TPP Scandal? Japan’s Economy Minister Akira Amari Resigns. Thursday, Jan 28 2016 

Bloomberg Amari is the fourth cabinet member to resign over allegations of financial impropriety. None were as important to Abe as his economy minister, who completed tough negotiations with the U.S. over the TPP trade deal even after battling cancer … Continue reading →

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New Center Helps Connect Louisville Health Care Workers Saturday, Jan 16 2016 

Mayor Greg Fischer and Louisville health care leaders opened a new center to connect people with careers in health care this week.

The Kentucky Health Career Center, located at 746 S. Fifth St., will provide professional training and career advice for job-seekers, and talent search assistance for health care providers.

The center is a partnership between KentuckianaWorks and the Health Careers Collaborative of Greater Louisville.

Fischer said with Louisville’s changing economy, it’s important to prepare people for 21st century jobs that enable them to take care of their families.

“We need to make sure that we’re giving our citizens the right education, the right training, the right career guidance and advice as well, so that we can fill these jobs that are growing in our city,” he said.

There were more than 3,700 jobs posted in the Louisville area in the third quarter of 2015, including nearly 2,000 positions open for registered nurses — jobs that have a starting pay of about $50,000 a year, according to Fischer’s office.

Jackie Beard, chair of the Health Careers Collaborative of Greater Louisville, said the goal of the center is to be a place where current or future employees in health care can learn about educational needs and potential career paths, and connect with educational resources and employers.

“When you think about what the employment areas are for individuals coming out of the career center, it’s going to be hospitals, doctors’ offices, medical centers, nursing homes. There’s a wide variety of areas where people can find employment out of the health care industry,” she said.

The city has a similar career center for manufacturing, which opened in 2013. The mayor’s office has identified health care and advanced manufacturing as key sectors of Louisville’s economy.

What GE Appliances Sale To China-Based Haier May Mean For Louisville Friday, Jan 15 2016 

Louisville business and political leaders say the planned sale of General Electric’s appliance business to the Chinese company Haier is potentially a positive development for the city’s economy.

The sale, announced Friday, would transfer GE’s appliance business and Louisville’s 900-acre Appliance Park to Haier. The Chinese company manufactures electronics and appliances but doesn’t have a foothold on the American market.

GE Appliances is expected to give it just that.

The circumstances of the Haier (pronounced hi-EAR) deal appear to be more favorable to Louisville than GE’s previous plan to sell its appliance business to the Swedish company Elextrolux, city officials said.

At a news conference Friday morning to address the acquisition, Louisville Mayor Greg Fischer said Haier likely will use GE Appliances and Louisville to springboard its presence in the United States.

That notion is also good for local GE employees, as it means there is little risk of workers moving to other Haier corporate offices in the United States.

“Because they don’t exist,” Fischer said.

Hainer has already announced that it intends to keep the current management of GE Appliances, including CEO Chip Blankenship.

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GE AppliancesGE Selling Louisville-Based Appliances Business to Chinese Company Haier For $5.4 Billion

Fischer said the GE Appliances corporate headquarters and the business’ nearly 6,000 employees will remain in Louisville. He said the $5.4 billion transaction price may be proof that Haier may, in fact, will be willing to invest more into the appliance industry in Louisville.

“When you see that, that’s an indication of how valuable the acquirer feels of the company,” he said. “You don’t pay a lot of money for an asset to move it.”

Fischer’s tone on Friday was different than in 2014, when Electrolux struck a deal to acquire General Electric’s appliance business. The GE-Electrolux deal left unanswered questions about how many jobs would be left in Louisville, leading to concern among the local workforce. The GE-Electrolux deal eventually fell through after federal regulators questioned its impact on market competition and consumer prices.

On Friday, Fischer said the concern with Electrolux was that that company already had an American corporate headquarters, in Charlotte, North Carolina. That means the corporate office jobs in Louisville may have been greatly reduced.

“That’s not the case [with Haier],” he said. “You’ve got a company that’s looking to establish a North American presence and they’ve done that in the most dramatic way by, in my mind, buying the most iconic brand in appliances, GE, and headquartering it here in Louisville.”

Haier may also begin exporting goods built in Louisville to China, GE Appliances spokeswoman Kim Freeman said.

The Haier deal appears to have a better shot of going through, too.

David Dubofsky, an economics professor for the University of Louisville, said  Haier shouldn’t pose the same anti-competitive issues as Electrolux.

“Electrolux plus GE was making a really, really big company,” he said. “Now, with Haier coming in, it’s just going to substitute the General Electric name with the Haier name.”

He said Haier will have about 15 to 20 percent of the appliance market, as General Electric does now.

“I don’t anticipate the [federal] regulators are going to fight this like they fought Electrolux,” he said.

Dana Crittendon, the head of the Appliance Park workers’ union, said the deal gives employees some closure regarding what the future holds for their jobs.

“We’re looking for job security and with Haier I think we’ll get that,” he said.

Crittendon said appliance park workers will for the next 12 months work under the parameters of their existing contract, meaning all pay and benefits will remain the same during that time. Within these next 12 months, negotiations will begin for a new contract, he said.

GE CEO Jeff Immelt said in a news release he is pleased with the purchase.

“Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business,” he said.

Zhang Ruimin, the chairman and CEO of Haier Group, said in a news release that GE and Haier have common goals and will look to enhance the value of both brands and employee development.

“This strategic alliance provides a new starting point for both Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies,” he said.

John Crockett, the soon-to-be chair of Greater Louisville Inc., called the deal between Haier and GE “good news for the city.”

“It appears to be the best case scenario for GE Appliance park and for our city,” he said.

Fischer said a challenge for Louisville is to ensure that it’s providing a quality workforce for businesses like GE Appliances. He said Louisville has about 75,000 workers in the manufacturing sector, earning an average salary of about $70,000.

“We have to increase our commitment to workforce development,” he said.

For nearly 60 years, GE’s Appliance Park has been a fixture of the community and he expects that to continue for decades to come, Crockett said.

Metro Councilwoman Barbara Shanklin is a GE Appliances retiree, and Appliance Park is in her district.

She said her constituents, many of whom work for GE Appliances, were excited to hear Haier was purchasing the business and aiming to keep the jobs in Louisville.

She said generations of Louisville families — including her own — have worked at the appliance park.

“It means a lot,” she said. “Because when you have a decent job the quality of life in the neighborhood is so much better.”

The deal must still gain Haier shareholder and regulatory approval, according to a news release. The transaction is targeted to close in mid-2016.

(Image of GE Appliance Park by Jacob Ryan/WFPL News)

GE Selling Louisville-Based Appliances Business to Chinese Company Haier For $5.4 Billion Friday, Jan 15 2016 

General Electric is selling its Louisville-based appliance business to the Chinese company Haier for $5.4 billion.

In a news release early Friday, GE said the appliance business’ headquarters would remain in Louisville. The current management team, led by CEO Chip Blankenship, will remain, the company said. No further details were released.

Haier manufactures electronics and appliances.

The deal has been approved by the boards of both companies, though it still has to pass Haier shareholder and regulatory approval, GE said. The company said it hopes to complete the sale by the middle of the year.

Haier has been looking to grow its U.S. business, and the deal is expected to dramatically boost those efforts, the Wall Street Journal reports.

This is GE’s second attempt to sell the appliance business. Last month, the company called off a $3.3 billion deal with the Swedish company Electrolux. The U.S. Justice Department challenged the Electrolux deal, arguing it would have raised consumer prices and reduced competition in the U.S. appliance market.

Based at the 900-acre Appliance Park, GE Appliances employs about 6,000 people in Louisville, including 3,700 hourly workers.

The deal also includes opportunities for the companies to collaborate in the future. At $5.4 billion, the sale represents China’s third-largest buy in the U.S. on record, according to financial firm Dealogic.

GE CEO Jeff Immelt said in a news release the sale would help boost his company in China.

“GE Appliances provides Haier with great products, state-of-the-art manufacturing facilities, and a talented team,” Immelt said. “In addition, we see the opportunity to work together to build the GE brand in China.”

Zhang Ruimin, chairman and CEO of Haier, called the deal a “starting point” for the two companies.

“Further, we share common goals that we hope to achieve together: enhancing the value of the Haier and GE brands and developing our employees by encouraging autonomous innovation and cooperation,” he said in a statement.

In a news release, Mayor Greg Fischer said: “Haier not only brings global scale and growth opportunity to GE Appliances, but we also keep the headquarters and existing great leadership and full complement of employees in Louisville. Haier’s proven track record of innovation and GE’s stable of new products and innovation pipeline creates a company that is now the envy of the global appliance industry.”

 

Brown-Forman Sells Southern Comfort, Tuaca Thursday, Jan 14 2016 

Louisville-based Brown-Forman is selling the Southern Comfort and Tuaca brands to the owner of Buffalo Trace for $544 million.

The sale, announced Thursday, stems from Brown-Forman’s attempts to “focus resources on its highest strategic priorities.” The buyer, Louisiana-based Sazerac Company, is expected to take over the brands in March, Brown-Forman said in a news release.

The sale is subject to regulatory approval.

Brown-Forman, which produces Old Forester, Jack Daniel’s and several other liquor brands,  has owned Southern Comfort since 1979 and Tuaca since 2002.

“Both brands played important roles in the Brown-Forman success story, and we will have fond memories of the enjoyment they brought to consumers, our partners, and to Brown-Forman,” chief executive Paul Varga since in a news release.

(Image via Mike Mozart/Creative Commons)

Another newshound fails to challenge chamber head’s RTW claims Wednesday, Dec 30 2015 

By BERRY CRAIG Kentucky Chamber President and CEO Dave Adkisson is at it again on “right to work.” It looks like another newshound let him get away with it, too. “…Adkisson, an advocate of right-to-work legislation, said Daviess County lost … Continue reading →

The post Another newshound fails to challenge chamber head’s RTW claims appeared first on Hillbilly Report.

Low Gas Prices Expected To Continue In 2016 Wednesday, Dec 23 2015 

Gas prices are under $2 a gallon across much of the country. That’s because crude oil has plummeted to the lowest price in nearly a decade.

The average U.S. household has saved an estimated $700 this year because of lower gas prices. And drivers can expect more savings in 2016.

Recently, Sharlene Brown was filling up her minivan at a Philadelphia gas station. When prices are down, Brown says, she drives more.

“It changes where I go, who I pick up because a lot of times I pick up and do errands for the church,” she says.

Lower prices make it easier for her to volunteer more and help out with grandkids. So what’s her wish for the price of gas in 2016?

“Hopefully it’ll go down some more,” Brown says.

That’s likely to happen, says Tom Kloza, head of energy analysis with the Oil Price Information Service.

“I wouldn’t be surprised to see a year where we might see gasoline prices nationally average between, let’s say, $1.85 and $2.75, which will be very similar to this year,” he says.

Kloza says the variation will depend on refinery operations near you. Gas prices tend to go up when refineries have to shut down for maintenance or switch to gasoline blends that produce less smog in the summer.

In addition to lower prices prompting people to drive more, Kloza says there’s evidence consumers are again starting to buy bigger cars that use more gas.

“I would hope that people might make good choices and buy vehicles recognizing that somewhere in the life of that vehicle we’re going to see high gas prices again,” he says.

Beyond what it costs the individual driver there are environmental concerns. The U.S. is among countries that pledged in Paris to reduce greenhouse gas emissions and address climate change.

But if people start driving more because of lower prices, that will work against the goal. And there are some in the oil industry predicting that low oil prices will prompt more demand by the second half of 2016.

Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis, says she is skeptical of a pickup in demand. She says a big factor will be the choices that members of the huge millennial generation make.

She suspects they will continue to embrace things like carpooling and more efficient hybrid and electric cars. “And car sharing — you know, where you don’t own a car but you just rent your car when you’re going skiing for the weekend. All of those trends really are going to have a substantial impact — negative on the oil industry and positive on climate solutions,” Myers Jaffe says.

She says in a world with plenty of oil reserves, that could eventually lead to an interesting outcome: low gas prices forever because demand is low.

But that’s looking way into the future. One thing Myers Jaffe suggests watching closely next year is the big oil states like Russia, Iran and Saudi Arabia. Low prices can make those governments less stable. She says if one of them goes through a significant upheaval or even falls, that could reduce world oil production dramatically and drive up prices again.

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

Federal Reserve Announces Hike In Short-Term Interest Rates Wednesday, Dec 16 2015 

The Federal Reserve on Wednesday announced liftoff for short-term interest rates — a launch that may send many borrowing costs higher in 2016.

The 0.25-percentage-point increase — to a range of 0.25 percent to 0.5 percent — in the federal funds rate was small but important because it signals the beginning of the end of easy money; the Fed wants to get back to normal after years of fighting economic stagnation with supercheap loans.

The economy has improved enough to be able to handle higher rates, the Fed said. “A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year,” the Fed policymakers said in a statement released at the end of their two-day meeting in Washington.

The policymakers said they expect “only gradual increases” in rates, adding that “the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Screenshot 2015-12-16 15.05.58npr

Shortly after the Fed’s announcement, Wells Fargo raised its prime rate to 3.5 percent, from 3.25 percent.

Although the Fed rate hike was widely expected, economists said it was worthy of heavy coverage and hullabaloo because it’s such a turning point. The last time the central bank raised rates was June 2006.

Symbolism aside, the Fed’s move was actually quite modest: It increased its target for the federal funds rate — the rate banks charge each other for overnight loans — by a quarter percentage point, up from near zero, where it has been for seven years.

But the Fed is likely to continue ratcheting up rates in the coming year. As the impact ripples out, Americans will very likely start to see higher rates for car loans, small-business loans, credit cards, corporate bonds, and the like. Even long-term home mortgages could be affected. Those higher borrowing costs could tamp down inflationary wage and price pressures by somewhat cooling the economy.

“Higher rates will eventually translate into downward pressure on the consumer or more specifically the consumer’s ability to finance large ticket items such as autos and homes, slowing both purchasing and construction activity,” Lindsey Piegza, chief economist at Stifel Fixed Income, said in a statement.

These are groups that will feel the changes as they start to kick in.

Likely Losers

  • Small-business owners: Small businesses tend to be tight on cash and dependent upon loans. So even minor rate increases can have a big impact on their budgets. A quarter-point change may not mean much to, say, General Electric, but it could hammer the profits of your neighborhood pizza shop.
  • Car dealers: Booming auto sales are likely to exceed 17 million this year — the first time they’ve hit that level since the Great Recession began. Dealers say their ability to offer cheap loans has been an important part of their sales pitch. Higher borrowing costs could tap the brakes on their sales.
  • Manufacturers: Factory owners already are struggling to fend off foreign competitors because the dollar has had a surge in value since the summer of 2014. A strong currency can make imports cheaper, and U.S. exports more expensive. Higher U.S. interest rates tend to make the dollar even stronger — exactly what U.S. manufacturers don’t want to see.
  • Stock investors: For years now, superlow interest rates have made it unattractive to invest in bonds. That pushed more money into the stock market. So as rates rise, more money may shift out of the stock market and back into bonds.
  • Consumers: People who borrow money with credit cards and home equity loans may find themselves paying more. Many credit card users have been paying around 11 percent interest — a lot less than the 15 percent of a decade ago. Now they could see a slow return to those higher rates.
  • Homebuyers: Long-term rates, such as a 30-year home loan, are not directly affected by a fed funds rate hike. But in general, when rates are heading higher, mortgages drift up too.

Likely Winners

  • Savers: Banks have been paying very little interest on certificates of deposit and savings accounts. Retirees who do not want to take risks in the stock market have been hoping for higher rates. But they should not be looking for any sudden boosts in their income: Banks tend to be quick when cutting CD payouts — and mighty slow when it comes to raising them. So it might be a while before savers get a raise.
  • Inflation hawks: Critics fear the Fed has kept interest rates unnaturally low for too long. They worry that the cheap loans have allowed too many business owners to take too many risks. They want to see more normal borrowing costs so that problems, like inflation and excess risk, don’t get baked into the economy.
  • Pension-fund managers: Fund managers charged with keeping retirement plans safe would like to get more income from low-risk investments. So their jobs will be a little easier if rates nudge up.
Copyright 2015 NPR. To see more, visit http://www.npr.org/.

The Tipping Point: Most Americans No Longer Are Middle Class Thursday, Dec 10 2015 

Americans have long lived in a nation made up primarily of middle-class families, neither rich nor poor, but comfortable enough.

This year, that changed, according to the Pew Research Center.

A just-released analysis of government data shows that as of 2015, middle-income households have become the minority. The trend is so firmly established that it may well continue; Americans have experienced “a demographic shift that could signal a tipping point,” Pew researchers concluded Wednesday.

Thanks to factory closings and other economic factors, the country now has 120.8 million adults living in middle-income households, the study found. That compares with the 121.3 million who are living in either upper- or lower-income households.

“The hollowing of the middle has proceeded steadily for the past four decades,” Pew concluded.

And middle-income Americans not only have shrunk as a share of the population but have fallen further behind financially, with their median income down 4 percent compared with the year 2000, Pew said.

So what exactly does it mean to be a middle-income family?

Screen Shot 2015-12-10 at 10.04.10 AMNPR

Pew starts with the U.S. median household income, which is the paycheck smack in the middle of them all, lined up from smallest to biggest. In other words, half of all households earn more, and half earn less. Then Pew defined “middle class” as households that had at least two-thirds of the median income, but no more than double that amount. And it adjusted for household size.

Bottom line: For a household with three people, being middle class means making between about $42,000 and $126,000. If your family of three makes less than $42,000, then you are in the lower class. If your family brings in more than $126,000, you are in the upper class.

Using that formula, Pew concluded that back in 1971, about 2 out of 3 Americans lived in middle-income households. Since then, the middle has been steadily shrinking. Today, just a shade under half of all households (about 49.9 percent) have middle incomes.

Slightly more than half of Americans (about 50.1 percent) either live in a lower-class household (roughly 29 percent) or an upper-class household (about 21 percent).

But Pew also points out that Americans have all gained. That is, the median income has risen 34 percent since 1970.

So we should be grateful, no? Yes, but here’s the rub: Upper-class Americans have seen their incomes rise 47 percent, while lower-class families have gained only 28 percent.

In other words, the U.S. economy has been growing, and we all have been getting wealthier. But people who have the biggest incomes have been pulling away from the pack in a trend that shows no sign of slowing. Those upper-class households are increasingly likely to be headed by a married couple with higher educations, the data show.

“Those Americans without a college degree stand out as experiencing a substantial loss in economic status,” Pew concluded.

The Pew study is the latest showing lost momentum for the middle class. For example, in August, Georgetown University’s Center on Education and the Workforce released a study showing that high-paying jobs are proliferating, but not middle-income jobs.

The Georgetown report concluded that the U.S. economy now has about 1 million more jobs that rank in the top third of income-generating occupations. But the middle third jobs have not yet recovered from the recession — that category is still showing 900,000 fewer jobs, compared with pre-recession levels.

The Georgetown study’s key finding was this: Since the recession ended, “almost all good jobs have gone to college graduates. Out of the 2.9 million good jobs created since the recovery, 2.8 million have been filled by workers with at least a bachelor’s degree.”

Copyright 2015 NPR. To see more, visit http://www.npr.org/.

GE Calls Off Sale of Louisville-Based Appliances Division Monday, Dec 7 2015 

General Electric has called off the $3.3 billion sale of its Louisville-based appliances division to Swedish company Electrolux, it announced early Monday.

In a news release, the company said the appliances division “is performing well, and GE will continue to run the business while it pursues a sale.”

The acquisition, which would’ve marked a major move into the U.S. for Electrolux, had been challenged by the U.S. Department of Justice, which asked a federal court to block the deal. The DOJ alleged the acquisition would’ve raised consumer prices and led to less competition in the consumer appliances market.

Electrolux sells the brands Frigidaire and Tappan in the U.S.

GE Appliances is based at the 900-acre Appliance Park and employs roughly 6,000 people in Louisville, including 3,700 hourly workers. The company has asked for a $175 million termination fee and will pursue other investors for the division, it said in a statement.

Related Story

Sale of GE's Appliance Park Leads to Unknowns for Workers and Louisville

Electrolux CEO Keith McLoughlin said in a statement his company is disappointed but would continue pursuing its strategy to grow in the U.S.

“The Group’s operations in North America have proved to be strong on its own merits, with good organic growth and a recovery in earnings during 2015,” he said. “Major Appliances North America has a strong presence in the U.S. under the brands Frigidaire and Electrolux, and we are confident that this position will be maintained and strengthened.”

UPDATE: Local Officials Weigh In

Mayor Greg Fischer:

“GE Appliances has been, and will continue to be, a great business and integral part of the Louisville community.  I have immense confidence that the team will continue to innovate, produce and sell at the world-class levels under the iconic GE brand. As GE explores new opportunities, the city of Louisville will do its part to help grow the workforce and maintain the GE Appliances headquarters here.”

Kent Oyler, president and CEO of GLI, the metro chamber of commerce:

“We are disappointed that the deal will not proceed as previously announced. Both GE and Electrolux have worked tirelessly to complete this transaction. However, when you look at the revenue and share growth, as well as the success of new products introductions, it is clear that GE Appliances remains strong and will continue to be an important factor in their industry.” 

 

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