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Why are these younger people, meaning today's nonelderly, spending more? Answers range from the declining stigma of antidepressants and the emergence of expensive treatments where the patients are mostly middle-aged, such as angioplasty for heart patients, to the rising incidence of chronic disease and disability among the under-65 population. Between the mid-1980s and late 1990s, diabetes increased by 70% among people in their 30s, and by 40% among people in their 40s. The higher spending can also be traced to better medical technology, more consumer awareness of and demand for powerful drugs and state-of-the art treatment. The Brandeis researchers believe that between 2000 and 2012 growth in hospital spending would increase 75%, versus just 55% forecast by the U.S. government. The authors also estimate that the U.S. would need between 18% and 28% more hospital beds, far higher than many estimates. Other researchers at Rand Corp. see a huge rise in nursing-home costs, some 10% to 25% higher than current government projections, much of which would be borne by states through the Medicaid program. To be sure, not everybody predicts that tomorrow's elderly will really be so sick. Analysis by Kenneth Manton of Duke University, among others, has shown that rates of disability among the elderly declined from 1982 to 1989, and then declined further during the 1990s. Some health-care experts think the trend isn't about to reverse. And, the increased detection and treatment of disease could help rein in costs over the long term, although experts disagree on this point.
Paul Glover, Verizon's product manager for billing services, said decisions to stop billing for vendors are based primarily on the number of complaints the company receives internally, and not on findings by the FTC. "Our policy is to respond to the customer complaints that we get," Glover said. "We assume that the customer reads the bill. When I get my bill, I read it." Local phone carriers routinely provide billing services for thousands of companies -- the vast majority of them legitimate. None of the major phone companies would release exact rates or revenue, but industry officials said the regional telecom giants each earn tens of millions of dollars annually through third-party billing. Abuses of the system have flared at times. In 1998, the National Fraud Information Center ranked cramming as the most common kind of telemarketing fraud. Complaints have dropped in recent years, however, as customer awareness increased and regulators cracked down on scams. Now, experts are concerned about a possible resurgence of the problem, with small businesses increasingly locked in crammers' crosshairs. There are two reasons why: The do-not-call rule has put many residential customers off limits for telemarketers, a luxury not afforded to businesses. Plus, the increasing complexity of many companies' phone bills has made it harder to detect illegitimate charges amid dozens of pages of taxes, surcharges, special features, miscellaneous items and Internet accounts. For its case against Mercury, the FTC conducted a survey of 417 businesses billed by Mercury and found that only one recalled hiring the company, none believed that Mercury had provided them with services and 72 percent were unaware that Mercury was charging them $29.95 per month through their phone bills. Mercury settled similar cramming allegations brought by the FTC in 2001, and the FTC says the company has violated that settlement. Mercury took in $56 million in revenue in 2002, and it has billed 356,000 small businesses for its Web-related services over the past several years, according to the FTC.
After six months, some cards are subject to as much as a $2.50-a-month "maintenance fee." The rules vary widely, and some merchants have recently pulled away from terms most likely to anger customers. Just last week, Sears announced that it was eliminating expiration dates from all its newly issued gift cards. Earlier this month, Starbucks dropped a $2-a-month fee imposed on a card unused for a year. Barnes & Noble says it will no longer charge a $1.50-a-month "dormant-account fee" against cards not used for 12 months. But other merchants appear to be hanging on to the fees. So do third-party gift-card issuers, such as malls and banks. The Visa Gift Card issued by Fleet Bank, is subject to the $2.50-a-month "maintenance fee" from the start, although Fleet says the fee is waived for the first six months. If you don't use it for a year, you'll have lost $15 - and maybe more. After that, you're likely to run into another hazard: the card's expiration date, which Fleet usually sets a year after its purchase. Fleet says you can still get what's left of your money back after the card expires. But it'll cost you an extra $15 simply to have the bank cut you a check. These third-party cards are often no bargain for the purchaser, either. Fleet charges a bank customer $5.95, or $7.95 for a noncustomer, for a Visa Gift Card of up to $200. Phone orders cost $4 more. Amex charges $3.95 per card on the Web, and $7.95 by phone. Expiration dates can be especially confusing. They're perfectly legal in New Jersey, so long as they're "conspicuously printed" on the card or certificate. But in Pennsylvania, gift certificates and cards come under the state's unclaimed-property laws. The cards can expire, but the money is still considered yours, not the merchant's. Under that law, the money paid for unused gift certificates or cards is supposed to be turned over to the state two years after the expiration date or, if none is stated, five years after issuance. Steve Schell, a spokesman for the state Treasurer's Office, says Pennsylvania is holding about $3.6 million in unclaimed funds for more than 37,000 recipients of gift certificates and cards.
In theory, credit counseling sounds great. In practice, it often isn't. For starters, there are plenty of scam credit counselors out there, and this year federal regulators moved to crack down on agencies that allegedly are using their nonprofit status to funnel cash into for-profit ventures. As for the reputable companies, they can't always achieve what consumers need. And while nonprofit credit counseling is technically free, many consumers end up paying unreasonably high fees. Here's the kicker: Just signing up for a credit-counseling service puts a dent in your credit score - lenders take it as an indication you're a credit risk. And, after setting up a debt-repayment plan, some really shady outfits take your money and run, causing serious delinquencies or loan defaults that can further mar your credit report. When credit counseling works, a counselor will ask to see every financial document you have, from payroll slips and checking accounts statements to monthly bills and mortgage statements. The counselor will spend an hour and a half to two hours combing through the mess to figure out where you stand. After interviewing you about your living expenses and requirements, the counselor will then determine how much you can reasonably afford to repay on your debts each month. The counselor then proceeds to contact your lenders to try and negotiate more amenable terms, and come up with a final, monthly payment figure for all your debts. Finally, the counselor will make recommendations on how to better structure your finances, and will help you to come up with an austere budget that will help you make all of your monthly payments. In most cases, each month you provide payments to the credit counselor, who in turn uses that money to pay your creditors. But that's just in theory. In truth, a good counselor is hard to find. Even if you find a good counselor, there's no guarantee these services can resolve all your problems. While reputable credit-counseling agencies can provide real help, they often can't get every lender to agree to better terms. And many consumers find that even if the counselor manages to get better terms on their debts, the monthly payments are still too large of a burden to carry. Then there are the fees: Because credit-counseling agencies operate as charitable organizations under IRS rules, they ask that consumers make voluntary payments, or "donations," for services rendered. Typically, agencies will ask consumers to pay two types of donations, a large upfront fee and a monthly service charge. Credit-counseling agencies that have come under scrutiny by the government have been charging consumers between $300 and $500 just to enroll. The agencies themselves receive about half of their funding from major credit issuers through a program called "Fair Share," where creditors give credit-counseling agencies back a percentage of the money they receive from borrowers through the credit counselors' repayment plans. The rest of the funding comes from voluntary fees. In October, the FTC sued AmeriDebt, a well-known credit-counseling service, alleging that the company urged consumers to make a one-time enrollment payment to the consumers' creditors, but kept the payments itself instead of disbursing the cash to the creditors. AmeriDebt issued a statement in response, saying it expected an FTC action and that it would defend itself vigorously. A few days later, the company announced plans to lay off most of its workers and stop seeking new customers. Before shopping credit-counseling agencies, it's a good idea to spend time working at getting your debt under control on your own. Many lenders and card issuers have financial-hardship departments staffed with representatives who will try work with you to resolve your debt before delinquencies or default damages your credit rating. When you call, be prepared to provide the creditor with your complete financial picture. Then make your offer: You might ask the lender to suspend payments for a month or two until you get back on your feet or lower the monthly minimum-payment due to a practical level. You can ask to have your interest charge temporarily lowered or suspended for a brief time, or to have your minimum monthly payments reduced while you funnel more of your cash to pay down higher-interest debt.
The magnetic field last flipped 780,000 years ago, but the time between reversals has varied from a few thousand years to 35 million years. The effects of such a reversal are hard to predict. In the fossil record, no noticeable die-offs of plants and animals coincided with earlier magnetic reversals, although some scientists speculate that the reversals may have disrupted migratory animals that use the magnetic field to navigate. A shrinking magnetic shield would increase the radiation risk to astronauts in orbit, especially during solar storms that eject a jet of high-speed protons. The protons could also short-circuit satellites or even induce electrical surges leading to widespread blackouts. Long-term changes in the magnetic field are normal, and the magnetic field could just as easily strengthen again.
After years of self-destructive price wars, phone companies need to wring more profit from their current customers. The goal: Persuade customers to enroll in new calling plans and packages by making their old plans less attractive. The companies say they hope to keep most of the customers whose bills are going up. But they seem willing to lose some, particularly those who spend only a few dollars a month, says Rich Sayers, publisher of phone-bill-alert.com and 10-10PhoneRates.com, two Web sites that track telephone charges. For some people who make few long-distance calls, the best bet might be a prepaid calling card like those available at drug stores and gas stations. AT&T, for instance, sells a 100-minute card for $13. Many of the cheapest discount services don't spend much on advertising, but they aren't hard to find on Web sites such as saveonphone.com and Getconnected.com that can help consumers sort through the options. MCI, formerly WorldCom, in November boosted fees by $1 on six calling plans it no longer promotes and made its heavily advertised 10-10-220 calling service stingier. The company had promoted the 10-10 service at a rate of 99 cents for up to 20 minutes and seven cents for each additional minute. Now 99 cents covers only up to 15 minutes, and the rate for additional minutes has more than doubled to 15 cents. That boosts the cost of a 20-minute call to $1.74 from 99 cents. AT&T's new fee, the most far-reaching of the increases, will apply to consumers who have its Basic Rates service. Just don't confuse "basic" with "low." The AT&T top basic weekday rate of 35 cents a minute is five times the 2002 average rate of seven cents a minute for a domestic long-distance call, according to the Federal Communications Commission.
Another wave of cost shifting is likely next year. A quarter of the companies surveyed said they expected to increase employee contributions, and 23% said they would pass on more costs by making changes to the health plans they offer workers. Nonetheless, companies in the survey said they anticipate that their health-care costs in 2004 will surge again, this time by 13%. Cost shifting by employers is prompting some employees to cut back on their use of prescription drugs and other medical care rather than absorb the extra costs. In a study of two employer plans published last week in the New England Journal of Medicine, in some cases as many as half of the employees changed from an expensive drug to a cheaper generic one after their employers switched to plans that charged more for brand-name medications. But many other employees quit filling prescriptions for chronic conditions, with as many as 21% at one employer, for example, giving up taking cholesterol-lowering statins. Many companies have been paring, and even phasing out, retiree benefits for years. According to the survey, only 21% of large employers still offered medical coverage to Medicare-eligible retirees, down from 40% a decade ago. Just 28% offered coverage to early retirees, compared with 46% 10 years ago. Health benefits for Lucent's retirees and their dependents alone cost the company $850 million a year, about 10% of the company's annual revenue. Post-employment Health Plans are Underfunded Too G Moregenson, NY Times 12-14 Post-employment health plans - offered by an estimated 5% of American companies - have an estimated future obligations of $284 billion, according to Glass, Lewis & Company, an institutional research firm in San Francisco. It studied 213 large companies offering post-retirement health care coverage. Funding for these plans is an abysmally low 13.2%, the study said. By comparison, pension obligations at these companies are 65.6% funded. The average company in the study says it is assuming that growth in health care costs will drop to 5% over the next five years. Yet one independent study of health maintenance organizations found that their managers expected to raise their rates by 14% next year. Among the companies that have underfunded health care obligations in the next five years are SBC, Verizon, Boeing, Goodyear, General Motors, Delphi and Ford.
More than half of the 175 members of the American Orthopaedic Foot & Ankle Society who responded to a recent survey by the group said that they had treated patients with problems resulting from cosmetic foot surgery. The society will soon issue a statement condemning the procedures, said Rich Cantrall, its executive director. The American Podiatric Medical Association is also likely to formally discourage medically unnecessary foot operations, said Dr. Glenn Gastwirth, executive director of the group. A 1993 study found that women have more than 80% of all foot surgeries, primarily because their shoes are too tight. Women have more than 94% of bunion surgeries, the 1993 study found.
As early as the 1820s, Americans had begun a gradual exodus from farms to factories. Industry was growing so rapidly that manufacturers began actively recruiting workers from farms. For several decades, the demand and supply of American labor seemed to be in rough balance. With the post-Civil War economic boom, there was an almost insatiable need for labor by railroads (which became the nation's largest employer), steel mills and meatpackers. Nearly half of the population left their farms to seek opportunity in the flourishing business of business. The financial panic of 1873 put a brutal end to this golden age. In the next few years, thousands of businesses failed, and the word "unemployed" was assigned a new definition. In 1894, Jacob Coxey, an Ohio businessman, decided to deliver a "living petition" to Washington on behalf of the unemployed. He and several hundred jobless men marched from Ohio to the capital hoping to pressure the government to create public-works projects until the depression passed. Although Coxey's army failed to get immediate relief, its voice was heard: Not being able to work was a greater hardship than 12-hour days in the bleakest mill or deepest mine. It wasn't until the 1930s that the U.S. government agreed that unemployment was intractable and that those who were involuntarily idle deserved financial assistance. Since the late 19th century, America has never been fully employed except during the two world wars, when jobless rates dropped to about 1.5%.
Consumers in all 50 states will be able to request and obtain one free copy per year of their credit reports from each of the three national credit repositories: Equifax, Experian and TransUnion. Research by the Consumer Federation of America and the National Credit Reporting Assn. found that millions of Americans were at risk of being charged higher fees by lenders solely because of unseen misinformation buried in their credit reports. Other consumers' credit files were incomplete - missing key data, including records of positive, on-time payments - because their lenders intentionally withheld it from the credit bureaus. The new legislation also guarantees you access to the credit scores used to evaluate and price your mortgage application. The legislation will facilitate the early placement of "fraud alerts" at the national credit repositories by consumers who believe their identity has been stolen. Those alerts, in turn, will instruct banks and other creditors not to open new accounts or extend additional credit to anyone without contacting the consumer directly. More Information Kathy Kristof, Philadelphia Inquirer 12-09 The Act provides a short-cut for consumers so now they can report credit fraud with one call. The three major credit-reporting companies (Equifax Experian and Trans Union) would be required to communicate with one another so a consumer has to call only one of the firms to get the fraud-reporting process started and create a posting to that effect in all credit files. The Act requires that fraud alerts be maintained on a consumer's files for no less than 90 days, unless the consumer requests they be removed sooner. The Act establishes an "extended fraud alert" that can last as long as seven years at the consumer's request. The Act entitles consumers who have been victimized by credit fraud to two free copies of their credit report during the year the theft takes place. The Act requires credit grantors such as credit-card companies and banks to verify the consumer's identity by calling the person or taking other "reasonable steps" before issuing new credit, if the consumer's file is flagged with a fraud alert. The Act blocks credit-reporting firms from distributing adverse credit information that resulted from a case of identity theft. In addition, they could not "re-pollute" consumer credit files with fraudulent charges that were previously wiped off a report. The law restricts the dissemination of medical information without the patient's permission. In general, medical information could be provided to credit companies and insurers only when the information was pertinent to the credit or insurance application. Employers wanting a prospective employee's credit information generally must get the applicant's permission before they can get a credit file. The new law entitles all consumers to one free copy of their credit report each year, removing the need for costly credit-monitoring services. Both Harney in the LA Times and Michelle Singletary of the Washington Post note that it is one report from each credit agency. Singletary gives a bit more info on the reports: Don't go rushing to get your free reports. It will most likely be six months to a year before you can get them, said Scott Duncan, assistant communications director for the House Committee on Financial Services. Duncan said the FTC has six months to draft regulations that will specify how the free credit report distribution system will work. After that, the agency has another six months to make those rules final and fully functional. And More Information Michelle Singletary, Washington Post 12-11 The new law mandates that the FTC conduct research that could lead to further changes in the credit reporting system, such as: (1) A look at common financial transactions not generally reported to the credit bureaus that may bear on a consumer's creditworthiness. For example, some lenders don't report to the credit bureaus their borrowers' on-time loan payments, to keep competitors from poaching their customers. However, not reporting such information can hurt a consumer's credit score. (2) Research on the accuracy and completeness of information contained in consumer credit files. This is long overdue. Many consumers complain that trying to have incorrect data removed from their credit files is akin to getting a 3-year-old to eat spinach -- a frustrating and messy task. The FTC will have to submit interim reports and a final report to Congress on its findings and conclusions, together with recommendations for legislative and administrative action. (3) An examination of the use of credit scores and credit-based insurance scoring.
The Roots of the Problem "In the 1980s, we deregulated consumer lending and created a monster. Now we have a two-tier lending system. For some, borrowing is cheap. But for some middle-income families, the credit agreements are loaded with tripwires that trap people in debt. There is a whole subprime industry that has grown up to take people who are in a little trouble and leave them dead by the wayside." Subprime mortgages are sold very aggressively. What you have to remember is that the bad money drives out the good. Banks could make a profit lending at 9%, but they can't pay fees to bird dogs and other [loan] hunters unless the rates are 13 or 14%. So the market splits. Some get low-cost mortgages. Others pay three times as much. It's a bipolar market. I asked if she had any advice to help people avoid problems. "The No. 1 thing is never take out a home equity loan or refinance a mortgage to pay other debts. People are told it will lower their interest expense, but there is a reason. Your house is at stake. It's like putting your house on a roulette wheel and hoping you can take it off. Every bit of research shows that families continue to have debt. They get the new mortgage or home equity line and they still have other debt." "The other thing is risk. Families do their best to make it from week to week or month to month. But most fail to acknowledge how much risk they face. Until someone dies with a terrible disease, until a family breaks apart, most people believe that income will always be there. They say, 'Next year I'll get the car paid off.' Or, 'Next year I'll be making more money.' "Well, God bless their optimism! But plan for the worst and hope for the best." Is Professor Warren a worrywart? I don't think so. Without wiggle room, without reserves, any one of us is the proverbial "accident waiting to happen." More Debt Stats & Warren Comments Susan Chandler, Chicago Tribune 11-30 Millions of people spent their summer tax refunds and then some. That contributed to an unexpected spike in consumer debt in September, more than twice the dollar amount experts had been expecting. Consumer balances on credit cards, auto loans and other debt rose $15.1 billion to $1.97 trillion, a 9.7 percent increase on an annualized basis. That was on top of a debt increase of nearly $9 billion in August. Credit-card debt continued to rise in September, but the big jump - 12.5% - came in the so-called nonrevolving area, which includes things like auto loans and personal loans. Bankruptcy expert at Harvard Law School Elizabeth Warren's theory is this: Most two-income families are struggling to make ends meet because they are house-poor. It's a logical consequence of the large mortgages families have taken out to buy homes near good schools. These stretched households are coping by using credit to finance ordinary purchases, not just luxuries. Warren has no trouble explaining rising levels of consumer debt. "It's a sign of the extraordinary pressure middle-class families are under. There's no place to run, no place to hide when they get hit even with a cutback in hours, let alone a job loss," she said. "It's not about people deciding to celebrate at the malls following a job loss. It's about people using short-term, high-interest debt to manage the mortgage payment, utilities and food at the same time." For an average family, that translated into a debt load of $4,126 in 2001, up from $2,697 in 1989, a 53% increase. But the biggest increase fell on those least able to pay. Among families with incomes under $10,000, credit-card debt rose 184%. Then the recession of 2001 hit, followed by 9-11 and nearly unprecedented layoffs in industries ranging from travel to manufacturing to investment. Warren doesn't mince words when she explains how rising consumer debt levels will play out. "It means bankruptcies will continue to rise [personal bankruptcy filings rose almost 8 percent to a record 1.6 million in the 12 months ended 9-30-03], home foreclosures will continue to go up.
From Tara Parker-Pope, WSJ 12-16: People who spend between $2,250 and $5,100 on drugs annually (roughly 30% of Medicare recipients) will see a maximum savings of $1,080. Once your drug bill exceeds $5,100 annually (about 20% of Medicare recipients) the potential savings offered by the Medicare benefit are drastically better. But you still must pay $4,020-plus - an average of at least $335 a month - out of pocket. Medicare Reform: The Discount Card Sarah Lueck, WSJ 11-25 The drug benefit doesn't kick in until 2006. But to bridge the gap, seniors, starting in May, would be able to buy a Medicare-approved discount card to help them cope with rising drug costs. The price is $30 or less. The discounts, which would become available in June, are estimated to be between 10% and 25% off the price of prescriptions. Seniors with annual incomes less than about $12,000 would be given $600 on the cards to spend on medications. Private pharmacy-benefits managers, the companies that manage drug coverage for big employers and insurers, would offer the cards, which are similar to programs available today. They are to have a Medicare logo, which means the plan has met certain requirements, including signing up a large network of pharmacies so most seniors don't have to travel far to get prescriptions filled at a discount. Each beneficiary can have only one "Medicare-approved" card. Before selecting a card, people should make a list of their medications so they can decide between cards, which would vary in the drugs they include and in amount of savings they provide. Medicare operators and card sponsors will be able to supply a price list -- but the actual cost may end up lower because the government wants price quotes to be conservative. Medicare Reform: Health Savings Accounts Albert Crenshaw, Washington Post 11-27 A provision of the Medicare bill Congress passed this week would allow people under age 65 who buy medical policies with deductibles of at least $1,000 for a single person or $2,000 for a family to establish tax-free "health savings accounts." They, or their employers, could fund them each year with an amount equal to the deductible and the money could be used to pay health care expenses. If not needed, the money could be invested. The money going in would be pre-tax dollars and withdrawals for medical care would be tax-free. Medicare Reform: Private Managed-Care Plans Milt Freudenheim, NY Times 11-28 The most politically charged feature of the Medicare legislation passed by Congress - its attempt to make the federal Medicare program compete with private managed-care plans - is also the least likely to come to fruition on the seven-year schedule set in the bill, according to health policy experts. Similar plans, the experts say, have failed to find support among patients, doctors and hospitals, or even some insurers. Even people who favor the idea say the potential for trouble this time is formidable. Many people enrolled in Medicare fear that they will end up with less generous benefits in a privately run program. Nor do hospitals and doctors like the idea of health insurers pushing down fees to make a profit for themselves, and health plans have balked at previous projects that threatened to squeeze their profit margins. Karen Ignagni, president of the American Association of Health Plans, a trade group that lobbied on behalf of private insurers, maintains that the demonstration projects will work nonetheless because much will have changed by the time they are to begin in 2010. [The prescription drug benefit starts in 2006.] Health plans will have developed new types of coverage, she said, and Medicare enrollees will have more favorable experiences with managed care. A Quick History of 'Medicare + Choice' Fuhrmans & Rundle, WSJ 11-28 In the wake of this week's health-care legislation, Americans eligible for Medicare are likely to see new insurance options and benefits emerge as early as the spring. The reason: An immediate boost in government payments to the managed-care companies that operate so-called Medicare + Choice options have suddenly made them a more attractive business opportunity. Together with the government, insurers established the private plans in the 1980s to give Medicare recipients the chance to receive the entitlement via a health-maintenance organization. Medicare + Choice was popular with many elderly, at least initially, because it wasn't as restrictive as straight Medicare, there was less paperwork and most plans offered a drug benefit. In the plans' heyday, more than six million, or 17%, of the Medicare-eligible population were enrolled in Medicare + Choice plans. But after the government changed its payment methodology in the late 1990s, its payouts to insurers fell ever shorter of what companies paid out, forcing them to abandon areas - and patients - where payments were the skimpiest. Insurers also began cutting benefits and raising co-payments. This year, for instance, more than half of the Medicare plans that offered a drug benefit limited coverage just to generic drugs, compared with 19% two years ago. Since 2000, the number of private-plan members has dwindled to nearly 11% of Medicare recipients as companies pulled out of areas that became unprofitable.
Some things haven't changed over the decades, like the capabilities of a standard television set: 480 horizontal lines of resolution. The catch is that every time a television signal is refreshed (generally 60 times a second), only half of those 480 lines are actually changed. That is called an interlaced signal - and standard television is called 480i. The Good [and Simple] Old Days For decades, the physical shape of television images has also remained unchanged: a relatively square ratio of 4 to 3 in the image's width to height, known as its aspect ratio. In most televisions, that signal is displayed by beaming electrons directly onto the back of a glass tube, which is why standard televisions are called direct-view cathode-ray tubes, or CRT's. In a conventional direct-view CRT, the bigger the screen, the farther back the electron gun has to be. That is why most televisions with bigger screens have until now been so heavy and bulky. So in technical language, the standard analog television is a direct-view 4:3 C.R.T. displaying a 480i image. (Keep in mind that merely subscribing to digital cable or digital satellite does not change the fact that your old television is still displaying old-fashioned 480i signals.) Alas, that's the easy part. Then it gets more complicated, not only because of new video formats (beyond 4:3 480i), but also because of new technologies (beyond CRT's) available to display those signals. Resolution & Aspect Ratios A movie buff might be annoyed at the black bars at the top and bottom of the screen when watching a wide-screen film on a 4:3 set. New TV's with the wider 16:9 aspect ratio often avoid that problem. And those wanting to see DVD movies in their full glory need a television capable of displaying, at a minimum, what are known as 480p images. DVD movies have the same 480 lines of resolution as television, but on a DVD all 480 lines are refreshed in every frame. This is known as progressive (as opposed to interlaced) scanning - hence 480p. The consumer electronics industry has taken to referring to 480p as "enhanced definition" and is positioning such products as entry-level digital televisions. Enhanced-definition sets can cost thousands of dollars less than their high-definition siblings. Even in what is generically called high-definition television, or HDTV, there are competing standards. The first (adhered to by companies including Panasonic and ABC) uses 720 lines, progressively scanned, called 720p. The second (adhered to by Sony, CBS and NBC) uses 1,080 interlaced lines, called 1080i. Fortunately for consumers, almost all high-definition units will accept signals in either format and will then convert them to the TV's native resolution. CRT vs. DLP vs. LCD Consumers must then decide on a display technology. Many experts believe that modern direct-view CRT's still have the best overall image quality. But CRT units are heavy, bulky and generally unavailable with screens bigger than about 40 inches. (And a 40-inch direct-view CRT is already a behemoth.) There are also the two flat-panel technologies, with plasma screens dominating the market at 40 inches and up, and LCD's dominating the market for smaller flat-panel units. (Flat-panel sets are not to be confused with flat screens, which even many conventional sets now have.) Flat-panel units, however, can be expensive - from $4,500 to $10,000 for a screen of 40 inches or so. That is why the most fervent technical and marketing battles are being fought at what appears to be a sweet spot of size, bulkiness and price: the new digital-projection technologies. The first wave of rear-projection units used cathode-ray tubes. While in a direct-view television, electrons are beamed directly onto a glass tube, a rear-projection set is more like a self-contained movie theater, where images are beamed as visible light onto a screen (in this case translucent). The imprecision of that process explains why analog rear-projection units do not look so great. Now two digital projection techniques are battling in the marketplace: LCD rear-projection [I have read that they may also be called micro-projection and are typically 8 inches deep] and a technology from Texas Instruments called digital light processing (or DLP) rear-projection. DLP is a slightly better picture quality, but LCD right now is more economical. Either, however, delivers pictures far superior to conventional rear-projection units, and in a much smaller package. Put together, the new digital projection technologies are known in the industry as microdisplay units (although they usually have big screens). SED's are Coming (From Olga Kharif, BusinessWeek 12-19) On Dec. 4, office-equipment maker Cannon and computing giant Toshiba announced a joint venture to build a factory that will make ultrathin, flat-panel TVs based on a new technology called surface-conduction electron-emitter display (SED). Their TVs will be only an inch thick - about one-third the width of average plasma or LCD screens.
True flat-panel TVs have scrapped the picture tube for one of two types of technologies: Plasma or LCD. These displays are perfectly flat, and very thin, even at large screen sizes. Large models of these two types start at nearly $3,000 and can top $10,000. But some ads for TVs feature "flat screen" models that are much cheaper. Beware of these sets: they are merely old-fashioned picture-tube TVs with a flat piece of glass in front instead of a curved glass. Like all picture-tube TVs, they are heavy and deep. If you want a new-technology flat-panel set, make sure it is flat panel, not just flat screen. And make sure it is Plasma or LCD. There are two other types of big-screen TVs whose displays are technically flat, but they are neither true LCD nor plasma sets. Both use projection techniques, like in a movie theater, and both use bulbs that must be replaced. One is the old standby, called rear-projection, which is based on old-fashioned conventional TV technology. These sets are huge and thick. The other is a newer digital technology called DLP, which is much thinner than traditional rear-projection, but thicker than LCD or plasma. Plasma vs. LCD Your biggest decision will likely be between the two true thin flat-panel digital technologies: Plasma and LCD (Liquid Crystal Display). Plasmas, which work by stimulating a captive gas with an electrical charge, are the only game in town for really large screens. They usually start at around 40", measured diagonally, and can grow to over 60". By contrast, LCDs, which work by passing current through tiny liquid crystals, start at a diminutive 10" and top out around where most plasmas begin - at about 40". Plasmas start at around $2,800 and can cost well over $20,000. LCDs range from about $500 to over $10,000. But plasmas are still much cheaper, inch for inch, than comparably sized, or even smaller LCDs. For instance, you can easily pick up a huge 42" plasma set for under $3,000, while a 30" or 32" LCD TV often costs as much or more. LCDs, which are similar to the screens on laptop computers, will be getting larger and cheaper as new factories come on line in Asia next year, and I expect them to eclipse plasmas over the next five years as the flat-panel technology of choice. That's because plasmas have some significant drawbacks. They are fragile, and can grow dimmer over the years, while LCDs retain their video quality for years. Also, plasmas are usually heavier, run hotter and noisier (due to fans), and don't work well at high altitudes. And plasma screens can suffer "burn-in" of unmoving images. That means that, if you watch CNN all the time, the little CNN logo in the corner of the screen can become permanently embedded on a plasma screen. LCDs have some of their own drawbacks. If poorly made, they can have limited visibility from the sides, and can get blurry during action shots and sports programs. But these problems are pretty rare today. Both plasmas and LCDs have great pictures. On balance, however, I prefer LCDs, which can also function as computer monitors in many cases. For now, though, there are no really large LCDs, and the medium-size ones cost a lot. So, plasmas win the big-screen contest today by default. Buying What Fits Your Needs Plasma and LCD sets are digital, and they don't usually work well with standard TV signals, even standard cable signals, which are analog. They do best with digital inputs, like the new digital cable systems and satellite TV. They also do well with DVDs. If you have only an old-fashioned analog cable input (most people do) your best bet may be to stick with an old-fashioned picture tube TV. If you must have an LCD or plasma set, be prepared to sign up for a digital satellite or cable service, if you want the same kind of picture you saw in the store. Another surprise for many flat-panel shoppers is that many flat-panel TVs can't handle the new High Definition, or HD, broadcasts. And, even if a TV is "ready" for HD, its built-in TV system, or "tuner," often can't receive HD signals. You often have to shell out $200 or $300 for an add-on HD tuner, or a special cable or satellite receiver. Check the specs carefully. Other Issues Rob Pegoraro, Washington Post 1-11 Brace yourself [for more confusion] as you contemplate these and other [TV set] features: ATSC tuner; CableCard compatibility; and DVI, HDMI or FireWire connectors. In (more or less) English: Does the set include a digital tuner for over-the-air broadcasts, can you pop in a card issued by your cable company to tune in digital broadcasts without a cable box, and which of three different kinds of digital inputs does it include? For my money, the optimal answers are yes, yes, HDMI and FireWire. Recording the shows you watch on the digital television may constitute another headache. The industry, not having settled a three-way format war in recordable DVDs, has already moved on to a two-way format war in high-definition recordable DVDs. Most manufacturers, including the likes of Sony, Panasonic, Philips and Samsung, back a format called Blu-ray, but the "official" standards-setting organization, the DVD Forum, has anointed an incompatible technology, HD-DVD.
The result: Today's consumer-electronics industry leaders, chiefly Japan-based multinationals such as Sony and Matsushita, are threatened the way computer leader IBM was threatened by the rise of the PC clone. The upstarts range from green entrepreneurs to well-heeled manufacturers that have achieved success in products such as computers or washing machines and are finding it easy to move into other consumer electronics. Three Examples of the Change Upstart cellphone manufacturers in China, relying heavily on chip sets and designs from companies in other countries, grabbed 40% of domestic cellphone sales in just two years. Gateway, the PC company, is likely to end up the year as the U.S.'s No. 1 seller of 42-inch plasma TVs, the most popular model. For most of its 19 years in business, Xoceco (pronounced ZO-say-co) churned out low-cost color TVs from its base in southeast China. But this fall, Xoceco found a formula that will let it challenge the heavyweights in its industry. Using inexpensive, standardized parts from South Korea and the U.S., Xoceco started mass-producing flat-screen TVs - a product that even electronics giants such as Sony are just starting to roll out in volume. Xoceco's leaders in April decided the company should develop an LCD TV and two bigger plasma TVs. It turned to Pixelworks of Tualatin, Ore., for help. Pixelworks is one of the component makers enabling the broader change in electronics production. While the giants moved into selling component technology because costs and market conditions forced them to, Pixelworks' founders started the company with the very idea of taking advantage of this change. Last year, Pixelworks put together a complete design for the electronics inside LCD and plasma TVs. When Xoceco decided to use the design as the base for its first flat-screen TVs, Pixelworks' engineers taught the company how it works and how it could be modified via software. This fall, Pixelworks finished work on a new video-processing chip, code-named Photopia, that integrates many functions onto one chip, saving space and cost. How the Leaders are Adapting Motorola, the world's second-largest maker of cellphones, sells the entire electronic innards of a phone to 13 other manufacturers, most of them in China. It licensed the design of its most advanced third-generation cellphone earlier this year to a major rival, Siemens AG of Germany. By selling such technology, Motorola can rely on something other than its own product revenue to pay for research and development. That means it can cut prices for its products more quickly. Sharp, one of the world's leading makers of flat-panel TVs, is pouring about two-thirds of its $2 billion in capital investments this year into LCD technology, and is taking draconian measures to make sure it can keep that technological lead. Sharp is withholding key information, such as operating temperature or run time, about the manufacturing equipment it uses at its newest factory, to prevent rival display makers from copying its success on the cheap by buying the same machines. For some equipment, Sharp ordered parts from different makers and then put them together. It even stopped patenting some factory processes. "Patents can be hints," says Zempei Tani, a vice president at Sharp. But Sharp too will next year contribute to the trend of assembling TVs from parts: Its newest factory will produce more flat screens than the company needs, and it will sell excess production to lower-tech companies like Xoceco. In the past five years, many chip makers moved beyond the sale of discrete components and began to offer the complete circuitry of products as a way to retain customers and capture a greater portion of the value of a finished product. Unit Sales Numbers Salkever& Kharif, BusinessWeek 12-19 According to the Consumer Electronics Assn. (CEA), wholesale sales of electronics gear from September through November are running 2% below a year ago. This may foretell flat sales through stores over the holidays - even though the CEA expects unit shipments to rise 3%. "Digital camcorders and cameras, DVD players, and digital TVs are selling very well," says Amrit Tewary, a consumer-electronics equity analyst with Standard & Poors. In 2003, rentals of DVD movies outpaced VHS rentals for the first time. Through Q3 of 2003, sales of stand-alone DVD players totaled 15 million, up 25% vs. same period last year. And sales of digital cameras are expected to grow 50% or so this year. Shipments of analog TV sets for the year should fall to 16 million units, from 18 million in 2002. VCR shipments will drop from 11 million to 5 million. Assuming that flat panel TV prices continue to drop by 30% annually, as they have for the past three years, their market share, now 3%, could exceed that of regular TVs by the end of the decade, predicts Matt Dever, vice-president for product planning at TV maker Pioneer. Flat-panel sales, now 1 million units a year in North America, could move to something closer to 13 million in 2007, predicts electronics consultancy iSuppli/Stanford Resources. From Becky Yerak, Chicago Tribune 12-23: The CEA says November was the biggest sales month ever for digital TVs - which include LCD and plasma sets - since their 1998 introduction. Sales rose 47% from November 2002. The group estimates 4.3 million units will be sold in 2003 and 16.2 million by 2007. From The Economist, 12-18: Flat-panel TVs will account for just 3% of the 160 million televisions sold this year, reckons market-research firm iSuppli, rising to 8% by 2005. This is still an 'early adopter' phenomenon. But as more suppliers enter the market and new factories come on stream, Riddhi Patel of iSuppli expects prices to fall by 40% over the next year. Bear that in mind before you buy. Cheaper TVs & Electronics Gary McWilliams, WSJ 12-22 Computer maker Dell last week began selling a glitzy new flat-panel TV that is priced to sharply undercut the Japanese behemoths that dominate consumer electronics. The 23-inch set is on the shelves for $1,600 - compared with $2,000 and up for similar-sized high-definition-ready Sharp, Sony and Panasonic models. Gateway is selling a 30-inch, high-definition-capable set for $3,000, as much as 20% less than the after-rebate prices for a similar sized Sharp or Sony model. Gateway is also the first big-name brand to break the $300 price barrier on DVD recorders. Next year Sony will roll out a new, lower-priced line of flat-panel TVs that are as much as $2,000 cheaper than its existing XS series, which go for between $5,000 and $7,000. Sharp and Sony argue that their higher prices are justified by the brighter displays and better contrast that their sets offer. Their TVs, they add, are preferable for watching sports and movies because of features like a faster "refresh rate," which reduces blurring on action shots. The computer makers contend that most consumers can't tell the differences in picture quality from one digital set to another.
Richard Doherty, a consumer electronics industry analyst who is president of Envisioneering, predicted that the low-cost display technology, which can be incorporated into the traditional rear-projection television sets, could lead to lightweight 50-inch screens only 7 inches thick for about $1,000, perhaps as early as the 2004 holiday season. The technology used by Intel employs vast arrays of tiny electronic shutters that can alter the amount of reflected light, an approach that may allow companies to make big-screen TV sets using rear-projection technology that matches or exceeds the quality of flat-panel TV's at a much lower cost than plasma and conventional L.C.D. [For a price comparision - Best Buy is advertising a 55 inch 1080i projection TV (a 'fat' TV) at $1,700 and a plasma 50 inch flat panel ('thin') HDTV at $9,000.] Philips Electronics and several American start-up companies have already begun offering yet another technology - 'liquid crystal on silicon', or LCoS, components and televisions. Many of the traditional makers of TV sets have themselves been researching lower-cost alternatives to the plasma and L.C.D. screens that now dominate the high end of the home entertainment market. Even the old rear projection TVs are being updated. At the consumer electronics show next month, experts said they expected to see rear-projection sets that are only 10 inches deep and far lighter than plasma and L.C.D. systems.
[From Charles Stein, Boston Globe 11-29: With nearly $250 billion in annual sales, Wal-Mart represents 2% of the country's GDP.] By the company's own admission, a full-time worker might not be able to support a family on a Wal-Mart paycheck. By squeezing suppliers to cut wholesale costs, the company has hastened the flight of U.S. manufacturing jobs overseas. Take as an example a $10 20-inch box fan at Wal-Mart. The fan was made in Chicago at Lakewood Engineering & Manufacturing Co. A decade ago, the same fan carried a $20 price tag. But that wasn't low enough for Wal-Mart. So Lakewood owner Carl Krauss cut costs at every turn. He automated production at the red-brick factory built by his grandfather on the city's West Side. Where it once took 22 people to put together a product, it now takes seven. Krauss also badgered his suppliers to knock down their prices for parts. In 2000, he took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago. About 40% of his products now are made in China, including most heaters and desktop fans. All the retailers Kruass supplies - including Home Depot and Target - drive a hard bargain with manufacturers. But none is as tough as Wal-Mart, Krauss said. Twice a year, his sales representatives travel to Wal-Mart headquarters to pitch their products. There, competitors sit side by side, waiting to be ushered into one of 60 glass-sided cubicles - a space some call Vendors' Alley. Then the haggling begins. "You give them your price," Krauss said. "If they don't like it, they give you theirs." The suppliers are at a disadvantage. The Wal-Mart buyer can always go out to the waiting room and find someone who will go lower. "Your price is going to be whittled down like you never thought possible," Krauss said. Wal-Mart is so ruthlessly efficient that 4% of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone, researchers at the McKinsey Global Institute estimated last year. No other single company had a measurable impact. Wal-Mart also has forced competitors to become more efficient, driving the nation's productivity - output per hour of work - even higher.
To cut costs, Honduran factories have reduced payrolls and become more efficient. The country produces the same amount of clothing as it did three years ago, but with 20% fewer workers. "You could be looking at a government meltdown if something were to happen to this industry," said Raja Rajan, a factory manager active in the apparel association. Rajan fears that the migration of sewing jobs to China and other lower-cost countries can't be stopped, only slowed. Chuck Wilburn figures that his 1,300 employees will be among the casualties. He manages a factory on the outskirts of San Pedro Sula that cranks out clothing for Wal-Mart, Target Corp. and other retailers. Wilburn's employer, Oxford Industries of Atlanta, once owned 44 factories in the American South. It shuttered them all in the last 15 years and moved the work to cheaper locales. That's how Wilburn found himself in Honduras. Wilburn expects that Oxford will close his factory in the next few years and move on to another country where basic cotton clothes, such as Wal-Mart's Old Glory khaki pants, can be produced for less. Bring It Home to the USA It wasn't long ago that Wal-Mart was fighting to keep manufacturing jobs on U.S. soil. In 1985, founder Sam Walton launched his "Bring It Home to the USA" program. "Wal-Mart believes American workers can make a difference," he told his suppliers, offering to pay as much as 5% more for U.S.-made products. In his 1992 memoir, "Made in America," Walton claimed that the program had saved or created nearly 100,000 jobs by using "the power of this enormous enterprise as a force for change." But the late Walton's much-trumpeted effort soon was overtaken by the rise of the global economy. The spread of the Internet and other technology, along with U.S.-led efforts to tear down trade barriers, made it easier to move goods and capital across borders. To maintain its edge on pricing, Wal-Mart quietly joined other retailers in a worldwide search for the cheapest sources of production. As late as 1995, Wal- Mart said imports accounted for no more than 6% of its products. Today, consulting firm Retail Forward estimates that 50% to 60% of the merchandise in the company's U.S. stores is imported. Wal-Mart in Bangladesh Wal-Mart is the most powerful corporate citizen in Bangladesh, even though it doesn't operate a single store in the country. The company bought 14% of the $1.9 billion in apparel that Bangladesh shipped to the U.S. last year. Sheikh Nazma, a former child laborer, has seen the way Wal-Mart can help clean things up. She worked at a Dhaka garment factory that had no clean drinking water and only a few filthy toilets for hundreds of employees. After the owner refused to pay their wages for three months, the employees complained to Wal-Mart, the factory's main customer. "Wal- Mart interfered, and - the owner paid our salaries and overtime and even paid bonuses to each worker," recalled Nazma, who later helped launch the Bangladesh Independent Garment Workers Union Federation. But Nazma and others say Wal-Mart undermines its good efforts with its incessant push for lower prices. To fill orders on short schedules, factories often force their employees to work overtime or stay on the job for weeks without a day off, according to Sayeeda Roxana Khan, a former factory manager in Dhaka. To conceal such practices, auditors say, some factories keep two sets of books. Wal-Mart in China In southern China, Wal-Mart has found all the ingredients it needs to keep its "every day low prices" among the lowest in the world. Although labor costs more here than it does in Bangladesh, China offers other advantages: low-cost raw materials; modern factories, highways and ports; and helpful government officials. Wal-Mart has been instrumental in making this corner of China the world's fastest-growing manufacturing zone. The marriage between the world's largest and most efficient retailer and China's low-cost factories is setting a new global "cost standard" for manufactured products, according to consulting firm Deloitte Touche Tohmatsu. The phenomenon is rattling competitors worldwide and worrying international labor activists. They cite the Chinese government's hostility toward organized labor and its lack of worker protections. Wal- Mart has more than 3,000 supplier factories in China, and the number is expected to rise. But that doesn't mean workers in China are secure. Wal-Mart in China II Goodman & Pan, Washington Post 2-08-04 More than 80% of the 6,000 factories in Wal-Mart's worldwide database of suppliers are in China. Wal-Mart estimates it spent $15 billion on Chinese-made products last year, accounting for nearly one-eighth of all Chinese exports to the United States. [This stats is probably wrong. Eight times Wal-Mart's $15 billion equals $120 billion. But China's trade surplus with the United States is estimated to have been $120 billion last year. So far that one-eighth figure to be right, China would have had to bought next to nothing from the U.S.] If the company that Sam Walton built with his "Made in America" ad campaign were itself a separate nation, it would rank as China's fifth-largest export market, ahead of Germany and Britain.
For decades, the unions have been a major force in the state grocery industry and have negotiated generous labor contracts. Wal-Mart pays its grocery workers an estimated $10 less per hour in wages and benefits than do the big supermarkets nationwide - $19 versus $9. As California grocery chains brace for the competition, their workers face severe cutbacks in compensation. The push for concessions has already started, prompting the longest supermarket strike in Southern California's history. About 70,000 grocery workers employed by Albertsons, Kroger's Ralphs and Safeway's Vons and Pavilions have been walking the picket lines since Oct. 11, largely to protest proposed reductions in health benefits. The supermarkets say they need these cuts to hold their own against Wal-Mart, already the nation's largest grocer. The unions and their community allies have stopped Wal-Mart in some places and slowed it down in others. They have persuaded officials in at least a dozen cities and counties to adopt zoning laws to keep out Supercenters and stores like them. Homeowner groups, backed by union money, sued to stop construction of two Supercenters in Bakersfield, arguing that the stores would drive local merchants out of business. Wal-Mart, however, can more than match its foes in resources and resolve. To soften its outsider image, the retailer has hired local political insiders to coax projects through planning bureaucracies. It has promised jobs and sales-tax bonanzas to cities struggling with deficits and unemployment. Several studies commissioned in recent years by independent groups, including the Orange County Business Council and the San Diego Taxpayers Assn., found the state would suffer a net economic loss if union jobs were traded for jobs at Wal-Mart. Wal-Mart had declined to respond with numbers of its own until a few months ago, when it commissioned the Los Angeles County Economic Development Corp. to measure the effect of Supercenters on the region. Researcher Gregory Freeman said the study balanced wage losses with consumer savings, noting that Supercenter prices are typically 20% lower than at union markets.
After more than eight years of treading cautiously, Wal-Mart is pulling out the stops in China. For China's long-suffering consumers, weaned on long lines and patient waits for shoddy merchandise, the change is almost revolutionary. Families dress up and go there for the day. Young people visit on dates. The store is a must-see for out-of-town visitors. A Sam's Club membership store owned by Wal-Mart in Shenzhen set a single-day sales record for the company two years ago, taking in $1.7 million during the Chinese new year holidays. Because of such volume, Wal-Mart is about to embark on an ambitious expansion in China, including its first outlets in the consumer strongholds of Beijing and Shanghai. The company, which employs 15,000 people in China, will have more than 30 stores open in the nation by year's end, up from 25 last year.
In the United States and Western Europe, Wal-Mart has been accused of driving down wages, introducing cut-throat business practices and bankrupting local companies. But in Mexico's dreary economy, foreign investment, especially American investment, is about the only bright light, and many Mexicans know it. Cries of economic and cultural imperialism, rampant 10 years ago, when the North American Free Trade Agreement took hold, are more muted now. Though it came to this country only 12 years ago, Wal-Mart is doing more business - closing in on $11 billion a year - than the entire tourism industry. Wal-Mart sells $6 billion worth of food a year, more than anyone else in Mexico. In fact, it sells more of almost everything than almost anyone. Economists say its price cuts actually drive down the country's rate of inflation. Last year, 585 million people - nearly six times the population of Mexico - passed through the check-out lanes of its 633 outlets.Half its Mexican operations now are here in the capital city. Its 81 Wal-Mart stores and 52 Sam's Club outlets now ring up close to $6 billion a year. Annual sales at its Superama and Bodega supermarkets approach $4 billion. Wal-Mart also runs 52 Suburbia department stores and 267 Vips restaurants, with close to $1 billion a year in sales. Its sales represent about 2% of Mexico's GDP - almost the same as in the United States. Analysts say it now controls something approaching 30% of all supermarket food sales in Mexico, and about 6% of all retail sales - also about the same as in the United States. More Misc. Info: Wal-Mart has also become the largest retailer in Canada, and has outlets in Argentina, Brazil, Germany, South Korea, Puerto Rico and Britain. In the United States, a unionized supermarket worker makes, on average, about $19 an hour. At Wal-Mart, where there are no unions, that worker makes about $9 an hour. In Mexico, for a newly hired Wal-Mart cashier, the pay stub reads about $1.50 a hour.
Shares of Wal-Mart de Mexico, 38 percent of which trade on the Mexico City Stock Exchange, have more than doubled since the company's creation. Now valued at $14 billion, Walmex, as it's known, is Mexico's third-biggest stock, behind Telefonos de Mexico SA and America Movil SA. Since Wal-Mart moved in, everything from Mexico's work force to the country's inflation rate to the efficiency of suppliers has been affected. The company makes 92% of its purchases, or about $8 billion a year, in Mexico. That's equal to 1.3 percent of Mexico's gross domestic product. Since 2001, Walmex has added 26,000 jobs. Mexico's unemployment rate rose to a six-year high of 4 percent in August 2003. Today, Walmex is Mexico's largest private employer, with about 101,000 workers. That compares with 38,000 at Organizacion Soriana, its closest competitor. During the same period, rival Controladora Comercial Mexicana shed 12 percent of its employees as it acquired a smaller rival. Walmex has helped reduce Mexico's inflation rate because goods that Walmex sells account for 42% of the items the central bank uses to measure prices.
But as it dips its toes into Japan, the world's second-largest economy, mighty Wal-Mart is confronting something it seldom encounters: skeptics who doubt that it can succeed. The retail market here is dominated by powerful manufacturers and wholesalers whose high prices have made the country an inhospitable place for foreign discounters. And Japanese consumers are famously finicky. Further complicating matters, Wal-Mart must repair a chain whose sales peaked a decade ago. Seiyu's sales slipped 3.9% from the period a year earlier. The company expects to lose 10 billion yen for the full year. In Seiyu's stores, few overt signs of the discount giant's presence can be found. Wal-Mart has spent most of its time centralizing the retailer's operations. The changes include giving new product scanners to aisle clerks and creating databases that provide up-to-the-minute information on sales, inventory and prices. The company is also teaching Seiyu's employees to sell the Wal-Mart way. That means using data to analyze sales, not just following store managers' hunches. Seiyu now pools data from all of its stores so that everyone from clerks to suppliers can see what is on the shelves, what is selling and when. Wal-Mat is also refurbishing the chain's older stores. In its first test store, entire first floor has been devoted to food; clothing and household goods have been moved upstairs. The aisles have been widened to allow two carts to pass, and a deli counter with prepared foods is now open until 11 p.m. The new layout appears to be a hit with customers. Food sales and traffic have risen 50% since the store was remodeled in June, taking business from three major supermarkets nearby. Still, Wal-Mart has learned that the Japanese, like consumers elsewhere, are creatures of habit. The company had stopped stuffing mailboxes with circulars to publicize twice-a-week sales. Wal-Mart argued that because its prices were already the lowest every day, there was no need to have special sales. But homemakers are addicted to circulars, using them to dart from store to store in search of deals. So, after some complaints, the circulars returned, to the relief of customers. Shoppers in Japan, like those in the United States, fret about a flood of cheap imports. So - unlike in the U.S. - less than 1% of the 50,000 products in the Seiyu stores are imported from Wal-Mart's network. And those that were on display were getting a mixed welcome. The Japanese managers have a tough time adapting to the Wal-Mart practice of continually praising co-workers. Backslapping compliments are rare in a country where workers are taught to be humble and bosses often command respect through intimidation. Machiko Amano, a credit analyst at Standard & Poor's in Tokyo, said that even Wal-Mart might not be able to save Seiyu from 'stagnant consumption, severe competition and shortened product cycles.' Wal-Mart acknowledges that such threats exist, but it says its decision to enter Japan through a local partner is the right one, even if it requires more subtlety and patience than simply using its huge size and muscle to go it alone. Seth Sulkin, president of Pacifica Malls K.K., which develops shopping centers in Japan, said Wal-Mart had made the right decision to enter Japan through Seiyu because only the biggest Japanese stores have leverage with manufacturers. "If Wal-Mart did it themselves," he said, "they'd get nowhere.''
Along with that has come tremendous growth in the use of debit cards for electronic funds transfer, or EFT, payments. These transactions allow money to be deducted directly from a consumer's bank account after the shopper enters a personal identification number (PIN) at the point of sale. Purchases on these systems reached $202.6 billion last year, up 33% from the year before. According to David Robertson, publisher of the Nilson Report, 20% of that total was cash back, meaning more than $40 billion was given back to consumers at the point of sale. Retailers are reluctant to talk about the cash-back issue and how they're managing it because of security concerns. Supermarkets and drugstores obviously don't want to publicize the fact that they're keeping more cash on hand, lest they become more frequent robbery targets. Rising cash-back rates are also more subject to fraud, with dishonest cashiers able to process transactions as if the unsuspecting customer wants cash back, and then pocket the cash themselves. Retailers will be encouraging even wider use of debit cards in coming years, thanks to a recently settled lawsuit between retailers and the credit-card issuers Visa and MasterCard. To process a credit-card transaction now, a retailer might pay up to $2 in fees for a $100 purchase. On a debit-card purchase processed with a signature, the fee is now about $1. But for an EFT transaction made with a PIN - which is processed by a banking network such as Star or Pulse, not by Visa or MasterCard - the fee is between 15 and 35 cents.
Jay Foley of the Identity Theft Resource Center recommends ordering a different report every few months so that you see all three reports more than once a year. Start by ordering your report from Equifax (www.equifax.com), for example, then three to four months later contact Experian (www.experian.com), and then three or four months after that get your report from TransUnion (www.transunion.com). A few months later, start the process all over again.
Nearly 46% of the respondents said they have never sanitized their toothbrush, although it is recommended that you do so daily using peroxide or mouthwash, to protect against germs from the toilet bowl. Fecal matter and bacteria can spray as much as 20 feet upward when a toilet is flushed, Dr. Tierno says. So remember to lower the seat cover, and keep toothbrushes off the counter. Close to half of the 1,000 respondents to the survey admitted they allow dust in their vacuum cleaners to accumulate for more than six months, while about a third said they wait until the dust buildup renders the vacuum inoperable before emptying it. Ideally, vacuums should be emptied at least once a month to control the release of bacteria into the air. In one case cited in Dr. Tierno's book, an entire family was repeatedly infected by salmonella bacteria spewed from a vacuum used to mop up a spill containing the germ. Moving into the kitchen, Dr. Tierno says his research has found kitchen sponges and scrubbers to be the single most infectious source of germs in the home. Nearly 50% of poll respondents said they use the same sponge or dishrag for all their kitchen tasks, such as cleaning dishes, cookware, cutting boards and counter tops. Roughly the same percentage said they use the same sponge for more than a month at a time. "If the average consumer could see what grows in a dirty sponge, they would be more apt to take common-sense steps to disinfect it and prevent cross contamination," Dr. Tierno says. Replacing sponges and dishcloths weekly and limiting their use to one activity also can reduce the risk of cross contamination. Waste and debris can create a breeding ground for bacteria in your garbage can. Garbage cans should be wiped clean and disinfected weekly even if [the can] is lined." "Even if there's nothing [visible] there, you should still spray with a disinfectant.
Garage door remotes operate at around 40 megahertz while some cordless phones use the band between 40 and 50 MHz. Baby monitors broadcast coos and whines at 49 MHz. The FCC tries to impose lane discipline. But when signals leak outside their frequency, or when two devices share the same frequency or broadcast with too much power, the results can be unpredictable.
The equipment causing all the fuss came on the market in January through a Minnesota-based firearms and law-enforcement supply company called FAC of America. Owner Tim Gow said he takes great pains to make sure none of the devices is ever sold to an unauthorized individual, either over his Web site or through a handful of authorized dealers. Gow's device, called MIRT for mobile infrared transmitter, is a small emitter that plugs into a cigarette lighter and can be mounted on the dashboard. It sells for about $500 per unit. Despite his security efforts, MIRT devices are readily available elsewhere on the Internet. One Web site offers plans and kits for making copies of the MIRT emitter, and a recent eBay search found a number being sold for $300 to $900.
Divorce is contagious, too. A married person is 43% more likely to get divorced if one-third of his or her co-workers are recently divorced people of the opposite sex, than if none of the co-workers were recently divorced. The effect shrank over time, suggesting it's the act of divorce, rather than simply being divorced, that sways others most. This isn't the first study to implicate office romance in divorce. An online survey of 31,207 men and women showed that among the 62% who had at least one office affair, 9% said the breakup of an affair led to a marital separation or divorce, says Janet Lever of California State University, Los Angeles, author of the 2002 study for Elle magazine and MSNBC.com.
"It's a very efficient type of sale," said Kathleen Seiders, an associate professor of marketing at Boston College who specializes in retail issues. "It's a way to offer an advertised price to someone who really cares about it but not have to give the price to someone who doesn't care." Filing a rebate claim isn't always easy. Some rebate systems are a bureaucratic nightmare waiting to happen. TCA, a major fulfillment house based in New Rochelle, N.Y., touts on its website that last year alone it rejected 800,000 fraudulent and noncompliant claims, saving its retail and manufacturing customers over $20 million. TCA's site indicated the 800,000 rejected claims represented about 20 percent of the rebate forms it had received. Just the Facts Life Expectancy Rates Rise The New York City Department of Health and Mental Hygiene declared in August that life expectancy rates were surging. In Gotham they have gone up since 1990 from 77 years to 80.2 years for women, and from 67.7 to 74.5 years for men. What is causing this happy increase in life expectancy is not fully known. But much of it has to do with wise nutrition, lots of exercise, moderate drinking and modern medications. Since all of those will continue, we have every reason to expect that good times will continue. (Marshall Loeb, CBS.MarketWatch 12-26) Fast FICO Estimate You can use this test from myFICO and Bankrate.com to get an estimate of your credit score. (Terri Cullen, WSJ 12-17) One more quick FICO Factoid: I used to sign up for retail credit cards the way some restaurant patrons grab peppermint candies at the hostess stand. I just couldn't resist getting the 10% discount that retailers dangled in exchange for signing up for their signature credit cards. But a credit inquiry remains on your credit reports for 24 months, though it lowers your score for only 12 months. Credit inquiries can lower your credit scores up to 12 points per inquiry, on average. So jut say no. (Michelle Singletary, Washington Post 12-17) Card Issuers Charges Vary for Cash Advances The GM MasterCard's cash-advance fee - 3%, with a $15 minimum - is one of the highest around, but most of the major card issuers charge aggressively for cash advances. MBNA, Citibank and Chase Manhattan also charge 3%, with a minimum fee of $5. So does Providian, with a minimum of $10. Wachovia charges only $2.50 for a cash advance. Moreover, credit cards typically offer no grace period for a cash advance - you pay interest charges from Day 1, even if you always pay your monthly balance in full. And interest rates are higher, too. Citibank, for example, currently offers a Platinum card with an annual percentage rate of 9.99%. But for cash advances, the rate is almost 20%. (Jeff Gelles, Philadelphis Inquirer 12-03) Why Inflation Seems Higher (1)Housing prices have a huge effect on the CPI, accounting for 40% of the index. So the recent housing boom should have boosted inflation, right? No. The BLS uses rental prices, not the price of buying a home, to measure housing costs. This explains why the housing component of the CPI has risen 30% in the past decade, whereas home prices have gained 60% in the same period. (2) Not all price increases don't always count as inflation. When the BLS calculates the CPI, it makes adjustments for any improvements in quality. So if you're paying more for a new toaster now than you did five years ago, some of the increase is attributed to design improvements. (Andrew Blackman, WSJ 11-02) Quick Facts, Stats & Opinions In a development that is likely to inspire both fascination and alarm, a Texas company said yesterday that it would soon start selling a genetically engineered aquarium fish that glows in the dark. The GloFish, as it is called, is a zebra fish containing a gene from a sea coral that makes the fish bright red under normal light and fluorescent under ultraviolet light. (Andrew Pollack, NY Times 11-22) For the United States over all, only 9.7% of households had been in the same home for more than three decades. By contrast, almost 20% of householders reported having moved into their residence in the 15 months before the census. (Motoko Rich, NY Times 11-22) Spending on televisions climbed 10.6% in the U.S. in the 12 months ended Sept. 30, to $13.2 billion, while unit sales grew 6.2%, according to NPD Group Inc. Sales of flat-panel televisions reached 394,000 units for September, more than triple the year-earlier figure. At a time when prices of traditional, analog televisions are falling rapidly, much of the spending growth is being fueled by comparatively higher price tags of flat-screen and other exotic sets. The average price paid for a television has risen 37% since 2000, to $590, NPD Group says. Digital TV prices are expected to fall 20% this year, following a 7% drop last year, says the Consumer Electronics Association. (Gary McWilliams, WSJ 11-13) About 60% of new restaurants are gone within three years, according to a recent study by hospitality professor H.G. Parsa at Ohio State. (Margaret Pressler, Washington Post 11-2) According to Information Resources, a market research firm, shoppers are willing to pay two to three times more per serving for the same food if it is presented in an easier-to-consume way. An example is Quaker's Instant Oatmeal Express, packaged in a to-go cup. It costs $1.29, versus 42 cents for Quaker Instant Oatmeal in a single-serve packet. Considering that an equivalent serving of Quaker Quick Oats scooped out of an 18-ounce canister costs 21 cents, it looks as if consumers are willing to spend six times as much for portable oatmeal. (Kate Murphy, NY Times 11-2) The most commonly used FICO formula starts at 300 and tops out at 850. Only 11% of consumers score above 800, according to Craig Watts, spokesman for Fair Isaac Corp., which created the FICO credit score. Far fewer are at the bottom of the range: Only 1% have scores below 500. A score over 700 is considered good by most lenders, and yours will allow you to get the best terms and rates from lenders. (Money Talk, LA Times 10-26) Tech Tips, News & Information Expiration Notice Microsoft said it would stop offering support services for its Windows 95 and Windows 98 operating systems. Owners of those PCs won't be able to call Microsoft for help after Jan. 16. Online assistance will still be available for Windows 98, a spokesman said. About 20% of all Windows-based computers still run Windows 95 or 98. (AP 12-13) [From Seattle Times 12-13: "Those older operating systems, as long as they're kicking around, they're potential security problems for every company that uses them," said Jupiter Research analyst Joe Wilcox. "They weren't built with encryption of data in mind. A lot of information is transmitted, passwords and things, as clear text. If you're looking for a good way to allow a virus on a network or allow it to be hacked, keep running these older operating systems."] Scam Warning A newly discovered security bug can let Internet scammers make phony sites that look even more authentic than usual in Internet Explorer for Windows: Instead of betraying their origin by showing the wrong address under IE's toolbar, phony sites can appear to have the same address as the real thing. This could eliminate one way for Web users to ensure they haven't been fooled by those Internet scams that invite you to "verify" your credit card information at sites that look awfully like eBay or another known, trusted company. (Mike Musgrove, Washington Post 12-14-03) Google Tracks FedEx Packages Just in time for the holidays, Google has rolled out a quick way for users of the popular search engine to track FedEx packages. Type "fedex" followed by a space and a FedEx tracking number to get the latest information on the whereabouts of your delivery. (Mike Musgrove, Washington Post 12-14-03) Home Page Previous Factoid Top Sites
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