GM drops request for $14.4B in U.S. loans

DETROIT — General Motors Co. is withdrawing its application for $14.4 billion in low-interest loans from the Department of Energy, saying it has enough liquidity to modernize its plants itself to build fuel-efficient vehicles.

The move is part of GM's plan to eliminate most of its debt and fully fund its pension plans. After receiving $50 billion in government aid in 2008 and 2009, the post-bankruptcy company has prioritized self-sufficiency, design chief Ed Welburn said Thursday at the Washington auto show.
"We're confident of our progress and the strong global performance of our company," Welburn said. "We are committed to keeping our financial house in order."

GM originally applied for a $10.4 billion loan in August 2008, Welburn said. The company's 2009 taxpayer-funded bankruptcy nullified that request, so GM reapplied in October 2009, this time for $14.4 billion in government loans.

But GM now has more than $20 billion in liquidity and successfully returned to the stock market in November, decreasing the U.S. government's ownership from 61 percent to about a third. So GM plans to fund the planned factory improvements itself, instead of using the Department of Energy loans.

"I think we're in a very different position today than we were then," Welburn said. "I would certainly think that the American public would feel better about that."

Ford Motor Co. is the only Detroit automaker to restructure without a federally funded bankruptcy, which boosted consumers' perception of the company. The Dearborn, Mich.-based automaker has already received approval to use $5.9 billion of the $25 billion Energy Department loan program, aimed at manufacturing of high-tech, fuel-efficient vehicles.

Chrysler, which also received federal funding for its 2009 bankruptcy, is still waiting to hear the results of its application for the green manufacturing loans.

Congress passed the Energy Department loan program in December 2007. Along with the Ford loan, the Energy Department also has approved $1.6 billion to Nissan Motor Co., $528.7 million to plug-in hybrid startup Fisker Automotive Inc. and $465 million to California electric-vehicle maker Tesla Motors Inc.

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TVA to test electric vehicle chargers in Knoxville

With nary a sunbeam in sight, TVA and the Electric Power Research Institute on Tuesday unveiled a concept for charging the electric vehicles that are just beginning to hit the local highways.

Equipped with about 12 kilowatts' worth of solar panels and a battery array with about five kilowatt-hours of storage, the six-parking-spot station will be used to analyze the potential impact of electric vehicles on the electric grid as well as ways to supplement that power. It is the first of two such stations to be built in East Tennessee and will serve as a research prototype to model how electric cars can be juiced up when they're away from home.
The stations will go through three to six months of testing before a series of stations will be added in Knoxville, Chattanooga and Nashville, bringing the total of charging spaces up to 125.

"We want to be the fuel that supplies electric cars," said Rudy Shankar, TVA vice president for technology innovation. But adding a new source of electric demand could affect the overall cost and availability of power, he said.

"We don't want to have any negative impact on the grid reliability," he said. "We don't want to have an impact on the ratepayers."

Read full story at the Knoxville News Sentinel.

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Sara Lee to divide into 2 divisions

CHICAGO — Downers Grove, Ill.-based food maker Sara Lee Corp. announced Friday that it will divide itself into two publicly traded companies. The plan, which has been approved by Sara Lee's board, divides the company into North American and European divisions. One company will focus on North American grocery and supplying products to the restaurant industry, and the other on European coffee, tea and bread.

In a call with investors, Marcel Smits, the company's newly appointed CEO, acknowledged that Sara Lee had received "unsolicited interest" in buying the company. He said that after a rigorous review, the company's board determined that splitting the company was in shareholders' best interest, adding that the individual companies are likely to do better on their own.
Sara Lee will issue a $3 special dividend to shareholders as part of the split.

The decision caps months of speculation about the dissolution of Sara Lee, which once sold everything from pantyhose, bug spray and undershirts to purses and bread, in addition to coffee, sausage and cheesecake. The company has completed a handful of sales that leaves it essentially focused on North American packaged meat and European coffee.

Speculation that the company was on the brink of accepting a buyout offer has brought Sara Lee's stock to a series of consecutive 52-week highs since December. Reports that the company had turned away suitors began taking a toll on stock Wednesday. Sara Lee's shares fell 2.7 percent Friday.

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Charles Trost to return to Waller Lansden Dortch & Davis

Charles A. Trost, who was Tennessee's revenue commissioner in the last few months of former Gov. Bredesen's term, has returned to a Nashville law firm.

He work with the Nashville law firm of Waller Lansden Dortch & Davis as senior counsel to the tax and government - relations departments.
He was appointed by Bredesen in September to replace Reagan Farr, who resigned. Trost served until Bredesen left office Jan . 15.

Before taking the revenue post, Trost was with Waller Lansden, which he joined in 1981.

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Rush to 3-D bandwagon ignores viewers' headaches

NEW YORK — From Hollywood studios to Japanese TV makers, powerful business interests are betting 3-D will be the future of entertainment, despite a major drawback. It makes millions of people uncomfortable or sick.

Optometrists say as many as one in four viewers have problems watching 3-D movies and TV, either because 3-D causes tiresome eyestrain or because the viewer has problems perceiving depth in real life. In the worst cases, 3-D makes people queasy, leaves them dizzy or gives them headaches.
Researchers have begun developing more lifelike 3-D displays that might address the problems, but they're years or even decades from being available to the masses.

That isn't deterring the entertainment industry, which is aware of the problem, yet charging ahead with plans to create more movies and TV shows in 3-D. Jeff Katzenberg, CEO of Dreamworks Animation SKG Inc., calls 3-D "the greatest innovation that's happened for the movie theaters and for moviegoers since color."

Theater owners including AMC Entertainment Inc. and TV makers such as Panasonic Corp. are spending more than $1 billion to upgrade theaters and TVs for 3-D. A handful of satellite and cable channels carry 3-D programming; ESPN just announced its 3-D network will begin broadcasting 24 hours a day next month.

Yet there are signs that consumers may not be as excited about 3-D as the entertainment and electronics industries are.

Last year, people were willing to pay an additional $3 or more per ticket for blockbuster 3-D movies such as Avatar and Toy Story 3. But that didn't help the overall box office take. People spent $10.6 billion on movie tickets last year, down slightly from the year before. People went to the theater less but spent more.

Last year, 3-D TV sets were available in the U.S. for the first time, but shipments came in below forecasts, at just under 1.6 million for North America, according to DisplaySearch. Nevertheless, TV makers such as Samsung Electronics Co. and Panasonic are doubling down on 3-D and introduced more 3-D-capable models this month at the International Consumer Electronics Show in Las Vegas.

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Flexible electronic display advances

SAN JOSE, Calif. — Later this year, Hewlett-Packard researchers say, they expect to deliver to the U.S. Army a working prototype of what they're calling a "Dick Tracy wristwatch" — a lightweight, wearable device that soldiers in the field can use to view digital maps and other data on a flexible plastic screen that won't shatter or crack like glass.

Though it will be Spartan by design, researchers say HP's prototype could be one of the first in a new wave of products incorporating flexible electronic displays. Freed from the constraints of a rigid glass screen, designers could one day build flexible plastic displays into clothing, wall coverings and perhaps even e-readers or tablets that can roll up like a newspaper.
"You can start thinking about putting electronic displays on things where you wouldn't ordinarily think of having them," said Nick Colaneri, a scientist and director of the Flexible Display Center at Arizona State University. "How about a stack of thin displays that I can peel off and stick on things, sort of like a pad of Post-It notes?"

Long before those hit the market, however, flexible plastic displays will provide tablets, smart phones and other portable computers with big screens that weigh less and are far more durable than today's models, said Carl Taussig, director of advanced display research at HP Labs in Palo Alto, Calif.

"Unlike glass, plastic doesn't break when you drop it on the floor," said Taussig, whose employer has a vested interest in electronic displays, as the world's biggest seller of personal computers.

Big future predicted

Experts have long predicted a big future for flexible displays. The Defense Department has funded efforts to develop lightweight screens that soldiers can use in hostile environments. A host of computer-makers and electronics companies are working on commercial applications.

"We're quite bullish on this market," said Jennifer Colegrove, vice president for emerging technologies at DisplaySearch, an industry research and consulting firm, which estimates that sales of flexible displays will grow from $85 million in 2008 to more than $8 billion in 2018.

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Beer news: Jackalope Brewing Co. gets building permit

Another tap will soon flow in downtown Nashville, with Metro Codes issuing a $165,000 building permit to Jackalope Brewing Co. on Monday.

DWC Construction Co. Inc. will handle the renovations to the former Kirkland Floor to Ceiling at 701 Eighth Ave. South.
Recent Vanderbilt law graduate Bailey Spaulding, 28, and New Hampshire transplant Robyn Virball, 29, plan to open Jackalope Brewing Company in March.

The company will have an on-site taproom, has signed with distributor BountyBev and expects to produce 1,000 barrels its first year.

Metro Codes also issued a $6.9 million permit Monday to Hollis & Span Inc. to construct a four-story, 101-room hotel for Marriott Towerplace Suites Hotel at 2700 Elm Hill Pike.

Contact Juanita Cousins at 615-259-8287, jcousins@tennessean.com or Twitter.com/talljournalist.

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Saint Thomas, UnitedHealthcare standoff may block 9,000 from hospitals

A stalemate in contract renewal talks between UnitedHealthcare and Saint Thomas Health Services could block thousands of the insurer's local members from going to hospitals and other outpatient centers run by the Catholic medical chain.

Two weeks ago, UnitedHealthcare notified 9,256 commercial and Medicare members that if a new agreement isn't reached by the end of January, they should seek treatment at other in-network hospitals or face higher out-of-network prices for the care they receive.
"Both parties haven't been able to come to terms on pricing or length of the agreement," Tracey Lempner, a spokeswoman for Minnetonka, Minn.-based UnitedHealthcare, said when asked about the nature of the dispute. "They're still at the table talking. There's hope we're going to reach a resolution."

Disagreements are common during contract talks between health-care providers and insurers, but disputes also have become more contentious of late.

"It's a reflection of the friction between the rising costs on the provider side and the rising price sensitivity on the employer side," said David H. Windley, an analyst at Jefferies & Co. here.

With operating costs for hospitals and doctors increasing, the providers want better reimbursement rates from carriers. On the other hand, employers that buy insurance through carriers such as UnitedHealthcare balk at paying more as they face their own pressures to control costs.

Last year, a six-month-long stalemate between UnitedHealthcare and Williamson Medical Center over reimbursement rates and other terms ended with a new multi-year contract.

The current three-year contract between UnitedHealthcare and Saint Thomas Health Services system ends on Jan. 31.

Rebecca Climer, Saint Thomas' spokeswoman, said that the nonprofit hospital system mailed a similar letter notifying doctors and other affiliated providers of the disagreement with UnitedHealthcare.

"We are certainly concerned about the inconvenience this might cause the patients who desire to come to our facilities but who might be prohibited from doing so," Climer said. "We are, however, still in negotiations."

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Local hospital chains invest in health care venture fund

Three Nashville area hospital operators are among investors in a new strategic venture fund targeting investments in businesses that improve the delivery of health care services.

Community Health Systems Inc., LifePoint Hospitals and Vanguard Health Systems and two other nonprofit hospital systems each have committed to invest at least $10 million in Heritage Healthcare Innovation Fund LP.
Their investments in the fund created by the Nashville-based investment and advisory firm Heritage Group LLC comes as health care reform and other regulatory changes have created a need for more innovations in health care. Hospital systems, meanwhile, face more pressures to find newer ways to reduce costs.

“There’s pressure to slow the growth in health care inflation and as you have pressure to lower the costs of health care, there will be opportunities for investments in companies that can lower costs and improve quality,” said Frank Morgan, an analyst at RBC Capital Markets LLC in Brentwood.

“It says a lot about the Nashville health care community that different companies can come together and invest in innovative ideas and opportunities.”

The Heritage Healthcare fund plans to make investments of up to $10 million in early-and-growth stage health care businesses in sectors such as health care information technology and companies working to improve processes involved in delivery of health care services.

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Health care propels Nashville economy

Bankruptcy filings drop in Middle Tennessee

Total bankruptcy filings in Middle Tennessee fell 6 percent last year, the first annual drop since a lull four years ago, but business and consumer experts were hesitant to declare the gains a clear trend.
Attorneys who specialize in bankruptcy cases warned that the economy remains volatile, and filings could spike again unless more people find jobs amid what looks to be an uneven recovery.

"It's still joblessness that's driving people into bankruptcy — and once the jobs start coming back people would want to reorganize their debts and hang onto their assets," said attorney Edgar Rothschild of the Rothschild & Ausbrooks law firm in Nashville.

Consumer and business filings declined last year, according to data released Wednesday by the U.S. Bankruptcy Court for Middle Tennessee.

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Locally, 14,063 cases were filed here last year — 875 fewer than in 2009, court records show. Of those, consumers filed 13,845, while businesses accounted for roughly 430 cases. Chapter 11 cases in which businesses craft a plan of reorganization, pay some debts and continue operating were about flat year over year.

A recent national snapshot of bankruptcy filings showed fewer cases late last year.

Filings collected from the nation's 90 bankruptcy districts showed 113,000 bankruptcies in December, down 3 percent nationwide from the same month a year ago. That followed a similar year-over-year decline for October. It had been four years since an individual month showed such an improvement.

At the law firm Mayer & Newton in Knoxville, partner John Newton said the Tennessee economy, while still challenging, appears to be more stable than other parts of the country. And he said many of the people who need relief from their debts have already gone through the bankruptcy process.

"I think we've sort of turned the corner," he said.

Bankruptcy filings have had a volatile decade, with a surge to record highs in 2005 as filers rushed to make their claims before Congress overhauled the system. Lawmakers made bankruptcy filings more cumbersome — and, as a result, more costly — amid concerns that some consumers were taking advantage of the old system to escape debts.

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UAW renews efforts in the South

DETROIT — The United Auto Workers union is positioning itself as a car company partner rather than an adversary as it renews a campaign to sign up workers at U.S. plants owned by foreign-based car companies.
Yet Bob King, the union's president, said it will play tough with Toyota, Honda, BMW, Hyundai and others if they don't agree to secret ballot election principles that the union is backing. Companies that don't sign on to the principles will be labeled as human rights violators, King told an industry group Wednesday.

The UAW has had little success over the past 30 years in organizing workers at U.S. factories owned by Japanese, Korean and German auto companies. The companies built factories mainly in southern states such as Tennessee, Alabama, Mississippi and Kentucky that are generally not as union-friendly as the UAW's home base around the Great Lakes. Many also pay wages comparable to UAW-represented factories owned by Detroit automakers, but the foreign companies have avoided UAW rules that can make plants less efficient.

Embracing change

King, speaking at the Automotive News World Congress in Detroit, said the union has learned from the Detroit companies' near-death experience and has eliminated inefficient work rules, job classifications and other issues that foreign companies have feared. Instead, he said the union understands how globalization has made it necessary for the UAW to help auto companies make money by being more competitive.

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"We have paid a deep price for failing to learn this lesson quickly enough," King said. "The UAW has learned from the past, and we have embraced dramatic and radical change."

As General Motors, Chrysler and Ford faced severe financial problems in 2009, the union agreed under pressure from Congress to scrap the "jobs bank," in which laid-off workers got most of their pay indefinitely for doing nothing. Now they get some pay for up to two years but can lose it if they turn down a job at a different factory. The union also has agreed to let the companies pay newly hired workers around $15 per hour, about half the hourly wage of a longtime UAW worker.

The union, though, still is seeking a "fair deal" with the companies that means pay and benefits that can sustain a middle class, King said.

The UAW wants the companies to agree to a secret ballot election without threatening workers that the factory will close if it's unionized, and to give the union equal campaign time to woo workers, King said.

For those that don't agree, the UAW will hold demonstrations and campaign with consumers to make its human rights point, King said.

Toyota spokesman Mike Goss wouldn't comment on King's speech. Messages were left with BMW and Hyundai officials.

The UAW is pushing for additional members at the Southern plants in part to boost membership, which has fallen from a high of 1.5 million in 1979 to about 350,000.

Associated Press writer Dee-Ann Durbin contributed to this report.

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Volkswagen introduces Passat in Chattanooga

CHATTANOOGA — Volkswagen's new Passat sedan made its hometown debut Wednesday at a celebration ceremony that doubled as a tribute to Tennessee Gov. Phil Bredesen, whose team is credited with bringing the German automaker to Chattanooga.
Bredesen, a Democrat, made what he described as his final official public appearance before Republican Gov.-elect Bill Haslam is sworn in on Saturday.

Bredesen joined VW's Chattanooga Operations President Frank Fischer in unveiling the new midsize sedan at a Chattanooga Area Chamber of Commerce luncheon, two days after VW first showed it off in Detroit at the 2011 international auto show.

The Chattanooga VW plant, a $1 billion project with production jobs starting at $14.50 an hour, is starting assembly of the new Passat in the next few months, with the cars expected in showrooms by the fall.

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A VW plant employee, Ben Edwards, 33, said during a lunch break that his job includes installing wheels, tires and seats. The plant is already making prototypes of the vehicle.

A former self-employed contractor, Edwards said that after almost a year of training at VW, the approaching startup of full production is an exciting time. He said one challenge is VW's quality check on every production step.

"That's all anybody talks about is quality," Edwards said.

The new Passat is expected to sell for about $20,000, about $7,000 cheaper than current models built in Germany and nearly matching the price of competitors such as Fusion, Camry, Accord and Sonata.

The new car is four inches longer and one inch wider than the current version. Mileage is estimated at 43 miles per gallon on the highway for a diesel version, 32 mpg for a 2.5-liter traditional gas engine and 28 mpg for a 3.6-liter.

In a Wednesday telephone interview, David Cole, chairman emeritus of the Center for Automotive Research, called the new Passat an excellent vehicle. "If it's (priced) in the low $20s, I think it will be very successful," he said.

He said building the Passat in Chattanooga reduces by about half its $100 per hour labor cost in Germany. "The cost of German labor is huge," he said.

Republican U.S. Sen. Bob Corker, a former Chattanooga mayor, told the audience of about 1,500 people that Bredesen was the team quarterback in recruiting VW to Tennessee. Corker also said that Bredesen, a former Nashville mayor, has shown himself to be the "ultimate deal maker."

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Volkswagen extends CEO's contract

Volkswagen AG extended Chief Executive Officer Martin Winterkorn's contract by five years as he aims to complete a merger with Porsche SE and surpass Toyota Motor Corp. as the world's biggest carmaker.
The company's supervisory board unanimously backed the executive's appointment through 2016, Wolfsburg, Germany-based Volkswagen said Sunday. Winterkorn, 63, started as CEO on Jan. 1, 2007, and his current contract expires Dec. 31, 2011.

Under Winterkorn, Europe's largest carmaker added Swedish truckmaker Scania AB to its portfolio and is now merging with Porsche, maker of the 911 sports car. The CEO plans to double production capacity in China with two new plants and open a factory in Chattanooga this year as he seeks to beat Toyota in sales and profitability by 2018.

"Volkswagen seeks continuity at the top of the company so we can concentrate completely on the details of our tasks," Bernd Osterloh, the supervisory board's deputy chief and head of the carmaker's works council, said in a separate statement. "With Martin Winterkorn we'll continue our successful course."

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VW's preferred shares, which have replaced its common stock on Germany's DAX Index since the Porsche deal, have more than doubled since the beginning of 2007. The stock gained 86 percent last year, the best performance in the benchmark index, which added 16 percent.

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Coalition wants to put limits on customized drugs

SACRAMENTO, Calif. — An unusual coalition of corporations, insurance companies and labor groups is pushing for legislation that would put restrictions on the customized medicines known as compounded drugs, saying the prescribing of these drugs has become rife with abuse.
Compounded drugs are medications whose ingredients have been tailored to meet a patient's individual needs. Proponents say they improve treatment, but critics say they are typically made with many of the same ingredients found in over-the-counter pills and generic prescription drugs and simply boost profits for doctors and pharmacies.

Proposed legislation by California state Sen. Mark DeSaulnier, former chairman of the Senate Labor Committee, and Assemblyman Jose Solorio, chairman of the Assembly Insurance Committee, would limit prices of medically necessary compounded drugs by adding them to the government's fee schedule.

"This is one we're getting out ahead of early," said Jason Schmelzer, a lobbyist for the California Coalition on Workers' Compensation, which includes Walt Disney Co., Marriott International Inc., Costco Wholesale Corp. and more than 200 other employers in the public and private sectors.

Labor is siding with business on this fight. The bill is needed "to make sure that bottom-feeders and cheaters of the system aren't rewarded," said Angie Wei, a Sacramento advocate for the California Labor Federation.

"When people excessively profit from the system, it oftentimes comes out of the hide of injured workers," Wei said.

Drug billings increase sharply

Critics of the use of compounded drugs point to a sharp rise in the bills submitted to the State Compensation Insurance Fund, California's biggest workers' comp insurer. Billings for compounded drugs reached $28 million, or 24 percent of the fund's total prescription billings, in 2009 — from a number so low the previous year that the state fund didn't bother to track it.

"There's no doubt about it that there are people gaming the system," said John Duncan, director of the California Department of Industrial Relations. "The fine line in this, of course, is to identify where legitimate medicine is being applied and abuse is beginning."

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IPad clones to duke it out at Vegas gadget show

What do you call it when you have 120,000 people and an elephant in the room?
The International Consumer Electronics Show, which kicks off this week in Las Vegas.

The elephant is Apple Inc. It won't be at the show this year, but its tablet computer, the iPad, is the most important new product for an industry that needs to once again excite consumers. Sales of the iPad have been strong since its April debut, and the whole industry is trying to mimic Apple's success.

With the iPad, Apple single-handedly cracked the code for the tablet, a device that dozens of manufacturers have tried to take to the masses for two decades, with little success.

Apple itself doesn't do trade shows. When Apple has new products to reveal, such as iPads or iPhones, it stages its own events.

But nearly every other company in the industry will be there for CES, which runs Thursday to Sunday and is the largest trade show of any kind in the Americas. A good many of them will show off their tablets — computing slabs with touch-sensitive screens. Big names expected to do so include Motorola Inc. and Dell Inc.

DisplaySearch analyst Richard Semenza estimated that a hundred tablet models are in development, though not all of them will reach store shelves.

Competing tablets will have a hard time catching up to Apple's lead, at least this year. Certainly, no one managed to do so last year, even though a lot of manufacturers, including Dell, brought out tablets. Samsung did have some success with its Galaxy Tab, but sales didn't come close to the iPad's.

Apple sold 7.4 million iPads through September, in the device's first six months on sale. That means they're already outselling Apple's Mac computers, but not iPods or iPhones.

Analyst Shaw Wu at Kaufman Bros. believes Apple sold an additional 6.1 million iPads in the holiday quarter, and there's every indication it was a popular holiday gift. Even some retailers that don't normally sell electronics, including TJ Maxx, carried the iPad.

Apple's would-be competitors include Motorola, which has been hinting that it will show off its first tablet at the show. Dell and Acer Inc. are also expected to show tablets. Microsoft Corp. CEO Steve Ballmer probably will touch on tablets in his keynote speech Wednesday.

Sales boost needed

The electronics industry's need for a hot new product is especially strong this year. Overall, the recent holiday season was the best for retailers since 2007, but electronics sales were up just 1.2 percent from the previous year, according to MasterCard SpendingPulse, which tracks spending across all transactions, including cash. They're still down 10 percent from pre-recession levels.

For about five years, the industry has been bolstered by Americans rushing out to buy flat-panel TVs. Now, that rush is slowing, as 61 percent of households already have such sets, according to Leichtman Research Group.

Meanwhile, sales of other products that have driven growth, such as GPS units, picture frames and digital cameras, have tapered off. The people who really want them already have them, while the rest make do with their cell phones instead.

Other technologies promoted at CES in recent years have been met with tepid consumer interest.

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