March 2008 Archives

March 4, 2008

Tech Worker admits stealing trade secrets for foreign sale

As reported in Sacramento Business Journal:

An El Dorado Hills technology worker accused of stealing trade secrets with military applications and offering them to foreign buyers for six figures in cash entered a guilty plea in Sacramento Friday, prosecutors said. Allen Cotten, 53, pleaded guilty to theft of trade secrets in U.S. District Court and admitted to a two-year scheme to steal and sell microwave technology, the local U.S. Attorney’s office said in a news release. He faces up to 10 years in prison and a $250,000 fine.

Assistant U.S. Attorney Anne Pings said Cotten worked for Genesis Microwave Inc. in El Dorado Hills, and admitted that beginning in February 2004 he began to steal plans, designs, parts and specifications for components known as logarithmic video amplifiers. The technology has military applications for radar jamming, guidance, countermeasures and locating enemy signals during combat.

Cotten sold trade secrets and offered them for sale to foreign governments and foreign military contractors through February 2006, prosecutors said; evidence and Cotten’s statements indicated he sold or was seeking to sell parts and information for a total amount of $250,000. The case was the product of an investigation by the FBI and the U.S. Department of Commerce’s Bureau of Industry and Security.

Filed under Legal and Criminal Issues by

Mexican avocado exporters sue California business group

The feud between Mexican and California avocado growers continues. As reported in “The Packer”:

Last year the Irvine-based California Avocado Commission unsuccessfully sued the U.S. Department of Agriculture in an effort to keep out Mexican avocados because of concerns about armored scale insects.

Now, Mexican avocado exporters have two active lawsuits against California interests.

Following up on a January lawsuit against the California Department of Food and Agriculture, the Avocado Producer and Exporting Packers Association of Michoacán (APEAM) has filed a lawsuit against the California Avocado Commission, requesting an unspecified amount to compensate for what it called severe damage to the marketing of Mexican avocados in California caused by the commission in 2007. Tom Bellamore, senior vice president and corporate counsel for the California Avocado Commission, said APEAM essentially has refiled the case that was dismissed without prejudice last September. “It is the commission’s position that that those claims then lacked merit and still do today,” he said.

Mexican exporters had hoped to settle the matter out of court, but the avocado commission’s board rejected a settlement proposal, said Emiliano Escobedo, APEAM’s U.S. representative in Los Angeles. “We had definitely hoped that the lawsuits were behind us, but they unfortunately are not,” he said. “What we really want is to sell more avocados and not have to fight anyone in court.”
The lawsuit states that less than two months after Mexico began shipping avocados into California in early 2007 the commission created significant disruption to the market and “severely damaged the ability of Mexican growers and packers to market their fruit,” according to a press release from APEAM.

The lawsuit charges that the California Avocado Commission spread falsehoods and disparaged Mexican avocados in ways that significantly reduced sales. Dale McNiel, Washington, D.C.-based lawyer for APEAM, said the lawsuit alleges trade defamation, interference with contractual relations, interference with prospective economic advantage, negligence and unfair competition. “The gist of the matter is that CAC made numerous public defamatory statements about Mexican avocados which contributed to the severe drop in demand during 2007 and to some extent continuing into the future,” he said.

Filed under Agriculture and Food, Mexico by

Crashing dollar makes wine exporters happy campers

As reported in the Los Angeles Times:

With the declining value of the U.S. dollar and increasing wine sales overseas, Charles Shaw wine, an American favorite, may seem in some places more like “One-Buck Chuck.”

That’s because the low value of the dollar is starting to turn California wines into bargains abroad. 2007 was a vintage year for wine exports, which grew by almost 9% to a record $951 million, the Wine Institute, the industry’s main trade group, said Thursday. California wineries make 95% of the U.S. wine sold abroad. Two large Central Valley companies, E. & J. Gallo Winery and Charles Shaw maker Bronco Wine Co., were among the biggest exporters.

Gallo, the nation’s largest wine exporter, has bottles on the shelves of supermarkets in China and 91 other countries, and Bronco is a big supplier of bulk wine that is bottled and sold in England, one of the largest foreign markets for California vintages.

The volume of U.S. wine sold abroad is growing by an even faster, 12% rate. California wine is now sold in 125 countries. On Thursday, the euro rose above $1.52 for the first time in its nine-year history. Further interest-rate cuts in the United States are likely to keep exchange rates favorable for wine exporters. At the same time, the low dollar helps California winemakers fend off foreign competition in the U.S. Jon Fredrikson, a Woodside, Calif., wine industry analyst, believes there are early signs that the low dollar is starting to pay off for California makers of premium wines.

“American wines are a bargain right now, and that’s showing up with what’s being shipped to Canada, where the value of our wine shipments is up nearly 25%,” he said. But exporters and industry analysts said the rosy numbers masked a more negative truth about the global wine market: There’s a huge trade imbalance.

Though the U.S. sold nearly $1 billion of wine abroad last year, it imported $4.7 billion worth, according to Fredrikson. The U.S. is a target for virtually every other wine-producing nation because it is the most lucrative market in the world, he said. Americans drink about $30 billion worth of wine each year.

High-end California vintners are having trouble breaking into many foreign wine markets abroad, where French labels still carry more prestige, he said. Much of the wine moving between the U.S. and Europe is less expensive bulk wine that companies are purchasing to bottle and market under their own labels. Fredrikson said the trade had taken on a certain irony with “these big ships of wine passing each other at night.”

Vintners, though, are bullish about exports. “We can compete very well with anywhere in the world,” said Joseph Gallo, chief executive of Modesto-based Gallo, the largest winery in the U.S. Constellation Brands Inc. of Fairport, N.Y., which owns the Ravenswood and Robert Mondavi brands, among others, said its sales of California wine grew by double digits through November.

“A lot of growth is happening with better wine at higher price points,” said Jose Fernandez, CEO of Constellation Wines North America. “It’s just not people looking for an inexpensive California Chardonnay.” Fernandez believes the low dollar has enticed overseas drinkers to sample California wine, and “once that happens, they discover that they like the quality of the wine.”

Filed under Agriculture and Food, Wine by

California lost more than 20,000 jobs in January

California lost 20,300 jobs in January as employers sliced payrolls while grappling with the slowing national economy and stubborn housing slump, state officials announced last week. The January job figures followed a revised gain of 11,400 jobs in December, the Employment Development Department reported. Revised annual job figures showed the state added only 14,900 payroll jobs in the 12-month period ended Jan. 31, a tiny 0.1 percent increase. The once-booming construction sector accounted for the most job cuts, shedding 69,300 positions, a 7.6 percent annual drop.

“These revisions, while not unexpected, highlight the probability that economic growth in 2008 will be lower than expected, which in turn will intensify the pressures on state and local budgets,” Stephen Levy, director of the Center for Continuing Study of the California Economy, wrote in a research brief. About 1.1 million Californians were looking for work in January, unchanged from December, but up by 182,000 since January 2007, the state agency reported. More than half were laid off, while 115,800 people chose to leave their job. The rest were either temporarily employed or new job seekers. The unemployment rate was 5.9 percent.

Filed under z9-Uncategorized by

Governor upbeat about Economy

Our famously optimistic Governor thinks we are being too negative about the economy, and that everything will be fine. As reported in the San Francisco Chronicle:

At a time when Sacramento is struggling to balance its checkbook, Gov. Arnold Schwarzenegger gave a robust assessment of the state’s economic strength Thursday and claimed the media is overstating the depth of the national slowdown.

“I don’t like the coverage that I see, because it’s a little bit too negative,” the celebrity-governor said in a speech to a civic group, Town Hall Los Angeles. “The reality of it is, it’s not that bad,” Schwarzenegger said. State finances “did go down with the economy, but we are going to be OK in California.”

Schwarzenegger’s remarks echoed in part an assessment of the national economy by President Bush, who expressed concern Thursday about slowing growth but predicted the nation is not bound for recession. “I believe that our economy has got the fundamentals in place for us to … grow and continue growing, more robustly hopefully than we’re growing now,” Bush said in Washington.

Faced with a troubled housing market and the largest projected budget gap in the nation, Schwarzenegger has called for across-the-board cuts to most state programs and said Thursday his administration “should go after” so-called tax loopholes. There are “tax loopholes out there that we can close that will give us additional money for our budget, so we don’t have to make just cuts,” the governor told reporters after his speech, without committing to specific steps.

The governor argued that the state is better positioned than many others to rebound, because of the diversity of California’s economy, which includes the entertainment capital in Los Angeles and high-tech powerhouses in the Silicon Valley. State income is higher than at this time last year, he said, but falling below projections for growth. But the state’s financial condition is nothing like 2003, he argued, when he was elected in a historic recall election. “We have turned things around,” he argued.

Filed under California Economy, Governor Schwarzenegger by

March 10, 2008

Chevron launches new gas project in Australia

As reported in the International Herold Tribune, Chevron Chevron Corp. has announced plans to develop a liquefied natural gas export venture based on its Wheatstone field off northwestern Australia. The facility will be built on the northwest coast of mainland Australia, the company said, ruling out a location on Barrow Island, the nearby site of Chevron’s Gorgon LNG venture with Royal Dutch Shell PLC and Exxon Mobil Corp. There is still uncertainty as to when Chevron and its partners will approve Gorgon, which would be Australia’s biggest resource development, the Tribune reported, and there have been been persistent speculation of dissent among the joint venture partners as costs on that project continue to rise. Wheatstone, in contrast, is much smaller, with Chevron planning to tap an estimated 4.5 trillion cubic feet of gas. A Chevron team of roughly 100 people will conduct further appraisal drilling on both Wheatstone and the adjacent Iago field this year, along with design studies and site evaluation.

Filed under Australia, Energy Industry by

A part time Governor?

Does California have a part time Governor? Some people apparently think so, and given the Governor’s commute times the evidence is on their side. When Governor Schwarzenegger was first elected, there were a few raised eyebrows because he was so slow in moving to the State capital. Then the press coverage on this just faded away and I think most people assumed the Governor keep a home or some kind of residence in Sacramento. It turns out he does not and in fact has been commuting on a daily basis to his mansion in Brentwood on his private jet. Other officials and politicians have apparently been grumbling about this for some time but have been “reluctant to risk alienating Schwarzenegger by publicly criticizing him for it”. As the Los Angeles Times reports “there have long been complaints in Sacramento that his attention is too often focused elsewhere”:

Like many of the Californians he represents, Gov. Arnold Schwarzenegger now spends more than three hours commuting because he lives so far from the office. But his ride is a private jet. After flirting briefly with buying a Sacramento abode for his family, then living alone for a while in a 2,000-square-foot hotel penthouse across from the Capitol, the governor has decided to stay nearly every night at his Brentwood mansion.

The commute costs hundreds of thousands of dollars a year, which aides say the governor pays for himself. Some environmentalists say the trips expand his carbon footprint enough to undermine his image as a crusader against global warming, despite the pollution credits he buys to offset the damage.

Abandoning more glamorous parts to settle in Sacramento has long been a trade-off governors made for the privilege of running the state. But Casa de los Gobernadores, the 12,000-square-foot suburban ranch home that Ronald Reagan and his family had built when they ruled the town, did not lure Schwarzenegger and kin, despite five visits to the home by California first lady Maria Shriver and a Realtor.

“I just don’t have a home in Sacramento,” Schwarzenegger said in a recent interview at a Starbucks in Washington, D.C., where he had flown — by private jet — to attend the winter meeting of the National Governors Assn. “The question is how can I be with my family, because that is extremely important, to be with my kids. They are all growing up. They are in their teens. They need their father around,” …

Schwarzenegger has used his vast financial resources to create a kind of roving governorship, with almost constant travel in and out of California. He spent more than $591,000 in campaign funds, donated mostly by special interests, for travel in 2007 — a year in which he was not running a major campaign.

The governor rarely sleeps now in the $62,000-a-year hotel penthouse paid for by a tax-exempt charitable foundation. But in the early years of his administration, Schwarzenegger spent most weeknights there, working late, receiving visitors and playing chess, former aides said.

“When I worked for him, he was there almost every night,” said Donna Lucas, a public relations consultant who was a senior advisor to the governor and first lady during Schwarzenegger’s first term. “We were working so hard, I can’t even tell you. I know it was important for him to have an opportunity to be up here in Sacramento.”

When he went out, his security detail would knock loudly on the door of the hotel garage where his caravan of SUVs was parked, wave to the workers and bring the governor down from his suite, as garage and hotel employees took pictures. Now he is rarely sighted. “I didn’t see him in a very long time,” a cashier said from inside a booth at the garage, speaking on condition of anonymity out of fear of losing the job.

Filed under Governor Schwarzenegger, Opinion by

March 11, 2008

Comercia freezing accounts of venture-backed start-ups

VentureBeat is reporting that Comerica Bank is freezing the money market accounts of venture-backed companies. They could not get Comerica to deny this and instead quoted a bank spokesperson as saying ““At Comerica, we are working with customers on a case-by-case basis to assist them with their liquidity needs.”. The problem can apparently be traced to the auction-rate note market that has been facing a serious disruption. “Those notes make up a $330 billion market that recently came to a virtual standstill. They represent debt from city governments and other tax-exempt organizations, and the rates are reset at auctions every week” according to the New York Times, and VentureBeat noted that in mid-February, the demand for those notes “completely dried up”. They believe this is one of the first examples of the subprime burst directly affecting venture-backed start-ups.

Filed under California Economy, Venture Capital by

March 12, 2008

Bridges to Italy economic development group launched

Bridges to Italy has launched as a first-of-its-kind economic development organization focused on helping Southern California entrepreneurs, researchers and investors pursue new business opportunities with their colleagues in Italy and throughout the world. The nonprofit organization will foster cooperation and collaboration through an ongoing series of networking events that highlight Italy’s emerging technology sectors. The first such event was held February 25th at UC Irvine, and introduced business leaders from Southern California and throughout the US to some of Italy’s most renowned biotechnology pioneers. “The goal of Bridges to Italy is to help business and research leaders in Southern California connect one-on-one with their foreign colleagues to build successful new ventures in the technology sector,” said Bridges to Italy founder Bianca Dellepiane. “Information and personal relationships are the building blocks of international business collaboration.”

Bridges to Italy events present information about business, research and investment opportunities in a format that transcends language and cultural barriers. The organization’s approach to international business introduces Italian and US participants to each other’s unique cultural, as well as business, resources and opportunities. This in turn helps its events attract a uniquely multicultural and multidisciplinary crowd. “We want to make learning about international business opportunities an approachable and even fun endeavor,” Dellepiane explains. More information about Bridges to Italy can be found at

Filed under Business Associations, Economic Development, Italy by

March 17, 2008

Black Market in H-1B Visas has developed

The U.S. Department of Homeland Security has permitted the development of a black market for H1B Visas, according to a report in World Journal. Senator Chuck Grassley (R-Iowa) recently criticized the Bush Administration for not upholding H-1B work visa regulations and wrote a letter to Homeland Security Secretary Michael Chertoff documenting abuse of the H-1B visa program. The World Journal’s review of court documents show that there is now a black market for H-1B visas in the United States. Companies now often apply for H-1B work visas for people who don’t have legal jobs waiting for them, and then lease the H-1B visa holders out to work for other companies, which is an illegal practice under current regulations. Grassley also said most of the H-1B visas are used by foreign-headquartered companies, and American companies who need high-tech international employees get only a small part of the annual quota.

Filed under Foreign Relations, Immigration by

China Blocking YouTube

The government of China is blocking YouTube, the online video broadcasting service operated by Google of Mountain View, apparently because users had uploaded videos of recent protests againt Chinese rule in Tibet. As reported in the San Francisco chronicle:

Internet users in China were blocked from seeing on Sunday after dozens of videos about protests in Tibet appeared on the popular U.S. video Web site. The blocking added to the communist government’s efforts to control what the public saw and heard about protests that erupted Friday in the Tibetan capital, Lhasa, against Chinese rule.

Access to, usually readily available in China, was blocked after videos appeared on the site Saturday showing foreign news reports about the Lhasa demonstrations, montages of photos and scenes from Tibet-related protests abroad. There were no protest scenes posted on China-based video Web sites such as, and The Chinese government has not commented on its move to prevent access to YouTube. Internet users trying to call up the Web site were presented with a blank screen.

Filed under China, Media and Entertainment by

March 31, 2008

West Coast Ports losing business to East Coast Ports

Remember the shipping holiday seasons in 2004/2005? So many imported goods shipments from Asia descended on California Ports that one observer at the Port of Long Beach said “it looks like the invasion of Normandy”. How things have changed, according to a variety of industry reports it appears that port traffic, and also congestion, are way down at California Ports. The reasons include a slowing economy and sinking dollar, more productivity at the Ports and apparently a loss of business to East Coast Ports. As reported in Supply Chain Digest there seems to be serious cause for concern:

In 2005, severe capacity constraints caused many importers to shift volumes from Long Beach/LA and other West coast ports in favor of places like Houston and a variety of East coast ports to gain more consistency in transit times. Now, slowing import growth combined with productivity improvements means West coast congestion issues are long gone – but by most reports, container volumes continue to move eastward for a new set of reasons.

Larry Gross, President of Gross Transportation Consulting, said recently that significant volumes of imports that previously came into the United States through West coast ports and then moved East through rail/intermodal are now coming into the U.S. via the East coast ports. “If you look at region-to-region intermodal flows, you will see that there are certain region-to-region flows that have dramatically dropped,” Gross recently said, as the containers come directly into East coast ports.

Similarly, according to a report last November by the American Association of Port Authorities, the West Coast’s share of Asian imports fell to 58 percent in 2005 from 86 percent in 1999, while the Panama Canal’s share climbed to 40 percent from 11 percent – a stunning shift in volumes. Why? Two primary factors:

* Rising fees that impact total delivered cost comparisons versus east coast ports
* Continued capacity constraints on the rail side to move containers inland

Traditionally, it has been cheaper to bring containers into west coast ports, and move them via rail to distribution centers in the central and eastern regions of the US, where they are distributed to the majority of the US population that lives east of the Mississippi.

But seemingly never-ending proposals for new container fees in California to fund infrastructure improvements and environmental impact mitigation are causing real concern for importers. For example, carriers that deliver cargo to the ports of Long Beach and Los Angeles are facing a combination of new fees that could amount to as much as $100 per fully loaded TEU.

“The cost of these fees is more than we pay to load or unload a container at the San Pedro (Los Angles) ports,” Edward DeNike, president of SSA Containers, recently said during a presentation at the Trans-Pacific Maritime Conference. “This is Southern California and we know that Northern California will follow and the Pacific Northwest won’t be far behind.” He said that his company recently lost handling business of 100,000 containers a year from one customer that shifted import volumes from Seattle to the East Coast.

As an example of the mounting fees, beginning June 1, 2008, a new $35 charge will be placed on every loaded 20-foot equivalent cargo container entering or leaving the Long Beach or LA ports by truck. When the new fees where approved, Long Beach Mayor Bob Foster commented that the new tariffs were “an important milestone for our community. It puts the costs for cleaner air where it belongs — on the prices of goods sold.” Well, that’s the way to attract more port business. As a result of these new fees, which East coast ports haven’t matched, West coast ports become increasing less cost competitive for containers that will ultimately move eastward.

Rail Capacity also an Issue. While West coast port capacity and throughput has definitely not been an issue of late, the rail lines leaving the West coast have not been able to expand their capacities at the same rates. As a result, port efficiency gains have not always results in total transit cycle time improvements. In Southern California, the challenge is getting long-haul freight out of a vast urban area. In the Northwest and Western Canada, the hurdle is dealing with the need to build more tracks and ensure reliable service through regions of heavy weather.

Planned improvements in the Panama Canal to increase throughput and the size of ships that can be handled may accelerate this trend. US West coast ports are being threatened by other change as well – the expansion of Canada’s West coast Prince Rupert port, and plans by Asian interests to invest in ports in Mexico that would move goods by rail to the rest of the U.S., bypassing West Coast urban traffic, are also getting increased attention from importers.

Filed under California Economy, California Ports by

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