Category: Business

Musical jobs between government and corporations still the favorite dance in DC

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Pilot programs and speed-up started in 2002

In 2004, Elsa Murano stepped down from her post as chief of the US Department of Agriculture division that oversees food safety at the nation’s slaughterhouses. Two years later, she joined the board of directors of pork giant Hormel, a company that runs some of the nation’s largest slaughterhouses. Murano received $237,000 in compensation for her service on Hormel’s board in 2014 alone.

This is a classic example of the “revolving door” that separates US government regulators from the corporations they regulate. It’s hardly the most shocking thing I gleaned from the whistleblower-protection group Government Accountability Project’s recent exposé of conditions at three hog-slaughter facilities associated with Hormel. But it’s interesting to think about in light of GAP’s allegations, found in sworn affidavits filed by four USDA inspectors stationed in Hormel-owned plants. Three of the inspectors chose to remain anonymous; the fourth, Joe Ferguson, gave his name.

Their comments focus on three Hormel-associated plants, which are among just five hog facilities enrolled in a pilot inspection program run by the USDA. In the regular oversight system, USDA-employed inspectors are stationed along the kill line, charged with ensuring that conditions are as sanitary as possible and that no tainted meat ends up being packed for consumption. In the pilot program, known as HIMP (short for Hazard Analysis and Critical Control Points-based Inspection Models Project), company employees take over inspection duties, relegating USDA inspectors to an oversight role on the sidelines.

What’s more, the HIMP plants get to speed up the kill line—from the current rate of 1,100 hogs per hour to 1,300 hogs per hour, a jump of nearly 20 percent. The five plants rolled out the new inspection system around 2002, USDA spokesperson Aaron Lavallee said. That’s when Murano, now on the Hormel board of directors, ran the USDA’s Food Safety and Inspection Service. If the privatization-plus-speed-up formula sounds familiar, it’s because the USDA ran a similar experimental program for chicken slaughter for years. After much pushback by workplace and food safety advocates and media attention (including from me), the USDA decided not to let poultry companies speed up the kill line when it opened the new system to all chicken slaughterhouses last year…

All four affidavits offer blistering critiques of the hog version of the pilot program. Three themes run through them: 1) company inspectors are poorly trained and prepared for the task of overseeing a fast-moving kill line involving large carcasses; 2) company-employed and USDA inspectors alike face pressure from the company not to perform their jobs rigorously; and 3) lots of unappetizing stuff is getting through as the result of 1) and 2)…

…The USDA’s Food Safety and Inspection Service, of course, continues to defend the pilot program. But then there’s its cozy ties to industry—in addition to Murano’s leap to Hormel, FSIS’s then-chief of staff flew the coop to the National Turkey Federation in 2011, and another high official bolted to work for meat processor OSI Group just this month. Given the tasty meat-industry opportunities that evidently await the USDA’s food-safety administrators, I take FSIS’s defense of the HIMP program in the face of these sworn statements with about as much salt as you might find in a slice of Hormel’s signature product, Spam.

RTFA for all the unappetizing details.

Our government’s standards for bureaucrats continue as the sloppiest excuse for honesty and integrity in the Western world. The revolving door for regulatory managers is as porous as the shuttle-dance between Congress and corporate lobbying.

Yes, I’m old enough to remember when American conservatives were as diligent as American liberals at fighting for honesty in government. While I’m not always certain of the level of dedication coming from the vaguely Leftish members of the Democrat persuasion – today’s Republican conservatives have clearly established their only target in so-called government reform is to bring government to its knees. A position already well-populated by most members of Congress before their corporate masters.

Currency manipulation leads to unintended consequences

Switzerland’s decision to lift the cap on the franc’s value against the euro has had unexpected consequences – in the form of intercepted pizza deliveries.

Swiss people looking for a bargain have been dialling up restaurants across the border in Germany, but now the authorities have had enough…

Uli Burchardt, the mayor of Constance, which borders Switzerland to the northeast, told the publication that German vans have been stopped by Swiss customs officials after it was discovered they had been delivering up to 60 pizzas at a time. And fast food is not the only thing the Swiss have been seeking elsewhere, as people cross the border to do their weekly shop and even visit the dentist.

Cripes. There are dentistas in Mexico who have public school contracts in Arizona and California.

Following the decision to lift the €1.20 cap last month, the franc shot up by 40 per cent against the euro. The franc also rose 30 per cent against the dollar and 15 per cent against sterling. In short, the Swiss can now get more for their money.

However, there is concern that businesses will be negatively impacted by the strong franc. Eurozone companies that buy their products in Switzerland are at risk of being priced out of the market, while Swiss businesses situated on the border may find themselves passed over in favour of their perceived better-value eurozone counterparts.

Interesting – and eventually acceptable when the situation stabilizes. Not out of line with long-term commerce in cross-border towns along the US-Canadian border or the US-Mexican border.

Of course, hypocrites in government can’t pass up an opportunity to whine for domestic political advantage. So, both the White House and Congress whine about so-called Chinese currency manipulation when the biggest fraud in Asia comes from the Bank of Japan. As it always has.

Wal-Mart discovers that treating employees like serfs doesn’t work

Last week, we learned that Wal-Mart was giving the lowest paid of its hourly employees a raise. In a blog post, Wal-Mart Chief Executive Officer Doug McMillon said that as of April, the company will pay a minimum of $9 an hour. That is $1.75 more than the federal minimum wage of $7.25, which has been unchanged for almost six years. Next February, Wal-Mart’s lowest hourly rate will rise to $10. All told, about a half-million Wal-Mart workers in the U.S. will be affected.

There has been lots of theorizing about why the nation’s largest retailer did this: See this, this and this. But I have a much simpler explanation: The Wal-Mart business model is broken.

As in any complex situation, there are many nuances and wrinkles: This was inevitable; state minimum-wage laws had already mandated those minimums (or higher) for at least two-thirds of the employees in Wal-Mart’s stores. In the years since the last federal minimum-wage increase, many of Wal-Mart’s employees had fallen below the poverty level and the strengthening economy has made it harder to attract and retain employees.

There is also the issue of the negative PR generated by Wal-Mart’s low, low wages. As we discussed back in 2013, many of its full-time employees receive a full array of federal and state welfare. Wal-Mart has become the nation’s largest private-sector beneficiary of taxpayer-supported public assistance (see “How McDonald’s and Wal-Mart Became Welfare Queens”). Indeed, the U.S. taxpayer has been subsidizing the wages of this publicly traded, private-sector company to the tune of $2.66 billion in government largess a year.

Although many factors contributed to the move, the simple reason for the increase is because Wal-Mart has stopped growing. Same-store sales have been little changed or declining for some time now. When we look at the underlying causes, the company’s workforce, and how it is managed, are the prime suspects…

Labor is seen as a cost driver rather than a sales driver. Managers do not have much direct control over sales, almost never making decisions on merchandise mix, layout, price, or promotions. But managers do have control over payroll costs and are evaluated regarding whether they meet weekly or monthly targets for payroll as a percentage of sales. At times these pressures have been such that Walmart managers have put pressure on employees to work off the clock.

With a bonus structure designed to drive down labor costs, guess what Wal-Mart managers did?

Cutting on salary and benefits, however, didn’t necessarily lower costs. About 44 percent of Wal-Mart’s hourly staff turns over each year. That’s a lot of people, because the company employs 2.2 million workers worldwide. Hiring replacements is a costly and time consuming process.

Consider competitors such as Costco: It has average hourly wages of $20 and a turnover rate of “17% overall and just 6% after one years employment,” according to the Harvard Business Review. HBR estimates the full cost of “replacing a worker who leaves is typically 1.5 to 2.5 times the worker’s annual salary.” That is no small chunk of change.

My favorite Recovering Republican, Barry Ritholtz…always my first read at Bloomberg news sites.

Behavior rooted in the attitudes and analysis of 19th Century Republican royalty ends up unproductive pretty consistently. Enjoying the fruits of the economic crash provoked by the financial-real estate band of thieves and frauds, Walmart was able to draw its serfs from the supersized pool of unemployed, underemployed and maybe-never-again-employed made accessible by free market economic ideologues.

But, just as those who don’t study history are doomed to repeat mistakes, those who don’t include economics studies as part of understanding history are doomed to repeat the biggest mistakes before their competitors. How much time do you spend shopping at Sears, Borders or Radio Shack? Driving there in your Oldsmobile.

Not paying your employees enough to shop at your own store is a second-order issue. One that Republicans couldn’t care less about. An example of pig-headedness masquerading as fiscal conservatism.

Walmart appears to be trying to enter the 20th Century – if not the 21st. Anyone think the Walmartians in Congress will learn from their example?

Golly — Climate change denier only received $1.2 million in payoffs

For years, politicians wanting to block legislation on climate change have bolstered their arguments by pointing to the work of a handful of scientists who claim that greenhouse gases pose little risk to humanity.

One of the names they invoke most often is Wei-Hock Soon, known as Willie, a scientist at the Harvard-Smithsonian Center for Astrophysics who claims that variations in the sun’s energy can largely explain recent global warming. He has often appeared on conservative news programs, testified before Congress and in state capitals, and starred at conferences of people who deny the risks of global warming.

But newly released documents show the extent to which Dr. Soon’s work has been tied to funding he received from corporate interests.

He has accepted more than $1.2 million in money from the fossil-fuel industry over the last decade while failing to disclose that conflict of interest in most of his scientific papers. At least 11 papers he has published since 2008 omitted such a disclosure, and in at least eight of those cases, he appears to have violated ethical guidelines of the journals that published his work.

The documents show that Dr. Soon, in correspondence with his corporate funders, described many of his scientific papers as “deliverables” that he completed in exchange for their money. He used the same term to describe testimony he prepared for Congress…

The documents were obtained by Greenpeace, the environmental group, under the Freedom of Information Act. Greenpeace and an allied group, the Climate Investigations Center…

Historians and sociologists of science say that since the tobacco wars of the 1960s, corporations trying to block legislation that hurts their interests have employed a strategy of creating the appearance of scientific doubt, usually with the help of ostensibly independent researchers who accept industry funding.

Fossil-fuel interests have followed this approach for years, but the mechanics of their activities remained largely hidden…

Environmentalists have long questioned Dr. Soon’s work, and his acceptance of funding from the fossil-fuel industry was previously known. But the full extent of the links was not; the documents show that corporate contributions were tied to specific papers and were not disclosed, as required by modern standards of publishing.

Hypocrites and liars defame their scientific credentials – while scumbag politicians who never have deserved respect use them to justify corrupt practices. There are damned few of the former – witness the overwhelming majority of collective and individual researchers who have defined the problems of climate change we face. The latter? Well, Congress and especially the majority of Republicans in that cesspool have a lower acceptability rating than Adolf Hitler and Bubonic Plague.

And the plague is innocent of decision-making.

Popular soda ingredient poses cancer risk

Public health researchers have analyzed soda consumption data in order to characterize people’s exposure to a potentially carcinogenic byproduct of some types of caramel color. Caramel color is a common ingredient in colas and other dark soft drinks. The results show that between 44 and 58 percent of people over the age of six typically have at least one can of soda per day, possibly more, potentially exposing them to 4-methylimidazole (4-MEI), a possible human carcinogen formed during the manufacture of some kinds of caramel color.

Building on an analysis of 4-MEI concentrations in 11 different soft drinks first published by Consumer Reports in 2014, researchers led by a team at the Johns Hopkins Center for a Livable Future (CLF) estimated exposure to 4-MEI from caramel-colored soft drinks and modeled the potential cancer burden related to routine soft drink consumption levels in the United States.

“Soft drink consumers are being exposed to an avoidable and unnecessary cancer risk from an ingredient that is being added to these beverages simply for aesthetic purposes,” says Keeve Nachman, PhD, senior author of the study…”This unnecessary exposure poses a threat to public health and raises questions about the continued use of caramel coloring in soda…”

While there’s currently no federal limit for 4-MEI in food or beverages, Consumer Reports petitioned the Food and Drug Administration to set limits for the potential carcinogen last year. It also shared the findings with the California Attorney General’s office, which enforces the state’s Proposition 65 law aimed at reducing consumers’ exposure to toxic chemicals. Under this state law, any food or beverage sold in the state that exposes consumers to more than a specific amount of 4-MEI per day requires a health-warning label.

Another one I don’t have to worry about. I actually keep most New Year’s Resolutions as long as I limit myself to one at a time. Make it simple. Make it achievable.

A number of years ago I stopped consuming any carbonated beverages.

WV oil train derailment, explosion, fire — those were the new “safer” tank cars


Click to enlargeAP Photo/Marcus Constantino

The fiery derailment of a train carrying crude oil in West Virginia is one of three in the past year involving tank cars that already meet a higher safety standard than what federal law requires – leading some to suggest even tougher requirements that industry representatives say would be costly.

Costly to who?

Hundreds of families were evacuated and nearby water treatment plants were temporarily shut down after cars derailed from a train carrying 3 million gallons of North Dakota crude Monday, shooting fireballs into the sky, leaking oil into a Kanawha River tributary and burning down a house nearby. It was snowing at the time, but it is not yet clear if weather was a factor.

The fire smoldered for a third day Wednesday. State public safety division spokesman Larry Messina said the fire was 85 percent contained.

The train’s tanks were a newer model – the 1232 – designed during safety upgrades voluntarily adopted by the industry four years ago. The same model spilled oil and caught fire in Timmins, Ontario on Saturday, and last year in Lynchburg, Virginia.

A series of ruptures and fires have prompted the administration of President Barack Obama to consider requiring upgrades such as thicker tanks, shields to prevent tankers from crumpling, rollover protections and electronic brakes that could make cars stop simultaneously, rather than slam into each other.

If approved, increased safety requirements now under White House review would phase out tens of thousands of older tank cars being used to carry highly flammable liquids.

Between “optimized profits” and bought-and-paid-for elected officials ranging from the state level to the hog trough that is Congress – railroads and oil companies figure they may as well be self-insured instead of making life a little safer for folks who live near the tracks. It’s as simple as that.

Which means it takes pressure from other ordinary folks around the country to get improved safety.

Apple’s 25-year solar agreement will provide 130MW of clean energy


Apple’s new Campus 2 – under construction in Cupertino, California

Apple’s landmark solar power deal…is a long-term sustainable energy solution that should generate enough to power essentially all of the company’s California operations, including the upcoming “spaceship” Campus 2, by the end of 2016.

The green energy will be purchased from First Solar, Inc., through an $848 million agreement that will last for at least 25 years, making it the largest of its kind in the industry. First Solar will be providing electricity through its forthcoming 2,900-acre California Flats Solar Project in Monterey County…

In total, the solar plant will output 280 megawatts of electricity, 130 megawatts of which will be bought by Apple. The remaining 150-megawatt capacity will be sold to Pacific Gas & Electric under a separate long-term power purchase agreement…

Cook said…that Apple will buy enough electricity to power nearly 60,000 California homes. That’s enough to offset the electricity used by Apple’s upcoming Campus 2, as well as all 52 Apple retail stores in the Golden State, and its data center in Newark.

The Apple CEO also made it clear that climate change is a very serious issue for him and his company, which is why they are taking the lead on renewable and sustainable energy. Cook also noted to investors that the agreement makes sound financial sense as well, as the $848 million deal will result in “very significant savings” on the cost of energy.

So, the most valuable corporation in the world says it makes economic sense to move eletricity generation away from fossil fuel, away from coal and oil.

Congressional pimps and cowards, Republican conservatives and Blue Dog Democrats, bleat this isn’t possible.

Which side are you on?

This ship cost you and me $15 million – US Navy is selling it for $180K


Click to enlarge

Any millionaire can buy themselves a fancy yacht, but if you want a conversation piece … well, it helps if it has a story behind it, and the Lockheed Martin-built Sea Slice certainly does. Launched in 1996 by the US Navy as a military support vessel, the experimental watercraft features a unique hull design that reportedly allows it to remain as stable as a conventional ship three times its size. It cost $15 million to design and build, but you can have it now for the low, low price of just $180,000…

A regular SWATH boat has two hulls, kind of like a catamaran. Whereas a catamaran’s hulls resemble skinnier versions of a conventional single hull, however, a SWATH’s are more like cylindrical pontoons that sit completely below the surface. The struts that connect those hulls to the rest of the boat are quite narrow, thus minimizing volume at the sea’s surface, where all the wave energy is located. Because the hulls themselves sit deeper in the water, they’re not affected much by the waves.

In the case of the Sea Slice, there are four shorter teardrop-shaped hulls – two on each side, one behind the other. Apparently this modification reduces waves caused by the boat, along with hydrodynamic drag. That drag reduction allows it to travel at higher speeds for a given amount of horsepower, as compared to other SWATH boats of a similar size and displacement.

The 105-ft long, 55-ft wide, 180-ton watercraft features two 3,480 hp diesel engines, two 180-kW Caterpillar diesel electric generators, and (if its specs are still the same as they were when it was first built) a top speed of 30 knots. There’s no word on how many people it can accommodate, although judging by the photos, there are at least six bunks. It also has a full galley, shower-equipped bathroom, plus a washer and dryer.

Anyone vetting prospective buyers to see if they’re fronting for Mexican drug cartels – or worse?

Improbable Research — jet-powered maple seed drone

In 1992, Litos et al. patented their bio-mimic throw-in-the-air toy called the ‘Autorotative Flyer’. It might not occur to everyone that the passive toy could be updated, and militarized, with the addition of a supersonic jet pack. But occur it did to high-tech weapons manufacturer Lockheed Martin Inc. which has just received a US patent for its Active Maple Seed Flyer.

The flying jet-seed, which can be used for transporting a miniature video camera for remote surveillance purposes, can also eject an (unspecified) ‘payload object’ on demand. The (unspecified) ‘payload object’ carries an adhesive causing it to stick to surfaces when it lands.

The remote-controlled, 10 gram, 3.5 cm long vehicle can fly for 20 minutes or so, and spins 250 times per second thanks to its supersonic jet thruster. Onboard (or offboard) electronics can de-spin the resulting images says the patent. For the convenience of the human-in-the-loop the seeds come in a blister-pack of 5 or more.

Martin Gardiner asks, “Is this the first time that a children’s toy has has been adapted to form a military device – rather than the other way around?”

My guess is probably not. Different age groups is all.