NEW YORK (Reuters) - Volatile markets have saddled U.S. companies with a $409 billion deficit on pension plans, reversing a $60 billion surplus a year earlier, and will cut into earnings in 2009, consulting firm Mercer said.
As of December 31, pension plans among members of the Standard & Poor's 1500 had $1.21 trillion of assets and $1.62 trillion of liabilities, Mercer said in a report released on Wednesday. At the end of 2007, pension plan assets totaled $1.66 trillion and liabilities totaled about $1.6 trillion, Mercer said.
The S&P 1500 is a broad portfolio representing large-cap, mid-cap and small-cap segments of the U.S. equity markets.
The shortfall suggests that more companies will have to pump cash into their pension plans to ensure they can meet their commitments to retirees.
Mercer estimated pension expenses will increase to about $70 billion this year from $10 billion in 2008, reducing overall profitability by about 8 percent.
"The decline in funded status will be capitalized and reflected in corporate balance sheets for many companies," Adrian Hartshorn, a member of Mercer's financial strategy group, said in a statement.
He said this will reduce balance sheet strength and could affect companies' ability to make capital expenses, meet loan covenants and preserve their credit ratings.
Mercer is a unit of New York-based Marsh & McLennan Cos Inc (NYSE:MMC - News), which also runs a large insurance brokerage.
http://finance.yahoo.com/news/US-companies-face-409-billion-rb-13997269.html
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Salmonella outbreak sickens 388 across U.S.: CDC
WASHINGTON (Reuters) - An outbreak of salmonella food poisoning has made 388 people sick across 42 states, sending 18 percent of them to the hospital, U.S. health officials said on Wednesday.
The U.S. Centers for Disease Control and Prevention is trying to trace the source of the outbreak, which began in September. The Department of Agriculture, state health officials and the Food and Drug Administration are also involved.
The CDC said poultry, cheese and eggs are the most common source of this particular strain, known as Salmonella typhimurium.
"It is often difficult to identify sources of foodborne outbreaks. People may not remember the foods they recently ate and may not be aware of all of the ingredients in food. That's what makes these types of investigations very difficult," said CDC spokesman David Daigle.
Daigle did not specify how many people were hospitalized, but the percentage he gave puts that figure at about 70.
"Because foods of animal origin may be contaminated with Salmonella, people should not eat raw or undercooked eggs, poultry, or meat. Persons also should not consume raw or unpasteurized milk or other dairy products. Produce should be thoroughly washed," he said.
Only Ohio state health officials have agreed to have their state named as one of those affected, with an estimated 50 cases.
Every year, approximately 40,000 people are reported ill with salmonella in the United States, the CDC says, but it said many more cases are never reported.
There have been several recent high-profile outbreaks of foodborne illness in the United States, including a strain of Salmonella carried by peppers from Mexico and that sickened 1,400 people from April to August of 2007 and an E. coli epidemic in 2006, traced to California spinach, that killed three.
Salmonella-contaminated dry pet food sickened at least 79 people, including many young children, in October and November.
http://www.reuters.com/article/healthNews/idUSTRE5066E420090107?feedType=RSS&feedName=healthNews
Don't get used to cheap oil, analysts say By JOHN PORRETTO
AP Energy Writer
Iraq's 08 oil revenues about $60 billion
Venezuela reduces oil production
Citgo extends free fuel after Chavez intervention
Falling crude prices squeeze Chavez oil diplomacy
HOUSTON (AP) -- All that money you're saving these days at the gas pump? You might want to put it in the bank.
The same cheap oil that's providing relief to drivers and businesses in an awful economy is setting the stage for another price spike, perhaps as soon as next year, that will bring back painful memories of last summer's $4-a-gallon gas.
The oil industry is scaling back on exploration and production because some projects don't make economic sense when energy prices are low. And crude is already harder to find because more nations that own oil companies are blocking outside access to their oil fields.
When the world emerges from the recession and starts to burn more fuel again, and higher demand meets lower supply, prices will almost certainly shoot higher.
Some analysts say oil could eventually eclipse $150 a barrel, maybe even on its way to $200. In such a scenario, gasoline would easily cost more than the record high of $4.11 a gallon set last summer. Oil trades at about $50 today.
No one knows for sure, but some analysts say the spike could happen as soon as next year, perhaps in 2011 or 2012.
"I think those supply limits will come back to bite with a vengeance," said Sean Brodrick, a natural resources analyst at Weiss Research Inc.
High prices at the pump last summer - more than $4 per gallon for gas on average - helped slash demand for oil. From November 2007 to October 2008, Americans drove 100 billion fewer miles than the year before, according to government figures. The nation's biggest automakers lurched toward bankruptcy as sales of sport utility vehicles and trucks plummeted.
"We wouldn't be bailing out the automobile industry today ... had we not had this crazy situation with oil prices," said Daniel Yergin, chairman of Cambridge Energy Research Associates, a consulting firm, and author of "The Prize," the Pulitzer Prize-winning history of the oil industry.
Oil giants like Exxon Mobil, Chevron and ConocoPhillips have yet to announce their 2009 capital spending plans, but analysts say even the cash-rich companies are likely to shelve some projects.
Already, Royal Dutch Shell has postponed a near-doubling of production in Canada's oil sands - an operation that analysts say only makes economic sense when oil is about $20 a barrel more expensive than it is now. Marathon Oil says it expects to cut capital spending by 15 percent in 2009.
Brodrick said canceled or postponed oil and gas projects could contribute to a drop of 7 percent or more in global oil production this year.
Smaller oil producers could cut spending by 30 percent, said Oppenheimer & Co. analyst Fadel Gheit. The majority of U.S. crude and natural gas is supplied by smaller, independent companies, not the Exxons and Chevrons, and smaller producers have been forced to pull back because of frozen credit markets.
All this comes as the Organization of Petroleum Exporting Countries, which controls about 40 percent of world crude supplies, embarks on its biggest single production cut ever.
It adds up to another round of price shocks for consumers that's probably inevitable, said Bruce Vincent, president of Houston-based Swift Energy Co., an independent producer.
"Demand will start growing, supply will start coming down, and you'll have that intersect again where prices will take off dramatically," Vincent said. "(But) it's not healthy for the economy. It's not healthy for the industry."
Already, the futures markets are pricing in more expensive oil. While a barrel of light, sweet crude for February delivery costs about $50, the market for September oil is already over $60.
Big Western oil companies like Exxon and ConocoPhillips have also been cut off from crude reserves under the control of nationalized oil companies from Saudi Arabia to Venezuela.
Late last year, the International Energy Agency said it will take more than a trillion dollars in annual investments to find new fossil fuels over the next two decades in order to avoid shortages that could choke the global economy.
When the world economy recovers from the current malaise, "Are we going to get another one of these violent cycles where prices overshoot and you get back in the same spiral?" asked Yergin. "Some volatility is inevitable in global commodity markets, but this kind of extreme volatility is bad for everyone. It creates deep wounds."
Another part of the problem, said Judy Dugan, research director for the nonprofit Consumer Watchdog, is that oil companies didn't invest enough in new exploration over the past several years, as they raked in billions in profits.
"They're screaming, 'Drill, baby, drill,' but they didn't invest anywhere near where they should have been investing when prices were high," she said. "Now that prices have crashed, they say prices are too low, knowing full well prices are going to go back up."
http://hosted.ap.org/dynamic/stories/O/OIL_PRICES_FUTURE_SHOCK?SITE=DCUSN&SECTION=HOME&TEMPLATE=DEFAULT
New safety rules for children's clothes have stores in a fit
Barring a reprieve, regulations set to take effect next month could force thousands of clothing retailers and thrift stores to throw away trunkloads of children's clothing.The law, aimed at keeping lead-filled merchandise away from children, mandates that all products sold for those age 12 and younger -- including clothing -- be tested for lead and phthalates, which are chemicals used to make plastics more pliable. Those that haven't been tested will be considered hazardous, regardless of whether they actually contain lead.
Barring a reprieve, regulations set to take effect next month could force thousands of clothing retailers and thrift stores to throw away trunkloads of children's clothing.The law, aimed at keeping lead-filled merchandise away from children, mandates that all products sold for those age 12 and younger -- including clothing -- be tested for lead and phthalates, which are chemicals used to make plastics more pliable. Those that haven't been tested will be considered hazardous, regardless of whether they actually contain lead.
"They'll all have to go to the landfill," said Adele Meyer, executive director of the National Assn. of Resale and Thrift Shops.The new regulations take effect Feb. 10 under the Consumer Product Safety Improvement Act, which was passed by Congress last year in response to widespread recalls of products that posed a threat to children, including toys made with lead or lead-based paint.Supporters say the measure is sorely needed. One health advocacy group said it found high levels of lead in dozens of products purchased around the country, including children's jewelry, backpacks and ponchos.
Lead can also be found in buttons or charms on clothing and on appliques that have been added to fabric, said Charles Margulis, communications director for the Center for Environmental Health in Oakland. A child in Minnesota died a few years ago after swallowing a lead charm on his sneaker, he said.But others say the measure was written too broadly. Among the most vocal critics to emerge in recent weeks are U.S.-based makers of handcrafted toys and handmade clothes, as well as thrift and consignment shops that sell children's clothing."We will have to lock our doors and file for bankruptcy," said Shauna Sloan, founder of Salt Lake City-based franchise Kid to Kid, which sells used children's clothing in 75 stores across the country and had planned to open a store in Santa Clara, Calif., this year.There is the possibility of a partial reprieve. The Consumer Product Safety Commission, which is responsible for enforcing the law, on Monday will consider exempting clothing and toys made of natural materials such as wool or wood. The commission does not have the authority to change the law but can decide how to interpret it.But exempting natural materials does not go far enough, said Stephen Lamar, executive vice president of the American Apparel and Footwear Assn. Clothes made of cotton but with dyes or non-cotton yarn, for example, might still have to be tested, as would clothes that are cotton-polyester blends, he said."The law introduces an extraordinarily large number of testing requirements for products for which everyone knows there's no lead," he said.Clothing and thrift trade groups say the law is flawed because it went through Congress too quickly. By deeming that any product not tested for lead content by Feb. 10 be considered hazardous waste, they contend, stores will have to tell customers that clothing they were allowed to sell Feb. 9 became banned overnight.These groups say the law should be changed so that it applies to products made after Feb. 10, not sold after that date.That would take action by Congress, however, because the Consumer Product Safety Commission's general counsel has already determined that the law applies retroactively, said commission spokesman Scott Wolfson.The regulations also apply to new clothing. That won't be a problem for large manufacturers and retailers, industry experts say, but it will be a headache for small operators such as Molly Orr, owner of Molly O Designs in Las Vegas.Orr has already produced her spring line of children's clothes. She says she can't afford the $50,000 it would cost to have a private lab test her clothing line, so she's trying to sell her inventory at a steep discount before Feb. 10. After that, she is preparing to close her business."We have a son with autism, so we are all about cleaning up the toxins that our children are exposed to," she said. "But I think the law needs to be looked at more closely to see how it is affecting the economy in general."Thrift store owners say the law stings because children's garments often come in new or nearly new, because children typically outgrow clothing quickly.Carol Vaporis, owner of Duck Duck Goose Consignment in New Port Richey, Fla., said her store stocks barely used brand-name clothing from places such as Limited Too and Gymboree."We really provide a service to the community to help people get clothes for their children they otherwise couldn't afford," she said.Families have been bringing more clothes to consignment stores, where they get a chunk of the proceeds, to earn a little cash this winter, she said. She plans to contact her congressional representatives and senators to ask them to amend the law but says there's not enough awareness about the repercussions of the law to force anything to change.Many retailers and thrift stores appear to be unaware that the law is changing. Of half a dozen Southern California children's thrift stores contacted by The Times, only one had heard of the law. Organizations such as Goodwill say they're still investigating how the law will affect them because there is so much confusion about what will be banned.Cynthia Broockman, who owns two consignment stores and a thrift shop in Virginia, recently stopped accepting children's products for resale. That raised the ire of a man who was trying to sell his son's castoffs there and had not heard of the new rules."I think it's not understood by people how sweeping and far-reaching this is," she said. "The ripples that are going to go forth from this are just astonishing."
http://www.latimes.com/business/la-fi-thrift2-2009jan02,0,02083247.story
Homeland Security rules on data collection rile businesses
WASHINGTON — The Department of Homeland Security will collect millions of new electronic records about private planes, imported cargo, foreign visitors and federal contractors as part of an array of controversial last-minute security policies imposed by the Bush administration.Businesses say the policies are costly, and worry that sensitive information could be released if a database is lost or stolen. Some charge the Homeland Security Department with rushing to impose policies and ignoring business concerns."Industry keeps reaching out to (them), but our comments are continually dismissed," said Catherine Robinson, director of high-tech trade policy for the National Association of Manufacturers trade group, which represents 14,000 companies.Homeland Security spokeswoman Amy Kudwa said that by collecting information electronically, the department can run security checks more quickly than with paper forms, and could flag people or cargo that should be barred from the USA. Some changes have been in the works for more than a year.There has been a lot of opposition. The U.S. Chamber of Commerce and four other groups have sued to block a policy requiring federal contractors to send information about employees electronically to the department to verify that they can work legally in the USA. The policy takes effect Jan. 15 and applies to employees working on a federal contract worth more than $100,000.Businesses worry that the department's online system, which some employers now use voluntarily, incorrectly lists legal citizens as ineligible to work, chamber Vice President Randel Johnson said. The chamber wanted more tests before 170,000 federal contractors were forced to use the system. But, Johnson said, "DHS simply has more faith in the system than a lot of our members." On Tuesday, Ed Bolen, CEO of the National Business Aviation Association, criticized as "overly broad" several proposed security rules for 15,000 private jets, such as barring dangerous items from the passenger cabin. The rules, which aren't final yet, would require private-jet passengers to be checked against terrorist watch lists.Companies fear that their business strategies could be compromised if their flight information leaks out, association Vice President Douglas Carr said. "I don't think there's a clear, demonstrated ability to secure this data," Carr said.Kudwa, the Homeland Security spokeswoman, said disputes are inevitable. She said, however, that the government routinely listens to business concerns about security. "We've approached regulations focusing on long-term security risks, which is not something the market necessarily does for itself," Kudwa said.The department has eased some proposals. Dozens of companies and associations protested a plan that would require them starting Jan. 26 to submit detailed information about imported cargo 24 hours before it is loaded on a ship in a foreign port. Robinson of the manufacturers association said the administration agreed to ease some of the data requirements and to reconsider the policy after June 1. "It's still onerous, but it's definitely better than where we started," Robinson said.The administration also eased a policy effective Jan. 12 that requires people flying to the USA from 27 friendly countries to register online three days before their flight, said Steve Lott of the International Air Transportation Association. Visitors who do not register will be allowed in the USA during a phase-in period likely to last months, Lott said."A lot of these programs were not coordinated," Lott said. "They were moving too fast."http://www.usatoday.com/tech/news/techp%20...%20rity_N.htm
Like Giant, Wegmans to offer free antibiotics January 7, 2009 - 8:55amBALTIMORE (AP) - One week after supermarket chain Giant Food LLC announced it would offer free antibiotic prescriptions to its customers, rival Wegmans Food Markets Inc. says it is doing the same.Wegmans' spokeswoman Jo Natale says the program has been in the works for weeks and called the timing of the announcements coincidental. She says the Wegmans program was not a direct reaction to Giant's program.Rochester, N.Y.-based Wegmans will fill prescriptions for nine types of drugs through March 31. The Giant program ends March 21.Wegmans has 72 stores, including five in Virginia and Maryland. Giant is the largest supermarket chain in the Washington, D.C., region with 182 stores and more than 160 in-store pharmacies.___Information from: The (Baltimore) Daily Record, http://www.mddailyrecord.com/
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