It's the kind of turnaround talk that could make Rush Limbaugh's blood boil ...........self-styled uber-conservative automobile retail executive Mike Jackson of AutoNation kicked off the Philadelphia International Auto Show this morning with an impassioned plea for big government.

Jackson, chairman and chief executive of AutoNation Inc., has been in the center of the economic storm.  He's a big-scale car dealer.  And like dealers across the country, his business has taken a massive hit thanks to the Wall Street crash last year that made auto sales virtually screech to a halt.

"We’re in a huge mess, and as an almost Libertarian Republican, the next sentence is very hard to say," Jackson told Philadelphia-area automobile dealers during a speech at the Pennsylvania Convention Center. "We’re not gonna get out of this mess without some big help from Big Brother. Who knows? Before this is all over I may be a Democrat.”

AutoNation has 313 new vehicle franchises in 15 states.   The company used to have 25,000 employees, but with the recession Jackson says he's now down to 21,000.

“This is not a good environment for anyone -  I don’t care who you are. This is an epic, hundred-year event that we’re all living through and the job losses are extremely painful," Jackson said.

Jackson says he likes President Obama and his economic team, calling them "pragmatists" when it comes to finding a way to deal with the economic crisis.  He thinks a massive stimulus package and the government's willingness to help finance consumer loans for cars are essential if this thing is going to turn around by year's end.

Convention Center audio-video technician John Gilroy found the Big Government rhetoric a curious sign of the times.  While taking down a video camera after Jackson had stepped offf the stage, Gilroy muttered to himself: "It's funny how Republicans are changing."  The Havertown man is a registered Republican. 

If there's one thing about uncertain times, it's that they often drive a lot of innovation.

Out of the economic malaise of the '70s came Microsoft Corp. and Apple Inc., two companies that are technology giants now.

So as we prepare to pour lots of concrete and install weather stripping in every school, the nation should rededicate itself to encouraging innovation in its many forms.

Certainly, the federal government funds a lot of worthwhile research in medicine, energy, science and defense. (And yes, some of those funds are spent on questionable studies. U.S. Sen. Tom Coburn in December picked on a $100,000 federal grant to researchers studying how videogame devotees from the good ol' U.S. of A. and China play World of Warcraft.)

Spending billions of dollars more money on research may sound like a good idea, but throwing money at problems doesn't guarantee breakthroughs. Just ask any Pfizer Inc. shareholder who's watched his company spend $30.5 billion on R&D over the last four years and come up well short of any blockbuster medicines.

And thank goodness we don't need to depend solely on the federal government for research money. There are all kinds of funding sources, university-corporate partnerships, and state-driven programs. I know because we receive press releases on them every day. Yesterday brought word of three projects that show how research finds a way to get funded.

Lockheed Martin's King of Prussia operations are partnering with Carnegie Mellon University on a project that sounds as it could benefit that World of Warcraft study. The defense contractor will fund $640,000 on R&D at the Pittsburgh university's Entertainment Technology Center, which has worked with George Lucas' Industrial Light & Magic and videogame maker, Electronic Arts.

Now systems engineering may sound far from cool compared with Hollywood movies and Madden NFL '09. But I can see how it might be helpful for a bewildered systems engineer to have a "natural" conversation with video persona when trouble-shooting, thanks to Carnegie Mellon's Synthetic Interview tool. (As long as Hal, let's call it, doesn't ruin the mission.)

In Newark, Del., the Fraunhofer USA Center for Molecular Biotechnology got an $8.7 million grant for clinical development of an avian influenza vaccine. The funder is the Bill & Melinda Gates Foundation, seeded with money from their Microsoft-generated fortune.

Fraunhofer itself is a nonprofit research organization that is using technology from a for-profit drug developer called iBioPharma Inc., also in Newark. The goal is to produce new vaccines, and iBioPharma will develop it commercially. But the Gates' money means that the technology will be part of the foundation's efforts to bring critical therapies needed in the developing world.

Finally, the Commonwealth of Pennsylvania invested in 49 clean energy and biofuels projects. Many of them involved new solar energy systems for school districts and colleges. (Each dollar spent by the state is supposed to be matched by nearly $4 in private capital.)

But a $255,442 grant awarded to Temple University will be used to develop an electric hybrid/fuel cell vehicle that has an extended range and load. We can only hope if Temple researchers are successful, they'll one day be able to license their innovations to the private-sector. The world gets a new vehicle, Temple gets some licensing income and Pennsylvania officials get bragging rights.

It's the second most expensive asset you own -- a car.  And while a lot of cash-strapped Americans aren't exactly splurging on big-ticket items right now, cars cars cars! are rolling into the Pennsylvania Convention Center for that annual spectacle of highway bling: The Philadelphia International Auto Show.

The Philly car show kicks off Friday with a big media splash before doors open Saturday to the public.  With U.S. automotive sales in the dump and dealers disappearing thanks to the recession, organizers this year are hoping to do more than just draw the car-crazed to Center City.  As Inquirer reporter Al Haas reports, now more than ever organizers are hoping to drive showroom sales with their dazzling display of 700 cars from 40 different manufacturers. 

Whether you love cars, hate cars or are just an old-fashioned news junkie, be sure to check out this blog over the next week.  Inquirer scribes Mike Armstrong and Maria Panaritis, along with philly.com host and producer Brandy Bell, join a slew of photographers, videographers and web personalities who'll be posting stories, photos, video packages and updates from the show.  We'll feed you more than fenders and tailfins.  We'll be talking news and nuggets about a retail sector that touches almost everyone old enough to reach a gas pedal.

Ford Motor Co. is the only one of the Detroit Three not to seek financial help from the federal government.

Even though the Dearborn, Mich. company posted a $5.9 billion net loss for its fourth quarter, Ford said it still doesn't need a bridge loan like the ones tapped by General Motors Corp. and Chrysler LLC.

(Ford's also the only automaker that will hold a press conference on Friday's media day for the Philadelphia International Auto Show. It will show off its 2010 Ford Taurus sedan and 2010 Lincoln MKT crossover.)

Still, the company also said it will draw on all its available credit lines, because it's concerned about the state of the capital markets and the economy. That's $10.1 billion it will put into cash. When you consider that Ford consumed $5.5 billion of cash in the fourth quarter, that new cash won't last two quarters at its current burn rate.

Ford continues to tell investors that it's "on track" to be break-even or profitable in 2011. That's on pretax basis and excluding those dreaded "special items."

Two years is a long time to bleed more red ink.

Many of the steps taken by the Federal Reserve and the Treasury Department over the last year have been designed to restore confidence in the nation’s financial system.

How are they doing? Well, four months into the $700 billion financial rescue plan, the new administration is signaling that it may create a “bad bank” to sop up all the “toxic assets” on bank balance sheets.

Does this sound familiar?

Yes, lots of financial minds were talking about this last fall, including former Treasury Secretary Hank Paulson. That’s originally what the Troubled Asset Relief Program was passed to do. But the strategy was quickly jettisoned by Paulson in favor of recapitalizing banks.

This month, Federal Reserve chairman Ben Bernanke and Federal Deposit Insurance Corp. chairman Sheila Bair floated the idea again of a “bad bank” to landfill and then one day recycle the hazardous securities making the nation’s financial giants ill.

Is this the right move? I don’t know.

Financial stocks rose yesterday, and some market watchers said that indicates investors like the “bad bank” idea.

The federal government did set up the Resolution Trust Corp. in the ’90s to clean up the savings-and-loan crisis. It worked, but without more details, it’s not clear that the Obama team’s “bad bank” is analogous to the RTC.

I do know that Washington’s financial engineers seem to have thrown everything but their laundry tub at the credit crisis. I applaud their willingness to hurl the plumbing now.

But if it doesn’t crack the crisis, we’ll be back to recapitalizing banks. The head of the Congressional Budget Office testified that that would require hundreds of billions of dollars beyond the $700 billion TARP.

How deep is this hole we’re in? Perhaps the most pessimistic view comes from New York University professor Nouriel Roubini, who that estimates financial losses from the credit crisis may hit $3.6 trillion.

I’d suggest Congress pass the $819 billion economic recovery plan as quickly as it can, because an equally huge Son of TARP proposal can’t be too far behind.

Around this time last year, I wrote about the continued growth of DuPont Co., which had issued its financial results amid the noise of a rate cut by the Federal Reserve.

Then as now, the stock market had started the year badly. I had hoped to shine some light on a well-known local company continuing to do well in what was then the start of a recession.

So it’s only fair to take another look. DuPont yesterday reported a net loss of $629 million, or 70 cents per share, for its fourth quarter compared with net income of $545 million, or 60 cents a share, for the same quarter of 2007.

Like other chemical companies, DuPont was confronting daunting economic conditions. Key consumers of DuPont products are the wounded housing and auto industries.

To her credit, DuPont CEO Ellen J. Kullman continues to offer guidance on what she expect earnings to be. For the first quarter, DuPont foresees earnings of 50 cents to 70 cents per share.

But the train wreck that’s become the global economy has convinced many other companies, including Microsoft Corp. and General Electric Co., to halt the practice. That may protect them from missing their public forecasts, but removes a key source of information about the future.

Some experts, including the U.S. Chamber of Commerce, have recommended public companies stop issuing guidance. They claim that companies would be more inclined to run their businesses for the long term rather than try to beat quarterly expectations. Such long-term focus would help their global competitiveness, they say.

The poster child for a company that refuses to issue guidance is Google Inc., which the entire tech world is chasing. (Of course, Google also just repriced stock options as a way of retaining its employees - a practice that infuriates many shareholders who get no such second chance.)

Managements see too much uncertainty in their respective businesses to make a guess they’re willing to release publicly. I can respect that. However, I may lose that respect if they resume issuing guidance once the stock market heads north again.

Venture capital firms are usually chasing the next big thing.

So when they invest less money in fewer companies as they did in 2008, that’s a signal something’s wrong in the business cycle.

The National Venture Capital Association said it was the first annual decline in total venture investment since 2003 - the year after the tech-stock bubble burst.

Nationally, the total amount invested fell to $28.3 billion in 3,808 deals from $30.9 billion in 3,952 deals in 2007, according to the MoneyTree Report released by the trade association and PricewaterhouseCoopers. Investment in the Philadelphia region declined to $749.9 million in 2008 from $844.4 million, but the number of deals rose to 140 from 127.

One trend to cheer entrepreneurs chilled by the credit crunch: the amount of venture capital sprinkled into “seed-stage” companies rose 19 percent to $1.5 billion. Such firms are often still developing their first product, building a management team, and refining their business plan.

The venture association said the amount attracted by seed-stage firms was the highest since 2000.

The Beat Goes On

There’s been a change at the top of CardioNet Inc., the Conshohocken patient-monitoring company that went public last year.

Out as president and chief executive officer is Arie Cohen. A statement issued after the stock market closed Monday said he left to “pursue other interests.”

In as interim president and CEO is CardioNet chairman Randy Thurman. The board of directors will search for a permanent replacement.

Thurman was recruited to CardioNet last July by Cohen, who’d worked for him at another company with Conshohocken ties, Viasys Healthcare Inc. Thurman ran Viasys, building it into a $700 million medical technology firm, until Cardinal Health Inc. bought it in 2007.

If “hope” was the theme of last week with excitement over the inauguration of President Obama, we might be battling “despair” this week.

This being earnings season, companies are telling us how the credit crisis and recession wrecked their financial results for the last quarter of the year.

One example from last week was Philadelphia electronic components maker Technitrol Inc. On Thursday after the stock market had closed, it reported a loss and a revenue decline of 17 percent. Its shares dropped 22 percent the next day to close at $2.19, down 63 cents. Markets are in no mood to be merciful.

Besides earnings, there are a bunch of economic reports, with the most anticipated being Friday’s report on gross domestic product for the fourth quarter. Take your pick of negative numbers. Lots of economists seem to think the U.S. economy shrank by 5 percent. IHS Global Insight forecasts a 5.8 percent decline, telling us to brace for the worst GDP number since 1982.

There is also a two-day meeting on the economy and interest rates by the Federal Open Market Committee. But for once, we won’t be wondering if the monetary chiefs will cut interest rates, because zero is pretty much as low as you can go.

On the Spot

Gus Sauter, chief investment officer of Vanguard Group, is the featured speaker at a 2009 Economic Outlook program sponsored by the La Salle University business school at the Union League, noon-2 p.m., Tuesday. Sauter, who oversees the management of more than $900 billion at the mutual-fund family, will discuss the struggling U.S. economy and concerns over possible inflation. Cost is $55.

Earnings

Tuesday: Carpenter Technology, Destination Maternity, DuPont, Sun Bancorp;

Wednesday: Airgas, Amerigas Partners, Innovative Solutions & Support, Kensey Nash, Sovereign Bancorp, SAP, Sunoco Logistics, UGI;

Thursday: Advanta, Bryn Mawr Bank, Dollar Financial, National Penn Bancshares, Roebling Financial, SEI Investments, TF Financial, Triumph Group;

Friday: Abington Bancorp, Ametek, Kulicke & Soffa Industries, Orleans Homebuilders, Wilmington Trust.

The initial public offering market may be a dog, but one IPO currently pending could be considered a turkey.

Changing World Technologies Inc. uses turkey-processing waste to make renewable diesel fuel oil. Since 1999, the West Hempstead, N.Y., company has done research at the Naval Business Center in South Philadelphia, where it employs seven people.

At a time when few firms are going public, Changing World is seeking to sell 2.75 million shares at between $11 and $15 each. If the shares were to go out at $13, the company would raise $32.75 million, according to an amended prospectus filed with the Securities and Exchange Commission Jan. 20.

While Philadelphia is Changing World’s R&D center, Carthage, Mo., is where it has a full-scale production facility.

The plant is next to a Butterball turkey-processing plant, so you can probably guess where it gets its raw material.
In the nine months ended Sept. 30, Changing World produced nearly 1.1 million gallons of diesel fuel oil. During that same time, it also lost $18.8 million.

All of us may cheer the innovation behind alternative- and renewable-energy firms, but Changing World’s prospectus has some sobering numbers. It says its cash production cost per gallon in Carthage is $11.18. During the first three quarters of 2008, the average price per gallon it received for its renewable diesel? $1.19.

Obviously, it can’t do that forever. With larger production facilities, the company says it should be able to lower its cost to 85 cents to $1.60 a gallon.

New Formation

Moorestown’s Formation Inc. has been acquired by EMS Technologies Inc., an Atlanta maker of wireless- communications technologies, for $40 million in cash.

R. Nim Evatt, president and chief executive officer of Formation, said the 38-year-old developer of wireless-connectivity products had grown rapidly in the last two years. So has its need for working capital, and this deal addresses that.

Evatt said the publicly held EMS intended to maintain Formation’s operations in South Jersey, where it employs 115 people.

Note: This column ran in the Inquirer Wednesday, Jan. 21, 2009, but due to blogger error was not posted until later.