Monday, August 31, 2015

POSTED: Saturday, August 29, 2015, 5:45 PM

My long-ago teacher Ted Hershberg, a scholar of urban growth and decay, liked to point out the simple fact that what sealed the fates of old industrial cities like Philadelphia -- did they decline like Detroit, or move ahead like Boston? -- wasn't how many factories and offices shut down, but how many new employers opened and expanded to replace the departed industries.

How's Philadelphia doing, on the eve of Mayor Kenney?

- We've been losing corporate headquarters: When a colleague asked me recently to name publicly-traded companies that had lately moved their main offices to Philadelphia, I pointed to two -- Hill International, the construction project manager, which moved over from Marlton; and Axalta, the DuPont Co. spin-off brought here by investor Carlyle Group in its recent Pennsylvania period.

POSTED: Saturday, August 29, 2015, 4:34 PM

Has the fight against Islamist terror come to this: law professors critical of U.S. tactics, accused of treason, can face firing, arrest, prosecution, even drone strikes on their offices as they talk to reporters?

The new editors of the National Security Law Journal, published by the law school down at George Mason University in Virginia, say their predecessors "made a mistake in publishing a controversial article" last month by William C. Bradford, now a professor at the United States Military Academy at West Point, N.Y. According to Bradford's richly-footnoted, 180-page piece, dozens of professors who challenge U.S. policy in fighting Islamic militants constitute a disloyal "fifth column" who are committing treason and can legally be punished or killed, for example in their law offices or while at TV studios. The Journal doesn't address Bradford's arguments; it apologizes for the "egregious breach of professional decorum that it exhibits.... We cannot “unpublish” it," but rather "acknowledge that the article was not presentable for publication." See 180-page article here. Highlights:  

Bradford argues that government officials, journalists and lawyers who challenge U.S. policy and practices in our conflicts with violent Islamist groups are furthering the "psychological operations" (PsyOps) agenda of Islamist forces who "know no limits" in their attacks on humanity to gain power. Bradford calls their work "treasonous" because it results in the withdrawal of Western forces from Islamic countries, granting victory to Islamists.

POSTED: Friday, August 28, 2015, 4:58 PM

Raeann Hofkin knows what it takes to meet a payroll.
She wishes Pennsylvania did, too.

Hofkin has worked as payroll manager at a string of Pennsylvania employlers ((currently Mobilex USA)). She's been honored by the American Payroll Assocation and co-wrote two books on how to match worker pay and benefits to spending and legal requirements.

No wonder John Gehman, president of the Upper Perkiomen school board, agreed to let Hofkin, vice president of the unpaid, nine-member board, lay out the history of why local taxpayers are having to pay so much more each year to fund the state Public School Employees' Retirement System, and suggest what to do about it, at a meeting last week in its Pennsburg, Montgomery County hall, between a beanfield and a townhouse development.

POSTED: Friday, August 28, 2015, 12:59 PM

Richest American Warren Buffett and Brazilian billionaire Bernardo Hees agree: There are even more food workers to be laid off, plants to be closed, production lines to be consolidated, suppliers and shippers to be squeezed, at Kraft Heinz Co. and other big, old U.S. supermarket brands.

Buffett's Berkshire Hathaway and Hees' 3G each own about one-quarter of Kraft Heinz, which is implementing 3G's "zero-based budgeting" concepts to cut unneeded costs and presumably boost profits. Investors are buying it, so far: Kraft Heinz has been trading at a fat 21 times earnings, nearly 15 times cash flow (enterprise value/EBITDA).

But there's a big problem: "Fewer people are eating their food," warns veteran food analyst Jonathan P. Feeney, now at Athlos Research's Berwyn outpost. Feeney worries the billionaire squeezers and other "strategic investors" who hope to drain more billions from America's fast-consolidating food factories won't be able to find enough additional stuff to cut, to justify today's inflated share prices.

POSTED: Friday, August 28, 2015, 9:25 AM
Bank of New York Mellon Corp. headquarters. (Photo by Mario Tama (Getty Images)

Four Philadelphia employers plan to cut a total of more than 800 jobs this fall, according to reports filed with the state Department of Labor (see UPDATE to St. Joseph's item):

  - Bank of NewYork Mellon is cutting 280 tech support positions in the old Lits building at 701 Market St., by Oct. 9. (Follows 120 back-office bank job cuts here by Wells Fargo & Co. last winter.)
  - Atkore International, a Harvey, Ill.-based electrical manufacturer , is cutting 217 and "closing" its Northeast Philadelphia plant, 11350 Norcom Rd., by Oct. 5. Atkore, part of Tyco International before its 2010 sale to buyout investor Clayton Dubilier & Rice, announced the closing, plus cutbacks at its Phoenix and Harvey, Ill., factories here. (Tough year for Northeast Philly manufacturing. See also the recent shutdown by Mondelez (ex Nabisco/Kraft) and the pending closure at Perfecseal, each idling hundreds).
  - Amoroso's Baking Co. has confirmed long-delayed plans to close its West Philadelphia plant (as my colleague Harold Brubaker reported earlier this month) and move baking to South Jersey, idling 200 here, by Oct. 6.
  - Saint Joseph's University plans to cut 172 jobs as of Sept. 30. UPDATE: Spokesman Joe Lunardi says this does NOT affect SJU permanent staff but rather "150 part-time student employees and 20 prospective student employees of the Telephonic Research Operation (TRO) in Alumni House that the University’s contract with Marketing Systems Group (MSG) is expiring and the TRO will cease operations on September 30, 2015.") (See also 23 job cuts by that other Catholic college in the city's outer rim, LaSalle University.)

Also, in West Chester, Flextronics International USA says it's cutting 90 jobs in a facility closing by the end of this year. Read the sad list of Pa. layoffs announced this month, here.

POSTED: Wednesday, August 26, 2015, 2:49 PM

Richard Vague, the Philadelphia marketing mogul (Chase credit cards, EnergyPlus) turned investor (Gabriel Investments), political donor (to prominenti of both parties), philanthropist (Penn medical research, Haiti development), and global policy wonk, argued in The Next Economic Disaster, a book I reviewed in the Inquirer last year, that high private debt -- not government spending -- marks economies in decline.

Last winter, while the China stock market was still at record highs, Vague said China's debt-fueled, government-led development had already stalled what had lately been the world's growth economy -- and predicted other countries will slow, too. See my March summary of his article in Democracy Journal here.

On Tuesday, after U.S. stock markets followed China's down for six days, I took Vague to lunch near his Center City home and asked him about China, credit, the threats and opportunities the market slide creates, and why U.S. politicians all sound so backward about what to do. Highlights:  

POSTED: Wednesday, August 26, 2015, 1:05 PM

With corporate headquarters still fleeing Philadelphia  -- Cigna to Connecticut, Destination Maternity to New Jersey, and chemical makers Arkema, Dow Advanced Materials and Sunoco to the Pennsylvania suburbs, to name five publicly-traded companies that have moved their bosses out in the past couple of years -- it's a good time to ask whether Pennsylvania's business tax rates are as unfriendly as critics claim.

Yes -- and no, according to a new report by the Tax Foundation and auditing firm KMPG LLC -- Location Matters: The State Tax Costs of Doing Business. Reviewing firms and facilities 10+ years old (and past the temporary-incentive stage), the report lists Pennsylvania, among the 50 states, as charging the nation's:
  - SECOND-HIGHEST effective state tax rate for corporate headquarters: 23.1%
  - #3 for an independent retail store: 22.9%
  - #5 for a distribution center: 41%
  - #17 for a call center: 22.3%
  - #21 for a research and development facility: 12.5%
But also the: 
  -  FOURTH-LOWEST state tax rate on capital-intensive manufacturers: 4.2%
  - 11th lowest for a labor-intensive manufacturer: 6.6%

In sum: Pennsylvania charges some of the highest taxes to companies based here, warehouses, and local retailers -- but also some of the lowest rates to companies that employ and invest in factory production. (Though the recent Mondelez/Kraft and Hostess bakery closings, and the pending departures of Perfecseal and Amoroso's, all from Philadelphia, each with hundeds of jobs, raise questions about whether we can keep a lot of factory jobs here, either.)

POSTED: Tuesday, August 25, 2015, 12:27 PM

Setting aside its failed Time Warner Cable merger bid, Comcast since 2012 has shifted focus from investing in "traditional cable, satelite and broadcasting" toward "Internet, software and media investments" in an effort to "broaden Comcast's audience base" among viewers and focus on online video, targeted ads and multi-play technology, writes analyst Amy Yong in a report to clients at Macquarie Capital USA. 

After Comcast's recent acquisitions of "high-growth opportunities" This Technology, Buzzfeed, Vox Media, Visible World and FreeWheel, investors are "wondering the next move on the M&A front" by Comcast, Yong adds. The company is well-armed for future deals with a relatively fat balanced sheet, "impressive acquisition track record" and new CFO Michael J. Cavanagh, a longtime member of empire-building JPMorgan CEO Jamie Dimon's inner circle. 

What will Comcast buy next? "We are not boxing out a potential T-Mobile merger," but a long-in-coming Comcast return to mobile telephony will more likely mean more deals with wireless companies "on the fringes" of its markets. Comcast could focus on "extending NBCU franchises globally, particularly in films and parks" where Comcast has made more money than expected. 

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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