UTAH’S BUSINESS JOURNAL www.slenterprise.com
THIS WEEK Acquisition gives Utah firm a foothold in Arizona
Wadsworth Construction buying heavy civil contractor.
• Industry Briefs • Begin on page 8.
Aug. 15-21, 2011
$1.44
Volume 41, Number 3
Cookietree Bakeries to build $7.1 million facility in Salt Lake
One of top 100 U.S. law firms opens office in Salt Lake City
Miami-based Akerman Senterfitt LLP, one of the top 100 law firms in the United States, has opened a Salt Lake City office, its 19th overall and an expansion of its National Consumer Finance Practice Group. The Utah office is located at 50 W. Broadway, Suite 475, and is staffed by former Van Cott, Bagley, Cornwall & McCarthy attorneys Robert Scott and Chandler Thompson, who are now Akerman Senterfitt shareholders. According to company spokesman Patrick Tucker, more attorneys will be hired in the near future, and the office will also house support staff. Both Scott and Thompson are additions to Akerman’s consumer finance team, which has added 50 lawyers during the past 12 months. The practice group’s total
DesignMatters Matters Legal Artist's rendering of the new Cookietree facility. An industrial revenue bond from Salt Lake City will help with the cost. be located on 5.8 acres in the By Barbara Rattle Ninigret Industrial Park at 4010 W. The Enterprise Enjoying a stability that Advantage Circle (approximately has eluded many U.S. business- 1400 South) and will replace the es, Murray-based Cookietree firm’s 56,000 square foot leased Bakeries is planning to build a facility in Murray. Salt Lake City has agreed new $7.1 million manufacturing plant and distribution facility in to issue and sell not more than Salt Lake City that it hopes will be $5.5 million in Industrial Revenue ready for occupancy by February Bonds to help with the cost of constructing the new plant. Industrial or March 2012. The 95,000 square foot plant, Revenue Bonds, also referred to for which ground will be bro- as Industrial Development Bonds ken in the immediate future, will see COOKIETREE page 2
of 78 lawyers across 19 offices represents one of the largest teams in the nation of lawyers dedicated to consumer finance litigation and compliance matters. Scott is a consumer finance litigator, also practicing in the areas of natural resources and commercial litigation. In addition to consumer finance litigation, Thompson has handled a variety of commercial litigation matters. “Financial institutions have confronted increasingly complex challenges over the last several years — last year in particular,” said William Heller, chair of
Executive Lifestyle Executive Lifestyle Legal Matters
Executive Lifestyle Begins on page 10.
• Calendar • See page 16.
see AKERMAN page 2
Local tent stake firm exceeds 100 percent monthly growth
Legal Matters Legal Matters Matters Legal
Uncertainty still ahead, but Utah doing better than most By Brad Fullmer The Enterprise The cream rises to the top. Despite vast concerns over the continued national recession, controversy over raising the debt ceiling, stagnant job growth and wild stock market fluctuations, the state of the overall economy in Utah has actually been quite healthy during the first seven months of 2011, according to several prominent local business owners and leaders. “There has been a steady increase in Utah’s job numbers, up 2 percent versus the national average of 0.9 percent,” said Sophia DiCaro, deputy director for the Governor’s Office of Economic Development (GOED). “When compared to most other states, Utah is better in terms of economic health and is in a better position to recover more quickly. That leads to greater optimism for the remainder of the year.” DiCaro said certain industry segments are definitely faring bet-
ter than others, including information/technology and aviation/ aerospace. Online retailers, businesses selling niche-type products (computers, outdoor recreation) and companies in the life sciences field also seem to be making forward progress. Markets including commercial and residential construction, along with brickand-mortar retail stores, are essentially flat, with hopes of modest recovery during the next six to 12 months. “One of the strengths of Utah’s economy is our diversity,” said Jeff Edwards, president/CEO for the Economic Development Council of Utah (EDCUtah). “We have some of everything. As one industry slows down, another picks up.” Not just local business leaders are touting the economic health of Utah and the Wasatch Front, added DiCaro. The American Legislative Exchange Council recently ranked Utah No. see ECONOMY page 6
StaffingMatters Matters Legal Toughstake's tent stakes are designed to more firmly anchor items in sand and snow. gross sales revenues to this point. By Brad Fullmer “Our growth has definitely been The Enterprise Salt Lake City-based explosive.” Located at 1721 S. Main, Toughstake has experienced tre- mendous growth since its incep- Toughstake has revolutionized tion in February 2011, with gross tent stake design for applications sales revenues increasing at least strictly in sand and snow, with a 100 percent every month since patented technology that provides formation, according to president up to 10 times the holding force over normal stakes. In addition, and founder Eric Simonson. “Our sales haven’t gone too the company recently launched crazy, but the future definitely its soon-to-be-patented cam strap looks crazy,” said Simonson, who device named Rollercam, which is preferred not to disclose actual see STAKE page 2
Real Estate Matters Legal Matters HR Matters Legal Matters
COOKIETREE from page 1
and Private Activity Bonds, are tax-exempt bonds issued by qualified government entities for the benefit of a private organization. JP Morgan Chase Bank will be the purchaser of the bonds in private placement transaction. Cookietree currently has sales of $37.6 million; the firm estimates that, in the future, the new facility will support sales of up to $110 million. In addition, Cookietree projects the new facility will allow it to add 17 new jobs in the next five years and up to 23 within the next 10 years. Most will be semi-skilled and unskilled workers. The average annual wage for the firm’s unskilled laborers is $27,472. The new facility will allow Cookietree to add additional manufacturing lines to expand its production capacity. Currently, the firm operates three production lines — two for baked products and one for frozen dough. Cookietree plans to add a new high-volume dough production line and freezing capacity to support increasing sales of cookie dough and cookies, investing about $2 million in new equipment with the help of bank financing. “We sell cookies internationally and the international exposure has helped us,” said company CFO and COO Harold Rosemann. “The U.S. sales have been relatively flat over the last couple of years, but we’ve had some pretty significant growth in our international sales. Some of our customers here in the U.S. continue to grow and some of them have gone
Aug. 15-21, 2011
The Enterprise backwards, but overall it’s been OK.” Approximately 20 percent of the company’s sales are exported out of the United States to countries in Asia, Europe and the Middle East as well as Canada. Cookietree does extensive private label business for eateries such as Einsteins, Quizno’s, Panda Express and Jimmy Johns, sells a great deal of product to schools and can be found in warehouse clubs such as Costco. The firm’s products — cookies, brownies and scones — can be found in restaurants, hotels and convenience stores. “Hopefully we’ll be able to continue to hire employees,” Rosemann said. “We hire right around the area, as close as possible. Hopefully it will work well for everybody.” The median household income in Salt Lake City’s Glendale area is significantly below both state and national averages. Cookietree has not had any layoffs in more than a decade. Cookietree began business in 1981 as a small retail cookie shop in Provo. Its success was based on a dough recipe rich with highquality chocolate.
If you’re 50 or older, talk to your doctor about colon cancer testing. No excuses, okay?
Hope. Progress. Answers.®
1.800.ACS.2345 www . cancer . org
© 2005 American Cancer Society, Inc.
2
STAKE from page 1
intended to provide greater holding capacity than traditional cam straps while being easier to use. Simonson said the key to the design of Toughstake is the guy wire/line attachment, which is located near the base of the stake, versus traditional stakes that tie in at the top. “It’s the guy line that provides a deep anchoring tension system that gives a much higher load,” said Simonson. “The shape of the stake is not as important. In sand and snow you need an effective guy line.” Like many other innovations, the idea behind Toughstake was born from practical experience. A Utah native with a masters degree in mechanical engineering from the University of Utah, Simonson has spent considerable time experiencing Utah’s great outdoor recreational opportunities, including many camping trips to Southern Utah in red desert sand. During one rafting trip on the Green River a few years ago, he and his group stopped to rest in the mid-afternoon along a pristine sand bar. While trying to set up a freestanding awning, they found it nearly impossible to anchor the structure in the sand bar, partly due to windy conditions. “The second we tried to get this set up, the wind started blowing and it was just impossible. I figured there had to be a better sand stake,” said Simonson. After two years of thought, research and “sitting around the campfire drinking beer” with his father Roger, himself a mechanical engineer, the
idea came to fruition. Toughstake is made of 6061 T6 aluminum in a dark satin orange color and comes in three sizes – small (nine inches, 1.2 ounces), medium (13.5 inches, 4.2 ounces) and large (17.5 inches, 7.2 ounces), and sells for $24.99 (small, four-pack), 34.99 (medium, two-pack) and $39.99 (large). The stakes are lightweight and are easily stackable, making them ideal for backpacking. Toughstake also has a line of stakes designed for military use, a market that Simonson believes will ultimately be huge for his business. The military line features black-colored stakes with
a slightly different geometrical design. Products are available online and at retail stores such as Sidsports and Marine Products in Salt Lake, Gearheads and Canyon Sports in Moab, and Extreme Sports in St. George. Simonson hopes to break into other significant local distribution and retail entities like Liberty Mountain and Wasatch Touring. Toughstake currently has four employees, and plans to add more as revenues increase. “We want to grow and create as many jobs as we can for people in Utah,” Simonson said. “That’s very important to me.”
AKERMAN
National Association of Mortgage Brokers and Consumer Advisory Council of the Federal Reserve Board. Recently, Akerman lawyers have counseled financial institutions throughout the financial crisis on a range of regulatory, transactional and litigation matters. Akerman’s National Consumer Finance Practice Group represents mortgage loan originators, servicers and investors in class and individual lawsuits, bankruptcy adversary cases, contested foreclosures and regulatory compliance matters. In addition, the group concentrates on repurchase and recovery litigation, with emphasis on investigating and prosecuting origination fraud, working closely with federal and state regulators and law enforcement. The Akerman team includes more than 100 lawyers and legal professionals, with a platform for national litigation outsourcing, case management and coordination, including direct litigation. The firm is ranked among the top 100 law firms in the United States by The National Law Journal in number of lawyers and is the leading Florida firm. With 500 lawyers and government affairs professionals, Akerman serves clients throughout the United States and overseas from Florida, New York, Washington, D.C., California, Colorado, Virginia, Nevada, Utah and Texas offices.
from page 1
the Akerman National Consumer Finance Practice Group. “We continue expanding to support our clients nationally in litigation, operations and compliance matters while concentrating on being a centralized and uniform group. Rob Scott and Chad Thompson fit right in, adding to our individual and class litigation experience and geographic reach.” As part of a firm with deep banking roots, Akerman’s consumer finance team builds on a longstanding commitment to the industry. Early in the firm’s history, Akerman was instrumental in the creation of one of the 10 largest banks in the nation. Akerman leaders have served in many key leadership roles with regulatory and industry groups including the Florida Bankers Association,
THE ENTERPRISE [USPS 891-300] Published weekly by Enterprise Newspaper Group Inc. 825 N. 300 W., Suite C309, Salt Lake City, UT 84103 Telephone: (801) 533-0556 Fax: (801) 5330684 Web site: www.slenterprise.com. For advertising inquiries, e-mail david@slenterprise.com. To contact the newsroom, e-mail barbara@slenterprise.com. Subscriptions are $55 per year for online only, $65 per year for print only and $75 per year for both the print and online versions. or $1.25 per copy. Opinions expressed by columnists are not necessarily the opinion or policy of The Enterprise Copyright 2011 Enterprise Newspaper Group Inc. All rights reserved Periodicals postage paid at Salt Lake City, UT 84199. POSTMASTER: Send address corrections to P.O. Box 11778, Downtown Station, Salt Lake City, UT 84147
Sugar House $16 / RSF / Year 500 to 12,000 Sq. Ft. Available 2257 South 1100 East Salt Lake City, UT 84106 Call 801-486-8157 or email gary@garyayork.com for property information and features. Secure prime office space now as Sugar House looks forward to light rail and major developments in the near future.
3
The Enterprise
Aug. 15-21, 2011
There’s good news and there’s good news. We’re not only upgrading your network today, but we’re also busy building a next-generation, high-speed network. This includes: • Upgrading and adding new cell sites here in the Salt Lake City area and all around the country • Adding more fiber optic cable to cell sites for greater capacity • And we’re planning to combine with T-Mobile to deliver a better, stronger network, adding thousands of cell sites across the nation to deliver the most advanced mobile broadband network experience From a simple phone call to the most advanced data download, AT&T is committed to delivering the best network possible to the Salt Lake City area.
To see more of what we’re up to, visit MobilizeEverything.com.
©2011 AT&T Intellectual Property. Service provided by AT&T Mobility. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. All other marks contained herein are the property of their respective owners.
ATM_LIT_P1_2222_Enterprise_O.indd
Client
AT&T
4
The Enterprise
Aug. 15-21, 2011
For dreamers who do.
Live, learn, and work with a community overseas. Be a Volunteer.
peacecorps.gov
5
The Enterprise
Aug. 15-21, 2011
Fusion-io to purchase California company for $95 million Fusion-io Inc., a Salt Lake City-based provider of a nextgeneration shared data decentralization platform, has entered into a definitive agreement to acquire San Jose-based IO Turbine Inc., a provider of caching solutions for virtual environments. Under terms of the agreement, Fusion-io will pay up to approximately $95 million, subject to purchase price adjustments, for all outstanding securities of IO Turbine. The cash portion won’t exceed $35 million; the transaction is expected to close by the end of August. The acquisition is a key part of Fusion’s strategy to enable enterprise customers to increase the utilization, performance and efficiency of their data center resources and extract greater value from their information assets. Having partnered closely for a number of months, Fusion-io and IO Turbine have a shared philosophy for solving data center inefficiencies. The integration of IO Turbine’s software into Fusion’s platform will enable traditional storage infrastructures to keep up
with the increasing demands of virtualized servers and expands Fusion’s market opportunities to both new and existing customers. “IO Turbine’s software is uniquely architected to take advantage of flash memory in the server to solve the I/O bottlenecks, the inhibitor to the adoption of enterprise virtualization,” said David Flynn, chairman and CEO of Fusion-io. “We believe integrating ioMemory and IO Turbine adds a critical and previously missing performance component to virtualized IT environments that will accelerate the adoption of Fusion-io technology. This acquisition also underscores our focus on providing customers with an enterprise solution that features software and hardware components designed to accelerate their full suite of applications." At closing, Fusion-io will add approximately 20 IO Turbine employees to its engineering team, with an additional approximately five employees across other areas. Fusion-io is traded on the NYSE.
Flexography printer to make expansion move to South SL
Flexo One, now located in 1,500 square feet in American Fork, will soon be occupying nearly 7,000 square feet. Flexo One, an American Fork-based flexography printer that creates adhesive-based products such as food and medicine labels, scrapbooking stickers and film packaging, is preparing to make an expansion move to South Salt Lake. Currently operating from about 1,500 square feet, the company plans to move in October to nearly 6,900 square feet at 3789 S. 300 W., according to Matt Sherry, who owns the business in partnership with Gary Crockett and Scott Opfar. The relocation was prompted to a desire to be closer to where the firm’s employees live, and because Flexo One has outgrown its current location, Sherry said. “We’ve seen growth since we opened our doors,” he said, noting the company also operates two online businesses that are expanding as well. “We’re busting at the seams and we need to be able to expand as far as being able
to order more raw inventory and keep it on the floor and be able to have more room to move about. We’re very much just-in-time right now and we’d like to be able to hold more inventory, both raw and finished.” Seven employees will make the move to the new location, leased with the assistance of Bob and Josh Mills of Commerce Real Estate Solutions.
We work for you, not Wall Street Have you ever wondered who your financial advisor really works for, you or the firm? Our goal is your success as an investor. We work strictly for you. And we are backed by the strength and reliability of LPL Financial, the largest independent broker/dealer in the nation.* LPL Financial stands out among financial firms for its financial strength and freedom from the conflicts of interest on Wall Street. We focus on one bottom line: yours. *Based on total revenues, Financial Planning magazine, June 1996-2008
James M. Rigtrup, LPL Registered Principal 9657 South 700 East Sandy, UT 84070 (801) 572-1077 jim.rigtrup@lpl.com www.lpl.com/james.rigtrup Securities offered through LPL Financial – Member FINRA/SIPC a Registered Investment Advisor Investments may lose value and are not insured nor guaranteed by any government agency unless otherwise disclosed. LPL Compliance Approval # 486597
The Enterprise
6
ECONOMY from page 1
1 for expected economic recovery, Fortune magazine in July listed Salt Lake City as one of only two U.S. cities (Austin, Texas is the other) among the Top 15 best new cities in the world to do business, and Forbes in July ranked Salt Lake No. 4 on its list of best cities for young professionals, while listing Provo No. 3 and Ogden No. 21 among the best U.S. cities for business and careers. Last October Forbes placed Utah No. 1 on its Best States for Business list. Utah is also one of only 13 states to retain a AAA bond rating, according to a recent list from Standard & Poor’s. “That’s a sample of the accolades we are getting,” said Michael Sullivan, GOED director of communications. “Utah is an up-and-coming place. We have a good quality of life and companies like the stability of knowing where their employees are coming from.” “We’re still amazed by the [national] attention we’re getting,” added Edwards. “We’re a small state, but we feel good being in this spot. I think we’ll continue to see modest growth; 1.5 to 2 percent growth isn’t a wild and off-the-charts success, but in these crazy economic times that’s actually a good sign.” Data Centers, Highway and Road Work Help Stabilize Construction Market Another positive indicator for Utah’s economy, one that is helping buoy the sluggish local construction market, is the number
of high-tech corporate behemoths that have built/are building data centers along the Wasatch Front, including eBay, Adobe and Oracle, not to mention the granddaddy of them all, the National Security Agency’s $1.5 billion, one million square foot Utah Data Center. “High-tech companies seem to have done well in the economic downturn,” said David Wesemann, president of Spectrum Engineers, a Salt Lake-based M/E engineering firm that is providing electrical consulting on the Adobe data center. “They’re finding a good opportunity to build here because prices are so competitive and electrical power is cheap.” EDCUtah’s Edwards said that another major technology firm, IM Flash, is planning to expand its Lehi plant operations and add up to 200 jobs over the next few years. “The place we’re seeing growth is with companies locating in our state,” Edwards said. “We’ve had an upturn in leads, whether it’s a new factory or a distribution or data center. We hope that means more [firms] will be coming here.” DiCaro points to myriad factors that make Utah an attractive state for companies to locate to, including: • A young, well-educated, technologically savvy, multi-lingual population; • Relatively low cost of land, electrical power and delivery of infrastructure; • An international airport that has a proven track record for on-time flights and is centrally located on the Wasatch Front; and • Utah’s AAA bond rating.
“All of these things are essential to our future economic success,” DiCaro said. Most local construction leaders do not expect Utah’s construction market to return to its glory days from as recently as 2008 in the near future, if ever, but there is hope for greater stability moving forward. “We don’t see the market getting a lot better, but there is some guarded optimism,” said Richard Thorn, president/CEO of the Associated General Contractors of Utah. “Construction unemployment is still at 17-19 percent, including residential, so we still have a ways to go. I think we’ve seen the worst, but I don’t think it will get robust again in the foreseeable future like it was four years ago.” “The debt crisis, rising energy costs and lack of job creation has set us back,” said Chris Hipwell, president of the Associated Builders and Contractors, Utah chapter. “Recovery in construction has been further postponed by the economic climate. The good news is that Utah has always performed better than other states. Firms need to position themselves for when the recovery starts.” Thorn said positives include a large amount of state DOT work, including the $1.2 billion I-15 CORE project in Utah County, the $200 million-plus downtown federal courthouse, the NSA data center, USTAR projects at the University of Utah and Utah State University, the $2 billion City Creek Center and other associated “Downtown Rising” projects. “Most of the vertical building is being driven by the public sec-
support
what you
Aug. 15-21, 2011 tor,” Thorn said. “The private sector is not as robust, even though City Creek is still moving along and has helped keep our industry moving forward. The stock market shows a lot of volatility and if people have money, they’re keeping it close to the vest. For companies interested in getting a project under way, there has never been a better time to get that going.” Thorn and Hipwell said in addition to ultra-competitive bid markets, there are vast resources of highly skilled labor available, meaning projects are likely to be built on time, on budget, at a very high quality. “Contractors’ backlogs are thin; it’s a very competitive market,” Thorn said. “If you’re an owner with money, there is a great opportunity right now to build.” Razor-thin profit margins and an overall lack of work in both commercial and residential construction have crippled some contractors to the point where they’ve either closed their business, are temporarily shutting down or are operating with skeleton crews. For example, general contractor Camco Construction of Murray is shuttering its doors until the economy rebounds, while drywall subcontractor Perry Olsen Drywall of Sandy is out of business completely after 45 years. “It’s definitely tough,” said Robert Bergman, executive vice president of the Utah Mechanical Contractors Association. “Our members doing work in the hard bid market, they’re having a hard time competing on jobs with 15 or more bidders. We’ve had a couple of members close, and a handful that are in hibernation. We’ve tried to use this time to convince contractors to invest in their companies; a lot have cleaned up their ship to try and weather the storm.” “We wish there was more profit in jobs, and more jobs in general,” said Keith Buswell, vice president of business development for Ogden-based general contractor Wadman Corp. “We’re trying to hang tight until commercial
Business lending is our business.
Kelly Hale
Business Lending Expert 801-924-3666
Member FDIC
construction gets better.” Recession-Proof? Certain Markets Appear Immune to Sour Economy Many businesses specializing in online marketing/Internet sales, those shilling high-tech items such as computers and smartphones, and niche markets like outdoor recreation are thriving despite the down economy. The public’s thirst for perpetual communication or the latest new camping gizmo is seemingly insatiable. “I’m amazed at the number of businesses I work with who are relatively new, yet have experienced major sales growth,” said Doug Granger, regional sales manager for DHL Global Mail over Utah, Colorado, Nevada and Wyoming. These companies generate sales strictly through the Internet, or have a niche selling support products for phones and computers. The recent Outdoor Retailer Summer Market (Aug. 4-7) in Salt Lake drew up to 25,000 visitors who viewed products from more than 1,300 retailers, of which more than 50 were Utah-based companies. Firms attending the show were there to capitalize on an outdoor recreation market that is up 6 percent nationwide. Utah-based Internet sales firms like Overstock.com of Salt Lake and Backcountry.com of Park City are holding steady until the economy improves. Overstock president Jonathon Johnson said company revenues showed single-digit growth – around 5-6 percent – during the first half of 2011. “We’d like to be doing better,” he said. “People are being very careful with their money. Middle-income families are more judicious; upper-end clients are still spending. Until we get government in order, it’s going to be a long, hard recession. I’ve long been a supporter of a balanced budget amendment. Washington will continue to keep digging the debt hole deeper. The only way to curb that is take away the shovel.” Dan Young, CEO of Salt Lake-based PC Laptops, said 2011 has been an interesting ride, with some months flat, others showing 300 percent growth from the previous year. His clients are buying more expensive computer systems versus basic, run-of-the-mill models. “What people are buying is much different than last year,” said Young. “They tend to be buying upper-end, really nice computers; I think that’s primarily because of smartphones. When people buy computers now they want something more sophisticated, with a bigger screen, even multiple screens. A lot of people that were laid off are now selfemployed, so they need optimal performance.”
$5 million in improvements being made at Hyatt Escala A new 2,000 square foot restaurant broke ground in late July at the Hyatt Escala Lodge at Park City, part of 8,000 square feet of improvements being made at the hotel, located at The Canyons resort. According to SDI Realty Group of Salt Lake City, the firm overseeing development and asset management of the project for the ownership group, the commercial build-out will include the restaurant, a market, meeting space and offices totaling $5 million and 8,000 square feet. The cost of the approximately 2,000 square foot restaurant, slated to open Nov. 1, is $3.5 million, said SDI partner Cory Williams. “We want something that is an approachable, fun gathering place,” said Williams. “There is so much high-end, white tablecloth dining that people don’t like to hang out in; we want a place
guests and owners want to use. We think it will be immediately successful because of the nature of the project.” The Hyatt Escala Lodge at Park City was named earlier this year as a top 12 resort by Ski magazine, and the New York Times listed it as one of 41 places to visit in 2011. Williams said since Hyatt took over management of the lodge, it has been rated as a Four Diamond property by AAA. The restaurant was designed by Salt Lake City-based IBI Group, which specializes in high-end resort projects, and is being constructed by Interior Construction Specialists, a subsidiary of Sandybased Layton Construction. SDI Realty will announce other aspects of the project, including restaurant style, menu options, interior/exterior finishes and projected number of employees, in early September.
Acquisition will give Wadsworth a toehold in Arizona market
Ralph L. Wadsworth Construction Co., Draper, has acquired Arizona-based J. Banicki Construction Inc. Banicki, a heavy civil contractor founded in 1990, builds construction projects for both public and private owners in Arizona. In addition to its strong Arizona presence and capabilities in structural concrete, utilities and paving, Banicki also excels at alternative bidding methods such as Construction Management at Risk and Job Cost Order contracts. Under terms of the transaction, RLW acquired 100 percent of Banicki’s stock for $8 million plus a five-year earn-out that will begin once Banicki achieves $2 million in EBITDA annually. As part of the agreement, Banicki was required to deliver certain levels of tangible equity and working capital at the closing date. Jerry Banicki will remain president and
7
The Enterprise
Aug. 15-21, 2011
Banicki will continue to be managed by its current senior management team. Based on historical performance and current backlog, it is expected that Banicki will contribute annual revenue of between $20 million and $25 million. “We are pleased to expand our geographic reach into Arizona,” said RLW CEO Kip Wadsworth. “It’s an important future market for the development of RLW and [parent company] Sterling and the location complements our growing presence in the Southwest.” RLW is a leading heavy civil construction company that specializes in the building and reconstruction of transportation infrastructure, including bridges, freeways, light rail and other heavy highway-related projects in the Intermountain West.
Ogden area has nation's lowest rate of health care spending for the commercially insured The Ogden/Clearfield metro area has the nation’s lowest rate of health care spending for the commercially insured, and Salt Lake City is not far behind. That’s according to a Thomson Reuters study that found vast differences from one city to the next in the amount spent on health care for Americans with employer-sponsored health plans. The study assessed the use and cost of health care services for 23.5 million Americans in 382 metropolitan statistical areas (MSA). The MSA with the lowest health care spending for the commercially insured — $2,623 per person — was Ogden/Clearfield. The highest-spending MSA was Anderson, Ind., at $7,231 per person. Salt Lake City was the eighth lowest-spending MSA, at $2,979 per person. “Studying these geographic variations can help us identify locations where health care costs are less, yet the quality of care and outcomes are not compromised. Understanding where, why, and how medical care costs less can provide solutions to control our nation’s health care spending,” said Ray Fabius, M.D., chief medical officer for the health care business of Thomson Reuters and one of the study’s authors. Research dating back to the 1970s has documented geographic variations in the cost and use of health care among Medicare
recipients. The Thomson Reuters study is the first of its kind to assess the health care experience of more than 20 million people with employer-sponsored insurance. It found substantial spending disparities similar to those seen in the Medicare population — but with different underlying patterns. For example, previous research has identified McAllen, Texas, as having the highest Medicare spending in the nation, but the Thomson Reuters study found McAllen to be among the 10 lowest spending communities for individuals with employersponsored health insurance. Spending patterns also varied significantly by age group and type of expenditure. In Ocala, Fla., for example, health care spending for children was 45 percent below
the national average and spending for adults (age 18-64) was 18 percent above average. Meanwhile, locations with high inpatient costs were likely to also have high outpatient costs, debunking the theory that high outpatient spending tends to limit or offset the use of inpatient services. “There are some unexpected findings here. The bottom line is that it’s risky to set policy based solely on Medicare evidence, because we’re seeing a different picture when we look at other patient populations,” said Bill Marder, PhD., senior vice president for research services at Thomson Reuters and lead author of the paper. “We clearly need to do more in depth research to better understand how these complex spending variations translate into
Mark Tuffin named president of Smith's Mark Tuffin has been promoted to president of the Smith’s Division of The Kroger Co. He succeeds Jim Hallsey, who announced his retirement after 47 years of service with Smith’s and Kroger. Tuffin brings more than 30 years of experience in the grocery industry to the role. He joined Smith’s in 1996 and held several key leadership roles before being promoted to vice president of merchandising in 1999. In 2009, Tuffin was named vice president of transition
for Kroger. In this role, he led Kroger’s efforts to implement significant organizational changes between all areas of the business. Kroger, the nation’s largest traditional grocery retailer, employs more than 338,000 associates who serve customers in 2,449 supermarkets and multidepartment stores in 31 states under two dozen local banner names including Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry’s, King Soopers, QFC, Ralphs and Smith’s.
Master developer picked for Market Station South Salt Lake’s redevelopment agency has inked an agreement with a company to act as master developer of the sprawling Market Station urban renewal project, which consists of roughly 40 acres at 2200 South between State an Main streets. The contract was signed with Crossroads Development LLC, whose managing member is Kaysville-based The Adams Co. Company principal David Adams, who owns The Adams Co. in partnership with his sons, David II and J. Stuart, said demolition of a number of aging buildings on the RDA-owned site should begin in the near future. The first phase
of the multi-phase development could begin as early as next year and probably will consist of retail and mixed-use space. “We’ll see what the market delivers to it,” Adams said. “It will be market-driven but there is a fair amount of enthusiasm toward it.” In operation for more than 30 years, The Adams Co.’s commercial projects include Angel Street Plaza in Kaysville, Hooper Neighborhood Center in Hooper and Layton View Plaza in Layton. It’s residential projects include Sunset Pointe in West Kaysville, Feathering Sands in Layton and Clearwater Cove in Layton.
Slate Creek Gift Co. - 10% off entire purchase Subway - 10% off entire order
At The Gateway, we believe that when you work hard, you deserve some perks. That’s why The Gateway, FM100 and The Enterprise have created and exclusive “Office Worker At Work Perk Card” for all of you hardworking people. (Fill out your At Work Perk Card application at The Gateway Concierge desk.) Flash your card and get savings and discounts at participating shops and restaurants at The Gateway. Just keep your card in your wallet and look for special deals throughout The Gateway. FM100 will be e-mailing you ever Monday with the “Perks of the Week.” Log on to www.fm100.com or check out The Enterprise for the most up to date list of specials. Turn in your completed form to The Gateway Concierge, located across from Urban Outfitters or to any participating retailer to be eligible for monthly drawings.
8
COMPUTERS/ SOFTWARE
• VLCM, a reseller of customized IT in the Rocky Mountain Region, headquartered in Salt Lake City, is entering a partnership with Cricket Communications, a provider of wireless services. VLCM is the first technology company in Utah to focus on distributing Cricket to corporations. Cricket offers wireless voice and highspeed broadband Internet services. Cricket’s smartphone plans are half the cost of AT&T and Verizon with no overages, contract or activation fees. • LanSchool Technologies, an Orem-based provider of crossplatform classroom management software, has been recognized by The Government Computer News as a Best of FOSE winner in the Desktop Software category for its LanSchool 7.6 software. The software gives instructors the tools to remove distractions, prevent inappropriate use, demonstrate skills, collaborate, monitor and assess student progress. Users of the software include the Federal Emergency Management Agency, the Jobs Corp, the Army and the Bay Area Transit System in San Francisco. • ContentWatch, a Salt Lake City provider of Internet safety, security and productivity solutions, has made additions to its staff. Greg Butterfield is chairman of the board; Gene White is chief financial officer and corpo-
Aug. 15-21, 2011
The Enterprise
• Industry Briefs •
rate secretary; Melissa Garland is vice president of marketing; Clayton Ostler is senior director of technology and Trish Kapos is the director of sales.
EDUCATION/TRAINING
• A new study by the Georgetown University Center on Education and the Workforce confirms that the value of college degrees is increasing. According to the study, individuals with a bachelor’s degree now make 84 percent more over a lifetime than those with a high school diploma, up from 75 percent in 1999. Bachelor’s degree holders can expect median lifetime earnings of up to $2.3 million, whereas those with a high school diploma will average around $1.3 million, a little more than $15 per hour.
FINANCE
• The IRS is reminding taxpayers that the 2011 Offshore Voluntary Disclosure Initiative will expire on Aug. 31, 2011. Taxpayers that come forward voluntarily get a better deal than those who wait for the IRS to find their undisclosed accounts and income. New foreign account reporting requirements are being phased in over the next few years, making it tougher to hide income offshore. For the 2011 initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in
the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties in certain circumstances.
affect HSAs. The Complete has Guidebook is available for $19.95 for a paperback copy or $3.95 for a downloadable PDF version at www.hsaguidebook.com.
INSURANCE/BENEFITS
MANUFACTURING
• Utah-based Bear River Mutual Insurance has been named one of the nation’s top 50 performing insurance companies by the Ward Group, an operational consulting firm and provider of benchmarking and best-practice services to the insurance industry. Bear River was the only Utah-based insurance company included on the list. To be included on the list, Bear River’s financial performance over the past five years was compared with that of more than 3,000 property-casualty insurance companies. The companies named to the 2011 Ward’s 50 list produced a 13.8 percent return on average equity from 2006 to 2010 compared to 8.7 percent for the property-casualty industry overall. • HealthEquity Inc., a personal health care financial services company headquartered in Salt Lake City, has released its fifth edition of The Complete HSA Guidebook: How to Make Health Savings Accounts Work for You. The guide offers a comprehensive overview of health savings accounts for both individuals and employers. The fifth edition includes information on health care reform legislation and its impact on HSAs as well as more recent tax changes that
• MonaVie, a Salt Lake City provider of nutrition products, has named Jeff Graham as president of sales for the company’s North America market. Graham has served as managing director of product development and as vice president of product management and has also served as senior vice president of North America, and will continue to oversee MonaVie’s product management, development and quality control while overseeing sales and marketing efforts in the United States and Canada.
MEDIA/MARKETING
• The Utah chapter of The Society of Marketing Professional Services, a trade organization of marketing professionals serving the architecture/ engineering/construction community, raised $1,550 in cash contributions in connection with its 2011 golf tournament, plus numerous items of clothing, food, toiletries and supplies for the Salt Lake YWCA to assist in its efforts in providing help and shelter to women in need.
REAL ESTATE
• Red Ledges, a recreational mountain golf community near Park City, experienced recordsetting sales in the month of July with 22 real estate sales, leading to a total of 34 sales so far in 2011. The real estate economy in the Park City and Heber Valley areas has experienced improvement and
• Deseret Digital Media, part of Deseret Media Companies, has promoted Mike Petroff to executive vice president and chief operating officer. Petroff will oversee all operational aspects of fulfilling the company’s mission. DDM has experienced increases in traffic and engagement across all its properties, including DeseretNews.com and KSL.com, resulting in year over year revenue growth of more than 50 percent. Petroff has piloted multiple new revenue-generating product lines including a rapidly growing deals solution and the KSL Local directory business.
continued on page 14
NONPROFIT
BACHELOR OF SCIENCE IN NURSING
Date: Saturday, September 10 Time: 10:00 a.m. - 2:00 p.m. Location: Roseman University South Jordan Campus 10920 S. River Front Pkwy, South Jordan, UT 84095
REGISTER TODAY!
www.roseman.edu/openhouse 801.878.1063
Aug. 15-21, 2011
9
The Enterprise
How important is writing? Prepare now for college expenses It's the key to the locked This time of year finds us wrapping up Savings Accounts There are several different types of savings family trips and sending children back to school. door of your success While businesspeople can hardly remember what accounts that are designed especially for college
I’m writing on writing. It’s the a result of building a following by core of my success. This article is the offering consistent value messages in second part of a short course on how favor of those who watch. I write for each area of my outreach. The message, the script, the title, My success is all about my “mix” your own channel and the trailer of messages, combined with the message at the end — to watch more searchable words on both content and or do something — are all vital parts title that createsattraction. Writing of your writing challenge. The view generates proactive connections, count and the subscription sign-up followers, likers, subscribers and are your report cards. customers. All free. How to write a blog post. How to write on My blog is less than two years LinkedIn. When you’re old. It was a combination of making a connection, do procrastination and stupidity NOT use their standard that took me so long to get line. Write customized into the blog world. At the words that might interest moment, it’s one of my most the other person. If you’re read resources and one of my looking for a job, ask a best lead sources. A few years question about the type of ago I bought salesblog.com Jeffrey person they’re looking for. and then finally launched it. Gitomer If you’re making a statement Blog posts need to be or offering a value message short, contain video whenever to all of your connections (know the possible and link to something people rules first), make certain it provides can see more (or buy more) of. Oh VALUE FIRST, solicitation second. yeah, posts must be readable by, and My LinkedIn profile is searchable engaging to, the people you seek to under my name, Jeffrey Gitomer. attract. Look at my posts and especially Here are a few examples of what my summary (self-description). All to write about: If you’re a retail words in my profile were carefully clothier, write about fashion or the 10 chosen to attract like-minded people. best places to dress up and be seen. NOTE: With the help of my social Have a contest where the winner media consultants, One Social Media gets two tickets to fashion week. If (onesocialmedia.com), I have linked you’re a pharmaceutical or medical all of my social media accounts. device salesman, write about bedside When I post on Twitter, it immediately manner. If you sell fitness equipment, appears on my LinkedIn profile page. write about unknown exercises or This generates lots of comments and how to get rid of ten pounds. dialog from my connections. FORMULA: Write about how the How to write scripts for customer wins and you become a compelling YouTube videos. winner in their eyes. Write twice YouTube is the second largest search a week and you will stay “top of engine in the world, and catching up. mind.” Your video posts on YouTube are no There’s still more to come on longer an option. Value messages specific subjects that can influence to your customers, testimonials to others to connect and act. prove your claims and short pieces Stay tuned for how to write that interest and attract viewers are e-mails, subject lines, short speeches, the keys to winning. Choose words an article, your personal commercial wisely, and titles more wisely. There and a book. are 150 to 180 words in a 60-second video, and one to five minutes is the maximum you can expect someone Jeffrey Gitomer is the author of to watch. Make certain your words Social BOOM!, The Little Red Book of Selling and The Little Gold Book of are directed to and help others. If YES! Attitude. President of Charlotte, the words “we” or “our” are in your N.C.-based Buy Gitomer, he gives message, that’s a clue it’s going in the seminars, runs annual sales meetwrong direction. Your subject matter ings and conducts Internet training must have value to someone else or programs on selling and customer it’s not going to get watched. Your service at www.trainone.com. He can title must contain your name and the be reached at (704_ 333-1112 or salesman@gitomer.com. subject, or it won’t get found. © 2011 All Rights Reserved NOTE: I’m YouTube proactive. When I post a new video (I usually record and post my weekly column), I tell everyone on my list. This immediately creates thousands of views and authenticates it for someone who just stumbles on it. My YouTube channel is BuyGitomer. Take a look at the assortment, the titles, the length, the content and the quality of my offerings. At this writing I have more than 1.6 million total views. This is
it was like to have a three-month-long summer savings. Many banks offer a child or student savvacation, they won’t soon forget another part of ings account with incentives like higher interest, back-to-school season: the hefty bill as they send monetary rewards for good grades or matching funds when savings goals are met. This is a good older children off to college. I can speak from experience, as my wife place for your children to contribute, as they will and I have helped put all seven of our children see tangible results from their savings efforts. Coverdell Education Savings Accounts (forthrough college. I emphasize the word “helped” because we didn’t foot the entire bill; instead we merly known as the Education IRA) are another made sure that our children were saving many option that allow contributions up to $2,000 per year and tax-free withdrawals. There are, howyears prior to departing for the dorms. Is your family prepared for the financial ever, limitations: gross income may not exceed $220,000 if you’re married and filing commitment that university requires? jointly, and the annual contribution cap Here are some ways to start saving now per child is $2,000. so you can afford tuition payments in the If you decide to go with one of the future: above savings account options, be sure 529 Plans to ask your bank about automatic trans One of the most popular college fers, which will automatically move savings options today are state-sponsored money from your checking account into investment programs called 529 plans your designated college savings account (named after its section number in the at regular intervals. IRS code). The state sets up the plan Dale Gunther As we look at the state of with an asset management company of affairs with our nation’s debt and the its choice, and allows citizens from any economic stress it has caused, it is clear state to open a 529 account according to the state’s predetermined plan features. Account that there needs to be renewed emphasis on the owners don’t deal directly with the state, but virtue of saving. Government cannot be relied upon to provide financial aid for college students. rather with the asset management company. With 529s, you deposit after-tax money, Many families choose to finance college with but earnings are free of taxes as long as you savings, loans and current income, but with conspend them on higher education-related expens- servative estimates putting the cost of a four-year es, including tuition, room and board. There are public university in 15 years at about $100,000 no income limitations on who can contribute and or more (an Ivy League school like Harvard is most plans let you save in excess of $200,000 per estimated to be closer to half a million dollars), it is up to parents and their children to plan accordbeneficiary. Utah’s 529 program is widely regarded as ingly. The key is to take action and start saving one of the nation’s best. Learn more at uesp.org. today. Investments While you can choose a portfolio type with Dale Gunther is vice chairman of the board of a 529 plan, some investors prefer to manage their People’s Utah Bancorp, the holding company own portfolio. Since tuition costs are rising faster for Bank of American Fork , which is an Equal than inflation, investors may want to consider a Housing Lender and Member FDIC. At the start of portfolio heavily weighted towards stocks while his 16-year tenure as CEO at Bank of American their child is young. Assets can be allocated Fork, the bank had two branches and $80 milinto lower-risk investment vehicles like bonds, lion in assets; it now has 13 offices and more money market accounts and cash as the child gets than $860 million in assets. Gunther has served as chairman of the Utah Bankers Association closer to college age. Whatever strategy you choose, choose and currently serves as an American Fork City Councilman This article should not be considquickly and start investing! Investing just $100 a ered legal or investment advice. Seek legal and month for 18 years will yield $48,000, assuming investment advice from your own qualified profesan 8 percent average annual return. sional.
10
Aug. 15-21, 2011
The Enterprise
Executive Lifestyle Executive Lifestyle Legal Matters Comparing airfares Making a comparison of airline ticket costs is not as easy as you’d think. Consider this scenario (relayed to me by one of my travel agent friends): A client was told by said agent that the least expensive flight to her destination would be on Southwest Airlines. Before booking her trip, this client wanted to do some comparing on her own — which I strongly advocate. She found a fare at delta.com which was $75 lower than the Southwest fare, called the travel agent and insisted he get the airline portion of her trip package on Delta Air Lines. Great! Right? Not so fast. When you added in the fuel surcharges, the Delta fare was only $15 less than the one on Southwest (which includes fuel costs in the price of the ticket). But if she
least $35 more. And while much is made of the Southwest system of not assigning seats, they also do not charge you extra to sit on the aisle or next to a window. American Airlines, for example, charges $5 per direction if you don’t want to be sandwiched in a middle seat. Many of us lust for those bulkhead or exit row seats, because we don’t like having our legs jammed into our pelvis when the person in front of us decides to recline. In those roomier seats it is possible to even stretch out a bit. If you are flying on Delta, that will be $15 per direction, please. Then there are the change fees. Let’s say your job dictates that you need to leave a day later. Well, thank you for the opportunity to get back into your wallet: that will cost you $75 per direction on most of the major airlines, except see SHAFER page 13
Don't miss these three business books, all due out this month
Legal Matters Legal Matters Matters Legal Don Shafer
By Jack Covert Founder, 800-CEO Read
cause some people to leave, but that’s OK — maybe even necessary. As Rieger states, “Imagine a company that is fearless. And then imagine the fear its competitors would feel.” Fear is an issue that both large and small organizations experience. Breaking the Fear Barrier can help people understand how to deal with it before too many barriers get built, and how to maintain good policies and actions that don’t produce fear in the first place.
StaffingMatters Matters Legal
actually wanted to change clothes while on this trip, and couldn’t get everything into a carry-on bag, she would then need to pay the dreaded luggage fee of $25 per direction in order to have a bag checked ($75 if she checked two bags). Mercy! Now the cost was at
Breaking the Fear Barrier: How Fear Destroys Companies From the Inside Out and What to Do About It By Tom Rieger, Gallup Press $24.95, 220 pages, Hardcover How people feel is not determined by the actual amount of the gain or the loss. That’s not what determines its value. Rather, the value of an outcome depends on what they expected, or their own personal “reference point.” Any outcome lower than what they expected will feel like a loss — even if it’s technically a gain. This is a sentence from Tom Rieger’s new book, Breaking the Fear Barrier: How Fear Destroys Companies From the Inside Out and What to do About it, and it’s a great introduction to the theme of the book. When people are afraid, afraid of loss, afraid of change, they build barriers, either personally or in groups. Those barriers presumably keep those inside safe, but cause many problems for those on the outside. Those problems, in turn, create more fear, which inspires outsiders to create their own set of barriers. Multiply this throughout a large organization, and you can understand the scope of the problem that Rieger is addressing. As Rieger points out, not all fear is necessarily bad. It is natural, and often inspiring, to be held accountable and feel the challenge to perform to the best of one’s ability. But fear of losing respect, power or anything that one feels entitled to can cause people to shut down, doing as little as they need to stay unnoticed. This, of course, does not produce growth or innovation. Rieger calls for “barrier busting,” where leaders identify what people are trying to protect and work to shift their focus to the greater good rather than the local process. The results of this might
Real Estate Matters Legal Matters THE CENTER OF IT ALL
HR Matters Legal Matters
INLAND WESTERN R
Retail Real Estate Trust, Inc.
Winning the War for Talent in Emerging Markets: Why Women Are the Solution By Sylvia Ann Hewlett and Ripa Rashid, Harvard Business School Press 288 pages, $35, Hardcover I was a big fan of Sylvia Ann Hewlett’s 2007 book, Off-Ramps and On-Ramps: Keeping Talented Women on the Road to Success. Hewlett is a prominent gender and workplace issues expert, and in that book, she took a much-needed look into a critical problem in our business world: the current career model and its lack of flexibility for talented women. In her new book, Winning the War for Talent in Emerging Markets, written with Ripa Rashid, she turns her attention to the hiring and retention problems inherent with emerging markets and the multinational corporations they spawn, and how women can be the solution to those problems. The situation and challenges for working women in each of these countries varies greatly. In the first half of Winning the War on Talent, the authors analyze the economic, societal and hegemonic trends in each country, then present sub-sections including “A Complex Web of Pulls,” that enumerates the particular challenges of women in each culture, and “Push Factors at Work,” that illustrates the demands of work in see BOOKS next page
11
The Enterprise
Aug. 15-21, 2011
BOOKS
from previous page that particular country, including expected hours, commute times and challenges. In Brazil, women must balance the expectations that come from a machismo culture that still judges a woman’s value by her contribution in the home and by her attention to her appearance. Russia is quite the opposite. Its Socialist history established an expectation that women always work and girls were educated and trained alongside boys. As a result, it is perhaps more difficult for Russian women to create a healthy home life (due to high divorce rates and high cost of living) than a productive work life, though they are still expected to respond to extremely long work hours and an inadequate transportation infrastructure. China is yet another wholly different situation, with elite education highly regarded and work highly encouraged, but the demands of contributing to the livelihood of aging parents as well as parenting high achievers is a nearly untenable situation. In the UAE, despite an increase in women working outside the home, there is still “a formidable range of social and cultural prohibitions” that deters most women. (When your culture discourages you from speaking to male strangers, and requires someone to accompany you, it makes traveling to an offsite meeting rather difficult.) The second half of the book looks at eight “talent magnet” organizations whose policies attract and retain highly qualified and ambitious women throughout these emerging markets: Bloomberg, Ernst & Young, Goldman Sachs, Google India, HSBC, Infosys, PepsiCo India and Siemens. These companies have done the three things the authors suggest in their Action Agenda: • Becoming a talent magnet, i.e., establishing a reputation for being a standout employer of talented women … by tapping into unconventional talent pools or targeting disciplines where they are underrepresented. • Claiming and sustaining ambition among talented women by making women feel valued and providing them with targeted skills and opportunities they need to succeed. • Dealing with pulls and pushes, keeping in mind the priorities for women in the emerging markets context. While you may not work or live in one of these emerging markets, or work in a multinational corporation’s human resources department, this book is an fascinating examination of the lives of women in these very complex and fast-changing societies, and
Shaping order from chaos: designing effective spaces for the ways people work
should appeal to anyone interested in attracting and keeping women employees who have different cultural and personal pulls than their male counterparts in every society. Now You See It: How the Brain Science of Attention Will Transform the Way We Live, Work, and Learn By Cathy N. Davidson, Viking Books 352 pages, $27.95, Hardcover The Internet did not exist in most offices or schools 15 years ago; today, most of us couldn’t do our work without it. It has changed how we do almost everything. Or has it? Cathy N. Davidson makes a strong case in Now You See It that the structure of our educational system and workplace, designed for the industrial age, need badly to be updated — that what made us so efficient in the past is becoming irrelevant and obsolete in the always-on information era. What she attempts to do in her book is offer “a systematic way of looking at our old 20th century habits so that we can break them,” and she does so by looking at the latest brain science concerning attention. If attention suddenly has our attention, it’s because we live in a time when everything is changing so radically that our mental software is in constant need of updating. We have heard many times that the contemporary era’s distractions are bad for us, but are they? All we really know is that our digital age demands a different form of attention than we’ve needed before. This is an important and necessary addition to the conversation about how the Internet is affecting our brains and our culture, and what we can and should do about it. And, though I’m fascinated by the debate between the usual cheerleaders and naysayers, Davidson gladly eschews their dichotomist positions to examine the more complex middle ground of everyday reality and how we can work in it most effectively. The era we are living in is way too complicated to reduce to the current “Internet is making us stupid” argument or its utopian counterpart (“Internet is making us brilliant.”) We all know that neither generalization tells the whole story of our working lives. Business readers will be see BOOKS next page
Designing effective office spaces can bring a company a competitive advantage,Office workers today have more ...stuff … to work with; paper has not decreased, as once thought. In addition, office work itself has changed, as evidenced by new uses of e-mail messages. When sorting, people either pile or file, and create intuitive groupings of their work based on time sensitivity and need for access of files. Persistent information way-finding and visible sharing are ways that worker effectiveness and productivity can be enhanced. By implementing a strategy, companies can best harness knowledge and help office workers get organized and be more effective at work. How people manage information in the workplace has helped to identify common strategies. It also identifies ways individuals tailor these strategies to accommodate their own working styles. It turns out that thriving on chaos has a lot to do with knowing how to thrive on order. Chaos... In his best-selling management handbook, Thriving on Chaos, Tom Peters portrays many of the challenges facing organizations at the close of the 20th century. Rapid and continuous change. Unpredictability everywhere and always. Unprecedented competitive pressure. The race to innovate. The need to go beyond managing change to thriving on it — thriving on a seeming-
ly chaotic economic environment. And these challenges were noted before the Internet exploded onto the scene, accelerating the rate of change and turbulence in the marketplace. To thrive on today’s chaos, organizations are increasingly looking to leverage the power of ideas as the engine of innovation. In many ways, making information and knowledge accessible begins and ends with individuals and their workspaces. If the space is designed to be effective, individuals can fully contribute to their company’s drive to innovate and compete. Everyone in the organization has to “know what they know” — take in enormous amounts of information and keep track of it so they can access what they need and share it with others. This necessitates bringing a level of order to a chaotic, information-flooded environment. ...and order “Getting organized” has traditionally been associated with finding “a place for everything and everything in its place.” Everyone talks about storage — putting things away in containers, drawers and cabinets, out of sight, out of the way. Emphasis is often on aesthetics rather than function — a “clean desk” represents a disciplined person. Messy desks reflect, well, messy minds. It’s no wonder many people begin to feel anxious when the subject of “organizing” comes up. What happens if we consider organizing the work environment as a strategy for thriving on chaos? If we shift emphasis from simply storing information to a focus on effectively managing our knowledge resources? What if we say that how an office appears to others —tidy or messy — isn’t necessarily a reflection of effectiveness? In fact, what’s important is one thing: Can workers access what they need when they need it — and keep the flood of information from overwhelming their ability to work effectively? What does it mean? Managing the explosion of information in today’s workplace starts with the individual. People need the opportunity to learn strategies for organizing their work, how to apply those strategies to suit their goals and individual work styles, and how to organize their work environments to support their organizing style. Companies can support this effort. By designing effective workspaces based on the information management style of each individual, the organization can gain significant headway in helping workers manage their knowledge. Organizations can also provide learning opportunities, reinforce the importance of information management to effective job performance and enable their people to tailor the work environment to accommodate individual approaches to organizing.
Midwest Commercial Interiors 987 S. West Temple • SLC, UT 84101 801•359•7681 •mwciutah.com
12
Aug. 15-21, 2011
The Enterprise
Snap ... crackle ... pop What a week! What a month! Terms like pathetic, shocking, painful, abysmal and costly all apply. One of the two positive recent developments was the release of the July employment data on Aug. 5. After two miserable months of job gains, the U.S. economy did a bit better. The U.S. Department of Labor reported a net gain of 117,000 jobs in July 2011, slightly stronger than the 85,000 net gain expected. In addition, estimated job gains of the two prior months were revised higher by 56,000 jobs. Goods-producing employment rose by 42,000 jobs in July, with gains in manufacturing (up 24,000 jobs), construction (up 8,000 jobs), and mining and logging (up 10,000 jobs). Private sector service providing employment rose by 112,000 jobs in July, led by gains in education and health services (up 38,000 jobs) and professional and business services (up 34,000 jobs).
Overall government employment fell by 37,000 jobs during the month, impacted by 23,000 temporary job losses in the state of Minnesota. 9.1 Percent The U.S. unemployment rate declined to 9.1 percent in July, versus June’s 9.2 percent rate. However, the jobless rate declined only because an estimated 193,000 discouraged workers left the labor force, not exactly a positive reason. Because of the labor force decline, the estimated number of unemployed people dropped by 156,000 to 13.9 million. The current 9.1 percent jobless rate compares to the 9.5 percent rate of one year ago, the 9.5 percent rate of July 2009, and the 5.8 percent rate during July 2008. Keep in mind that roughly 130,000 net new jobs need to be added monthly just to meet the needs of a rising population, just to meet the typical needs of a rising labor force and just to keep the unemployment rate
The Fed’s traditionally vague language as to the direction of monetary policy was “turned on its ear” at this meeting. The FOMC statement suggested that the Fed will keep its federal funds rate — the most important of all short-term interest rates — at its current level of 0-0.25 percent “at least through mid-2013.” That is almost two years from now! The rate has already been at the current historically low level for more than two-and-a-half years. stable. Getting the unemployment rate below 8 percent or 8.5 percent anytime soon is going to be very rough sledding. Oil Plunge Another positive development in recent weeks has been the sharp decline in oil prices. Only two weeks ago oil was trading at $100 per barrel. Global economic slowing and stock market paranoia have led oil down 20 percent — or $20 per barrel — to roughly $80. The oil plunge, should it continue or even stabilize, will allow more dollars to stay in consumer hands in coming months, a positive development for consumers and the economy. Declining prices at the pump are similar to a tax cut. A Weak U.S. Economy As noted previously, downward revisions to U.S. economic growth released on July 29 have changed the game in regard to forecasting. Yes, the U.S. Commerce Department noted that the U.S. economy was weaker in recent years and that the recovery was more pathetic than known before. However, the fact that the economy grew at a revised 0.8 percent real (after inflation) annual rate during 2011’s first half is shockingly bad, especially in light of the massive amounts of fiscal and monetary stimulus coming out of the nation’s capital. It clearly speaks to the fact that American businesses and American consumers have little to no confidence in either the administration or the
Business lending is our business.
Howard G. Holt President and Chief Executive Officer Brighton Bank
Roger Christensen
SVP Business Lending Expert 801-924-3620
Member FDIC
Congress to firmly address this nation’s ills, and put us back on the path to fiscal sanity. More European Fallout Another factor contributing to plunging stock prices has been more and more bad news emanating from Europe. I had noted 18 months ago that worst case fears were that a required Greek financial bailout could trigger similar bailouts in Ireland and Portugal, with fears that such financial contagion could spread to larger European nations, including Italy and Spain. Unfortunately, that’s where we are today. Following bailouts of the three smaller nations, the global focus is now on the ability of Italy and Spain to get and keep their financial houses in order. Hundreds of billions of additional euros could be needed from Germany and France to stabilize their neighbors, putting pressure on the current AAA ratings of those leading European nations. As noted before, you can bet that tens of millions of German and French citizens wish they had never heard of the idea of “European integration.” S&P Slap The United States of America has enjoyed a AAA rating (the highest in the world) since 1917. As you are no doubt aware following last Monday’s global stock market shellacking, that rating was reduced on Aug. 5. To add insult to injury, major rating agency Standard & Poor’s also maintained a negative outlook for the U.S., with a viable chance of another downgrade within two years.
BOOKS
from previous page most interested in the third section of the book, “Work in the Future.” There, Davidson examines how the increase in MBAs and the proliferation of management philosophies affected the literal rise of the hierarchical modern workplace in skyscrapers, with the importance of the corner office and the higher floors where the executives reside, the ubiquity of the middle-manager, and the entry of females into the workforce in lower positions
S&P noted the broken nature of political discussion in Washington, D.C. and suggested that the increase in the debt ceiling and modest adjustments to future government spending growth were insufficient. For the moment, the other two major ratings agencies, Moody’s and Fitch, are maintaining their highest ratings. S&P noted that the fastest any nation has ever returned to a AAA rating was nine years. Given the disastrous nature of politics in the nation’s capital, it is more likely that the next ratings change by S&P will be down rather than up. Note: one can make a very strong case for Congressional term limits after seeing the carnage left by broken political dialogue of the past four to six weeks. The Fed In summary, the Federal Reserve’s Open Market Committee (FOMC) indicated on Aug. 9 its view that economic growth within the U.S. is “considerably slower” than the “moderate pace” language used in prior meetings. The Fed left the door slightly ajar for a third round of monetary stimulus later this year, although many economists and market players hope we don’t get to that point. The Fed’s traditionally vague language as to the direction of monetary policy was “turned on its ear” at this meeting. The FOMC statement suggested that the Fed will keep its federal funds rate — the most important of all short-term interest rates — at its current level of 0-0.25 percent “at least through mid-2013.” That is almost two years from now! The rate has already been at the current historically low level for more than two-and-a-half years. Snap … crackle … pop. Jeff Thredgold is the only economist in the world to have ever earned the CSP (Certified Speaking Professional) international designation, the highest earned designation in professional speaking. He is the author of econAmerica, released by major publisher Wiley & Sons, and serves as economic consultant to Zions Bank.
and for less pay than their male counterparts. That world is slowly fading, but unless you work at a place like Google, the workplace doesn’t look all that different for most of us. Now You See It does a fine job of examining how the structures that exist in our society came into being, how they are (or are not) serving us in the digital era, and how to best restructure our own lives, our education system, and our workplaces to take advantage of how our brains work and adapt to a new paradigm.
SHAFER from page 10
Southwest. Oh, and you will also have to pay the difference between what you paid for the original ticket versus the higher cost of the new ticket, because none of the cheap seats are available on your new date — they sold out right about the time you made your original purchase. Oh, and if that’s an international flight, the change fee goes up to $125 per direction. It all makes you feel kind of warm and fuzzy, doesn’t it? Well, there’s more. In this
13
The Enterprise
Aug. 15-21, 2011 day and age, it’s hard for some of us to imagine, but a huge segment of our population still does not feel comfortable on the Internet, particularly making purchases on the Web. Many people don’t even like the idea of having an electronic ticket. They just don’t feel comfortable without that old-fashioned piece of paper with a page than can be torn off along the perforation line, in spite of the fact that they’ve usually lost or misplaced that chunk of paper more times than they want to mention. Shucks. You’ll be glad to know that it will only cost you $50 to have your very own paper ticket. And you
will also be thrilled that having a real live person issue even an electronic ticket is only going to add another $20 fee. Did I mention that Southwest doesn’t charge you a having-a-real-person-issue-yourticket fee? And here’s more good news from Delta. If you have been saving Skymiles to upgrade your ticket purchase, you cannot upgrade the four lowest priced ticket categories to anything — they don’t qualify, they are not upgradable. Sorry. Please don’t get me started on the use of Skymiles. I mean, 25,000 miles for a domestic ticket? And where can you fly for 25,000
Skymiles? Maybe Toothache, Tenn. or Goatrope, Okla. or Cow Pie, Texas or Needle Nose, N.D. But if you have in mind a place where real live vacationers or people doing business go, such as New York, Chicago or even Denver, Los Angeles or San Francisco, good luck finding anything for less than 45,000 miles. And internationally? The idea of going to Europe for 50,000 miles is a myth. It’s going to cost more like 100,000 or more. No. I’m not talking about business class. This is what you’ll be charged for being one of the sardines back where us peons are found.
But I digress. The whole point I started with was this: when you compare, make sure you include everything in your comparison. Add in all the fees before you make your judgment. Don Shafer has been hosting radio travel shows in Salt Lake City for more than a dozen years, and was taught everything he knows by travel experts he has interviewed. Although some have called him “The Travel Doctor,” he holds a Ph.D. in a totally unrelated field, religion.
14 from page 8 is receiving national attention as a top area for luxury real estate. According to the Park City Board of Realtors’ second quarter report summary, single family home sales are up 24 percent and inventory is down 35 percent compared to last year. • The Salt Lake Board of Realtors presented a $30,000 check to representatives of The Road Home, a shelter for overcoming homelessness. The money was raised at a charity dinner and auction sponsored by the Salt Lake Board of Realtors. More than 400 Realtors and other real estate professionals attended the event and bid on items including autographed portraits, special VIP packages and football tickets to the University of Utah’s first home game as a PAC-12 team.
RESTAURANTS
• Subway Restaurants partnered with the Rescue Mission of Salt Lake for the annual “Day of Giving,” which provides Utah’s homeless with free Subway sandwiches, clothing and other giveaways in Pioneer Park. The event is meant to raise awareness of the Rescue Mission of Salt Lake’s services and benefits to the community. Subway presented a $10,000 check to the Rescue Mission of Salt Lake. • Paul Schmitt, general manager of the Olive Garden in
Aug. 15-21, 2011
The Enterprise West Valley, has been presented with Darden Restaurants’ the Joe R. Lee Diamond Club Award, which is presented annually to general managers throughout North America who demonstrate outstanding results by providing guests with a genuine Italian dining experience and achieve top financial performance in the company’s previous fiscal year. This is the second time Schmitt has received this recognition. • Gunnison resident Blake Newton has been named the recipient of Subway’s Franchisee of the Year award for single unit owners from the chain’s North American markets. Newton was honored for his accomplishments in building sales and increasing profitability while also achieving excellent store evaluations. He was selected from the chain’s more than 12,000 U.S and Canadian franchisees.
Sport Bike Association. TTXGP is an international race series that provides a high-profile platform for development of electric vehicles, enabling technology behind them to be tested in a challenging way. • Solitude Mountain Resort is offering its season pass options, beginning at $35 a day. For an additional $4, a day customer can choose to “rollover” credit from unused days to next season. The Custom Season Pass allows the user to choose which days they want to ski all season. The Family Pak allows adults to split 12 days. Two Juniors are given unlimited season passes, plus a family can choose up to two additional addons such as a spa treatment, demo rentals, ski school lessons and pizzas at the $859 price point. Traditional Season Passes are available with a Mon-Thurs. option for $499 and a full season pass is $999, a reduction of $100 from last season.
at an awards luncheon on Sept. 15 at 1:30 p.m at the Grand America Hotel. Tickets for the event are $75 for members and $85 for nonmembers. The sixteen finalists are: Shawn Adamson, XO Communications; Christine M. Archibald, ManagementPlus; Reyhan Baktur Ph.D, Utah State University; Erin Bolton, Pivot Communications; Wendi P. Coccimiglio, Ascent Alliance Humanitarian; Patricia R. Hall, Goldman Sachs and Co.; Kaye Hanson, Brigham Young University; Sarah B Hiza Ph.D, ATK Aerospace Systems; RueyJen Jennifer Hwu Ph.D, InnoSys; Susan Johnson, Futura Industries; Kristi Knight, Vivint Inc.; Kate Maloney, Costume Craze; Laura Nelson Ph.D, Red Leaf Resources; Karen J. Quinn, ATK Aerospace Systems; Mary Michelle Scott, Fishbowl Inventory and Sarah Harris Watts, Utah Interactive.
Salt Lake City, has selected the 16 finalists for its fourth annual Women Tech Awards. The program recognizes technologyfocused women who are driving innovation, leading technology companies and are contributors to the community. Finalists and award recipients will be honored
has made additions in its corporate office. Jeff Vanderlinden joins as a facility manager; Marco Villano and Melissa Bain join as senior driver recruiters; Tiffany Brewster joins as a customer manager for the intermodal division and Jaymie Morton joins as driver payroll clerk.
SPORTS • TTXGP, a premier electric TECHNOLOGY/ TRANSPORTATION motorcycle championship, has LIFE SCIENCES • C.R. England, a Salt Lake been added to the lineup for • The Women Tech Council, City-based transportation provider, Miller Motorsports Park’s 2011 Bike Fest on Sept. 3 and 4. The motorcycles will join the American Historic Racing Motorcycle Association’s Bonneville Vintage Grand Prix, and Round 6 of the Masters of the Mountains championship, MMP’s local motorcycle racing series organized by the Utah
SHE MAY NOT LIVE TO SEE HER CHILD GROW UP She is running out of breath and running out of time… Thousands of young women are living with a deadly lung disease called LAM — and don’t know they have it. LAM is often misdiagnosed as asthma or chronic bronchitis. There is no known cure. But there is hope. Learn more about LAM.
thelamfoundation.org
15
The Enterprise
Aug. 15-21, 2011
“Utah company finds $200,000 per year of new, unexpected profit!” Now your company can try our profit finding program for FREE. You are guaranteed to find new, unexpected profit through this limited time offer. Call us today for the details.
It’s never been so easy to... “follow the Profit”
As a management team, we knew that our people saw things in their daily tasks that could provide cost- and time-saving measures. Tapping into our valuable employee resources, we believe could provide an anticipated bottom-line savings of $200,000 a year. We are glad to have gone through this training and hope that some of the clients we work with regularly will embrace the same ideology and want to pursue this philosophy as well.”
— Craig Madsen, Partner/Founder, J&M Steel
For more information call 801-738-PRFT (801-738-7738)
16
Aug. 15-21, 2011
The Enterprise
• Aug. 17, noon: “Salt Lake Chamber University — Mixing Four Generations in the Workplace,” an online video course by generational expert Cam Marston. Generational conflict costs billions of dollars in lost productivity to organizations worldwide. The video is designed to reduce workplace conflict and provide managers and supervisors with strategies for dealing with recruiting, retaining and motivating and using generational differences in a positive way. Cost is $99 per group and includes a copy of the whitepaper “The Millennial Workforce: How to Reach Them and Why It’s Important.” Lunch will be served Register at http://slchamber.bizvision.com/ video/3469. • Aug. 17, noon-1:30 p.m.: “Where is Software Revenue Recognition Headed?” sponsored by the Utah Technology Council. Scott Robinson, senior manager at Tanner LLC, will discuss the accounting topic of software revenue recognition. The Financial Accounting Standards Board (FASB) and International Accounting Standards Board will soon be issuing an updated Exposure Draft on Revenue Recognition, revising its June 24, 2010 Exposure Draft. The FASB decided on July 13, 2011 that private companies will have to
comply with the new Revenue Recognition standard (after it’s released and becomes effective) at the same time as public companies, and restating any prior years presented in the year of adoption (retrospective basis.) Location is the Key Bank Tower, 36 S. State St., Suite 600, Salt Lake City. Free to UTC members, nonmembers pay $30. Register at www. utahtech.org. • Aug. 18, repeating Sept. 8 and Nov. 10, 8:30 a.m.-noon: Employment Tax Workshop, offered by the Salt Lake Region Small Business Development Center, Utah State Tax Commission and Internal Revenue Service. Topics to be covered will include employment taxes, types of businesses and their tax treatment, and more. Location is the Salt Lake Community College, Miller Campus, 9750 S. 300 W., Sandy. Free. For more information, call (801) 957-5200 or visit http:// www.irs.gov/businesses/small/ article/0,,id=99179,00.html. • Aug. 18, 8:30 a.m.-4 p.m.: “Internet Marketing Strategies,” sponsored by Bank of American Fork and CEObuilder. Seth Ellsworth, founder of SiteRehab, will discuss how search engine optimization (SEO) and social media efforts can combine to help create a solid Web presence. Ellsworth will also reveal his
• Calendar • seven favorite Internet marketing strategies that attendees will be able to implement immediately. Location is the Riverton branch of Bank of American Fork, 2691 W. 12600 S. Free. Register at bankaf. com/events or by calling (801) 642-3139. • Aug. 18, 7:30 a.m.: Seventh Annual Utah Manufacturers Association Best Practices Expo. Keynote speaker will be Jeff Edwards, president and CEO of EDCUtah. Awards for best practices will be presented to Futura, Autoliv, Firestone Building Products, MEP, UCAT and Hyperion Solutions. Location is Weber State University, Ogden. Cost is $30 for UMA members, $40 for nonmembers, including breakfast and lunch. RSVP to Teresa Thomas by Aug. 14 at (801) 363-3885 or teresa@umaweb.org. • Aug. 24, 11 a.m.-1 p.m.: “Utah’s Mechanic’s Lien Laws and the Changes Made in 2011,” sponsored by Associated Builders and Contractors of Utah. Darrel Bostwick of Bostwick & Price PC will discuss the most recent changes to Utah’s mechanic’s lien statutes, including significant changes to the State Construction Registry, and current statutory and judicial trends. Location is the ABC offices, 2130 S. 3140 W., Suite B, West Valley City. Cost is $30 for ABC members, $40 for nonmem-
bers, lunch included. Nonmembers must pre-pay. Register with Jodi Frank at jfrank@abcutah.org or (801) 708-7036. • Aug. 30 and Aug. 31, noon5 p.m.: 10-Hour Construction Compliance Training, sponsored by Associated Builders and Contractors of Utah. Targeted at entry-level workers, the program is intended to provide a variety of training on construction safety and health. Attendees will receive course completion cards and materials. Location is the ABC offices, 2130 S. 3140 W., Suite B, West Valley City. Cost is $50 for ABC members, $65 for nonmembers, lunch included. Nonmembers must pre-pay. Register with Jodi Frank at jfrank@abcutah.org or (801) 708-7036. • Sept. 8, 6-9 p.m.: Social Commerce Exchange, hosted by Whitehall Ventures. Interactive learning sessions with leading experts and networking opportunities with like-minded businesses will be available. Representatives of Adobe, BlueGrass, KSL.com and others will lead discussions on effective Facebook and Twitter strategies, social content management, social media measurement and mobile applications. Location is the Miller Campus of Salt Lake Community College, 9750 S. 300 W., Sandy. Free, but seating is limited. Register at http://social-
We Mean Business Subscribe or advertise 533-0556 www.slenterprise.com
commerceexchange-6428.eventbrite.com. • Sept. 13, 10 a.m.-noon: “Developing Superior Customer Service,” sponsored by Associated Builders and Contractors of Utah. Henry “Dutch” Hempel, a business consultant for the construction industry, will be the presenter. Location is the ABC offices, 2130 S. 3140 W., Suite B, West Valley City. Cost is $10 for members, $15 for nonmembers, who must prepay. Register with Jodi Frank at (801) 708-7036 or jfrank@abcutah.org. • Sept. 30, 9 a.m.-5 p.m.: Dave Ramsey’s EntreLeadership Nationwide Simulcast Training Event, presented by ChamberWest and hosted by the Salt Lake Community College Jordan campus. Cost is $39. Register at www. chamberwest.org or by contacting Holly at (801) 673-332 or holly@ chamberwest.org. • Nov. 4, 7 p.m.: Utah Technology Council 2011 Hall of Fame Gala. Keynote speaker will be Larry Ellison, founder and CEO of Oracle Corp. Location is the Grand America Hotel, 555 S. Main St., Salt Lake City. A networking session will begin at 6 p.m. Cost is $300 for UTC members, $450 for nonmembers. Register at www.utahtech.org.
Aug. 15-21, 2011
17
The Enterprise
Come and Play Where
Fun is universal! Mariner of the Seas®
7-Night Mexican Riviera Departing from Los Angeles, California
485*
Starting from: $
Freedom of the Seas®
7-Night Eastern or Western Caribbean Departing from Port Canaveral, Florida
549*
Starting from: $
Monarch of the Seas®
3/4-Night Bahamas Departing from Port Canaveral, Florida
169*
Starting from: $
Book any 2010 cruise and receive an onboard coupon booklet
Ask us about Universal Studios packages in conjunction with your 3, 4, or 7-Night cruises departing from Port Canaveral!
For Reservations and Information, Please Contact Your Professional Travel Agent:
Cruise and Travel Masters 4376 South 700 East • Salt Lake City, UT 84107
(801) 268-4470 or (800) 264-0557 www.cruiseandtravelmasters.com
*All itineraries and prices are subject to change without notice. Certain restrictions may apply. Government taxes and fees are additional. ©2010 Royal Caribbean Cruises Ltd. Ships’ registry: The Bahamas. 10019666• 6/29/10
18
Aug. 15-21, 2011
The Enterprise
Franken calls for oversight of ratings agencies With world markets suddenly It was those abuses, he said, sagging under the weight of the that left taxpayers, workers and Standard & Poor’s Aug. 5 down- government “holding the bag” grade of Treasury bonds, Sen. Al while the bankers and ratings firms Franken, D-Minn., is disturbed by walked away with huge profits. the monopolistic power of the rat- “What I was trying to do was ings agencies — and still open this business to more determined to curb their competition,” Franken abuses, as he tried to do said. “And then ultimatelast year with an amendly, as time went on, the ment to the Dodd-Frank track record of accuracy banking reform bill. would be the thing that In an exclusive determined who got what Aug.8 interview for The (contract) and who got National Memo, the to grade (which securiMinnesota Democrat Joe Conason ties). You’d be rewarded said that the misconduct for accuracy instead of of the ratings agencies bribery. Put those alongled directly to the economic catas- side each other — bribery, accutrophe that S&P’s rating decision racy. Accuracy, bribery, hmm.” He has made even worse. Franken laughed. “Which method do you wondered aloud why his proposed think will probably yield a better reforms of the ratings industry product, a more transparent prodshould still be subject to “study” uct?” rather than action by the Securities He recalled, “The problem and Exchange Commission. wasn’t just that (the ratings agen By setting up an independent cies) gave these AAA ratings to federal board to assign ratings subprime mortgage securities. It’s jobs to the agencies — rather that after the banks ran out of than letting them be paid by those subprime mortgages to securitize, who issue the securities they grade they then gave AAA ratings to — his proposal would have sev- bets on subprime. They created ered the industry’s gross conflicts an entire other ‘market’ based on of interest. Known as the “issuer so-called derivatives that allowed pays” model, that traditional rela- the banks to bet on (or against) the tionship let the banks reward S&P future value of those assets. and Moody’s for awarding rubber- “Basically, the banks were stamp AAA ratings to worthless going like, ‘Oh, man, we’ve run mortgage-backed securities (as out of these subprime mortgagethey did for years before the hous- backed securities; we can’t make ing bubble burst). any more money with these things.
Wait a minute. Why don’t we do derivatives of them? Great idea! You know what? We need AAA ratings, though. ... No problem! We’ll just go to our pals, the guys we’ve been paying for these other AAA ratings, and ask them to rate these! Wink wink.” He laughed again. “And then they did those!” The result, said Franken, was the construction of a “house of cards” that became “bets on bets.” To award AAA ratings to those securities was “unconscionable and unbelievable,” he added, “but it created the market that led to this collapse.” In his view, the way to prevent similar abuses in the future is “to open this business to more competition,” with reforms overseen by a board composed mainly of institutional investors, as well as members from the ratings agencies and the investment banking community. Rating firms that are smaller than S&P and Moody’s would have a better chance to compete under such a system, he said, “because they would develop expertise” in certain areas of finance. Big and small firms alike “might be rewarded for their diligence, intelligence and ingenuity” rather than their prejudicial treatment of dubious investment vehicles. “They’d get more business if they’re more accurate and less business if they’re less accurate.” The old-fashioned American way
of doing business? “Yeah, I think there was a time when that was rewarded,” he said sardonically. Franken’s own reward, most recently, was a strange editorial in the Aug. 8 Wall Street Journal, which accused him of protecting the oligopoly enjoyed by the three major ratings agencies. “You know how usually they bend the truth?” he said of the notoriously conservative Rupert Murdoch-owned daily’s editorial page. “Well, this is the opposite of the truth. I was the nemesis of the rating agencies. When my amendment passed, the rating agencies’ stocks went down the next day.” Although the Franken amendment passed the Senate by a substantial margin, with many Republican votes, his proposed reforms were delayed by a twoyear study of the problem now under way at the SEC. “I don’t know why you need to do much of a study on this thing,” he said. “We know what happened. This is like doing a study on whether using steroids is a good idea for ballplayers.” There was Republican opposition to his reforms, especially in the tea party-dominated House. But according to Franken, it was Sen. Chris Dodd, D-Conn. — then the chairman of the Senate Banking, Housing and Urban Affairs Committee — who told him that the ratings agencies needed to be studied further because
“unintended consequences” might result if his reforms were implemented immediately. “I said, ‘What in this bill couldn’t conceivably have unintended consequences?’” he said. “Everything could possibly have unintended consequences.” He laughed again. “We’d never pass anything if it had to be held up to that standard.” And of course, there could be unintended consequences from doing nothing, as well — as we are now learning. Franken said that he doesn’t know how much money the ratings agencies earned from past abuses. “The banks made their money. The ratings agencies made their money. And all of us are left holding the bag, with this high rate of unemployment and the inability of small businesses to get capital, which makes unemployment worse. And they’re still making fortunes now.” Joe Conason’s articles have been published in Harper’s, The Nation, The New Republic, The Guardian (London) and The New Yorker, among many other periodicals in the United States and abroad. He also appears frequently as a commentator on television and radio programs. A winner of the New York Press Club’s Byline Award, he has covered every American presidential election since 1980. Copyright 2011 Creators Syndicate
Aug. 15-21, 2011
19
The Enterprise
A Pyrrhic 'victory' In Don Marquis’ classic satiri- financial crisis than are blaming cal book, Archy and Mehitabel, the President. Mehitabel the alley cat asks Why was there a financial criplaintively, “What have I done to sis in the first place? Because of deserve all these kittens?” runaway spending that sent the That seems to be the pained national debt up against the legal reaction of the Obama administra- limit. But when all the big spending tion to the financial woes bills were being rushed that led to the downgradthrough Congress, the ing of America’s credit Democrats had such an rating for the first time in overwhelming majorhistory. ity in both houses of There are people who Congress that nothing see no connection between the Republicans could what they have done and do made the slightest the consequences that foldifference. Thomas low. But Barack Obama Yet polls show Sowell is not likely to be one of that many people today are them. He is a savvy politiblaming the Republicans cian who will undoubtedly be sat- for the country’s financial probisfied if enough voters fail to see lems. But, by the time Republicans a connection between what he has gained control of the House of done and the consequences that Representatives, and thus became followed. involved in negotiations over rais To a remarkable extent, he ing the national debt ceiling, the has succeeded, with the help of spending which caused that crisis his friends in the media and the in the first place had already been Republicans’ failure to articulate done — and done by Democrats. their case. Polls find more people Had the Republicans gone along blaming the Republicans for the with President Obama’s original
request for a “clean” bill — one simply raising the debt ceiling without any provisions about controlling federal spending — would that have spared the country the embarrassment of having its government bonds downgraded by Standard & Poor’s credit-rating agency? To believe that would be to believe that it was the debt ceiling, rather than the runaway spending, that made Standard & Poor’s think that we were no longer as good a credit risk for buyers of U.S. government bonds. In other words, to believe that is to believe that a Congressional blank check for continued record spending would have made Standard & Poor’s think that we were a better credit risk. If that is true, then why is Standard & Poor’s still warning that it might have to downgrade America’s credit rating yet again? Is that because of the national debt ceiling or because of the likelihood of continued runaway spending?
The national debt ceiling is just one of the many false assurances that the government gives the voting public. The national debt ceiling has never actually stopped the spending that causes the national debt to rise to the point where it is getting near that ceiling. The ceiling simply gets raised when that happens. Just a week before the budget deal was made at the eleventh hour, it looked like the new Republican majority in the House of Representatives had scored a victory by getting the President and the Congressional Democrats to give up the idea of raising the tax rates — and to cut spending instead. But now that the details are coming out, that “victory” looks very temporary, if not illusory. The price of getting that deal has been having the Republicans agree to sitting on a special bipartisan Congressional committee that will either come to an agreement on spending cuts before
Thanksgiving or have the budgets of both the Defense Department and Medicare cut drastically. Since neither side can afford to be blamed for a disaster like that, this virtually guarantees that the Republicans will have to either go along with whatever new spending and taxing that the Democrats demand or risk losing the 2012 election by sharing the blame for another financial disaster. In short, the Republicans have now been maneuvered into being held responsible for the spending orgy that Democrats alone had the votes to create. Republicans have been had — and so has the country. The recent, short-lived budget deal turns out to be not even a Pyrrhic victory for the Republicans. It has the earmarks of a Pyrrhic defeat. Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His Web site is www.tsowell.com. Copyright 2011 Creators Syndicate
4th annual utah’S fineSt presented by the Cystic Fibrosis Foundation
Congratulations to all of our honorees!
Spencer checkettS ESPN 700 Radio
preSton cochrane AAA Fair Credit of Utah
Scott edgar Robert B. Sykes & Associates
kaSey kennington Ogden Prep Academy
Jacque ramoS J Ramos Law Firm
carey Seager Dyer Law Group
greg SummerhayS Workers Compensation Fund
Jennifer Ward Callister Nebeker & McCullough
The Cystic Fibrosis Foundation is pleased to honor outstanding young professionals from across the state as Utah’s Finest 2011. Those selected exemplify strong leadership qualities, are active in volunteer roles and have excelled in the Utah business community. Their fundraising efforts from Utah’s Finest will be quickly translated into assuring the development of the means to cure and control cystic fibrosis and to improve the quality of life for those with the disease. We would like to thank them for their dedication and commitment to support the Cystic Fibrosis Foundation. If you would like to nominate someone as a candidate for 2012, please contact 801-532-2335 or utah@cff.org. For more information on the Cystic Fibrosis Foundation, visit www.cff.org or call 1-800-fightcf.
110740_Utahs_Finest_CFF_Ad_larger.indd 1
7/22/11 9:00 AM