Financial life in a big town

Another Johnson & Johnson manufacturing plant — this one making heartburn and gas relief drugs Pepcid, Imodium and Mylanta — was cited for a pattern of quality lapses similar to those seen at the company’s shuttered Tylenol plant.

Earlier this month, safety inspectors from the Food and Drug Administration issued a "Form 483" to Johnson & Johnson’s Lancaster, Pa., plant.

A Form 483 is issued after an FDA inspection finds problems with a company’s manufacturing practices.

The Lancaster plant is owned by Johnson & Johnson-Merck Consumer Pharmaceuticals, a joint venture of J&J and Merck (MRK, Fortune 500), but is operated by the company’s McNeil division.

McNeil, which makes pain and cold drugs such as Tylenol and Motrin, is under investigation by the FDA and lawmakers in connection with successive recalls of those drugs over the past year. McNeil shut its plant in Fort Washington following a scathing FDA inspection report of the factory in May that cited 20 manufacturing violations.

This latest setback for Johnson & Johnson is raising questions about lax quality standards at its over-the-counter drug factories and the possibilty of a pattern that could result in the FDA hitting the company with another warning letter or tougher oversight at its plants.

Disturbing pattern

The latest inspection report on the Lancaster plant, released by the FDA on Wednesday, cites 12 violations of good manufacturing processes, at least five of which were also observed at the Fort Washington plant.

One expert said the violations observed at the Lancaster plant are "very serious."

"If this is going on in Johnson & Johnson plants that make over-the-counter drugs, is this indicative of what is going on in other parts of the company’s business?" said David Rosen, who worked at the FDA for 14 years. Rosen is now with with law firm Foley & Lardner and advises major pharmanceutical companies on FDA regulations and compliance.

In an conference call with analysts this week, Johnson & Johnson’s chief financial officer Dominic Caruso declined to comment on whether other company plants had received Form 483 reports payday loans.

At both plants, inspectors questioned whether lab procedures and controls were adequate to assure products "conform to appropriate standards of strength, quality and purity."

Both plants were cited for failing to properly review an unexplained manufacturing discrepancy in a batch of drugs and for not properly following up on consumer complaints about products made at the facilities.

Specifically, the FDA’s report on the Lancaster plant noted that the staff failed to follow up on several consumer complaints, including instances where consumers said they found mint-flavored Pepcid tablets mixed inside the same bottle as berry-flavored tablets. There were also multiple complaints about a product lot for "lack of effect."

Experts said "lack of effect" could mean that the product was not producing the desired result when used. The FDA report did not name the product. Also, inspectors said the plant’s complaint coordinator did not initiate an investigation of the product.

However, the report did not mention the possibility or need for a product recall.

Additionally, regulators said the Lancaster factory didn’t properly document equipment malfunctions or keep adequate maintenance records. Inspectors said they found unlabeled test tubes filled with product sitting out on a counter. The factory also didn’t properly clean utensils used in the drug making process.

One industry expert, who did not want to be named, said he would not be surprised if the FDA is pondering further action on the Lancaster plant, such as a warning letter or a consent decree. Under a consent decree, the plant would be able to continue production, but would have constant third-party inspection.

The FDA and Johnson & Johnson declined to comment on the possibility of further enforcement action against the company. 

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A flood of temporary Census workers in May led to the biggest jump in jobs in ten years, the government reported Friday.

Employers added 431,000 jobs in the month, up from 290,000 jobs added in April. It was the biggest gain in jobs since March 2000.

But Census hiring was responsible for 411,000 of May’s increase in employment. Private sector employers also added 41,000 jobs in the period, well below the 218,000 private sector job gains in April. Government payrolls other than Census declined by 21,000 jobs in May, due largely to job cuts by state and local governments.

It was a disappointing number for private sector hiring, as economists surveyed by Briefing.com had forecast an overall gain of 500,000 in May. U.S. stocks traded sharply lower on the report, with the Dow Jones industrial average down more than 200 points in midday trading.

"This is a timely reminder that, although the economic outlook is improving, the recovery is still pretty fragile," said Paul Ashworth, senior U.S. economist for Capital Economics.

Despite the spike in hiring, the unemployment rate declined only modestly, to 9.7% from 9.9% in April. Economists had forecast it would decline to 9.8%.

After nearly two years of constant job losses, the U.S. economy has added 982,000 jobs so far in 2010, adding workers in every month, a sign that the labor market is improving beyond the short-term Census jobs. But the modest gain shows that employers are still cautious about adding staff.

Christina Romer, chair of the White House Council of Economic Advisers, said the lower unemployment rate was encouraging, even if the slowing of private sector job growth was reason for concern.

But Republicans were quick to criticize the report as proof that the Obama administration had taken the wrong path on trying to create jobs.

"Let me be clear — during challenging times, a job is a job," said Rep. Eric Cantor, the House Republican Whip. "Yet government jobs that are paid for by taxing small business people and borrowing from the Chinese are not signs of a healthy economic recovery."

Rep. Carolyn Maloney, D-NY, said she was encouraged by the numbers in the report, and that it was important to recognize how much the labor market has improved.

"The job picture is very different from what it was a year ago," said Maloney, one of the chairs of Congress’ Joint Economic Committee. "We’re on an upwards trend. The road to recovery is bumpy, but we’re trending in the right direction."

Shrinking gains: Just over half of private sector industries added jobs in the month, while 46% continued to shave jobs from their payrolls. Job gains in the private sector were far more widespread during the previous three months.

Manufacturers added 29,000 jobs in the month, but that was balanced out by a 35,000 job loss in construction. Retailers also trimmed 6,600 jobs and financial firms cut 12,000 jobs. Some sectors that added jobs, such as leisure and hospitality or health care, posted their smallest gains in months.

The Census Bureau wasn’t the only employer adding temporary jobs, as there was a gain of 31,000 jobs in temporary help services.

Scot Melland, CEO of Dice Holdings, a provider of specialized career Web sites, said he was surprised by the weak private sector hiring. A semi-annual survey by his firm had found employers in the process of stepping up hiring. Despite the disappointing numbers, he still expects job growth to pick up through the rest of this year.

"You don’t want to read too much into one months’ results," he said. "It could be a month of digestion and we move on from here. The indicators are still positive."

Bright spots: The good news in the report beyond Census was in hours worked, which increased to an average of 33.5 hours from 33.4. That helped to lift weekly wages and also cut the number of part-time workers who wanted full-time jobs by 343,000, as workers who had their hours cut during the recession were put back on full-time status.

Job seekers are also somewhat less discouraged, as the number of unemployed workers who wanted jobs but had stopped looking for work declined by 114,000.

But the problem of long-term unemployment continued to worsen as those out of work more than six months rose to a record 6.8 million, or nearly half of all unemployed workers.

"The U.S. unemployment rate is likely to be higher for longer during the current recovery due to a structural mismatch between workers and jobs," said John Silvia, chief economist for Wells Fargo Securities 

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As with fast payday loans, this recently used to be the case, but competitive lenders and higher demand has taken this loan type to mainstay levels.

The global spotlight is still on the Pittsburgh region, with domestic and international delegations and media visiting regularly to see firsthand Pittsburgh’s transformation and to learn about rebuilding an economy and revitalizing the environment.

The Pittsburgh Symphony Orchestra and the Pittsburgh Regional Alliance have packed their bags – and their instruments – and have crossed the Atlantic, ready to put Pittsburgh on the world stage during the BNY Mellon 2010 European Tour. It’s an ideal time for the PRA to be traveling with the PSO, capitalizing on the global exposure Pittsburgh received during last year’s G-20 Summit and leveraging the orchestra as one of our region’s most acclaimed assets.

It’s also the inaugural leg of a PRA-led Pittsburgh World Tour 2010, a marketing initiative that begins with the PSO in Europe and will extend into the fall in Seoul and Shanghai.

Representatives of the PSO and the PRA, along with regional business leaders, such as BPL Global’s CEO Keith Schaefer, will be creating a conversation about Pittsburgh as a prime business investment destination.

The PRA’s vice president of international business investment, Suzi Pegg, will be traveling with the PSO, leading the PRA’s business investment activities in Basel, Frankfurt, Luxembourg, Paris and Prague. A native of Pittsburgh’s sister city in the U.K., Sheffield, Pegg has called Pittsburgh home since 2000.

Follow her entries from Europe this week on the Pittsburgh Business Times website. Pegg promises to offer perspective on Pittsburgh’s global positioning, post-G-20, as well as some lighter observations about life on the other side of the Atlantic.

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When you’re done with your tax return, your first instinct may be to stash it in a drawer and put it out of your mind until next year. That would be a mistake.

A smarter move would be to think of your return as a financial snapshot. Here are some questions to consider:

— Should you adjust your withholding? If you’re getting a fat refund, it’s smart to reduce withholding so you receive that money during the year. If you’re writing a big check each April, you might see that as an interest-free loan. But if you pay the bill with a credit card or other loan, chances are you’re better off paying as you go.

— Are you saving for retirement? If your job offers a 401(k) plan with an employer match, you benefit twice, because you’ll save on taxes and get those matching funds. If you don’t have a plan at work, that makes an Individual Retirement Account or Roth IRA even more important.

— Did you itemize deductions? IRS statistics show that only about 35 percent of returns include itemized deductions. That means millions are missing out on tax savings, and for many it’s because of sloppy record keeping.

— Is it time to buy a house — or pay off your mortgage? With housing prices and interest rates still low, you may find it’s the right time to purchase a home. In contrast, Eisenberg said some could benefit from paying down their mortgage. If the interest deduction is no longer substantial, it’s worth considering.

— Did you file your first joint re turn, or have kids? If you’re recently married or you’re a new parent, it’s a good time to reassess your insurance needs and make sure you’ve updated your financial paperwork and records.

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Solar power company GreenVolts Inc. hired Uday Bellary as its chief financial officer.

Bellary worked previously at Atrica Inc., where he was CFO and helped the company raise $34 million in equity and debt. That company was ultimately bought by Nokia Siemens Network. He was also CFO of Metro Optix. and MMC Networks.

GreenVolts’ CEO David Gudmundson will be his boss. Gudmundson took over as CEO in October, when previous CEO Gary Beasley left for a job in private equity.

Fremont-based GreenVolts makes “concentrating photovoltaic” technology — systems that track the sun and with mirrors that focus sunlight onto solar cells for greater generating efficiency.

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Chi-X Europe criticized the London Stock Exchange for adopting a procedure that prevented trades being routed to rival venues when glitches halted trading for more than three hours on Thursday.

The LSE’s main rival said the exchange put its market into auction status when the system broke down and that this triggered the block on routing to other venues.

“The auction status hampered investors’ ability to trade by not enabling participants to seek a reference price on another venue,” multilateral trading facility Chi-X said in a statement.

A spokesman for the LSE denied Chi-X’s claim.

“Our decision was a result of customer feedback,” he said. “Some were experiencing connection issues while others were not, and customers requested for the market to be put into auction status so that there would be a level playing field.”

Chi-X said many firms’ trading systems treated the auction status like a normal market event such as the daily closing auction.

By contrast, on November 9 the LSE halted trading during a partial systems failure, and many member firms were able to switch to other venues to trade UK stocks, Chi-X said.

“We call for the LSE and any other market of listing to close their market outright when outages occur in order to allow market participants to continue trading,” the statement said.

Chi-X also called on the Financial Services Authority to ensure the “continuation of trading and an orderly market.”

Another LSE rival, Nasdaq OMX called for standardization of market data in Europe.

“This would enable trading to continue even if one market fails to operate,” said Charlotte Crosswell president of Nasdaq OMX. “We are supportive of the European Commission further investigation this issue.”

(Editing by Will Waterman)

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Mitsubishi UFJ Financial Group became the third major Japanese bank to post upbeat results, underscoring the improving outlook for the sector, and said it would raise $11 billion to meet stricter capital rules.

Japan’s top bank also said it would adjust its plan to merge its brokerage with Morgan Stanley’s Tokyo operation, cancelling its original target of full-scale integration. Mitsubishi UFJ owns one-fifth of the U.S. investment bank.

Japanese lenders have suffered smaller credit losses than their Western rivals, but have been slow on the rebound, hampered by their dependence on Japan’s sluggish economy.

“It appears that the worst is behind, but revenue momentum is still not strong and the outlook for Japanese banks is unclear, given the uncertainties about the economy and the possibility of deflation,” said Masahiko Watanabe, credit analyst at Fitch Ratings in Tokyo.

Economists expect Japan’s deflation to persist until at least the second quarter of 2011, a recent Reuters poll showed, meaning that interest rates and revenue from lending will have little chance to rise.

Mitsubishi UFJ confirmed earlier reports that it planned to raise up to 1 trillion yen ($11.2 billion), becoming one of scores of Japanese firms to tap a modest rebound in share prices for much-needed cash.

Japanese companies have so far raised about $40 billion this year by issuing common stock and convertible bonds to shore up balance sheets depleted by the economic downturn.

EYES ON MIZUHO, SUMITOMO MITSUI

Almost three-quarters of the fundraising has been by financial firms, and analysts say that Mizuho Financial Group and Sumitomo Mitsui Financial Group, Japan’s other big banks, will also need to raise more funds cash til payday.

Speculation about the possibility of further fundraising has weighed on bank shares this year.

“These companies issuing their own shares is a big burden on the market,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“And now you have to wonder if Mizuho will do it, and how big, as well as a lot of smaller banks,” he said.

All three banks have already completed a round of fundraising, but only Mitsubishi UFJ is out of the “lock-period,” meaning it is the only one able to issue new shares now. The timing may be a critical advantage, analysts have said, if Japan’s stock market slides again.

Mitsubishi UFJ and Morgan Stanley said that they would be forming two separate companies to share their Japanese securities businesses, instead of one, fully merged unit. The creation of the two firms will be completed by May 2010 the said, two months later than originally planned.

Mitsubishi UFJ President Nobuo Kuroyanagi told a news conference that Mitsubishi UFJ Morgan Stanley Securities, to be owned 60 percent by the Japanese bank, will concentrate on the retail business. 

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WASHINGTON–A group of businessmen on Monday launched a new coalition to urge the federal government to make a major investment in electric transportation, pointing to electric cars as the best way to confront the nation's dependence on imported oil.

Top executives with more than a dozen companies, including Nissan Motor Co., Fedex Corp., electric utility PG&E Corp. and battery developers A123 Systems Inc. and Johnson Controls-Saft, announced the formation of the Electrification Coalition to lay the groundwork for millions of electric cars to reach U.S. highways.

Issuing a lengthy plan to electrify the nation's fleet, the coalition urged Congress to pass a series of tax credits and loan guarantees to bring 14 million electric cars to the road by 2020 and more than 100 million by 2030. The group envisions a network of electric vehicles in six to eight cities in the short term and an expansion across the country, making 75 percent of all vehicle miles traveled powered by electricity by 2040.

"There's no pie-in-the-sky here," said Frederick W. Smith, FedEx's chairman, president and CEO. "It's simply a matter of organization, a matter of will and a matter of execution.''

Participants, however, acknowledged that the proposals would be expensive and would require a major commitment from Congress. The group's blueprint would cost more than $120 billion over eight years and promote tax credits for the installation of advanced batteries, loan guarantees for the retooling of plants, and tax credits for public charging stations and home charging equipment no credit check payday loans.

"Ultimately the consumer will make the judgment about where this country goes, but from the standpoint of public policy we can set the stage for it," said Sen. Byron Dorgan, D-N.D., who joined the group for its announcement.

Nissan President and CEO Carlos Ghosn said the auto industry was working quickly to develop zero-emissions cars in response to concerns about oil security, tighter emissions requirements in the United States and elsewhere and a public thirst for alternative vehicles not tied to petroleum.

Ghosn said the world market of 600 million vehicles is expected to expand to 2.5 billion vehicles in 2050 with the growth in vehicle purchasing in developing nations such as China and India, making electric cars a must. Nissan is releasing the Leaf, an all-electric car, in limited numbers next year and plans to put the vehicle into mass-production globally in 2012.

"The time is right for electric cars – in fact the time is critical," Ghosn said.

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On the Net:

Electrification Coalition: http://www.electrificationcoalition.org/

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Contracts in the $450 trillion derivatives markets would need to be cleared through central counterparties unless they are exempted by regulators, under a financial regulation reform bill introduced by U.S. Senate Banking Committee Chairman Christopher Dodd on Tuesday.

The bill here calls for all swaps to be centrally cleared, but said regulators may exempt the contracts if no central clearinghouse accepts the swaps, or of if one of the counterparties to the trade is not a dealer.

Details on what constitutes a swap and a major swap participant, both of which would fall under the regulation of the Commodity Futures Trading Commission and Securities and Exchange Commission, are included in the bill.

The CFTC and SEC would adopt rules further defining terms within 180 days of the act being implemented and the regulators would have the right to prescribe definitions for swaps to include transactions that have been structured to avoid the classification, under the bill online payday advance.

Regulators are pushing for the majority of derivatives to be cleared through central counterparties, which stand between trade counterparties and assume the risks of the trade, to reduce systemic risks posed by the interconnectiveness of the contracts.

Derivatives can be used to hedge against or bet on the changes in value of the underlying assets such as stocks, bonds, commodities.

(Reporting by Karen Brettell and Kevin Drawbaugh; Editing by Leslie Adler)

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DuPont posted an 11 percent jump in third-quarter profit on Tuesday, beating Wall Street estimates, but narrowed its earnings outlook for the year.

Net income rose to $409 million, or 45 cents per share, from $367 million, or 40 cents per share, a year earlier. Analysts on average expected 33 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 18 percent to $5.96 billion from $7.29 billion. Analysts expected $6.14 billion.

For the full year, the company now expects earnings of $1.95 to $2.05 per share, compared with a previous estimate of $1.70 to $2.10.

(Reporting by Ernest Scheyder; Editing by Lisa Von Ahn)

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