Financial life in a big town

General Motors Corp (GM.N: Quote, Profile, Research) expects the recovery in the U.S. auto market will be “a long haul” that only begins in the second half of the year, a senior executive at the No. 1 U.S. automaker said on Wednesday.

The market comments by Mark LaNeve, vice president for sales for GM North America, were the first by a top GM executive since Ford Motor Co (F.N: Quote, Profile, Research) cut its outlook for U.S. sales last week, citing rising gas prices and sharply lower demand for its trucks and SUVs.

“I think it’s going to be a long haul,” LaNeve said at an industry conference in Los Angeles, when asked when he expected U.S. auto sales to recover. “We think it starts to get better in the back half of the year.”

But LaNeve said the battered U.S. housing market and consumer confidence would have to both improve to support a rebound for auto sales.

“We don’t look for it to come roaring back instant payday loan. We think it will be a slow ramp up,” LaNeve said at the event in Los Angeles sponsored by Automotive News.

U.S. sales for GM are down almost 17 percent for the first four months of the year, compared with a decline of about 8 percent for industrywide sales.

Most analysts now see U.S. sales of cars and light trucks dropping to near 15 million units in 2008, down from about 16.15 million in 2007 and the lowest annual tally for the industry since 1994.

GM said in late April when it announced a $3 billion first-quarter loss that it would face a slower recovery in its home market than it had first forecast and a faster shift out of higher margin trucks and SUVs in response to higher gas prices. 

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Canadians shouldn’t let the gloomy news about the United States’ economic crunch persuade them that things are bad in this country, too, says Finance Minister Jim Flaherty.

In an address in Toronto, he admitted that manufacturing - particularly in forestry and autos - faces major challenges in Canada. But Flaherty said the economy, overall, is faring much better in the current uncertain economic period than in the U.S.

"There is a steady drumbeat of negative media coverage on the state of the U.S. economy," he told a business audience this morning.

"Sometimes I think this spills over into Canadian readership and influence on Canadians. Often, when you pick up a newspaper, economic forecasts are being adjusted downwards. And certainly there’s been a psychological effect of the recession in the U.S. housing sector."

The Bank of Canada has recently said that the economy is barely limping along in the April-to-June period and will grow by a weak 1.4 per cent for the year as a whole.

But Flaherty, clearly trying to deflect complaints about his management of the business environment, stressed that no one is predicting a decline in output in Canada.

"Keep in mind: Canadian projections are on the positive side of the ledger," he said.

He said Canada continues to have low unemployment, tame consumer-price inflation and balanced government books in Ottawa.

"We have the strongest economic fundamentals of all of the major industrialized countries" in the Group of Seven nations, Flaherty added.

And Canadians and Canadian businesses have shown resilience in face of the collapse of the U.S quick payday. housing bubble, higher energy prices, increased competition from abroad and the higher-valued loonie, he said.

"Canada is in a good position to weather this economic storm."

He added, "We are not the United States," pointing out that the causes of the "current American malaise" are not likely to be duplicated here.

Canada’s financial institutions have not faced the drastic credit crunch that has rocked banks south of the border. And Canadian banks are not heavily exposed to risky securities backed by U.S. subprime mortgages, he said.

"Canada’s housing market remains solid. It has not experienced the same stresses as in the United States, certainly not the same bubble."

For Ontario, which is facing near-recessionary conditions, Flaherty had nothing new to offer today. He said the Conservative government’s major policy thrust has been trying to stimulate the economy by cutting personal and corporate taxes and the GST.

He rejected direct support measures for troubled industries, saying a program of short-term assistance to help struggling regions "always leads to failure."

"In our view, it is not only misguided, it’s expensive and it does long-term damage."

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Citigroup offered some investors an unwelcome dose of deja vu on Friday.

The largest bank in the United States presented its most comprehensive turnaround plan since Morgan Stanley banking and trading veteran Vikram Pandit took over as chief executive in December, but many of its key plans sounded all too familiar.

Pandit said on Friday that Citigroup Inc (C.N: Quote, Profile, Research) businesses would work together, allowing them to squeeze more revenue from individual products by selling them across multiple units. He also said he would cut costs and invest overseas.

If all this sounds familiar, there’s a good reason: it’s exactly what was promised at Citi’s last analyst day in December 2006 by the then-CEO, Chuck Prince, before he was succeeded by Pandit a year later.

“We thought Citi was going to start on a new road, and lo and behold, we’re down the same road again,” said Helena Ocampo, an analyst covering financial stocks at Sentinel Investments, which manages $5.6 billion of assets and owns Citi shares.

Skepticism helped push Citi’s stock down 2.8 percent to $23.63 on Friday, bringing its loss this year to nearly 20 percent.

To be sure, Pandit is making some bold moves credit scores. He said Citi would shed some $400 billion of non-core assets within three years, scale back in businesses like bond trading and ramp up in prime brokerage and electronic trading.

But by and large, Pandit is not proposing massive strategic changes, and is focusing instead on making sure Citi doesn’t see a repeat of the last two quarters, when it posted more than $15 billion of losses. 

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Defense contractor General Dynamics Corp. said Wednesday that its first-quarter earnings rose nearly 32 percent.

The Falls Church, Va.-based firm said it earned $572 million, or $1.42 per share, up from $434 million, or $1.06 payday loan. Sales totaled $7 billion, up 11 percent.

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You sign a long-term gas and electricity contract, hoping to save money, but promised savings have not materialized.

In the last two years, anyone who signed or renewed energy contracts has paid more than if they had stayed with their local utility.

But if they try to get out early, they’re hit with big penalties.

On Your Side has helped many people get out of contracts without fees because they were older, living on low income or obviously confused about what they signed.

Agata Falkowski-Ham: Her grandparents, both in their eighties with limited English, were paying 40 cents a cubic metre for gas – about one-third higher than the Enbridge Gas price (29 cents).

They were clients of Ontario Energy Savings Corp., which wanted $800 to cancel the contract.

I helped her grandparents get out penalty-free. Then, I went to work for her mother.

A 60-year-old widow, she had signed electricity contracts with two companies – Direct Energy and Universal Energy Corp. – at the same time.

Direct Energy released her, but Universal did not. Spokesperson Jonathan Drummond said the mother had consulted her daughter before reaffirming the contract.

Falkowski-Ham insisted she was out of town and had not discussed the deal with her mother.

Universal agreed to cancel without penalty after getting proof the widow’s only income was $639 a month from a survivor’s allowance.

Juan Molina: He had a contract for gas and electricity with Ontario Energy Savings Corp., but signed new contracts at the door with Superior Energy Management.

OESC asked him to come back and he agreed. That led Superior to impose cancellation charges for the two new contracts.

"I agreed to allow Juan out of his contract (reluctantly)," said Greg McCamus, president of Superior, after I appealed on his behalf paydayloans. "He seems like he has a lot of financial issues and made a mistake by signing another contract when he had an existing contract in place."

Wendi Maroon: Her mother, 73, had a gas contract with Universal Energy. Later, she signed with OESC when offered lower rates.

Universal Energy charged cancellation fees, but relented.

"If the family provides documentation that Mrs. Maroon was over 70 at the time of signing the contract, UEC will cancel without fee," Drummond said.

The daughter had been told there was no policy of releasing seniors from contracts. She was relieved to hear her mother would no longer get letters from a collection agency.

Whitney Slattery: A first-year college student living in her own apartment, she signed a five-year electricity deal last fall with Superior Energy.

"When I got my hydro bill, it was double its normal cost of about $50," she said. "I called Superior Energy and was told that it would cost me $753 to cancel."

McCamus said the contract and reaffirmation call were done properly, but he would not hold her to the deal.

"She is so agitated and obviously confused and frustrated that I don’t know if she is capable of understanding our offer," he said after listening to her calls.

Remember you have a choice. You can say no to energy sellers at the door. If you can live with floating prices, you may pay less with your utility – and you won’t get penalized if you want to end the relationship.

Write to onyourside@thestar.ca or visit www.ellenroseman.com

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Health products maker Johnson & Johnson reported a 40 percent jump Tuesday in its first-quarter profit, due to higher sales of consumer products, favorable exchange rates and a research charge a year ago.

The New Brunswick, N.J.-based maker of contraceptives, medical devices, baby care items and prescription drugs reported net income of $3.6 billion, or $1.26 per share, for the first three months of the year, up from $2.57 billion, or 88 cents a share, a year ago.

Revenue rose 7.7 percent to $16.19 billion from $15.04 billion a year earlier fast cash now.

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Anyone who has tried to break a bad habit knows how hard it can be. Every New Year’s Day millions resolve to lose weight, quit smoking or get better organized. And every Jan. 2, those making the resolutions are resolved to try it again another day.

In his latest book, "Strategy and the Fat Smoker," author David Maister equates business achievement with the struggle a smoker has when trying to quit the habit. Many try, but not all will succeed.

With business, as it is with smoking, Maister surmises some essential questions of strategy are not being asked and answered despite a plethora of practical wisdom that is well disseminated, publicized and understood.

Smokers who want to quit know that doing so will benefit their health and their wallets. Executives know a well-designed business approach will add to their bottom line.
There are a million good reasons for doing both. But turning reason into reality means thinking differently about strategy. Without answering some tough questions, the smoker lights up again or the business fails because of the pursuit of the same old failed strategy in hopes of a better result.

Those who lead organizations, according to Maister, must think differently about strategy. First, they must learn what drives and motivates people, then take that information to the next level by using it to figure out how to change and improve their businesses. Second, they must be ready to rebound from mistakes. The ability to recover from mistakes is a strategy move in its own right.

Maister’s book has opened my eyes to two important ways of looking at strategy.

First, it has helped me realize that creating a single resolve in a group to take action is more important than merely creating insights into what should be done. Getting everyone on board and, as Maister says, "sticking to the diet" can be a leader’s biggest challenge. If done well, however, it can also be the most rewarding.

Second, is the importance of taking an action-oriented approach to strategy cash advance loan. Problems should be addressed now, before something serious happens in the future, leaving what needs to be fixed beyond repair. Being successful means moving forward and implementing something management and your organization cannot ignore.

Maister also reveals his finding that success cannot be achieved if you rely on only doing things "well most of the time." For him, the pursuit of short-term goals is inherently anti-strategic and self-defeating. The time necessary to make noteworthy advancements cannot be undervalued.

He reminds us that anything worth putting an effort into, whether it is breaking a bad habit or building a better business strategy, will take time to bear fruit. You must forgo some of today to reach a better tomorrow.

Maister says strategies in business are applied more efficiently when presented as matters of principle and not just convenience. In establishing those strategies, business leaders must take into account that some people have an appetite for high-investment, future-oriented strategies they are willing to defer. Others, they will find, are reluctant to invest, even in their own future.

If you are willing to invest some of your time on a strategy book designed to make you a better manager, take a bite out of "Strategy and the Fat Smoker."

BENJAMIN OLA. AKANDE IS DEAN OF WEBSTER UNIVERSITY’S SCHOOL OF BUSINESS AND TECHNOLOGY. READERS ARE INVITED TO JOIN WEBSTER’S ONLINE BIZTALK BOOK CLUB. GO TO WWW.WEBSTER.EDU/SBT/BOOKCLUB TO JOIN AND PARTICIPATE IN THE BOOK CLUB CHAT FOR "STRATEGY AND THE FAT SMOKER" FROM NOON TO 1 P.M. TODAY. NEXT MONTH’S BIZTALK BOOK CLUB SELECTION IS "LIFE’S A CAMPAIGN: WHAT POLITICS HAS TAUGHT ME ABOUT FRIENDSHIP, RIVALRY, REPUTATION, AND SUCCESS," BY CHRIS MATTHEW.

‘Strategy and the Fat Smoker’ by David Maister The Spangle Press, $29.99

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SEOUL–Special prosecutors probing claims of corruption at Samsung Group took their investigation to the very top yesterday, questioning its chair for nearly 11 hours over allegations the iconic conglomerate used a slush fund to bribe influential legal figures.

Lee Kun-hee, who has run South Korea’s biggest industrial group for two decades, appeared for questioning at the office of the independent counsel examining the claims.

Surrounded by a throng of reporters, the 66-year-old Lee, moving slowly and speaking softly, stopped briefly to answer questions, saying he had nothing to do with directing the alleged fund.

The independent counsel, established by parliament and approved by South Korea’s previous president, is focused on allegations raised by Samsung’s former top lawyer.

Kim Yong-chul claimed in November that Samsung had $200 million (U.S.) in the slush fund and used it regularly to bribe prosecutors and judges. He also said that Lee’s wife used some of the money to purchase expensive works of art from abroad.

Samsung vociferously denied the allegations when they were raised.

Lee, whose father established the conglomerate 70 years ago, is widely credited with turning its flagship Samsung Electronics Co. into a top global brand during his tenure by transforming the corporate culture into one focused on quality.

Samsung Group – with interests ranging from shipbuilding to leisure – is widely respected by South Koreans as the global face of their economy payday loans. Samsung, however, is controversial, with many South Koreans also feeling the family-run conglomerate has too much power and influence in society.

"I’ve come here to raise the voice of the people’s desire, that the criminal behaviour of Lee Kun-hee should thoroughly be revealed, investigated, and he should be punished," Chung Jong-kwon, a protester, said outside the special counsel’s office before Lee arrived.

Lee himself took aim at such opinions, telling reporters they were to blame for propagating negative portrayals of Samsung.

"I have never thought of (Samsung) as a criminal organization," Lee said when questioned. "I think the problem is with you reporting that."

Prosecutors, who began the investigation in January, questioned Lee’s wife, who heads a Samsung art museum, for more than six hours Wednesday. His son and brother-in-law and senior Samsung officials have also endured hours of questioning.

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KANSAS CITY — Bombardier Aerospace is considering Kansas City as a site for a $375 million passenger jet assembly plant, city and state officials said.

While the project is only in its initial stages, discussions have gone far enough that state officials outlined legislation Tuesday to provide state tax credits as a prerequisite for landing the plant.

The Montreal-based Bombardier Aerospace is looking for a site to assemble the C Series of 110- and 130-seat passenger jets. The plant eventually would employ up to 2,100 people, with up to 5,200 related jobs created by employers attracted by the plant. The estimated overall economic impact over 22 years would be $5.9 billion.

"This is exponentially larger than any deal we’ve ever done," Missouri Department of Economic Development Director Greg Steinhoff told The Associated Press.
Kansas City officials also are enthused. "This would be a game-changer for Kansas City," Bob Marcusse, president of the Kansas City Economic Development Council, told The Kansas City Star. "We would suddenly be major players in the aviation industry."

However, the deal faces several obstacles. Bombardier made a preliminary deal two years ago to build the plant in Canada and is under political pressure to honor that deal.

Also, the company has just begun marketing the C Series and must generate enough orders to justify building the assembly plant. A decision on whether to go ahead with the project is expected this year.

Marc Duchesne, a Bombardier spokesman, confirmed Tuesday that the company has talked to Missouri officials, but he noted that other states also have expressed interest, although he would not name them cash advance. He also said the company’s "preferred choice" is still Mirabel, Quebec.

Kansas City and state officials say Bombardier has looked at a site on city-owned property at Kansas City International Airport for the 1.3-million-square-foot assembly plant. The firm hopes to begin production in 2013 and reach full production in 2015 or 2016.

Steinhoff acknowledged some initial concern that Bombardier was looking at Missouri to leverage a better deal from Canada. But he now believes the company is serious about Kansas City.

State economic development officials want to give Bombardier tax credits through a "mega-project" amendment to the Enhanced Enterprise Zone Program, which would be for projects that hire a minimum of 1,000 employees and invest at least $300 million.

With Bombardier, the state would cap the amount of tax credits at $40 million annually over the 22-year life of the deal.

Steinhoff said Bombardier would gradually repay the state for the tax credits, with interest, by giving the state a certain amount of money for each plane it produces. The details of those repayments are still being negotiated, he said.

Senate Majority Leader Charlie Shields, R-St. Joseph, and Rep. Ron Richard, R-Joplin, are sponsoring the tax credit legislation. Committee hearings on it are scheduled today in both the House and Senate.

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REYNOLDS, Ind. — This one-stoplight farming hamlet had big dreams in 2005 when it was christened BioTown USA.

Its goal: to become the first U.S. community to meet all electricity and gas needs through renewable energy by using everything from farm waste to sewage.

Industry and government officials led the early charge. BP installed a gas pump offering an ethanol fuel blend, and South Dakota-based VeraSun Energy Corp. started building an ethanol production plant near town pay day loans.

Former U.S. Agriculture Secretary Mike Johanns stopped by in support, as did the band Crosby, Stills, Nash & Young. Visitors also included a group of Chilean corn farmers who were touring the Midwest and interested in learning more about biofuels.

But the visitors are long gone, and many say the excitement is, too. Money problems, leadership changes and other obstacles have sparked skepticism that Rey