BEIJING — The mother of China’s prime minister was a schoolteacher in northern China. His father was ordered to tend pigs in one of Mao’s political campaigns. And during childhood, “my family was extremely poor,” the prime minister, Wen Jiabao, said in a speech last year.
But now 90, the prime minister’s mother, Yang Zhiyun, not only left poverty behind, she became outright rich, at least on paper, according to corporate and regulatory records. Just one investment in her name, in a large Chinese financial services company, had a value of $120 million five years ago, the records show.
The details of how Ms. Yang, a widow, accumulated such wealth are not known, or even if she was aware of the holdings in her name. But it happened after her son was elevated to China’s ruling elite, first in 1998 as vice prime minister and then five years later as prime minister.
Many relatives of Wen Jiabao, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times shows. A review of corporate and regulatory records indicates that the prime minister’s relatives — some of whom, including his wife, have a knack for aggressive deal making — have controlled assets worth at least $2.7 billion.
In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners. Untangling their financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.
Unlike most new businesses in China, the family’s ventures sometimes received financial backing from state-owned companies, including China Mobile, one of the country’s biggest phone operators, the documents show. At other times, the ventures won support from some of Asia’s richest tycoons. The Times found that Mr. Wen’s relatives accumulated shares in banks, jewelers, tourist resorts, telecommunications companies and infrastructure projects, sometimes by using offshore entities.
The holdings include a villa development project in Beijing; a tire factory in northern China; a company that helped build some of Beijing’s Olympic stadiums, including the well-known “Bird’s Nest”; and Ping An Insurance, one of the world’s biggest financial services companies.
As prime minister in an economy that remains heavily state-driven, Mr. Wen, who is best known for his simple ways and common touch, more importantly has broad authority over the major industries where his relatives have made their fortunes. Chinese companies cannot list their shares on a stock exchange without approval from agencies overseen by Mr. Wen, for example. He also has the power to influence investments in strategic sectors like energy and telecommunications.
Because the Chinese government rarely makes its deliberations public, it is not known what role — if any — Mr. Wen, who is 70, has played in most policy or regulatory decisions. But in some cases, his relatives have sought to profit from opportunities made possible by those decisions.
The prime minister’s younger brother, for example, has a company that was awarded more than $30 million in government contracts and subsidies to handle wastewater treatment and medical waste disposal for some of China’s biggest cities, according to estimates based on government records. The contracts were announced after Mr. Wen ordered tougher regulations on medical waste disposal in 2003 after the SARS outbreak.
In 2004, after the State Council, a government body Mr. Wen presides over, exempted Ping An Insurance and other companies from rules that limited their scope, Ping An went on to raise $1.8 billion in an initial public offering of stock. Partnerships controlled by Mr. Wen’s relatives — along with their friends and colleagues — made a fortune by investing in the company before the public offering.
In 2007, the last year the stock holdings were disclosed in public documents, those partnerships held as much as $2.2 billion worth of Ping An stock, according to an accounting of the investments by The Times that was verified by outside auditors. Ping An’s overall market value is now nearly $60 billion.
Ping An said in a statement that the company did “not know the background of the entities behind our shareholders.” The statement said, “Ping An has no means to know the intentions behind shareholders when they buy and sell our shares.”
While Communist Party regulations call for top officials to disclose their wealth and that of their immediate family members, no law or regulation prohibits relatives of even the most senior officials from becoming deal-makers or major investors — a loophole that effectively allows them to trade on their family name. Some Chinese argue that permitting the families of Communist Party leaders to profit from the country’s long economic boom has been important to ensuring elite support for market-oriented reforms.
Even so, the business dealings of Mr. Wen’s relatives have sometimes been hidden in ways that suggest the relatives are eager to avoid public scrutiny, the records filed with Chinese regulatory authorities show. Their ownership stakes are often veiled by an intricate web of holdings as many as five steps removed from the operating companies, according to the review.
In the case of Mr. Wen’s mother, The Times calculated her stake in Ping An — valued at $120 million in 2007 — by examining public records and government-issued identity cards, and by following the ownership trail to three Chinese investment entities. The name recorded on his mother’s shares was Taihong, a holding company registered in Tianjin, the prime minister’s hometown.
The apparent efforts to conceal the wealth reflect the highly charged politics surrounding the country’s ruling elite, many of whom are also enormously wealthy but reluctant to draw attention to their riches. When
Bloomberg News reported in June that the extended family of Vice President Xi Jinping, set to become China’s next president, had amassed hundreds of millions of dollars in assets, the Chinese government blocked access inside the country to the Bloomberg Web site.
“In the senior leadership, there’s no family that doesn’t have these problems,” said a former government colleague of Wen Jiabao who has known him for more than 20 years and who spoke on the condition of anonymity. “His enemies are intentionally trying to smear him by letting this leak out.”
The Times presented its findings to the Chinese government for comment. The Foreign Ministry declined to respond to questions about the investments, the prime minister or his relatives. Members of Mr. Wen’s family also declined to comment or did not respond
to re
quests for comment.
Duan Weihong, a wealthy businesswoman whose company, Taihong, was the investment vehicle for the Ping An shares held by the prime minister’s mother and other relatives, said the investments were actually her own. Ms. Duan, who comes from the prime minister’s hometown and is a close friend of his wife, said ownership of the shares was listed in the names of Mr. Wen’s relatives in an effort to conceal the size of Ms. Duan’s own holdings.
“When I invested in Ping An I didn’t want to be written about,” Ms. Duan said, “so I had my relatives find some other people to hold these shares for me.”
But it was an “accident,” she said, that her company chose the relatives of the prime minister as the listed shareholders — a process that required registering their official ID numbers and obtaining their signatures. Until presented with the names of the investors by The Times, she said, she had no idea that they had selected the relatives of Wen Jiabao.
The review of the corporate and regulatory records, which covers 1992 to 2012, found no holdings in Mr. Wen’s name. And it was not possible to determine from the documents whether he recused himself from any decisions that might have affected his relatives’ holdings, or whether they received preferential treatment on investments.
For much of his tenure, Wen Jiabao has been at the center of rumors and conjecture about efforts by his relatives to profit from his position. Yet until the review by The Times, there has been no detailed accounting of the family’s riches.
His wife, Zhang Beili, is one of the country’s leading authorities on jewelry and gemstones and is an accomplished businesswoman in her own right. By managing state diamond companies that were later privatized, The Times found, she helped her relatives parlay their minority stakes into a billion-dollar portfolio of insurance, technology and real estate ventures.
The couple’s only son sold a technology company he started to the family of Hong Kong’s richest man, Li Ka-shing, for $10 million, and used another investment vehicle to establish New Horizon Capital, now one of China’s biggest private equity firms, with partners like the government of Singapore, according to records and interviews with bankers.
The prime minister’s younger brother, Wen Jiahong, controls $200 million in assets, including wastewater treatment plants and recycling businesses, the records show.
As prime minister, Mr. Wen has staked out a position as a populist and a reformer, someone whom the state-run media has nicknamed “the People’s Premier” and “Grandpa Wen” because of his frequent outings to meet ordinary people, especially in moments of crisis like natural disasters.
While it is unclear how much the prime minister knows about his family’s wealth, State Department documents released by the WikiLeaks organization in 2010 included a cable that suggested Mr. Wen was aware of his relatives’ business dealings and unhappy about them.
“Wen is disgusted with his family’s activities, but is either unable or unwilling to curtail them,” a Chinese-born executive working at an American company in Shanghai told American diplomats, according to the 2007 cable.
China’s ‘Diamond Queen’It is no secret in China’s elite circles that the prime minister’s wife, Zhang Beili, is rich, and that she has helped control the nation’s jewelry and gem trade. But her lucrative diamond businesses became an off-the-charts success only as her husband moved into the country’s top leadership ranks, the review of corporate and regulatory records by The Times found.
A geologist with an expertise in gemstones, Ms. Zhang is largely unknown among ordinary Chinese. She rarely travels with the prime minister or appears with him, and there are few official photographs of the couple together. And while people who have worked with her say she has a taste for jade and fine diamonds, they say she usually dresses modestly, does not exude glamour and prefers to wield influence behind the scenes, much like the relatives of other senior leaders.
The State Department documents released by WikiLeaks included a suggestion that Mr. Wen had once considered divorcing Ms. Zhang because she had exploited their relationship in her diamond trades. Taiwanese television reported in 2007 that Ms. Zhang had bought a pair of jade earrings worth about $275,000 at a Beijing trade show, though the source — a Taiwanese trader — later backed off the claim and Chinese government censors moved swiftly to block coverage of the subject in China, according to news reports at the time.
“Her business activities are known to everyone in the leadership,” said one banker who worked with relatives of Wen Jiabao. The banker said it was not unusual for her office to call upon businesspeople. “And if you get that call, how can you say no?”
Zhang Beili first gained influence in the 1990s, while working as a regulator at the Ministry of Geology. At the time, China’s jewelry market was still in its infancy.
While her husband was serving in China’s main leadership compound, known as Zhongnanhai, Ms. Zhang was setting industry standards in the jewelry and gem trade. She helped create the National Gemstone Testing Center in Beijing, and the Shanghai Diamond Exchange, two of the industry’s most powerful institutions.
In a country where the state has long dominated the marketplace, jewelry regulators often decided which companies could set up diamond-processing factories, and which would gain entry to the retail jewelry market. State regulators even formulated rules that required diamond sellers to buy certificates of authenticity for any diamond sold in China, from the government-run testing center in Beijing, which Ms. Zhang managed.
As a result, when executives from Cartier or De Beers visited China with hopes of selling diamonds and jewelry here, they often went to visit Ms. Zhang, who became known as China’s “diamond queen.”
“She’s the most important person there,” said Gaetano Cavalieri, president of the World Jewelry Confederation in Switzerland. “She was bridging relations between partners — Chinese and foreign partners.”
As early as 1992, people who worked with Ms. Zhang said, she had begun to blur the line between government official and businesswoman. As head of the state-owned China Mineral and Gem Corporation, she began investing the state company’s money in start-ups. And by the time her husband was named vice premier, in 1998, she was busy setting up business ventures with friends and relatives.
The state company she ran invested in a group of affiliated diamond companies, according to public records. Many of them were run by Ms. Zhang’s relatives — or colleagues who had worked with her at the National Gemstone Testing Center.
In 1993, for instance, the state company Ms. Zhang ran helped found Beijing Diamond, a big jewelry retailer. A year later, one of her younger brothers, Zhang Jianming, and two of her government colleagues personally acquired 80 percent of the company, according to shareholder registers. Beijing Diamond invested in Shenzhen Diamond, which was controlled by her brother-in-law, Wen Jiahong, the prime minister’s younger brother.
Among the successful undertakings was Sino-Diamond, a venture financed by the state-owned China Mineral and Gem Corporation, which she headed. The company had business ties with a state-owned company managed by another brother, Zhang Jiankun, who worked as an official in Jiaxing,
Ms. Zhang’s hometown, in Zhejiang Province.
In the summer of 1999, after securing agreements to import diamonds from Russia and South Africa, Sino-Diamond went public, raising $50 million on the Shanghai Stock Exchange. The offering netted Ms. Zhang’s family about $8 million, according to corporate filings.
Although she was never listed as a shareholder, former colleagues and business partners say Ms. Zhang’s early diamond partnerships were the nucleus of a larger portfolio of companies she would later help her family and colleagues gain a stake in.
The Times found no indication that Wen Jiabao used his political clout to influence the diamond companies his relatives invested in. But former business partners said that the family’s success in diamonds, and beyond, was often bolstered with financial backing from wealthy businessmen who sought to curry favor with the prime minister’s family.
“After Wen became prime minister, his wife sold off some of her diamond investments and moved into new things,” said a Chinese executive who did business with the family. He asked not to be named because of fear of government retaliation. Corporate records show that beginning in the late 1990s, a series of rich businessmen took turns buying up large stakes in the diamond companies, often from relatives of Mr. Wen, and then helped them reinvest in other lucrative ventures, like real estate and finance.
According to corporate records and interviews, the businessmen often supplied accountants and office space to investment partnerships partly controlled by the relatives.
“When they formed companies,” said one businessman who set up a company with members of the Wen family, “Ms. Zhang stayed in the background. That’s how it worked.”
The Only SonLate one evening early this year, the prime minister’s only son, Wen Yunsong, was in the cigar lounge at Xiu, an upscale bar and lounge at the Park Hyatt in Beijing. He was having cocktails as Beijing’s nouveau riche gathered around, clutching designer bags and wearing expensive business suits, according to two guests who were present.
In China, the children of senior leaders are widely believed to be in a class of their own. Known as “princelings,” they often hold Ivy League degrees, get V.I.P. treatment, and are even offered preferred pricing on shares in hot stock offerings.
They are also known as people who can get things done in China’s heavily regulated marketplace, where the state controls access. And in recent years, few princelings have been as bold as the younger Mr. Wen, who goes by the English name Winston and is about 40 years old.
A Times review of Winston Wen’s investments, and interviews with people who have known him for years, show that his deal-making has been extensive and lucrative, even by the standards of his princeling peers.
State-run giants like China Mobile have formed start-ups with him. In recent years, Winston Wen has been in talks with Hollywood studios about a financing deal.
Concerned that China does not have an elite boarding school for Chinese students, he recently hired the headmasters of Choate and Hotchkiss in Connecticut to oversee the creation of a $150 million private school now being built in the Beijing suburbs.
Winston Wen and his wife, moreover, have stakes in the technology industry and an electric company, as well as an indirect stake in Union Mobile Pay, the government-backed online payment platform — all while living in the prime minister’s residence, in central Beijing, according to corporate records and people familiar with the family’s investments.
“He’s not shy about using his influence to get things done,” said one venture capitalist who regularly meets with Winston Wen.
The younger Mr. Wen declined to comment. But in a telephone interview, his wife, Yang Xiaomeng, said her husband had been unfairly criticized for his business dealings.
“Everything that has been written about him has been wrong,” she said. “He’s really not doing that much business anymore.”
Winston Wen was educated in Beijing and then earned an engineering degree from the Beijing Institute of Technology. He went abroad and earned a master’s degree in engineering materials from the University of Windsor, in Canada, and an M.B.A. from the Kellogg School of Business at Northwestern University in Evanston, Ill., just outside Chicago.
When he returned to China in 2000, he helped set up three successful technology companies in five years, according to people familiar with those deals. Two of them were sold to Hong Kong businessmen, one to the family of Li Ka-shing, one of the wealthiest men in Asia.
Winston Wen’s earliest venture, an Internet data services provider called Unihub Global, was founded in 2000 with $2 million in start-up capital, according to Hong Kong and Beijing corporate filings. Financing came from a tight-knit group of relatives and his mother’s former colleagues from government and the diamond trade, as well as an associate of Cheng Yu-tung, patriarch of Hong Kong’s second-wealthiest family. The firm’s earliest customers were state-owned brokerage houses and Ping An, in which the Wen family has held a large financial stake.
He made an even bolder move in 2005, by pushing into private equity when he formed New Horizon Capital with a group of Chinese-born classmates from Northwestern. The firm quickly raised $100 million from investors, including SBI Holdings, a division of the Japanese group SoftBank, and Temasek, the Singapore government investment fund.
Under Mr. Wen, New Horizon established itself as a leading private equity firm, investing in biotech, solar, wind and construction equipment makers. Since it began operations, the firm has returned about $430 million to investors, a fourfold profit, according to SBI Holdings.
“Their first fund was dynamite,” said Kathleen Ng, editor of Asia Private Equity Review, an industry publication in Hong Kong. “And that allowed them to raise a lot more money.”
Today, New Horizon has more than $2.5 billion under management.
Some of Winston Wen’s deal-making, though, has attracted unwanted attention for the prime minister.
In 2010, when New Horizon acquired a 9 percent stake in a company called Sihuan Pharmaceuticals just two months before its public offering, the Hong Kong Stock Exchange said the late-stage investment violated its rules and forced the firm to return the stake. Still, New Horizon made a $46.5 million profit on the sale.
Soon after, New Horizon announced that Winston Wen had handed over day-to-day operations and taken up a position at the China Satellite Communications Corporation, a state-owned company that has ties to the Chinese space program. He has since been named chairman.
The TycoonsIn the late 1990s, Duan Weihong was managing an office building and several other properties in Tianjin, the prime minister’s hometown in northern China, through her property company, Taihong. She was in her 20s and had studied at the Nanjing University of Science and Technology.
Around 2002, Ms. Duan went into business with several relatives of Wen Jiabao, transforming her property company into an investment vehicle of the same name. The company helped make Ms. Duan very wealthy.
It is not known whether Ms. Duan, now 43, is related to the prime minister. In a series of interviews, she first said she did not know any members of t
he Wen family, but later described herself as a friend of the family and particularly close to Zhang Beili, the prime minister’s wife. As happened to a handful of other Chinese entrepreneurs, Ms. Duan’s fortunes soared as she teamed up with the relatives and their network of friends and colleagues, though she described her relationship with them involving the shares in Ping An as existing on paper only and having no financial component.
Ms. Duan and other wealthy businesspeople — among them, six billionaires from across China — have been instrumental in getting multimillion-dollar ventures off the ground and, at crucial times, helping members of the Wen family set up investment vehicles to profit from them, according to investment bankers who have worked with all parties.
Established in Tianjin, Taihong had spectacular returns. In 2002, the company paid about $65 million to acquire a 3 percent stake in Ping An before its initial public offering, according to corporate records and Ms. Duan’s graduate school thesis. Five years later, those shares were worth $3.7 billion
The company’s Hong Kong affiliate, Great Ocean, also run by Ms. Duan, later formed a joint venture with the Beijing government and acquired a huge tract of land adjacent to Capital International Airport. Today, the site is home to a sprawling cargo and logistics center. Last year, Great Ocean sold its 53 percent stake in the project to a Singapore company for nearly $400 million.
That deal and several other investments, in luxury hotels, Beijing villa developments and the Hong Kong-listed BBMG, one of China’s largest building materials companies, have been instrumental to Ms. Duan’s accumulation of riches, according to The Times’s review of corporate records.
The review also showed that over the past decade there have been nearly three dozen individual shareholders of Taihong, many of whom are either relatives of Wen Jiabao or former colleagues of his wife.
The other wealthy entrepreneurs who have worked with the prime minister’s relatives declined to comment for this article. Ms. Duan strongly denied having financial ties to the prime minister or his relatives and said she was only trying to avoid publicity by listing others as owning Ping An shares. “The money I invested in Ping An was completely my own,” said Ms. Duan, who has served as a member of the Ping An board of supervisors. “Everything I did was legal.”
Another wealthy partner of the Wen relatives has been Cheng Yu-tung, who controls the Hong Kong conglomerate New World Development and is one of the richest men in Asia, worth about $15 billion, according to Forbes.
In the 1990s, New World was seeking a foothold in mainland China for a sister company that specializes in high-end retail jewelry. The retail chain, Chow Tai Fook, opened its first store in China in 1998.
Mr. Cheng and his associates invested in a diamond venture backed by the relatives of Mr. Wen and co-invested with them in an array of corporate entities, including Sino-Life, National Trust and Ping An, according to records and interviews with some of those involved. Those investments by Mr. Cheng are now worth at least $5 billion, according to the corporate filings. Chow Tai Fook, the jewelry chain, has also flourished. Today, China accounts for 60 percent of the chain’s $4.2 billion in annual revenue.
Mr. Cheng, 87, could not be reached for comment. Calls to New World Development were not returned.
Fallout for Premier
In the winter of 2007, just before he began his second term as prime minister, Wen Jiabao called for new measures to fight corruption, particularly among high-ranking officials.
“Leaders at all levels of government should take the lead in the antigraft drive,” he told a gathering of high-level party members in Beijing. “They should strictly ensure that their family members, friends and close subordinates do not abuse government influence.”
The speech was consistent with the prime minister’s earlier drive to toughen disclosure rules for public servants, and to require senior officials to reveal their family assets.
Whether Mr. Wen has made such disclosures for his own family is unclear, since the Communist Party does not release such information. Even so, many of the holdings found by The Times would not need to be disclosed under the rules since they are not held in the name of the prime minister’s immediate family — his wife, son and daughter.
Eighty percent of the $2.7 billion in assets identified in The Times’s investigation and verified by the outside auditors were held by, among others, the prime minister’s mother, his younger brother, two brothers-in-law, a sister-in-law, daughter-in-law and the parents of his son’s wife, none of whom is subject to party disclosure rules. The total value of the relatives’ stake in Ping An is based on calculations by The Times that were confirmed by the auditors. The total includes shares held by the relatives that were sold between 2004 and 2006, and the value of the remaining shares in late 2007, the last time the holdings were publicly disclosed.
Legal experts said that determining the precise value of holdings in China could be difficult because there might be undisclosed side agreements about the true beneficiaries.
“Complex corporate structures are not necessarily insidious,” said Curtis J. Milhaupt, a Columbia University Law School professor who has studied China’s corporate group structures. “But in a system like China’s, where corporate ownership and political power are closely intertwined, shell companies magnify questions about who owns what and where the money came from.”
Among the investors in the Wen family ventures are longtime business associates, former colleagues and college classmates, including Yu Jianming, who attended Northwestern with Winston Wen, and Zhang Yuhong, a longtime colleague of Wen Jiahong, the prime minister’s younger brother. The associates did not return telephone calls seeking comment.
Revelations about the Wen family’s wealth could weaken him politically.
Next month, at the 18th Party Congress in Beijing, the Communist Party is expected to announce a new generation of leaders. But the selection process has already been marred by one of the worst political scandals in decades, the downfall of Bo Xilai, the Chongqing party boss, who was vying for a top position.
In Beijing, Wen Jiabao is expected to step down as prime minister in March at the end of his second term. Political analysts say that even after leaving office he could remain a strong backstage political force. But documents showing that his relatives amassed a fortune during his tenure could diminish his standing, the analysts said.
“This will affect whatever residual power Wen has,” said Minxin Pei, an expert on Chinese leadership and a professor of government at Claremont McKenna College in California.
The prime minister’s supporters say he has not personally benefited from his extended family’s business dealings, and may not even be knowledgeable about the extent of them.
Last March, the prime minister hinted that he was at least aware of the persistent rumors about his relatives. During a nationally televised news conference in Beijing, he insisted that he had “never pursued personal gain” in public office.
“I have the courage to face the people and to face history,” he said in an emotional session. “There are people who will appreciate what I have done, but there are also people who will criticize me. Ulti
mately, history will have the final say.”
ABC World News with Diane Sawyer Invites Viewers to Have a “Great Made in America Christmas” — Are You In?
in UncategorizedNov 28, 2012
Reports will air each Wednesday during the month of December as “ABC World News” weekend anchor David Muir scours the country for the best gifts that are made in American towns. Along the way he will introduce viewers to some proud American businesses, the people they employ, and the ingenious products they make.
Viewers who want to join in on “The Great Made in America Christmas” this holiday shopping season can get more information at ABCNews.com/WorldNews.
“ABC World News with Diane Sawyer” airs at 6:30 p.m., ET on the ABC Television Network. Michael Corn is the executive producer of the broadcast. Follow Diane Sawyer and the “World News” team online: @DianeSawyer; @ABCWorldNews; facebook.com/DianeSawyer; facebook.com/WorldNews.
About “Made in America”
In 2011 “World News with Diane Sawyer” kicked off a special series, “Made in America,” to examine American manufacturing, the economy, and what simple things people can do every day to help power up jobs in this country. “World News” continues to highlight various American businesses that are contributing to their local economies and creating more jobs here in the U.S.
Follow the Made in America Movement on Facebook, Twitter, Pinterest, Tumbler, and Google+
Email us for corporate membership and/or sponsorship details: info@TheMadeinAmericaMovement.com
A Documentary Examines the ‘Made in China’ Label
in UncategorizedSince China joined the World Trade Organization in 2001 and gained full access to American markets, the AFL-CIO claims that over 50,000 factories in America have disappeared along with more than 6 million manufacturing jobs. For these reasons, AFL-CIO President Richard Trumka in the film urges people who pick up a product Made in China to “think about your relative that just got laid off or the factory that just got shut down. Think about the school that is doing with less because the manufacturing base has gone and the tax base has left. Think about the lower income that you’re receiving now because we’re not making products, and we’re not buying our own products.”
And here’s something else former Canadian Minister of Parliament David Kilgour wants you to think about as you consider your next Made in China purchase: That product may well have been made by prison labor. To emphasize his point, Kilgour in the film relates this darkly comic and well-documented tale about Charles Lee, an American citizen arrested in China and detained in one of China’s forced labor camps for three years: “When Lee was finally released thanks to pressure from the American people, he came back to New Jersey, and he was in a store, and he saw these big [Homer Simpson] slippers that he’d made in the work camp.”
Beyond the issues of jobs and human rights, there is also the prodigious air, soil, and water pollution generated annually by China’s factory floor. In fact, a study conducted by the World Health Organization found that China now has 16 of the 20 most polluted cities in the world.
Perhaps most unsettling is the well-documented tendency of at least some unscrupulous entrepreneurs in China to alter their products with toxic ingredient substitutes as a means of cutting costs and boosting profits. Well-publicized scandals to date have included the spiking of both pet food and baby formula with deadly melamine and the blood thinner heparin with lethal oversulfated condroitin sulfate. We’ve also seen lead paint in toys, antifreeze in toothpaste, baby cribs with choking hazards, tainted drywall, the list goes on and on.
The problem as Forbes columnist Gordon Chang describes it is “a political system that does not punish manufacturers for bad products. And it’s because it’s the nature of the political system. The Communist Party does not allow independent prosecutors, doesn’t allow a free press, doesn’t allow people to complain about bad products.”
Given the chronic failure of America’s politicians to confront China on these issues, in my opinion, if more consumers would pause at the Made in China label, that would be all to the good. As Judith Samuelson suggests at the end of the film: “I think that at every level, people could boycott to some extent, and there would be a shot heard around the world.”
Peter Navarro is a business professor at the University of California-Irvine. He wrote, produced, and directed the documentary “Death By China.” For for more information go here.
Bangladesh Factory in Fire: WalMart & Disney Among Clients
in News, WalmartAn Associated Press reporter searching the factory Wednesday found these and other clothes, including sweaters from the French company Teddy Smith, among the equipment charred in the fire that killed 112 workers Saturday. He also found entries in account books indicating that the factory took orders to produce clothes for Disney, Sears , nd other Western brands.
Garments and documents left behind in the factory show it was used by a host of major American and European retailers, though at least one of them — Wal-Mart — had been aware of safety problems. Wal-Mart blames a supplier for using Tazreen Fashions without its knowledge.
The fire has elevated awareness of something labor groups, retailers and governments have known for years: Bangladesh’s fast-growing garment industry — second only to China’s in exports — is rife with dangerous workplaces. More than 300 workers there have died in fires since 2006.
Police on Wednesday arrested three factory officials suspected of locking in the workers who died in Saturday’s fire, the deadliest in the South Asian country’s less than 35-year history of exporting clothing.
Local police chief Habibur Rahman said the three will be questioned amid reports that many workers trying to escape the blaze had been locked inside. He said the owner of the factory was not among those arrested.
The three officials were arrested Wednesday at their homes in Savar, the Dhaka suburb where the factory is also located. Rahman did not identify the officials or give their job status.
Workers who survived the fire say exit doors were locked, and a fire official has said that far fewer people would have died if there had been just one emergency exit. Of the dead, 53 bodies were burned so badly they could not be identified; they were buried anonymously.
The fire started on the ground floor, where a factory worker named Nasima said stacks of yarn and clothes blocked part of the stairway.
Nasima, who uses only one name, said that when workers tried to flee, managers told them to go back to their work stations, but they were ignored.
Dense smoke filled the stairway, making it hard to see, and when the lights went out the workers were left in total darkness. Another surviving worker, Mohammad Rajiv, said some people used their cellphones to light their way.
“Everyone was screaming for help,” Nasima said. “Total chaos, panic and screaming. Everyone was trying to escape and come out. I was pulling the shirt of a man. I fainted and when I woke up I found myself lying on the road outside the factory.
“I don’t know how I survived.”
Rajiv said the factory conducted a fire drill just three days before the fire broke out, but no one used the fire extinguishers. “Only a selected group of workers are trained to use the extinguishers. Others have no idea how to use them,” he said.
Now windows at the eight-story factory are broken, sewing machines melted or burned to ash. Much of the clothing on the lower floors was incinerated. Nightgowns, children’s shorts, pants, jackets and sweat shirts were strewn about, piled up in some places, boxed in others.
Prime Minister Sheikh Hasina and Interior Minister Muhiuddin Khan Alamgir have said arson is suspected. Police say they have not ruled out sabotage.
Wal-Mart had received an audit deeming the factory “high risk” last year, said it had decided to stop doing business with Tazreen, but that a supplier subcontracted work to the factory anyway. Wal-Mart said it stopped working with that supplier on Monday.
Calls made to The Walt Disney Company and to Sears Holdings were not immediately returned.
Local TV reports said about 3,000 garment workers held protests over the fire Wednesday, blocking roads and throwing stones at some factories and vehicles. It was the third straight day of demonstrations, and as they did previously, factories in the area closed to avoid violence.
Police used batons to disperse the protesters, but no injuries were immediately reported.
According to local television, most factories in the area closed after opening briefly because of the protests — a common tactic to avoid violence.
—–
Associated Press writer Farid Hossain in Dhaka, Bangladesh, contributed to this report.
Is Traditional America Dying?
in Uncategorized11/18/2012
Actually, I was not surprised by O’Reilly’s irrational observations. The Republican party threw every weapon it had at President Obama during the recent election, including racism, birtherism, homophobia, xenophobia, socialism, communism, sexism, tax laws, abortion, birth control, legitimate rape, Kenya, NPR and Big Bird.
It didn’t start there, either. Those Chicken Little cries of “The Sky is Falling” started long before President Obama ever arrived on the scene.
When we declared our Independence from England, there were some who said it would be a disaster and was doomed to fail. When we ended slavery, others also declared that it was the end of America. Likewise, when we stopped segregation, gave women the right to vote, and allowed gays to openly serve in the military. They were wrong in all cases, and today we are a stronger nation because of the changes.Despite O’Reilly’s accusations about the president, which include everything from losing the big picture of God and country, to bowing and apologizing to corrupt leaders, to wreaking havoc on society with welfare, abortion and the public school system, to running us off a fiscal cliff with entitlements for the poor, the death of traditional America has little to do with Obama. It has more to do with the wealthy. Ask yourself this: why aren’t tax perks for the rich, agricultural subsidies for mega-farms, $700 billion dollar bank bailouts and lobbyists securing legislation favorable only to the rich labeled entitlements? I don’t know about you, but I call that welfare at the highest level.
The real truth about traditional America, though, is that this country is shifting, not sinking. Someone needs to tell O’Reilly that you can’t run a modern government based on ideals that are hundreds of years old (or thousands, if you believe the Bible). It was once legal to own people, to force employees to work in unsafe conditions, and to not allow women the right to vote. Face it, traditional America was never good for women, Native Americans, African-Americans, Asians, the disabled or the elderly.
It’s funny how quickly we forget the bigotry, homophobia and racism that was so common in our past. Remember the centuries of slavery, followed by segregation, religious intolerance, sweat factories, Salem witch hunts, McCarthy era communism, exploitation of immigrant labor, racism, anti-Semitism, economic oppression of the poor, and the breaking of treaties with Native Americans? If that’s tradition, who needs it?
Bill O’Reilly is cherry picking history. The idealized version of America he envisions is one where white men were the dominant social class, diversity was feared, a person’s worth was measured by the size of their bank balance, and the regulation of a woman’s body by church and state was good. Bill would like to go back to a time when the government, not you, decides who you can and can’t marry. Back to when the votes of minorities and women didn’t count, and where it was perfectly OK for individuals in power to force their beliefs and ideology on others.
I hate to burst O’Reilly’s bubble, but American history is no Norman Rockwell painting.
If you’re searching for traditional America, the best place to look is in the White House. President Obama and the first lady are strong supporters of traditional values of faith, and caring for one’s neighbors and family. They don’t think people should go bankrupt over health insurance or go hungry for lack of food. They want all religious institutions protected, but don’t want them (or the government) to dictate who should have access to contraceptives. The president and his wife believe that the education of our children is important, and that we need to do everything possible to keep them happy and healthy. That’s the kind of America I want to carry forward into the future.
Tim Martin resides in McKinleyville
Made In America Has A New Ring
in Uncategorized11/19/2012
The data shows that Made in the USA resonates even stronger for U.S. consumers, of course.
Naturally, this presents a great opportunity for the many small businesses and manufacturers to tap into a new market like China with over a billion people. Many have tried to tap overseas markets only to fail because of the cultural differences, government red tape (on both sides), and shipping logistics, just to name a few of the challenges. The good news is there are many international trade resources for navigating this complex arena.
If you are looking to understand what your competitors are shipping, you can check out a company like Manifest Journals where a business connection of mine, Michael Heffernan, helps companies make sense of U.S. Customs Import Trade Data. Or head to the International Trade Administration to start your exporting journey. The USA.gov site on international trade is also a powerful resource.
The findings—part of BCG’s ongoing study of the changing global economics of manufacturing and its Made in America, Again research series—support previous BCG analysis showing that the U.S. is becoming increasingly attractive as a location for making certain products for the U.S. market and as a base for global exports.
The U.S. has improved its cost competitiveness compared with China and the advanced economies of Western Europe and Japan, leading BCG to estimate that higher U.S. exports—combined with production “reshored” from China—could create 2.5 million to 5 million new U.S. jobs in manufacturing and related services by the end of the decade (which I’ve reported on earlier this year).
In both the U.S. and China, respondents of all age groups and income levels expressed a concern for quality, a key driver of the consumer preference for U.S.-made products. Eighty-five percent of U.S. consumers and 82 percent of Chinese said they “agree” or “strongly agree” that they feel better about Made in USA quality. Patriotism is another strong consideration among U.S. consumers: 93 percent said that they would pay more for U.S.-made goods in order to keep jobs in the U.S., and 80 percent said that buying U.S. products demonstrates patriotism.
In contrast to U.S. and Chinese consumers, European consumers strongly prefer products made in their own countries. More than 65 percent of consumers in both Germany and France said that they would be willing to pay more for products made in their home country than for those made in the U.S.
Shopping for American-Made Holiday Gifts – Renewed Focus on Gifts Made in USA
in ChristmasRead more
The Revival of American Manufacturing: An Update
in UncategorizedChris Mayer
Nope. Made in the USA. The Solo Cup Co. makes them in Lake Forest, Ill.
Recently, another company started making an almost identical-looking reusable red cup. Trudeau USA makes millions of these cups, which they call simply the Red Party Cup. This was a job that in another year not so long ago might’ve headed to China. Not today.
American manufacturing is quietly enjoying a revival on some levels. Goods once made in China are now coming back to the USA — a process called re-shoring. In May, I wrote to my Capital & Crisis readers about “A New Trend ‘Sneaking up on People’”. I talked to Scott Huff, a principal at Innovate International, an engineering design and contract manufacturer for several industries. Scott was actively involved in re-shoring. Recently, I talked to Scott again to get an update.
“That red cup has been one of the most successful things we’ve re-shored,” he told me. I love this story precisely because it goes against what so many people think they know. They think US manufacturing is in inevitable decline. The red cup story is another strand in a growing thread of anecdotal evidence to the contrary.
As Scott says:
The end result is kind of like what we see in the mortgage market: superlow rates that not many borrowers can access. Ergo, manufacturers need to run lean these days.
“So,” Scott continues, “if you can make your manufacturing process leaner, you can free up cash. One way to do that is to make it local and turn over the dollars faster.” This way, you don’t have cash sitting in goods on a boat from China.
Driving the renaissance is more than just shipping costs, of course. Many of the factors we talked about back in May are still in play today. Namely: It is getting expensive to do business in China.
“The glory days of China’s export business are over,” Scott says. “Now it is down to hard work. The adjustment in the renminbi [China’s currency] took some of the pressure off the export companies, but the cost of living continues to just crawl upward — the cost of food and the cost of housing, especially. Those don’t come down. There is only so much you can do with currencies.”
Cheaper US energy prices also help along the re-shoring trend. Fertilizer and chemical firms want to put down roots in the US and plug into cheap sources of natural gas. In Asia, natural gas costs at least four times the price.
“Natural gas production has gotten to the point where we can’t store it all,” Scott says. “Natural gas prices should be even lower. And things that include natural gas as a raw material, such as olefin plastics, propylene and ethylene, should be cheaper to make here. We should have the cheapest propylene and ethylene in the world in the US.”
The same could happen with oil. US production is up 25% since 2008 as new technology cracks up new supplies. As I write, the price of West Texas Intermediate, the US benchmark oil price, is down nearly 16% on the year.
So China’s cost advantages have been ground away in several ways. Still, there are challenges bringing stuff back to the US — like a dearth of manufacturing know-how.
“You have a base of experience in Illinois and Michigan and places that have traditionally been the centers of excellence for some of these manufacturing processes,” Scott said. “A toolmaker who is capable and has kept up with the technology — well, let’s just say there aren’t very many unemployed toolmakers. There’s plenty of opportunity now as people are trying to re-shore stuff.”
I was fascinated by a role reversal Scott described.
“The vast majority of my design engineers are Chinese and work in my office in China,” Scott said. “And these are guys that have been with me for five years or more, in some cases as long as I’ve been in China. I’ve been there eight years. They’ve got a lot of experience.
“So,” he says with a chuckle, “one of the things we’re starting to do is bring some interns from the States to work with them. It’s kind of a role reversal. We have design engineers that actually put lines on paper in China for the products being made in Chicago. Eight years ago, I was taking a handful of older American guys to China with me to help work with these young Chinese designers. And now it’s going back the other way. Now I have young American graduates I’m shipping over there for six months to get experience with people that know what they’re doing.”
Incredible, isn’t it? All things change. As I like to say, if you stand around long enough in markets, you’ll see them come full circle.
US consumers also favor US-made products — to a point. “People love this story,” Scott said. “Having US-made products is an advantage in the marketplace. But on consumer products in particular, as much as people love US-made products, there is a limit to what they’ll pay for them. The economics of it all will still rule the day.”
There are a handful of publicly traded US manufacturers headquartered in places like Milwaukee, Wis., and Mansfield, Ohio, that are lean and world-class competitors. They are in good position to gain from this trend. But, as always, patience is key.
The stock market may be somewhat overzealous in its enthusiasms at this very moment. While keeping my eye on this still-nascent trend, I’ve determined to wait for better prices — and they will come, I have no doubt. In the meantime, though, the revival of American manufacturing is an important story to keep in mind…especially for contrarians who don’t mind getting paid to go against the crowd.
Made in USA Label Popular in China, Too: Study
in UncategorizedNovember 14, 2012
The report, by the Boston Consulting Group (BCG), found 61 percent of Chinese consumers would pay more for a product made in the United States. When products are of similar price or quality, about 47 percent prefer the U.S.-made alternative, more than double the number who would pick the Chinese-made item.
“The Chinese consumer is quietly concerned about what they’re getting,” said Hal Sirkin, a BCG senior partner and co-author of the BCG study.
Consumers are responding to recent cases of lead paint in toys, tainted milk and other scandals that, in some cases, led to severe penalties for those responsible. As more Chinese enter the middle class, they will increasingly look for value in the goods they buy rather than just the lowest price, which will pressure Chinese manufacturers to improve quality, Sirkin said.
Chinese consumers’ preference for U.S. goods, of course, is not as strong as U.S. consumers’, and its causes are different: Chinese shoppers more often cite durability and environmental impact than do shoppers in the United States.
But the survey still shows a potential advantage for manufacturers or retailers of consumer products, who may be able to charge higher prices for goods made in the United States.
BCG cited several examples of U.S.-based manufacturing: Dell Inc. makes computers; Google Inc. makes Motorola-branded phones; and General Electric Co manufactures home appliances in Kentucky.
PREMIUM FOR U.S. GOODS
The survey of more than 5,000 consumers helps support the argument that more manufacturers should base production in the United States, according to BCG.
As the cost of producing and shipping goods from China rises, more U.S. manufacturers are expected to expand U.S. capacity, BCG predicts. And as U.S. factories churn out more autos and auto parts, electrical equipment and furniture, they could spark an industrial renaissance with 5 million new jobs, it says.
BCG recommends retailers lock in U.S. suppliers to attract shoppers, and is advising consumer brands to make their U.S. sourcing as visible as possible. For now, relatively few do.
“If you’re going to have things that have a long life, like mechanics’ hand tools, there’s real premiums for ‘Made in USA’ over a foreign brand because the quality is better,” Sirkin said. He named Stanley <SWK.N> brand tools as an example.
In both the United States and China, more than 80 percent of those polled cite quality as a reason to pay more for U.S. goods. Baby food, household appliances, tires, car parts and furniture are items for which most people are willing to pay a premium, generally of 10 percent or less.
Some categories are outliers: shoppers in China would pay 77 percent more for U.S.-made athletic shoes, a status symbol.
Patriotism motivates U.S. consumers. More than nine in 10 cited domestic jobs as a reason for choosing “Made in USA” goods. Overall, 81 percent of Americans are likely to pay more for goods that carry the “Made in USA” label. More than a quarter of people are willing to pay at least 10 percent more for appliances, furniture, and baby food.
The BCG study, to be published Thursday, focused on consumer goods rather than pricy capital equipment geared toward business and government. It found only minor differences in attitudes based on age, income and whether respondents had children.
The appeal of U.S. goods is by no means universal, however. French consumers see U.S.-made mobile phones, shoes or baby toys as less valuable than local equivalents, and almost two-thirds of Germans would pay more for German products.
AMERICAN MOUNTAIN CO.: U.S.-MADE ALPINE GEAR WITH STYLE
in UncategorizedNovember 14, 2012
Driven by a desire to make products with fortitude and inspired by passion for the experiences unique to the magnificient peaks, the company makes mountain wear reminiscent of a time when climbing was in its purest form and excellence was found in all aspects of a product—when performance and quality were as important as style and design.
American Mountain Co. uses high-tech materials combined with classic style for its products, all manufactured in the United States. Every single stitch of their wears is sewn by a craftsman who takes personal pride in each pass of the needle. And every garment is arduously tested to ensure you can rely on it for a lifetime. When a product is finally deemed perfect, the crafter signs the garment before it’s sent to you with American Mountain Co.’s lifetime guarantee.
The company is launching on Kickstarter now with two products: the No. 907 High-Altitude Hardshell Jacket and the No. 307 Mid-Altitude Windproof Fleece Jacket.
The company took a ground-up approach to design these pieces. The made-in-the-USA fabrics are the best available, and the jackets have innovative features, like a system to keep the base of the jacket tight around your waist, which is far superior to the ubiquitous elastic waist drawcord used in most other jackets. And American Mountain Co.’s hightop collar offers increased wind protection and heat retention.
—Berne Broudy
@berneb
Available February 2013, $325 for the #307 and $625 for the #907 at americanmountainco.com.
Check out American Mountain Co. on:
Facebook
Twitter
Pinterest
American Manufacturing Loses Another Member
in UncategorizedNovember 13, 2012
Third-generation owner Walter Meck and other family members bought the company back from the Fessler family after Meck’s father had sold it in 1960. After the advent of “free trade” and NAFTA had claimed its three biggest customers, the company shifted from high-volume mass-market apparel to higher-end products made with more expensive fabrics produced quickly in small quantities. The company adopted a policy of offering organic cotton, and fabrics made from bamboo.
FesslerUSA thrived. So much so that five years ago the company doubled its capacity and moved into a new factory. But it finally fell victim to the Great Recession with its tighter credit standards, Asian competition, and weak consumer spending.
The Detroit News, itself a part of a dying industry (the printed newspaper), quoted Meck as observing, “We knew that it was change or die. We had to reinvent ourselves.”
So reinvent they did. Meck laid off half his workforce and maintained a leaner, more profitable company until 2010, when sales again plummeted. New markets and new product proposals were promising, but not in time to avoid the bank calling the company’s loan.
Meck noted that his company could have survived had he been able to find a lender, but that tightened credit is a common problem for small manufacturers. Chad Moutray, chief economist for the National Association of Manufacturers, told The Detroit News,“Many of [the member companies] have complained to me that the standards for borrowing have become a lot more strict since the recession. It’s much tougher to get a loan today than it was in the past.”
In particular, new lending standards, a casualty of the country’s bailout policy, are what have made it much more difficult for struggling companies to get a loan. That, along with a national program of increased taxation and regulations on producers, has resulted in jobs and production going overseas. Meck also blamed part of his company’s problem on lack of investor interest — not surprising to analysts, given that the economy is scaring investors into hanging onto their money.
Fessler was one of the few remaining vertically integrated companies, meaning that all aspects of production remained under one roof. The company wove its own fabric, and did its own cutting and sewing.
Los Angeles-based American Apparel is an example of a highly successful clothing manufacturer using the vertical integration model, having carved itself a good chunk of a niche market. It has bucked the system. According to The Detroit News report,
“’It’s going to be tough for me to get a job because of my age,” said Bambrick, who became the sole breadwinner for her stepdaughter and elderly mother after the recent death of her husband. “I am very strapped. I will need a good job.”’
Americans still do have choices, although they are shrinking. Though die-hard label-readers are finding fewer and fewer items made anywhere but China, analysts note that perseverance can pay off. In addition to American Apparel, “Made in the USA” labels can still be found at Munro Shoes, Finley Shirts, Unis, and Patricia Wolf, among others.
For Fessler, however, the run is over. Production will shut down in November after nearly 113 years, leaving 130 employees out of work. Meck commented,
Foxconn in America? Not So Fast.
in Manufacturing, Reshoring, Supply Chains, TechnologyFoxconn and the American Factory Dream: Are U.S. Manufacturing Jobs on the Table?
The contract manufacturing giant behind many of tech’s biggest names — including Apple — has stated that it has no current plans to expand its operations in North America.
So when headlines surfaced claiming that Foxconn was scouting U.S. locations for new manufacturing plants, it sparked immediate interest. In an economy still recovering from global disruptions and job losses, any hint of new factory jobs in the U.S. is bound to make waves.
Read more
Popular Wrench Fights a Chinese Rival
in UncategorizedNovember 8, 2012
The tools have one significant difference, Mr. Craig noted. The Bionic Wrench is made in the United States. The Max Axess wrench is made in China.
The shift at Sears from a tool invented and manufactured in the United States to a very similar one made offshore has already led to a loss of American jobs and a brewing patent battle.
The story of the Bionic Wrench versus Craftsman, which bills itself as “America’s most trusted tool brand,” also raises questions about how much entrepreneurs and innovators, who rely on the country’s intellectual property laws, can protect themselves. For the little guy, court battles are inevitably time-consuming and costly, no matter the outcome.
Still, the inventor of the Bionic Wrench is determined to fight. He is Dan Brown, an industrial designer in Chicago who came up with the wrench after watching his son try to work on a lawn mower. Mr. Brown says he believes that the Max Axess wrench copies his own and he is planning to file suit against Sears, which declined to answer any questions about the wrenches for this article.
Since Sears has halted new orders, the Pennsylvania company that makes the Bionic Wrench has had to lay off 31 workers, said Keith Hammer, the project manager at the company, Penn United Technologies. “And that’s not to mention our suppliers,” he added.
Mr. Brown sees a broader issue than just the fate of his wrench. “Our situation is an example of why we’re not getting jobs out of innovation,” he said. “When people get the innovation, they go right offshore. What happened to me is what happened to so many people so many times, and we just don’t talk about it.”
Inventors typically spend $10,000 to $50,000 to obtain the type of patent Mr. Brown has on the wrench, said John S. Pratt, a patent expert at Kilpatrick Townsend & Stockton in Atlanta. Though he said he could not comment on the merits of Mr. Brown’s potential suit, patent infringement cases can be especially difficult in the tool field, where many improvements are incremental, Mr. Pratt explained.
A defendant in such a case would most likely argue that either the tool did not warrant a patent in the first place, or that its own product did not violate the patent.
The fact that Sears made some changes to the wrench’s design, like making the grooves that allow the metal prongs to slide back and forth visible instead of hidden, will make the case more challenging, he said. “It’s hard for me to imagine that Sears isn’t particularly careful about breach of patent, so there’s probably another side to the story,” he said.
After patenting the wrench in 2005, Mr. Brown formed a company, LoggerHead Tools, to bring it to market, making a point of having it made in the United States.
The Bionic Wrench was greeted with enthusiasm at trade shows and in industrial design competitions, and the company survived the downturn in 2008. Mr. Brown resisted overtures from large chain stores that wanted to sell the tool under their proprietary brand, he said, and rejected the lure of cheaper manufacturing in China. “I was raised a different way,” he said.
The tool sold fairly well on its own — LoggerHead has shipped 1.75 million of them — but Mr. Brown, 56, who teaches industrial design at Northwestern University, says LoggerHead operated on a shoestring and he plowed much of the profit back into the company. “You cannot have big offices and fancy cars and everybody with an administrative assistant, because we are competing with China,” he said.
In 2009, LoggerHead hit pay dirt when Sears agreed to do a test sale. The product sold out, Mr. Brown said, and Sears ordered 75,000 Bionic Wrenches the next year. In exchange Mr. Brown agreed not to sell the wrench to Sears’s competitors, including Home Depot and Lowe’s.
In 2011, sales at Sears increased again, far outpacing LoggerHead’s other outlets like the QVC shopping channel and smaller hardware stores. But LoggerHead’s profit margin remained small, in part because it produced a television commercial and paid Sears to show it.
The Sears Holdings Company, which owns the Craftsman brand, declined multiple requests to comment on the Bionic Wrench or the Max Axess Wrench. The company would not answer questions about patent infringement or the volume of sales.
But in a string of e-mails provided by Mr. Brown, the buyer at Sears who had the LoggerHead account wrote, making liberal use of exclamation points, that the wrench’s holiday sales last year exceeded its target by 23 percent.
In the manufacturing world, lead time can determine price, and from the beginning cost was a particular issue for the Bionic Wrench, because of the competition from China. A 2006 article in The Wall Street Journal was headlined, “Wrench Wins Awards, but Is It Priced Too High to Be a Hit?”
According to Mr. Brown’s account of his dealings with Sears, the chain was pleased with the tool’s performance and agreed to place an order for 2012 in plenty of time to keep the cost low. Then his buyer at Sears changed and that agreement seemed to get lost in a new round of haggling. When the order for Father’s Day
finally cam
e, Mr. Brown said, it was too late to guarantee the lower price. He refused the order.
Sears responded by agreeing to the higher price. But when it came time for the Christmas holiday order, negotiations stalled once more, again pushing LoggerHead past the deadline to get the best price, according to Mr. Brown.
“We were sitting there going, ‘Why do they want Father’s Day so bad but they won’t commit for Christmas?’ ” Mr. Brown said. Now he believes that the company had already placed its order for the Craftsman version.
In late September, Mr. Brown said, his suspicions were confirmed. LoggerHead got a “customer feedback” e-mail from Mr. Craig, the tool connoisseur, describing the new Max Axess wrenches. “Sadly, they are made in China,” Mr. Craig wrote. “Can you tell me if LoggerHead has authorized these?”
Craftsman has come under fire before, accused of misleading customers into thinking that its tools are made in America and for stealing intellectual property. In one case, Sears spent two decades defending itself against a claim by Peter M. Roberts, who as a young Sears employee had, on his own time, invented a type of socket wrench.
Mr. Roberts told the court that Sears had played down the value of his invention, paid him $10,000 for the rights, and then made tens of millions of dollars. He eventually received settlements of less than $10 million, according to news reports.
In another, more recent case led by Lee Grossman, Mr. Brown’s lawyer, a judge awarded $25 million to the maker of a tool called the Rotozip who said he had disclosed trade secrets to Sears in an attempt to get the store to carry a new version of the tool.
Sears, a jury decided, took the trade secrets and had the tool made abroad for Craftsman.
“You have LoggerHead out, Dan Brown out, and dozens of American workers laid off — all in the name of profits for Sears,” Mr. Grossman said.
LoggerHead’s lawsuit, Mr. Brown said, will most likely include claims that Sears interfered with the company’s ability to do business with other stores.
“I’m in favor of free trade,” Mr. Brown said. “The person who’s out-innovated loses. But it’s destructive when someone competes but doesn’t out-innovate, they just produce it in a different market without regard to safety codes and human conditions.”
The company that makes the Max Axess wrench and other tools for Craftsman, the Apex Tool Group, is being acquired by Bain Capital, the company founded by Mitt Romney, in a $1.6 billion deal.
Throughout the presidential campaign, Bain was criticized on the grounds that it encouraged outsourcing by companies it buys at the expense of American workers. Apex makes many of its tools overseas. A company spokesman referred all questions to Sears.
Mr. Brown and his lawyer say they believe they have a solid case against Sears, but it could take years to litigate. “What happens to us in the meantime?” Mr. Brown asked.
Mr. Brown is also concerned that while he fights in court, Sears can undercut the price of his wrench.
For now at least, Sears still has some of Mr. Brown’s wrenches in its inventory. On the Sears Web site, the Craftsman and the LoggerHead wrenches are listed at the same regular price, $24.99 for the 8-inch version, and today both are on sale. But for at least a few days in recent weeks, only the Craftsman version was on sale, for $19.99.
A version of this article appeared in print on November 9, 2012, on page B1 of the New York edition with the headline: An Innovator vs. a Follower.
How New Parents Can Bring Back ‘Made in the USA’
in UncategorizedFounder & Creative Director, Oliver & Adelaide
11/07/2012
As an online retailer of baby and toddler products made exclusively in the U.S., I am in a position to see an area where American manufacturing is trying to make a comeback.
Manufacturing American-Made Values
The word “manufacturing” tends to conjure images of industrial assembly lines and heavy machinery. But it’s worth remembering that the word means, at root, “to work by hand.” The vendors I work with range from a retired schoolteacher who crochets blankets to savvy, garment-industry veterans who have struck out on their own with smaller design ventures. Whatever the size of their respective enterprises, these are true businesspeople; I would not be able to work with them if they weren’t capable of delivering products on time, season in and season out.
They are also people who are operating from a system of core values — paramount among them, that “Made in the USA” still matters. It matters for a country where that label remains a source of pride. It matters for the environment, when it makes a real difference whether a product needs to be transported 200 miles versus 6,000 miles. And for parents, it matters perhaps most of all in terms of quality and safety.
What’s at Stake
My own background is in the fashion industry. I’ve lived in China, overseeing production at factories there, and seen firsthand how impersonal and indifferent that process can be. As a parent of two young children, I know that what I buy for them ends up in their hands and, inevitably, their mouths. So for every piece of clothing, each doll and toy I purchase, I want to know exactly how it was made, what it is made of and where it’s been. My experience tells me that when something comes from half a world away, you simply cannot know where it’s been sitting, and for how long, on what warehouse floor, in what cargo ship — and, to me, that’s unacceptable. When scarcely a week goes buy without a recall of a foreign-made product, that’s unacceptable, too.
What “Made in the USA” Means in a World of Choices
Being a new parent can be, let’s face it, intimidating. We are presented with an overwhelming list of products that we are told we need to buy in order to be a “good parent,” and then faced with thousands of choices from scores of brands. My company, Oliver & Adelaide, grew out of my own process of trying to separate the things a parent really needs from the marketing hype, and trying to find the very best manufacturers making these products here in the USA.
Very few parents have the time to undertake this kind of research, and fewer still have the opportunity to visit studios and factories. I have made it my business. In seeing for myself where the products are designed and made and inspecting the raw materials used to make them, I have discovered an impressive group of businesses that put a very personal degree of care and concern into every step of their manufacturing processes. And in meeting these suppliers, I have also discovered that they also bring real passion and pride to what they do.
Small businesses like Loop, which was founded in 2010 by two knit designers to create heirloom quality children’s clothes and blankets, or Zuzii, which uses the highest-quality materials and employs traditional cobbler techniques to handcraft shoes for babies and toddlers, are making outstanding products here in the United States, and doing so with love. But without the huge sales forces and marketing budgets of larger companies that outsource manufacture overseas, they face an uphill climb when it comes to connecting with parents. And because they insist on making American products with American labor and materials, they are unable to take advantage of the mass manufacturing that drives down costs for major brands.
Good for Baby, Good for the Economy
These are the kinds of manufacturers who depend on small retailers to spread word of their products. I’m proud to play a part in that. More than that, though, they depend on parents who will make it a point to buy American — even if it means buying fewer items, but of significantly higher quality. Births, aside from being a joyous experience for each family, are also tremendous drivers of the economy; much like house sales, they set in motion a cascade of purchases. If parents commit to supporting manufacturers who believe in the USA, I believe we can take a real step towards bringing jobs back to this country. In doing so, we may find that the answer to fixing the trade imbalance lies not with any particular policy — or any particular candidat — but, rather, in our own hands.
It’s an approach that could benefit all sectors of our economy. Why not start with the purchases that end up in the hands of our children?
Carhartt's Patriotic New Made-in-USA Line, Old Made-in-USA Line
in UncategorizedNovember 7, 2012
But clothing brand Carhartt has been making its clothing in the US since, well, forever. And now its is working to make this fact more a part of its message.
Carhartt’s tan, swirly wave logo on its characteristically tan garments is probably familiar even to those who don’t count on the brand for work wear. But construction workers, truckers, welders, farmers, and just about anyone else in America who works outside an office have a special appreciation for the brand.
“Best for wear” and “From the mill to millions” have been a couple of the mottos the brand has used since it was founded in 1889 by its namesake, Hamilton Carhartt. The “Made in America” tags on its clothing was more or less an afterthought. But now, Carhartt has released a “Made in the USA” line featuring some of its most iconic products. The line, Carhartt says, is “stitched on American soil for any person that believes in hard work.”
“Rather than follow trends, our goal is to always design and manufacture premium work-worthy apparel at a price that respects our consumer’s hard-earned dollar,” Carhartt Vice President of Marketing, Tony Ambroza, told brandchannel when asked about the new line’s timing. When asked any Carhartt chose now to stress its “Made in America” bona-fides, Ambroza said, “Our Made in the USA line of apparel was created in response to consumer feedback; they told us they wanted to know exactly which products we make and source in the U.S. We were able to shift some product to other manufacturing facilities in order to accommodate production of these popular styles.”
But a recent study published by the Clothing and Textiles Research Journal argues that American consumers overvalue US-made apparel. From the study:
With this in mind, Ambroza hinted that the line was not yet complete, suggesting Carhartt fans “look for additional USA-made exclusives this holiday season.”
Made in America Markets Create Communities of Like-Minded Consumers
in UncategorizedNovember 5, 2012
They arrived in town late Friday night and were among the first to show up on a recent crisp October morning at a warehouse in Chicago’s Fulton Market area. Music by Band of Horses played softly in the background, giving the airy, white-washed loft space an ambiance equal parts gallery opening and trade show. A large vintage American flag looming over the showroom signaled the common domestic origin of the clothing, accessories, shoes, bicycles and skin care products for sale.
Adachi and Kennedy were already fans of some of the brands at NorthernGRADE, a pop-up menswear market of American-made goods making its Chicago debut two years after launching in Minnesota. Meeting the crafters, designers and small-business owners behind the brands added to the appeal, they said.
“I like the idea of craftsmanship. I feel like the brands are doing it because they care and there’s something about that that’s very commendable. I’d rather support that than go to the mall and buy something made overseas,” said Adachi, 25.
“We had to come, especially since events like this don’t happen much in the Midwest,” said Kennedy, a 23-year-old self-described “made in America freak” who was turned onto the concept by her boyfriend. “It’s so awesome to see people doing what they love. It’s evident in the quality of their products.”
About 800 people turned up for NorthernGRADE Chicago, according to organizers’ estimates, from across the Midwest and beyond, underscoring the growing popularity of the made in America movement in style and fashion, especially among younger consumers.
The markets are fueling the movement beyond the country’s major fashion markets, where the concept has proven successful. NorthernGRADE is modeled after New York City’s annual Pop-Up Flea, which began in 2009 as a showcase of brands mostly from the United States known for their quality goods. The creators of NorthernGRADE adopted the model for a Midwestern audience by focusing on brands from region. But the focus on quality brands hasn’t changed, said Katherine McMillan of men’s accessory line Pierrepont Hicks, which co-founded NorthernGRADE.
“I would not feel comfortable producing this market if I didn’t believe in all of the brands we invite to take part,” she said. “We all have similar philosophies and ethics about our products. If someone’s products don’t turn out to meet (our standards), we don’t invite them back.”
“The Midwest has long history of manufacturing, but no one was cheering it on until now,” said fashion and brand consultant Noah Zagor, who showed up at the market dressed the part in a vintage denim Levi’s jacket and Alden “Indy” boots, both of which were made in the United States.
“There’s a new generation of men learning about basics of getting dressed, and they want knowledge. They want to know where their stuff comes from.”
It’s tempting to want to stereotype supporters of American-made apparel as either a bunch of trendy urbanites who want to look like lumberjacks on the weekend or blue-collar workers expressing patriotism through their work boots. But this event brought in visitors of all stripes. Teenagers dragged their parents along for their wallets while middle-aged men scanned the displays for unadorned pairs of jeans and silver-haired couples, who remembered the days when manufacturing plants dotted the Midwest, tried on trapper hats.
One thing they all seemed to share was nostalgia for an era when clothing and accessories were made to last, regardless of whether they were actually alive during that time.
One man came from London in search of “a few bits of inspiration” for a potential American-made and UK-made retail concept in England, which is also experiencing a wave of nostalgia for a time when clothing was made closer to home.
“People like me want to stray from goods made in the Far East,” said David Swetman, a 27-year-old freelance designer who resembled a menswear model in a Barbour jacket and fisherman’s sweater over a flannel shirt, JW Hulme duffel bag slung over his shoulder.
“We’re swinging away from fast fashion, and we’re willing to invest and spend more on quality,” he said. Sure enough, he left the market about an hour later with a $300 Archival waxed cotton vest, a $195 shawl-collared Pendleton sweater and leather shoelaces of different colors. “A nice way to accessorize your brogues,” he noted.
For anyone who might use the words “classic,” “structured,” “Americana” or “heritage” to describe their personal style, there was plenty to covet: colorful racks of Oxford cloth button-ups, thick shawl-collared sweaters, jeans from some of the hottest names in premium denim and all manner of vintage.
Footwear fanatics had their choice of leather boots and shoes in every imaginable color and texture from Red Wing and Oak Street, two boot makers representing old and new school establishments. Tables displayed unisex accessories, from sturdy canvas rucksacks, shoulder bags and pencil cases to wool trapper hats and candy-colored assortments of neckties, bow ties and blankets.
Like other market-goers, Adachi was dressed as though his outfit had come from the showroom: Red Wing Heritage boots (made in America), Raleigh Denim jeans (naturally), flannel shirt (no) and Hill-Side scarf (yes) over a henley (no).
Kennedy also looked the part in dark jeans, vintage pullover sweater and boots, though none of it was made in America, underscoring arguments that clothing made in America can be prohibitively expensive or hard to find.
What would make her wardrobe more patriotic, so to speak? “More shows like this would help,” she said. “It’s hard to find this stuff in person.”
13;
Radio host Glenn Beck last month announced his line of American-made jeans, which gets its denim from the same North Carolina mill used by many premium jean brands. Made Collection, an online flash site sale, launched this fall offering American-made products at discounted prices. In time for the holiday season, luxury and mass market retailers such as Anthropologie, Urban Outfitters and Barneys are continuing the trend of partnering with independent brands and designers who make their products in America.
It’s also been a busy year for pop-up markets. The Chicago show marked NorthernGRADE’s first incursion into another city, two years after it was started by Pierrepont Hicks and J.W. Hulme. Another show is scheduled for Minneapolis in December, which will be its third there this year. In 2013, it plans to expand to San Francisco, Nashville, Denver and Moscow.
Another pop-up, American Field, debuted in Boston the weekend before NorthernGRADE Chicago and featured 40 vendors, organizer Mark Bollman said.
“It’s one thing to read about companies making things in the U.S. or to check a label, but I think it’s a whole other thing to have a physical representation of like-minded companies in one place,” said Bollman, founder of Boston-based outfitter Ball and Buck. “You can directly see and understand the growth of this movement and really understand the impact of a purchase, be it big or small.”
The markets featured a combination of businesses that use American factories and workshops to produce their goods along with artisans and crafters who, by virtue of living in the United States, make their product here. Across all categories, the raw materials may or may not be domestically sourced depending on availability, with hardware such as zippers, snaps and woven fabric among the materials in shortest supply in the United States.
The growing hype has some worried that “made in America” is on the precipice of becoming a passing style trend before it actually has a chance to realize its oft-cited underlying goals.
“The initial made in the USA message was about bringing jobs back to the country to stimulate the economy, ending the dependency on other countries for goods and bringing back the education and know-how that comes along with the industry. All that’s being diluted and boiled down into the message of buy made in the USA. The bottom has been taken out and become a selling point,” said Chicago-based menswear blogger and digital strategist Brad Bennett, who helped coordinate NorthernGRADE.
It’s unclear whether interest in American-made clothing correlates with an increase in industrial domestic manufacturing of clothing, which declined by 0.7% from September 2011 to September 2012, according to the Federal Reserve’s numbers on industrial production. However, preliminary numbers for September showed a 1.6% increase over the previous month.
That’s where the markets come into play, to create a movement by bringing together consumers, brands and retailers who are doing their part to raise the profile of American-made fashion.
“It’s definitely a celebration of things made here but also a celebration of the people making it,” said Bennett, whose blog, Well Spent, features “obtainable, honestly crafted goods” from the United States and abroad.
“It’s a pretty cool thing to pick up a bag knowing it’s going to last the rest of your life and then shake the hand of the person who made it,” he said. “You’re not just coming to NorthernGRADE to spend money, you meet people and it’s sort of like, here’s your community.”
A big part of selling made in America is educating the consumer on what they get from their investment, said Lesli Larson, co-founder of Archival Clothing, whose best-selling roll top backpack goes for $220.
“You pay upfront, but you buy sparingly and wisely with the idea that you’re going to use this piece for many seasons and eventually you get pennies per wear,” she said.
Her business grew out of her blog, which documented “long-lost artifacts” from Montgomery Ward catalogs and Americana-inspired fashion being produced in Japan with old machines and equipment purchased from the United States.
“The shift of moving past a state of nostalgia to what can we do to make this a reality using available resources has been the challenge,” said Larson, who has kept her job as an archivist at the University of Oregon-Eugene even as her business has grown.
Larson relishes the opportunity to share her knowledge, which she did with fans including Adachi, who spent more than three hours floating around the showroom before deciding to drop $300 on an Archival vest. His girlfriend’s big-ticket purchase was a pair of Tellason jeans for $198. They were confident that the purchases were worth the money, not only for their quality but because of the stories behind them.
It reminded Adachi of a TED Talk by Simon Sinek who put forth the idea that people don’t buy what you do, they buy why you do it.
“I’m the type of person who’s more interested in why,” Adachi said.
For others, though, the origin of the goods was not nearly as important as their quality.
“I came to the event for the uniqueness of the collections,” said Jeff Medchill, a mortgage industry auditor who also picked up a pair of Tellason jeans. “American-made is not a strong point, I wouldn’t go out of my way to avoid or buy American-made.”
Collin Moody said he was drawn to the event because he supported Chicago-based retailers Haberdash and Penelope’s, which were showing at the market. Normally, not everything they carry in their stores is domestically made, reflecting a commonly held position among consumers and stockists that buying made in America is secondary to sourcing high-quality products made responsibly regardless of their origin.
“We’re interested in
the
ethics of the products. We try to be conscious of where they come from and who’s making them,” said Moody, 21, also a student. “It also helps us not be wasteful.”
For retired carpenter Paul Hortenstine, the market was simply an opportunity “to find quality products made in the USA.”
He and his wife made the trip from Shorewood, Illinois, after learning of the event on Twitter. He had his sights set on a Stormy Kromer trapper hat, but stopped on his way over to quiz George Vlagos, proprietor of Oak Street Boots, on the origin of material for his footwear (Horween Leather of Chicago).
“This guy from Oak Street Bootmakers, he’s making quality product. I’m all for seeing people succeed making quality products in the U.S.,” Hortenstine happily exclaimed as he walked away without purchasing a pair, which run from $200 to $500.
“The price is high but quality justifies it,” he said. “Maybe you can buy it all or you can focus on one or two things.”
He finally settled on two hats in different colors from Stormy Kromer, which have been made in Ironwood, Michigan, for more than 100 years. He also picked up a vest, a recent addition to Stormy Kromer’s apparel catalog, reflecting the success of what sales rep Joel Anderson called “the Trojan horse approach.”
“They come for the hats, because that’s what we’re known for, and they find our apparel,” said Anderson, whose brand was one of few at NorthernGRADE that fell into the heritage category (along with Red Wing) for its long history. While Stormy Kromer is an established brand, being in the same space alongside up-and-coming brands puts it in front of a new, younger audience of consumers and potential wholesalers.
“It’s a three-pronged approach. Educate consumers on our rich history and story, meet fellow vendors, and get new retail business,” he said. “You never know who’s going to come in.”
What Is ‘Made in America’ Worth?
in American Made, Domestic Sourcing, Economy, Made in USA, Manufacturing & SourcingRead more
It's Global Warming, Stupid
in UncategorizedNovember 01, 2012
Clarity, however, is not beyond reach. Hurricane Sandy demands it: At least 40 U.S. deaths. Economic losses expected to climb as high as $50 billion. Eight million homes without power. Hundreds of thousands of people evacuated. More than 15,000 flights grounded. Factories, stores, and hospitals shut. Lower Manhattan dark, silent, and underwater.
In an Oct. 30 blog post, Mark Fischetti of Scientific American took a spin through Ph.D.-land and found more and more credentialed experts willing to shrug off the climate caveats. The broadening consensus: “Climate change amps up other basic factors that contribute to big storms. For example, the oceans have warmed, providing more energy for storms. And the Earth’s atmosphere has warmed, so it retains more moisture, which is drawn into storms and is then dumped on us.” Even those of us who are science-phobic can get the gist of that.
Sandy featured a scary extra twist implicating climate change. An Atlantic hurricane moving up the East Coast crashed into cold air dipping south from Canada. The collision supercharged the storm’s energy level and extended its geographical reach. Pushing that cold air south was an atmospheric pattern, known as a blocking high, above the Arctic Ocean. Climate scientists Charles Greene and Bruce Monger of Cornell University, writing earlier this year in Oceanography, provided evidence that Arctic icemelts linked to global warming contribute to the very atmospheric pattern that sent the frigid burst down across Canada and the eastern U.S.
If all that doesn’t impress, forget the scientists ostensibly devoted to advancing knowledge and saving lives. Listen instead to corporate insurers committed to compiling statistics for profit.
On Oct. 17 the giant German reinsurance company Munich Re issued a prescient report titled Severe Weather in North America. Globally, the rate of extreme weather events is rising, and “nowhere in the world is the rising number of natural catastrophes more evident than in North America.” From 1980 through 2011, weather disasters caused losses totaling $1.06 trillion. Munich Re found “a nearly quintupled number of weather-related loss events in North America for the past three decades.” By contrast, there was “an increase factor of 4 in Asia, 2.5 in Africa, 2 in Europe, and 1.5 in South America.” Human-caused climate change “is believed to contribute to this trend,” the report said, “though it influences various perils in different ways.”
Global warming “particularly affects formation of heat waves, droughts, intense precipitation events, and in the long run most probably also tropical cyclone intensity,” Munich Re said. This July was the hottest month recorded in the U.S. since record-keeping began in 1895, according to the National Oceanic and Atmospheric Administration. The U.S. Drought Monitor reported that two-thirds of the continental U.S. suffered drought conditions this summer.
Granted, Munich Re wants to sell more reinsurance (backup policies purchased by other insurance companies), so maybe it has a selfish reason to stir anxiety. But it has no obvious motive for fingering global warming vs. other causes. “If the first effects of climate change are already perceptible,” said Peter Hoppe, the company’s chief of geo-risks research, “all alerts and measures against it have become even more pressing.”
Which raises the question of what alerts and measures to undertake. In his book The Conundrum, David Owen, a staff writer at the New Yorker, contends that as long as the West places high and unquestioning value on economic growth and consumer gratification—with China and the rest of the developing world right behind—we will continue to burn the fossil fuels whose emissions trap heat in the atmosphere. Fast trains, hybrid cars, compact fluorescent light bulbs, carbon offsets—they’re just not enough, Owen writes.
Yet even he would surely agree that the only responsible first step is to put climate change back on the table for discussion. The issue was MIA during the presidential debates and, regardless of who wins on Nov. 6, is unlikely to appear on the near-term congressional calendar. After Sandy, that seems insane.
Mitt Romney has gone from being a supporter years ago of clean energy and emission caps to, more recently, a climate agnostic. On Aug. 30, he belittled his opponent’s vow to arrest climate change, made during the 2008 presidential campaign. “President Obama promised to begin to slow the rise of the oceans and heal the planet,” Romney told the Republican National Convention in storm-tossed Tampa. “My promise is to help you and your family.” Two months later, in the wake of Sandy, submerged families in New Jersey and New York urgently needed some help dealing with that rising-ocean stuff.
Obama and his strategists clearly decided that in a tight race during fragile economic times, he should compete with Romney by promising to mine more coal and drill more oil. On the campaign trail, when Obama refers to the environment, he does so only in the context of spurring “green jobs.” During his time in office, Obama has made modest progress on climate issues. His administration’s fuel-efficiency standards will reduce by half the amount of greenhouse gas emissions from new cars and trucks by 2025. His regulations and proposed rules to curb mercury, carbon, and other emissions from coal-fired power plants are forcing utilities to retire some of the dirtiest old facilities. And the country has doubled the generation of energy from renewable sources such as solar and wind.
Still, renewable energy accounts for less than 15 percent of the country’s electricity. The U.S. cannot shake its fossil fuel addiction by going cold turkey. Offices and factories can’t function in the dark. Shippers and drivers and air trave
lers w
ill not abandon petroleum overnight. While scientists and entrepreneurs search for breakthrough technologies, the next president should push an energy plan that exploits plentiful domestic natural gas supplies. Burned for power, gas emits about half as much carbon as coal. That’s a trade-off already under way, and it’s worth expanding. Environmentalists taking a hard no-gas line are making a mistake.
Conservatives champion market forces—as do smart liberals—and financial incentives should be part of the climate agenda. In 2009 the House of Representatives passed cap-and-trade legislation that would have rewarded more nimble industrial players that figure out how to use cleaner energy. The bill died in the Senate in 2010, a victim of Tea Party-inspired Republican obstructionism and Obama’s decision to spend his political capital to push health-care reform.
Despite Republican fanaticism about all forms of government intervention in the economy, the idea of pricing carbon must remain a part of the national debate. One politically plausible way to tax carbon emissions is to transfer the revenue to individuals. Alaska, which pays dividends to its citizens from royalties imposed on oil companies, could provide inspiration (just as Romneycare in Massachusetts pointed the way to Obamacare).
Ultimately, the global warming crisis will require global solutions. Washington can become a credible advocate for moving the Chinese and Indian economies away from coal and toward alternatives only if the U.S. takes concerted political action. At the last United Nations conference on climate change in Durban, South Africa, the world’s governments agreed to seek a new legal agreement that binds signatories to reduce their carbon emissions. Negotiators agreed to come up with a new treaty by 2015, to be put in place by 2020. To work, the treaty will need to include a way to penalize countries that don’t meet emission-reduction targets—something the U.S. has until now refused to support.
If Hurricane Sandy does nothing else, it should suggest that we need to commit more to disaster preparation and response. As with climate change, Romney has displayed an alarmingly cavalier attitude on weather emergencies. During one Republican primary debate last year, he was asked point-blank whether the functions of the Federal Emergency Management Agency ought to be turned back to the states. “Absolutely,” he replied. Let the states fend for themselves or, better yet, put the private sector in charge. Pay-as-you-go rooftop rescue service may appeal to plutocrats; when the flood waters are rising, ordinary folks welcome the National Guard.
It’s possible Romney’s kill-FEMA remark was merely a pander to the Right, rather than a serious policy proposal. Still, the reconfirmed need for strong federal disaster capability—FEMA and Obama got glowing reviews from New Jersey Governor Chris Christie, a Romney supporter—makes the Republican presidential candidate’s campaign-trail statement all the more reprehensible.
The U.S. has allowed transportation and other infrastructure to grow obsolete and deteriorate, which poses a threat not just to public safety but also to the nation’s economic health. With once-in-a-century floods now occurring every few years, New York Governor Andrew Cuomo and New York City Mayor Michael Bloomberg said the country’s biggest city will need to consider building surge protectors and somehow waterproofing its enormous subway system. “It’s not prudent to sit here and say it’s not going to happen again,” Cuomo said. “I believe it is going to happen again.”
David Rothkopf, the chief executive and editor-at-large ofForeign Policy, noted in an Oct. 29 blog post that Sandy also brought his hometown, Washington, to a standstill, impeding affairs of state. To lessen future impact, he suggested burying urban and suburban power lines, an expensive but sensible improvement.
Where to get the money? Rothkopf proposed shifting funds from post-Sept. 11 bureaucratic leviathans such as the Department of Homeland Security, which he alleges is shot through with waste. In truth, what’s lacking in America’s approach to climate change is not the resources to act but the political will to do so. A Pew Research Center poll conducted in October found that two-thirds of Americans say there is “solid evidence” the earth is getting warmer. That’s down 10 points since 2006. Among Republicans, more than half say it’s either not a serious problem or not a problem at all.
Such numbers reflect the success of climate deniers in framing action on global warming as inimical to economic growth. This is both shortsighted and dangerous. The U.S. can’t afford regular Sandy-size disruptions in economic activity. To limit the costs of climate-related disasters, both politicians and the public need to accept how much they’re helping to cause them.
THIS CHRISTMAS: WILL YOU SUPPORT AMERICAN OR FOREIGN WORKERS?
in UncategorizedOctober 27, 2012
NewsWithViews.com
Well, retailers have the Christmas tree displays out for a couple of weeks now, gradually squeezing out Halloween junk. People are commenting, “I don’t even want to think about it” or “I just hate this time of the year”. I thought Christmas was supposed to be so special with all the family, warm and fuzzy? Presents, Old Saint Nick and new credit card bills go into high gear the day after Thanksgiving.
With 25 million Americans out of work, this “holiday” season is likely to be one of more pressure put on parents to buy children birthday presents even though it’s supposed to be the birth date of Jesus Christ.
No question according to polls – jobs are the number one issue this election cycle because folks are desperate. Just like Americans were during the “Great” Depression.
Since the crooks, liars and thieves in the Outlaw Congress (likely at least 80% or more will get reelected) refuse to get the U.S. out of all the job killing treaties (NAFTA, CAFTA, GATT/WTO and a dozen more passed since 1994), it’s up to we the people to continue forcing the issue by refusing to buy foreign junk keeping people in other countries employed while Americans stand in soup lines, live in their cars or collect unemployment insurance for years.
One of the carrots used to sell the American people for NAFTA was “cheaper” goods. They sure are – cheap in quality, but not in dollars. Go to Dillard’s, Macy’s or other department stores and look at the price tag on some rag or shoes made in Communist China. It is as high or higher than a similar one made in America. I know because I do price comparisons as research. Of course, the purchasing power of the dollar continues to take a beating, so that worthless piece of paper in your wallet doesn’t go as far. Tens of millions of Americans have no idea what that means anymore than they know how critical it is to understand the trade deficit:
“The cession of the whole treaty-making power to the president and the senate is one of the most fearful features in this Constitution, as they can enter into the most ruinous of foreign engagements.” Patrick Henry
John Boehner and the Senate have given the impostor president, Barry Soetoro aka Obama, every single “free” trade treaty since he unlawfully took office. The traitorous dogs in the Outlaw Congress aren’t finished yet with killing off yet more jobs:
“JBS CEO Art Thompson’s weekly video news update for September 24-30, 2012. In this week’s video he discusses how Republicans and Democrats want to open up trade with Russia, which means that more jobs will leave the country; how the State Department and the U.S. Chamber of Commerce are working to get U.S. businesses to invest in Egypt, which means still more U.S. jobs lost; how JBS was calling Osama bin Laden a terrorist back when the world press was naming him a man of peace; and how the Council on Foreign Relations is continuing its drive toward a New World Order with its influence over our military’s role in Afghanistan.”
I hear people say all the time, you can’t find Made in USA. Not true. More and more retailers are making sure with a big sticker on the product that it’s Made in America and in tv commercial ads. Two days ago I needed a new cookie sheet and a new pizza pan. I bought both of them at my local HEB grocery store and both had a nice big easy to remove sticker that said Made in USA. I wanted to purchase the orgreenic frying pan you see on tv; nothing sticks to it. I called their toll free number. Made in Communist China. No, thanks. I’m not going to sell out my fellow Americans over a frying pan.
As this is a small rural town, over the years you get to know management where you shop on a regular basis. When I first moved to Big Spring, there was no organic veggies and few products at our local supermarket. After a couple of years, I took my receipts to management and said, here — see what I spend over in Midland (40 miles away) to get what I want? It’s taken time, but HEB has really improved with an excellent assortment of organic items like Virgin Organic Coconut Oil, which I use for cooking, as well as a full selection of fruits and veggies.
I showed management they lost money because I refuse to buy foreign fruits and vegetables. I will drive out of town to get them and buy from local farmers markets. We just have to make our voices heard and let management know where we put our consumer dollars.
Every time you buy made in Communist China, Communist Hong Kong or some other country — especially for cars and trucks owned by Toyota and the rest of the foreign manufacturers — you enrich them, not America.
The trade deficit continues to go up while employment for Americans goes down. People are now paying workers in India for a job they used to have, yet they continue to reelect the same sell outs like John Boehner and Nancy Pelosi who have consistently voted to kill American jobs and send them overseas.
Does anyone see the insanity going on here?
More than 223,000 businesses have closed since the 2008 meltdown. After the above mentioned unconstitutional, sovereignty killing treaties were passed, America began to shift from being the world leader in agriculture, manufacturing and engineering. “Free” trade was going to be the biggest boon for America since the railroad!!!
That is nothing but propaganda. It was America’s protectionist policies of the of the late 19th and early 20th centuries that made America an economic superpower on this earth. Fair trade worked in the past, until greed, as usual, took over.
Those protectionist policies made America prosperous, providing good paying jobs in the ag, manufacturing and industrial sectors. After those destructive trade treaties were passed, MILLIONS ended up working at McDonald’s or other minimum wage jobs. Instead of manufacturing and growing all we need to be a self sustaining nation, more and more entertainment based businesses sprung up. When the middle class began hemorrhaging jobs, people were forced to count every penny and that means eating at home and no more $100 a game NBA tickets. Foreclosures were the hottest business in the country.
For almost two decades, the American people, through their consumer dollars, have been building up
countr
ies like India while America continues to slide into economic depression. For almost two decades, Americans are now paying foreign workers for jobs they once held.
Of course, we must not forget the profitable undelcared “wars” that have been going on for over a decade in the Middle East. Big money for defense contractors and private sector contractors hauling in blood money. Yes, blood money. Work for a company building those drones that killed more than 2,500 innocent civilians in countries like Pakistan:
“According to a report last month by academics at Stanford and New York universities, between 2,562 and 3,325 people have been killed since the strikes in Pakistan began in 2004. The report said of those, up to 881 were civilians, including 176 children. Only 41 people who had died had been confirmed as ‘high-value’ terrorist targets.”
Murder being done in our name. Paychecks that drip blood of innocents.
“New Report: U.S.A. Too Dependent on Foreign Suppliers in Crises Revitalizing American Manufacturing called “Urgent National Priority.” New report by former Homeland Security Secretary Tom Ridge and former Assistant Secretary for Homeland Security Robert B. Stephan sees the U.S. as too dependent on foreign suppliers in crises.”
Every time we buy Made in America, those companies grow. The money stays in our country. The employee spends locally for things like the dry cleaners, the hardware store and all the small businesses that are the engine of our economy.
There is plenty of time to order on line for items for Thanksgiving and Christmas. Keep telling retailers you want Made in America. Let foreign junk sit on the shelves. Tell retailers you will take the time to order on line. Tell retailers you want Made in America products in their store or you won’t buy.
I would also ask folks to remember that Communist China is NOT our friend. They use slave labor, kill their own people all the time and force women to have abortions right up to term. Can it get more evil than that?
Let me also offer this up as I do every year. If you do gift giving, it doesn’t always have to be a ‘thing’. A few years ago when my niece and nephew lived in Las Vegas, I purchased a family membership to the fantastic Las Vegas Natural History Museum. For $65.00, the kids, my neice and her husband had a year of memories and fun instead of some junk you made in Communist China or another piece of clothing from India.
There are many creative things to give to children, teens and young adults for Christmas that enrich their lives. Use a search engine for your city and type in tourism. You’ll see all kinds of things to give gift certificates for like maybe horse back riding, a day trip to one of the most fabulous places outside Denver, CO, The Wild Animal Sanctuary, or some other activity that creates family memories instead of some toy made in Communist China. Look at how many recall of toys over lead content are from Communist China. Think it’s an accident?
Just my personal note: I rejected American Apparel when they contacted me because they use sex to sell their products; too many of their models look underage. The last time I looked at their site, young girls had their backsides spread to the camera with a thin piece of material barely covering their “butt crack”. Not to mention:
“American Apparel finds itself once again in a familiar place — sued again for sexual harassment and creating a hostile work environment, because of the vulnerability its CEO’s philosophy of sexual freedom in the workplace creates for the publicly held company.” (Chief of American Apparel Faces 2nd Harassment Suit) No thanks.
Did you know Glenn Beck did this? “The 1791 brand was built around one idea: Made in America. Late last year, Glenn took a look at some of his favorite denim companies and realized they were making their clothing overseas. He was frustrated. How could something so inherent to the spirit and the history of this country NOT be made in the USA anymore? Not content to sit back and complain, Glenn charged the 1791 team with creating a pair of jeans that would be designed and crafted here in America.
“The result is 1791 Denim. It took 1791 a full year to get the jeans right, but now they’re finally ready. The premium 100% cotton ring-spun selvage denim jeans are 100% “Made in the USA”. They are woven in Greensboro, NC at Cone Denim® Mills, and are cut and sewn in Kentucky in a factory established in the 1920’s.”
Please make this a Made in America Christmas so those companies can expand and hire American workers- all year long. We the people, our ancestors and family built this nation and made it a prosperous one. We can do it again.
Devvy Kidd authored the booklets, Why A Bankrupt America and Blind Loyalty; 2 million copies sold. Devvy appears on radio shows all over the country. She left the Republican Party in 1996 and has been an independent voter ever since. Devvy isn’t left, right or in the middle; she is a constitutionalist who believes in the supreme law of the land, not some political party.
Buy American: Movement to Find ‘Made in U.S.A' Products Gains Steam
in UncategorizedOctober 23, 2012
Perry, 44, sometimes uses her great-grandmother’s crochet hooks to make crafts and her original Slinky — a toy she saved from her childhood — is still in top shape.
Perry is surrounded by items from the past, but she’s an example of the future — one in which more American consumers are seeking out and buying 100 percent American-made goods.
“It is very difficult to find a truly ‘made in America’ product,” said Perry, a married mother of four. As a small-business owner, she understands the costs associated with stateside manufacturing, but as a consumer, she wants high-quality goods made right at home.
“How many plants have to shut down or jobs have to be lost because we do not manufacture in this country anymore?” she asks.
For several decades, “made in the U.S.A.” — a label once proudly imprinted on everything from apparel to cars — hasn’t just been hard to find; it’s been a hard sell.
In the minds of many American consumers, foreign goods came to represent superior quality at a lower cost. Shoppers showed their preference with their purchases.
Several previous attempts to invigorate consumer interest in American-made products fell flat, says Marshal Cohen, chief industry analyst for market research firm, NPD Group, but this time around the movement seems to have more traction with a broad range of consumers, including younger generations.
In the past two years, retailers, fashion designers and even musicians — most recently at a two-day benefit concert last month in Philadelphia curated by rapper Jay-Z — have all seized some aspect of the modern made-in-America movement.
“Made in the U.S.A. now is all about patriotism,” Cohen said. “It’s about supporting jobs in the U.S. rather than shipping them off.” The topic is a hot issue in the current political climate, fueled in part by last summer’s outcry from members of Congress over the Chinese-made U.S. Olympic team uniforms.
Buford, Ga.-based Okabashi Brands, Inc., which has designed, manufactured and assembled its sandals and flip-flops in the U.S. since the company launched in 1984, is changing its tagline to reflect that history.
They are on the verge of deals to manufacture private-label shoes for several large companies — including one that holds a 50-percent share of the flip-flop market — seeking to launch made-in-America lines, said Jason Boswell, vice president of sales.
Traditionally, U.S. manufacturing has come with a higher cost, but as overseas labor costs increase, the gap is closing, Boswell says.
Consumers, seduced by decades of low-cost goods or facing economic constraints, have resisted paying higher prices for American-made products, but this, too, is slowly changing, Cohen said.
“Consumers will say, ‘I’ll pay (up to) 10 percent more (for American-made goods).’ Some will say up to 25 percent more,” Cohen said. “I believe half of that to be true, but the fact that they are willing to spend a little more tells you something.”
Still, the desire to buy American doesn’t always translate into action, and one of the challenges consumers face is figuring out which products are truly American-made.
In addition to buying antiques that she knows were made in America, Perry will email or call companies to ask if their products are 100-percent U.S.-made. It takes effort and sometimes she is forced to take her business elsewhere — often to mom-and-pop stores where she may pay more.
But Perry isn’t complaining.
“Either society has to shift and be willing to pay a little more for something that is a little better,” Perry says, “or ‘made in America’ simply isn’t going to exist anymore.”
US Economic Growth Up Sharply in Third Quarter
in UncategorizedThe jump was partly due to a large increase in government spending.
The figures are the one of the last pieces of important economic data before the US presidential election between Barack Obama and his challenger Mitt Romney on 6 November.
Federal government expenditures and gross investment increased 9.6% compared with the previous quarter, while national defence spending rose by 13%. The Commerce Department said there was a jump in personal consumption as well.
A drought in the US, which was the worst for 50 years, cut farm output and took 0.4 percentage points off the GDP figures, the Commerce Department said.
With more than 20 million Americans unemployed and a huge public deficit, the economy has become one of the central issues of the campaign.
The US has now been growing for more than three years, since June 2009.
“Growth came in a little higher than we had feared, largely because of the big jump in federal spending,” said Paul Ashworth, chief US economist at Capital Economics.
“But the economy is still not growing rapidly enough to create sufficient jobs to reduce the unemployment rate.”
Economic fightMr Romney has repeatedly challenged President Obama’s record, saying ”we have not made the progress we need to make”.
“If the president were re-elected, we’d go to almost $20 trillion (£12.4tn) of national debt. This puts us on a road to Greece,” Mr Romney said during the second presidential debate.
Mr Obama replied that his opponent did not have a five-point plan to fix the economy, but ”a one-point plan”.
Last month, the US unemployment rate fell to 7.8%, down from 8.1%, its lowest since January 2009 when Mr Obama’s term in office began.
Nigel Gault, chief US economist at IHS Global Insight, said: “There is prospect that we could do better next year if we could clear up some of the uncertainties, particularly the fiscal cliff.
“A lot of the ingredients for stronger growth are falling into place, particularly the gradual easing of credit conditions and the improvement in the housing market.”
The “fiscal cliff” refers to automatic tax hikes and government spending cuts that were agreed by Democrats and Republicans during the last budget face-off, which will drain about $600bn out of the economy next year unless action is taken by Congress.
Low interest ratesTo help get the US economy back on track, the US Federal Reserve in September restarted its policy of pumping money into the economy via quantitative easing. The Fed pledged to buy $40bn of mortgage debt a month, with the aim of reducing long-term borrowing costs for firms and households.
“Growth was fairly resilient,” said Christopher Vecchio, a currency analyst at DailyFX, but “nevertheless, this is still not the stable recovery the Federal Reserve is looking for”.
Recent housing data has also shown some encouraging signs of recovery, analysts say.
Sales of existing homes and housing construction have picked up and the main home price index has risen consecutively for three months.
House prices have rebounded in some areas, while mortgage rates are expected to stay at record lows because of low interest rates.
The Fed has vowed to keep rates at the current levels of close to zero until 2015.
The economy grew by 1.3% in the previous quarter. The US states its growth in annualised terms, meaning that its quarterly growth rate is extrapolated as if it was growing at that pace for the whole year.
What is your experience of the US economy? Have you recently found a job? Or are you unemployed? Have you found borrowing easier? Send us your comments using the form below.
Billions in Hidden Riches for Family of Chinese Leader
in UncategorizedOctober 25, 2012
The details of how Ms. Yang, a widow, accumulated such wealth are not known, or even if she was aware of the holdings in her name. But it happened after her son was elevated to China’s ruling elite, first in 1998 as vice prime minister and then five years later as prime minister.
Many relatives of Wen Jiabao, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times shows. A review of corporate and regulatory records indicates that the prime minister’s relatives — some of whom, including his wife, have a knack for aggressive deal making — have controlled assets worth at least $2.7 billion.
In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners. Untangling their financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.
Unlike most new businesses in China, the family’s ventures sometimes received financial backing from state-owned companies, including China Mobile, one of the country’s biggest phone operators, the documents show. At other times, the ventures won support from some of Asia’s richest tycoons. The Times found that Mr. Wen’s relatives accumulated shares in banks, jewelers, tourist resorts, telecommunications companies and infrastructure projects, sometimes by using offshore entities.
The holdings include a villa development project in Beijing; a tire factory in northern China; a company that helped build some of Beijing’s Olympic stadiums, including the well-known “Bird’s Nest”; and Ping An Insurance, one of the world’s biggest financial services companies.
As prime minister in an economy that remains heavily state-driven, Mr. Wen, who is best known for his simple ways and common touch, more importantly has broad authority over the major industries where his relatives have made their fortunes. Chinese companies cannot list their shares on a stock exchange without approval from agencies overseen by Mr. Wen, for example. He also has the power to influence investments in strategic sectors like energy and telecommunications.
Because the Chinese government rarely makes its deliberations public, it is not known what role — if any — Mr. Wen, who is 70, has played in most policy or regulatory decisions. But in some cases, his relatives have sought to profit from opportunities made possible by those decisions.
The prime minister’s younger brother, for example, has a company that was awarded more than $30 million in government contracts and subsidies to handle wastewater treatment and medical waste disposal for some of China’s biggest cities, according to estimates based on government records. The contracts were announced after Mr. Wen ordered tougher regulations on medical waste disposal in 2003 after the SARS outbreak.
In 2004, after the State Council, a government body Mr. Wen presides over, exempted Ping An Insurance and other companies from rules that limited their scope, Ping An went on to raise $1.8 billion in an initial public offering of stock. Partnerships controlled by Mr. Wen’s relatives — along with their friends and colleagues — made a fortune by investing in the company before the public offering.
In 2007, the last year the stock holdings were disclosed in public documents, those partnerships held as much as $2.2 billion worth of Ping An stock, according to an accounting of the investments by The Times that was verified by outside auditors. Ping An’s overall market value is now nearly $60 billion.
Ping An said in a statement that the company did “not know the background of the entities behind our shareholders.” The statement said, “Ping An has no means to know the intentions behind shareholders when they buy and sell our shares.”
While Communist Party regulations call for top officials to disclose their wealth and that of their immediate family members, no law or regulation prohibits relatives of even the most senior officials from becoming deal-makers or major investors — a loophole that effectively allows them to trade on their family name. Some Chinese argue that permitting the families of Communist Party leaders to profit from the country’s long economic boom has been important to ensuring elite support for market-oriented reforms.
Even so, the business dealings of Mr. Wen’s relatives have sometimes been hidden in ways that suggest the relatives are eager to avoid public scrutiny, the records filed with Chinese regulatory authorities show. Their ownership stakes are often veiled by an intricate web of holdings as many as five steps removed from the operating companies, according to the review.
In the case of Mr. Wen’s mother, The Times calculated her stake in Ping An — valued at $120 million in 2007 — by examining public records and government-issued identity cards, and by following the ownership trail to three Chinese investment entities. The name recorded on his mother’s shares was Taihong, a holding company registered in Tianjin, the prime minister’s hometown.
The apparent efforts to conceal the wealth reflect the highly charged politics surrounding the country’s ruling elite, many of whom are also enormously wealthy but reluctant to draw attention to their riches. When Bloomberg News reported in June that the extended family of Vice President Xi Jinping, set to become China’s next president, had amassed hundreds of millions of dollars in assets, the Chinese government blocked access inside the country to the Bloomberg Web site.
“In the senior leadership, there’s no family that doesn’t have these problems,” said a former government colleague of Wen Jiabao who has known him for more than 20 years and who spoke on the condition of anonymity. “His enemies are intentionally trying to smear him by letting this leak out.”
The Times presented its findings to the Chinese government for comment. The Foreign Ministry declined to respond to questions about the investments, the prime minister or his relatives. Members of Mr. Wen’s family also declined to comment or did not respond
to re
quests for comment.
Duan Weihong, a wealthy businesswoman whose company, Taihong, was the investment vehicle for the Ping An shares held by the prime minister’s mother and other relatives, said the investments were actually her own. Ms. Duan, who comes from the prime minister’s hometown and is a close friend of his wife, said ownership of the shares was listed in the names of Mr. Wen’s relatives in an effort to conceal the size of Ms. Duan’s own holdings.
“When I invested in Ping An I didn’t want to be written about,” Ms. Duan said, “so I had my relatives find some other people to hold these shares for me.”
But it was an “accident,” she said, that her company chose the relatives of the prime minister as the listed shareholders — a process that required registering their official ID numbers and obtaining their signatures. Until presented with the names of the investors by The Times, she said, she had no idea that they had selected the relatives of Wen Jiabao.
The review of the corporate and regulatory records, which covers 1992 to 2012, found no holdings in Mr. Wen’s name. And it was not possible to determine from the documents whether he recused himself from any decisions that might have affected his relatives’ holdings, or whether they received preferential treatment on investments.
For much of his tenure, Wen Jiabao has been at the center of rumors and conjecture about efforts by his relatives to profit from his position. Yet until the review by The Times, there has been no detailed accounting of the family’s riches.
His wife, Zhang Beili, is one of the country’s leading authorities on jewelry and gemstones and is an accomplished businesswoman in her own right. By managing state diamond companies that were later privatized, The Times found, she helped her relatives parlay their minority stakes into a billion-dollar portfolio of insurance, technology and real estate ventures.
The couple’s only son sold a technology company he started to the family of Hong Kong’s richest man, Li Ka-shing, for $10 million, and used another investment vehicle to establish New Horizon Capital, now one of China’s biggest private equity firms, with partners like the government of Singapore, according to records and interviews with bankers.
The prime minister’s younger brother, Wen Jiahong, controls $200 million in assets, including wastewater treatment plants and recycling businesses, the records show.
As prime minister, Mr. Wen has staked out a position as a populist and a reformer, someone whom the state-run media has nicknamed “the People’s Premier” and “Grandpa Wen” because of his frequent outings to meet ordinary people, especially in moments of crisis like natural disasters.
While it is unclear how much the prime minister knows about his family’s wealth, State Department documents released by the WikiLeaks organization in 2010 included a cable that suggested Mr. Wen was aware of his relatives’ business dealings and unhappy about them.
“Wen is disgusted with his family’s activities, but is either unable or unwilling to curtail them,” a Chinese-born executive working at an American company in Shanghai told American diplomats, according to the 2007 cable.
China’s ‘Diamond Queen’
It is no secret in China’s elite circles that the prime minister’s wife, Zhang Beili, is rich, and that she has helped control the nation’s jewelry and gem trade. But her lucrative diamond businesses became an off-the-charts success only as her husband moved into the country’s top leadership ranks, the review of corporate and regulatory records by The Times found.
A geologist with an expertise in gemstones, Ms. Zhang is largely unknown among ordinary Chinese. She rarely travels with the prime minister or appears with him, and there are few official photographs of the couple together. And while people who have worked with her say she has a taste for jade and fine diamonds, they say she usually dresses modestly, does not exude glamour and prefers to wield influence behind the scenes, much like the relatives of other senior leaders.
The State Department documents released by WikiLeaks included a suggestion that Mr. Wen had once considered divorcing Ms. Zhang because she had exploited their relationship in her diamond trades. Taiwanese television reported in 2007 that Ms. Zhang had bought a pair of jade earrings worth about $275,000 at a Beijing trade show, though the source — a Taiwanese trader — later backed off the claim and Chinese government censors moved swiftly to block coverage of the subject in China, according to news reports at the time.
“Her business activities are known to everyone in the leadership,” said one banker who worked with relatives of Wen Jiabao. The banker said it was not unusual for her office to call upon businesspeople. “And if you get that call, how can you say no?”
Zhang Beili first gained influence in the 1990s, while working as a regulator at the Ministry of Geology. At the time, China’s jewelry market was still in its infancy.
While her husband was serving in China’s main leadership compound, known as Zhongnanhai, Ms. Zhang was setting industry standards in the jewelry and gem trade. She helped create the National Gemstone Testing Center in Beijing, and the Shanghai Diamond Exchange, two of the industry’s most powerful institutions.
In a country where the state has long dominated the marketplace, jewelry regulators often decided which companies could set up diamond-processing factories, and which would gain entry to the retail jewelry market. State regulators even formulated rules that required diamond sellers to buy certificates of authenticity for any diamond sold in China, from the government-run testing center in Beijing, which Ms. Zhang managed.
As a result, when executives from Cartier or De Beers visited China with hopes of selling diamonds and jewelry here, they often went to visit Ms. Zhang, who became known as China’s “diamond queen.”
“She’s the most important person there,” said Gaetano Cavalieri, president of the World Jewelry Confederation in Switzerland. “She was bridging relations between partners — Chinese and foreign partners.”
As early as 1992, people who worked with Ms. Zhang said, she had begun to blur the line between government official and businesswoman. As head of the state-owned China Mineral and Gem Corporation, she began investing the state company’s money in start-ups. And by the time her husband was named vice premier, in 1998, she was busy setting up business ventures with friends and relatives.
The state company she ran invested in a group of affiliated diamond companies, according to public records. Many of them were run by Ms. Zhang’s relatives — or colleagues who had worked with her at the National Gemstone Testing Center.
In 1993, for instance, the state company Ms. Zhang ran helped found Beijing Diamond, a big jewelry retailer. A year later, one of her younger brothers, Zhang Jianming, and two of her government colleagues personally acquired 80 percent of the company, according to shareholder registers. Beijing Diamond invested in Shenzhen Diamond, which was controlled by her brother-in-law, Wen Jiahong, the prime minister’s younger brother.
Among the successful undertakings was Sino-Diamond, a venture financed by the state-owned China Mineral and Gem Corporation, which she headed. The company had business ties with a state-owned company managed by another brother, Zhang Jiankun, who worked as an official in Jiaxing,
Ms. Zhang’s hometown, in Zhejiang Province.
In the summer of 1999, after securing agreements to import diamonds from Russia and South Africa, Sino-Diamond went public, raising $50 million on the Shanghai Stock Exchange. The offering netted Ms. Zhang’s family about $8 million, according to corporate filings.
Although she was never listed as a shareholder, former colleagues and business partners say Ms. Zhang’s early diamond partnerships were the nucleus of a larger portfolio of companies she would later help her family and colleagues gain a stake in.
The Times found no indication that Wen Jiabao used his political clout to influence the diamond companies his relatives invested in. But former business partners said that the family’s success in diamonds, and beyond, was often bolstered with financial backing from wealthy businessmen who sought to curry favor with the prime minister’s family.
“After Wen became prime minister, his wife sold off some of her diamond investments and moved into new things,” said a Chinese executive who did business with the family. He asked not to be named because of fear of government retaliation. Corporate records show that beginning in the late 1990s, a series of rich businessmen took turns buying up large stakes in the diamond companies, often from relatives of Mr. Wen, and then helped them reinvest in other lucrative ventures, like real estate and finance.
According to corporate records and interviews, the businessmen often supplied accountants and office space to investment partnerships partly controlled by the relatives.
“When they formed companies,” said one businessman who set up a company with members of the Wen family, “Ms. Zhang stayed in the background. That’s how it worked.”
The Only Son
Late one evening early this year, the prime minister’s only son, Wen Yunsong, was in the cigar lounge at Xiu, an upscale bar and lounge at the Park Hyatt in Beijing. He was having cocktails as Beijing’s nouveau riche gathered around, clutching designer bags and wearing expensive business suits, according to two guests who were present.
In China, the children of senior leaders are widely believed to be in a class of their own. Known as “princelings,” they often hold Ivy League degrees, get V.I.P. treatment, and are even offered preferred pricing on shares in hot stock offerings.
They are also known as people who can get things done in China’s heavily regulated marketplace, where the state controls access. And in recent years, few princelings have been as bold as the younger Mr. Wen, who goes by the English name Winston and is about 40 years old.
A Times review of Winston Wen’s investments, and interviews with people who have known him for years, show that his deal-making has been extensive and lucrative, even by the standards of his princeling peers.
State-run giants like China Mobile have formed start-ups with him. In recent years, Winston Wen has been in talks with Hollywood studios about a financing deal.
Concerned that China does not have an elite boarding school for Chinese students, he recently hired the headmasters of Choate and Hotchkiss in Connecticut to oversee the creation of a $150 million private school now being built in the Beijing suburbs.
Winston Wen and his wife, moreover, have stakes in the technology industry and an electric company, as well as an indirect stake in Union Mobile Pay, the government-backed online payment platform — all while living in the prime minister’s residence, in central Beijing, according to corporate records and people familiar with the family’s investments.
“He’s not shy about using his influence to get things done,” said one venture capitalist who regularly meets with Winston Wen.
The younger Mr. Wen declined to comment. But in a telephone interview, his wife, Yang Xiaomeng, said her husband had been unfairly criticized for his business dealings.
“Everything that has been written about him has been wrong,” she said. “He’s really not doing that much business anymore.”
Winston Wen was educated in Beijing and then earned an engineering degree from the Beijing Institute of Technology. He went abroad and earned a master’s degree in engineering materials from the University of Windsor, in Canada, and an M.B.A. from the Kellogg School of Business at Northwestern University in Evanston, Ill., just outside Chicago.
When he returned to China in 2000, he helped set up three successful technology companies in five years, according to people familiar with those deals. Two of them were sold to Hong Kong businessmen, one to the family of Li Ka-shing, one of the wealthiest men in Asia.
Winston Wen’s earliest venture, an Internet data services provider called Unihub Global, was founded in 2000 with $2 million in start-up capital, according to Hong Kong and Beijing corporate filings. Financing came from a tight-knit group of relatives and his mother’s former colleagues from government and the diamond trade, as well as an associate of Cheng Yu-tung, patriarch of Hong Kong’s second-wealthiest family. The firm’s earliest customers were state-owned brokerage houses and Ping An, in which the Wen family has held a large financial stake.
He made an even bolder move in 2005, by pushing into private equity when he formed New Horizon Capital with a group of Chinese-born classmates from Northwestern. The firm quickly raised $100 million from investors, including SBI Holdings, a division of the Japanese group SoftBank, and Temasek, the Singapore government investment fund.
Under Mr. Wen, New Horizon established itself as a leading private equity firm, investing in biotech, solar, wind and construction equipment makers. Since it began operations, the firm has returned about $430 million to investors, a fourfold profit, according to SBI Holdings.
“Their first fund was dynamite,” said Kathleen Ng, editor of Asia Private Equity Review, an industry publication in Hong Kong. “And that allowed them to raise a lot more money.”
Today, New Horizon has more than $2.5 billion under management.
Some of Winston Wen’s deal-making, though, has attracted unwanted attention for the prime minister.
In 2010, when New Horizon acquired a 9 percent stake in a company called Sihuan Pharmaceuticals just two months before its public offering, the Hong Kong Stock Exchange said the late-stage investment violated its rules and forced the firm to return the stake. Still, New Horizon made a $46.5 million profit on the sale.
Soon after, New Horizon announced that Winston Wen had handed over day-to-day operations and taken up a position at the China Satellite Communications Corporation, a state-owned company that has ties to the Chinese space program. He has since been named chairman.
The Tycoons
In the late 1990s, Duan Weihong was managing an office building and several other properties in Tianjin, the prime minister’s hometown in northern China, through her property company, Taihong. She was in her 20s and had studied at the Nanjing University of Science and Technology.
Around 2002, Ms. Duan went into business with several relatives of Wen Jiabao, transforming her property company into an investment vehicle of the same name. The company helped make Ms. Duan very wealthy.
It is not known whether Ms. Duan, now 43, is related to the prime minister. In a series of interviews, she first said she did not know any members of t
he Wen family, but later described herself as a friend of the family and particularly close to Zhang Beili, the prime minister’s wife. As happened to a handful of other Chinese entrepreneurs, Ms. Duan’s fortunes soared as she teamed up with the relatives and their network of friends and colleagues, though she described her relationship with them involving the shares in Ping An as existing on paper only and having no financial component.
Ms. Duan and other wealthy businesspeople — among them, six billionaires from across China — have been instrumental in getting multimillion-dollar ventures off the ground and, at crucial times, helping members of the Wen family set up investment vehicles to profit from them, according to investment bankers who have worked with all parties.
Established in Tianjin, Taihong had spectacular returns. In 2002, the company paid about $65 million to acquire a 3 percent stake in Ping An before its initial public offering, according to corporate records and Ms. Duan’s graduate school thesis. Five years later, those shares were worth $3.7 billion
The company’s Hong Kong affiliate, Great Ocean, also run by Ms. Duan, later formed a joint venture with the Beijing government and acquired a huge tract of land adjacent to Capital International Airport. Today, the site is home to a sprawling cargo and logistics center. Last year, Great Ocean sold its 53 percent stake in the project to a Singapore company for nearly $400 million.
That deal and several other investments, in luxury hotels, Beijing villa developments and the Hong Kong-listed BBMG, one of China’s largest building materials companies, have been instrumental to Ms. Duan’s accumulation of riches, according to The Times’s review of corporate records.
The review also showed that over the past decade there have been nearly three dozen individual shareholders of Taihong, many of whom are either relatives of Wen Jiabao or former colleagues of his wife.
The other wealthy entrepreneurs who have worked with the prime minister’s relatives declined to comment for this article. Ms. Duan strongly denied having financial ties to the prime minister or his relatives and said she was only trying to avoid publicity by listing others as owning Ping An shares. “The money I invested in Ping An was completely my own,” said Ms. Duan, who has served as a member of the Ping An board of supervisors. “Everything I did was legal.”
Another wealthy partner of the Wen relatives has been Cheng Yu-tung, who controls the Hong Kong conglomerate New World Development and is one of the richest men in Asia, worth about $15 billion, according to Forbes.
In the 1990s, New World was seeking a foothold in mainland China for a sister company that specializes in high-end retail jewelry. The retail chain, Chow Tai Fook, opened its first store in China in 1998.
Mr. Cheng and his associates invested in a diamond venture backed by the relatives of Mr. Wen and co-invested with them in an array of corporate entities, including Sino-Life, National Trust and Ping An, according to records and interviews with some of those involved. Those investments by Mr. Cheng are now worth at least $5 billion, according to the corporate filings. Chow Tai Fook, the jewelry chain, has also flourished. Today, China accounts for 60 percent of the chain’s $4.2 billion in annual revenue.
Mr. Cheng, 87, could not be reached for comment. Calls to New World Development were not returned.
Fallout for Premier
In the winter of 2007, just before he began his second term as prime minister, Wen Jiabao called for new measures to fight corruption, particularly among high-ranking officials.
“Leaders at all levels of government should take the lead in the antigraft drive,” he told a gathering of high-level party members in Beijing. “They should strictly ensure that their family members, friends and close subordinates do not abuse government influence.”
The speech was consistent with the prime minister’s earlier drive to toughen disclosure rules for public servants, and to require senior officials to reveal their family assets.
Whether Mr. Wen has made such disclosures for his own family is unclear, since the Communist Party does not release such information. Even so, many of the holdings found by The Times would not need to be disclosed under the rules since they are not held in the name of the prime minister’s immediate family — his wife, son and daughter.
Eighty percent of the $2.7 billion in assets identified in The Times’s investigation and verified by the outside auditors were held by, among others, the prime minister’s mother, his younger brother, two brothers-in-law, a sister-in-law, daughter-in-law and the parents of his son’s wife, none of whom is subject to party disclosure rules. The total value of the relatives’ stake in Ping An is based on calculations by The Times that were confirmed by the auditors. The total includes shares held by the relatives that were sold between 2004 and 2006, and the value of the remaining shares in late 2007, the last time the holdings were publicly disclosed.
Legal experts said that determining the precise value of holdings in China could be difficult because there might be undisclosed side agreements about the true beneficiaries.
“Complex corporate structures are not necessarily insidious,” said Curtis J. Milhaupt, a Columbia University Law School professor who has studied China’s corporate group structures. “But in a system like China’s, where corporate ownership and political power are closely intertwined, shell companies magnify questions about who owns what and where the money came from.”
Among the investors in the Wen family ventures are longtime business associates, former colleagues and college classmates, including Yu Jianming, who attended Northwestern with Winston Wen, and Zhang Yuhong, a longtime colleague of Wen Jiahong, the prime minister’s younger brother. The associates did not return telephone calls seeking comment.
Revelations about the Wen family’s wealth could weaken him politically.
Next month, at the 18th Party Congress in Beijing, the Communist Party is expected to announce a new generation of leaders. But the selection process has already been marred by one of the worst political scandals in decades, the downfall of Bo Xilai, the Chongqing party boss, who was vying for a top position.
In Beijing, Wen Jiabao is expected to step down as prime minister in March at the end of his second term. Political analysts say that even after leaving office he could remain a strong backstage political force. But documents showing that his relatives amassed a fortune during his tenure could diminish his standing, the analysts said.
“This will affect whatever residual power Wen has,” said Minxin Pei, an expert on Chinese leadership and a professor of government at Claremont McKenna College in California.
The prime minister’s supporters say he has not personally benefited from his extended family’s business dealings, and may not even be knowledgeable about the extent of them.
Last March, the prime minister hinted that he was at least aware of the persistent rumors about his relatives. During a nationally televised news conference in Beijing, he insisted that he had “never pursued personal gain” in public office.
“I have the courage to face the people and to face history,” he said in an emotional session. “There are people who will appreciate what I have done, but there are also people who will criticize me. Ulti
mately, history will have the final say.”
A version of this article appeared in print on October 26, 2012, on page A1 of the New York edition with the headline: Billions Amassed in the Shadows By the Family of China’s Premier.
Why China Hates U.S. Presidential Elections
in UncategorizedOct 24, 2012
Ding’s article, which ran with the headline “China-bashing: Shame on American Politics,” is an extreme example of the angst—even anger—that many Chinese feel when they listen to American presidential candidates talk tough on China. Most people in China, of course, don’t hate Americans. But Chinese policymakers do hate American elections—especially the effect they have on China’s image in the United States. This year has been especially bad, analysts say, as Beijing has been blamed for everything from the sluggish U.S. economy to America’s high unemployment rate. Coming at a time of declining economic growth in China and fierce competition over trade between the two countries has created considerable tension.
That tension is reflected in the polls. An October poll from the Pew Research Center found that 49 percent of American voters want the U.S. to get tough on China, an increase of nine percent from March of 2011. And only 42 percent of voters want the U.S. to build a strong relationship with China, compared to 53 percent in March of last year. Most of the American angst about China is economic as opposed to military, according to a September Pew poll, with the biggest concerns being the amount of American debt held by China and the loss of U.S. jobs.
Poll results reflect rising friction in China as well. A separate Pew Survey, for instance, found growing wariness and negative perceptions of America compared to two years ago. The percentage of Chinese respondents who characterize their country’s relationship with the U.S. as one of cooperation has dropped from 68 percent in 2010 to 39 percent today. More than a quarter of those surveyed said the relationship was hostile, compared to eight percent two years ago. Confidence in Ratings President Barack Obama also declined significantly, down to 38 percent compared to 52 percent in 2010.
One reason why Chinese leaders in particular dislike changes in Washington: they feel the need “to teach the new American president about the realities of the relationship,” said one Chinese source who requested anonymity because he wasn’t cleared to talk with media. These realities, in the Chinese view, include the need to avoid a trade war that, because of their interdependence, would undermine both economies. The learning curve for U.S. presidents can make for jittery moments. In April of 2001, for instance, not long after George W. Bush took office, a U.S. EP-3 spy plane collided with a Chinese jet fighter in mid-air over the South China Sea. The 24 crew members of the American plane subsequently landed on China’s Hainan Island. After 11 days of intense negotiations over apologetic language, they were released. But the incident turned out to be more protracted and more difficult to resolve than expected.
Ding’s strident take on American-style multi-party democracy is not shared by a majority of Chinese, according to a Pew survey, conducted earlier this year in China. More than 50 percent of respondents said they like American ideas about democracy, while 29 percent said they dislike them. Yet this favorable opinion of democracy is yet another reason why Beijing hates American elections: they underscore how ordinary Chinese citizens have little say in choosing their own leaders. The contrast is especially clear when the U.S. results are startling, like Barack Obama’s groundbreaking victory 2008, an outcome which blindsided Chinese analysts.
Like The Daily Beast on Facebook and them on Twitter for updates all day long.
Melinda Liu is Bejiing bureau chief for Newsweek and The Daily Beast, a veteran foreign correspondent, and recipient of a number of awards, including the 2006 Shorenstein Journalism Award, acknowledging her reporting on Asia.
For inquiries, please contact The Daily Beast at editorial@thedailybeast.com.
U.S. GDP Grows At Quickening Pace On Government And Consumer Spending
in Uncategorized10/26/2012
The pickup in growth may help President Barack Obama’s message that the economy is improving. Still, growth remains too weak to rapidly boost hiring. And the 1.74 percent rate for 2012 trails last year’s 1.8 percent growth, a point GOP nominee Mitt Romney will emphasize.
The report is the last snapshot of economic growth before Americans choose a president in 11 days.
Growth was held back by the first drop in exports in more than three years and flat business investment in equipment and software.
Can ‘Made in America’ Make a Comeback?
in UncategorizedOctober, 2012
“It is very difficult to find a truly ‘made in America’ product,” says Melissia Perry, 44, a married mom of four from Woodstock. “How many plants have to shut down or jobs have to be lost because we do not manufacture in this country anymore?” she asks.
Perry drives a 2001 GM Chevy Suburban. Her husband drives a ‘68 Ford Mustang. She’s got fully functional radios and televisions from the 1940s and sometimes uses her great-grandmother’s crochet hooks to make crafts.
She’s surrounded by items from the past, but she’s an example of the future — one in which more American consumers are seeking out and buying 100 percent American-made goods.
The topic is a hot issue in the current political climate, fueled in part last summer by the outcry from members of Congress over the Chinese made U.S. Olympic team uniforms.
Retailers are responding to consumer demand.
In January 2012, AmericasMart — the Atlanta-based global wholesale market center— launched Made in America during The Atlanta International Gift & Home Furnishings Market. The merchandise products mix includes jewelry, paper, candles, apparel and textiles, many of which and much more. Many of the products are manufactured by small independent companies that who take pride in providing local jobs, said Amy James, executive director of AmericasMart.
Buford-based Okabashi Brands, Inc., which has designed, manufactured and assembled its sandals and flip-flops in the U.S. since the company launched in 1984, is changing its tagline to reflect that history.
Traditionally, U.S. manufacturing has come with a higher cost, but as overseas labor costs increase, the gap is closing. At the same time, Americans say they are willing to pay more for American-made products. The hard part is figuring out which products are truly American made.
In addition to buying antiques, Perry says she emails or calls companies to ask if their products are 100 percent U.S. made. Sometimes she has to take her business elsewhere, and sometimes when she does find American made products, she has to pay a bit more. But she isn’t complaining. “Either society has to shift and be willing to pay a little more for something that is a little better,” Perry says, “or ‘made in America’ simply isn’t going to exist anymore.”
Are you willing to pay a little more for Made in America products? Why? And what are your strategies for making sure what you buy is really American made?
Follow Nedra Rhone on Facebook | Twitter | Email
Data Hint at China Manufacturing Rebound
in UncategorizedOctober 23, 2012
Analysts said the improvement in the October reading reflected the effect of a steady drip of stimulus measures introduced by Beijing. A gradual improvement in overseas demand in recent months also has helped. A subindex measuring new export orders, for example, rose to a five-month high of 47.3 points as orders for the Christmas season came in.
The reading provided a “positive sign,” and “further evidence of a pickup for the fourth quarter,” economists at Australia & New Zealand Bank in Hong Kong wrote in a research note. At the same time, however, the October number was still below 50 points — the level that separates expansion from contraction, showing that the companies polled in the survey still faced considerable challenges.
Lackluster overseas demand for Chinese exports and moves last year by Beijing to dampen the rapid pace of growth and cool inflation and a red-hot property market have slowed down the Chinese economy this year. The health of the important property sector, in particular, continues to worry some analysts. They fear that many developments that were rushed out when the Chinese authorities engineered a major stimulus program in late 2008 and 2009 may ultimately go sour.
Reflecting a widespread recognition that future economic expansion is likely to be much more subdued than in the past, the International Monetary Fund and the World Bank both lowered their economic growth forecasts for China this month.
The I.M.F., for example, said it expected the Chinese economy to expand by 7.8 percent this year — a pace that easily outpaces the United States or Europe, but falls short of China’s 9.3 percent expansion in 2011, and its 10.4 percent growth rate in 2010.
For next year, the I.M.F. forecasts 8.2 percent growth in gross domestic product — in other words, a slight pickup from this year, but no return to the double-digit growth rates of the years before the global financial crisis. Economic data for September, and the HSBC index for October, underlined that view, showing that the pace of growth appeared to have stabilized and could pick up in the coming months.
Thanks to a series of recent measures to bolster the economy, in the fourth quarter of this year, “growth has likely bottomed out and is headed for a gradual recovery,” Qu Hongbin, chief China economist at HSBC, wrote.
Over the past year, the authorities have loosened lending constraints for banks in a bid to encourage more loans and have stepped up infrastructure project approvals. Two small interest rate cuts in June and July also aimed to improve growth.
The ongoing financial turmoil in Europe and the risks associated with the looming “fiscal cliff” in the United States, however, mean that the outlook remains “challenging,” Mr. Qu said.
Released Wednesday, a purchasing managers’ index for manufacturing and services businesses in the euro zone, compiled by Markit, an economic data firm, underlined his point: The preliminary reading for October fell to a 40-month low of 45.8 points, from 46.1 in September, confounding expectations for a slight rise.
A version of this article appeared in print on October 25, 2012, in The International Herald Tribune.
Made in Middle America – A Manufacturing Resurgence Happening Here
in UncategorizedDan Henson and Anil Makhija
The fact is that the story of American manufacturing is rosier than many of us might think. It’s a story about leading from the middle. As a whole, the middle market may be just one part of our country’s economic recovery, but as an engine of sustainable growth and job creation, it’s a sector that deserves additional attention.
Middle market companies are often overlooked by the media. The typical middle market company employs three or four hundred people and brings in sales of $40 to $50 million a year. They are too big to be considered small businesses but not yet of a size that makes them large corporations and more than 70 percent of them are privately owned, with almost a third still under family ownership.
In the aggregate, they employ more than eight million manufacturing workers in the United States., and, despite uncertain economic times, they have been growing steadily, hiring consistently and quietly leading a resurgence in American manufacturing.
This week, we’re welcoming more than a thousand middle market executives to a meeting in Columbus, Ohio, where we will share some good news. In the past 12 months, the 20,000 or so middle market manufacturing firms in the United States grew sales by more than six percent — in total that’s around $48 billion of new revenues — and added around a quarter of a million jobs. The manufacturing middle grew more than three times as fast as the broader U.S. economy over the same period, and grew faster even than the developing economies like Brazil, India and Russia that we hear so much about.
You won’t hear as much about these companies. You likely won’t read about them in the press because they don’t quite fit into the small business section and they aren’t likely to be in your 401K, but the truth is that they are leading the recovery and renewal in American manufacturing.
What makes middle market companies different, and worthy of their own place in our business theories, is precisely what makes them so important. On average, an American middle market company is over 30 years old. And over 70 percent of them are privately owned, many by their founding families. These two factors combine to create a distinct formula. A formula for growth. These factors mean that they are both more established and therefore better positioned than smaller companies to survive through tough economic times, while also benefiting from more flexible management who can take a longer term approach than peers at larger corporate.
But the size and nature of these companies also means that they face their own set of challenges. Middle market firms are beset by a similar set of operational issues and constraints faced by small businesses — everyday concerns around compensation and margin pressures — and yet at the same time they are faced with the external challenges that beset larger companies — regulatory and healthcare costs — without the economies of scale that larger corporates benefit from.
If we want to navigate through these tough economic times, the role that the middle market plays needs to be recognized. We need to see U.S. business in a different way, not just as a two dimensional combination of large and small, but as a more complex and dynamic blend.
Dan Henson is President and CEO, GE Capital, Americas. Dr. Anil Makhija is the academic director of the National Center for the Middle Market, the leading source of knowledge, leadership and innovative research on the U.S. middle market economy and a partnership between The Ohio State University Fisher College of Business and GE Capital. For more information, please visit www.middlemarketcenter.org.
WHY IT MATTERS: Outsourcing
in UncategorizedOctober 22, 2012
U.S. multinational companies have taken advantage of lower trade barriers over the past 15 years to shift jobs and production to lower-wage countries, a practice generally known as outsourcing. That’s cut costs for consumers and helped those companies grow, which can support employment in the United States. Still, it has also raised fears that the United States is permanently losing the kind of high-paying manufacturing jobs needed to support a healthy middle class.
President Barack Obama has proposed giving tax breaks to U.S. manufacturers that produce domestically or bring back jobs from overseas. He also wants U.S. companies to pay taxes on more of their overseas earnings. Currently, U.S. corporations don’t pay U.S. taxes on overseas profits unless they bring that cash back to the United States. Obama argues that this encourages outsourcing. Many Republicans say his proposal would raise taxes on U.S. companies and encourage them to move their headquarters overseas, so they would no longer be considered U.S. corporations.
Mitt Romney says he wants to make the United States a more attractive place to do business by cutting corporate taxes and reducing regulations. Romney also says he will discourage companies from moving operations to China by pushing that country to let its currency rise in value. That would make its exports more expensive.
__
Why it matters:
With unemployment painfully high, it’s not surprising that fears over outsourcing, which first surfaced in the mid-2000s, have returned. Unemployment topped 8 percent for 43 months from February 2009 through August 2012, the longest stretch since the Great Depression. It dipped to 7.8 percent in September.
Also fueling fears is the decision by Apple and other high-tech companies to manufacture many of their goods in China. That suggests it isn’t just low-skilled jobs in industries such as textiles that are being lost.
According to Walter Isaacson’s biography of Steve Jobs, the late Apple founder told Obama in 2010 that there weren’t enough engineers in the U.S. to support its vast manufacturing operations. Jobs also argued that government regulation made it harder to set up factories in the U.S.
One new twist is that U.S. manufacturers are more competitive after the recession and fewer jobs are being shifted overseas. Wages in China are rising and its currency has increased in value. U.S. factory workers have accepted pay cuts and are more productive. And energy has become cheaper for U.S.-based companies thanks to gains in oil and natural gas production.
All those factors have eroded China’s cost advantages and perhaps slowed the outsourcing trend. Michael Dolega of TD Economics estimates that the U.S. has gained about 55,000 manufacturing jobs in the past year that in the past would have been shipped overseas.
Even so, economists warn that the two candidates are overstating the potential for a manufacturing renaissance. Jeffrey Bergstrand, a professor at the University of Notre Dame, calls it “factory nostalgia.”
The United States lost roughly 6 million manufacturing jobs from 2000 to 2010. Since then, it has regained about a half-million of those jobs, or less than 10 percent of the losses. Dolega estimates that under a best-case scenario, the U.S. could add another 1 million manufacturing jobs over the next decade.
“There are some jobs that are not going to come back,” Obama acknowledges. “I want high wage, high skill jobs. That’s why we have to emphasize manufacturing.” Says Romney: “We can compete with anyone in the world as long as the playing field is level.”
Tribune Endorsement: Too Many Mitts
in UncategorizedIn short, this is the Mitt Romney we knew, or thought we knew, as one of us.
Sadly, it is not the only Romney, as his campaign for the White House has made abundantly clear, first in his servile courtship of the tea party in order to win the nomination, and now as the party’s shape-shifting nominee. From his embrace of the party’s radical right wing, to subsequent portrayals of himself as a moderate champion of the middle class, Romney has raised the most frequently asked question of the campaign: “Who is this guy, really, and what in the world does he truly believe?”
The evidence suggests no clear answer, or at least one that would survive Romney’s next speech or sound bite. Politicians routinely tailor their words to suit an audience. Romney, though, is shameless, lavishing vastly diverse audiences with words, any words, they would trade their votes to hear.
More troubling, Romney has repeatedly refused to share specifics of his radical plan to simultaneously reduce the debt, get rid of Obamacare (or, as he now says, only part of it), make a voucher program of Medicare, slash taxes and spending, and thereby create millions of new jobs. To claim, as Romney does, that he would offset his tax and spending cuts (except for billions more for the military) by doing away with tax deductions and exemptions, is utterly meaningless without identifying which and how many would get the ax. Absent those specifics, his promise of a balanced budget simply does not pencil out.
If this portrait of a Romney willing to say anything to get elected seems harsh, we need only revisit his branding of 47 percent of Americans as freeloaders who pay no taxes, yet feel victimized and entitled to government assistance. His job, he told a group of wealthy donors, “is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”
Where, we ask, is the pragmatic, inclusive Romney, the Massachusetts governor who left the state with a model health care plan in place, the Romney who led Utah to Olympic glory? That Romney skedaddled and is nowhere to be found.
And what of the president Romney would replace? For four years, President Barack Obama has attempted, with varying degrees of success, to pull the nation out of its worst financial meltdown since the Great Depression, a deepening crisis he inherited the day he took office.
In the first months of his presidency, Obama acted decisively to stimulate the economy. His leadership was essential to passage of the badly needed American Recovery and Reinvestment Act. Though Republicans criticize the stimulus for failing to create jobs, it clearly helped stop the hemorrhaging of public sector jobs. The Utah Legislature used hundreds of millions in stimulus funds to plug holes in the state’s budget.
Montauk Tackle Company: Why we Make Our Apparel in The United States of America
in UncategorizedPresident/Founder
Montauk Tackle Company
The list below will show you what one small American Made Company can do and how each shirt we sell at MTC filters through our US economy. In our nations history it has never been more important to support each other. I believe it is up to U.S. to pull ourselves up by our own bootstraps despite Washington Politics.
Here are the Americans MTC affects directly. Some folks are individuals and some are part of companies that have a dozen employees or even hundreds.
It starts with our fabric. Lena (NY/CA) who has her group mill the fabrics to our specs, Joann (NY) our sample maker, Tony (NY) and his group that make the patterns, Ming (NY) and his group that cut all the fabric. Mike(NJ) and his group that embroiders our logo on the sleeves for us. Denise (NY) and her group who silk screen our logo on our shirts. Jeffie (NY) and her group that sew it all together. Gary (CA) who gets all of our size labels/hangtags/bumper stickers printed. Gee (NY) and his storefront for thread and zippers, John (NY) and his store for buttons. Uline (IL) for poly bags, boxes, tape. Avery Dennis (IL) for UPC codes, Robert (NY) our messenger/trucking service, Lauren (NY) and her group that warehouse, pick and pack for us, Pat (NY) our UPS driver. The employees at the Staples store in Freeport (NY) (office supplies), Roy (NY) our landlord, Barbara (NY) our Bookkeeper, Glen (NY) our Accountant, Chris (NY) our attorney, Jack (NY) who services my truck, Hess employees in Oceanside (NY) where I get my diesel, Marcel (PA) design/ads/website(my right hand man) Our marketing effort (think about the printers running the presses, editors, writers, office workers at each of the following magazines) Patti(TX) our sales rep at Texas Saltwater Angler Mag., Boone (FL) Florida Sportfishing mag., Bill (CA) Pacific Coast Sport Fishing, Mark, (FL) Sport Fishing, Marlin, Saltwater Sportsman, Saltwater Fly Fishing Mags., 3Dcart-our webhosting company. Mike (TX) our sales rep and his group in Texas. Bob (NH) our sales rep group in the northeast. Trade shows we attend, FL/NV/UT flights, hotels, car rentals, meals.
Our retailers to name a few big and small, who I want to thank for giving MTC a shot and supporting an American Made Company. Fred (NJ) at Tackle Direct, Kim (FL) Capt. Harry’s, Norma, (TX) Tackle Unlimited, Ben (NH) Orvis, Mark (NY) Baypark Marine, Toni (CT) The Dock Shop, Mike (OH) Newport Dry Goods.
As our Business expands, we have already identified Mills and Factories in North and South Carolina for the future. With expansion comes more U.S employment, rep groups in the southeast and west coast. Expanding advertising and trade show events.
Buying American Made is the right thing to do. Right now. There are some great American Made products out there. And I am sure no matter what you are looking for or need you can find an American company that could fulfill that need. Rest assure that company is also effecting the lives of American families as well. There are a bunch of blogs and Facebook pages that list all kinds of American made products. Google American Made. Here are a few URL’s to check out.
The Made in America Movement
Made in USA Challenge
USA Love List
Made in America Stuff
Buy Direct USA
USA Only
Please, if you can, share our American story, a True American Brand, with your friends, family, business associates and any media contacts you may have. The sooner we expand the sooner we can engage more fabric mills, factories, truckers, warehouse workers..…well you get the idea.
Doing my part,
Ron (NY)
Facebook: Montauk Tackle Company
Pinterest: Montauk Tackle
Twitter: @MontaukTackle
Google+: Montauk Tackle Company
—————————
Montauk Tackle Company is a Proud Corporate Member of the Made in America Movement. Become a Corporate Member and enjoy some amazing benefits which come along with membership. Email us for details: info@themadeinamericamovement.com
Defense Department Pushed to Buy 'Made in America' Military Uniforms
in UncategorizedOct. 18, 2012
“If it’s taxpayer dollars, it should help American workers and American businesses, pure and simple,” Brown told ABC News.
A spokesman for Kendall told ABC News: “Our policy has been and will continue to be to purchase combat boots and other articles of military clothing that are made in the U.S.”
Since 1941, the Berry Amendment has required the Department of Defense to give preference to clothing and other items made in the U.S.
An Air Force spokeswoman told the newspaper that the Berry Amendment did not apply for purchases under $150,000.
In his letter, Sen. Brown questioned the law’s language that allows for waivers and asked if the Defense Department violated its policies.
“Our service members should not be given equipment manufactured in other countries when domestic options exist,” Brown wrote. “Our men and women in uniform are fighting for their country, and deserve to fight in quality uniforms and boots that are made in the U.S.A.”
Earlier this month, Rep. Duncan Hunter, R-Calif., and Rep. Mike Michaud, D-Maine, also drafted a letter to Kendall about the Berry Amendment.
“There’s no justifiable explanation for issuing foreign-made uniforms when there are American manufacturers who can make high quality items for everyday military use,” Hunter told ABC News. “Our military not only defends American interests but it represents American interests and it’s definitely in the national interest to have a military that directly supports domestic manufacturers.”
About 40 bipartisan lawmakers are in the process of signing the letter and plan to send it to Kendall soon.
“We should not rely on other countries, particularly those who may have competing global interests, to supply our forces with basic items,” Hunter and Michaud wrote. “This is especially true when there are millions of Americans looking for work.”
Brown said it is not clear if the Defense Department would be paying more or less for products in the U.S., but public support is in favor of using U.S. products, especially for groups representing the country.
He pointed to the outcry over U.S. Olympic team members wearing uniforms made in China. In July, a “World News” report revealed outfits for the opening ceremony were not made in the U.S. Lawmakers wrote letters to the U.S. Olympic Committee asking that future uniforms be made in America.
“American flags that fly over post offices should be 100 percent American-made,” Brown said. “Any kind of military uniforms should be made in this country.”