TheState.com: Business

Shop Around: Malls report bright spots amid recession

Fri, 10 Jul 2009 01:42 EDT

Despite a bleak retail picture, some area malls are landing new stores and have others expanding.

“When we go into recession, it’s always tough on retail,” said Charles Gwinn, general manager of Columbia Place Mall on Two Notch Road. “Then, you have the opportunity for innovation.”

Columbia Place lost two anchors six months ago, Dillard’s and Steve & Barry’s. But Gwinn can rattle off nine smaller retailers that are moving into the mall or expanding. Its occupancy rate is 82 percent, not including anchor spaces, he said.

Gwinn said larger organizations that are failing might have been caught with large debt loads when the recession started in December 2007.

“The smaller entrepreneur generally doesn’t have that baggage,” he said. They can take advantage of reduced prices on spaces they couldn’t afford or weren’t available two years ago, and they require much less capital to get started than a big anchor tenant, he said.

Nice office, river view — but did Madoff leave ‘bad karma’?

Thu, 09 Jul 2009 23:21 EDT

Behind unmarked doors on the 17th floor of a red granite high-rise known as the Lipstick Building is the former headquarters of Bernard Madoff.

And as of July 1, it has become a leasing opportunity for any potential tenant who can stomach its status as ground zero of the largest securities swindle in history.

“Some people may see a stigma associated with it,” building manager Russell Freeman said on a recent tour of the piece of the three-floor firm that has been put on the market. “But he’s out of there. His bad karma has gone with him ... Space is space.”

Space once used by Madoff himself — a fishbowl corner office with partial views of the East River — has been emptied of most furniture and paperwork, like the rest of the 19th floor. Only a pair of built-in cabinets and a wall-mounted television, easily 10 years old, remain.

The color theme throughout — from the refrigerator in a galley kitchen to the trading floor desks to the many conference rooms — is the minimalist black and ash gray favored by Madoff, who was sentenced to 150 years in prison.

GM wins right to sell assets

Thu, 09 Jul 2009 23:21 EDT

The path is now clear for General Motors Corp. to leave bankruptcy protection in record time as a leaner company that is better equipped to compete in a brutal global auto market.

On Thursday, a judge’s order allowing GM to sell most of its assets to a new company went into effect, despite a last-minute appeal by plaintiffs in a product liability case. GM lawyers are working on paperwork to close the sale as quickly as possible, after which GM would leave bankruptcy protection.

CEO Fritz Henderson will hold a news conference in Detroit today to explain executive cuts, management changes and the company’s plan to make money by emphasizing quality and fuel economy. He will be joined by Edward Whitacre Jr., who will lead the board of GM.

Once the world’s largest and most powerful automaker, the “new GM” will become government-owned, but leaner and greener, cleansed of debts and burdensome contracts that nearly dragged it into liquidation. But the new company faces tough international competition and the worst auto sales market in more than 25 years.

John Pottow, a University of Michigan Law School professor who specializes in bankruptcy, said opponents of the sale had little legal recourse to block it because their issues were shot down by higher courts in Chrysler’s bankruptcy case.

A $500 federal bonus, just for being born

Thu, 09 Jul 2009 23:21 EDT

A U.S. senator wants to give every child born in the U.S. a $500 savings account, courtesy of the federal government.

U.S. Sen. Charles Schumer, D-N.Y., plans to introduce legislation next week that would establish savings accounts for all newborn U.S. citizens and allow them to grow tax-free, with the federal government donating $500 to start each account and, in some cases, making matching contributions up to $500 a year.

Schumer said his plan would encourage youngsters to begin lifelong saving habits. With more than 4 million babies born annually, the cost of the initial savings accounts in a single year could be about $2 billion.

The proposal could be a tough sell on Capitol Hill, given renewed criticism of the mounting federal deficit. Under Schumer’s bill, the U.S. Treasury would establish and oversee the individual accounts, awarding them to newborns when their Social Security numbers are issued.

Account holders would be barred from withdrawing any money until they are 18 years old, and even then tax-free withdrawals would be limited to home purchases, schooling and other limited purposes.

Retailers ailing after rainy, gloomy June

Thu, 09 Jul 2009 23:21 EDT

The nation’s retailers were already reeling from the new consumer frugality but in June, incessant rain and rising unemployment further dampened sales.

Stores that had made strides in recent months reverted to double-digit declines. Overall, the industry posted a 6.7 percent decline in sales for the month, in contrast to a 3.9 percent increase a year ago, according to the Goldman Sachs Retail Composite Index.

Wal-Mart, which had been a bright spot in the retailing world and helped lift the overall industry number, is no longer reporting monthly sales. Retailers also are facing challenging year-over-year sales comparisons because this June there were no tax rebate checks to help bolster shopping.

Apparel and department stores were hurt most as chilly, soggy weather on the East Coast did nothing to inspire summer clothes shopping.

Sales declined 14 percent at Dillard’s, 8.9 percent at Macy’s, 8.2 percent at J.C. Penney and Stein Mart, and 5.6 percent at Kohl’s. T.J. Maxx and Ross Stores performed much better, posting 4 percent and 1 percent sales increases respectively.

Union contract key to Boeing decision

Thu, 09 Jul 2009 23:21 EDT

Unless Boeing Co. can win a long-term contract that bars strikes by its largest union, the aerospace company will build a second production line for its new 787 jetliner outside of Washington state, members of the state’s congressional delegation say.

North Charleston, where major components of the 787 already are made, will most likely be a contender for that line, a Boeing executive told The (Charleston) Post and Courier this week.

The machinists’ union, which represents production workers at Boeing, has struck the company four times over the past 20 years, most recently last fall for two months.

“The whole thing comes down to, can they get a long-term agreement with the union, with a no-strike clause?” U.S. Rep. Norm Dicks, D-Wash., told The Seattle Times. He added, “I think if they get this agreement, they would stay.”

Washington Gov. Chris Gregoire said Boeing Commercial Airplanes CEO Scott Carson also told her recently the company wants a long-term, no-strike agreement with the machinists union.

With ‘toxic’ assets on back burner, banks still troubled

Thu, 09 Jul 2009 23:21 EDT

The bundles of bad home mortgages that panicked the Bush and Obama administrations have turned out to be not so toxic for the financial industry after all.

After assembling $700 billion to deal with the problem, the government is devoting a relatively modest $30 billion to buy troubled mortgage-backed securities. With that on the back burner, the big threat to the economy is now believed to be troubled credit card, commercial real estate and commercial industrial debt.

These bad loans, made worse by the severity of the recession, could be responsible for two-thirds of banks’ losses.

On that front, the administration is still looking for a solution. A so-called “legacy loan” purchase plan by the Federal Deposit Insurance Corp. announced last March has fizzled.

At the end of the first quarter of this year, banks held about $1.8 trillion in commercial real estate loans. About 7 percent of those loans were considered delinquent, almost twice the level a year earlier, Jon D. Greenlee, the Federal Reserve’s associate director for banking supervision and regulation, told Congress on Thursday.

Feds sue ex-UCI officer

Wed, 08 Jul 2009 19:41 EDT

Federal regulators this week sued a former executive of Columbia-based UCI Medical Affiliates, manager of Doctors Care medical clinics, over the embezzlement of $2.97 million.

Jerry Wells Jr., 47, was fired in December as the company’s chief financial officer and executive vice president after an internal audit uncovered a scam dating back to 2003, according to court documents.

On June 24, Wells agreed to waive indictment and pleaded guilty to eight counts of making false statements on the company’s financial reports filed with the Securities and Exchange Commission.

He awaits sentencing in U.S. District Court, according to a spokesman for the U.S. Attorney’s office. Wells, of Columbia, faces a maximum sentence up to 40 years in prison and could be fined up to $2 million.

Wells also has agreed to repay the company he had worked for since 1995, according to court documents.

Diamond Pet Foods expands Gaston plant

Wed, 08 Jul 2009 19:41 EDT

Diamond Pet Foods is spending $3.8 million to expand its Gaston plant.

The expansion comes almost four years after the Missouri-based company produced a toxic dog food that killed at least 46 dogs and sickened 21.

However, the company has settled most of the lawsuits, increased its marketing and introduced new products to overcome its past, executive vice president Mark Schell said

“We’re really doing well right now,” Schell said. “Our sales are growing, and we’re bringing on more production to meet demand.”

In Lexington County, Diamond plans to increase its warehouse storage space and add new equipment for packaging and bulk storage of ingredients, Schell said.

Bottled water quality questioned

Wed, 08 Jul 2009 19:41 EDT

Consumers know less about the water they pay dearly for in bottles than what they can drink almost for free from the tap because the two are regulated differently, congressional investigators and nonprofit researchers say in new reports.

Both the Government Accountability Office and the Environmental Working Group, a nonprofit research and advocacy organization, recommend in reports released Wednesday that bottled water be labeled with the same level of information municipal water providers must disclose.

The researchers urged Americans to make bottled water “a distant second choice” to filtered tap water because there isn’t enough information about bottled water. The working group recommends purifying tap water with a commercial filter, however.

Both reports were released at a congressional subcommittee Wednesday.

Bottled water — an industry worth about $16 billion in sales last year — has been suffering lately as colleges, communities and some governments take measures to limit or ban its consumption. As employers, they are motivated by cost savings and environmental concern because the bottles often are not recycled.

Shriners deciding fate of 6 hospitals

Wed, 08 Jul 2009 19:41 EDT

For generations, children with clubbed feet, severe burns and other debilitating injuries have been treated for free at Shriners hospitals. That care could be in jeopardy.

As the charity’s endowment shrivels, the fraternal group known for wearing red fezzes and driving miniature cars in parades faces a serious decision: whether to close six of its hospitals or alter how the system offers care, including one in Greenville.

About 1,300 Shriners International members who sit on the hospital system’s governing body are deciding the hospital system’s fate at the group’s annual meeting in San Antonio this week. They are considering permanently closing a quarter of the hospital system’s facilities, among other changes.

In initial votes, the Shriners agreed to keep all 22 of their hospitals open and to begin accepting insurance money for some services. They also voted to replace Ralph Semb, CEO of Shriners Hospitals for Children, said Rod Brown, chairman of the Greenville hospital.

None of the decisions, however, is binding until the convention ends today.

Food safety standards tighten

Wed, 08 Jul 2009 19:41 EDT

The White House is trying to make Americans’ food safer after recent recalls of popular products like peanut butter and cookie dough.

A food safety working group established by President Barack Obama said this week that the government will try and boost the safety of some of the nation’s most popular foods, announcing stricter rules for the production of eggs, poultry, beef, leafy greens, melons and tomatoes. The new standards are an effort to reduce instances of salmonella and E. coli contamination.

The group, headed by Agriculture Secretary Tom Vilsack and Health and Human Services Secretary Kathleen Sebelius, is also directing the Food ad Drug Administration to help the food industry establish better tracing systems if there is an outbreak, so the origins of a disease can be quickly found. A new network to help the many agencies that regulate food safety communicate better will also be created.

Tougher standards, including stiffer penalties and increased inspections, are included in legislation approved by a House panel earlier this year.

The White House and Congress have turned their attention to the issue after a string of food safety breakdowns in recent years, from contaminated spinach in 2006 to salmonella in peppers and possibly tomatoes last year.

S.C. Price-gouging cases settled

Tue, 07 Jul 2009 21:23 EDT

Three South Carolina gas stations and a supplier have agreed to donate $6,500 to the American Red Cross to settle price-gouging allegations related to last fall’s Gulf Coast hurricanes, state Attorney General Henry McMaster is expected to announce today.

The settlements were reached with the stations and a supplier “whose prices were out of line with general market prices and were potentially unconscionable,” according to a report on the state’s gouging investigation obtained by The State newspaper.

Among the gas stations were two in Lexington County — Best Stop in West Columbia and Bobb’s Food and Fuel in Lexington. They charged $5.49 and $5.79 a gallon, respectively, on Sept. 12, as Hurricane Ike approached and forced Gulf Coast refiners to halt production that cut off much of the state’s gas supplies.

Statewide, consumers filed 4,360 gouging complaints in the weeks after Ike. But many could not be verified because of incomplete and incorrect information, a report on the state’s gouging investigation says.

The attorney general’s office said it investigated complaints against 37 stations, wholesalers and distributors. Most were able to show their price hikes came from the shortages.

Dunkin’ Donuts update: Midlands to get 3 new stores despite bankruptcy filing

Wed, 08 Jul 2009 00:27 EDT

Three Dunkin’ Donuts stores planned for the Columbia area should still open despite a bankruptcy protection filing Monday by Greer-based franchisee Kainos Partners.

Kainos operates 21 stores in the Greenville area, according to Dunkin’ Donuts spokeswoman Michelle King. But none of the seven stores in Columbia are owned by the franchise, she said.

Kainos, one of 1,200 Dunkin’ Donuts franchisees in the U.S., has three stores under construction in the Columbia area: Main Street, Red Bank and Northeast Richland.

“We do expect that these stores will open in the future,” King said. But she did not have dates. In 2007, Kainois said it would open 31 stores in the Midlands in the next five years.

Kainos filed for Chapter 11 bankruptcy protection to reorganize their operations and “position themselves for future growth,” the company said in a statement.

Boeing buys S.C. plant

Tue, 07 Jul 2009 21:23 EDT

North Charleston facility that makes plane sections sells for $580 million

Boeing Co. will pay $580 million for a North Charleston plant that makes large sections of its 787 jetliner, in an apparent effort to rein in supplier problems that have led to costly delays of the next-generation aircraft and hurt the company’s credibility.

The plant, owned by Vought Aircraft Industries, makes barrel-like sections of the 787’s fuselage that fit between its wings and tail and are composed primarily of lightweight materials.

Deliveries of the 787 have been postponed by nearly two years partly because of problems with components made by suppliers and work that suppliers didn’t complete. Those difficulties are expected to cost the airplane maker billions of dollars in added expenses and penalties. Boeing has booked orders for a record 850 of the planes.

Boeing said the acquisition of Vought’s North Charleston plant will boost its capacity to develop and build large plane sections made from carbon-fiber composites, the lightweight material expected to make the 787 more fuel efficient than other planes.

Boeing’s S.C. land purchase raises worries in Washington state

Tue, 07 Jul 2009 17:28 EDT

Washington state officials worry that Boeing’s $580 million purchase of the Vought Aircraft Industries plant in North Charleston means the company might open a second 787 production line on the other side of the country, but union officials don’t appear to be concerned.

The undeveloped land included in the Vought purchase “signals that Washington state is truly in a competition for the second line” and future jobs, said Aaron Reardon, the top county official in Snohomish County, where Boeing now assembles the 787.

He said Washington must improve its competitive climate and encourage Boeing and its unions to re-establish a partnership. A Machinists Union strike last fall shut down work for eight weeks.

The president of the Machinists Union local that represents Boeing workers in Western Washington said Tuesday that the company has told them this move is not a statement about where the second 787 line is going to be located.

“When that issue is discussed, we will do everything in our power to ensure that Puget Sound is at the top of the list,” said District 751 President Tom Wroblewski in a statement.

Automakers speed through court cases

Tue, 07 Jul 2009 17:28 EDT

That didn’t take long.

In fewer than 45 days each, General Motors and Chrysler swept through government-sponsored sales in bankruptcy court — quick tours that most people in the legal community thought impossible not long ago.

The swift action has riveted bankruptcy lawyers and law professors, who say the cases will be widely studied this fall when law students return.

“It is remarkable,” said James White, a professor at the University of Michigan Law School, who is planning a three-day seminar on the cases in his bankruptcy class.

Judge Robert Gerber of U.S. Bankruptcy Court in New York approved the GM sale late Sunday, although he issued a four-day stay that blocks final action until Thursday.

S.C. counties among hardest hit by economy

Mon, 06 Jul 2009 21:36 EDT

South Carolina, California and Michigan suffered the most financial pain in May as unemployment, home foreclosures and bankruptcies rose, according to The Associated Press’ monthly analysis of economic stress in more than 3,100 U.S. counties.

The latest results of the AP’s Economic Stress Index show the worst financial crisis since the 1930s causing lingering damage even as other signs suggest the recession is winding down.

The average county’s Stress score, fueled by worsening unemployment, foreclosures and bankruptcies, rose to 10 in May, from 9.7 in April.

In May 2008, the average Stress score was 6.2. The pain was lower then because the economy was still expanding. In fact, the second quarter of 2008 was the last time the economy grew.

The AP calculates a score from 1 to 100 on the basis of each county’s unemployment, foreclosure and bankruptcy rates. The higher the score, the higher the economic stress.

Marvin Chernoff back in PR

Mon, 06 Jul 2009 21:37 EDT

Marvin Chernoff thinks retirement is boring.

So, at 76, he has started a new public relations company, MC2. He will work out of a virtual office in his home near Lake Katharine and use freelancers to staff projects.

“I just decided that retirement wasn’t really in the works for me,” said Chernoff, who in 1974 founded the firm that became Columbia public relations giant Chernoff Newman. He said he has never taken to golf or fishing.

Columbia’s idea man has about half a dozen people he’s worked with over the years who have signed on to work with him in this new venture. He has one client so far, a group developing the new state farmers market in Lexington County. His new firm’s Web site (www.mc2.com) will be operational within a week. And he hopes to do some political consulting, the arena where he got his start.

Over the past few years, Chernoff has, with his son, opened a restaurant, which is now closed, served on various boards and been a strong supporter of the arts community, including producing an arts festival held in 2007.

9 Save-A-Lot stores in S.C. received recalled beef

Mon, 06 Jul 2009 21:37 EDT

Nine Save-A-Lot stores across South Carolina received beef recalled last month because it was possibly tainted with E. coli bacteria.

On Saturday as grillers prepared for July Fourth cookouts, the U.S. Department of Agriculture released an expanded list of more than 2,100 stores in 27 states that received the 380,000 pounds of beef recalled by JBS Swift Beef Co. of Colorado.

A short list of retailers was first released Thursday.

At least 23 people in nine states have become ill with ties to the recalled beef, the Centers for Disease Control and Prevention reported as of Wednesday. Two have suffered kidney failure, the CDC said. No illnesses have been reported in South Carolina.

The expanded list of stores included previously reported “various locations” of Food Lion and Bi-Lo in South Carolina.