Dell to close part of Lebanon facility as PC sales slow

Dell Inc. said it plans to close the part of its Lebanon, Tenn., facility that manufactures desktop computers on Friday, due to weaker sales for the products.

The closure will move 250 to 300 employees from Lebanon to Nashville, Dell spokesman Ken Bissell said. Some employees who previously built desktop computers would now either be boxing, shipping or handling materials in the company's Nashville distribution center off Murfreesboro Road, he said.

The news comes as overall demand for PCs industrywide has declined, hurt by falling home prices, weaker stock values and skittish consumer confidence, said Framingham, Mass.-based research firm IDC.

All that leads to deteriorating credit in the corporate world and depressed consumer spending.

Dell's shipments of personal computers have slipped 6.3 percent compared with a year ago, according to IDC.

"We're managing our volumes (manufacturing operations) by shifting capacities to other production facilities," said Bissell, who declined to give specifics.

Way to reduce costs

The Lebanon facility has manufactured desktops since it opened in 1999. The remaining workers there will continue to refurbish desktop PCs, with about 250 to 300 employees remaining in Lebanon, Bissell said. Employees were informed earlier this week and the transition to the Nashville facility begins next week, Bissell said.

The decision is part of a larger initiative within Dell to reduce operating costs. Dell announced last March it would have $3 billion in planned cost reductions by the end of fiscal 2011.

Dell's net income declined 5 percent to $727 million during its third quarter ending Oct. 31, compared with a year earlier.

Third-quarter revenues declined 3 percent to about $15.2 billion, the company said.

Dell has four Tennessee facilities, including the one in Lebanon, plus two distribution centers in Nashville, and a call center here that houses sales and technical support staff.

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GM to end jobs bank Monday

In a major concession required by terms of the auto industry's federal bailout, General Motors Corp. will end its controversial "jobs bank" program that gives some idled workers full pay and benefits even though they're not making cars.

The jobs bank ends on Monday.

On Wednesday, GM said that the United Auto Workers union had agreed to allow the company to end the program, which means that about 1,600 workers now in it will have to apply for unemployment benefits.

But even so, they still will receive about 72 percent of their normal take-home pay, because GM will give them so-called "sub pay" to supplement the money they receive from their states' unemployment insurance programs, the automaker said.

There is still a lingering question whether just wiping out the jobs bank will satisfy provisions of the federal bailout, under which Chrysler LLC and GM are to receive a total of $17.4 billion in federal loans to help them through their financial crises.

The terms of the government aid require the automakers to stop "the payment of any compensation or benefits to U.S. employees of the company or any subsidiary" if those workers have been fired, laid off, furloughed or idled, other than giving them "customary severance pay."

Chrysler has already ended its jobs bank program.

Mike Herron, chairman of UAW Local 1853 at the GM plant in Spring Hill, said that GM and the union see the so-called "sub-pay agreement" as part of customary severance pay.

U.S. Sen. Bob Corker, R-Tenn., who pressed the automakers for pay concessions as a condition of receiving the federal loans, said that GM's Wednesday announcement was "old news."

"The UAW agreed to do away with the jobs bank in early December," he said. "But there are, however, still a number of outstanding issues, and I look forward to seeing what progress has been made when the auto companies submit their plans next month."

GM and Chrysler must give the government their comprehensive revitalization plans in February, and if those plans are not deemed acceptable, they might have to begin repaying the loans by the end of March.

Chrysler has received $4 billion, and GM has been given $13.4 billion.

Auto industry analyst Erich Merkle said the elimination of the jobs banks "is largely political posturing. This by no means will return GM to viability. There are many issues the company has to work through to ensure its future."

Negative connotation

But he added, "The whole jobs bank idea has a negative connotation, especially to those outside the auto industry who don't have such benefits."

Herron said no workers at the Spring Hill plant are in the jobs bank program at this time, and that while the plant was shut down for 14 months from spring 2007 to summer 2008 for retooling, the workers were officially on layoff and receiving state unemployment benefits and GM sub pay.

State unemployment benefits usually are available for up to 26 weeks, unless they are temporarily extended by the federal government, as they have been at least twice in the past few months as the recession has deepened.

On a national level, workers participating in the GM jobs banks had been expected to report to either their plant or union halls and undergo training or perform community service in return for receiving their pay. Many, though, have said they spent their days sitting in conference rooms, playing cards or watching TV.

The theory was that sales would grow, allowing the manufacturers to bring many of the idled employees back to work. The companies saw the jobs banks as a way to keep trained, experienced workers available for callback, rather than losing them permanently to other manufacturers.

The notion that jobs banks were exclusive to the U.S. automakers was a false concept, Merkle said.

Toyota, for instance, suspended production at its Tundra pickup plant in San Antonio, Texas, for the last three months of 2008 because of bloated inventories, but employees still reported to work each day and were given additional training or other tasks not related to the assembly of vehicles.

"The problems the auto industry is facing right now are not limited to the U.S. manufacturers," Merkle said. "It's a global problem because of the economy, and every company is hurting."

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Cummings Inc. founder dies at 89

Thomas L. Cummings Jr., a local businessman and community leader, died Monday morning.

The son of a Nashville mayor, Cummings, 89, was best known for the company that he founded, Cummings Inc., which he built into one of the world's biggest sign makers. He was a Nashville native, and he graduated from Hume-Fogg High School and Vanderbilt University, where he was a member of the Delta Kappa Epsilon fraternity.

Polite yet direct, given to wearing monogrammed shirts with French cuffs and suits with impeccably folded handkerchiefs, Cummings was described in a 1989 Tennessean profile as the quintessential businessman of Nashville's "old school."

Twenty years later, some who knew him said the label still applied.

"If by that you mean reaching agreements on a handshake, if you mean with integrity, if you mean your word is good and taking care of people, then those are the things that come to mind," said Stephen Lynn, one of the two Nashville businessmen who bought Cummings' company a decade ago.

Cummings first came to public attention during World War II, when as the son of then-Mayor Thomas L. Cummings, he successfully fought to join the U.S. Army after having been rejected for service for poor eyesight.

Cummings entered the service as a second lieutenant and was stationed in the Pacific, where he rose to the rank of captain. He would retire from the Tennessee Air National Guard in 1967 as a colonel and deputy wing commander.

Cummings and a friend from Memphis founded his sign company in 1946, one year after returning from combat. Each put in $7,500, and at first the company operated out of the Cummings family garage.

Cummings bought his partner out in 1954. He would take his firm through a public offering in 1967 and return to private ownership two decades later. He eventually sold the company to Lynn and Stephen Kerr in 1998.

He worked with hotelier

It was a Memphis company, Holiday Inn, that would help Cummings get established. For several decades, Cummings held the contract to supply the chain's iconic green sign, with the hotel's name in white script beneath a golden arrow. Cummings would manufacture 1,700 of the signs, which were placed in front of Holiday Inns nationwide.

The company also supplied signs for General Motors, Ford, Domino's Pizza, Taco Bell and Kentucky Fried Chicken, among others. His company placed the L&C letters atop Nashville's first downtown skyscraper.

From his wood-paneled office at Demonbreun Street and 12th Avenue South, Cummings' influence extended far into the Nashville business and social community. He was a board member of several local banks, three private schools and two colleges.

Cummings also worked with several local charities. Most notably, he was a leader in the United Givers Fund, a predecessor to the United Way of Metropolitan Nashville, and in 1960 he served as campaign chair.

Cummings is survived by four children, Tamara Lee Haggard, Tina Cummings Huggins, Thomas Leon Cummings III and Timothy James Cummings Sr.; eight grandchildren; and two great-grandchildren.

Visitation will be held Thursday from 4 p.m. to 7 p.m. at Covenant Presbyterian Church. The family will receive friends at 10 a.m. Friday, with a service to follow at 11 a.m. Burial will be at Woodlawn Memorial Park.

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Investor nominates 4 to board at Gaylord

Gaylord Entertainment Co.'s biggest shareholder nominated two hotel executives and an oil industry dealmaker to the company's board of directors, the latest move in a proposed shakeup of management.

Oil and hotel investor Robert Rowling, chairman of the investment firm TRT Holdings Inc., named himself and three others with Texas roots to a slate that is meant to force leadership and operational changes at Gaylord, the Nashville-based convention hotel chain.

"We believe that our director nominees are well qualified, highly experienced and have the judgment necessary to improve Gaylord's financial and operational performance," Rowling said in a statement.

A Gaylord spokesman said the company had received the list of nominees and would review whether they meet the requirements of the company's bylaws.

Nominees based in Texas

Apart from Rowling, the nominees are all independent of TRT, which owns just under 15 percent of Gaylord, as well as Omni Hotels, Gold's Gym International, oil company Tana Exploration and Mexican retailer Waldo's Dollar Mart.

None but Rowling holds stock in Gaylord, the firm said in a statement and in a filing with the Securities and Exchange Commission.

All have backgrounds that would put them within Rowling's circle of associates:

>> David Johnson is the president and chief executive of Aimbridge Hospitality, a hotel company with headquarters in the Dallas suburb of Carrollton. TRT is based in nearby Irving.

>> Mark Langdale is a former Dallas real estate investor and hotel executive who runs the George W. Bush Presidential Center. Rowling was an early and ardent supporter of Bush.

>> Michael Dickman is a former Morgan Stanley executive who specialized in advising oil mergers. Rowling's fortune, estimated at more than $6 billion, began in the Texas oil patch.

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Twitter connects travelers and businesses
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Nashville leads effort to combine health payments

Nashville companies are on the leading edge of one of the significant concepts being touted as a major tenet of health reform.

Health-care delivery, like medical education, has long been organized in micro systems. These systems tend to function effectively in their own specialized universes, but the intersection of these specialty worlds can be like the meeting of the tectonic plates, subject to significant disaffection — even earthquakes — that disrupt health-care delivery.

Earlier this year, Centers for Medicare and Medicaid Services Administrator Kerry Weems referred to these health-care micro systems as "silos in health care," and announced a demonstration project to bring about a single, comprehensive payment to cover a bundle of services.

The demonstration project, called Acute Care Episode Demonstration, is intended to facilitate a coordinated and integrated approach to achieving clinical oversight and financial savings in delivery for a single episode of care — such as a stroke or coronary arterial bypass surgery.

The Centers for Medicare and Medicaid Services announced five major health systems had been selected to participate in the project to explore the concept.

Two of the participants, Hillcrest Medical Center in Tulsa, Okla., and Lovelace Health System in Albuquerque, N.M., are owned by Ardent Health Services of Nashville.

Also selected was Baptist Health System in San Antonio, owned by Vanguard Health System in Nashville. The final two participants are the Oklahoma Heart Hospital in Oklahoma City and Exempla Saint Joseph Hospital in Denver.

How payments work now

In the current clinical and payment world, many health-care services are a la carte. The hospital may bill the diagnostic-related group, but the physicians submit individual bills.

This might include separate bills from the surgeon, pathologist, anesthesiologist and various consulting specialties. There may also be separate bills for lab and imaging, depending on the procedure.

Finally, any subsequent care, such as rehabilitation, skilled nursing or home health services, is also billed and paid under separate payments and even separate reimbursement methodologies.

Any of us who have been through, or had a family member go through, a major procedure know there are bills coming from multiple vendors for services we did not even know occurred.

The concept of a single payment for an acute care episode is sound in theory, but there are those tectonic plates. Let's hope that Nashville again proves to be a leader in innovation and aids the nation in making progress integrating essential and necessary health-care services.

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PlayStation 2 finally goes country with new game

PlayStation-owning country music fans can now breathe a sigh of relief. Or, sing one.

Since late 2006, PlayStation 2 owners have been able to sing along karaoke-style with their favorite rock artists on the popular game SingStar .

Until the end of 2008, players who are fans of country music were left crooning along with ABBA and Weezer. But now, with the recent release of SingStar Country , musical gamers can boot scoot with Brooks & Dunn, have a good time with Alan Jackson or walk the line with Johnny Cash.

"We had contemplated country for a while thinking how to enter the country market and make the game really appealing," said Rob Alvarez, product marketing manager of Sony Computer Entertainment. "Country, being one of the most successful genres of music, was appealing to us. We were looking at country because we wanted to widen our demographic. It happened to be our best-selling title this holiday season."

SingStar cartridges are sold individually and in bundles that include two microphones. After plugging in the mikes, players select songs from the menu, the artist's video that corresponds with the selection starts to play and the words appear at the bottom of the screen. The game records performances for playback at the end of the songs.

Alvarez said he thinks the game is successful because it is versatile — one to eight people can play, different game settings accommodate different skill levels, and multiple activities are offered, including duets, head-to-head contests and group sing-alongs.

"If you lack experience in singing, you can still have a great time. It's a party game — the easy pick-up-and-play music game," he said.

It's more than just a game

Much research went into selecting songs and artists to appear on SingStar Country , Alvarez said. The company wanted to make sure a broad range of country singers was represented so that it could maximize appeal among country fans; among those included are Faith Hill, Taylor Swift, Willie Nelson and Brad Paisley.

As far as the songs, they had to be instantly recognizable.

"We picked songs that are super popular that people can sing so when they get the game they can enjoy the experience right out of the box," Alvarez said.

Troy Gentry from Montgomery Gentry said he enjoyed SingStar Country right away. Because two of his duo's songs are included on the game he already knew the words.

"I did pretty well," he said. "What I did learn is you don't have to be able to sing on pitch to keep up with the game, you just have to sing within the line.

"It's kind of hard when you're trying to keep up, but it was fun. I sing that song every night. But obviously they used the studio cut, and we get on the road and we start singing it all the time and we change the little styles to keep it interesting. Going back and having to sing the original version was kind of an eye opener."

Gentry also sees more potential for the game than just a fun thing to do at parties.

He said aspiring singers could use the game to help fine-tune their vocals.

"I have heard that NASCAR drivers go out and buy the NASCAR games because they are set up just like the tracks," he said. "They use that as a simulator and as a tool for driving when they aren't at the track.

"This is a good useful tool for someone who wants to be a singer as far as learning to sing on pitch, because you can play it back," Gentry said. "You can use it to help better yourself."

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In a world of information, listening is a vital tool

U.S. home sales rise in December

WASHINGTON — Sales of existing homes posted an unexpected increase last month, as consumers snapped up bargain-basement foreclosures in California and Florida, closing out the worst year for the U.S. real estate market in more than a decade.

Analysts, however, cautioned that prices are likely to keep falling through 2009, and said the outlook for home sales is highly uncertain, despite a boost from low mortgage rates.

"I don't think we're close to a bottom yet," said Michelle Meyer, a Barclays Capital economist who sees nationwide prices falling an additional 15 percent this year. "We're still very far away from a normal housing market."

While sales boomed last month in Los Angeles, San Diego and Las Vegas, they sank in cities with formerly healthy markets, such as Atlanta; Charlotte and Raleigh, N.C.; Seattle; and Portland, Ore., according to the Associated Press-Re/Max Monthly Housing Report, also released Monday.

The Greater Nashville Association of Realtors said home sales dropped 33 percent from December 2007 to December 2008.

If President Barack Obama's administration enacts a plan to keep borrowers in their homes, analysts said, the number of foreclosures on the market might decline, but it's still unclear how successful any government efforts will be.

Sales of existing homes rose 6.5 percent to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November, the National Association of Realtors said Monday. Without adjusting for seasonal factors, sales nationwide were up 1.1 percent from a year earlier, reflecting a surge of more than 36 percent in the Western states.

Some in the real estate industry were encouraged by the surprising jump in sales and a big decrease in the number of homes for sale. "It looks like we are hitting bottom" in sales, said Ronald Peltier, chief executive of HomeServices of America Inc., which owns real estate agencies in 19 states.

Interest these days is coming from prospective buyers like Todd Kuhn of Richmond, Va., who waited until prices dropped to a more affordable level before starting to look in earnest. Kuhn and his wife, parents of a 14-month-old daughter, have visited about 20 homes this month.

"I see this as the first real opportunity that we've had ... at, hopefully, the bottom of the market," said Kuhn, 34, a dentist. "I know that the economy is going to turn around someday. Hopefully we'll be well positioned for that."

Home prices in Seattle are falling and foreclosures have picked up, but sales are still sluggish and listings are languishing on the market for six months or more, said Gary DeRosa, a Seattle-based real estate agent with ZipRealty Inc.

"Even though the sellers may be reducing their prices, the buyers are still coming in at 5 to 10 percent below the market price," DeRosa said.

The nationwide median sales price plunged to $175,400 last month, down 15.3 percent from $207,000 a year ago.

That was the lowest price since May 2003 and the biggest year-over-year drop on records going back to 1968.

In Nashville, the median sales price for a single-family home was $163,750 in December, the lowest price for the month since 2004.

Prices may keep falling

With sales of foreclosures and other distressed properties making up about 45 percent of sales, many economists expect prices to keep falling.

For all of 2008, there were 4.9 million existing home sales, down more than 13 percent from a year earlier, and the lowest total since 1997.

Making matters worse, layoffs continue to accelerate as the recession deepens.

Experts say that when the housing market turns around, price increases are likely to be modest.

"We have another year to go of soft home prices, primarily at this point because of the recession and job losses," Norm Miller, a real estate professor at the University of San Diego, said in an interview last week.

In one encouraging sign, the number of unsold homes on the market last month fell nearly 12 percent to 3.7 million, the lowest level since January 2007. At the current sales pace, it would take 9.3 months to sell all of the properties, down from 11.2 months in November.

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48 Home Depot stores will close; Nashville loses 1
Real Estate Outlook: Obama Effect

48 Home Depot stores will close; Nashville loses 1

Atlanta-based The Home Depot announced it is closing 48 of its stores in various divisions nationwide, including one in Nashville, as consumers continue to cut back on spending for home décor.

The shutdown of the 48 stores will affect 5,000 employees, or about 2 percent of the company's work force, Home Depot said. The company said it was exiting its Expo Design Center business, causing the shutdown of the Expo store on Powell Avenue, affecting 150 workers.

"Exiting our Expo business is a difficult decision, particularly given the hard work and dedication of our associates in that business and the support of our loyal customers," Chairman and CEO Frank Blake said in a statement. "At the same time, it is a necessary decision that will strengthen our core Home Depot business."

Home Depot saw a 6.2 percent drop in sales to $17.8 billion during the third quarter, which ended Nov. 2, compared with the same period a year earlier. Net earnings in the third quarter declined 30.7 percent to $756 million.

Home Depot said the Expo business has never been a strong business, and sales have "weakened significantly as the demand for big ticket design and décor projects has declined in the current economic environment."

The Nashville store will begin a liquidation sale on Tuesday, starting at an average of 10 percent off, said company spokesman Ron DeFeo. The discounts will increase in percentage over time and the store is expected to close by April 8, he said.

Workers will receive a severance package, with at least 60 days' pay from the last day of work, DeFeo said. Full-time hourly and salaried employees who are enrolled in the company's benefits plan will receive a lump sum payment of at least nine months' worth of the company's contributions to their medical coverage, he said. Employees will also be encouraged to look for other opportunities within the company and will be given job placement assistance, he added.

Store types are varied

Home Depot will be shutting down 34 Expo Design Center stores, five YardBIRDS stores, two Design Center stores and seven HD Bath locations. Home Depot plans to reduce its work force in administrative functions in the store support centers by 2,000 employees. These employees make up 10 percent of the company's officer ranks. Home Depot said it would have a salary freeze among all of its officers.

The company said it expects to have a total pre-tax charge of $532 million, of which $390 million will be recognized in the fourth quarter.

Home Depot was one of several companies that announced job cuts on Monday. Sprint Nextel Corp. announced that it planned to eliminate 8,000 jobs, and Caterpillar said it would eliminate about 20,000 jobs.

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Surgeons-for-hire ease ER loads

For more hospitals, finding general surgeons to treat emergency room patients has become a bigger challenge as experienced doctors opt out of late-night call rotations or more physicians choose specialty practices to better control how many hours they work.

That reality has sparked the use of more temporary surgeons by hospitals, a trend that can prove lucrative for the doctors who work stints of a couple of weeks to a few months for take-home pay that can range from $700 to $1,500 a day.

Often, staffing agencies that arrange such assignments keep at least a third of a doctor's pay and pick up malpractice insurance and other costs. Some physicians see benefits to the setup, saying it frees them from the bookkeeping headaches of running their own offices and lets them work as much or as little as they like.

Consider Dr. Jennifer Peppers, a Franklin resident who's spending the next four weeks at a Kentucky hospital after staffing the emergency room at Horizon Medical Center in Dickson earlier this month.

Peppers, who left a group practice to work as a traveling general surgeon in May, has worked at seven hospitals since then, including at facilities in Kentucky, New Hampshire, Tennessee and Oregon.

"You have to really be a flexible person to be able to do that — step into any hospital and kind of assume the role," Peppers said, adding that her recent work in Dickson included performing three appendectomies.

Hospitals deal with shortage

Hospital administrators say hiring doctors for these short-term assignments helps compensate for the fact that comparatively fewer general surgeons are coming out of medical school and residencies these days.

Nationally, only 1,032 general surgeons came out of residency and were certified by the American Board of Surgery last year. That's roughly the same number that was produced 28 years ago when the U.S. had 79 million fewer people living here.

For years, nurses, primary care doctors and anesthesiologists have been hired on a temporary basis. But hiring general surgeons this way is relatively new. The trend has especially caught on in many rural areas where it can take longer or prove more difficult to recruit new full-time surgeons.

Nationwide, 365 rural counties don't have a surgeon living there, according to the American College of Surgeons, a Chicago-based trade group.

At the Dickson hospital where Peppers has worked, an ongoing search for a new general surgeon has already lasted three months, and officials say it could take more than a year to land a good prospect.

Some see benefits

Often, temporary surgeons are put to work via staffing agencies such as Staff Care of Irving, Texas, a company that has arranged a number of assignments for doctors in Middle Tennessee.

Hospital officials say the price tag varies.

"They don't come cheap," said Dr. Lanny Copeland, chief medical officer with LifePoint Hospitals, a Brentwood-based rural hospital operator that occasionally uses temporary surgeons. "But the flip side is they take a lot of work off the hospitals."

On average, Staff Care keeps 35 percent of a doctor's pay and handles such necessities as medical malpractice insurance and paying fees to get surgeons licensed in a state. Other travel costs are often absorbed by the hospital.

Peppers likes the routine of being a traveling surgeon in part because her take-home pay doesn't depend on wrangling with insurers over a patient's coverage.

"This is a little simpler life," said Dr. George Sheldon, a professor of surgery at the University of North Carolina at Chapel Hill and past president of the American College of Surgeons. "They just go and practice medicine, and the hospital will take care of the insurance — and they can have an assured income."

Others tout alternatives

Other health-care executives tout alternatives to surgeons for hire.

The Surgical Clinic LLC, a 27-surgeon group that staffs a half-dozen local hospitals, is close to an arrangement with three of those facilities to provide surgical hospitalists during the day and for some on-call coverage at night, said Bob McCorkle, its chief executive.

Such employees are full-time, permanent employees with somewhat limited duties. They free up other doctors to see patients in clinics or perform elective surgeries.

McCorkle said traveling surgeons' services cost too much and the surgeons don't have a long-term relationship with the community, which he sees as a shortcoming.

Other critics say there should be safeguards against the potential risk of miscommunication when a patient's care is handed off to a temporary surgeon.

But proponents see the trend as a way to leverage the use of part-time surgeons to do the jobs of full-times ones, who remain in short supply.

In a world of information, listening is a vital tool

In a world of information, listening is a vital tool

Jeffrey Immelt, the chairman and CEO of General Electric, recently described our new president as an aggressive listener and someone who doesn't just go through the motions, but who listens to learn.

Listening is not just for winning presidential campaigns; it's also one of the most important communication skills for business success.

We live in a world of information overload. We just can't get comfortable with silence. Yet, being patient while another person talks is a fast way to establish and build trust.

People instinctively know when the listener simply postures and goes through the motions of listening without actually taking in what is being said. They also know when a listener is physically alert so that he or she can concentrate and actively focus on what is being said.

If you're in the habit of thinking about what you want to say while someone else is speaking to you, it's time to learn to listen.

One way to increase your focus is to listen so that you can repeat the point of what has just been said, putting it in the form of a question to add credibility. Try this phrasing, "So what I believe you're telling me is … "

That kind of approach has the added benefit of validating the other person, which also builds rapport.

Another tool is to learn not to be afraid of silence. Reporters know that if they want to learn something new, the best tactic is simply to be quiet. Salespeople know this technique as well. If the silence lasts long enough, the other person will try to fill it, and you may learn something the speaker wouldn't have otherwise divulged.

Another tool may take longer to learn and apply. You have to care in order to listen with focus.

And that means you must care about the other individual's information. If you tell yourself that the information in the conversation is more important than the points you want to make, it could be the beginning of actually taking the time to hear someone else.

Use nonverbal cues like nods and good eye contact to validate the speaker as well.

Finally, a great way to learn to listen is to take notes. It is a great compliment to the person speaking and it underscores that what he or she is saying is important to you.

Good product at right price is no longer enough

Good product at right price is no longer enough

As you navigate in the current economy, it is important to step back and take the long view on your business.

Author Daniel Pink's new book, A Whole New Mind , encourages us to look at three factors —abundance, Asia and automation — that affect the very nature of our products and services.

First, abundance: The World War II and Great Depression stories told to baby boomers by parents and grandparents were about doing without. Today, the social, economic and cultural lives of much of the world are one of abundance.

Consider three quick facts on the American economy to prove the point:

• Today, home ownership is seen as the American birthright, not the American dream. Two-thirds of us are homeowners. In fact, 13 percent of all homes purchased today are second homes.

• The 2001 Bureau of Transportation Statistics reported we have more cars than licensed drivers.

• Americans spend $17 billion annually on storage units. We have so much stuff that we need places away from home to store it.

Second, Asia:Outsourcing is a continuing source of anxiety for Americans. Our recent election cycle had both parties debating and pontificating on the subject.

Paul Taylor, reporting in the Financial Times , said that one in four information technology jobs will be off-shored by 2010.

According to Forrester Research, at least 3.3 million white-collar jobs and $136 billion in wages will shift from the U.S. to low-cost countries such as India, China and Russia by 2015.

Why is this dramatic shift taking place? Follow the money.

According to Pink, an American computer chip designer earns $7,000 a month; in India, that wage is $1,000. An aerospace engineer in the U.S. makes $6,000 per month, while his Russian counterpart makes $650.

A typical American accountant might command $5,000 a month, while a similarly qualified and English-speaking accountant based in the Philippines makes $300 per month.

Third, automation: In an Esquire story titled "The Best and the Brightest," computer scientist Vernor Vinge said, "Anybody with even routine skills (once) could get a job as a programmer. That isn't true anymore. The routine functions are increasingly being turned over to machines."

All of these facts are disturbing but true. So what do you do?

Pink contends that products today not only must be reasonably priced and functional, they also must be beautiful, distinctive and meaningful.

Think of Apple. The iPod wasn't just sleek and interesting — it solved the consumer problem of downloading music, via iTunes. Taking another step, Apple announced what it calls the "first green laptop." It features a recyclable aluminum and glass casing, requires less energy to run and is manufactured with fewer harmful chemicals, all of which appeals to green consumers.

Here's the bottom line: We in business must learn to use our whole brain. Approach your job and business more holistically. Combine high-tech abilities with high concepts and high-touch approaches to win.

As Tennessee job losses soar, Bridgestone plans cuts
Investor Report: PMI Group Risk List

As Tennessee job losses soar, Bridgestone plans cuts

Statewide unemployment soared to 7.9 percent in December — up 0.9 points in a month — while the pace of job cuts picked up more steam with Nashville-based Bridgestone Americas saying it would slash hundreds of additional jobs at its La Vergne tire plant on Thursday.

The dual announcements were fresh evidence that the local economy could get worse before it improves.

"It's likely we're going to see a few more months of job losses of this magnitude or perhaps even higher," said David Penn, an economist at Middle Tennessee State University. "Anything dealing with producing or selling goods has been hammered."

Tennessee's unemployment rate in December is higher than the national rate of 7.2 percent for the month.

Bridgestone Americas Tire Operations said a new round of layoffs — on top of 158 cuts made last month — would affect 644 more workers in La Vergne as Bridgestone permanently ends production of tires for cars, pickups and SUVs at the plant there.

Some 259 people who make tires for commercial trucks and buses are included in the job loss totals, but they could be called back if business improves later, the company said. "We have to try to adjust," said Dan MacDonald, a Bridgestone spokesman.

The plant will retain about 700 employees on the side of the house that makes truck tires. Bridgestone has owned the La Vergne plant since 1982 and it's the company's oldest passenger tire facility.

"The mood in the plant is very somber. We all read the newspapers; we all see what's happening with the economy," plant manager John McLaughlin said.

"Most people are wondering how far down the seniority list the cuts are going to go. People are concerned about having a job," said Garry Manning, president of the United Steel Workers Local, which represents many Bridgestone employees.

Job losses across board

Statewide, the manufacturing sector has lost a net of 20,100 jobs in the past year. Losses also have been felt in trade, transportation and utilities, with 17,300 jobs lost in the past year; and in professional and business services, where 15,000 jobs were shed.

On the bright side, 6,300 jobs have been added in education and health services, while employment in local governments rose by 1,500 jobs year-over-year, the state labor department said.

But that data was of little comfort to city officials and workers in La Vergne as they deal with the latest Bridgestone cuts.

"People don't realize how these jobs (impact La Vergne)," Mayor Ronnie Erwin said. "It is really going to affect our tax dollars. My heart goes out to the employees. It hits me to the bone."

Rising unemployment also has brought more people to career centers across Middle Tennessee as they look for new work.

The Tennessee Career Center location off Rosa Parks Boulevard is averaging 225 to 250 people daily during this week. The Murfreesboro office had about 125 visitors on Wednesday, said Jeff Hentschel, a spokesman with the state Department of Labor and Workforce Development.

Job searches are bearing little fruit, though, as many companies trim back on hiring. "The labor market remains a disaster area," warned Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Nationally, first-time applications for unemployment benefits jumped last week by 62,000 to 589,000, the U.S. Labor Department reported Thursday. That was much more than the 540,000 tally economists had expected.

The number of unemployed people continuing to draw jobless benefits soared by 97,000 to 4.6 million, up from 2.7 million people who were receiving such aid a year ago.

Others cut jobs, too

Bridgestone joined a host of other companies in cutting jobs. This week, Clear Channel Communications said it had eliminated about 1,850 positions across its corporate offices, outdoor advertising and radio operations, representing 9 percent of its work force.

The owner of five radio stations in Nashville isn't breaking down numbers by geography or business functions, said Lisa Dollinger, a spokeswoman.

The latest downsizing at Bridgestone's La Vergne plant will occur from mid-March to the end of June, said McLaughlin, the plant manager.

Before layoffs and other job restructuring began last month, the La Vergne plant employed 1,530.

Under the union contract, most employees who could be called back to work in the future will receive some money to supplement their unemployment benefits, MacDonald said.

Penn, the MTSU economist, said the layoffs could be felt beyond Rutherford County because some plant employees live in surrounding counties, including Davidson and Wilson.

"Those jobs are good-paying jobs, and it's going to take some time to replace them," Penn said.

As economy falls, more people put money away in savings
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Good product at right price is no longer enough

As economy falls, more people put money away in savings

For the better part of two decades, Americans have been busy spending wildly and racking up as much debt as possible. But that appears to be changing.

For the first time since the federal government started keeping track in the 1950s, the national household debt level actually fell a little last year.

The personal savings rate — after dipping below zero on a couple of occasions during the past eight years — is now creeping upward, meaning people are saving more of their incomes.

Ironically, a trend that seems so praiseworthy may further worsen the economy in the short term, as laid-off workers and even people with good jobs curb their spending. But it could mean good things for the economy in the long term, if it lasts.

People are rethinking their attitudes toward debt — people such as Jesse Doeinck, 31, whose days of enjoying late-night entertainment and profligate spending ended soon after the recession began and his son was born — seven months
ago.

"The economy does scare me,'' said Doeinck, a Verizon sales manager. "Even though I perform at my company, that doesn't mean we're not in jeopardy. If I lost my job, I would need some time to find another job."

Even affluent wage earners such as Bill McConnell of Brentwood are rethinking how they spend money — cutting back on even minor expenditures such as dry cleaning.

After a near-cataclysmic loss of wealth in the stock market and in housing values, many Americans are beginning to save more of what they earn and trim their debt.

Affliction under control

It's the wealth effect that has gone away, or as Middle Tennessee State University economist Bill Ford puts it, "affluenza" has cleared up. That's the common malady of spending more money than you actually make, a sickness fueled by the perception that stock portfolios and real estate values were bound to keep increasing. Home equity loans became plentiful, funding things like new cars and home improvements, perhaps too easily.

Now, many lenders are simply unwilling to hand out loans the way they did a year or two ago, despite the billions of dollars in aid the federal government is giving them in the hopes of fueling an economic revival.

After handing out money as if it were Monopoly paper, a few financial institutions have gone out of business. And many Americans have watched more than a decade of their stock market returns shrivel by a third or more.

Bill McConnell, a senior manager at cell phone insurance company Asurion, is one of those people.

"It essentially wiped out all of our gains,'' he said. Now, the 37-year-old executive's plans to retire at age 55 seem more like a hazy dream. He and his wife, a dermatologist, are saving a little more, even though they haven't really seen a decline in their paychecks from work.

They go to Costco and buy food in bulk. They've cut back on eating in restaurants. Recently, they spent about $6,000 on a Disney vacation, instead of going to the Barbados, as they did two years ago at a cost of about $10,000.

McConnell worries not just about the economy but also about whether the Obama administration and Congress will raise his income taxes, and whether Social Security will be bankrupt by the time he retires.

"I don't have confidence anything will be there for us or for our son,'' he said. "Our goal is to leave a nest egg for our son and get some flexibility to deal with life."

Cushions get thicker

David Hayes, a certified financial planner in Mt. Juliet, said many of his clients are increasing their savings and holding on to last spring's government stimulus checks instead of spending them. Watching friends and neighbors get laid off while their own stock portfolios dwindle has had an impact, too.

"I would say my clients are acting more responsibly as a result of this," he said. "They feel the wolf is at their door."

Some financial planners are altering their advice.

Instead of recommending as little as three months of emergency funds in the bank, as some financial planners used to do, Bill Garrett of Garrett Financial in Brentwood now tells clients to keep at least six months of cash on hand to weather the recession.

"I don't know too many people who are entirely secure in their jobs," he said. "We're going to see a lot more layoffs and we don't know where it's going to stop."

Doeinck went to Garrett a few months ago to get his finances in order, and he has decided to build up a six-month cash reserve. The economy and the birth of his son have helped change his spending habits. "We were living a young lifestyle,'' said Doeinck, who said he and his wife went out occasionally to bars and managed to run up $19,000 in credit card debt in their 20s.

Now, at 31, Doeinck is paying off that debt as well as a car loan. Gone is the roughly $50-a-month gym membership that he rarely used. His wife, who stays at home to care for their child, has given up her tanning bed membership.

"I could do some push-ups and run around the block,'' he said. "As far as tanning, my wife can lay on the back porch."

Will people stay frugal?

Some doubt the newfound frugality of Americans will really last. But if it does, it could lead to more money for investing, for people to start businesses and to provide for their own living expenses if another economic downturn arrives, economists say.

"I think it's going to be a while before people are comfortable tapping housing wealth and depending on that. They're going to want savings," said Vincent Reinhart, a former Federal Reserve economist who works at the American Enterprise Institute, a conservative think tank.

Reinhart said low savings rates have led to a reliance on foreign investors who buy up government debt to fuel the federal government's increased spending.

During the 1980s, the national personal savings rate ranged from 7 percent to 12 percent. It was 2.8 percent in November, the latest figure available from the federal Bureau of Economic Analysis.

Lisa Mensah, the executive director of the Initiative on Financial Security at The Aspen Institute in New York, said a lack of savings has diminished the financial security of Americans, just in time for a global financial crisis.

"We have a bigger long-term problem to fix with our savings, investment and ownership, and I do think now is the moment to fix it,'' she said. "Sometimes, when Humpty-Dumpty falls off a wall, it's time to rebuild it."

Twitter connects travelers and businesses

Twitter connects travelers and businesses

When Mike Wilson joined Twitter in July 2007, he wasn't expecting it to garner him his proverbial 15 minutes of fame. But that's exactly what happened last month when the Denver native boarded the ill-fated Continental Flight 1404 headed for Houston.

Thanks to Twitter — a free micro-blogging service that allows users to send and read short text updates — Wilson (or "2drinksbehind" on Twitter) became a national news phenomenon as he documented his experience during the Dec. 20 plane crash.

His descriptions ("tweets" in Twitter parlance) from the scene of the crash ranged from initial alarm to annoyance as the airline refused to serve alcohol post-crash in the lounge. "You have your wits scared out of you, drag your butt out of a flaming ball of wreckage and you can't even get a vodka-tonic. Boo," he tweeted from the scene.

Wilson is being tagged as the first to tweet from a plane crash, but he's certainly not the first twittering road warrior — and those in the travel industry are noticing.

Hotel brands, airlines, airports, destinations and other travel companies are joining the growing Twitter community not only to have their voices heard, but also to hear what their customers in the Twitter community are saying about them.

The mobile nature of the technology makes it especially attractive to travelers.

It was even attractive to users attending President Barack Obama's inauguration festivities. According to the Twitter company blog, "Twitter sailed smoothly through the inauguration but at the peak (around noon), some folks did experience a two- to five-minute delay receiving updates."

Airlines keep in touch

"We consider our Twitter account akin to an information booth," said Morgan Johnston, JetBlue's manager of corporate communication. "Responding to situations after they've happened is a great idea; responding to situations while they're happening is even better."

JetBlue frequently responds to tweets by directing people to tools already available for their use such as flight status updates and weather alerts. But oftentimes, Twitter gets much more personal.

In late November, a Twitter user updated her status announcing that she needed a wheelchair for a JetBlue flight. Before customer service got to her, Johnston saw the tweet and hooked the woman up with someone at the airport who was able to offer assistance in less than 10 minutes.

Southwest Airlines is often credited with innovative marketing, and when it comes to its Twitter account, it's no different. Answering inquiries and announcing new service aren't Southwest's only uses of Twitter.

The airline regularly posts photos of airport giveaways and holiday terminal decorations to its account. The airline even hosts Tweetups for users to get together.

Tablet Hotels utilizes its Twitter account similarly to JetBlue, keeping an eye on what customers are saying and what they can do to improve their experience. "We had one of our TabletPlus members Twitter from the front desk when the hotel was giving her a hard time," said Michael Davis, co-founder of Tablet Hotels. "We caught it within 30 seconds of posting and our customer service called the hotel to resolve.

"Customer problems can no longer be kept 'quiet' with the emergence of the Web," Davis said. The Marriott hotel group agrees, which is why it has not one, but two Twitter accounts. One serves as public relations and customer service vehicle, while the other focuses on Marriott's efforts to go green.

"The most interesting way we used Twitter was after the attack on our Islamabad hotel," said John Wolf, senior director of public relations for Marriott.

"The responses were not only heartwarming but overwhelming. It really represented what social media is all about because the conversation was authentic and genuine, and because the replies came from people in so many nations."

Fairmont Hotels and MGM Mirage are other popular hotel tweeters.

Tourists get answers

Before road warriors and leisure travelers hit the road, more are turning to Twitter to scout their destination. Baltimore, Chicago and Philadelphia tourism officials are active users on the site and use it to offer tips from restaurants to shopping and everything in between.

The man behind Baltimore's account, Tom Rowe, frequently responds to tweets requesting live music on specific dates. "We'll respond with what's on our radar, but the community will chime in," said Tom Noonan, president and CEO of the Baltimore Area Convention and Visitors Association.

Even specific destinations are getting into the micro-blogging madness. California's Monterey Aquarium is an avid user, as are the folks behind the Brooklyn Museum, who promote exhibits and happenings on the site.

The San Francisco Zoo learned the power of Twitter early on. "We had one (user) complaining that one of our exhibits was closed," said Gwendolyn Tornatore of the zoo. "They had come all the way out here and were upset they didn't get to see that specific animal. This was a key learning experience for us and we started to Twitter when animals were off exhibit or if our carousel was closed for the day."

Goo Goo plant in Ga. to close

The company that makes Goo Goo Clusters is closing its plant in Eastman, Ga., and will relocate 250 jobs to Nashville.

Standard Candy announced Tuesday that it plans to shut down the Dodge County plant by early April. CEO James Spradley Jr. said the factory, built in the 1950s, needed major upgrades.

Spradley said the Georgia operations will be moved to the company's headquarters in Nashville. The company said all 250 of its full-time Georgia employees will be offered jobs in Nashville if they want to move.

Standard acquired the Eastman plant in 1985 from Georgia-based candy maker Stuckey's, a move that added pecan logs to the company's roster of confections.

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As shoppers stop spending, retailers learn their lessons

NEW YORK — For years, retailers could afford to be sloppy about running their businesses because customers kept buying. No more.

Stung by the worry that shoppers, who cut spending by the most dramatic amount in at least 39 years this holiday season, may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices, from ordinary groceries to jeans from brands they could once only aspire to.

Of course, the downside is that consumers who want something out of the ordinary — an olive green prom dress, for example — may have to look harder. Stores are rooting out offbeat, unpopular colors and styles, which will mean fewer choices.

Sales clerks are also checking back with customers to see if they're satisfied with their purchases.

"We are in a sea change," said Millard "Mickey" Drexler, J.Crew's chairman and chief executive and former CEO and visionary of Gap Inc.

Pricing goods within reach of strapped consumers is also a big focus, given the way nervous consumers have stopped shopping. Same-store sales, or sales at stores open at least a year, fell 2.3 percent in November and December together, according to the International Council of Shopping Centers. And the worsening sales slump in January has many worried about the industry's prospects over the next few months.

Spring inventory is slim

Belt-tightening is in evidence at Belk, which operates several department stores in Middle Tennessee.

Arlene Goldstein, Belk's vice president of trend merchandising and fashion direction, said the consumer will be "very careful … very strategic about what she buys" in the coming months.

Goldstein said Belk has "definitely adjusted" its inventory for the spring, taking a look at anything that seemed "excessive or duplicative" in its assortment.

Belk suffered a nearly $23.5 million net loss in the third quarter ending Nov. 1, according to a document filed with the U.S. Securities and Exchange Commission. Sales at stores open at least a year declined 9.8 percent in the period.

"Sales are down so the merchant doesn't buy as much," Goldstein said. "Everything is about sales per square foot."

Feast may be over

The biggest unknown is when or if shoppers will ever resume spending the way they once did when the housing market was booming, credit was easy and jobs were more plentiful.

"Customers wanted and wanted and wanted some more and we sold and sold and sold some more," said Burton M. Tansky, president and CEO of The Neiman Marcus Group. Now, "frugality is more important."

For the last two years, many of the nation's best-run retailers such as J.C. Penney Co. had been reducing inventories in response to the consumer spending slowdown. But no one anticipated the severe retrenchment that hit in September as the financial meltdown ravaged shoppers' retirement accounts, reduced credit availability and resulted in massive layoffs across industries.

As shoppers simply stopped buying, stores were forced to discount as much as 75 percent off in some cases even before the official start of the holidays — resulting in the weakest season since at least 1969, when the ICSC index began.

Some companies like KB Toys Inc. couldn't make it through the Christmas season, and many more are expected to file for bankruptcy in the coming months. Circuit City Stores Inc., which filed for Chapter 11 bankruptcy protection in November, said Friday that it will go out of business — closing its 567 U.S. stores, after not being able to work out a sale.

Cutbacks aren't enough

With no sign of the economy improving soon, and no pressure on people to buy now that the holidays are over, merchants are preparing for times to get worse. Those who have survived face battered fourth-quarter profits and are slashing expenses and hoarding cash. Apparel merchants are cutting inventory by 20 percent to 30 percent for the summer and fall seasons from already reduced levels a year ago, according to Kathryn Deane, president and CEO of Tobe Report, a fashion consultancy.

But it's just not about slashing how much merchandise they carry. Companies like Polo Ralph Lauren Corp. are turning to outside specialists in areas like sourcing and currency hedging to reduce the impact of volatile foreign exchange rates. They are working with suppliers to reduce the time it takes to produce an item. And they're trying to understand the new mindset of shoppers, scrutinizing the products they offer to see whether the prices and quality meet the new standards from consumers who are questioning the real value of things.

Apparel suppliers say they have noticed the difference in recent weeks as the buyers for big chains visit their showrooms to order for fall. They want eye-catching pieces that have longevity — and nothing too radical.

"They're not buying disposable clothing," said Allen Schwartz, owner of fashion company A.B.S. by Allen Schwartz.

He noted that store buyers are taking styles with staying power like daytime dresses. But while in years past they would buy one color and three different styles, he said, now they're buying three colors in one style.

Nicole Miller, a fashion company, ships 80 new styles per month instead of 120. Bud Konheim, president of the business, said even buyers from upscale stores are questioning the prices of its top designers, which top at about $1,600. He said he's doing more clothing business in the $200 to $300 range instead of the $700 to $800 range.

Michael Ball, founder and creative director of Rock & Republic, said he immediately lowered the prices of the company's most expensive jeans in September before they hit the floors when the economy imploded. The premium line, which had been priced from $180 to $320, now peaks at $280.

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Try something new to open up a world of business

Everyone has a "fish tale" — the monster captured or the big one that got away. Mine has a sales slant.

I've written before that referrals from satisfied customers or word of mouth are among the best ways to secure new business. This sales lead was an example of that:

The call came from a Port Agneles, Wash., certified public accountant who had heard how our business forms were custom-designed to be used as inventory and receivable accounting systems for the salmon fishing industry.

Most small businesses at the time did not have computer systems and bookkeeping was done manually. He wanted to help his client with ease of record keeping, especially during the busy fishing season.

The client was an American Indian tribe with a reservation on the Olympic Peninsula. We would be meeting with the manager of their fishing business, who was also one of their tribal leaders.

I had not had the opportunity to work with them, so I asked the CPA if he had any additional suggestions before I came to visit. "Dress down a bit," he replied, "and just follow his lead, and you will be fine."

Etiquette holds sway

It was a long, rainy drive from Seattle to Port Angeles to meet the CPA. He left his tie in his desk before we departed on the next leg of the journey to the reservation.

As we headed into their building, I wished I had ditched my low-heeled pumps (my one nod to fashion) for rubber soled duck shoes for better footing. We reviewed their books, and I showed them samples of how the system could be designed to account for coho, chinook and steelhead poundage based on their catch.

We were making decent headway, when our manager/leader suggested we have lunch. "Great," my CPA colleague replied, "what's on the menu?"

Fish head soup, came the reply. The aroma of the soup was mouth-watering, and our host made sure there was at least one fish head per bowl. He took two. We ate silently. I was avoiding the eyes looking back at me, steering clear of the head. He noticed and simply said, "The best meat is in the cheeks of the fish head."

He picked up one and broke it apart to extract the meat. My CPA colleague was already gnawing on the meat from his fish head with relish. I took a spoon and another eating utensil, carefully scooped out the meat of one cheek avoiding the eyeball, and popped the spoonful into my mouth.

The meat was silken and delicious. I smiled and my host noticed; I had passed some sort of initiation.

The rest of the afternoon, he was more receptive to my ideas and suggestions.

In the world of business meals, etiquette holds sway. Relationships can be forged more quickly and deeply when we allow our hosts to guide us, become more open-minded to their suggestions and try something new.

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Higher deductibles delay health care

Add rising deductibles on health insurance policies to a growing number of financial problems forcing some Nashville-area residents to delay needed medical care.

Coming at a time of job loss and higher unemployment in the state, the higher costs run the risk of creating sicker patients who put off care too long, critics say. The trend also is a double-edged sword that could mean less revenue for cash-strapped hospitals, doctors and other providers as the national economy slows down.

Consider Ron Brumley of Old Hickory. He's had a sinus infection for the past month, but he has not visited a doctor because under his employer's new health plan he'd have to pay the first $2,500 before insurance kicks in.

Or Bethpage resident Ress Benson, who says he has put treatment for a common form of skin cancer on hold because of the $5,000 deductible on the individual health plan that he signed up for after losing his job six months ago.

These Middle Tennessee consumers aren't alone in feeling the effects of rising deductibles. Last year, the median deductible required by employers for individual coverage in preferred provider organizations, or PPOs — the most popular type of health plan with 69 percent of all covered employees — rose to $1,000 from $500, according to the National Survey of Employer-Sponsored Health Plans conducted each year by Mercer consultants.

The number of employers that impose a deductible for PPO coverage also has risen from about half in 2000, when the median deductible for individual coverage was just $250, to about
80 percent today, according to Mercer.

Many deductibles reset at the start of the new year, and delays in patients' seeking care have some hospital executives on edge.

"A lot of it is going to depend on if consumer confidence goes up," said Craig Becker, president of the Tennessee Hospital Association. "One thing this taught us is that hospitals aren't immune to a lack of consumer confidence. If they won't buy a car, they won't take an elective surgery either. They don't want to pay the co-pay."

'I can't afford to be sick'

In Brumley's case, his employer abandoned a PPO plan last fall in favor of a high-deductible health plan with a health savings account. By doing so, Five Oaks Golf and Country Club of Lebanon avoided a 27 percent jump in its monthly insurance premiums while shifting more responsibility for managing health costs to its employees.

Brumley now pays about $9 less a week in premiums on a plan that covers him and his wife, Judy. Each of them also must pay out of pocket the first $2,500 in expenses (including for drugs) before insurance benefits start.

Brumley said he has put off his own care, and the couple's first priority is to pay for his wife's visits to a pain clinic — plus some medications. His wife suffers from back pain and has diabetes.

"I can't afford to be sick," Brumley said.

Still, Judy has had to go without some prescribed medications, such as the anti-diabetic drug Metformin, and she hasn't yet filled a prescription for the cholesterol medicine Zetia. "It's terrible because my whole disability check is going on medicines, but I can't afford this. Sometimes, we have to cut back on groceries and things like that — and it's pitiful," she said.

Studies have shown that people in high-deductible health plans are more likely to cut back on care and prescriptions.

"It's like anything — when the price is higher, people cut back," said Jessica Greene, a professor of health policy at the University of Oregon. "The problem is people don't always know when they're cutting back on care that doesn't really matter versus care that has long-term health consequences."

Employers may suffer

Often, the use of health-care services rises in recessions as consumers who feel less secure about their jobs rush to get treatment while they're still employed and insured.

But higher employee cost-sharing — such as higher deductibles — might prevent that spike this time around, said Jim Horrell, a principal in Mercer's Nashville office.

Christopher Parks, chief executive of change:healthcare consultants here, said employers that keep increasing deductibles might face higher costs in the long run if employees delay care and develop more serious health problems. He favors an approach that reduces barriers to preventive care.

For some consumers, high-deductible health plans aren't a matter of choice.

Benson, the Bethpage resident, who moved to Middle Tennessee from Los Angeles two years ago, said several insurers considered his skin cancer a pre-existing condition, and that made it difficult to get individual coverage on favorable terms. He ended up with insurance that costs $400 in monthly premiums and comes with a $5,000 deductible.

The former sales representative with a Lebanon homebuilder said he is praying to be healed of the skin cancer and hoping that he doesn't have to use his insurance policy for a major illness.

"If it's a catastrophic thing, I'll find a way to come up with the five grand for that care," Benson said. "If it's not major … you've got to put it off."

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Autoworkers union begins discussions on concessions

Union, Peterbilt remain at odds

About 310 United Auto Workers union members at Madison's Peterbilt truck factory remain locked out by management as a nearly seven-month labor stalemate continues into this week.

The company shut the workers out of the plant in late June after their contract expired.

The previous contract ran out June 26, and the union has yet to vote on the company's offer for a new five-year pact.

UAW Local 1832 President Mike Pardue said Monday that the union would like to resume talks with the company but that Peterbilt "refuses to answer our calls or e-mails" requesting a meeting. The two groups last held negotiations in August.

"We're going to send them another letter this week asking to get together, but it doesn't seem like they're interested in opening the plant again right now," Pardue said.

Plant manager Larry Vessels said Monday that Peterbilt has answered the union's questions and would like to have its contract offer presented to the members for a vote.

"We have an offer on the table, and we think it is very competitive for this area," Vessels said.

Whether the plant would resume production immediately after a contract was approved isn't certain, but that is not related to the contract situation, Vessels said.

"We don't have a crystal ball on the economy, and the truck market is down," he said. "We monitor market conditions and make adjustments as necessary."

The Madison plant, which opened in 1969, is one of two Peterbilt facilities that assemble the company's over-the-road trucks.

The other plant is in Denton, Texas, where the company has its headquarters. The Texas plant, which is not unionized, continues to manufacture trucks while the Tennessee plant is shut down.

Health care is concern

Under the company's latest offer for the Madison workers, they would get a raise of 35 cents an hour in the first year of the new contract, and 50 cents an hour in each successive year, Vessels said.

The average hourly pay at the plant is $24.70, but that is not the main issue with the new contract, Pardue said.

Among sticking points as far as the union is concerned, Pardue said, are provisions that would increase employee health-care premiums by more than 300 percent and would force laid-off workers to accept $5-an-hour pay cuts if they were called back to work.

Besides the employees locked out of the plant, about 300 people were already on layoffs.

It's to Peterbilt's advantage to use nonunion labor to make its trucks in the current economy, and that might explain the company's reluctance to negotiate with the union, said George Peterson, an auto industry analyst and president of AutoPacific Inc.

He said the big-truck market was down in 2008 because of new U.S. diesel-engine smog standards that took effect after 2007.

"For the truck makers, 2007 was a good year because a lot of people moved up their purchases" to avoid price increases after the engine changes that manufacturers were forced to make on 2008 models, Peterson said.

Peterbilt is a subsidiary of PACCAR, which also makes Kenworth trucks. The company has "never had a losing quarter since about 1931," Peterson said. The company's stock closed at $27.88 per share at the end of trading last week. Markets were closed on Monday.

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Regions reports $6.2 billion loss

Nashville's largest bank, Regions Financial Corp., swung to a $6.2 billion loss during the fourth quarter, the latest sign that the turmoil from real estate losses nationally hasn't run its course.

Regions' stock fell 24 percent Tuesday, part of a general collapse among many bank stocks as the Dow Jones average plummeted 332 points to close below 8,000 on the same day that Barack Obama was sworn in as the nation's 44th president.

Regions said the size of its quarterly loss was a result of the bank's having to write down the value of its banking enterprise because of accounting rules, though its underlying capital ratios remain in an acceptable range.

"This is by far the most difficult credit cycle that we've ever witnessed," Dowd Ritter, Regions' chairman, president and CEO, said during a conference call with analysts.

Without a $6 billion accounting adjustment, Regions still would have lost $245 million, or 35 cents per share, in the fourth quarter, its first quarterly loss in at least 18 years.

Nationally, the dawn of the Obama presidency wasn't enough to boost Wall Street. After hearing the new president's inaugural address at midday, investors went back to unloading stocks.

The Dow Jones industrial average closed at 7,949.09 points, down 4 percent. Broader indexes fell more than 5 percent in Tuesday trading.

At Regions, Ritter issued a statement saying the bank was hurt by "continued declines in housing and residential-related construction project values, as well as rising unemployment."

"Prices of Florida-based properties remain under particular pressure, with the real estate downturn rippling through the economy," he said.

Net loan charge-offs for bad loans nearly doubled from $416 million to $796 million between the third and fourth quarters.

"The losses were higher than expected,'' said Jefferson Harralson, an analyst with investment bank Keefe, Bruyette & Woods in Atlanta. "The banks aren't really designed to be losing money."

Loan portfolio erodes

Regions' loan portfolio, like that of other regional banks, continues to deteriorate, especially in Florida, and Regions increased its loan loss provision by $733 million to $1.15 billion in the quarter.

The bank's stock ended trading on the New York Stock Exchange at $4.60 per share, down $1.47 a share on the day.

Analysts say they aren't sure what the rest of the year will bring.

"The management team sounded as if the net losses could continue at least in the near future," Harralson said.

The bank previously cut its quarterly dividend to 10 cents per share, down from 38 cents per share in the first half of 2008.

Ritter said it would take unemployment levels reaching a peak and real estate values bouncing back from a low point before bank earnings improve. The company didn't provide specific guidance on future earnings.

"Although we're encouraged by steps the government has taken to stabilize the housing market and revitalize the economy, there is no quick fix for credit quality issues currently plaguing the financial services industry," Ritter said in a statement. "We fully acknowledge the challenges that we face in 2009."

Bank cuts expenses

Regions executives said they were cutting expenses, limiting attendance at conferences and conducting only the most essential training for bank employees to save money.

Regions received a $3.5 billion infusion from the U.S. Treasury under the government's Capital Purchase Program. The program is part of the U.S. Treasury Troubled Asset Relief Program designed to encourage banks to build capital and increase the flow of financing to businesses and consumers.

Other regional and national bank shares also plummeted Tuesday. SunTrust Banks Inc. lost $4.87, or 24 percent, to $15.07 per share; Fifth Third Bancorp shed $1.21 cents, or 22 percent, to close at $4.22; and Citigroup, which reported a loss of $8.29 billion, hit a 17-year low Tuesday, dropping 70 cents a share to close at $2.80.

Despite slowdown, banks are still lending
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First Horizon’s losses decline
Washington Report: Treasury Department Sidesteps

Alternative Service signs lease

Alternative Service Concepts, LLC is leasing 14,725 square feet at Two Rivers Corporate Centre for its corporate headquarters. Two Rivers Corporate Centre at 2501 McGavock Pike is managed and leased by SmartSpace LLC.

Tenant improvements will start immediately, officials said. The facilities are designed to house up to 100 people and will consolidate local operations for Alternative Service Concepts.

The 284,000-square-foot Two Rivers Corporate Centre is the former Factory Outlet Stores retail space that SmartSpace renovated in 2001.

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Follow plan while keeping ear to the ground

Gathering accurate information about potential customers is essential for developing an effective business plan.

Learn how your customers make the decision on whether or not to buy your product.

Determine the key decision-making criteria they will use to choose your product over your competitors'. It does not matter what you think they should consider in the decision — all that matters is what the customers think and how they actually make their choice.

So how do you gather information about what your potential customers prefer? You need to get out and talk to them, observe them, or whatever it takes to learn how to think like they do.

Also, gather information about how well your competitors are satisfying these customers. You can gather this information by talking to customers, visiting your competitors' businesses, interviewing suppliers and meeting with others in the industry.

Entrepreneurs typically rely heavily on their business plans when the time comes to launch their new venture. It is a plan that they may have agonized over for weeks, months or years. They have done their research, creating a carefully thought-out business that justifies their financial forecasts. But then a funny thing happens. They assumed in their business plan that the market wanted "A." But if they listen carefully to the customer, they often find out that the customer really wants "B."

Switch; don't fight

One of my former students, Matt Meents, is a case in point.

His Minneapolis-based company, Reside LLC, originally was set up to build high-end Web sites for the real estate industry. They had conducted extensive research and thought they understood the right market for their services.

Although they did land some real estate firms as clients, the market soon began to tell them that there was a wider market for what they offered beyond real estate.

Other types of business contacted them to see if they could do similar services for their businesses. They listened to this information from the market and significantly broadened their target market. As a result of this change, Reside LLC has seen significant growth every year.

If Matt had rigidly followed his original plans, his company would never have grown the way it has. The market wanted to help Reside LLC grow, but Matt had to be willing to listen to what it really wanted and shift his plans.

I call this learning to "dance with the market." And you should be ready to let your customers lead in this dance.

The need to listen to the market never really ends. Markets are dynamic, so you need to be ready to follow where they lead.

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Marketing soothsayer takes uncertainty out of 2009

Borrowers apply to multiple lenders

WASHINGTON — As mortgage interest rates continue falling to new lows, a growing number of borrowers are applying to more than one lender to increase their chances of getting approved for refinancing.

Anecdotal evidence suggests that only about half of the borrowers trying to refinance are getting approved, down from 60 percent to 70 percent during previous refinancing booms, said Doug Duncan, chief economist at mortgage financier Fannie Mae. As a result, borrowers are getting frustrated and anxious.

"There's no question there are multiple applications being done," Duncan said. "The economic incentive to refinance is so strong with rates being under 5 percent."

The average for a 30-year fixed rate mortgage last week dropped to 4.96 percent from 5.01 percent the previous week and 5.96 percent a year ago, according to a survey released Thursday by Freddie Mac.

Rates have been falling for 11 consecutive weeks; for five weeks straight, 30-year rates have set new marks for the lowest level since Freddie Mac started tracking the data in 1971.

But not everyone can take advantage of the low rates. Homeowners with poor credit scores or little equity in their homes are not likely to qualify for a new loan in this tightened credit environment. A recent analysis by Inside Mortgage Finance found that the average score for borrowers whose loans were sold to Fannie Mae and Freddie Mac was 748 out of a possible 850.

"That's incredibly high," said Guy Cecala, publisher of the trade publication. "One way to improve your chances of getting approved is to apply to two lenders and hope that one of those applications is accepted."

The practice has been common in past refinancing booms. Lenders call it "double-apping," as in double applications, said Christopher Cruise, a loan officer at GOTeHomeLoans.com. Lenders can spot the tactic when they pull a borrower's credit reports and find that another lender has done the same.

"It drives (lenders) crazy because we get a loan all approved and ready to close and the borrower just disappears on us," Cruise said. "That's because they got a lower rate or were just able to close more quickly with someone else." It also costs the lenders money when they lose a loan they have already locked in with investors.

Lenders are swamped

There's a difference between shopping around to get the best loan and formally applying, which costs money but could give a borrower a better shot at securing a loan at the cheapest rate.

To discourage borrowers from applying twice, some lenders are charging upfront deposits, at least one of them as high as $500. Then there's the cost of the appraisal required to initiate the refinancing, which can range from $350 to $450. It costs $20 or so to pull the borrower's credit report.

Still, loan officer Jean Marie Pace suspects that one of her borrowers applied to multiple lenders. Pace locked in a 4.75 percent rate for that client on a 30-year fixed-rate loan that exceeds $417,000, also known as a conforming jumbo mortgage.

The loan came with one point, a fee paid by the client to lower the rate.

The client then came back to Pace with a quote from a competing lender that was one-eighth of a percentage point lower and asked her to match it, Pace said.

"She was shopping me," said Pace, who works for FNMC, a division of National City Bank.

One reason that borrowers have a 50-50 shot of getting refinanced these days is that lenders are swamped by the rush to refinance at a time when they have lost staff to layoffs.

But also contributing to the situation are the tough underwriting standards that many lenders adopted in the wake of the mortgage meltdown and the foreclosure crisis that followed.

About 2.3 million households were the subject of a foreclosure filing last year, up 81 percent from 2007, according to data released Thursday by RealtyTrac, a private research firm that collects data on more than 90 percent of U.S. households.

The filings range from default notices to notifications that a home is scheduled for auction or has been repossessed by the lender.

Home loan troubles break records again
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Lower rates spark wave of refinancing

First Horizon's losses decline

The Memphis-based parent company of First Tennessee reported Friday that its losses are getting smaller, lifting its shares to their biggest gains in three months.

First Horizon National Corp. reported a net loss of $55.7 million, or 27 cents per share, for the fourth quarter that ended Dec. 31. That's less than the $125 million it had lost in the third quarter.

It was a rare positive signal from the banking company, which for most of last year struggled with credit problems, including losses from bad real estate loans. The narrower loss beat analysts' expectations and bucked huge losses reported by larger banks such as Citibank and Bank of America that surprised investors.

The average analyst polled by research firm Thomson Reuters had expected worse for First Horizon — a 32-cent per share loss for the recent quarter.

First Horizon's stock price rose 18 percent, or $1.36 per share, to $8.82 at the end of the trading day on the New York Stock Exchange. That was Friday's biggest gain on the S&P 500.

Despite the rebound, it was the third consecutive quarter of losses for First Horizon, which promised investors it was working hard to write down bad debt on commercial and real estate loans as the economy continues to sour.

"We were heartened,'' said Jefferson Harralson, an analyst who follows First Horizon at Keefe, Bruyette & Woods in Atlanta. "They have been very aggressive in dealing with problem credits."

First Horizon chief executive Bryan Jordan said the company's decisions last year to raise capital in a private sale, sell assets and exit the lending business outside of Tennessee "put us in a stronger position by the end of one of the worst years the financial services industry has faced."

He also said the banking company has written $900 million in new loans, mostly to businesses, in part with help from the federal government, which bought $866.5 million in First Horizon stock in the Treasury Department's banking rescue plan.

Tony Thompson, the Middle Tennessee regional president for the bank, said the local lending portfolio is up about 8 percent from the year before, despite an overall drop in the banking company's lending as it exits markets outside of the state.

Past-due loans rise

Problem signs include an increase in past due loans as the bank's commercial loan portfolio deteriorates.

The recession has been rippling out to broad sectors of the economy, making loans sour outside of the residential real estate industry.

Jordan said he expected the economy and the loan portfolio to improve in the second half of the year, although he declined to say when he thought First Horizon would be profitable again.

"I can't pinpoint when that will be, but I think when the economy turns, we'll be the first beneficiaries," he said.

Analysts expect on average that First Horizon will lose a moderate amount of money in the first and second quarters compared to last year, with a slight recovery in the second half of 2009.

Other banks also are expected to face bad quarters ahead. Regions Financial Corp., which reports fourth quarter results next week, is expected to lose money in the fourth quarter and the first quarter of next year, according to analyst estimates at Thomson Financial.

SunTrust Banks is expected to make 19 cents per share in the fourth quarter and 16 cents in the first quarter, with bigger profits later in the year.

Despite slowdown, banks are still lending
Home loan troubles break records again
Real Estate Outlook: Affordability Dramatically Improved

Shareholder's actions put Gaylord on notice

Robert Rowling has made his fortune with the well-timed bet. Now the Texas billionaire is rolling the dice on one of Nashville's most venerable brands.

With riches estimated at $6.2 billion and a business climate in which shareholders are clamoring for winning strategies, Rowling appears to have picked the right time to launch his campaign to wrest control of Gaylord Entertainment Co. from its current managers, observers said last week.

But Rowling's intentions for the company, which owns the Opryland Resort and Convention Center, Ryman Auditorium and the Grand Ole Opry, remain unclear.

In announcing plans on Thursday to nominate his own slate of directors, Rowling said his firm wants only to increase the value of Gaylord shares, which have plunged over the past 15 months. But Gaylord officials view the move as a step toward an acquisition — and one made on the cheap.

Outside observers largely agree with Gaylord, saying that Rowling has never been an investor who acts passively.

His most notable previous transaction in the hospitality industry, the 1996 purchase of Omni Hotels, resulted in widespread changes to the luxury chain. And with plenty of money from his firm's oil and gas holdings, Rowling has the cash and clout needed to grab the attention of shareholders.

"Omni is probably the best- funded hotel owner that I've seen," said John Keeling, a Houston-based executive with the hotel adviser PKF Consulting. "If Omni goes after a company, they usually get it."

The plan sets up a likely battle at Gaylord's upcoming annual meeting in May. Coming before an early February deadline for shareholders to submit their nominees to the board, Rowling has left himself ample time to lobby other Gaylord investors.

Their reaction Friday was positive. Shares in the company rose 44 cents to $11.85 a share on the first full day of trading after Rowling's letter critical of Gaylord's management was released.

"I think some legitimate issues are raised," said Robert LaFleur, an analyst with Susquehanna Financial Group who follows Gaylord. "Gaylord is going to have to address these issues."

Plans are unclear

One of the biggest questions remains just what Rowling would do with four board seats.

In an open letter to shareholders outlining his plans, Rowling disparaged Gaylord's current nine-person board as being too cozy with management to be objective. Rowling also criticized Gaylord's practice of allowing its chairmanship to be held by the company's chief executive, Colin V. Reed.

But Rowling has named only one of the candidates his investment firm, TRT Holdings, would nominate for a seat on the hotel chain's board — namely, himself. The only thing he said about the rest has been that they would have no affiliation with Omni, a hotel chain that competes with Gaylord.

Nonetheless, Rowling has made clear that his candidates would push for new leadership at Gaylord. In his letter, which Rowling circulated widely on Thursday, he described current management has having botched deals and squandered company assets.

Rowling also levied several direct attacks on Reed, calling him overcompensated at nearly $3.9 million in 2007 and suggesting that he had misused Gaylord's
$15 million corporate jet with frequent trips to his homes in Florida and Mississippi.

In a response, Gaylord defended its executives' record and governance practices. The company also reiterated its position that giving Rowling seats on the board would be tantamount to a back-door acquisition.

Observers said that Rowling's exact next steps are unclear, but the degree to which he is seeking to control Gaylord's future is anything but hidden.

"If it's a back door, it's very close to the front door," said Nell Minow, of corporate-governance research firm The Corporate Library, which tracks shareholder battles. "I don't think anybody's hiding anything."

A shake-up would be in keeping with Rowling's past practices. The son of a wildcat oilman, Rowling started his business career in Corpus Christi, Texas, by joining his father's firm Tana Oil & Gas in 1980.

In the ensuing decade, the Rowlings diversified into other sectors of the Corpus Christi economy, including banking, lodging and real estate. They flipped businesses to bigger players — Texaco, Bank of America, Unocal — eventually building a portfolio valued in the billions.

In 1996 TRT, the firm the Rowlings set up to manage their growing fortune, bought Omni from Hong Kong-based Wharf Holdings Ltd. for $500 million.

At the time, Omni was a little- followed firm based in New Hampshire, with a handful of luxury hotels scattered around the country.

Rowling fired the management team and moved the firm to Texas. From there, TRT has expanded the chain to 40 properties.

Omni's latest venture has been to increase its convention business.

Toward that end, the company this week will open its newest property, a 614-room hotel across the street from the Fort Worth Convention Center.

Taking control of Gaylord would further that strategy, Keeling said. Gaylord's convention center hotels are similar to the Omni in terms of quality, but they are all far larger than anything Omni has opened to date.

"Gaylord does not duplicate anything that Omni has," Keeling said. "And because Omni is so flush for cash from its pipeline business, it could do the expansions that Gaylord has found difficult."

Rowling finds flaws

Rowling cited what his company sees as missteps among several of Gaylord's previous expansion plans in justifying TRT's bid for more control.

Gaylord management squandered $12 million pursuing the acquisition of the Westin La Cantera Resort in San Antonio, Rowling said, a deal that Gaylord walked away from last year as market conditions deteriorated.

And the company failed to control costs at its newly opened Gaylord National hotel near Washington, allowing the cost per room to swell 55 percent over the original budget, Rowling added. He criticized management for purchasing the vacation management company ResortQuest in 2003, only to unload it four years later.

Such arguments could get a sympathetic reception from other investors. With the stock market and the economy in turmoil, many investors have been inclined to support new approaches to management, observers said.

"Investors are so unhappy that they may make decisions that in other circumstances they might not," said Minow. "The big secret of proxy contests is that you can't lose. The only way for the incumbent to beat you is to do a lot of what you're asking."

In making a play for Gaylord, Rowling is wagering that the odds are once again in his favor. The next four months may show whether once again he is right.

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