Hotel Indigo is sold for $14 million

Hotel Indigo in downtown Nashville, a $30 million investment that went sour during the recession, was sold for $14 million in a bankruptcy sale recorded in county documents on Friday.

According to the documents, Winston Hospitality, Inc., a hotel management company based in Raleigh, NC, purchased the boutique hotel located on Union Street in downtown.

The property and building were sold for $11.8 million and the remaining sum was attributable to the hotel’s business operations, confirmed Robert Waldschmidt, the sale’s trustee.

The hotel's property owner, 315 Union Street Holdings LLC., filed for Chapter 11 bankruptcy protection in December.

In all, the hotel's total debt was about $25.6 million against assets of about $14.1 million, including the $13.1 million value of the real estate.

The hotel includes 96 rooms and a penthouse, along with 3,000 square feet of meeting space.

A Winston Hospitality spokesman would not immediately comment on the sale.

GM workers approve deal; Spring Hill plant to have 'maximum model flexibility'

Factory workers at General Motors have overwhelmingly approved a new four-year contract with the company that has profit-sharing instead of pay raises for most workers and promises thousands of new jobs.

The United Auto Workers union said Wednesday that 65 percent of production workers voted for the deal, while 63 percent of skilled-trades workers such as electricians were in favor. Voting by GM’s 48,500 blue-collar workers ended on Wednesday.

A top General Motors executive said the Spring Hill plant where the automaker plans to restart assembly and create some 1,700 jobs as part of the new labor deal will have “maximum model flexibility.”

The automaker has said it intends to reopen the former Saturn plant with staffing and operating rules still being worked out with the union.

GM Chief Financial Officer Dan Amman said Wednesday the plant will have flexibility to make “distinctly different vehicles” and be ready to quickly adjust to changing market demands.

Amman declined to give a date for the restart or say if there is a limit on entry-level workers.

Under the new contract, GM can have as many entry-level, roughly $15-an-hour workers as it wants. Amman said after 2015 only 25 percent of the factory workers can be paid the lower wage.

Among terms of the four-year contract between the United Auto Workers and GM, Spring Hill is to get two new midsize vehicles to assemble. One would arrive sometime next year and bring 600 jobs; the other would come in 2013 and add 1,110 jobs.

GM was the first company to reach a deal with the auto workers’ union, which is now negotiating with Ford Motor Co. and Chrysler Group LLC.

Under the deal, which runs through September of 2015, most workers won’t get annual pay raises. But they’ll get $5,000 signing bonuses, profit-sharing checks and other payments that total at least $11,500 during the next four years. GM also promised to add at least 5,100 jobs.

Entry-level workers who now make a base wage of around $15.78 per hour will get 22 percent raises. GM currently has about 1,900 entry-level workers who make about half the pay of longtime UAW members.

The deal cuts GM’s factory worker labor costs to $5 billion per year, less than a third of the $16 billion the company paid in 2005, Amman said. The figure was $11 billion in 2007, as the company headed into bankruptcy protection and needed a government bailout to survive.

The deal also includes offers for older employees to leave so GM can hire new ones at entry-level wages. Eligible workers can get up to $10,000 if they retire within the next two years. There’s also a $65,000 bonus for skilled-trades workers such as electricians if they retire or leave the company between Nov. 1 and March 31.

GM expects 1,000 skilled trades workers and up to 1,000 production workers to take the exit packages and be replaced by new hires who’d make the cheaper entry-level pay.

Phony auto-replies are latest spamming trick

NEW YORK — If you’re prone to mistyping email addresses, here’s a new thing to worry about: you could be a target for spammers trying to sell you a dream vacation or a diet product by pretending to be one of your friends or colleagues.

In a clever twist on spam, some websites with names that are confusingly similar to legitimate sites have been set up to reply to any mail sent to them. The responses are framed as out-of-office replies but sneak in mentions of a new product or service you should try.

How it works

Here’s a real-life example : An Associated Press reporter accidentally sent a message to a “verizonwireless.co” address instead of the proper “.com” and got this response, ostensibly from his contact “tom”:

“I am out of office right now on a my (sic) dream vacation and will get back to you when I return. If you don’t hear from me, my assistant should contact you shortly. You should check this site to see how I scored the best travel deal for my trip.”

That’s followed by a link to a site that advertises luxury resorts. Presumably, the owner of verizonwireless.co makes money when someone clicks through to any of the resort sites.

Only a handful of sites were set up to produce the autoreplies tracked by the AP, and they stopped after the AP’s inquiries. But there are hundreds of thousands of sites out there that could be set up to reply to Mr. and Mrs. Butterfingers, with names that are slight variations of major sites — like “yaoo” instead of “yahoo.” They’ve been registered by so-called “typo-squatters,” whose goal is to make money from advertising as people accidentally visit the sites after mistyping an address in their Web browser.

If more typo-squatting sites start autoreplying, that could be particular problem for Internet mailing lists. If a participant mistypes his or her address when joining a mailing list, every message to the list could get a response from a typo-squatter. This infestation is already apparent on a few Internet mailing lists, including one about Django, a free software package, and one for Communist University, a group based in Johannesburg, South Africa.

Going after them

Tom Pica, a spokesman for Verizon Wireless, said the company’s legal department is looking at the matter and intends to pursue the owner of “verizonwireless.co.” Patrick Flaherty, a lawyer for Verizon, said the company will probably try to seize the domain name through legal action.

It’s unclear who owns verizonwireless.co and the page with the links. Their address registration data is masked.

Verizon Communications Inc., which controls Verizon Wireless, has gone after typo-squatters before. In 2008 it won a $33.1 million judgment against OnlineNIC, a San Francisco-based company that according to Verizon had registered 663 domain names like “myverizionwireless.com.”

The phone number given in the spam messages goes to the online fax account of a real-estate broker in Honolulu. She said she first learned the number was included in the spam when asked by an AP reporter.

The mailing address in the spam goes to an apartment building in Encino, Calif. The messages don’t include an apartment number.

Internet searches revealed that at least two other typo-squatting sites have produced autoreplies: yaoo.es and livingdeadolls.com. One response from the latter site said “I’m on sick leave because of some news from my Dr., please check out this diet product he recommended.”

According to registration data, yaoo.es is owned by Tomasz Kurlenko of Poland. Reached by phone, Kurlenko said he had no control over the site, which like the other two sites is managed by Bodis.com.

Bodis.com is a “domain parking service,” that manages sites for owners. It puts up ads on the sites and gives owners a share of advertising revenue if surfers stumble onto them.

Unhappy

The company is run by Matt Wegrzyn of New York. Reached by phone, he said the autoreply service is provided by AdMedia, a Los Angeles-based company.

Wegrzyn said he wasn’t happy with the money the service provided, and that he was considering shutting down autoreplies for Bodis sites. The sites stopped autoreplying to messages after the AP reached him.

AdMedia didn’t reply to a request for comment.

Tyler Moore, a fellow at Harvard University, and Benjamin Edelman, an assistant professor at the Harvard Business School, estimated last year that nearly 1 million typo-squatting domains, like faceboop.com, gootle.com and wamlart.com shadow the top 3,264 dot-com sites. That’s almost 300 typo sites for every legit one.

Not surprising

Moore said he had never heard of typo-squatters sending fake out-of-office replies, but said it makes sense for them.

“Since squatters have already registered the domain, they quite cleverly are converting any human interaction with the domain into an advertising opportunity,” he said.

Unwanted out-of-office spam isn’t the only reason to be careful about typing email addresses. A small security firm recently reported setting up 30 Web addresses, with names similar to those of major corporations, and saving every email that came in over six months.

The firm, Godai Group, ended up with 120,000 emails, with contents that included trade secrets and network usernames and passwords.

Middle Tennessee businesses remain hesitant to hire

Middle Tennessee businesses say they need more access to capital, less uncertainty about the federal debt and fewer government regulations before they’ll start hiring workers again in bigger numbers.

Otherwise, CEOs of many of the region’s largest companies say they’ll remain reluctant to add jobs even if Congress and the Obama administration offer them fresh incentives to do so.

Mark IV Enterprises, a Nashville-based commercial construction company, has no plans to hire after seeing construction prospects plummet a couple of years ago. Owner Tonya Jones said she let 14 employees go two years ago, and today she hires only when she has a job and contract in hand.

“Hiring someone is a major commitment,” she said, estimating it would cost at least $66,000 in annual salary, benefits and insurance to hire a full-time construction superintendent. “Hiring means confidence, and I don’t have any right now.”

“Until you get an economy that’s really moving forward, most businesses won’t be hiring more people,” said Terry Turner, president and CEO of Pinnacle Financial Partners, a bank holding company here.

Several other executives, from a small-town banker to the top executive of a major manufacturer, generally agree. They said fundamental business conditions — not tax breaks or other government incentives — will drive hiring decisions in the next few months.

“People have got to get to feeling a lot better about spending money,” said Randall Clemons, chairman and CEO of Wilson Bank & Trust, based in Lebanon. “Activity. We need activity.”

For Clemons, that means the easing of credit and brisker loan demand from customers at his bank, which employs 430 people.

“Most businesses have decided in general that they can do the same job with (fewer) people, so even when there is a recovery, you won’t see the level of new jobs we’ve seen in past recoveries,” Clemons cautioned.

At Pinnacle Bank, recent hiring has been limited to a handful of relationship managers, Turner said.

“The folks we’ve hired over the last month or two are in revenue-producing positions” that could lead to hiring more support staff, he said. But “if they don’t produce incremental revenue, we won’t hire more people.”

Gallagher Benefits Services “will add staff when we’re confident it’s needed,” said Karen Saul, Nashville-area president. The human resources firm has added a sales associate and several account managers in recent months, increasing its local presence to about 135 people.

Additional hiring will ultimately depend on confidence — among consumers and business owners, she said. “It’s confidence issues, no question about it. People have been shaken and taken a step back. There’s just so much uncertainty.”

Surveys make point

A trio of recent national business surveys reinforce such an iffy outlook:

A Manpower poll of more than 18,000 U.S. employers found that just 16 percent planned to add staff in the October-December quarter. In Middle Tennessee, it was 15 percent — which was nearly offset by the 13 percent who expect to shrink their payrolls.

A U.S. Chamber of Commerce survey of 1,400 businesses found that 19 percent plan to expand in the coming year, while 64 percent intend to keep employee levels steady.

Almost 41 percent of small businesses participating in a Pepperdine Private Capital Markets Project and Dun & Bradstreet Credibility Corp. study said they plan to hire in the next six months. But almost as many, 38 percent, had no hiring plans.

Hiring anxiety stems from uncertainty over the economy, the ballooning federal debt and the reluctance of Congress and the president to work together, said Jim Burnett, chief development officer for SMS Holdings Corp.

The company offers security and maintenance services in places as diverse as shopping malls and airports. It employs 13,500 people nationally.

“The market and employers need certainty,” Burnett said. “It’s important for the president and Congress to work together; … that basically has companies in a holding pattern.

“When you see zero job growth (nationally) in August, that’s a concern. If other people aren’t hiring, that could impact our company. As our customers go, we go.”

Despite such angst, some Middle Tennessee companies say they’ve made small to significant additions to their payrolls in recent days.

For example, Clarcor Corp., a manufacturer of truck and industrial air filters, recently announced it will add 70 jobs in South Dakota because of increased demand from its customers.

“To me, that’s pulling the trigger” on hiring, said Norm Johnson, the Franklin-based company’s chairman and CEO. “It may not be a big gun, but it’s still a shot.”

But future hiring by the niche manufacturer, which has 5,600 employees worldwide, “will be strictly based on the demand for our products,” Johnson added.

And even then, the job growth won’t necessarily be at a blistering pace. Initial steps will be to improve the productivity of existing workers, and also use overtime hours to fill orders.

Tractor Supply, a Brentwood-based farm and ranch retailer with stock publicly traded on Wall Street, has opened more than 50 stores nationally and added 1,100 employees this year.

That gives it more than 15,000 people on the payroll, Chairman and CEO Jim Wright said.

But for hiring to pick up for corporate America as a whole, Wright said, consumer confidence barometers must improve by at least 10 percentage points over several months.

“What we want to see is whether consumers feel better about the prospects of keeping their jobs or not losing their jobs,” he said. “The key is job security.”

Faith in startups

Mark Rowan, president of Griffin Technology, which makes accessories for iPhones, iPods and other Apple products, thinks entrepreneurs are the answer to the nation’s slack economy.

The privately held company has expanded its payroll by more than 10 percent to 200-plus employees in two years because of risk taking, Rowan said.

“The company is 20 years old, but we still think like a startup, so risk is something we’re comfortable with.”

He predicts it will be startup businesses, not Fortune 500 companies, that do the most to spark significant job creation.

“The companies standing on the sidelines are not going to solve the problem,” Rowan said, citing previous economic recoveries led by new ideas and novel business models. “Some companies saw the future pass them by. Looking back has never moved the economy forward.”

Business briefs: Nashville-Murfreesboro jobless rate at 8.5 percent

County by county unemployment numbers were a mixed bag in Middle Tennessee for August, with nearly an equal number shifting slightly higher or slightly lower compared to a month earlier.

Davidson County’s jobless rate edged up three-tenths of a percentage point to 8.8 percent, while the Nashville-Murfreesboro region as a whole reported an 8.5 percent jobless rate. The state Department of Labor and Workforce Development reported these other results in the following counties compared to July rates:

" Cannon, 9.5 percent unemployment, up three-tenths of a percentage point.

" Cheatham, 9 percent, up from 8.4 percent.

" Dickson, 9.6 percent, down from 10.1 percent.

" Hickman, 10.5 percent, down from an 11 percent rate.

" Macon, 9.3 percent, down from 10.6 percent.

" Robertson, 8.7 percent, down three-tenths of a point.

" Rutherford, steady at 8.4 percent unemployment.

" Smith, 9.1 percent unemployment, down from 9.8 percent.

" Sumner, 8.4 percent, up one-tenth of a percentage point.

" Trousdale, 10.7 percent, down from 11.1 percent.

" Williamson, 6.8 percent, up one-tenth.

" Wilson, 8.1 percent, up two-tenths of a percentage point.

— Randy McClain

Bridgestone to add McMinnville jobs

Bridgestone added one more plant expansion with an announcement this morning that it will spend $36.6 million and add 50 jobs at its McMinnville bus and truck tire plant. The project is to be completed by the first quarter of 2013. Earlier this week, the company announced projects in Clarksville, Tenn.; and Aiken County, S.C.

— G. Chambers Williams III

Music industry banker Russell Goldsmith sees way to more jobs

Music City’s newest bank executive is Russell Goldsmith, chairman and CEO of Los Angeles-based City National Bank, which just opened on Nashville’s Music Row.

The big-city bank is here, in large part, to offer financial services and loans to the music industry — from performers to business agents to concert tour operators.

Goldsmith said the time was ripe to open a Nashville office. The bank has long worked with the music and film businesses on the East and West coasts.

“It’s helpful to have offices in New York, Los Angeles, Las Vegas and now Nashville. An entertainer here could be doing a movie in L.A., or performing live in New York or doing a concert in Las Vegas,” Goldsmith said while in town for the opening of City National’s 54 Music Square East branch last week.

City National’s roster of clients includes talent agencies, law firms, accountants, business managers, performers and others with links to the entertainment industry. It’s among the nation’s Top 50 financial institutions, weighing in at $22.5 billion in assets.

As CEO, Goldsmith also has become a national voice in support of targeted federal spending, particularly on roads, bridges and transportation to create jobs beyond his own industry. He chairs a jobs committee in Los Angeles that examines strategies to reduce unemployment.

“(The jobs plan) the president has put forward is headed in the right direction,” Goldsmith said. “In the short run, we need to stimulate the economy; … Keynesian economics is not dead. Long-term, we need a coherent deficit reduction plan.”

Goldsmith said lack of confidence is holding back many businesses from hiring.

Loan demand from small and midsize businesses remains weak, and thousands of construction workers clog the unemployment rolls in many states.

“The challenge in a tepid economy is not so much whether banks have the desire to lend … but it’s loan demand. If small and mid-sized businesses don’t have confidence about the future, they sit on cash, they don’t hire and they don’t expand.

“At City National, we’re making loan commitments to our creditworthy clients, but (some) are hesitating for all sorts of reasons. They don’t buy the warehouse and rehabilitate it or expand production. We’ve got to get confidence back at a higher level.

“One of the things the president wants to do is expand funding for the Transportation Infrastructure Finance and Innovation Act, which is something I’ve been encouraging in my role as chairman of the Los Angeles Area Coalition for Jobs and the Economy,” the banker said.

Opportunity in Nashville

In Southern California, voters approved a special half-cent increase in the sales tax in 2008 to fund transportation projects in Los Angeles County, and Goldsmith said that could create a spark.

“If we can get some additional money from TIFIA, we literally have shovel-ready projects with plans (ready to go). So, with a small percentage of federal loans and other things … we could build projects in 10 years that would otherwise take three decades to complete.

“To me as a banker, that’s what you do. You lend against cash flow, particularly with so many unemployed construction workers. We don’t want bridges to nowhere or congressional pork. But we do want true impact — subway systems in dense environments, an improved electrical grid, roads being repaired.”

Goldsmith acknowledges that politically it may be tough to get much new federal stimulus through Congress, where Republican opposition to what many see as runaway government spending remains fierce.

For its part, City National has added roughly 200 jobs nationwide in the past year. The branch here will employ 17 people.

“We see a lot of opportunity in Nashville,” Goldsmith said.

City National’s loan portfolio, like that of many banks, took losses in California real estate lending, but recent quarters have seen improved loan quality, fewer charge-offs and more recoveries as properties taken back by the bank are resold.

“Basically, our loan portfolio, all things considered, held up extremely well except for … residential real estate development. We never made sub-prime mortgages, but we did lend money to the guy who’d build 10 homes for $1 million each.

“When the bottom fell out, those suddenly became $600,000 homes and couldn’t get sold,” Goldsmith said. “But, for our purposes, the worst is absolutely over, and we see a more normalized picture going forward.”

Business Briefs: David Posch is new CEO of VU hospital, clinics

David Posch, chief executive officer of The Vanderbilt Clinic and executive director of Vanderbilt Medical Group, will slide over to the new role of CEO, Vanderbilt University Hospital and Clinics in October.

He will take on the new job when current hospital CEO Larry Goldberg leaves to run Loyola University Health System in Maywood, Ill. Direct management responsibility for the hospital and clinics has not been combined in a single leadership role since 1995.

Posch will appoint a chief operating officer for the hospital after a national search. Until then, hospital Chief of Staff Dr. Allen Kaiser will serve in that capacity on an interim basis.

— Cindy Smith

LifePoint to buy back up to $250M in stock

LifePoint Hospitals Inc. said Friday it will buy back up to $250 million in stock over the next 18 months.

The company said it completed a stock repurchase during the third quarter. LifePoint had 52 million shares on the market as of July 22.

LifePoint’s stock rose 7 cents a share and closed at $34.97 per share on Friday. It also moved slightly higher in after-hours trading.

— Associated Press

China to learn secrets of Chevrolet Volt

SHANGHAI — General Motors Co. agreed Tuesday to deepen cooperation with its flagship Chinese partner on development of electric vehicle knowhow amid pressure from Beijing to hand over proprietary technology.

GM would not say how much it’s investing in the venture with Chinese state-owned partner Shanghai Automotive Industrial Corp., and gave few details of the deal.

The Detroit company denied that the agreement was the result of a push by China to acquire advanced technology like the Chevrolet Volt electric car that its own automakers have yet to develop. The Volt can travel about 35 miles on battery power, and a gas-powered generator kicks in to run the car when the batteries are depleted. The generator technology eliminates anxiety over whether a driver will run out of electricity.

GM Vice Chairman Steve Girsky, in a conference call from Shanghai, told reporters that neither SAIC nor the Chinese government have requested Volt technology.

Under the agreement with SAIC, the two companies will equally share the cost of developing a new all-electric vehicle, reducing GM’s cost and risk, Girsky said.

GM, he said, makes a lot of money in the growing China market, and the partnership is an investment to keep that going. “This is not a political decision. This is a business decision,” he said.

U.S. lawmakers complain

However, U.S. lawmakers have complained that China is shaking down GM to get the technology that drives the Volt. GM plans to start selling the Volt in China by the end of the year, but it probably won’t sell many because it doesn’t qualify for a Chinese government subsidy that amounts to $19,000 per car. The government offers the subsidy only to electric cars made in China. There also are tariffs on cars imported to China.

Lawmakers contend such requirements are unfair and may violate world trade rules.

Girsky said GM plans to sell only a small number of Volts in China at first to test consumer reception.

But he hinted that the Volt, now built at a Detroit factory for export worldwide, could eventually be built locally in China.

“If we localize, eventually it won’t have a tariff and it will get the subsidy,” Girsky said. “We have made no decision on if, when or where we build Volt in the future.”

Flying fish, monsters on hot toy list for the holidays

NEW YORK — Every year, toy makers and sellers hope there will be a runaway hit toy to help spur excitement around the holidays and boost sales.

Toys R Us is betting that 15 toys ranging from a flying, inflatable remote-control fish to tiny collectible monsters will be big hits this season.

Making the right picks early is crucial for toy sellers so they have the right mixture of toys at the right prices to lure shoppers.

The holiday season can account for about 40 percent of a toy seller’s annual profit. In 2010, U.S. toy sales rose 2 percent to $21.87 billion, according to the NPD Group.

“There’s lots of really interesting and different and unique toys on the list,” said Karen Dodge, senior vice president and chief merchandising officer of Toys R Us in the U.S.

The 15 toys on the Toys R Us list are:

Air Hogs Hyper Actives by Spin Master, $49.99: Radio controlled miniature racing cars.

Air Swimmers Extreme by Animal Planet, $49.99: Inflatable fish and shark balloons that are radio controlled .

Lalaloopsy Silly Hair dolls by MGA Entertainment, $34.99: Rag dolls with button eyes and bendable hair.

LeapPad Explorer by Leapfrog, $99.99: A tablet-like device which children can use to read books, play educational games and take pictures.

Monster High Fearleading 3-Pack by Mattel, $42.99: Three dolls which are offspring of famous monsters, dressed in “Fear Squad” cheerleading outfits.

Moshi Monsters Moshling Mini-Figures 3-pack by Spin Master, $5.99: Tiny collectible monsters related to a hit online game.

My Keepon by Wow! Stuff, $39.99: A bright yellow blob-like robot that dances to music.

Nerf Vortex Vigilon by Hasbro, $24.99: A foam dart gun that launches foam discs up to 50 feet.

Ninjago Lightning Dragon Battle by Lego Systems Inc., $79.99: A 645-piece construction set offered exclusively at Toys R Us with characters from Lego’s popular Ninjago line.

Poppin’ Park Elefun Busy Ball Popper by Hasbro’s Playskool, $29.99: A colorful elephant that can launch plastic balls and plays music.

Power Wheels Dune Racer by Mattel’s Fisher-Price: $279.99. A child-size dune buggy that can ride over grass, gravel and mud.

Radica Fijit Friends by Mattel, $49.99: Robotic toys that dance and respond to squeezes and spoken words.

Sesame Street Let’s Rock! Elmo by Hasbro, $69.99: An Elmo doll that sings and comes with a drum, tambourine and microphone.

“Skylanders: Spyro’s Adventure,” by Activision, $69.99: A video game that includes action figures that can be placed in a portal and then appear in the game.

The Trash Pack Garbage Truck by Moose Toys, $19.99: A garbage truck that can hold 10 collectible Trashies, which are tiny collectible characters.

Jobs outlook weak but stable, survey finds

WASHINGTON — Employers’ hiring plans for the fourth quarter are “relatively stable” — slightly down from the third quarter, but a tick higher than in the prior year, according to the Manpower Employment Outlook survey released Tuesday.

A seasonally adjusted net 7 percent of employers said they plan to add to their workforce in the fourth quarter, compared with 8 percent in the third quarter, and 6 percent in the fourth quarter of 2010. When the job market is healthy, the net level is in the mid-20s. Most firms expect no change in their staff levels.

“We are kind of hovering. Our numbers have been in positive territory, but they’ve been in the single digits, and that’s reflective of the uncertain economic environment,” Melanie Holmes, a vice president at Manpower, a Milwaukee-headquartered staffing company, said. “It seems to be just slogging along at the same level. I’m happy that it’s positive, but I just wish it were more positive.”

The Manpower survey measures the percentage of firms planning to hire minus the percentage of those intending layoffs.

The U.S. Labor Department recently estimated that nonfarm payroll employment was unchanged in August, with private employment up a weak 17,000 that was offset by a decline in government payrolls. Net private employment growth has been positive since March 2010, while government jobs have declined almost every month since June 2010.

On a not-seasonally-adjusted basis, the net portion of employers who said they plan to increase their workforce in the fourth quarter was 5 percent — 16 percent planned to increase, 11 percent planned to decrease, 70 percent expected no change, and 3 percent didn’t know. In the third quarter, a non-seasonally adjusted net 12 percent planned an increase, compared with 4 percent in the fourth quarter of 2010.

By industry, 11 of 13 industries showed a net positive employment outlook for the fourth quarter. However, for 12 of 13 industries, the level was down from the third quarter.

'Less positive'

“So even if they continue to be positive, the numbers are less positive,” Holmes said.

The categories of wholesale and retail trade, as well as mining had the strongest fourth-quarter results, while government and construction had the weakest.

“Mining is quite often among the strongest. With all of the natural gas exploration going on, we are still taking oil out of the ground, and we are still refining it,” Holmes said.

Manpower divides the U.S. into four regions: the Midwest, South, Northeast and West. The seasonally adjusted net employment outlook was 8 percent in the Midwest and the South, and 6 percent in the Northeast and the West.

“The regions remain positive, but the numbers aren’t really going up. The bottom line is employers are holding kind of steady,” Holmes said.

GM, Chrysler miss deadline for new contracts

DETROIT — General Motors Co. and Chrysler Group LLC failed to meet a Wednesday deadline for reaching new contract agreements with the United Auto Workers union. GM negotiators were still in talks early Thursday, but talks at Chrysler appeared to have broken down.

Up until Wednesday, the negotiations that began over the summer appeared to be proceeding without acrimony. But late Wednesday, the CEO of Chrysler fired off a letter saying an agreement likely wouldn't be reached because UAW President Bob King didn't come to the table Wednesday night to finalize the deal.

"I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant," Chrysler CEO Sergio Marchionne said in the letter to King, which was obtained by The Associated Press.

Marchionne said he planned to travel out of the country and will return next week. He said he would agree to extend Chrysler workers' current contract for a week, but the decision to extend the contract must be made by the UAW.

A message seeking comment was left late Wednesday with the UAW. The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker.

The union may have little choice but to extend the contract. In the past, workers could strike if an agreement wasn't reached by the deadline. But GM and Chrysler workers can't strike over wages this time, a condition placed on them when the companies took government bailout money two years ago.

Things appeared to be progressing more smoothly at GM. Joe Ashton, the UAW's vice president in charge of the GM negotiations, told local union officials Tuesday night in a note that bargainers have made "much progress" in talks with the company. GM has taken the lead on the negotiations and its agreement may be used to set the pattern for the other two companies.

The contract talks will determine wages and benefits for 111,000 union workers at the auto makers, and they also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands more. The contract talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.

Ashton wrote that "difficult restrictions" have been placed on the union and company as a result of the bailout. GM nearly ran out of cash and needed $49.5 billion from the government to survive, but it's been making billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well.

To get the government funding for GM, the union had to agree not to strike over wages at GM and Chrysler. Also, unresolved issues can be taken to binding arbitration, and the union's new contracts must keep the companies' labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.

"As you know, several difficult conditions were agreed to in order to obtain financing during the bankruptcy," Ashton wrote in the note to local union officials. "We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations."

The union has been seeking bigger profit-sharing checks instead of pay raises, higher pay for entry level workers who make $14 to $16 per hour, signing bonuses and guarantees of new jobs as auto sales recover. Ford and GM want to cut their labor costs to get them closer to Honda and Toyota, while Chrysler wants to hold its costs steady.

The contract agreements are only temporary until they are ratified by workers.

Medicare cuts worry suppliers

Over the past decade, Skip Sawyer has seen the amount Medicare pays for the wheelchairs that his Goodlettsville-based company, Medical Mobility, supplies to patients decline by 30 percent.

Now, he’s concerned those prices could be cut by an additional 20 percent as Medicare’s overseer expands a cost-cutting program to cover the four largest metropolitan areas in Tennessee, including Nashville. The others are Memphis, Knoxville and Chattanooga.

Under the competitive bidding program, Sawyer would have to submit bids sometime next year in hopes of being picked as one of the vendors who could continue offering products to Medicare beneficiaries in specific ZIP codes.

The government program has been in a pilot stage, but now it’s expanding tenfold to more than 90 metro areas nationwide. It has already drawn stiff criticism from many of the home medical equipment suppliers who would be affected by the new auction process.

“I don’t mind being in a program where products are competitively bid or auctioned; we just don’t want to have to auction off our companies,” said Randy Wolfe, owner of Lambert’s Health Care in Knoxville and a board member of a new trade group, the Association of Tennessee Home Oxygen & Medical Equipment Services.

Products affected by the expanded program include oxygen, oxygen equipment and supplies; wheelchairs, scooters and related accessories; respiratory devices; hospital beds and accessories; walkers; and certain types of pumps, among other equipment.

New prices that would result from the competitive bidding process would go into effect July 1, 2013, here. Medicare would pay for 80 percent of the cost of covered equipment, while beneficiaries would pay the other 20 percent.

In announcing plans for the program’s second phase involving 91 markets, Medicare’s overseer, the Centers for Medicare and Medicaid Services, said the expansion could save $28 billion over the next decade. The first round, which involved nine markets, produced average savings of 32 percent to Medicare and the beneficiary on the items subject to bidding, said Ellen Griffith, a Medicare spokeswoman.

“At a time when people are concerned about health-care spending, for Medicare to be paying too much compared (with) any other payers … makes no sense,” Griffith added.

Tom Milam, a former medical supplier executive who sits on a committee created by Congress to advise Medicare’s overseer on competitive bidding, remains concerned that the program could hurt business owners and reduce consumers’ access to certain products.

“These people providing oxygen, walkers and beds need to know that 50 percent to 70 percent of them are not going to be here two years from now,” Milam said. “It’s a scheme designed to get a lower price, and Medicare just assumes people will figure it out.”

Low-ball bids

Jesse Schwartz, an economics professor at Kennesaw State University in Kennesaw, Ga., says the current design of the bidding process encourages low-ball bids.

Plus, companies that win this initial round aren’t required to accept a Medicare contract; they can simply walk away from a deal and not supply the products.

“That’s a big problem because Medicare might not be able to meet demand because there won’t be enough suppliers,” Schwartz said.

Griffith, however, said that 92 percent of the bidders offered contracts in the first round of competitive bidding signed them.

Sawyer of Medical Mobility isn’t the only local vendor concerned about the potential impact.

David Baxter, president of Medical Necessities & Services of Columbia, Tenn., a supplier of oxygen tanks, power wheelchairs and other products, has offices in Nashville and Chattanooga. Those would be affected by the expanded competitive bidding program.

He expects to bid in hopes of being selected, but he still worries about the end result.

“What I’m trying to do is look at all the expenses we have — and anything that’s not directly supportive of keeping our doors open, I (will) try to reduce it or eliminate it completely to keep going,” Sawyer said.

Officials lobby GM to revive Spring Hill auto plant

Officials from Spring Hill and Maury County, along with Bill Hagerty, the state’s economic development commissioner, made their case to General Motors’ manufacturing executives in Detroit on Thursday for an eventual reopening of the automaker’s auto plant in Spring Hill.

While there, they also met with GM real estate executives over the automaker’s plans for about 2,000 acres it owns adjacent to the Spring Hill plant.

Local and state officials wanted to know whether any of that property might be made available to the community for other development, said Brandom Gengelbach, president of the Maury County Chamber & Economic Development Alliance, which organized the trip.

Gengelbach said there was no presumption on the part of the Tennessee delegation to attempt to pressure GM on a possible Spring Hill reopening.

The leaders, including Spring Hill Mayor Michael Dinwiddie and Maury County Mayor Jim Bailey, “recognize there has to be a business case for future investment by GM in Spring Hill,” Gengelbach said. “We have a down economy and people are out of work, so we know we’re not going to get a vehicle at Spring Hill unless new car sales warrant it.

“We just want to make sure that when things do come back, and when the demand justifies looking at adding production, Spring Hill can be first on the list,” he said.

Hagerty and members of the state Department of Economic and Community Development staff were along “to gather information,” said department spokesman Clint Brewer.

“We’ve been having conversations with GM and local officials,” he said. “We’ve heard from the company that the primary factor (in a decision to reopen the assembly line) is a question of vehicle demand increasing, rather than incentives.”

The automaker has not asked for any state or local incentives in connection with a possible restart of the assembly line, local officials said.

GM put the Spring Hill vehicle-assembly line “on standby” and laid off 2,000 workers when production of the Chevrolet Traverse crossover was moved to Lansing, Mich., nearly two years ago.

The company just a year earlier had completed a $750 million upgrade of the former Saturn plant to convert it to make the Traverse, but the plant was shuttered as part of GM’s bankruptcy reorganization.

There still are about 1,100 hourly workers employed at the facility making four-cylinder engines, metal body panels and plastic parts for a number of GM vehicles assembled at other plants, however. And a $500 million upgrade of the engine-production operation is under way, which is expected to add about 500 jobs.

The United Auto Workers Union is in final negotiations with GM for a new national labor contract that local union officials hope will include a new product for Spring Hill.

A deal is expected within a few days.

The company’s contract with the UAW expired Wednesday night, but the two sides have agreed to extend it temporarily while bargaining continues. The GM workers are barred from striking, however, under terms of the GM bankruptcy and bailout by the federal government.

Gengelbach said the local and state officials’ visit to Detroit on Thursday was “just coincidental” to the GM-UAW talks, and was not intended to push GM to include a new Spring Hill vehicle in a labor agreement.

Gengelbach said local officials primarily wanted to get acquainted with GM’s current manufacturing executives.

“All of the leadership has changed, and we felt it was important for us to meet the new leaders and make sure there is an awareness of our interest in the continuing success of their Spring Hill plant.”

The idea of converting some of GM’s unused land to other development was also a key component of the visit, and that meeting was separate from conversations with the manufacturing executives, Gengelbach said.

“They own over 2,000 acres at the facility, and we wanted to get an understanding about what the future use of some of that acreage might be,” he said. “They told us they are doing a study on the land, and looking at their plans.”

Homebuyers are frustrated by cash investors

WALNUT CREEK, Calif. — After getting the good news on a Friday night that their offer topped all the others on a foreclosure in Vacaville, Calif., they wanted as their retirement home, Jack and Donna Pfister spent the weekend packing.

But the next Tuesday they were told the bank had decided to go with an all-cash buyer, whose offer was $25,000 less than the $475,000 offer from the Pfisters.

“My husband was heartbroken,” said Donna Pfister of Rodeo, Calif. “I was heartbroken because he was heartbroken. … Right now, we both feel kind of let down.”

The Pfisters are far from alone. While no reliable figures are available, San Francisco Bay Area real estate agents report dozens of people like the Pfisters have lost their dream houses, edged out by a steady increase in homes bought by those who don’t plan to live in them.

Investors are gravitating toward low-end properties, the same homes that first-time and move-up buyers want. The median price paid by all-cash buyers in July was $230,000, down from $270,000 a year ago.

Most sellers, including banks that own foreclosed homes, prefer all-cash buyers because the deal can close faster than a transaction involving a loan, say real estate professionals.

In the past few years, many regular buyers have turned to government-insured Federal Housing Administration loans after conventional and jumbo loans became harder to get as a result of the housing meltdown.

“Over the past two years, cash has been king,” said Dominic Carano, an East Bay Realtor with ZipRealty. “Then next comes a conventional loan with 20 percent or better down, and the next is the FHA loan with 3.5 percent down.”

Carano’s territory is eastern Contra Costa, where low home prices have made it a ground zero for investment buyers. “Silicon Valley (buyers) are buying up properties in Antioch and Pittsburg to become landlords.”

“Most of the investors are buying into the first-time homebuyer price range of $200,000 to $400,000,” said Linnette Edwards, an East Bay associate broker with Better Homes and Gardens Real Estate.

All-cash buyers are also purchasing a lot of homes on the east side of San Jose, said Sami Asfour, a broker with Keller Williams Realty. “Most of them will buy them, fix them up and flip them,” he said.

He said that one of his clients, who is looking for a home in San Jose for under $300,000, has lost out several times to all-cash investors.

“We made six or seven offers; in some cases it was above the asking price. (The buyer) that comes in with all cash takes it,” Asfour said.

As his client and the Pfisters discovered, sellers will often take all-cash offers that are less than the bid from someone using a loan, say real estate professionals.

Loans take time

Loans require time-consuming appraisals before a sale can close. Also, FHA loans have property inspection requirements that can slow down the process even more.

“The investor has the cash wherewithal to be able to close on the property without the risk of the seller worrying about whether the buyer can get the loan or not,” said Mike Sibilia, another broker with Keller Williams.

But while all-cash buyers are dashing the homebuying dreams of regular buyers, the trend is also helping to move along the glut of foreclosures dragging down home prices, real estate experts say.

“You have to see both sides,” said Ivonne Valdes, a South Bay Realtor with Coldwell Banker. There are many times when a bank won’t make a loan to a regular buyer because the property is “in a state of disrepair or sometimes there are safety issues,” she said.

“(The homes bought by investors) are getting a face-lift and are getting rebuilt,” said Jeff Pereyda, a broker with Tri-City Real Estate Brokers in Fremont, Calif.

“Usually, the all-cash buyers are out there looking for a flip. They’re going to use all cash to buy it, fix it up, turn it around, and sell it.”

Feds' zero interest rates burn savers

KANSAS CITY, Mo. — Rock-bottom interest rates shored up banks, turned around the stock market and steadied the economy. They also put 82-year-old Wayne Wagner behind a lawn mower.

Wagner, a retired engineer, mows and sprays for weeds at an Independence, Mo., fourplex he rents out to make ends meet. He bought the property two years ago when the interest rates on his savings dropped so low he couldn’t get by.

Instead of collecting interest, Wagner now collects rent, fills vacancies and spends more time figuring out his taxes and the other paperwork that comes from being a landlord.

Savers of all stripes have had to make other plans since the Federal Reserve embarked on its zero-interest-rate policy more than two years ago. They have little tolerance for the gyrations of the stock market, choosing instead to save through federally insured bank accounts and government-backed bonds. And that has meant less and less income as rates tumbled.

Then, at its early August meeting, the Fed vowed to keep rates this low at least through mid-2013.

Two more years of scant income for those who have lost work and had to turn to their savings unexpectedly. Two more years of pressure to take on more risk for little reward that can be passed on to the newest generation. Two more years to worry whether gasoline or food prices will finally outstrip fixed incomes in retirement.

“It certainly is hurting anybody who was responsible, that saved. And it’s certainly hurting seniors who may be relying more on the interest to live on than me,” said Dave Wininger, a business owner who has staked his retirement plan on savings.

Savers have gotten used to seeing their interest earnings dry up periodically.

Under then-Chairman Alan Greenspan, the Federal Reserve repeatedly drove down interest rates to offset jolts — the 1987 stock market crash, the Asian contagion, the Sept. 11 terrorist attacks.

Typically, the Fed brought rates back up quickly as conditions improved. That didn’t happen the last two times the Fed slashed rates. Greenspan’s Fed held its benchmark rate below2 percent for 2½ years. Current Chairman Ben Bernanke’s Fed has held it near zero just as long.

And the Fed’s vow last month to keep rates low has only added to the anxieties of just about anyone who prefers the safety of earning income from certificates of deposit, money market accounts and other safe, fixed-income investments.

And for what?

“I don’t see how it’s helping anybody with the rates down,” said Billie Wilson, a 78-year-old retired teacher hoping to leave money to a collection of great-great nieces and nephews. “Maybe I don't know enough about the economy. All I know about is my own economy.”

Those who know plenty about economics can’t agree whether super-low interest rates should continue. Three members of the Fed’s powerful committee voted against making the promise Aug. 9 to keep rates down through mid-2013.

Tom Hoenig, president of the Federal Reserve Bank of Kansas City, has argued that capital markets don’t function well at zero percent interest rates. How, for example, can a business weigh risky expansion and hiring plans when the price it pays for capital is being artificially held down by the Fed?

Others count hundreds of billions of dollars in lost interest income that could have been plowed into the economy, or at least used to bolster consumers’ confidence about their future.

The debate could come to a head later this month. The Fed has expanded its scheduled Sept. 20 policy session into a two-day affair. Bernanke said the extra time was needed for “a fuller discussion” of the Fed’s next steps.

Some retirees are moving their bank savings into stocks.

Wilson, who taught high school for more than 40 years, said she’s hunting stocks because she doesn’t want to let banks use her money practically for free.

“I’m just tired of the low CD thing,” Wilson said.

Some economists blame low interest rates on banks’ apparent unwillingness to lend money to businesses and consumers. They argue that banks can get plenty of deposits at extremely low rates and make risk-free money buying safe government bonds that pay a bit more.

Wilson’s taking her money out of banks because she figures she can afford to do it. She is targeting college expenses for her seven great-great nieces and nephews, who range from a first-grader to a high school freshman.

But Wilson’s not happy about having to shuffle out of safety to do it.

“I want to help the family in the future. It makes me, I guess, mad that I can’t get anything done for them,” Wilson said. “I don’t understand the Fed anymore.”

Dennis Maloney retired with a good pension after years flying for Trans World Airlines.

By itself, the pension covered his living expenses and child support he paid at the time. Maloney wasn’t eligible for Social Security yet.

But that was 1987. What had been plenty to live on is now just enough.

“I’m spending every penny of my Social Security and my pension to live, just from everyday expenses,” the 76-year-old Prairie Village, Kan., resident said.

Those include a $332 electric bill followed by a $405 electric bill, the most Maloney remembers paying in the house where he’s lived for 33 years. He’s seen higher food prices and gasoline prices.

“My cost of living went up a lot,” he said.

Consumers with older certificates of deposit may have decent rates, but those are maturing soon in many cases.

Now that business owner Wininger’s older CDs are coming due, he is having trouble finding good rates again. The best he’s found is 2.79 percent, “which is still pathetic,” and that requires locking up the money for five years.

Wininger is rethinking his retirement plan partly because of something he heard on a news program on TV. It was an interview with the president of the Chicago Federal Reserve, Charles Evans. His comment was that the Fed should promise to keep interest rates this low even longer.

“At least they’ve told people so that we can plan,” Wininger said.

TN doctors have deep ties to drugmakers

The latest data in a ProPublica study of financial ties between doctors and big drug companies reveal deeper links involving Tennessee physicians and medical researchers than were previously known.

One Nashville psychiatrist’s take from five major drug companies for a two-year period crossed the half-million-dollar threshold, the data show.

Overall, drug companies disclosed $20.8 million in spending in Tennessee for speakers’ fees and consulting work or picking up the tab for doctors’ meals and travel costs. The total includes money that went to individual doctors and research institutions such as Vanderbilt University Medical Center and the Sarah Cannon Research Institute.

That revised total is up from $8.9 million when ProPublica last compiled drug-company disclosures in December, combing through a database of such payouts as fresh information from additional pharmaceutical companies has been reported.

Among Nashville-area physicians, psychiatrist Jon W. Draud collected the largest amount, a total of $633,181 in speaking and consulting fees, travel and meals from the first quarter of 2009 through this year’s first quarter.

Doctors, firms say patients benefit

Dr. Hal M. Roseman, a cardiologist who has collected nearly $300,000 in industry payouts over the past two years, makes no apologies for receiving fees for being a speaker at events organized by drugmakers.

His payments from the second quarter of 2009 through this year’s first quarter were $294,000. That includes money from Merck and GlaxoSmithKline.

“It has not altered my practice,” Roseman said of the financial gains, adding that sharing his knowledge with other doctors about medical issues helps patients get proper care, and it doesn’t determine which drugs he prescribes.

“The pharmaceutical industry clearly benefits by promoting their products, but in many instances it’s to the benefit of society that these educational efforts continue,” Roseman said.

That stance echoes drugmakers’ explanation of payments to doctors.

As ProPublica was preparing to release its report on Wednesday, the drug industry defended its practices as a way for doctors to stay current with information about drug performance and related risks.

Diane Bieri, executive vice president of the Pharmaceutical Research and Manufacturers of America, said in a news release:

“Interactions between biopharmaceutical research companies and healthcare professionals play a critical role in improving patient care and fostering appropriate use of medicines. …

“Through these programs, physician speakers are able to help their peers stay up-to-date with clinical data about new FDA-approved medicines, new uses of medicines, emerging risks and side effects, and more,” she said.

Bieri said the industry also supports increased transparency to reveal to consumers the business and research relationships between drugmakers and doctors.

Still, Dr. Kevin H. Beier, an emergency medicine physician with Middle Tennessee Medical Center in Murfreesboro, has concerns about doctors taking the payouts.

“Unless there’s complete separation between drug companies and physicians and hospitals, the most cost-effective and best medicine for the specific illness may not be utilized,” he said.

However, he believes only a small fraction of physicians are prescribing drugs and treatments under the direct influence of the pharmaceutical industry.

Beth Uselton, executive director of patient advocate group Tennessee Health Care Campaign, said the disclosures by the drug companies are a key step toward transparency and a more efficient, fair and cost-effective health-care system.

“Shining a light on those sorts of economic relationships tells us a lot about why the health-care system is the way it is,” she said. “In and of itself, financial ties don’t necessarily compromise physicians’ judgment, but there’s always a possibility that an economic relationship affects delivery of care to patients and the types of drugs prescribed.”

Food prices will probably rise next year

National food prices are probably on the way up because of an unseasonably hot summer and damage to this year’s corn crop, but at least in Tennessee a splash of much-needed rainfall from the remnants of Tropical Storm Lee may have provided some relief for farmers.

This spring, farmers planted the second-largest crop since World War II. But high temperatures stunted plants.

In Tennessee, corn, cotton and soybean harvests and growth of the plants continue to run behind last year’s pace because of dry conditions, a U.S. Agriculture Department report said Monday.

But at least rain from Tropical Storm Lee last week gave many farmers a boost except in some parts of west Tennessee that got only a few scattered showers from the storm.

“Pastures and late soybeans are improving,” said Richard Groce, county agent in Maury County, where 6 to 8 inches of rain fell over three consecutive days early last week.

In Franklin County, Ed Burns, a county agent, said the corn harvest made better progress there after 4 to 7 inches of rain last week.

But Burns said, “I am afraid the rain was too late to help early planted and early maturing beans …; yield loss due to hot, dry conditions is estimated at 30 (percent) to 50 percent.” He said the jury remains out on cotton crop conditions.

In major corn-growing regions around the country, though, conditions are even more uncertain.

“We just didn’t have a good growing year,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis. “It was too hot, too warm, too dry at the wrong time.”

The price of corn was relatively unchanged at $7.33 a bushel on Monday. While that’s down from its peak of $7.99 in June, it’s still nearly twice the price paid last summer. A bushel of corn equals 56 pounds.

Corn is an ingredient in everything from animal feed to cereal to soft drinks. It takes about six months for corn prices to trickle down to products at the grocery store.

But many food producers are already being squeezed by the higher prices. Chicken producer Sanderson Farms Inc. reported its third straight quarterly loss late last month, in part, because of increased costs for feed. Smithfield Foods Inc., the world’s largest hog producer, said last week that high feed costs would remain a problem this year.

“Ingredient prices are going to stay high for a while,” Ward said.

Traders also worry that grain shortages could return next year because of the damaged crops.

International Paper, Temple-Inland merger faces review

MEMPHIS — International Paper is buying smaller rival Temple-Inland Inc. for $4.3 billion after sweetening its bid and taking on some debt, but the deal still faces the scrutiny of the U.S. Justice Department.

If the sale goes through, it would give the combined company roughly a 40 percent share of the corrugated packaging materials market in North America.

Both companies said there will be financial considerations if the sale fails to pass antitrust muster after federal officials review it. Memphis-based IP is the largest producer of corrugated packaging in North America, while Temple-Inland is No. 3.

It’s unlikely that the Justice Department will file a complaint to stop the proposed merger because product in other paper industries, such as office paper, is more concentrated than the International Paper deal, according to Montreal-based BMO Capital Markets analyst Stephen Atkinson.

“This should not be seen as a threat,” he said. He added that the $32-a-share price, although it’s up from June’s offer of $30.60 a share, is still a bargain.

“This is very much a story of optimizing logistics and management,” Atkinson said. “It very much reflects what’s going on in the marketplace right now.”

If the merger were to be scuttled over antitrust issues, International Paper could be required to pay Temple-Inland $200 million, the merger agreement states.

The deal was described as a friendly one on Tuesday by IP, which also will assume $600 million in debt as part of the transaction.

International Paper’s stock rose $2.28 per share to close at $27.77 in New York Stock Exchange trading Tuesday afternoon.

The proposed deal has been approved by the boards of both companies. If shareholders and regulators follow suit, it could close during the first three months of 2012.

IP said Tuesday the proposed buyout probably would add to its earnings the first year after the deal is done, and that it could save about $300 million a year within the first two years.

UAW seeks national deal

DETROIT — Signing bonuses, pay raises for entry-level workers and early-retirement buyouts may soon be on the way for about 112,000 U.S. autoworkers.

Since late July, the UAW and the Detroit Three have been negotiating a national labor deal to replace one that expires at 11:59 p.m. Wednesday.

On Saturday, for the third day in a row, UAW President Bob King was in and out of contract talks with General Motors in downtown Detroit. It’s another sign that GM will set the pattern for the Detroit Three.

GM’s agreement, the Detroit Free Press previously reported, is likely to add thousands ofjobs at U.S. plants, offer buyouts for skilled trades workers andenhance the profit-sharing formula. This week, GM applied for tax incentives that could helpadd up to 2,000 jobs in Wentzville, Mo.

Chrysler has been in lock step with talks at GM.

Meanwhile, talks lag at Ford, where economic issues have barely begun being discussed. The devil is always in the details.

And this year, autoworkers won’t be the only ones judging the first new contract with the Detroit Three since the bankruptcies of General Motors and Chrysler and a massive restructuring at Ford.

Many others to weigh in

Taxpayers, Wall Street, the news media and political pundits across the nation almost certainly will be weighing in on any deal reached.

To win workers’ votes, Ford, GM and Chrysler will probably offer signing bonuses that could draw criticism if they are viewed as excessive.

Kristin Dziczek, director of the labor and industry group for the Center for Automotive Research in Ann Arbor, Mich., estimates that signing bonuses will probably be between $3,000 and $5,000 so that workers can recoup performance bonuses they gave up in 2009 and 2010.

An increase in entry-level pay, which King has said is his highest priority, also is expected to be offered. Although that would increase fixed costs, the union may take that cost out of the contract somewhere else.

Q&A: Hospital chief Tom Ozburn says South Davidson gets bum rap

Last month, the large, bold-red sign that identifies the emergency department at Southern Hills Medical Center was replaced with one with the Spanish word “Emergencia” next to the English version.

It’s one example of efforts to make the HCA-owned hospital a more welcoming place to the fast-growing, diverse community near its campus off Nolensville Pike in southeast Davidson County.

Under the 3½-year reign of Chief Executive Tom Ozburn, Southern Hills also has been trying to shed its image as an aging, 30-year-old facility that in recent years had been known for cutting back services.

Now, it’s adding services again, such as a new inpatient rehab unit, and opening outposts including a new medical office building near the Williamson County line.

Ozburn hopes those expansions and improvements to the exterior of buildings on Southern Hills’ main campus make it a more appealing place to seek medical care for the broader market it serves, including the fast-growing Antioch area.

Ozburn, previously chief operating officer of Southern Hills’ sister hospital Summit Medical Center in Hermitage, spoke with Tennessean reporter Getahn Ward about efforts to boost the image of the hospital, capitalize on its presence in a growing community and take steps to get ready for health-care reform.

What was your No. 1 challenge coming here, and how have you tackled it?

In the past several years, Southern Hills had lost some service lines and key physicians. We wanted people to know that we were here to stay, weren’t closing down (and) would actually be growing. (Our goal) was really to create a culture and a vision for the hospital and its medical staff.

Every hospital has both positive and negative feelings about them. Unfortunately, there is a very inaccurate stereotype associated with this section of Davidson County — that it’s a bad, poor section of town. With that ... comes negative stereotypes sometimes.

One of the first things that I wanted to do was to work hard at addressing that and really changing the image. (I want) ... people to see South Davidson for what it is — one of the fastest-growing areas of Nashville that is culturally diverse and made up of hard-working individuals. One of the images we were getting here is that we were an old facility. We’ve invested so much in trying to improve the exterior appearance.

What are you doing to capitalize on the location?

We’re branching out services and expanding our borders. So, as opposed to expecting everyone to come to us on campus, we’re putting our new offices off campus into the communities where people live and work, (to make) health care more convenient.

A great example would be our new TriStar Medical Plaza building at the corner of Concord and Nolensville roads. There, we have a full imaging center with a dedicated women’s center, family practice, internal medicine, general dentistry, orthopaedics, cardiology, neurology, OB/GYN and physical therapy (among a list of services).

And then, we have another one planned for Antioch.

Antioch remains a very important area for us. We pull a lot of patients from that area. I’ve been meeting with (Metro) council members from that area and residents to talk ... about bringing those services. Our two biggest ZIP codes for Southern Hills Medical Center are 37211 and 37013 — that represents more than 150,000 people who live in those two areas.

What have you done to better serve the large Latino community near your hospital?

We’re members of the Tennessee Hispanic Chamber of Commerce and we participated with David Lipscomb in an event called Opening Doors that was about engaging the Latino community in the different service sectors.

From that meeting, in partnership with United Neighborhood Health Services, we formed the Wallace Road Clinic on-site here, which is a sliding-fee-scale clinic available for people who don’t have insurance. And then, if you look at our new ER sign or ER canopy, it is a bilingual one. It says “Emergency” and “Emergencia,” the (Spanish) translation. It tells the people in our community they are welcome.

The health conditions that are more prevalent in the Latino community here are the same as (nationally). That is a need that arises around obesity, diabetes and heart disease. What we try to focus on is connecting this group — Latinos — into the medical community with primary-care physicians. That was one of the reasons for the development of the Wallace Road Clinic.

What does Southern Hills want to be known for from a branding perspective?

As a general, medical-surgical facility where you can receive high-quality, comprehensive care close to where you live or work. That includes focusing on neurology, rehabilitation, orthopaedics and cardiology.

We opened our new, 12-bed inpatient rehab unit June 1 and will become stroke-certified by the year’s end. You’re going to see us expand our orthopaedics operations in conjunction with physicians from Premier Orthopaedics and also our other orthopaedic surgeons on campus.

Describe your inpatient rehab unit’s goals and the need for such services here.

It’s a 12-bed unit, and we’re running an average census of nine (beds). Some days we are completely full. Basically, it says there was a huge demand for inpatient rehab services on the southern corridor of Nashville. It is for individuals that meet criteria for an extended stay, and who need more advanced rehabilitation prior to going home.

These patients typically have had stroke-related neurological conditions or advanced orthopaedic procedures.

What are you doing to better manage the flow of patients in your emergency room?

Our ER will do about 38,000 to 39,000 visits a year, and (among) things we focus on has been decreased wait times from the time a patient comes in to the time they’re seen by a physician. We’ve done that through the use of expanded physician and nurse practitioner coverage. And then, we’ve tried to partner with our local EMS (Emergency Medical Service) or ambulance drivers to ensure that we’re responsive to their needs.

What keeps you up at night as a hospital executive?

Probably the same things most hospital CEOs consider. No. 1: Am I making a difference in my community, and are the strategies we’re putting forth leading to the overall improvement of health?

And then second is taking care of the workforce — the people who dedicate their lives to health care on a daily basis.

Southern Hills saw some backlash a few years ago for deciding to stop delivering babies. What are your current plans?

In 2008, we had a group of OB/GYN doctors covering our hospital and StoneCrest (Medical Center in Smyrna). When their group size diminished, they were no longer able to cover two hospitals, and we were forced to close our obstetrics department.

However, we are currently partnering with local OB/GYNs to bring OB services back to Southern Hills on an outpatient basis, and we will be partnering with Women’s Hospital at Centennial for deliveries.

So, a lady will be able to come on our campus for all of her prenatal work and see an OB/GYN here, and when it’s time for delivery she can go to our Women’s Hospital. We’re doing this because we still feel there’s an unmet need for OB/GYN services in our community.

Southern Hills trimmed 13 jobs last spring as part of broader cutbacks at Nashville-area HCA/TriStar hospitals. What was behind those layoffs?

We all have to respond to decreasing reimbursements and ensure that our operations are fiscally sound. It is never an easy decision to make.

What do you do in your spare time?

I spend a lot of time with (nonprofit) commitments that I feel personally attached to — one being Men of Valor, a prison ministry, and the other being Soles4Souls. And then I like to spend time with my wife and two children.

Business briefs: TVA makes 'top utilities' list

Site Selection magazine has named its annual Top Utilities in Economic Development and the Tennessee Valley Authority made the list.

Top utilities in alphabetical order were: Alabama Power, Birmingham, Ala.; Ameren, St. Louis; Duke Energy, Plainfield, Ind., and Charlotte, N.C.; Entergy Corp., New Orleans; FirstEnergy, Akron, Ohio; Georgia Power, Atlanta; Hoosier Energy, Bloomington, Ind.; Hydro-Québec, Montréal, Québec, Canada; and the TVA.

The magazine said the utilities help create jobs “through innovative programs for businesses, collaboration with community partners and their own investment in generation, transmission and other assets.”

— Randy McClain

CCA buys prison

Corrections Corporation of America paid $72.7 million to buy an Ohio prison that was among a handful of locations put up for sale by state officials there.

Under the agreement, Nashville-based prison operator CCA will operate Lake Erie Correctional Institution in Conneaut, Ohio, starting Jan. 1. About 304 prison beds are to be added to that location.

CCA’s operating costs should be 8 percent less than projected state operational costs, saving $3 million a year for the state, Ohio officials said.

— Getahn Ward

Community Health completes sale of two hospitals

Community Health Systems Inc. has completed the sale of two hospitals in Oklahoma to a subsidiary of Nashville-based rival hospital chain Ardent Health Services.

SouthCrest Hospital in Tulsa and Claremore Regional Hospital in Claremore, Okla., will become part of Ardent’s Hillcrest HealthCare System.

— Getahn Ward

Lawsuits hit First Horizon

Seventeen banks and mortgage lenders, including Memphis-based First Horizon, were sued by the federal government Friday, the latest development in a broad-ranging housing scandal that caused havoc on Wall Street and crippled the Tennessee bank’s earnings late last decade.

Bigger names, including Bank of America, Citigroup and Goldman Sachs, may be the prime targets of the lawsuits in a Manhattan court, but the parent of First Tennessee Bank was also swept up in the case.

Between September 2005 and April 2007, First Horizon and related entities sold $883 million in mortgage-backed securities to Fannie Mae and Freddie Mac containing false or misleading statements and omissions, according to the 78-page complaint filed in New York State Supreme Court in Manhattan.

The federal suit says that borrowers’ credit scores were misrepresented, property values and appraisals were inflated, and loan-to-value ratios meant to protect the bank and investors were exaggerated on some securitized loans.

First Horizon had “enormous financial incentives to complete as many offerings as quickly as possible, without regard to ensuring the accuracy or completeness,” the suit contends.

In 2006 First Horizon securitized $1.74 billion of loans, or about double its volume of a year earlier, the government says.

“Poor origination practices eventually caught up to (First Horizon), and many entities that purchased loans … forced the company to buy them back,” the federal suit says.

First Horizon reported$148.5 million in charges related to such a turn of events in its 2008 annual report alone.

The bank holding company has since retrenched and backed off its aggressive home loan and mortgage-backed securities binge that caused tens of millions of dollars in losses dating to 2008.

Kim Cherry, First Horizon spokeswoman, said Friday that the suit has not yet been reviewed, but that “we will vigorously defend ourselves.”

Home mortgage-backed securities were risky investments whose collapse after the real-estate bust helped fuel the financial crisis that erupted nationally in late 2008.

Refunds demanded

The lawsuits were filed Friday by the Federal Housing Finance Agency, which oversees mortgage buyers Fannie Mae and Freddie Mac.

Among the bigger of the 17 institutions targeted by the lawsuits are Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs.

The FHFA has been demanding refunds from banks for loans sold to Fannie Mae and Freddie Mac that were based on false or missing information about borrowers and properties.

The two government-backed mortgage finance firms had to be rescued by taxpayers as defaults on home loans soared toward record levels.

The agency said in Friday’s filings that Fannie Mae and Freddie Mac bought $6 billion in securities from Bank of America; $24.8 billion from Merrill Lynch, which Bank of America bought; and $3.5 billion from Citigroup.

Fannie Mae and Freddie Mac have operated under U.S. conservatorship since 2008, when they were seized amid subprime mortgage losses that pushed them toward insolvency.

Since running up large real estate loan losses — including on out-of-state loans in Florida, for instance — First Horizon (the parent of First Tennessee Bank) has pulled back on lending in such hard-hit markets and focused on its core area much more in recent quarters.

On Friday, the bank’s stock fell 46 cents a share, or 6.8 percent, to close at $6.31 a share on the New York Stock Exchange. Its stock was trading as high as $12.53 a share in mid-January.

Institutions such as Barclays Plc, Countrywide Financial Corp., Nomura Holding America Inc., HSBC North America Holdings and Credit Suisse Holdings (USA) also were among those named as defendants in separate documents.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, declined to comment, as did Kerrie Cohen, a spokeswoman for Barclays, and Kristin Lemkau, a spokeswoman for JPMorgan.

Gasoline prices rise 5 cents a gallon in Nashville

NEW YORK — Gasoline is near the highest it has ever been for this time of year, just ahead of the Labor Day weekend.

In Nashville the average price at the pump has edged up by a nickel to $3.48 per gallon, compared with $3.43 a week ago, the latest AAA fuel gauge survey shows.

The run-up in oil prices this year, combined with a rash of refining problems throughout the U.S., has boosted pump prices across the country. The national average on Thursday was $3.629 per gallon. Drivers are paying more for gasoline this Sept. 1 than in any other year except 2008, when pump prices hit an average of $3.686.

Retail gas prices are rising in the U.S. even though motorists are buying less. Analysts say they have been pushed higher by a rise in international gasoline demand. Americans may be using less, but drivers in developing nations are using more.

“It is all part of being in a global market,” said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

The U.S. is using so little gasoline now that it has been a net exporter of refined fuels to other countries for the past nine weeks. That’s typical for OPEC countries, but it is extremely rare in the U.S.

“You have to go back years and years,” Kloza said. “I haven’t found a time when we’ve been a net exporter for that many weeks.”

Most of those exports head to Mexico and Canada. The U.S. also sends fuel to dozens of other countries, including the Netherlands, Singapore, Japan, Ecuador, Panama, Chile and Colombia.

Paper giant's boss earned more than firm paid in taxes

WASHINGTON — Memphis-based International Paper ranks among a group of large corporations whose chief executives earned more in 2010 than the company paid in federal income taxes, according to a report released Wednesday.

The report by the liberal-leaning Institute for Policy Studies found that 25 of the nation’s 100 highest-paid CEOs — representing such large corporations as Coca-Cola, Ford, eBay, General Electric and Verizon — took home more than their companies paid in taxes in 2010.

The companies’ chief executives earned an average $16.7 million, the report found — higher than the $10.8 million average for all CEOs in the Standard and Poor’s 500 index.

While the 25 companies profiled earned average profits of $1.9 billion each, only five paid income taxes last year. On average, each company received tax benefits of $413 million.

International Paper received a federal income tax benefit of $249 million last year, despite earning $198 million in pretax U.S. profits, according to the report. Meanwhile, CEO John Faraci’s salary increased about six percent to $12.3 million in 2010.

In 2009, the company paid $228 million in federal income taxes.

International Paper spokesman Tom Ryan said the company claimed capital expenditure depreciation and made a $1.15 billion pension contribution in 2010, which “significantly reduced our cash tax liability.”

The report attributes companies’ low tax bills to “aggressive corporate tax dodging,” which it said includes taking advantage of tax credits, offshore tax havens and other loopholes in the tax code.

For International Paper, the report said, those loopholes included renewable energy tax credits for “black liquor,” a wood byproduct from pulp-making that paper companies have used for decades to generate electricity.

The company received $1.7 billion in cash and an additional $379 million off its tax bill in 2009 from a credit aimed at encouraging companies to mix alternative energy sources with fossil fuels. It reported receiving an additional $40 million tax benefit in 2010 from a credit for cellulosic ethanol, which the Internal Revenue Service ruled could apply to black liquor.

Congress barred black liquor from qualifying for either credit in future years after some lawmakers said the credits don’t encourage paper companies to use new fuel sources.

'Questionable value'

Ryan said alternative fuel tax credits “played a small role” in the tax benefit the company received compared to the company’s sizable pension contribution.

The report’s authors wrote that while not all tax breaks are nefarious, “the lion’s share of tax breaks reward corporate behaviors — from ‘offshoring’ to accelerated depreciation — that are of questionable value to society.”

The report comes as a newly created “super committee” of lawmakers gears up to recommend more than $1 trillion in federal deficit cuts over the next 10 years, which could include changes to the tax code.

Some members of Congress and business leaders are pushing for an overhaul of tax policy, and the Obama administration has said it will consider lowering the corporate tax rate if Congress agrees to end enough loopholes and tax breaks to pay for it.

William McBride, an economist at the Tax Foundation, said the problem isn’t corporate behavior, but rather the nation’s complicated, loophole-ridden tax code.

“This is not about illegality or tax evasion, this is legal tax avoidance,” he said. “A lot of these loopholes were put in the tax code precisely because (lawmakers) expect companies to respond to them, to change their behavior, do things like put solar panels on the roof or hire veterans... so it’s kind of ironic that we then turn around and paint these corporations as evil profit-seekers for doing what the intent of the law was.”

Bid to block AT&T deal reflects telecom industry

WASHINGTON — The Obama administration has explained its effort to block AT&T’s purchase of T-Mobile USA by saying it will fight mergers that would reduce competition and hurt consumers.

Yet few think the lawsuit the administration filed last week signals a more aggressive stance toward acquisitions in other industries. Rather, experts say, the administration’s challenge of AT&T’s purchase comes down to this: Telecom is dominated by just a few big companies. Reducing the number of major players could all but kill competition and drive prices up.

By contrast, few other major industries are controlled by just a handful of giants.

And none relies on access to a limited number of public airwaves.

Conditional OK

With previous big mergers, the administration has taken a middle-ground approach to antitrust: It’s green-lighted deals such as cable company Comcast’s acquisition of media giant NBC Universal and Ticketmaster’s merger with concert promoter Live Nation. But it imposed conditions in those deals intended to preserve competition.

“They’re looking even at very big mergers on their merits, and if the merging parties can’t satisfy their concerns, the Justice Department will say, ‘We can’t let this go through,’” said Melissa Maxman, an antitrust attorney with the law firm Cozen O’Connor.

AT&T says it will fight the court action.

President Barack Obama, on the campaign trail, had pledged tougher antitrust policy.

And early in his administration, the Justice Department repealed Bush-era guidelines that had discouraged government action against companies with near monopolies.

As a result, many had expected bold action from the department — crackdowns on industry-dominating companies and roadblocks to many big mergers.

That didn’t happen.

The lawsuit against AT&T might satisfy some critics who hoped for a much tougher antitrust policy. But it probably doesn’t suggest a policy shift.

The AT&T proposal was unique, said Benjamin Brown, a former Justice Department antitrust lawyer, now a partner with the law firm Cohen Milstein.

“I could very easily have seen this same decision being made under the Bush administration,” Brown said.

He said there was little evidence for AT&T’s claim that regional cellphone carriers can compete with the four national companies: AT&T, Verizon, T-Mobile and Sprint.

If AT&T bought T-Mobile, just three national players would be left. And Sprint could have trouble competing with two bigger behemoths.

So it might be acquired, too, further shrinking competition.

“Any time you take four major parties and turn it into three, the Justice Department is going to take a close look,” Maxman said.

Telecom mergers attract more scrutiny in part because it’s next to impossible for new competitors to emerge.

Companies need permission to transmit data on public airwaves. The licenses are costly and scarce. And the cost of building a new system of cell towers and satellites is enormous.

“You can’t just pull a bunch of capital together and launch a national cellphone provider, Brown said.

The Obama Justice Department has allowed several big mergers to proceed without court action. But it made the companies sell or change parts of their businesses.

Changes forced

For instance, in the Live Nation-Ticketmaster merger, regulators required Ticketmaster to license its software to a competitor.

It also forced it to sell a subsidiary that handles tens of millions of tickets a year.

In January, when the nation’s largest cable-TV company, Comcast, took control of NBC Universal, the government forced Comcast to make the full suite of NBC Universal content available as a single package to online competitors.

And Comcast had to do so on terms comparable to those reached with more established rivals such as Dish Network Corp. and DirecTV.

The Federal Communications Commission, which can block telecom mergers, joined Justice in making those demands.

'Treated on its own merits'

In April, Google Inc. won government clearance for its $700 million purchase of airline fare tracker ITA Software. The deal gave Google a key role in online travel.

But to win Justice Department clearance, Google agreed to license ITA’s software to other companies through 2016. And it agreed to continue to invest in research and development of products, which it would also have to license.

Those deals are likely templates for future merger reviews by Justice, experts say.

“Firms got signals from the earlier deals that were approved that if they were willing to make sufficient (compromises), deals on the borderline might get approved,” said Spencer Waller, a professor at Loyola Chicago’s School of Law and director of the school’s Institute for Consumer Antitrust Studies.

The lawsuit against AT&T “shows that each case is treated on its own merits,”said Art Brodsky, a spokesman for Public Knowledge, a digital-rights advocacy group that applauded the Justice Department’s move.

Banks help less-affluent invest assets

Wealth management services, long a bedrock of revenue for banks, are no longer catering solely to the ultra-rich.

Increasingly in Middle Tennessee, banks are offering personalized services to a larger slice of their customer base.

Experts say it’s the latest way to maintain profit margins as new federal regulations transform the way financial institutions do business.

At First Tennessee Bank, 400 employees work in the wealth management division, which grosses about $70 million annually, said Dave Miller, executive vice president of retail banking.

Miller said the division’s work helps fill the profit gap created by the recent tightening of rules on overdraft fees and the approaching limits on debit card swipe fees.

“People have seen gyrations in their investment portfolios and want advice on how to invest in the future,” Miller said. “The services are being sought by the affluent, the mass affluent and now, even the regular Joe.”

The “mass affluent” — the phrase typically denotes individuals with $100,000 to $1 million in liquid assets — have been targeted by other banks, including Bank of America, which in February launched an online brokerage service called Merrill Edge geared toward helping this group invest.

In June, Regions Financial announced that it would combine its wealth management unit with its trust and private banking divisions, widening the scope of its personalized wealth management services to less-affluent customers.

In a statement, the bank said the unit’s creation was intended to “increase non-interest revenue.”

Regions expects the new financial overhaul rules to cost the bank $170 million in yearly revenue, according to a Regions spokesman.

“From a banker’s perspective, wealth management helps fill the hole created by the new regulations and what we’ve been through the last couple years,” First Tennessee’s Miller noted.

Targeting the aging population

Though wealth management has beencritical to regional banks for decades, demographic changes have forced many financial institutions to meet a growing demand, said Greg McBride, a senior financial analyst at Bankrate.com.

Not least, the baby boomers are entering retirement, he said.

The number of Americans over the age of 65 is expected to increase to 71 million by 2030, according to the Centers for Disease Control and Prevention’s latest statistics. There are currently about 40 million people over 65.

“As the baby boomers move into retirement, financial institutions see an opportunity, and so what used to be marketed toward high-net-worth individuals is now an outreach geared toward the mass affluent,” McBride said. “As they leave the workforce, they’re realizing that they need help managing their money.”

This is not to suggest that the highly wealthy are being deserted, noted Anjan Thakor, professor of finance at Washington University’s Olin School of Business in St. Louis.

But what has changed, Thakor said, is the understanding of a high-net-worth individual — once thought to be someone with $5 million or more in liquid assets. It now has come to mean a person with $1 million in net value, he said.

And this prosperous subset has been amassing ever more riches.

The 3.4 million people in North America who have a net worth of $1 million or more grew their wealth by 9.1 percent last year, to $11.6 trillion, according to Merrill Lynch’s World Wealth Report released last month.

“Banks have always coddled the super-rich,” Thakor said. “And the services grow with the population.”

Banks target wealth niches

At Nashville-based CapStar Bank, the wealth management team has uncovered a lucrative niche: helping professional athletes handle their money.

The bank’s Robin Henderson manages investments and other financial decisions for some 40 athletes around the country.

The bank, which opened in 2008, announced last month that Henderson’s division would expand into the Atlanta marketplace.

As his division extends its regional reach, Henderson thinks more Nashville banks will ramp up niche wealth management services — like how SunTrust, Bank of America and other regional banks have catered to Music Row — to make up for lost profits.

The growth potential, he said, is extraordinary in services targeting athletes, musicians and other deep-pocketed professionals.

“All bankers are now searching for ways to add value,” Henderson said. “It’s all net-revenue driven.”

'We're forgetting how to fly'; pilots' manual skills deteriorate

WASHINGTON — Pilots’ “automation addiction” has eroded their flying skills to the point that they sometimes don’t know how to recover from stalls and other mid-flight problems, say pilots and safety officials. The weakened skills have contributed to hundreds of deaths in airline crashes in the last five years.

Some 51 “loss of control” accidents occurred in which planes stalled in flight or got into unusual positions from which pilots were unable to recover, making it the most common type of airline accident, according to the International Air Transport Association.

“We’re seeing a new breed of accident with these state-of-the art planes,” said Rory Kay, an airline captain and co-chair of a Federal Aviation Administration advisory committee on pilot training. “We’re forgetting how to fly.”

Opportunities for airline pilots to maintain their flying proficiency by manually flying planes are increasingly limited, the FAA committee recently warned. Airlines and regulators discourage or even prohibit pilots from turning off the autopilot and flying planes themselves, the committee said.

Fatal airline accidents have decreased dramatically in the U.S. over the past decade. However, The Associated Press interviewed pilots, industry officials and aviation safety experts who expressed concern about the implications of decreased opportunities for manual flight, and reviewed more than a dozen loss-of-control accidents around the world.

Safety experts say they’re seeing cases in which pilots who are suddenly confronted with a loss of computerized flight controls don’t appear to know how to respond immediately, or they make errors — sometimes fatally so.

A draft FAA study found pilots sometimes “abdicate too much responsibility to automated systems.”

Because these systems are so integrated in today’s planes, one malfunctioning piece of equipment or a single bad computer instruction can suddenly cascade into a series of other failures, unnerving pilots who have been trained to rely on the equipment.

The study examined 46 accidents and major incidents, 734 voluntary reports by pilots and others as well as data from more than 9,000 flights in which a safety official rides in the cockpit to observe pilots in action. It found that in more than 60 percent of accidents, and 30 percent of major incidents, pilots had trouble manually flying the plane or made mistakes with automated flight controls.

Pilot mistakes

A typical mistake was not recognizing that either the autopilot or the auto-throttle — which controls power to the engines — had disconnected. Others failed to take the proper steps to recover from a stall in flight or to monitor and maintain airspeed.

The airline industry is suffering from “automation addiction,” Kay said.

In the most recent fatal airline crash in the U.S., in 2009 near Buffalo, N.Y., the co-pilot of a regional airliner programmed incorrect information into the plane’s computers, causing it to slow to an unsafe speed.

That triggered a stall warning. The startled captain, who hadn’t noticed the plane had slowed too much, responded by repeatedly pulling back on the control yoke, overriding two safety systems, when the correct procedure was to push forward.

An investigation later found there were no mechanical or structural problems that would have prevented the plane from flying if the captain had responded correctly. Instead, his actions caused an aerodynamic stall. The plane plummeted to earth, killing all 49 people aboard and one on the ground.

Two weeks after the New York accident, a Turkish Airlines Boeing 737 crashed into a field while trying to land in Amsterdam. Nine people were killed and 120 injured. An investigation found that one of the plane’s altimeters, which measures altitude, had fed incorrect information to the plane’s computers.

That, in turn, caused the auto-throttle to reduce speed to a dangerously slow level so that the plane lost lift and stalled. Dutch investigators described the flight’s three pilots’ “automation surprise” when they discovered the plane was about to stall. They hadn’t been closely monitoring the airspeed.

The ability of pilots to respond to the unexpected loss or malfunction of automated aircraft systems “is the big issue that we can no longer hide from in aviation,” said Bill Voss, president of the Flight Safety Foundation in Alexandria, Va. “We’ve been very slow to recognize the consequence of it and deal with it.”

The foundation, which is industry supported, promotes aviation safety around the world.

Airlines are also seeing smaller incidents in which pilots waste precious time repeatedly trying to restart the autopilot or fix other automated systems when what they should be doing is “grasping the controls and flying the airplane,” said Bob Coffman, another member of the FAA pilot training committee and an airline captain.

Opportunities to fly manually are especially limited at commuter airlines, where pilots may fly with the autopilot off for about 80 seconds out of a typical two-hour flight.

And experts say it is the less-experienced first officers, starting out at smaller carriers, who most need manual flying experience. Senior pilots, even if their manual flying skills are rusty, can at least draw on experiences flying older generations of less automated planes.

Airlines will have to rethink their operations fundamentally if they’re going to give pilots realistic opportunities to keep their flying skills honed, said Voss, the flight safety expert.

HealthStream exec leaves for new post

HealthStream Inc. said Kevin P. O’Hara, its senior vice president and general counsel, resigned to become chief executive of early stage health-care information technology company Syus LLC.

Michael M. Collier, formerly a corporate attorney at law firm Bass Berry & Sims, will replace him as vice president and general counsel of the Nashville-based health-care research and online health education provider.

In addition, HealthStream has promoted Senior Vice President J. Edward “Eddie” Pearson to senior vice president and chief operating officer.

— Getahn Ward

Banks adopt payday loans

As regional banks ready for new federal regulations expected to cut into profits, some of them are zeroing in on the down-and-out customer to turn a buck.

More banks are now doling out short-term, high-interest loans to customers in dire straits.

Observers worry that the loans signify an industry-wide shift toward making money from desperate consumers and — more broadly — slapping more fees on services for everyone.

“If the banks want to maintain their revenue growth, they’re going to have to come up with new profits and new approaches,” said Richard Bove, banking analyst at Rochdale Securities.

“The net result for Tennessee is an increased cost of banking, and it’s anti-consumer.”

In October, new Federal Reserve rules will limit how much banks can charge retailers for debit card purchases, reducing fees from an average now of 44 cents per swipe to 21 cents. The Fed had proposed limiting fees to 12 cents a transaction, but banking officials pushed back.

Regions Financial Corp., the Alabama-based bank with the largest market share in Nashville, estimated that the new fee cap will result in a $170 million annual loss for the company.

The change comes about a year after overdraft fees — a key money-maker for banks —were regulated by the federal government. Banks can no longer charge overdraft fees without customer approval.

Regions and Cincinnati-based Fifth Third Bank are among a new wave of banks around the country employing direct-deposit loans, which some analysts say are predatory payday loans disguised with a different name.

“You either walk into a payday loan company or you walk into a bank — at the end of the day, it’s the same thing,” Bove said.

The direct-deposit loans are targeted at consumers in emergency circumstances, the banks say, and offer checking account customers a cash advance with high interest rates.

Conventional payday loans use a written check as collateral to borrow money. Direct-deposit loans, however, borrow against a customer’s next directly deposited paycheck.

At Fifth Third, the loans charge $10 for every $100 borrowed until the customer’s next paycheck, usually a week or two. This could amount to a 300 percent annualized interest rate. For comparison, typical payday loans carry interest rates of about 400 percent.

Consumer advocates say the loans will entangle low-income borrowers in a financial mess.

Direct-deposit loans typically eat up 44 percent of a borrower’s next deposit and create the need to take out another loan, the Center for Responsible Lending recently found.

Thus, borrowers often stay in debt, on average, for 175 days and typically end up paying $900 to borrow $500 or less over six months, according to the study.

Regions entered the direct-deposit loan business this spring and has announced plans to roll out check cashing and prepaid debit cards in the coming months.

The bank says the new products are part of its overall expansion of fee-based services.

Wade Lindsey, Fifth Third’s head of retail banking in Nashville, said the direct-deposit loans come with safeguards such as restricting loan amounts and limiting repayment periods to 35 days to protect consumers.

“There’s been quite a bit of demand for the product, but we’re trying to offer this as an emergency service only,” Lindsey said.

'Unintended effects'

Anjan Thakor, professor of finance at Washington University’s Olin School of Business in St. Louis, said federal regulators were repeatedly cautioned that the new rules, many stemming from the Dodd-Frank Act, would squeeze consumers.

“I like to call it the theory of unintended effects,” when proposals introduced to protect consumers actually end up impairing them, Thakor said.

Analyst Bove said the Dodd-Frank Act, which many in the banking industry vilify, may stir consumer resentment toward banks instead of providing a feeling of security.

“Banks will start service charges for everything,” Bove said. “They used to notarize for free. Soon it could be 20 bucks. They’ll start charging you for your statements, and so on.”

He continued: “The consumer is going to go crazy and start hating banks, if they don’t already. It’s going to result in deep problems.”

Some local community banks such as Bank of Nashville view the crush of new banking fees as an opportunity to recruit customers. The bank does not offer direct-deposit loans, and it does not plan to introduce checking account service fees, according to Anne Livingston, Bank of Nashville spokeswoman.

“The new regulations and rules are going to affect everyone in the banking industry,” Livingston said. “But we’re hoping there’s enough dissatisfaction with debit card and other fees that it will drive customer volume to us and allow us to stay profitable.”