 million Rio Grande Valley Premium Outlets, a 400,000-square-foot, upscale outlet, in November.
The reason: Mexican shoppers, both rich and poor, are pouring into the area, making it the equivalent of Madison Avenue for northern Mexico's consumer class. Border agencies tally nearly 40 million legal visits a year by Mexicans coming to Texas for leisure activities. The Federal Reserve Bank of Dallas figures they spent $3 billion on merchandise in Texas border counties in 2004, the latest data available, up from around $1.6 billion a decade earlier. In the past 10 years, retail sales in McAllen have risen more than 75%, nearly double the nationwide pace of 40%. Per-capita sales here are twice the national average, according to the census
While Mexican money has long flowed north, the current upsurge has turned South Texas' poor borderlands into the latest, and one of the last, ripe frontiers for big retailers. At a time when major retail chains are facing declining market share and tepid sales in America's affluent suburbs, they are finding unexpected hope in the Mexican consumer.
Forty of the nation's top 100 retailers have recently staked their claim here. When Guess Inc. launched its new clothing boutique, Marciano, in 2004, the company chose Los Angeles, Toronto and McAllen as its three test cities. Foley's, a chain of department stores in Texas owned by Federated Department Stores Inc., Cincinnati, says operations in McAllen and nearby Laredo are its fastest-growing locations. J.C. Penney Co., Plano, Texas, says about three quarters of customers at its McAllen store are from Mexico and last year the chain allowed Mexican shoppers to apply for its gift registry and credit card. The store offers bilingual gift cards and an in-store beauty salon popular with Mexican women. . . .
For Mexicans, a trip to McAllen yields a better variety of American products than they can get back home. The strong peso and steep tariffs on goods imported from China to Mexico make some items more affordable in the U.S. And U.S. retailers typically have more lenient exchange policies than do stores in Mexico.
"It's just nicer to shop here," says Rosalia Vincent Mabarak, a 25-year-old saleswoman for an auto-parts maker in Monterrey, who saves up all year to come shopping with her family. Laden with Victoria's Secret shopping bags and piles of Abercrombie & Fitch T-shirts over her arm, she adds, "I bring back underwear and makeup for my friends, whatever they want, I buy it."
Retailers work hard to keep people like Ms. Mabarak coming back for more. Foley's, J.C. Penney and Bealls buy print and radio advertising in northern Mexico. La Plaza Mall hangs fliers on the doorknobs of middle-class homes in Monterrey. La Plaza also pushes its shopping-and-travel packages with Drury Inn, a hotel chain. H-E-B, a San Antonio chain that has 38 grocery stores in Texas border communities and four stores in Mexican border towns, buys print, radio and television advertising in Mexico and hands out coupons in Northern Mexico and at border crossings. Many salespeople are bilingual, and U.S. stores accept payment in pesos.
The McAllen Chamber of Commerce does its part, too, spending more than $1.8 million in northern Mexico in the past 12 years to promote the city as a retail destination. It has a satellite office in Monterrey.
Posted by dan at 09:45 AM
David Rogers reports in the Wall Street Journal that deficit hawks are esssentially extinct in Washington:
Bowing to election-year pressure, Senate Republicans are preparing a budget resolution that largely avoids the billions of dollars in benefit-program savings called for in President Bush's spending plan.The administration proposed an estimated $65 billion in five-year savings, more than half of which would come from the Medicare health-care program for the elderly. But it looks likely that the Senate Budget Committee will report a resolution next week without instructions to require separate deficit-reduction legislation to implement the savings.
"Spending is always easier than saving and will always meet with resistance," said a spokesman for the White House budget office. But the lack of Republican support for the president's budget for the fiscal year beginning Oct. 1 is striking this year and spells trouble down the road since Mr. Bush must slow spending more to have any hope of sustaining his tax cuts.
Senate Budget Committee Chairman Judd Gregg (R., N.H.) said he is still committed to holding new appropriations near the $870.7 billion ceiling set by the White House. But he ruled out any "firewall" to protect the military's share of the president's request and accused the administration of using emergency spending requests each spring to create "two sets of books" for the federal budget.
"The White House has approached budgeting as if they are running two sets of books: one for the general government and one for national defense," Mr. Gregg said. "And the one for general government is subject to severe budget restraint and the one for national defense is subject to absolutely no budget restraint."
Speaker Dennis Hastert (R., Ill.) still hopes to effect some benefit savings in the House budget, and a modest package could be resurrected in final talks between the two chambers. But following a meeting with his leadership late yesterday, Mr. Gregg said nothing is envisioned even close to the $39 billion five-year deficit-reduction bill enacted for this year.
The president's agriculture and pension-related savings are widely contentious, and in Medicare's case, Senate Finance Committee Chairman Charles Grassley (R., Iowa) will need any savings he finds to pay for other health needs, not deficit reduction.
Mr. Gregg is usually among the most optimistic and aggressive about the chances of deficit reduction. When House leaders wanted to delay action on a budget-savings bill in the fall, the New Hampshire conservative pushed the Senate ahead to the surprise of many, and he continues to enjoy good relations with White House Budget Director Joshua Bolten.
In response to the chairman's "two sets of books" remark, Mr. Bolten's spokesman said, "Funding emergencies by supplemental is mandated largely because emergencies' costs, by definition, cannot be anticipated."
But Mr. Gregg's frustration is shared by an increasing number of Republicans. Even traditional allies of the Pentagon and State Department have complained recently that the administration is using its emergency requests to circumvent requirements that it provide Congress detailed justifications of how the money will be spent.
New funding requests for the wars in Iraq and Afghanistan, for example, include $3.4 billion to help equip and prepare brigades designed to be part of a more modular structure for the military. Proponents argue that the brigades being financed will be used overseas, but critics argue that the expenditures aren't genuine emergencies and ought to be treated as part of the annual military budget.
Posted by dan at 09:53 AM
Eric Dash reports in the New York Times that Citigroup pays for the taxes on chairman Sanford Weill's income:
Sanford I. Weill, the billionaire chairman of Citigroup, got a perk on his perks last year.Not only did Citigroup's board hand Mr. Weill $21.5 million in pay; it also took care of the taxes on his benefits. The cost to Citigroup shareholders was hundreds of thousands of dollars, based on public filings disclosed yesterday.
A Citigroup spokeswoman, Leah Johnson, said the company long included the extra tax benefits in its executive pay calculations, but this year "voluntarily disclosed more information" about its perks to provide investors with the "most accurate and transparent" results.
The move also allows Citigroup to get ahead of more stringent disclosure rules proposed by the Securities and Exchange Commission in January. More companies that cover their top executives' taxes — not an unusual practice — could soon follow suit.
Shareholders picked up the bill for both taxes and benefits awarded to Mr. Weill in 2005. Perks included Mr. Weill's use of the company's planes (calculated at $524,000), the cost of Mr. Weill's medical and dental claims ($61,846) and personal financial planning advice ($85,714). Other top company executives were entitled to similar benefits.
Posted by dan at 09:51 AM
Interesting article by Eduardo Porter on the front page of today's New York Times on women in the workforce.
Posted by dan at 09:50 AM
So, the Committee on Foreign Investments in the U.S. thinks it's fine for a company owned by the United Arab Emirates to acquire U.S. port terminals. But apparently, it's not OK for a privately-held Israel-based company to acquire a firm that deals with a different type of vital infrastructure with security implications: software.
The Associated Press reports, via Ha'Aretz:
The same Bush administration review panel that approved a ports deal involving the United Arab Emirates has notified a leading Israeli software company that it faces a rare, full-blown investigation over its plans to buy a smaller rival.The company was told U.S. officials feared the transaction could endanger some of government's most sensitive computer systems.
The objections by the FBI and Pentagon were partly over specialized intrusion detection software known as "Snort," which guards some classified U.S. military and intelligence computers.
Snort's author is a senior executive at Sourcefire Inc., which would be sold to publicly traded Check Point Software Technologies Ltd. in Ramat Gan, Israel. Sourcefire is based in Columbia, Maryland.The ongoing 45-day investigation into the Israeli deal is only the 26th of its type conducted among 1,600 business transactions reviewed by the Committee on Foreign Investments in the United States. The panel, facing criticism by U.S. Congress about its scrutiny of the ports deal, judges the security risks of foreign companies buying or investing in American industry.
In private meetings between the panel and Check Point, officials from the FBI and U.S. Defense Department objected forcefully to permitting any foreign company to acquire some sensitive Sourcefire technology for preventing hacker break-ins and monitoring data traffic, an executive familiar with the discussions told The Associated Press. This executive spoke on condition of anonymity because government negotiations are supposed to remain confidential.
Under the sale, publicly announced Oct. 6, Check Point would own all
Sourcefire's patents, source-code blueprints for its software and the expertise of employees.
Posted by dan at 09:21 AM
CBS is shocked, angered, and dismayed to learn that Howard Stern, whose self-promotion paid so many dividends for the company over the years, is a self-promoter.
Posted by dan at 09:24 AM
David Cay Johnston reports in the New York Times on an interesting Supreme Court case about the practice of states and localities using tax breaks to lure companies to relocate and expand.
Posted by dan at 09:21 AM
Gregory Zuckerman reports in today's Wall Street Journal that shares of Rupert Murdoch's News Corp. may trade at a discount in part because investors don't fully trust the septuagenarian mogul.
Some of the lethargy is due to the market's distaste for old-line media businesses. But it also reflects fear that Mr. Murdoch -- long seen as an empire builder rather than a builder of shareholder value -- will launch another expensive takeover, perhaps of Univision Communications Inc.But News Corp.'s assets are among the most valuable in the media and Internet industries, and its shares are cheap compared with rivals. Investors have overlooked impressive profit and cash-flow growth, and upbeat future prospects.
If Mr. Murdoch, the 74-year-old media mogul, can control his acquisition urges and the company pays heed to investors pushing it to boost stock buybacks, News Corp. shares could jump, especially if the love affair between investors and large media companies is rekindled.
Some of Mr. Murdoch's acquisitions, such as an investment in Gemstar-TV Guide International Inc. that resulted in an almost $6 billion write-down, have sparked teeth gnashing among shareholders. But the septuagenarian recently said the likely price for Univision is too expensive, and he has suggested that there are no big acquisitions currently on the table.
"The company has all the pieces in place to grow at a higher rate than the industry," says Aryeh Bourkoff of UBS Investment Research, who has a "buy" rating on the stock. He doesn't own the shares; his firm has done investment banking with News Corp. in the past. "If they have a more liberal buyback policy, it could spark a sentiment shift on the stock."
News Corp.'s earnings growth tops its peers. The company is expected to earn 87 cents a share this year, a rise of 18% compared with 2005, and $1.04 next year, a jump of almost 20%, according to analysts polled by Thomson Financial. By comparison, rivals such as CBS Corp., Walt Disney Co., Viacom Inc. and Time Warner are expected to generate earnings growth of 10% to 17.5% in 2006, and 6% to 17.5% in 2007.
Despite that, News Corp. shares trade at 18.7 times its expected 2006 earnings, compared with price/earnings ratios of 20 for Viacom, 19.7 for Time Warner and 18.5 for Disney. CBS has a trading multiple of 14 but is expected to see much slower growth.
Posted by dan at 09:19 AM
The slow embourgeoisement of Mexico continues. Elisabeth Malkin reports in the New York Times on a wave of shopping mall construction in Mexico. And Matt Cowley reports in the Wall Street Journal that Mexico and other Latin American countries continue to buy back high-interest debt.
Bond buyback plans from four Latin American governments have underpinned a long-running rally in emerging-market debt.The plans, unveiled in recent days by Mexico, Brazil, Venezuela and Colombia, could see as much as $33 billion of foreign bonds disappear by year's end.
Creditworthiness in all these sovereigns is certainly on the upswing, and the fact that they are flush enough to do the buybacks reflects the changing dynamic of the market," said Scott MacDonald, co-head of research at hedge fund Aladdin Capital in Stamford, Conn.
Standard & Poor's Ratings yesterday upgraded Brazil's long-term sovereign credit ratings to double-B from double-B-minus, just eight months before national elections.
Many Latin American governments are running current-account surpluses, as high commodities prices lead to strong trade surpluses and appreciating currencies. Moreover, inflation across the region has, for the most part, fallen to single digits.
Through the buybacks, governments are shifting the emphasis from foreign-currency debt to their own currencies, which reduces their exposure to swings in exchange rates.
This increasing scarcity of foreign-currency bonds comes just as investment funds specializing in emerging markets are being flooded with cash. According to Emerging Portfolio Fund Research, dedicated emerging-market bond funds attracted $3.04 billion of net inflows in the first eight weeks of the year, compared with the $1.95 billion a year earlier.
The combination of falling supply and rising demand has added fresh impetus to the rally that has driven emerging-market bonds for the past three years. After Brazil and Mexico announced their buyback plans on Thursday, the emerging-market risk premium, as measured by J.P. Morgan Chase's Emerging Markets Bond Index Plus, narrowed 0.017 percentage point to a record low on Monday of 1.86 percentage points over U.S. Treasurys.
Posted by dan at 09:12 AM
that's got his own earned income tax credit. Tom Herman reports in the Wall Street Journal on how some high-income families are claming the earned-income tax credit.
Defining the term "child" sounds simple -- except at tax time.There are at least five different tax breaks tied to children and until recently, the tax code had a separate test for each. Recognizing the absurdity and inefficiency of that, Congress enacted legislation in late 2004 streamlining the definition of a child. The new system took effect for 2005 tax returns, which people are preparing now.
But the new law has ended up creating loopholes allowing some high-income families to get tax benefits that weren't intended for them -- such as the earned-income tax credit, which is intended for low-income workers. At the same time, some low-income families are finding themselves unable to claim benefits that they should be getting.
Some lawmakers and tax experts are up in arms about what they say are the law's unfair consequences. Coming up with a fair solution is tricky not only because of the Internal Revenue Code's complexity but also because of the varied types of households and living arrangements in the U.S. today. . . . .
The changes to the child-definition law streamlined the definitions of a child for five different tax breaks -- the dependency exemption, child-tax credit, earned-income credit, dependent-care credit and head-of-household filing status. They are among the new twists and turns taxpayers have to grapple with as they fill out returns for last year.
Most families probably won't be affected by the change. But for some high-income earners the law could be a boon. This is especially true for wealthy families with two or more children living at home, where one or more of the kids has taxable income, especially income from a job.
Francis Degen, president of the National Association of Enrolled Agents, which represents about 40,000 private-sector tax specialists, offered this example: A couple with two children living at home -- a 14-year-old daughter and a 22-year-old son -- file a joint return with adjusted gross income of $400,000. At that level of income, the parents don't get any tax benefit from claiming the daughter as a dependent. On the other hand, the son, who has $15,000 in wages and isn't a full-time student, can claim his sister, enabling him to receive the child-tax credit and earned-income tax credit. Assuming he had no tax withheld, this turns what would have been a balance due of $683 on his return to a federal income-tax refund of $3,158. . . .
Under the new law, there are several tests to qualify as a child. The child must be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of them. The child must be under age 19 at the end of the year, or under 24 at the end of the year and a full-time student -- or any age if permanently and totally disabled. The child must have lived with you more than half the year (although there are some exceptions, such as children who were born or died during the year). The child must not have provided more than half of his or her own support for the year. For more details, see Chapter Three of IRS Publication 17 (www.irs.gov).
This broad definition can also work against some lower-income taxpayers, according to Treasury officials, who offered this example in a recent report: A 20-year-old woman who works at a minimum-wage job and attends school full time is the legal guardian of her 15-year-old brother. Because of complex rules in the new tax law, the woman can't claim her younger brother for the earned-income tax credit, even though she would have been able to do so under the old tax law. However, the woman may still be able to claim other child-related tax benefits.
Posted by dan at 09:09 AM
I will be appearing on Brian Lehrer's show on WNYC this morning @ 11:00.
Posted by dan at 10:27 AM
From Michael Barbaro's article on Wal-Mart CEO Lee Scott in the New York Times.
Mr. Scott conceded that one of Wal-Mart's new efforts, the introduction of health savings accounts, had gotten off to a slow start because setting up the accounts was "too complicated." He said he found the process confusing and had not yet set up his own account.
The reason Lee Scott isn't setting up his own HSA isn't that its too complicated and confusing. The reason Lee Scott isn't setting up his own HSA is because he, and other top Wal-Mart executives, likely have gold-plated health insurance benefits. The kind that pays the bills when you get medical attention. Indeed, among all the many CEOs, academics, policy wonks, editorialists, and government officials advocating that the masses sign up for HSAs, it's a safe bet not more than a handful think HSAs are good enough for them and their families. Lee Scott will set up an HSA the day Wal-Mart's board of directors holds hands and sings Joe Hill.
Posted by dan at 05:39 PM
Something tells me the performance of this fund--$150 million turned into $150,000--doesn't get included in the various industry performance indices.
Ian McDonald and Valerie Bauerlein report in the Wall Street Journal:
After a week of hunting, state and federal authorities have tracked down only about $150,000 of the allegedly $150 million invested with an Atlanta money manager accused of fraud, according to people briefed on their progress. A bench warrant has been issued for the arrest of the firm's chief executive, in hopes of getting his help in the search for the firm's assets.Kirk S. Wright, founder and CEO of Atlanta-based International Management Associates LLC, said the firm was beset with redemptions but had about $150 million of client assets in the bank, during a Feb. 15 interview with The Wall Street Journal. Two days later, a local judge in Georgia state court froze the assets of the firm and its three principals, including Mr. Wright, after several current and former professional football players who invested more than $15 million with the firm accused the company of fraud, forgery and refusing to meet redemption requests.
Other International Management clients have since made similar allegations, kicking a regulatory inquiry into high gear. Over the past week, the Securities and Exchange Commission and a receiver appointed to mind International Management's assets have scoured the hedge-fund firm's offices, records and accounts, but found only crumbs so far. To date, investigators have tracked down only a small fraction of the money Mr. Wright claimed was in the bank on Feb. 15, but their review of the firm's records could continue for several weeks.
A bench warrant was issued in Georgia state court late Friday for Mr. Wright's arrest. Authorities have spoken with Mr. Wright on the phone, but are eager to get more details on the firm and its accounts. Bench warrants are issued by judges when a defendant hasn't appeared in court. Mr. Wright hasn't appeared at hearings over the past week, but it's not clear he was served with papers requesting his presence.
Mr. Wright, who claims an investor has threatened his life, postponed a visit to the SEC's Atlanta office to answer questions last week, saying he needed time to hire local counsel, according to people familiar with the situation.
Mr. Wright didn't return calls to his cellphone over the weekend and hasn't returned media calls in recent days. During his Feb. 15 interview, he said he was aware of "no irregularities" in the firm's operations or accounts, although he acknowledged that audits of any kind hadn't been done since 2003.
Posted by dan at 05:34 PM
Business Week profiles Austrian-policeman-turned-hedge-fund-for-the-masses impresario Christian Baha. ($ required)
The graphic accompanying the article contains the following:
Among his favorite books: Hot Commodities by Jim Rogers and Forbes Greatest Business Stories by Daniel Gross
Posted by dan at 04:23 PM
Did an Institutional Investor article help do in Larry Summers at Harvard? Sara Ivry reports in the New York Times.
Posted by dan at 04:13 PM
Fred Barnes files from Planet Zorgon. From his most recent column in the Weekly Standard.
Like few presidents before him, President Bush was poised for a consequential and potentially quite successful second term. It hasn't worked out that way (so far). Bush made one strategic error in 2005, guessing wrongly that the country was adult and serious enough to reform Social Security.
One strategic error in 2005? Barnes is so charitable to Bush, he makes Andrew Carnegie look like a miser. Looking back at the last several years of fiscal and social policy, it's quite clear who the childish jokesters are.
Posted by dan at 08:07 AM
A telling quote from Louis Uchitelle's fine article in yesterday's New York Times about Caterpillar's two-tier wage system.
AS Caterpillar's managers see it, they have no choice. "There is a balance that must be struck between being competitive and being middle class," said Douglas R. Oberhelman, a group president. Although Caterpillar's factories are among the most productive in the world, the managers argue that the company cannot afford to be more generous simply because it is doing well right now."You could say that in good times you could afford a different kind of package and in bad times you couldn't," said Christopher E. Glynn, the director of corporate labor relations. "The real question is: What's competitive? And our target is competitiveness."
When it comes to striking the balance, of course, the force weighing on the "competitive" side of the scale is far greater than the force weighing on the "middle class" side of the scale.
Posted by dan at 08:04 AM