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Worst Day for Markets in Two Months as Signals Are Mixed

August 15, 2013 by

The stock market was pummeled on Thursday after two big companies issued grim sales forecasts and economic data added to investors’ concerns that the Federal Reserve would soon start winding down its economic stimulus program.

The Dow Jones industrial average fell more than 225 points, its worst day in nearly two months. Investors also sold off bonds, driving the yield on the 10-year Treasury note to its highest level in more than two years.

Before the start of trading, Wal-Mart Stores cut its estimates for annual revenue and profit, warning that cautious shoppers are spending less. The news followed a disappointing revenue forecast from Cisco Systems late on Wednesday.

In a twist, more signs of resilience in the nation’s economy weighed on the stock market. Reports on inflation and the job market appeared to raise the odds that the Fed would begin winding down its $85 billion monthly program of buying Treasury and mortgage-backed securities as early as next month. Many investors think that the Fed’s effort to keep interest rates extremely low has underpinned the stock market’s record run.

“People are worried that this move up in interest rates will kill the recovery, and we won’t see the anticipated second-half improvement in growth and corporate earnings,” said Alec Young, global equity strategist at S. P. Capital IQ.

The Dow industrials lost 225.47 points, or 1.5 percent, to close at 15,112.19. The Standard Poor’s 500-stock index fell 24.07 points, or 1.4 percent, to 1,661.32. The selling swept across all 10 industry groups in the S. P. 500.

The Nasdaq composite index dropped 63.16 points, or 1.7 percent, to 3,606.12.

“It seems like an overreaction today,” said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.

Mr. Frederick said many investors were speculating that the improving economy meant that the Fed would start pumping less money into the financial system in the coming months. If that results in lower bond prices and even higher yields, it could lead more investors to dump dividend-paying stocks in favor of bonds.

“Some of the stocks getting hit hardest recently are big companies paying dividends,” Mr. Frederick said. Utilities stocks are down 3 percent this week, for example, the worst of the S. P. 500’s industry groups.

The government said on Thursday that the number of Americans applying for unemployment benefits dropped to 320,000 last week, the lowest level since October 2007, two months before the start of the recession.

A slowly improving economy should eventually lead to higher spending and more sales for big companies. But right now, investors are more focused on the Fed’s next move, said Natalie Trunow, the chief investment officer at Calvert Investments.

“There’s this counterintuitive reaction to economic news,” Ms. Trunow said. “Positive data comes out and markets aren’t excited about it. They say, ‘Uh-oh, the stimulus will be removed.’ ”

Wal-Mart fell $1.99, or 3 percent, to $74.41 after the company cut its profit and revenue forecasts for 2013. It also reported second-quarter results that missed Wall Street’s estimates.

Shares of Cisco Systems fell $1.89, or 7 percent, to $24.49, for the biggest drop of the 30 big companies in the Dow, after the company announced plans late on Wednesday to cut 5 percent of its work force, roughly 4,000 employees, as its sales slow.

Cisco’s announcement led to selling in other technology stocks, as it is widely regarded as a bellwether for the entire industry. That is because the company sells a wide range of products to corporations and governments and its fiscal quarters end a month later than most major technology companies’, which gives investors an early look into current conditions.

The Dow has slumped 2 percent so far this week, and the S. P. 500 is down 1.8 percent. However, the Dow is up 15.3 percent for the year so far, while the S. P. 500 is up 16.5 percent. Both indexes closed at nominal highs on Aug. 2.

In the bond market, interest rates climbed, and the yield on the 10-year Treasury note, a benchmark for interest rates on mortgage loans, jumped as high as 2.81 percent in early trading. The selling in the 10-year note eased a bit later in the day and its price ended down 15/32, to 97 22/32, giving it a yield of 2.77 percent, up from 2.71 percent late on Wednesday.

Higher long-term interest rates could cool housing sales. “A sharp increase in long-term rates translates into a sharp increase in mortgage rates,” Ms. Trunow said. “That’s bound to impact the housing market.”

Article source: http://www.nytimes.com/2013/08/16/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

The Boss: How Audubon Society’s Chief Took Wing From Journalism

June 29, 2013 by Leave a Comment

While studying mass communications at what was then San Jose State College, I wrote a story about a man who trained seals and whales at Marine World Africa USA, in Redwood Shores, Calif. The park’s vice president for marketing liked the article and offered me a job that turned into educating schoolchildren and others about the park, animals and nature.

A young staff member and I brought a llama, a falcon and an 80-pound lion cub to a mall one day, and she accidentally let the lion loose. He ran into the mall; I ran after him and found him nose to nose with a toddler in a stroller. I dove for the cub, grabbed him to my chest, and rolled away from the stroller. Luckily, that was the end of it.

I graduated with a degree in photojournalism in 1976. Afterward, I worked as chief photographer for The Longview Daily News in Washington State, then briefly in public relations and for The Associated Press. In 1978, I joined The San Jose Mercury News as its first picture editor and was promoted to managing editor 16 years later. In 1995, Knight Ridder, the paper’s parent company, appointed me as the first vice president for content of its online division, Knight Ridder Digital.

The group was like any Silicon Valley start-up at the time. We had terrific ideas but no business model. We tried publishing an early online magazine, but it was shuttered after 18 months. (The group eventually switched to providing online services through Real Cities, an online information network.) I returned to my job as managing editor at The Mercury News, a post that had been left open, and rose to executive editor in 1999.

A few years later, I started thinking about an encore career. In 2005, I joined the Environmental Defense Fund as executive director and had the chance to work in China and on corporate partnerships with companies including Wal-Mart. I was promoted to president of the Environmental Defense Action Fund in 2003. It was a great learning ground for someone new to nonprofits and environmentalism.

A recruiter contacted me in 2010 about the top position at the National Audubon Society, and I joined that August. My first challenge was to find a unifying message for the society. After a month in which I listened to staff members, chapter leaders and our international partners, a story emerged. Birds’ migratory routes are like four superhighways in the sky, and below them are their rest stops and homes. When you connect all these flyways and habitats, there’s a web of biodiversity, and it’s our job to protect that. I’m not a bird expert, but I’m skilled in figuring out a story. That vision became the basis of our new strategic plan.

We’ve improved our corporate functions, from I.T. to finance, and have engaged more fully with our 470 chapters. They’re our strength. We’re also experimenting with new ways to reach young people, as with apps and games. Two weeks after I started, I joined some chapter members on a birding trip down the Pascagoula River in Mississippi. I had new binoculars and was desperately looking for the birds I was hearing all around me. I saw four people farther down the boat holding their iPhones to the sky. All four were using apps of loud and melodious bird calls to try to attract birds.

As told to Patricia R. Olsen.

Article source: http://www.nytimes.com/2013/06/30/jobs/how-audubon-societys-chief-took-wing-from-journalism.html?partner=rss&emc=rss

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Legal Experts Debate U.S. Retailers’ Risks of Signing Bangladesh Accord

May 22, 2013 by Leave a Comment

A few shareholders at Gap’s annual meeting this week questioned the company’s refusal to sign on to a plan that commits retailers to help finance safety upgrades in Bangladesh, where 1,127 workers died when the Rana Plaza factory building collapsed on April 24.

“In the United States, there’s maybe a bigger legal risk than there is in Europe,” Gap’s chief executive, Glenn Murphy, responded. “If we were to sign onto something that had unlimited legal liability and risk, I think our shareholders should care about that.”

Whether the new accord would subject retailers to substantial legal risks has been debated since nearly three dozen European retailers embraced the plan last week while almost all major American companies shunned it. The plan, called the Accord on Factory and Building Safety in Bangladesh, was forged by retailers, union leaders and government officials overseas.

Labor advocacy groups and other supporters of the plan pilloried the responses by Gap, Wal-Mart and other American retailers that have decided to rely on their own inspection systems rather than join the plan.

Johan Lubbe, a legal adviser to the National Retail Federation, asserts that the Americans’ worries about litigation are legitimate. “The liability issue is of great concern, at least on this side of the Atlantic,” Mr. Lubbe said. “For U.S. corporations, there is a fear that someone will try to impose liability and responsibility if something goes awry in the global supply chain.”

For example, if a Bangladesh factory burns and workers die, the victims’ families, represented by zealous American lawyers, might seize on the legal commitments in the accord to file lawsuits in the United States against retailers that bought apparel from the factory.

John C. Coffee Jr., a professor of corporate law at Columbia University, said American companies generally faced a higher risk of litigation than overseas competitors, largely because the court systems differ significantly. Unlike the system in the United States, courts in Europe generally prohibit class-action lawsuits, do not allow contingency fees for lawyers who win cases and require losing parties to pay legal fees for both sides. Those policies often discourage lawyers and plaintiffs from filing lawsuits.

But Professor Coffee also cited a Supreme Court decision last month that could greatly reduce the ability of overseas factory workers and their families to file lawsuits in United States courts.

“It may be that those retailers who worry about legal liability are pointing to an outdated sense of what liability is for actions taken abroad,” Professor Coffee said. He added that if an accident occurred abroad — for instance, at a factory in Bangladesh — “there is an increasing doubt that the American retailer could be sued in the United States,” because the Supreme Court ruling, Kiobel v. Royal Dutch Petroleum, went far to curb such lawsuits under the Alien Tort Claims Act.

Long before the Bangladesh safety plan was developed, overseas workers had sued American retailers over illegally low wages, 12-hour shifts and the use of guard dogs and barbed wire fences, said Scott Nova, executive director of the Worker Rights Consortium, a university-backed factory monitoring group. In 2003, Gap, Nordstrom, Target, Wal-Mart and 20 other retailers settled a lawsuit for $20 million on behalf of 30,000 garment workers on the Pacific island of Saipan who alleged those abuses.

Mr. Lubbe cited a more recent lawsuit as evidence that American retailers still faced risks. Last year, the University of Wisconsin sued Adidas, demanding that it pay $1.8 million in severance benefits to former workers at an Indonesian factory it used. The factory’s owner had failed to comply with an order to pay those benefits to 2,800 workers who lost their jobs.

Mr. Nova said the University of Wisconsin lawsuit was based on a licensing agreement with more specific obligations than the Bangladesh accord. Adidas had pledged to comply with a labor code of conduct that said it must “ensure that all manufacturers comply” with the code and “provide legally mandated benefits,” such as severance benefits.

Liz Alderman contributed reporting.

This article has been revised to reflect the following correction:

Correction: May 22, 2013

An earlier version of this article misstated the position that Philip J. Jennings holds at Uni Global Union. He is the general secretary, not the executive director.

Article source: http://www.nytimes.com/2013/05/23/business/legal-experts-debate-us-retailers-risks-of-signing-bangladesh-accord.html?partner=rss&emc=rss

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Media Decoder: Gillette Taps Superman to Connect With Customers

May 20, 2013 by Leave a Comment

LOS ANGELES — How does Superman shave? If he is a “Man of Steel,” impervious to nearly everything, what could possibly remove that formidable stubble?

Gillette is posing those questions in an unusually playful promotional campaign tied to the June 14 release of the new movie, “Man of Steel.” It is part of a renewed effort by the men’s grooming company to find new ways of connecting with customers.

Starting on Monday, Gillette will begin soliciting fan theories via HowDoesHeShave.com and rolling out related Web videos from five superhero enthusiasts: the director Kevin Smith; Adam Savage and Jamie Hyneman, hosts of the TV series “MythBusters”; the comedian Bill Nye (“the Science Guy”); and Mayim Bialik, real-life neuroscientist and “Big Bang Theory” actress.

Does he burn off that beard with his heat vision? Or maybe he just whisks his whiskers away with a puff of superhuman breath.

Fans will be asked to vote for their favorite theory.

“The idea is to bring the brand to life in new ways,” said Elliott Wilke, Gillette’s North American brand manager. “We are definitely the best a man can get, but the best Superman can get? We wanted to hear from the superfans.”

Clark Kent is typically the cleanest of clean-shaven guys, but an early trailer for Zack Snyder’s “Man of Steel” showed him with various degrees of facial hair, including a bushy lumberjack beard, and then re-emerging with a smooth face. One of Gillette’s ad agencies, Concept One, spotted that snippet and alerted Gillette, which in turn got in touch with Warner Brothers, Mr. Wilke said.

The movie has a superhero-size marketing campaign behind it. Gillette joins a long line of promotional partners, including Wal-Mart Stores, Twizzlers, the National Guard and Hardees, which will soon introduce a Superman-themed hamburger. But if Superman eats junk food, how does he keep his abs of steel?

BROOKS BARNES

Article source: http://www.nytimes.com/2013/05/20/business/media/gillette-taps-superman-to-connect-with-customers.html?partner=rss&emc=rss

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Wal-Mart Announces Its Own Factory Safety Plan in Bangladesh

May 14, 2013 by Leave a Comment

The Bangladesh Center for Worker Solidarity has provided The New York Times with photos of several documents not disputed by Wal-Mart that were recovered in the building’s rubble, showing that a Wal-Mart contractor from Canada had produced jeans last year at the Ether Tex factory, which had been situated on the fifth floor of the collapsed Rana Plaza building.

While both the contractor and Wal-Mart denied any knowledge of the production orders there, Wal-Mart on Tuesday announced that it would put in place new safety measures at the factories it was using in Bangladesh.

Saying it was unwilling to sign on to the broad safety plan embraced by more than a dozen European companies this week, Wal-Mart said its factory monitors would “conduct in-depth safety inspections at 100 percent” of the 279 factories it uses in Bangladesh and publicize the results on its Web site.

Wal-Mart promised to stop production immediately at factories if urgent safety problems were uncovered and to notify factory owners and government authorities of improvements. But the company, the world’s largest retailer, stopped short of committing to help underwrite the improvements — one of the crucial aspects of the Bangladesh safety agreement adopted by European companies.

On Tuesday, Carrefour, the world’s second largest retailer, Benetton, Marks Spencer and El Corte Inglés, the Spanish department store chain, joined major retailers like HM and Inditex, the parent of Zara, in signing on to the safety agreement. The plan requires companies to have rigorous independent inspections and to help pay for fire safety upgrades, like adding fire escapes, which many factories still lack.

But Wal-Mart and numerous other American retailers and apparel companies have sought to maintain a distance from the April 24 building collapse, and have balked at the worker safety agreement urged by consumer and labor groups.

Wal-Mart maintained on Tuesday that it had no involvement at the Rana Plaza building, playing down the newly discovered documents.

One document, dated May 12, 2012, that was found in the rubble detailed a purchase order by a Canadian company, Fame Jeans, for “dark blue wash,” “skinny fit” jeans to be delivered to Wal-Mart in the fall of 2012. Another document, dated April 27, 2012, discussed pricing for five styles of jeans, with the prices ranging from $3.41 to $4.50 a pair.

But Wal-Mart emphasized that the documents dated back a year. “Our investigation of the Rana Plaza building site after the collapse revealed no evidence of authorized or unauthorized production at the time of the tragedy,” said Kevin Gardner, a Wal-Mart spokesman. He declined to say on Tuesday whether the Ether Tex factory, as well as the Fame Jeans order there, were authorized.

After The Times questioned Wal-Mart about the documents on Tuesday, Alen Brandman, chief executive of Fame Jeans, said in an interview, “It’s very clear that Wal-Mart did not authorize me in any capacity to work within this factory.” He blamed a “rogue employee” for the order, who had decided to use the factory without Mr. Brandman’s knowledge.

He said after that order “no other product came out” of that factory “for us or for Wal-Mart.”

After a fire last November at another Bangladesh garment factory that killed 112 workers, numerous documents showed that six suppliers had clothes made there for Wal-Mart in previous months. Wal-Mart said it had deauthorized the factory because of violations and had terminated its relationship with the suppliers that continued using the factory after it was deauthorized.

Article source: http://www.nytimes.com/2013/05/15/business/six-retailers-join-bangladesh-factory-pact.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Inside Asia: Held Up by Red Tape and Graft

May 6, 2013 by Leave a Comment

MUMBAI — The Hong Kong entrepreneur Ramesh Tainwala spent 18 months operating branded clothing retail stores in India before deciding it was impossible to succeed without paying bribes.

Mr. Tainwala, a 55-year-old expatriate Indian, owns Planet Retail, which held the India franchise rights for the U.S. fashion labels Guess and Nautica and the U.K. retailers Next and Debenhams. He sold the brands last September to Indian businesses.

“Right now it’s not possible to do business in India without greasing palms, without paying bribes,” said Mr. Tainwala, who is also president for Asia Pacific and West Asia for the luggage maker Samsonite. Mr. Tainwala said he had refused to pay bribes to licensing officials, though that could not be independently confirmed.

India is the next great frontier for global retailers, a $500 billion market growing at 20 percent a year. For now, small shops dominate the sector. Giants like Wal-Mart Stores and Ikea won the right to enter the market only last year.

But a daunting array of permits — more than 40 are required for a typical supermarket selling a range of products — pushes retailers to pay so-called “speed money” through middlemen or local partners to set up shop.

In interviews with middlemen and several retailers, Reuters found the official cost for crucial licenses was typically accompanied by significant expenses in the form of bribes. The added cost erodes profitability in an industry where margins tend to be razor thin. It also creates risk for companies by making them complicit in activity that, while commonplace in India and other emerging markets, is nonetheless illegal.

That creates a handicap for foreign operators like the U.S.-based Wal-Mart, the world’s biggest retailer, and the British retailers Tesco and Marks and Spencer, which must comply with anti-bribery laws in their home countries while operating abroad.

A Wal-Mart representative said the company was strengthening its compliance programs, part of a global compliance review that has cost more than $35 million over the past 18 months. Ikea, which is awaiting final approval to enter India, has started assessing the market, a spokeswoman said, adding the group had “zero tolerance” for corruption in any form.

Retail is especially prone to bribery because stores sell multiple types of merchandise, which in India increases the number of licenses and permits needed — a legacy of the so-called License Raj that was largely dismantled during the country’s economic overhaul in the early 1990s.

The Ease of Doing Business survey by the World Bank ranks India 173rd among 185 countries when it comes to starting a business, behind Malawi, Niger, Sudan and Guatemala. In 2012, Transparency International ranked it 94th among 174 countries on its corruption table, a fall from 72nd five years earlier.

“Even for a simple thing like putting up signage in front of your store, you are harassed for money,” said Mr. Tainwala. “There are many bodies regulating that and the permits needed to set up one shop are baffling.”

The License Raj, Mr. Tainwala said, substantially increases costs in a market where sluggish consumer demand, high rent and a currency that has depreciated for more than a year have made it hard for retailers like him to operate profitably. He plans to return when there is more order in the way business is done.

Ais Kumar, head of the western region for the Food Safety and Standards Authority of India, acknowledged that graft existed across government ranks and departments. Many government departments also have staff shortages that cause delays.

“These licenses are required for compliance and safety and not because the government wants to delay or complicate things for anyone. It’s the law of the land and it must be followed,” he said.

He added that the government was striving to put licensing systems online to streamline the process and make it more transparent.

Checks with three retailers, however, showed the online forms still needed to be physically delivered to licensing departments.

Permits needed to open a store range from the routine, like a trade license, to the trivial: lighted shelves require a separate permit, and even a shop window needs a license.

Playing music in the store requires a license. So does selling cosmetics or providing valet parking.

Article source: http://www.nytimes.com/2013/05/07/business/global/07iht-inside07.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Economic View: The Minimum Wage, Employment and Income Distribution

March 2, 2013 by Leave a Comment

I don’t believe that’s because economists care less about the plight of the poor — many economists are perfectly nice people who care deeply about poverty and income inequality. Rather, economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty.

First, what’s the argument for having a minimum wage at all? Many of my students assume that government protection is the only thing ensuring decent wages for most American workers. But basic economics shows that competition between employers for workers can be very effective at preventing businesses from misbehaving. If every other store in town is paying workers $9 an hour, one offering $8 will find it hard to hire anyone — perhaps not when unemployment is high, but certainly in normal times. Robust competition is a powerful force helping to ensure that workers are paid what they contribute to their employers’ bottom lines.

One argument for a minimum wage is that there sometimes isn’t enough competition among employers. In our nation’s history, there have been company towns where one employer truly dominated the local economy. As a result, that employer could affect the going wage for the entire area. In such a situation, a minimum wage can not only make workers better off but can also lead to more efficient levels of production and employment.

But I suspect that few people, including economists, find this argument compelling today. Company towns are largely a thing of the past in this country; even Wal-Mart Stores, the nation’s largest employer, faces substantial competition for workers in most places. And many employers paying the minimum wage are small businesses that clearly face strong competition for workers.

Instead, most arguments for instituting or raising a minimum wage are based on fairness and redistribution. Even if workers are getting a competitive wage, many of us are deeply disturbed that some hard-working families still have very little. Though a desire to help the poor is largely a moral issue, economics can help us think about how successful a higher minimum wage would be at reducing poverty.

An important issue is who benefits. When the minimum wage rises, is income redistributed primarily to poor families, or do many families higher up the income ladder benefit as well?

It is true, as conservative commentators often point out, that some minimum-wage workers are middle-class teenagers or secondary earners in fairly well-off households. But the available data suggest that roughly half the workers likely to be affected by the $9-an-hour level proposed by the president are in families earning less than $40,000 a year. So while raising the minimum wage from the current $7.25 an hour may not be particularly well targeted as an anti-poverty proposal, it’s not badly targeted, either.

A related issue is whether some low-income workers will lose their jobs when businesses have to pay a higher minimum wage. There’s been a tremendous amount of research on this topic, and the bulk of the empirical analysis finds that the overall adverse employment effects are small.

Some evidence suggests that employment doesn’t fall much because the higher minimum wage lowers labor turnover, which raises productivity and labor demand. But it’s possible that productivity also rises because the higher minimum attracts more efficient workers to the labor pool. If these new workers are typically more affluent — perhaps middle-income spouses or retirees — and end up taking some jobs held by poorer workers, a higher minimum could harm the truly disadvantaged.

Another reason that employment may not fall is that businesses pass along some of the cost of a higher minimum wage to consumers through higher prices. Often, the customers paying those prices — including some of the diners at McDonald’s and the shoppers at Walmart — have very low family incomes. Thus this price effect may harm the very people whom a minimum wage is supposed to help.

It’s precisely because the redistributive effects of a minimum wage are complicated that most economists prefer other ways to help low-income families. For example, the current tax system already subsidizes work by the poor via an earned-income tax credit. A low-income family with earned income gets a payment from the government that supplements its wages. This approach is very well targeted — the subsidy goes only to poor families — and could easily be made more generous.

By raising the reward for working, this tax credit also tends to increase the supply of labor. And that puts downward pressure on wages. As a result, some of the benefits go to businesses, as would be the case with any wage subsidy. Though this mutes some of the direct redistributive value of the program — particularly if there’s no constraining minimum wage — it also tends to increase employment. And a job may ultimately be the most valuable thing for a family struggling to escape poverty.

What about the macroeconomic argument that is sometimes made for raising the minimum wage? Poorer people typically spend a larger fraction of their income than more affluent people. So if an increase in the minimum wage successfully redistributed some income to the poor, it could increase overall consumer spending — which could stimulate employment and output growth.

All of this is true, but the effects would probably be small. The president’s proposal would raise annual income by $3,500 for a full-time minimum-wage worker. A recent analysis found that 13 million workers earn less than $9 an hour. If they were all working full time at the current minimum — and a majority are not — the income increase from the higher minimum wage would be only about $50 billion. Even assuming that all of that higher income was redistributed from the wealthiest families, the difference in spending behavior between low-income and high-income consumers is likely to translate into only about an additional $10 billion to $20 billion in consumer purchases. That’s not much in a $15 trillion economy.

SO where does all of this leave us? The economics of the minimum wage are complicated, and it’s far from obvious what an increase would accomplish. If a higher minimum wage were the only anti-poverty initiative available, I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small.

But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time. And pre-kindergarten education, which the president proposes to make universal, has been shown in rigorous studies to strengthen families and reduce poverty and crime. Why settle for half-measures when such truly first-rate policies are well understood and ready to go?

Christina D. Romer is an economics professor at the University of California, Berkeley, and was the chairwoman of President Obama’s Council of Economic Advisers.

Article source: http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

You’re the Boss Blog: Our Vision: Make Sales to End Sweatshops

February 5, 2013 by Leave a Comment

Courtesy of Fashioning Change

Fashioning Change

A social entrepreneur tries to change the way people shop.

There have been a lot of grim stories lately involving the manufacture of clothing.

Over the last few months, there have been factory fires in Bangledesh that have taken the lives of hundreds of men and women who endured depressing sweatshop environments in order to feed their families. These factories were producing products for global brands like Wal-Mart, Disney, and Enyce. And a recent study by Greenpeace International concluded that Calvin Klein, GAP, Zara, Diesel, and other top apparel brands produce clothes that contain high levels of dangerous chemicals.

Does it make sense that these and other brands are allowed to make products that expose people throughout their supply chains — cotton farmers to garment workers to consumers — to cancer-causing and endocrine-disrupting agents that can cause birth defects, learning disorders, and even death? If clothing were food, wouldn’t there be a recall?

In most cases, these brands have little to fear in the way of regulation. What they do fear is a loss of sales – and that is where my start-up, Fashioning Change, hopes to play a role. We have built a marketplace that offers stylish, money-saving, safe, sustainable, and sweatshop-free alternatives. Our goal is to support manufacturers that are doing things right – and to leave the big brands no option but to adopt authentic practices that protect health, the Earth, and human rights. That’s our plan, any way.

When we share that plan with venture capitalists, we are often told, “but shoppers won’t pay more for products that are green or socially responsible.” And we don’t think they should have to. That’s why, in addition to showcasing socially responsible brands, we are using our marketplace to demonstrate that shopping “green” doesn’t have to mean spending more or compromising on style and quality.

To prove our point, we built a feature on our Web site that we call Wear This, Not That (see photo above). Here’s how it works: We look for styles that are trending within mainstream brands, and then we review the Fashioning Change catalog for items that are comparable in price and style. When we find a match, we feature a side-by-side comparison of the Fashioning Change alternative to the mainstream product. Every comparison presents the fashion aesthetics and the price and also highlights the brand’s manufacturing process. Here’s an example, Wear This, Not That: Reuse Jeans vs Guess.

We did an analysis comparing more than 100 products from 27 mainstream brands to the Fashioning Change equivalent, and the data showed that shoppers can save an average of 27 percent with our alternatives. From Black Friday through Cyber Monday, we calculated that shoppers buying through Fashioning Change saved $25,509.84 — the difference between our retail price and what these shoppers would have spent on the mainstream option.

All of this may sound simple but making it happen isn’t easy, especially when you don’t have a huge budget to spend on marketing. To help us connect with each member of our growing audience, we built a targeted e-mail system that reviews shared preferences and site behavior to help us understand what e-mail content is relevant for each person. We use that data to share relevant information with each person who signs up for Fashioning Change. Every day, we work to increase our relevancy to each person so that we can make more sales while reducing pollution and the use of sweatshops.

So far, all of the money we make goes back into building Fashioning Change. My co-founder Kevin and I have forgone salaries until we can get Fashioning Change to profitability (something we look forward to in the near future). In order to live without a salary, I gave up my two-bedroom apartment, sold all of my furniture, and moved into my parent’s guest room. I lived there for more than a year on savings while getting the company started. Now I split time between the Fashioning Change house in Santa Monica and my parent’s house in San Diego. (I also gave up health insurance, which I will discuss in my next post.)

We see fashion as just the beginning for us. We have built a Web platform that will eventually allow us to provide access to authentic, great-looking, money-saving, sustainable, and sweatshop-free alternatives to almost everything that goes on (or in) our bodies, in our homes, or into our communities: clothes, food, detergents, cars, bedding, toothpaste, etc. While we could start adding all different types of products, I believe our success will lie in attacking one vertical at a time. We will see how quickly our vision gains momentum.

Some of the older investors we meet seem skeptical that we can create this mix of business and ethics. We’re looking forward to proving them wrong.

Questions? Thoughts? Lets connect, talk shop, and build some original and meaningful start-ups in the process. You can leave a comment below, or e-mail me at adriana@fashioningchange.com. You can also find me on Twitter at @adriana_herrera.

Article source: http://boss.blogs.nytimes.com/2013/02/05/our-vision-make-sales-to-end-sweatshops/?partner=rss&emc=rss

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Wal-Mart Dismisses Labor Protests at Its Stores

November 24, 2012 by Leave a Comment

The group, OUR Walmart, said there were protests at 1,000 stores in 46 states, ranging from a couple of community supporters’ asking to talk with store managers about raising wages to raucous demonstrations in the Los Angeles, New York and Washington areas that each attracted hundreds of people.

In Quincy, Mass., two dozen workers and their supporters demonstrated during the night, projecting a message on the store’s outside walls that read, “Massachusetts Supports Walmart Workers Rights.” More than 1,000 people — employees, community supporters and members of the clergy — rallied outside the Walmart in Paramount, Calif.; nine were arrested after blocking a nearby street.

OUR Walmart — its formal name is Organization United for Respect at Walmart — claims several thousand store employees as members and said hundreds of them did not report to work Friday in what the group said was a strike.

“In its 50-year history, Wal-Mart has never seen strikes like those we’re seeing today,” said Lynsey Kryzwick, a spokeswoman for OUR Walmart, which works closely with the United Food and Commercial Workers International Union. “It will be hard for Wal-Mart to ignore all these workers and their allies calling for change at Wal-Mart.”

Wal-Mart sought to play down the protests, saying they were largely a made-for-TV event and had hardly affected the company on what it said was its best Black Friday.

“The number of protests being reported by the U.F.C.W. are grossly exaggerated,” said David Tovar, a Wal-Mart spokesman. “We are aware of a few dozen protests at our stores today.” OUR Walmart said that in Massachusetts alone there were protests at four dozen Walmarts.

The retailer said that some demonstrators had been bused from one store to another. Mr. Tovar said that the protesters represented a fraction of the company’s 1.4 million United States employees.

Last week, Wal-Mart asked the National Labor Relations Board for an injunction against the protests, which have occurred sporadically for weeks. Wal-Mart said they violated a federal law that bars unions from picketing for more than 30 days when seeking union recognition.

Nancy Cleeland, the spokeswoman for the labor board, said on Friday that it was not ready to issue an announcement.

OUR Walmart said the protests were aimed at fighting retaliation and not at gaining union recognition. The group filed its own complaint with the labor board, saying that Wal-Mart had violated federal laws against intimidating workers who seek to strike or otherwise protest by saying there could be consequences — in the form of dismissals, demotions or reduction in work hours.

“A lot of people are fearful of retaliation,” said Colby Harris, a three-year Walmart employee in Lancaster, Tex. “A lot of allies have come and spoken up and that’s given the workers a lot of confidence.”

Mr. Tovar said the company did not retaliate and was always ready to hear employees’ concerns. He added, “The large majority of protesters aren’t even Walmart workers.” He said the number of employees who missed their scheduled shifts on Friday was 60 percent lower than Black Friday last year.

The company said it was providing employees who worked their scheduled Black Friday shift a special 10 percent discount off Walmart purchases.

Dan Schlademan, one of the protests’ main organizers and the director of Making Change at Walmart, an arm of the food and commercial workers union, said it was hard to determine how many protests there were nationwide. He said OUR Walmart had commitments from employees and community supporters to stage some type of action at more than 1,000 stores.

“This is open-source striking,” Mr. Schlademan said. “It’s going to take some time to know exactly what’s happening.”

He acknowledged that most of the demonstrators were not store employees but community allies, saying they shared the protesting workers’ goal of pressing the company to improve wages and halt any retaliation.

On a conference call organized by OUR Walmart, Eric Lee, president of the Los Angeles chapter of the Southern Christian Leadership Conference, pledged his group’s support for the effort, not just on Black Friday but in the coming months.

“What’s most inspiring is that we find the workers are standing up themselves for respect,” he said. “They have the support of our entire community.”

Article source: http://www.nytimes.com/2012/11/24/business/wal-mart-dismisses-labor-protests-at-its-stores.html?partner=rss&emc=rss

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Advertising: Marketers, Seeking Family Show, Hold Script Contest

January 23, 2012 by Leave a Comment

The contest sought scripts for 30-minute situation comedies about modern family life. More than 235 scripts were submitted during the contest, which was won by a young freelance writer whose entry, “O’Connell for Congress,” is about a dysfunctional family turned upside down when the father runs for office.

The contest was sponsored by what is known as the ANA Alliance for Family Entertainment. The initials stand for the Association of National Advertisers, the trade organization for marketers. All 34 members of the alliance also belong to the association.

Those members include major ad spenders like ATT, Campbell Soup, General Mills, Johnson Johnson, Kraft Foods, Mars, McDonald’s, Procter Gamble, Verizon and Wal-Mart Stores. The goal of the alliance, which began in 1998 as the Family Friendly Programming Forum, is to encourage broadcast networks to add to their prime-time schedules more shows that can be watched together by parents and children.

The contest is “a great opportunity to encourage the type of programming we feel is important,” said Colleen Milway, global media director at the Campbell Soup Company, and “create buzz and excitement around the idea of supporting family-friendly programming.”

“We want to make sure we’re reaching our core consumer group, moms and families,” she added, and running commercials in shows they like “makes engagement that much greater.”

More than 20 shows on six networks have been supported by the alliance through efforts like a script-development fund, among them “Everybody Hates Chris,” “Friday Night Lights” and “Gilmore Girls.” One, “Chuck,” on NBC, is still running, but will finish its fifth and final season on Friday. “There was a belief there’d be a momentum in the marketplace for family-friendly programming,” said Robert D. Liodice, president and chief executive of the association, but recently “reality programming has begun to push family programming to the back burner.”

“So our coalition has had to re-strategize and take a different tack,” he added, “and out of a lot of different ideas came the contest.”

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The winner, Megan Angelo, of Jersey City, is a freelancer for publications including Glamour, Marie Claire and The New York Times. She receives $5,000 and a chance for her script to be offered to the networks.

“I can’t believe any of this is happening,” said Ms. Angelo, who lists among her favorite sitcoms “It’s Always Sunny in Philadelphia,” “New Girl” and “Parks and Recreation.”

Ms. Angelo, 27, said she learned about the contest from her husband, Erik Parker, a software engineer, who read about it on a comedy blog, SplitSider, that he follows because he is “also a sketch comedian.”

(Now there’s an idea for a sitcom.)

Among the judges of the contest was John Wells, executive producer of series including “ER,” “Shameless,” “Southland” and “The West Wing.” Mr. Wells will be a mentor to Ms. Angelo, working with her on the script.

“There’s always a lot of talented people around who are not in Hollywood making a living,” Mr. Wells said, adding that he was “very taken with the irreverence” of “O’Connell for Congress,” whose title character turns to politics after being far less successful in business than his wife.

Ten or 15 years ago, such a script might not have passed muster as family entertainment, Mr. Wells said, but today “the audience has a much larger definition of what ‘family friendly’ or ‘family viewing’ should be.”

“The idea got a bad rap because it had some political implications,” he added, associated with the term “family values,” but series like “Modern Family” are just as much about “generosity and kindness and love” as traditional sitcoms.

Ms. Milway of Campbell Soup echoed him. “We want to be relevant in today’s time, relevant to consumers as we see them now,” she said, and the company takes “an open-minded approach” in evaluating the content of shows in which it buys commercials.

“Our preference would be more wholesome family programming that doesn’t rise to the level of controversy,” she added, with scripts that “are more meaningful over time and can live on in syndication,” unlike say, a “sensational” reality show that may be “the high-rated program” for only a brief time.

Although the days when Campbell Soup sponsored family series like “Lassie” are unlikely to return, there is a demand for contemporary versions of such shows, George Carey, a marketing consultant, said.

“A lot of advertisers are hypnotized by the allure of narrowly targeted audiences like tween boys born in November under full moons,” said Mr. Carey, chief executive at the Family Room in Norwalk, Conn., a marketing consultancy formerly known as Just Kid Inc.

“But kids and parents are telling us they’re looking for ‘shared solutions,’ ways to come together to have fun,” he added, citing examples like the Nintendo Wii game console, so shows families could watch together would be “addressing a tremendous need.”

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The alliance plans more efforts this year to urge the development of family-oriented series, including working with a network.

Mr. Wells said he was inspired to work on the contest by something that happened when he was starting out as a script writer.

“Danny Arnold ran a very informal scholarship program,” he said, of the writer and producer who created sitcoms like “Barney Miller,” and “I had just finished my degree at U.S.C., and he gave me a small honorarium.

“That was the difference between being a writer or not,” he added.

Article source: http://feeds.nytimes.com/click.phdo?i=26fae797dddb5776a8eb5dcf28c32822

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