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WEEKLY RECAP: Bernie Madoff’s prison walk, State Street’s SEC showdown and Stop & Shop’s trademark fight
Posted on July 4, 2009 by Jon Chesto
Filed Under energy, financial services, retail, scandal | Leave a Comment
Madoff gets the max for bilking billions: It’s rare when a judge orders a maximum sentence for a white-collar case. But when we’re talking about Bernie Madoff, it’s not surprising, either. A federal judge hit Madoff with a 150-year prison sentence, which will give the 71-year-old Manhattanite plenty of time to think about the billions he swindled from unsuspecting investors, including many in the Boston area.
Putnam Investments’ week is a bit rocky: Putnam Investments had a turbulent time despite the shortened holiday week. The company told its 500-plus employees in the Franklin office that they would be relocated to Andover or Boston. Then Putnam chairman Ed Haldeman said he would be stepping down, giving current CEO Bob Reynolds more responsibility. Finally, reports surfaced that Haldeman is actually being lined up to be the next CEO of Freddie Mac.
State Street braces for SEC case: State Street Corp. faces a new potential plaintiff over its bond investments: the Securities and Exchange Commission. State Street said the SEC is preparing a case against the company involving the disclosure of the risk of certain bond investments it made for clients. The SEC would be the latest litigant to line up for a piece of a $625 million reserve fund State Street established in 2007 to address this issue.
Stop & Shop lawsuit is the real deal: Stop & Shop is again reasserting that its “Real Deal” is the real thing and a rival’s slogan is a fake. Instead of Whole Foods, discounter Big Lots is the defendant of a Stop & Shop trademark lawsuit this time. The Quincy-based grocery chain is trying to protect its own “Real Deal” promotional campaign and wants Big Lots to stop using the slogan in its ads.
Bad news for Cashman: Gov. Deval Patrick says he is a champion of wind power, but his latest zoning map for state-regulated waters leaves only two tiny areas off Cuttyhunk and Martha’s Vineyard available for major wind farms. That’s bad news for Jay Cashman Inc. of Quincy, which has plans to build wind turbines in Buzzards Bay, and won’t affect Cape Wind Associates, whose turbines would be built in federal waters.
Yankee Candle rolls out scented puzzles with Hasbro
Posted on July 3, 2009 by Jon Chesto
Filed Under entertainment, manufacturing | Leave a Comment
Two New England companies have teamed up to create an unusual family diversion: puzzles infused with candle scents. Deerfield’s Yankee Candle and Hasbro, which is based in Pawtucket and has major operations in East Longmeadow, unveiled their first joint venture on Tuesday: Yankee Candle Scented Puzzles.
The press release flirts with hyperbole by touting their patriotism, saying “there is nothing more all-American than puzzling as a family.” But the price of these puzzles, which will be available starting in the fall, is reasonable, at $10 apiece (including a $10 gift certificate to Yankee Candle). The first puzzles will include a scene of apple orchards infused with an apple scent, as well images of a children’s tea party (with Yankee Candle’s ”Clean Cotton” scent) and galloping horses (with “MidSummers’ Night”). A new group of puzzles will be introduced every two or three months.
Imagine the possibilities if the two companies tried this with some of Hasbro’s famous games. Candy Land, with its Molasses Swamp and Gumdrop Mountains, would be an obvious first choice. An aroma of a sea breeze could waft up during a Battleship fight, while Clue detectives could encounter the odor of musty books in the library. But they might want to leave gruesome games like Operation off the table.
No severance pay for displaced Putnam workers
Posted on July 2, 2009 by Jon Chesto
Filed Under financial services, labor market | Leave a Comment
The employees at Putnam Investments’ Franklin office might want to think about investing in a more fuel-efficient car – or, at the very least, some good books on tape.
That’s because it turns out that the 500-plus workers in Franklin who are being asked to relocate to Putnam’s two remaining Massachusetts offices in Andover and Boston won’t be eligible for severance payments after all.
I had asked Putnam spokesman Jon Goldstein on Tuesday whether workers in Franklin would be eligible for severance pay if they opted not to take a job in the Andover office (which is 61 miles away from the Franklin office) or the Boston office (which is closer to 40 miles away). He responded at the time by saying that in general, it would be decided on a case-by-case basis.
However, when I checked in with Goldstein about this issue today, it became clear that there was a policy in place: The company offers severance packages to people who are being laid off or who would be relocated further than 65 miles from their current office, but there are no severance packages offered when the distance is under 65 miles. The Andover office is just under the cutoff, meaning Putnam’s current HR policy wouldn’t allow severance pay for the Franklin employees if they don’t want to relocate.
Goldstein says the Boston-based mutual fund manager has had the policy in place since at least 2006 because it wanted the flexibility to move employees as needed among Putnam’s three Boston-area offices. He says this relocation, which would take place by the end of the year, isn’t considered a layoff because Putnam wants all of the employees to stay with the company.
It’s hard to blame Putnam for wanting to save on real estate costs during some tough times, and it’s great that the company says it has no plans to actually terminate the employees. But it’s even harder not to feel bad for the workers who feel like they have no choice but to accept spending at least two hours of their lives on Interstate 495 each weekday.
New Boston Scientific CEO will fly the friendly skies on a corporate jet
Posted on July 1, 2009 by Jon Chesto
Filed Under manufacturing, travel | Leave a Comment
During his last two years as CEO of Boston Scientific, Jim Tobin did a good job of paring down the company’s operating expenses and working to pay off its mountain of debt.
However, there’s one big-ticket item that is slated to continue under the new CEO at the Natick-based medical device company: the corporate jet rides for the chief executive.
The company’s June 22 job offer letter to Ray Elliott – the new CEO of Boston Scientific as of July 13 and a recent board member of the company – describes the situations in which Elliott will be able to use the corporate jet for personal trips. They include round-trip “weekend home visits” (although Boston Scientific is also paying for Elliott to relocate here from Indiana), trips for his wife to visit the Boston area once or twice a month, occasional visits to his children combined with normal business trips, and standard annual vacations.
The agreement doesn’t put a dollar cap on the personal jet use; it just states that the jet use will be “in accordance with the company’s current practice.”
Tobin, apparently, significantly cut back on his personal use of the corporate jet during his last two full years as Boston Scientific’s CEO. The company accounted for nearly $173,000 in personal jet travel for Tobin in 2008, down from $288,000 in 2007, according to documents filed with the Securities and Exchange Commission.
The truth is, personal use of a corporate jet remains a commonplace perk for CEOs at big companies such as Boston Scientific. The arguments for retaining such a perk range from safety to productivity.
However, top executives can engender goodwill among their employees – and save their company a few dollars – by deciding to simply give up the perk. This is especially true during lean times such as these – and for companies like Boston Scientific that are not done with charting a course for a comeback.
Maple syrup farmers bounce back from December’s ice storm
Posted on June 30, 2009 by Jon Chesto
Filed Under agriculture | Leave a Comment
If anyone can see a silver lining in this seemingly never-ending series of rainy days, it’s a maple syrup farmer like Tom McCrumm.
McCrumm, who runs South Face Farm in Ashfield, says the rainy June has helped many of the state’s maple trees recover from damaged suffered during the infamous December ice storm. Many trees were lost for good, but many more were just severely damaged, leaving their long-term future reliant, to some extent, on the weather right now.
The ice storm probably played a role in the Massachusetts maple syrup industry’s production levels dropping by 29 percent to 46,000 gallons for the 2009 sugaring season (which is typically February through April) from the same time in 2008. At the same time, New England’s overall production levels rose 30 percent (dominated by Vermont and Maine).
But McCrumm, coordinator for the Massachusetts Maple Producers Association, is happy to point out that the state’s maple syrup farmers still had a strong year this time around. The state produced about 40,000 gallons of syrup a year – until last year, when favorable weather enabled Massachusetts farmers to produce 65,000 gallons. The output was bound to fall from such a peak. But 2009 was still an above-average year despite the ice storm’s damage to farmers’ trees and pipes, thanks in part to favorable temperatures.
It’s also a tribute to the hard work of the state’s farmers that they saw an above-average season, despite the ice storm’s havoc. Many of them tapped new trees on their own properties, or leased them from other landowners. McCrumm says he was out yesterday, cleaning up ice storm damage with a chainsaw.
The long-term outlook is a bit hazy, though, as McCrumm and others wait to see how well the damaged trees can recover. That’s why he’s glad to see that there’s been plenty of moisture in the weather lately. But McCrumm also readily admits that even he is beginning to get a little tired of all this rain.
GM takes more humane approach than Chrysler with franchise terminations
Posted on June 29, 2009 by Jon Chesto
Filed Under manufacturing, retail | Leave a Comment
Like other dealerships that have franchises with U.S. automakers, Westminster Dodge didn’t go looking for a government bailout and it isn’t asking for one now.
But the Dorchester dealership, which had still been profitable last year, suffered a huge financial blow when Chrysler included it last month on a list of nearly 800 dealerships targeted for franchise termination as part of Chrysler’s Chapter 11 bankruptcy filing.
It certainly seems unfair that profitable, independent dealerships such as Westminster (which I profiled in my weekend column for The Patriot Ledger) need to suffer because of Chrysler’s poor planning.
Yes, the extensive domestic auto dealership networks that grew over many decades in the U.S. have hampered the Big Three’s ability to compete with foreign-based car companies.
But this is no way to slim down your dealership count.
All three U.S. automakers – General Motors, Chrysler and Ford – have been trying to scale back dealerships in recent years. And, in a few cases, dealership owners certainly were unhappily forced out of business.
But no round of dealership closures comes close to resembling the bloodbath that occurred during Chrysler’s trip through bankruptcy court.
General Motors had been facing many of the same issues as Chrysler. But GM started its dramatic dealership termination early, before filing for bankruptcy. Chrysler, meanwhile, filed for bankruptcy and then came up with a plan to reduce its dealer count.
The result, according to a Chrysler spokeswoman, meant that GM could have a significant amount of control over how it ends its franchise agreements. Chrysler, meanwhile, was bound by all sorts of limits because it was under the constraints of the bankruptcy court.
GM gave its dealers more than a year’s notice. Chrysler gave its dealers fewer than two months. GM gave its dealers an appeals process. Chrysler forced dealers to pursue an expensive, fruitless approach to an unsympathetic bankruptcy court judge. GM is leaving it up to each of the affected dealers to publicize when they are going to stop selling new GM cars. Chrysler let its dealers know just as it was announcing its full list publicly, via a bankruptcy court filing.
The way the process transpired certainly begs the question: Could Chrysler have started its latest round of franchise terminations early, allowing it to pursue a more humane route like GM’s, or did its executives knowingly wait until it was in bankruptcy to pull the plug?
The Obama administration didn’t help matters by essentially acting as a cheerleader for Chrysler’s bankruptcy filing (and unsurprisingly fueling speculation that perhaps some of the franchise terminations had as much to do with politics as profits). Sure, the government’s financial support will help Chrysler survive. But it will survive in a much smaller form, with a smaller impact on the national economy.
Westminster (the Dodge is no longer part of the name) in Dorchester will continue to stay open, at least as a car-repair and used auto shop. It may even retain most of its nearly 40 jobs if its owners can get a new franchise with another automaker. The Chrysler spokeswoman says more than half of the nearly 800 dealerships will continue in some form, and nearly half already had a franchise with another automaker.
But many other dealerships won’t make it. In order to save an unprofitable auto manufacturer, the Chrysler rescue plan could end up helping to put many profitable dealerships out of business.
WEEKLY RECAP: Twin River rolls the dice with bankruptcy, Globe union delivers a new contract and Boston Scientific gets a new CEO
Posted on June 28, 2009 by Jon Chesto
Filed Under casinos, media, scandal | Leave a Comment
Double down for remade Lincoln Park: The old Lincoln Park racetrack in Lincoln, R.I., was born anew as Twin River with a polished, expanded gambling hall opening in 2007. But the added traffic was not enough to help pay off the debt associated with the image makeover, and Twin River filed for Chapter 11 bankruptcy. The move will make it easier to get state approval to run a 24-hour operation and to end the unprofitable greyhound races there (although Rhode Island lawmakers seem intent on protecting the dog races).
Globe union lines up a new contract: The Boston Globe’s largest union reached a new agreement on $10 million in cost concessions with the paper’s management, and it’s not that different from the one that the union narrowly voted down earlier this month. The Boston Newspaper Guild contract still would call for a pay decrease and an elimination of lifetime employment guarantees for many employees. The union’s full membership, which faces a steep pay cut if it doesn’t approve the new contract, will vote on the plan on July 20.
Future Boston Scientific CEO aims to diversify: Boston Scientific Corp. could take a new direction now that it has a new chief executive lined up. The Natick-based company tapped Ray Elliott, a longtime executive in the medical device field and a Boston Scientific board member until recently, to take over for departing chief Jim Tobin. Elliott plans to further diversify the company’s medical device products and resolve pending quality control issues with federal regulators.
Boston broker faces SEC complaint for Madoff ties: The Securities and Exchange Commission widened its reach in its investigation of the Bernie Madoff scandal by filing a fraud complaint against additional defendants, including Robert Jaffe, a broker who had acted as Madoff’s rainmaker in Boston. Jaffe, who now lives in Florida, continued to maintain that he was another victim of Madoff’s massive Ponzi scheme, and not a willing participant.
Boston comics go “Branson or Bust” in effort to pitch business idea
Posted on June 26, 2009 by Jon Chesto
Filed Under Boston, entertainment | Leave a Comment
Most people who want an audience with a business bigwig try to work through the normal corporate chain of command. But Norm Laviolette and Chet Harding aren’t like most people.
The comedic entrepreneurs, who run the Improv Asylum in Boston’s North End, flew to London on June 15 to pitch a business idea to Virgin Group mogul Richard Branson. But they had no appointment set up; in fact, Branson didn’t even know they were coming.
Instead, they hit the streets of London, asking just about everyone they met if they had any connection to Branson. Laviolette tells me they found a sympathetic tour bus operator who also happened to be a comedian who let them announce on the bus that they were looking for Branson. They sent a bottle of wine to Joan Collins at a fancy restaurant, dressed up in strange British formalwear for the Royal Ascot horse race and arm-wrestled a Bulgarian street cleaner.
They also tried to use online social networking outlets Twitter and Facebook to collect leads. And they brought along a cameraman, Chris Loughran, who filmed the their adventures and posted them on their “Branson or Bust” blog.
The bottom line: Laviolette says they left England on June 19 without a face-to-face meeting with Branson (who apparently was out of town), although they’re still trying to set one up. Laviolette says they did make a connection with a close associate of Branson’s who pledged to forward their business idea to Branson directly. They also returned to Boston with material for a possible documentary – and a newfound appreciation for the kindness of strangers.
Tax-credit move could keep some big-budget pictures away from Bay State
Posted on June 26, 2009 by Jon Chesto
Filed Under film, state government | Leave a Comment
State lawmakers may have thought they would just be punishing a few out-of-state wealthy actors by agreeing to a $2 million cap on how much a movie star’s salary can count toward the state’s film industry tax credit.
Unfortunately, the Legislature threatens to keep a range of big-budget pictures at bay by tucking the cap into a couple outside sections in the back of the state budget legislation for the fiscal year that begins on July 1.
That’s because major movie studios will gravitate to the locations where they can get the best bang for the buck. And movie-star salaries are often a big part of any blockbuster’s budget. By limiting how much of the stars’ salaries that a production company can claim for the state’s 25-percent tax credit, we’ll be giving the company a big incentive – to shoot someplace else that doesn’t have the cap.
This limit, at least, still makes a lot more sense than the $7 million-per-production cap that was in place from when the tax incentives took effect in January 2006 until the Legislature wiped that cap from the books in mid-2007. That limit basically put a ceiling on how much an entire production’s expenses could count for tax credits. Within weeks of the removal of that cap, a number of big budget flicks arrived in the state.
Lifting the $7 million cap paid off as an economic development measure. In 2006, the state reported $61 million in film industry spending, according to the Massachusetts Film Office. That rose to $125 million in 2007, and to nearly $400 million in 2008.
However, the state has had a hard time luring the biggest of the blockbusters (such as the latest “Terminator” movie, which was shot in New Mexico). That’s largely because we don’t have the sound stages yet to support a special effects-laden movie that requires numerous stages at once.
To be sure, many causes more worthy than the film industry will take a hit from the Legislature’s austere budget for the next fiscal year. But economic development should remain a priority for lawmakers, especially during lean times like these. And putting a salary cap in place on the state’s film credits threatens to undermine the progress that the state has made in fostering one of the few industries that’s actually adding jobs around here these days.
UPDATE: I just heard from a State House source that the Legislature passed another bill on Thursday with language that would eliminate the $2 million salary cap that the Legislature just decided to impose a week ago (Gov. Deval Patrick could still veto that language, which would keep the cap in place). It’s a very unusual move, and makes me wonder if lawmakers knew what they were doing when they put the language in the full state budget in the first place. Stay tuned.
New England could get a ‘Gansett brewery again
Posted on June 25, 2009 by Jon Chesto
Filed Under manufacturing, restaurants | 1 Comment
Raise a glass for entrepreneur Mark Hellendrung: He is getting significantly closer to bringing New England’s beloved Narragansett beer back to a New England brewery.
Hellendrung, who owns Narragansett Brewing Co. with other New England investors, tells me that his beer is available on draft in about 250 bars among four New England states right now, an increase of about 40 percent from the same time year ago. He says he’ll need another 185 or so to sign on before he has enough critical mass to justify building a brewery here in New England. That goal, Hellendrung says, could be obtainable within the next 18 months, thanks in part to the regional nostalgia for the brand.
Hellendrung has come a long way with reviving the once-popular ‘Gansett brand from the recycling heap of beer brands since he started his company in 2005 by buying the Narragansett brand from Pabst Brewing Co.
He has restored the recipe, working with former ‘Gansett brewmaster Bill Anderson, to bring back the more full-bodied taste that New Englanders enjoyed when the beer was brewed here (Hellendrung says it was watered down under its previous owners, but now BeerAdvocate.com gives the lager a “B plus” rating). And Hellendrung has slowly been building a base of package store and bar clients, starting with the brand’s home state of Rhode Island, and expanding out to Massachusetts, Maine and Connecticut. Notably, Hellendrung was able to get the beer back within the hallowed walls of Fenway Park about a month ago.
All of the ‘Gansett beer is currently brewed on a contract basis at the Genesee brewery in Rochester, N.Y. But Hellendrung figures he could start a brewery for $1 million that churns out draft beer (no bottling yet) if he can get enough critical mass with keg distribution to local bars.
Hellendrung, a former president of Nantucket Nectars, is holding promotional rallies to draw attention to the brand. He already held one in Providence. He’ll join with ‘Gansett fans (and presumably a few ‘Gansett Girls) in a “march” from Boston’s Copley Square to the Rattlesnake on Boylston Street at 5 p.m. on July 2, and another rally is scheduled for the following week in Worcester (still a ‘Gansett stronghold after all these years).
Potential locations for the new brewery, which could employ at least 20 people after it opens, include Providence and Cranston, R.I. (the brand’s original hometown). But Hellendrung says the Boston Marine Industrial Park in South Boston is also being considered. The industrial park is already home to Harpoon’s headquarters and one of Harpoon’s breweries, as well as The Boston Beer Co.’s corporate office. If Narragansett were to join that lineup, that would certainly be a good reason for Boston beer drinkers to celebrate.
Braintree adviser offers dire prediction for stock market this summer
Posted on June 23, 2009 by Jon Chesto
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The bear market might not be ready for hibernation just yet.
Many financial advisers are brimming with cautious optimism about the stock market, believing that the worst could be behind us. But Paul Hess has a much different view: The Braintree-based financial planner sounds like the Grim Reaper when you talk to him about the market.
Hess has been saying all spring that this stock market rally we’ve seen since the beginning of March will lead us to an even more precipitous crash this summer than the one we just endured. I asked him to drop me a line to tell me when he thinks the downward slide is beginning. Well, the Reaper gave me a tap after the market closed on Monday.
Of course, the stock market had just had a rough day, with the Dow dropping 200 points, to just over 8,300. But Hess still sees a much bigger decline ahead. He predicts that the Dow could be down around 5,000 by Labor Day before starting to rise again (and the S&P 500 could drop to around 500). That’s probably one of the most pessimistic outlooks I’ve heard or seen from anyone.
Hess says he is trying to put his clients in short-term bond investments or special funds that allow investors to bet that stocks are going to fall (such as the ProShares Short S&P500 fund). He suggests that conservative investors consider just setting money aside in savings accounts (such as insurance-protected CDs at your local bank). And he says investors need to be ready to hop in once the rebound begins for real, which he thinks will happen as soon as September.
Hess relies on a mathematical analysis that loosely follows what’s known as the “Elliott Wave” (essentially a wave pattern used to predict the ups-and-downs of the stock market).
But Hess also says much of the recent run-up hasn’t been based on fundamentally good economic news. Instead, investors have been buying stocks on downbeat reports that still look like improvements from the really bad news we heard last fall and over the winter. For example, the labor market is still shedding a bucketful of jobs, but at least we’re not losing jobs as quickly as we did several months ago.
I agree with Hess on that last point, to some extent. We still haven’t seen much evidence that the economy – here in Massachusetts, or across the country – has truly turned the corner. But we have seen numerous positive signs that it’s at least not falling apart as quickly as it once was.
Truthfully, though, I would be quite surprised if Hess’ doomsday scenario of seeing the Dow drop to 5,000 came true this summer. But then, a year ago I never thought we would be struggling just to stay in the 8,000s right now.
State labor investigations leave ICE out in the cold
Posted on June 21, 2009 by Jon Chesto
Filed Under labor market, state government | Leave a Comment
The Massachusetts task force charged with addressing the underground economy fielded more than 500 tips since its formation in March 2008, and forwarded many of them to a wide range of agencies. But one agency is deliberately being kept out of the loop: the U.S. Immigration and Customs Enforcement office.
The task force doesn’t hide this omission. In its first annual report, the task force all but boasts of the fact that ICE didn’t receive any of those 500-plus tips. The task force also says it will not forward any future complaints to federal immigration authorities.
I spoke to George Noel about this while I was researching my column on the task force’s first year for this weekend’s Patriot Ledger. Noel, the chairman of the task force and the director of the state’s department of labor, tells me that he believes it’s his job to make sure that workers’ rights are protected.
Sure, unscrupulous employers are taking advantage of many illegal immigrants in this so-called “underground economy” (a catch-all phrase used to describe workers who are being misclassified and/or kept “off the books” for one reason or another). But Noel says plenty of legal immigrants and native-born citizens are also affected.
As far as Noel’s concerned, a worker who puts in a day at work deserves a day’s pay - regardless of that worker’s citizenship status.
Undoubtedly, the bungled ICE raid of the former Michael Bianco plant in New Bedford is still fresh in the minds of many task force members. That March 2007 raid, you may recall, involved immigration officials rounding up more than 300 immigrant workers, temporarily separating many of them from their families. Apparently, following labor laws isn’t profitable enough for the company that operates the plant now because the company plans to close the plant this summer.
By keeping ICE in the dark, state officials are trying to avoid giving leverage to the shady employers that abuse illegal immigrants, thinking that they would be too scared of deportation to report the abuse to the authorities. It’s not an ideal situation. But Noel knows that if he really wants to crack down on the underground economy, he can’t afford to scare off some of the people who are most in need of help.
WEEKLY RECAP: Filene’s Basement sale wraps up, Jordan’s chief saves the Enchanted Village and Genzyme gets the biotech blues
Posted on June 20, 2009 by Jon Chesto
Filed Under biotechnology, labor market, retail, state government | Leave a Comment
Taxes, we’ve got your taxes here: The Legislature approved some big tax increases with minimal debate as part of its $27 billion-plus budget for the fiscal year that begins in July, including a hike in the sales tax to 6.25 percent from 5 percent, a removal of the sales tax exemption for alcohol purchases and a 5 percent tax on satellite TV bills. Gov. Deval Patrick has threatened to veto the sales tax increase, but that could be just a gambit to prod the Legislature to pass an ethics reform bill.
Questions remain as Syms buys Basement: This is one Filene’s Basement sale that went in the opposite direction of the retailer’s typical markdowns. A heated auction over the assets of Filene’s Basement nearly tripled an original bid and ended with discount retailer Syms Corp. agreeing to buy the Basement for nearly $65 million with the help of Vornado Realty Trust. The deal keeps open 23 of 25 stores, although it raises more questions about whether a flagship Filene’s Basement store will reopen in Downtown Crossing.
Jobless rate up in May, but so are new jobs: The state’s unemployment rate continued to rise in May, to 8.2 percent from 8 percent. But a separate survey showed that the state’s employers actually added nearly 5,000 jobs in the same month. That marked the first time the state recorded a month of job growth in a year. Some of that increase was probably due to the way economists account for seasonal fluctuations in hiring patterns. But we’ll take the good news where we can get it.
May foreclosures trend is good thing: A new clear trend is emerging among the state’s foreclosures – and it’s a positive one for a change. The Warren Group reported that foreclosure deeds fell nearly 60 percent in May from the same time a year ago to the lowest monthly level of foreclosures in two years. Lenders apparently are becoming more willing to allow homes to be sold for less than the value of the mortgages.
Problem would shut Genzyme plant through July: Workers at Genzyme Corp.’s Allston plant found they could get an unplanned summer vacation now that the biotech firm decided to shut down the plant until the end of July. The Cambridge-based biotech company found viral contamination that was slowing down the production of two drugs. There was reportedly no risk to humans, but Genzyme still wants to shut down the plan to clean its equipment.
Enchanted Village heading to Jordan’s: From Jordan Marsh to Jordan’s Furniture, the Enchanted Village that enchanted generations of Hub shoppers will remain open to the public now that Eliot Tatelman won an auction for the holiday display with a $140,000 bid. The Jordan’s chief executive will make the Enchanted Village available for viewing at his Avon store during the holiday season.
Newton company names Blarney Stone the world’s “germiest” tourist attraction
Posted on June 19, 2009 by Jon Chesto
Filed Under travel | 1 Comment
The Blarney Stone has topped a Newton company’s worldwide list of tourist attractions, but I’m pretty sure that the Cork Chamber of Commerce isn’t going to be bragging about this accolade. That’s because TripAdvisor named the famous rock at Ireland’s Blarney Castle the No. 1 germiest attraction in the world.
The Blarney Stone had some serious competition, including a giant wall of gum at Seattle’s Market Theater and the pigeon-infested St. Mark’s Square in Venice. They finished at No. 2 and No. 4 on the TripAdvisor list, respectively (St. Mark’s made the list despite the the recent crackdown on pigeon-food vendors in Venice).
TripAdvisor customers have been paying more attention to hygiene as of late, with those swine flu fears sweeping the travel industry. About one-third of participants in a TripAdvisor.com poll say they’ve become more “germaphobic” recently.
That trend might not bode well for attendance at the Blarney Stone, which legendarily bestows the gift of eloquent speech to all those willing to lean back over the parapet wall to kiss its surface. TripAdvisor editors jokingly caution that the risk of putting your lips on a stone kissed by hundreds of thousands of other mouths each year might be too high a price to pay for the “gift of gab.”
At least one Boston fund company expanded its work force through the bear market
Posted on June 18, 2009 by Jon Chesto
Filed Under Boston, financial services | Leave a Comment
The bear market has rocked a number of Boston mutual fund companies in the past year, prompting waves of layoffs. But one Boston fund firm owned by a French bank has been quietly bucking that unfortunate trend.
The name Natixis Global Asset Management may be unfamiliar to you, but it’s hard to argue with these results during a rough bear market: The company says its Boston work force has grown by about 150 people, or 16 percent, from the end of 2006 to nearly 1,120 today, and the amount of money that investors poured into Natixis’ U.S. mutual funds in 2008 represented net inflows of about $4 billion for the year.
Unlike several of Boston’s well-known mutual fund companies, Natixis oversees a network of independently-managed fund firms, each with separate specialties and research teams. The most well-known of those (at least around here) is Boston’s Loomis, Sayles & Co. But there are many small money management boutiques that are part of the Natixis group as well.
John Hailer, the CEO of the company’s North American operations, says that offering an investor a range of different money management teams represents a much more diversified investment approach than just, say, offering a range of funds with the same brand name managed by people who share the same research and corporate culture.
Hailer says investors’ advisors were particularly attracted to strategies employed by two money managers that Natixis acquired in the past two years, AlphaSimplex and Gateway Investment Advisers. Those two firms offer products that allow average mutual fund investors to gain some of the benefits of investing in hedge funds and mitigate the pain caused by the stock market’s downward slide.
A Boston native, Hailer spent his entire career in the city’s storied money management industry. He recognizes that it’s at a crossroads now, and hopes to play at least some role in keeping it a thriving part of Boston’s corporate scene. Hailer says he plans to continue to be slow and steady about hiring, adding workers in places where it makes strategic sense – such as sales people who can pitch Natixis funds to potential investors through their independent financial advisors.
Hailer says he is frustrated by the way that other financial companies have shifted jobs to offices in other parts of the country, and believes companies can find the real estate and cost-of-living savings that they need here in New England, in cities like Springfield and Hartford. Natixis’ headquarters may be in Paris, but Hailer at least shows he’s an executive who is still willing to think locally, even though his corporate bosses are thousands of miles away.
Covidien pulls up stakes for an Irish address, but it’s actually still based here
Posted on June 18, 2009 by Jon Chesto
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The biggest life sciences company based in Massachusetts technically still isn’t based here. But Covidien did just move the place where it is incorporated across the Atlantic, from Bermuda to Ireland, this month in search of favorable tax treatment.
It may sound confusing. But a little complexity should be expected for a company that emerged from the far-flung reaches of the Tyco empire, a vast conglomerate built at least in part by the acquisitive former CEO Dennis Kozlowski (yes, the same guy who’s in prison right now for using corporate cash to help fund his extravagant lifestyle) until it was split in three in 2007.
When Covidien was born out of the old Tyco Healthcare unit, the medical device company came into this world with more than 40,000 employees and nearly $10 billion in annual revenue. That would top local leader Boston Scientific Corp. to make Covidien the biggest Massachusetts-based life sciences company.
Except Covidien could never technically lay claim to that title. The head of the company, CEO Rich Meelia, is based in Mansfield. Nearly all of his direct reports are there, too. So you would think Mansfield would be considered Covidien’s home base.
However, Covidien inherited Tyco’s Bermuda corporate address, a tax-shelter holdover from the 1990s.
But Bermuda’s beaches have lost some of their appeal recently amid promises in Washington of a crackdown on companies who set up shop there just to avoid taxes. Several big companies, including former Covidien sibling Tyco International, have already decamped Bermuda’s shores for Europe.
Covidien spokesman Bruce Farmer says Covidien considered several locations before settling on Dublin as its new place of incorporation. He says Covidien opted against planting its flag in the U.S. – where nearly half of its employees work – because the shift would have led to a significant increase in Covidien’s global tax rate.
Ireland, Farmer says, has friendlier tax rules than the U.S. and is home to several Covidien facilities that together employ about 2,000 people. Farmer says that because only a handful of employees worked in Bermuda, the shift would have no substantial impact on the company’s operations.
The trip to Ireland earned a swift rebuke from the folks who compile the Standard & Poor’s 500 and S&P 100 lists: Covidien was promptly dropped from both a few weeks ago. But Covidien’s stock price chugged along steadily despite getting booted from the popular indexes.
Covidien is publicly traded, so it’s hard to blame the executives there for wanting to do right by its shareholders.
But the real loser here is the federal government, which could find it tougher to recapture corporate taxes that should be coming its way from the big companies with overseas addresses managed by U.S.-based executives.
It would have been nice to have seen the HQ designation move to Mansfield. But at least Covidien’s move to Dublin is essentially a tax-shelter maneuver. Even if those corporate press releases now include “Dublin” in their datelines, the company is still headquartered in Mansfield as far as I’m concerned.
Dunkin’ tradition disappearing during a half-dozen decades
Posted on June 16, 2009 by Jon Chesto
Filed Under restaurants, retail | 5 Comments
While it was great to see Dunkin’ Donuts hop into the Wayback Machine to hand out their namesake product for 15 cents apiece yesterday at the site of the original Dunks on Southern Artery in Quincy, I would rather see the nearly 60-year-old chain return to a different type of tradition.
Remember the days when the doughnuts were actually baked there in the shops? Nowadays, they mostly arrive like FedEx packages, carried in vans from a centralized commissary. Sure, the practice is efficient. It has helped allow for the proliferation of the Dunkin’ logo – the unofficial flag of New England – across the globe (there are roughly 9,000 franchisee-owned shops worldwide now). But it certainly doesn’t help guarantee the freshness of the doughnuts.
It wasn’t always this way. When I first became a Dunkin’ junkie as a young kid, I could smell the beautiful aroma of baking doughnuts all the way out in our car. The doughnuts were at least as fresh as what was available at the local bakery, and certainly the selection was better. Unlike the independent shop, Dunkin’ never ran out of my favorite, the Boston Creme (still, to this day, the best dessert anywhere for under $1 and fewer than 300 calories).
We all remember how Dunkin’ rose to national prominence on the back of those “Time to make the doughnuts” ads featuring the seemingly unstoppable Fred the Baker in the 1980s. If he was alive today, Fred probably would be busy taking orders at the drive-through or making a Coolatta.
Dunkin’ deserves credit for avoiding the missteps of its Southern rival, Krispy Kreme. Dunkin’ Donuts’ phenomenal growth has been possible thanks to its franchisees’ investments, which meant the Canton-based chain (now owned by a trio of private equity firms) could expand in new locations with a minimal outlay of its own money. And Dunkin’ increasingly received a smaller share of its dough from its doughnuts over the years, allowing it to continue to thrive as a coffee-focused chain when the low-carb craze unfairly gave doughnuts a bad name.
The Dunkin’ menu has also come a long way in the past two decades. When I was a college student, the only late-night place to grab food near the campus was a 24-hour Dunkin’ Donuts. But the only non-doughnut choice there was a croissant sandwich (it was priced at 99 cents, so I wasn’t complaining).
Now, of course, there’s an entire “DD Smart” menu devoted to (relatively) healthy offerings. You can choose among several flatbread sandwiches (just don’t look when they first come out of the freezer), low-fat blueberry muffins, yogurt-based smoothies and a variety of bagels.
But there are no more doughnuts baked fresh on the premises – at least not at most locations.
Fortunately, there are still some holdovers. The next time you’re on the Southeast Expressway in Dorchester, do yourself a favor and take a detour on Morrissey Boulevard to check out the Dunkin’ Donuts on the back side of the Red Line overpass. You’ll find a reason for the long lines at the drive-through there: fresh doughnuts are baked every day in the back, just like old times. Fred would be proud.
Boston’s activist investors make progress with executive pay issue
Posted on June 14, 2009 by Jon Chesto
Filed Under Boston, financial services | Leave a Comment
What happens when a city is both a bastion of liberal activism and a global money management hub? My column in this weekend’s Patriot Ledger tries to answer that question by looking at the work of some Boston-based activist investors with regard to keeping CEO pay levels in check.
The truth is that activist investors and their subgroup of socially responsible funds can be found in a number of big cities, as well as many smaller ones (Pax World Funds of Portsmouth, N.H., is among the nation’s biggest socially-conscious mutual fund managers). A growing number have focused on environmental causes in recent years, such as the Winslow Green funds in Boston.
In most cases, activist investors try to make the case that doing the right thing also can do the right thing for investors. Certainly, that’s the case for the “say-on-pay” movement that is gaining momentum in boardrooms and in Washington.
WEEKLY RECAP: Globe thrown off its axis, Talbots slims down and Filene’s Basement has extended sale
Posted on June 12, 2009 by Jon Chesto
Filed Under financial services, media, retail | Leave a Comment
As the Globe turns: The Boston Globe was thrown off its axis this week amid a barrage of news events involving the newspaper itself. The paper’s largest union, the Boston Newspaper Guild, narrowly rejected a $10-million cost concession plan that had been pursued by Globe management and owner The New York Times Co. (the vote means the Times Co. will now enact a drastic 23 percent pay cut for Guild members, compared to the roughly 10 percent pay cut that had been proposed).
Then the names of possible bidders for the paper emerged after the Times Co. had tried to keep the sale process on the down low for weeks. Among the names: Former Globe exec Stephen Taylor, who could end up buying the paper for a fraction of the $1.1 billion the Times Co. spent in 1993 when it bought the paper from Taylor’s family.
Talbots slims down: Talbots Inc. is continuing to find that slimming down is all the rage in retail fashion. The Hingham-based apparel retailer finally announced a buyer for its beleaguered J. Jill chain: J. Jill will be acquired by San Francisco private equity firm Golden Gate Capital for $75 million, and stay based in Quincy. Talbots also laid off about 260 Talbots employees, including about 200 in Massachusetts.
New York may beat Boston again: The battle over the title of world’s biggest asset manager was often fought here in Boston between State Street Corp. and Fidelity Investments, although British bank Barclays was often in the mix. But both Boston firms will face a formidable competitor now that New York’s BlackRock has landed a deal valued at $13.5 billion to buy Barclays’ asset management arm, a move that would solidly place BlackRock at the top in terms of total assets under management.
Extended sale at Filene’s Basement: Some sales are too good to be true at Filene’s Basement – or at least at the Burlington-based retailer’s bankruptcy auction. Men’s Wearhouse had been declared the winning bidder, but the sale process was reopened on Friday after two competitors objected to the way the initial auction had been handled.
Curtains close on Plymouth studio funds: The curtains closed on a state plan to provide $50 million in badly-needed infrastructure funding for Plymouth Rock Studios, an ambitious movie studio campus proposed for a golf course in Plymouth. While losing the state aid was a big blow, developers vowed that the show would go on with private funds.
Mortgage-backed securities an Evergreen problem: The mortgage-backed securities market’s meltdown last year continues to plague Boston’s money managers. Evergreen Investments agreed to pay $40 million back to investors in one of its bond funds and a $1 million fine to settle regulators’ accusations that Evergreen had improperly priced the fund and gave an unfair early warning of the problem to preferred investors.
Colbert can thank Haverhill factory workers for unique camouflage suit
Posted on June 12, 2009 by Jon Chesto
Filed Under entertainment, manufacturing | Leave a Comment
Many viewers of Comedy Central’s “The Colbert Report” in the past week noticed Stephen Colbert’s new military-style crew cut. But you can bet the workers at the new Southwick Apparel factory in Haverhill were paying more attention to the unusual camouflage-colored suit the comedian was wearing.
The host of “The Colbert Report” trekked to Iraq where he performed shows in front of U.S. troops that aired during the past week. The segments, dubbed “Operation Iraqi Stephen: Going Commando,” represented the first time that anyone has broadcast from Iraq for a USO tour.
During the broadcasts, Colbert wore that custom-made suit with a camouflage pattern. A tailor at the Brooks Brothers store on Madison Avenue in New York fitted Colbert for the suit, which was then manufactured in two weeks at the Haverhill plant. The plant regularly makes clothes for the Brooks Brothers chain.
Unfortunately, you won’t be able to buy one of these “camo suits” for the next wedding or major corporate function that you need to attend. A spokesman for Brooks Brothers says there are no plans to make Colbert’s camouflage suit available for commercial distribution.
