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Archive for January, 2010|Monthly archive page

Teamsters & United Auto Workers Call Toyota “A Danger to America”

In Uncategorized on January 28, 2010 at 7:33 pm

Teamsters General President James P. Hoffa and United Auto Workers (UAW) Vice President Bob King joined representatives from labor, environmental and consumer groups outside the Embassy of Japan in Washington today to call on the Japanese government to hold Toyota accountable for waging an attack on thousands of good-paying jobs in the United States.

In addition to endangering 5,000 middle class jobs in the carhaul industry, Toyota is also planning to close its New United Motors Manufacturing Inc. (NUMMI) assembly plant in Fremont, CA, which will mean a loss of up to 50,000 jobs at NUMMI and suppliers and other supporting businesses. Toyota began production in the U.S. in 1984 through NUMMI, its joint venture with General Motors at Fremont, according to industry research firm IBISWorld.

The delegation delivered a letter from UAW Vice President Jimmy Settles and Hoffa to Prime Minister of Japan Yukio Hatoyama following the speaking program. In the letter, the leaders of UAW and the Teamsters expressed concern that Toyota’s plan to abandon workers and communities will negatively affect America’s perception of Japan, and calls on the Japanese government to meet with them and with Toyota management.

King, who was representing UAW President Ron Gettelfinger and Settles, told the crowd that California led the nation in “Cash for Clunkers” sales in 2009, and that Toyota sold more cars under this program than any other auto maker.

“It’s outrageous that the number one-selling car in Cash for Clunkers was the Corolla, the car that is manufactured in the NUMMI plant. After receiving more money in this bailout program than any other company, Toyota is turning its back on American workers and American taxpayers by closing the plant in the state where they sell the most cars in the U.S., shipping these jobs to Japan, and then importing the cars back to the United States for sale,” said King.

“Toyota management is seeking to move work from auto transport companies that have delivered their new cars and trucks for decades,” Hoffa said. “The loss of this work could lead to the destruction of the largest auto transport companies in the country and the loss of thousands of good, middle class jobs. Toyota promised to support American communities; they’re instead threatening the very types of good jobs that our communities need in this time of economic crisis.”

“Toyota’s plant closure plan in California has betrayed American workers and exhibited a disdain for our federal programs like cash for clunkers that directly and handsomely benefited Toyota,” said Dr. Brent Blackwelder, President Emeritus of Friends of the Earth US. “Toyota’s decision to shift production to Japan will dramatically increase shipping miles to California for its new vehicles and is inconsistent with a worldwide effort to reduce carbon footprints.”

Toyota is likewise losing the trust of the American public by abandoning its commitment to safety and being less than forthright about some of its problematic vehicles, said auto safety advocate Sean Kane, president and founder of Safety Research & Strategies.

“The now well-publicized sudden acceleration problem with some Toyota and Lexus vehicles has actually been festering for a number of years, but Toyota neglected the issue,” said Kane. “Now it’s trying to repair its image with a series of recalls that few believe will actually repair the many vehicles affected. It’s pretty clear that there are a multitude of defects contributing to these unintended accelerating incidents that, unfortunately, have resulted in deaths and injuries.”

“The Toyota Fremont, CA NUMMI plant is where the popular Toyota Corolla and Tacoma pickup truck are made, and it has among the best productivity and quality of any assembly plant in the U.S.,” King said. “Abandoning this facility and endangering tens of thousands of jobs is a betrayal of Toyota’s promise to support communities, and a betrayal of its workers, middle class American jobs and our economic recovery.”

Related links

Car & Automobile Manufacturing in the U.S. – IBISWorld Industry Report 

State of Union Proposals Cost Taxpayers $70 Billion

In Uncategorized on January 28, 2010 at 7:08 pm

Even as he encouraged reforms like a freeze on a small portion of the federal budget and a robust disclosure process for Congressional earmarks, President Obama still called for at least $70.46 billion in new federal spending burdens on taxpayers, according to a line-by-line analysis of his first State of the Union speech by the non-partisan National Taxpayers Union Foundation (NTUF).

Among the findings of NTUF’s analysis:

•President Obama outlined items whose enactment would increase federal spending by a net of $70.46 billion per year. Since 1999, when NTUF began tracking Presidential addresses, the lowest recorded total was President Bush’s address in 2006, coming in under $1 billion in new spending; the highest was President Clinton’s 1999 speech, which proposed $305 billion in new outlays. Obama’s speech last night amounted to $36 billion less than the $106 billion that George W. Bush offered in his first State of the Union speech in 2002.

•Obama outlined 21 proposals with a fiscal impact last night, eight of which would boost spending, three of which would cut them, and 10 of which had costs or savings that could not be pinpointed. The single largest item Obama mentioned was a call to pass cap-and-trade national energy tax legislation, with an outlay cost of $51.5 billion (not including revenue increases or price hikes in energy bills). Other large initiatives included immigration reform ($9.8 billion) and subsidies for retirement savings among low-income Americans. Major undertakings with unquantifiable costs included a student loan forgiveness program and a new round of mortgage refinancing subsidies.

“This analysis doesn’t include huge potential burdens from big-government health care legislation, a new ‘stimulus’ plan, or greater obligations to bailed out entities like auto companies and banks. While it’s clear we face enormous deficits as far as the eye can see, taxpayers seeking specifics on the President’s future direction of federal expenditures likely won’t find a compass in last night’s speech,” Brady concluded.

Stocks Tumble Amid Bank Tax Proposal

In Uncategorized on January 21, 2010 at 9:22 pm

President Obama’s latest economic folly — proposing to tax America’s biggest banks and extract $117 billion from bank capital — is already causing headwinds in the financial markets. Not surprisingly, stocks tumbled amid concerns corporate profits could be crunched.

The president is working to seek approval for proposals that would prohibit banks from proprietary trading or investing in either hedge or private equity funds. Obama also proposed limiting consolidation of the financial sector by putting broad limits on the growth of the market share of liabilities at the largest financial firms, supplementing existing caps on the market share of deposits.

“It just doesn’t make any sense to me,” said Warren Buffett, whose Berkshire Hathaway Inc. is an investor in Wells Fargo and Goldman Sachs — two banks that would be affected by the tax even though they have already repaid bailout funds.  “What was done in the fall of 2008 was to save the American economy. It wasn’t to save the banks.”

At midday, the Dow Jones Industrial Average was 1.88% lower, the Standard & Poor’s 500 was 1.6% lower and the Nasdaq Composite had shed 1.11%.

Among the decliners were JP Morgan and Morgan Stanley, each down more than 5%. Goldman fell 5% even after it reported better than expected fourth-quarter results. Bank of America and Citigroup also fell.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ surged 12.7% to 21.06.

The selling in the financial sector spilled into other sectors too. Exxon Mobil and Freeport-McMoRan Copper slid, following oil and metal prices lower. Part of the reason why commodities fell was linked to concerns that China is prepared to slow economic growth.

Chinese authorities this week said they have told that country’s bankers to slow lending.

Oil fell below US$77 a barrel for the first time this year, while gold fell almost 2% to US$1090 an ounce, its lowest so far in 2010.

The Dow Jones Stoxx 600 dropped 1.4% to 252.71. Seventeen of the 18 national benchmarks in Western Europe fell. The FTSE 100 fell 1.6%, Germany’s DAX fell 1.8% and France’s CAC 40 dropped 1.7%.

The European equivalent of the VIX, the VStoxx Index, surged 12% to a six-week high of 26.14.

At a Hong Kong financial conference, Nouriel Roubini issued a warning for investors about the outlook for global equities.

“The real economy is gradually recovering but since March, asset prices have gone through the roof,” Roubini said, according to Bloomberg. “If I’m correct, by the second half of the year, there’s going to be a slowdown of growth in U.S., Europe and Japan. That could be the beginning of a market correction because the macroeconomic news is going to surprise on the downside.”

Any decline in commodities might be limited because of demand for raw materials from emerging markets, he said.

Obama’s bank plans reverberated through the currency market with the yen the key beneficiary.

The euro decreased 0.8% to 127.69 yen at 12:14 p.m. in New York, from 128.68 a day earlier. The dollar fell 1% to 90.30 yen, from 91.24. The dollar slid 0.2% to US$1.4139 versus the euro, compared with US$1.4106.

The Kiwi dropped 2.3% to 64.34 yen. Sterling fell after a report showed the U.K.’s budget deficit widened last month. The U.K. Office for National Statistics said in London that Britain had a 15.7 billion-pound budget deficit last month, compared with 13.8 billion pounds a year earlier.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.096% to 78.28.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.55% to 277.95.

U.S. copper futures edged higher on hopes for continued Chinese demand. Benchmark copper for March delivery HGH0 rose 1.20 cents to US$3.3670 per pound at 10:21 a.m. EST on the New York Mercantile Exchange’s COMEX division.

Growing Interest in Outsourced Services Amongst Higher Education Community

In Uncategorized on January 18, 2010 at 10:24 pm

 

A recent survey conducted by CDI IT Solutions reveals that higher education IT decision makers are becoming increasingly interested in outsourced services to help address key challenges and implement priority initiatives.

Results of the survey show that those making IT support decisions at higher education institutions are most challenged by efforts to effectively manage resources dedicated to the needs of their constituencies, while still maintaining focus on their organization’s strategic initiatives.  The survey shows they are finding challenges in:

•Disaster recovery (lack of adequate disaster preparedness)
•Quality assurance/testing (lack of standardization, lack of QA resulting in costly rework, lack of staff and time)
•Application development (have talent but lack IT process, standards and governance)
•Ability to stay on top of IT innovations and their impact on IT support models
•Security (threat of breaches)
•IT staff retention

As for immediate needs, the survey indicates that top IT initiatives for 2010 include:

•Disaster recovery and business continuity
•Content management and workflow
•Strengthening enterprise technology governance programs
•Expansion of service desk self-service
•Student computing & desktop virtualization
•Virtual computer labs

“As their CIO counterparts in the private sector learned in past business cycles, IT leaders at colleges and universities are beginning to recognize the value of outsourcing services to stretch tight budgets while maintaining quality service delivery to faculty, students and administration,” says Andy Cvitanov, President of CDI IT Solutions.

Half of the survey respondents indicated that they already outsource some IT services within their organization with the most common being those considered non-strategic in nature (student email, laptop distribution, printer support and project management, etc.).  Noting that most opportunities would be in the QA/Testing and application development areas, nearly all believe outsourcing would be good for their institution provided they can:

Successfully address outsourcing as cultural change with other internal decision makers
•Accept that an external service provider (ESP) can provide equal or better service than the institution itself and are willing to keep control by managing the ESP through Service Level Agreements

“Demand for services continues to grow as more innovative and non-traditional use of technology permeates into pedagogy, business systems and social computing models,” said one survey participant.  “Demand for services requires us to evaluate our core competencies and where does it make sense to outsource to experts.”

“The results of our survey clearly show that IT outsourcing is perceived as favorable within the higher education community and the participants agree interest will continue to grow over the next few years,” continues Cvitanov.  “Companies like CDI will prove to be an asset to those institutions as we provide them with high-value IT outsourcing solutions, ultimately allowing them to focus on their core organizational initiatives.”

About the Survey

CDI targeted IT decision makers (e.g. VP, AVP, CIO, Deputy CIO) of both public and private 4-year colleges and universities located throughout the United States.  The purpose of the survey was to further explore the current challenges facing today’s higher education IT decision makers, understand their opinions on outsourcing IT services to external service providers and identify their top IT initiatives for 2010.  CDI partnered with an independent third party to facilitate the survey.

The End of Rapid Growth in Biomedical Research

In Uncategorized on January 12, 2010 at 11:52 pm

After a decade of remarkable growth, total annual funding for biomedical research in the U.S. has decelerated and may have even fallen when adjusted for inflation, according to a recent study published in the Journal of the American Medical Association.

“The era of rapid expansion in biomedical research funding that began in the 1990’s has ended,” said Ray Dorsey, M.D., a neurologist at the University of Rochester Medical Center and lead author of the study. “Looking back at this period, one of the striking observations is that while research funding increased, the number of novel treatments entering the market remained steady. If research funding levels are to return to a phase of growth, we should examine funding priorities, particularly in health services research, and barriers to the development of new therapies.”

The authors compiled data from government sources, trade organizations, and industry financial reports to create a profile of biomedical research funding from 2003 to 2007. Over the five year period, annual research funding increased from $75.5 to $101.1 billion. Adjusted for inflation, funding grew by an average annual rate of 3.4% over the period. Using incomplete data, the authors estimated research funding from the National Institutes of Health (NIH) and industry for 2008 at $88.8 billion, which, when adjusted for inflation, represents a decrease in funding.

The study is a follow-up to a similar analysis published in 2005 by the same authors that showed that biomedical research funding from all sources had tripled in nominal value and doubled when adjusted for inflation between 1994 and 2003. The annual growth rate in funding over the period was more than twice as fast at 7.8%.

This deceleration in funding, if unchanged, has a significant potential impact for the biotechnology and pharmaceutical industries and academic research institutions that rely on government and private funding. As has been noted in other reports, the flat-lining of federal funding for biomedical research in particular has a cascading effect on the national academic research enterprise, leading to scientists spending more of their time chasing funding, influencing career choices of new graduates, discouraging higher risk research, and curtailing the establishment of new scientific programs and construction of new research facilities.

The growth in research funding that began in the 1990s fueled a significant expansion in academic research and many universities became engines for economic growth in their communities. Consequently, the deceleration in research funding could have a profound effect on communities where academic research, health care, and biotechnology have become major economic players.

Approval of New Drugs and Devices Stagnant


While funding has generally increased over the period examined, this growth has not been accompanied by an increase in the number of new drug and device approvals by the U.S. Food and Drug Administration (FDA). For example, the number of new molecular entities, essentially drugs that have not been marketed in the U.S. previously, approved by the FDA in 2003 was 21 and in 2008 was 17. Similar trends were observed for new biologics, as measured by biologic license applications, and devices, as measured by device pre-market application approvals.

“The relative lack of new therapeutic advances has been a decade-long problem that continues to persist despite previous large investments in research funding,” said Dorsey. “The current model is not working well if the desire is to approve new novel therapies to improve health. We need to modify incentives to reward risk and increase support for companies pursuing early stage and innovative research.”

Increasingly, the model for drug development has the pharmaceutical industry devoting a large portion of its spending for late-stage clinical trials as opposed to drug discovery research. The large pharmaceutical companies have largely abdicated the role of early stage research and development to smaller companies that often serve as the bridge between academic research and the market. These smaller companies, in turn, then develop relationships (either through partnerships or acquisitions) with larger companies once they have proven they have a viable product. However, these smaller firms, with limited resources and capital, face considerable risk and increasing pressures to generate promising results in short time frames from impatient markets. The model currently creates little incentive for investors to put capital into companies who are engaged in research that may be innovative, but has a higher risk of failure.

Biomedical vs. Health Services Research

The analysis also reveals that health services research represents a fraction of the nation’s $2 trillion in annual health care spending. This research – which is funded by foundations and federal agencies such as the Agency for Healthcare Research and Quality, the Centers for Disease Control and Prevention, NIH, and the Center for Medicare and Medicaid Services – is intended to improve health care quality and access and control costs by examining the impact of financial, social, technological, and organizational factors on public health.

The study’s authors contend that, in the context of the ongoing national debate over how to control growth in health expenditures, which now exceed $2.3 trillion in the U.S., and impending legislation in Congress that will dramatically increase the number of people with health insurance, spending on health services research, which was $2.2 billion in 2008, is inadequate.

“We spend almost $5 for every $100 in national health expenditures on biomedical research, but we spend less than a dime on ensuring those treatments reach the right people and the right time,” said Dorsey. “Given the massive changes in health care that may occur in the very near future, we need to dedicate more resources to understanding the most effective and efficient ways of delivering care.”

Industry Funding Up, NIH Funding Shrinks

Industry – pharmaceutical, biotechnology, and medical device firms – supplies the largest proportion of total research spending at 58%, followed by the federal government at 33%. Industry research and development funding increased by 25% between 2003 and 2007 with growth in research activity by medical device (59%) and biotechnology companies (41%) significantly outpacing pharmaceutical companies (14%).

The study found that funding from the National Institutes of Health – which is by far the single largest supporter of biomedical research – decreased by 12% between 2003 and 2008 when adjusted for inflation. Total federal funding for biomedical research increased by 0.7% over the period, that is in contrast to the period between 1994 and 2003 when federal research funding increased by 100%.

IBISWorld Identifies Best And Worst Performing Sectors By Revenue Growth

In Uncategorized on January 12, 2010 at 6:57 pm

As another decade comes to an end, industry research firm IBISWorld identified the Top 10 Best & Worst Performing Industries in the U.S. based on cumulative revenue growth from 2000-2009, as well as prospects for 2010-2019:

Best Performing Industries In the Past Decade (2000-2009)
 
1.  Voice Over Internet Protocol Providers (VoIP)  *See Note 
2.  Search Engines: 1655.9% 
3.  eCommerce & Online Auctions:  468.9% 
4 . Online Dating & Matchmaking:  248.8% 
5.  Tank & Armored Vehicle Manufacturing:  244.7% 
6.  Petrochemical Manufacturing:  221.2% 
7.  Mining Support:  186.7% 
8.  Wireless Telecommunications Carriers:  183.4% 
9.  Biotechnology:  182.1% 
10.  Warehouse Clubs and Supercenters:  146.5% 

Note: VoIP is a new industry that only began to earn revenue in 2002. In the short period to 2009, revenue growth accumulated to an astronomical 179035.8%.

“VoIP has skyrocketed from non-existent to a massive application targeting telecom carrier’s voice revenues,” explained George Van Horn, senior analyst with IBISWorld. “Continuing cost advantages for service providers, improving service quality and the expected emergence of mobile VoIP during the next 10 years pave the way for VoIP to be the primary beneficiary of the next leg in telecom’s service development cycle.”

Worst Performing Industries In The Past Decade (2000-2009)

1.  Men`s & Boys` Apparel Manufacturing: -89.1% 
2.  Clothing Accessories Manufacturing:  -76.2% 
3.  Money Market & Other Banking:  -73.3% 
4.  Broad Woven Fabric Mills:  -72.7% 
5.  Women`s & Girls`s Apparel Manufacturing:  -71.4% 
6.  Apparel Knitting Mills:  -70.9% 
7.  Leather Tanning & Finishing:  -70.0% 
8.  Manufactured Home Dealers:  -67.4% 
9.  Circuit Board & Electronic Component Manufacturing:  -63.9% 
10.  Recordable Media Manufacturing:  -63.7% 

Industries that have not performed well are primarily in the slow decline stage of their life cycle and continue to grapple with competitive pressures ranging from overseas supply sources to product substitution threats originating from other industry sectors.

Best Performing Industries In The Coming Decade (2010-2019)

1.  Voice Over Internet Protocol Providers (VoIP):  149.6% 
2.  Retirement & Pension Plans:  133.7% 
3.  Biotechnology:  127.6% 
4.  eCommerce & Online Auctions:  124.7% 
5.  Environmental Consulting:  120.3% 
6.  Video Games:  112.9% 
7.  Trusts & Estates:  105.7% 
8.  Search Engines:  100.9% 
9.  Recycling Facilities:  80.9% 
10.  Land Development:  72.7% 

While the technology and innovation industries that have thrived in the past 10 years are generally expected to continue their run through 2019, the winners of the next ten years will also share the stage with a recovery in financial services and increasing social concerns (e.g. environment).

Worst Performing Industries In The Coming Decade (2010-2019)

1.  Wired Telecommunications Carriers:  -52.0% 
2.  Tank & Armored Vehicle Manufacturing:  -51.9% 
3.  Vacuum, Fan & Small Household Appliance Manufacturing:  -34.4% 
4.  DVD, Game & Video Rental:  -32.8% 
5.  Photofinishing:  -31.5% 
6. Lighting & Bulb Manufacturing:  -26.8% 
7.  Telecommunications Resellers:  -26.4% 
8.  Laminated Plastics Manufacturing:  -25.3% 
9.  Synthetic Fiber Manufacturing:  -24.6% 
10.  Wire & Spring Manufacturing:  -24.5% 

Over a 10 year time frame, the industries that outperform or underperform their peers are those that either benefit from competitive strategic advantages or worse, suffering from significant disadvantages. While the performance of the economic recovery will dominate near-term industry performance measures, innovative products, competitive costs and improving efficiency will continue to separate the winners from the losers in the upcoming decade (2009-2019).

About IBISWorld, Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every U.S. industry.  With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions.  Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide.  For more information visit www.ibisworld.com or call 1-800-330-3772.