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Detroit bankruptcy: Retirees vote in favour of pension cuts

Written By doni icha on Selasa, 22 Juli 2014 | 22.40

Workers and retirees approved pension cuts in Detroit's bankruptcy by a landslide, the city reported Monday, a crucial step to emerging from the largest municipal insolvency in U.S. history.

The city disclosed results from two months of balloting, which ended July 11. Judge Steven Rhodes still must hold a trial in August to determine if Detroit's overall bankruptcy plan is fair and feasible to all creditors, but support from retirees is vital.

"It's clearly a victory for the city," said Anthony Sabino, a bankruptcy expert who teaches business law at St. John's University in New York. "It will pave the way for a confirmation hearing. Detroit will be able to move forward, not with absolute financial certainty but far more than Detroit has enjoyed in decades."

General retirees would get a 4.5 per cent pension cut and lose annual inflation adjustments. They accepted the changes with 73 per cent of ballots in favour. Retired police officers and firefighters would lose only a portion of their annual cost-of-living raise. Eighty-two per cent in that class voted "yes."

The counting was done by a private company.

$816M bailout

Approval of the pension changes triggers an extraordinary $816 million bailout from the state of Michigan, foundations and the Detroit Institute of Arts. The money would prevent the sale of city-owned art and avoid deeper pension cuts. The judge, however, still must agree.

"It's absolutely unprecedented in a bankruptcy," Sabino said.

There are tens of thousands of creditors in Detroit's $18 billion bankruptcy, from bond holders to businesses that provide soap, but much of the focus of the last year has been on the roughly 32,000 retirees and current and former workers banking on a pension. They have put a real and often anguished face on the process.

The average annual pension for police and fire retirees is $32,000, while most other retired city workers get $19,000 to $20,000. Detroit emergency manager Kevyn Orr has said pension changes are unfortunate but necessary because two funds are underfunded by billions. If investment performance improves in the years ahead, he said, the cuts could be restored.

"I want to thank city retirees and active employees who voted for casting aside the rhetoric and making an informed positive decision about their future and the future of the city," Orr said in a statement late Monday.

Federal law trumps state constitution

Many organizations, including the leaders of retiree groups, had urged a "yes" vote, insisting it was the best option under tough circumstances. But Dorothy Baker, 64, disagreed. Besides the pension cut, the library retiree who lives in suburban St. Clair Shores would lose a portion of her annuity earnings.

"Don't they sell assets in bankruptcy? They haven't sold any assets. There are parking garages and golf courses," said Baker, who worked for Detroit for nearly 39 years.

The Michigan Constitution says public pensions can't be cut, but Rhodes, in his most significant decision in the case, said in December that federal bankruptcy law trumps that shield. It was a groundbreaking opinion that could influence local governments across the country that go broke.

Michigan Attorney General Bill Schuette believes Rhodes is wrong, but he said Monday he won't appeal now that retirees have voted for the cuts.

"I will respect their decision," he said in a statement.

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Toyota Sienna minivan drivers can scream at kids using built-in mics

Toyota wants to help you scream at your unruly kids.

The latest version of the company's Sienna minivan has a feature called "Driver Easy Speak." It uses a built-in microphone to amplify a parent's voice through speakers in the back seats.

Toyota says it added Easy Speak "so parents don't have to shout to passengers in the back." But chances are many parents will yell into the microphone anyway.

And the feature only works one way, so the kids can't talk back. At least not with amplified voices.

The feature is an option on the 2015 Sienna, which is being refreshed with a totally new interior. It also has an optional "pull-down conversation mirror" that lets drivers check on kids without turning around.

Automakers are trying to come up with creative ways to make the out-of-fashion minivan more appealing, said Jessica Caldwell, senior analyst at the Edmunds.com automotive website. Last year Honda unveiled a vacuum cleaner built into the back of its revamped Odyssey minivan that got a lot of attention.

Such features are important because there's little automakers can do to make the practical but bland vans more stylish, Caldwell said.

"I think they're on the right lines of trying to find these features that people are going to talk about," she said.

Minivan sales peaked at 1.37 million in 2000, but fell as low as 415,000 in 2009, when auto sales bottomed during the Great Recession. Sales have risen as the market rebounded, and last year people bought just under 519,000 of the vans. But Caldwell said the minivan share of the market now is holding steady at 3.4 per cent, less than half the share from peak years.

Some new products are entering the minivan market despite its decline. Ford is rolling out a new family hauler based on the Transit Connect small commercial van and Chrysler is working on a revamp of its Town & Country minivan.

Toyota is unveiling the new Sienna mainly through social media and at a Baltimore arts festival this weekend. It's due to hit showrooms in the fall.

"Driver Easy Speak" is available only on vans equipped with Toyota's Entune premium audio systems. Prices of the van and the voice feature were not announced.

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China tainted meat scandal widens to Burger King, Starbucks

A suspect meat scandal in China engulfed Starbucks and Burger King on Tuesday and spread to Japan where McDonald's said the Chinese supplier accused of selling expired beef and chicken had provided 20 percent of the meat for its chicken nuggets.

Chinese authorities expanded their investigation of the meat supplier, Shanghai company Husi Food Co. A day after Husi's food processing plant in Shanghai was sealed by the China Food and Drug Administration, the agency said Tuesday that inspectors also will look at its facilities and meat sources in five provinces in central, eastern and southern China.

The scandal surrounding Husi Food, which is owned by OSI Group of Aurora, Illinois, has added to a string of safety scares in China over milk, medicines and other goods that have left the public wary of dairies, restaurants and other suppliers.

Tough sanctions threatened

Food safety violations will be "severely punished," the food agency said on its website.

Starbucks Corp. on Tuesday said it removed from its shelves sandwiches made with chicken that originated at Husi. Burger King Corp. said it stopped using hamburger it received from a supplier that used product from Husi. Pizza restaurant chain Papa John's International Inc. announced it stopped using meat from Husi.

In Japan, McDonald's Corp. said it stopped selling McNuggets at more than 1,300 outlets that used chicken supplied by Husi. It said the Shanghai company had been supplying chicken to it since 2002.

A Shanghai broadcaster, Dragon TV, reported Sunday that Husi repackaged old beef and chicken and put new expiration dates on them. It said they were sold to McDonald's, KFC and Pizza Hut restaurants.

McDonald's and Yum Brands Inc., which owns KFC and Pizza Hut, said they immediately stopped using meat from Husi. A third restaurant chain, Taiwanese-owned Dicos, also said Monday it stopped using meat from Husi.

Husi 'appalled'

In a statement, Husi said it was "appalled by the report" and would cooperate with the investigation. It promised to share the results with the public.

"Our company management believes this to be an isolated event, but takes full responsibility for the situation and will take appropriate actions swiftly and comprehensively," Husi said.

Some companies said they didn't deal with Husi but had discovered their suppliers bought meat from that company.

Food and drug safety is an unusually sensitive issue in China following scandals over the past decade in which infants, hospital patients and others have been killed or sickened by phony or adulterated milk powder, drugs and other goods.

Foreign fast food brands are seen as more reliable than Chinese competitors, though local brands have made big improvements in quality.

"If confirmed, the practices outlined in the report are completely unacceptable to McDonald's," the company's Chinese business said in a statement.

Yum's KFC is China's biggest restaurant chain, with more than 4,000 outlets and plans to open 700 more this year.

The company, based in Louisville, Kentucky, said in a statement that "food safety is the most important priority for us."

"We will not tolerate any violations of government laws and regulations from our suppliers," it said.

KFC sales in China plunged after state television reported in December 2013 some poultry suppliers violated rules on drug use in chickens. KFC overhauled quality controls and eliminated more than 1,000 small poultry producers from its supply network.

In Japan, McDonald's spokesman Kenji Kaniya said the affected stores are in Tokyo area and the cities of Nagano and Shizuoka.

Other chicken used by McDonald's in Japan comes from suppliers in Thailand and China, Kaniya said.

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Facebook save feature launched

Facebook save feature

The new Facebook feature, announced Monday afternoon, stores items containing things like links, and pages including photo albums, places, events and movies to a 'saved items' list. (Facebook)

Facebook has a new bookmarking feature that will allow users to save links and Facebook pages to look at when they have more time.

The new feature, announced Monday afternoon, stores items such as links, and Facebook pages including photo albums, places, events and movies to a "saved items" list.

The list is visible only to the user who made the list, and that person can later view, archive, delete, or share the saved items.

Facebook said the new feature will be rolling out to everyone using web, iOS and Android version of Facebook "over the next few days."

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Yahoo buys mobile ad placement firm Flurry

Yahoo Inc has announced it will buy mobile ad placement firm Flurry in an effort to beef up its own mobile advertising.

Flurry is at the forefront of mobile analytics and so-called "real time buying," a form of hyper-fasting bidding for mobile ad space based on the characteristics of the user.

"We have reached a definitive agreement to acquire Flurry, the industry leader in mobile analytics," Yahoo said in a blog post. It said the purchase "reinforces our commitment to building and supporting useful, inspiring and beautiful mobile applications and monetization solutions."

The companies did not release the terms of the deal, but reports said Yahoo paid several hundred million dollars. Flurry, which had planned an IPO , said the deal would give it access to resources.

"With Yahoo, we will have access to more resources to speed up the delivery of great products that can help app developers build better apps, reach the right users for their apps and more importantly, make money from ads that look great and blend into the app experience," Flurry's CEO and founder Simon Khalaf said.

Yahoo has lagged rivals Google Inc. and Facebook Inc. in developing mobile advertising. Flurry is expected to kickstart its ability to generate interest on mobile.

Flurry monitors apps to gather analytics worldwide on 1.4 billion mobile users — information such as sex, age and buying habits. On average, it monitors seven apps on each phone to build a profile of the user.

When one of the users it tracks picks up a smartphone to, for example, play a mobile game, it can sell an ad in real time to appear on the phone in the infinitesimal time it takes for game to power up.

The prospect of high-speed auctions for targeted ads also drove Twitter's acquisition of MoPub in September 2013 for $350 million.

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Billionaire says we should all work 3 days a week but never retire

Written By doni icha on Senin, 21 Juli 2014 | 22.39

Carlos Slim Helu

Mexican tycoon Carlos Slim Helu says the concept of retirement is disappearing as people work later into life but take more time off along the way. (Jeremy Piper/ Associated Press)

One of the world's richest men says instead of the current model of a 40-hour workweek and retirement in the 60s, the world should adopt a system of working later in life with more time off.

Mexican magnate Carlos Slim Helu of telecom giant América Móvil told a business conference in Uruguay this weekend he thinks the world needs a "radical change" in the way we approach our working lives.

"This means that people do not retire at 50 or 60 years old," news agency Paraguay.com reported him as saying at the 20th Montevideo Circle meeting, an annual meeting of business leaders and politicians from across Latin America. "People will have to work longer, to 70 or 75 years old, and only work three days a week." 

The catch is that sometimes, employees may need and want to work much longer and harder on days when they do work — possibly as much as 11 hours a day, he says.

Slim, a self-made billionaire who has cornered the Mexican telecom market, says the concept of retirement comes from the Industrial Revolution, when life expectancy was until 60 to 75 years old. Now, people in the developed world regularly live to 86, 90 or beyond. 

As founder of Telmex, Slim is also putting his money where his mouth is. His telecom conglomerate recently offered a deal to employees whereby long-serving workers can sign up to work well past the traditional retirement age, but on a reduced workload of four days a week.

Slim also says the way we educate young, future workers also needs an overhaul. Education needs to be "not boring [and] memorized, but .. to train and educate. "

"We must train welders, nurses, health technicians, we need to train for jobs," he said, "giving greater importance than ever before towards educating for work.​"

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3 ways Target missed the mark in Canada

The impending Canadian launch of fabled American retailers Nordstrom and Saks Fifth Avenue is eagerly anticipated by consumers, but the disastrous rollout of Target stores might make executives pause.   

It's no secret that Target stores in Canada have struggled out of the gate. The Minnesota-based retailer posted a $1-billion loss in Canada last year. Customer satisfaction is abysmal, despite efforts to improve product availability and pricing.

Just this week, a retail analyst at Credit Suisse recommended executives shutter the Canadian operations entirely only 18 months after the stores opened. The company has balked at such a move and is reaffirming its commitment to the Canadian market, at least for now.

Fumbled launches

But Target is not the only American retailer to flounder.

In the wake of the 2008 recession, many American retailers turned their sights north, a market that was spared the worst of the economic downturn.

'You still have to come in and wow people and Target didn't do that.'- Doug Stephens, retail consultant

It seemed like a no-brainer: the countries are side by side, culturally similar and millions of Canadians shop in American chain stores each year.    

But it hasn't been quite so simple for new entrants. In addition to Target, teen retailer Aeropostale, which began its aggressive expansion north of the border less than 10 years ago, is closing many of its 77 stores this year.

Sam's Club, a membership-based wholesaler, and a division of Wal-Mart, closed all of its stores after a less than rosy reception from consumers. Another discount chain, Big Lots, closed all of its stores in this country in February, two years after making its first foray.

Will they ever learn?

The American invasion continues, unabated, despite the mixed results of some of these retailers. Upscale department store chain Nordstrom will make its much anticipated debut in Calgary this fall. Stores at Ottawa's Rideau Centre, Toronto's Eaton Centre, Yorkdale and Sherway Gardens will follow in subsequent years.

But the Seattle-based retailer has had to amend its ambitious plans in the wake of Target's troubled entry. It has pushed back the launch of its off-price division, Nordstrom Rack, from next year to 2017. The company said the complexity of the Canadian market was behind the delay.

What makes the Canadian market so complex? And what can other prospective American retailers learn from Target's near-death inducing errors?

Price matters

The major sticking point is price. Target Canada has been inundated with complaints from shoppers that its wares are just too pricey. It has had to fight the perception that it is significantly more expensive than its direct discount competitor, Wal-Mart, or homegrown chains like Canadian Tire and Loblaws.

Doug Stephens, a retail consultant, and the president and founder of Retail Prophet, said pricing has been a headache for Target because the store experience has been lacklustre for many consumers.

"If you're not really blowing customers away, you give them a reason to focus on price. Target got caught up in a conversation that should have never happened," Stephens said.

He said that nearly everything in Canada is more expensive than in the United States, but other retailers have escaped the ire of price-conscious Canadians because of execution.

"Nobody obsesses over the difference between computer prices at Apple in Canada versus the U.S. because, by and large, we just really love the experience of dealing with Apple," he said.

Stephens said new entrants, like Nordstrom, have to be cognizant of the fact that Canadian consumers are familiar with the products — and prices — on offer in the U.S. and that they will have to carefully manage expectations.

"You can't be gouging customers," he said, and that while price matching is nearly impossible — as wages, benefits and taxes are often higher in Canada than in the U.S. — they should at least be competitive.

Don't rest on your laurels

J. Crew, a popular preppy fashion chain, faced an onslaught of bad press when it opened its first Canadian store at Toronto's Yorkdale Shopping Centre. Consumers were angry that prices at the store, and on the retailer's website, were up to 30 per cent higher than in the U.S. for the same item. It assumed the hunger for its goods would outstrip backlash from inflated prices. Stephens said that is an error many American retailers, including Target, made when entering the Canadian market.

"They say 'this is going to be a cakewalk.' But, in fact, you cannot rest on your laurels, your reputation, coming into the country. The market in Canada was Target's to lose, there was such high anticipation," he said. "But you still have to come in and wow people and Target didn't do that. They failed to bring a unique assortment of products and they got the basics wrong, like not stocking the shelves."

Name recognition can also be a double-edged sword.

"It was a good thing and a bad thing that people knew the Target brand," said Maureen Atkinson, a retail consultant at J.C. Williams Group, "the bad thing was people expected what was in the U.S. stores and the Canadian stores just simply don't have the same kind of magic." 

The same lesson applies for luxury retailers. 

"Nordstrom can't just come in and say 'we're Nordstrom, we're fantastic.' They have to really come and blow the customer away," and replicate its much lauded service in Canada, Stephens said. 

Too big, too fast

Another lesson that new entrants need to learn is that they cannot overestimate the strength of the Canadian economy relative to the U.S.

"In 2009, retailers had a very good reason to look north and think wow, it's the promised land, but now we face our own headwinds here," Stephens said. 

"Consumer credit is very, very high, and wages in the middle class are not robust in terms of growth," and the market can become oversaturated with new stores, Stephens said. Target opened 124 stores, mostly in now-defunct Zellers locations, in less than a year, a pace far too fast to execute the experience properly, Stephens said.  

Many retailers face pressure from Wall Street to expand at a rapid pace to keep growth rates high and investors happy.

"It's the issue that Lululemon is facing now, and that Starbucks faced in the early 2000s. They stretched organizational resources, and the customer experience is disappointing," Stephens said.  

Starbucks ultimately closed 900 stores in North America and focused on growing same-store sales, a key retailing metric, in existing stores. The results have paid off; Starbucks posted higher earnings in 2013.

Atkinson said Target undertook a gargantuan task in opening as many stores as it did in such a short time. 

"It's a different country, with different tax laws, language legislation, you name it. It's a major, major undertaking and Target definitely underestimated just how difficult it would be," she said. 

Lessons learned

That experience is a cautionary tale that Nordstrom seems to have already learned from, by delaying the launch of Nordstrom Rack, to concentrate on its six new full-line stores, he said. "But it might be hard to deal with the innate pressure from investors to open more stores in the future."  

Canadians are voracious shoppers — malls just over the border are teeming with Canadians on the hunt for a good deal or the latest must-have product.

"Canadians are just a little bit more moderate [than Americans] in their shopping habits and they need a good reason to buy," Stephens said.

"There's a tremendous opportunity for American retailers if they just execute everything perfectly, stores that are fully stocked in a remarkable environment," he said. "Anything less will open them up to a barrage of criticism that they may never recover from."

Atkinson believes Target is here to stay.

"When you make that kind of investment you're not going to walk away," she said. 

Target, and other American retailers, will depend on international expansion to grow, she said, "and if they can't learn how to operate in Canada, they don't have much of a chance in markets like France or Germany.

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BlackBerry hires Marty Beard to be new COO

Blackberry Ltd. announced this morning that it has hired Marty Beard as the company's new chief operating officer.

The position has been vacant since November after a management shakeup by the new chief executive officer, John Chen, at the Waterloo-based tech firm. 

Most recently, Beard was chairman and CEO of LiveOps Inc., a provider of cloud applications and mobile messaging. Beard will be responsible for marketing, app development for the BlackBerry 10 platform and customer service. Marty will be a key member of Chen's turnaround team.

Chen said in a release that the hiring of Beard shows that BlackBerry "continues to attract top talent" and that his extensive experience in operations, marketing and serving customers will be an asset to the company. 

Prior to joining LiveOps, Beard was president of Sybase 365, a mobile messaging and mobile commerce services unit, and held a series of executive positions including vice-president of marketing.

He also worked at Oracle as vice-president of its e-commerce unit, Oracle Online.

Mr. Beard will start immediately, BlackBerry said.

BlackBerry's stock has recovered from its lows but took a hit last week after Apple Inc. announced a deal with IBM to sell mobile devices and software to business and government clients — so-called enterprise clients — an important segment that BlackBerry is targeting as part of its turnaround efforts. 

BlackBerry shares were up 0.40 per cent to $10.07 a share, shortly after the market opened. 

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Nexus goes 24 hours at Peace Bridge crossing

Nexus members making frequent crossings at the Peace Bridge, which spans the Niagara River between Fort Erie, Ont., and Buffalo, N.Y., will get through faster 24 hours a day and at certain times, without seeing a guard in person, it was announced today.

These and other border-crossing changes were announced Monday by the federal ministers of public safety and defence, who spoke from the bridge crossing.

Three changes in total were announced, all aimed at easier border crossings, for what the ministers described as low-risk patrons and businesses.

It will give border guards more time to work on "unknowns," said Steven Blaney, minister of public safety and emergency preparedness.

For Nexus users, Blaney said it will make their travel time easier for work, the beach and golf. 

"It's reducing the face-to-face time between officers and Nexus members so officers can focus on unknowns," Blaney said. 

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Allergan cuts 1,500 jobs in bid to avert Valeant takeover

Botox maker Allergan will cut about 13 per cent of its workforce, or roughly 1,500 employees, as part of a push to become more efficient and productive.

The Irvine, California, company also said Monday it plans to eliminate about 250 vacant positions in a restructuring that will streamline its business and allow the drugmaker to focus on its "highest value opportunities."

Allergan is fighting a hostile takeover bid from Valeant Pharmaceuticals of Laval, Que. 

CEO David Pyott is attempting to prove there is no need for the Valeant merger as Allergan can boost its earnings, cut spending and create better shareholder value on its own.

Allergan announced the cuts the same day it also said second-quarter earnings grew 16 per cent to $417.2 million US, or $1.37 per share, and revenue jumped 17 per cent to $1.86 billion. Both earnings and revenue trumped analyst expectations, according to FactSet.

The drugmaker also raised its forecast for adjusted 2014 earnings to between $5.74 and $5.80 per share from a range of $5.64 to $5.73 that it predicted in May. Analysts expect, on average, $5.71 per share.

Battle over takeover bid

Allergan said its restructuring will yield annual pre-tax savings of about $475 million in 2015, while costs tied to it will total between $375 million and $425 million.

Canadian drugmaker Valeant Pharmaceuticals International Inc. and investment firm Pershing Square Capital Management have made several bids to buy Allergan, the latest amounting to about $53 billion in cash and stock.

Allergan has said the offers "substantially undervalue" the company and create big risks for its shareholders. It also has adopted a "poison pill" measure to block a takeover.

Pershing Square wants to hold a special meeting where Allergan shareholders can have a say in the buyout bid and on the company's direction.

Complaint to regulators

In the takeover battle's latest twist, Valeant said Monday it has complained to regulators that Allergan has been making false statements about its business.

Valeant said it has contacted both the Autorité des marchés financiers and the U.S. Securities and Exchange Commission to complain that Allergan is trying to mislead investors.

Valeant said the latest example of these statements involves the performance of contact lens maker Bausch + Lomb, which Valeant acquired last year. Valeant said Allergan has falsely asserted that the business's pharmaceutical sales were stagnant or declining when it actually grew in the second quarter.

"We can no longer tolerate unjustified attacks on Valeant's business and strongly believe we are obligated to take action to protect Valeant shareholders from Allergan's apparent attempts to mislead investors and manipulate the market for Valeant stock," Valeant CEO J. Michael Pearson said in a statement.

An Allergan spokesman responded by email that the company stood by its comments.

"We call on Valeant to report complete and transparent details on its business on an ongoing basis," the spokesman said. "At the end of the day, investors will make their own decisions."

Shares of Allergan climbed 35 cents to $167.75 Monday at the start of trading. The stock had already climbed 51 per cent so far this year as of Friday's close as a result of the takeover fight.

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