Bankruptcy filings drop in Middle Tennessee

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

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

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

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

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

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

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

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

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

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UAW renews efforts in the South

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

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

Embracing change

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

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

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

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

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

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

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

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

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

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Volkswagen introduces Passat in Chattanooga

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

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

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

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

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

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

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

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

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

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

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

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Volkswagen extends CEO's contract

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

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

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

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

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Coalition wants to put limits on customized drugs

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

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

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

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

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

Drug billings increase sharply

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

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

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IPad clones to duke it out at Vegas gadget show

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

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

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

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

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

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

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

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

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

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

Sales boost needed

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

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

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

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

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4 trends may help sharpen marketing for 2011

We seem obsessed with predicting the future, and it goes beyond who will win the Super Bowl or how many more times Lindsay Lohan will be ordered to rehab.
For marketers, there is no lack of pundits and organizations lined up to help you see what is around the corner. One group that appears to have a good handle on trends that will help define business is Vistage International. This San Diego-based executive leadership firm is made up of 14,000 business professionals worldwide who work together in small, peer advisory groups.

Vistage recently published a report on 12 trends it believes create opportunities for business. I found four of the predictions especially relevant to marketers.

Short-term consumer thinking: Coming off the worst financial crisis in decades, fear based on the inability to predict what might happen next has prompted purchases based on immediate need.

"People are now thinking more about the here and now and less about things that may or may not last a long time," said William Higham, trend analyst and author of The Next Big Thing-Spotting & Forecasting Consumer Trends for Profit .

Mobile purchasing: The U.S. will soon catch up to consumers in Japan and Sweden in the ability to use mobile phones for transactions. If you have been in an Apple store recently, you might have seen a card reader attached to an employee's iPhone. Without going to the checkout desk, the employee will swipe your credit/debit card and offer to e-mail you a receipt. Quicker, faster, cooler.

Behavioral segmentation: That's a mouthful. But it means you can craft more relevant, and therefore more effective, communications by taking steps to better understand your customers' behavior, especially how they act and react to your digital offerings.

Using non-threatening analytical tools, you can develop profiles based on how people use your website content, which offers they respond to, what they buy, which e-mails they open and the information provided during registration.

The product offerings served up to customers on Amazon and Netflix are a great example of proper behavioral segmentation.

The traditional sales model evolves: The traditional sales cold call may be a thing of the past for many industries.

"Now the process has been reversed. We attempt to get the client to come visit us. Pull marketing instead of push selling," said Vistage speaker and sales consultant Sam Bowers.

Here are some of the basic elements of an effective pull marketing program: a robust and highly functional website with detailed product information, an easy way to buy online, customer product reviews posted on third-party sites, targeted advertising that leads prospects to your site, and an aggressive website search optimization program.

Also, research trends and seek sound advice to help plan your business's future. Using your own shoe leather and intellect can be even more reliable than following some pundit's sound bite prediction of the next big thing.

David Bohan founded BOHAN Advertising|Marketing, a Nashville agency with clients in travel, hospitality, health care and consumer products, in 1990. He has worked in marketing and advertising since earning a degree at the University of Tennessee-Knoxville in 1970.

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