August 13, 2008

Mitsubishi offers $3 billion for Union Bank of California

Japan’s Mitsubishi UFJ Financial Group has offered to purchase the 35 percent stake in San Francisco based UnionBanCal- parent of Union Bank of California, that’s held by the public. As reported in the San Francisco Business Times:

Japan’s largest bank my market cap sees the Union Bank branch network as a nice launch pad for its own banking ambitions in America. “We view this transaction as a first step of our growth strategies in the United States, and we will achieve greater management flexibility and aim to further strengthen our presence,” MUFG said.

MUFG unsolicited offer calls for the Japanese bank to pay $63 per share, or $2.7 billion, for the UnionBanCal shares in public hands. That was up from a previously undisclosed offer of $58 per share that the San Francisco bank’s board rejected in June as too low. The proposed transaction values the entire bank at $8.8 billion. Investors anticipate that the purchase price may be nudged higher, pushing the bank’s shares up 13 percent Aug. 12 to $65.50 at the close of New York Stock Exchange trading.

UnionBanCal operates 330 branches in California, Oregon and Washington state. Union Bank in recent years has adopted a strategy of courting business owners and affluent customers rather than trying to go head-to-head against California’s two-largest banks, Bank of America and Wells Fargo. The numbers don’t work for Union Bank to engage in that costly battle, given the larger banks’ ubiquitous branches and ATMs.

Filed under Banking and Financial Services, Japan, Mergers and Acquisitions by

August 6, 2008

Space Exploration company raised $20 million

As reported in Venturebeat:

Space Exploration Technology Corp., the company created by PayPal co-founder Elon Musk and better-known as SpaceX, has raised $20 million from The Founders Fund.

This is the first time SpaceX has raised outside funding, according to the Wall Street Journal; Musk previously invested $100 million of his own money. The news follows right behind the Hawthorne, Calif. company’s third attempted launch. The launch ended in failure last weekend, when the first-stage engine didn’t separate as required. The Falcon 1 (pictured left) carried three satellites — one for the U.S. Department of Defense, two for NASA — as well as the remains of 208 people who paid to have their remains shot into space, including astronaut Gordon Cooper and actor James Doohan, who played Scotty on Star Trek.

But Musk says a fourth launch is “almost ready” to go, and that the new funding is just a “precautionary measure.” Musk already has a connection with The Founders Fund, which was established by his PayPal co-founders Peter Thiel, Luke Nosek and Ken Howery. The Journal reports that SpaceX also held unsuccessful talks with aerospace company Northrop Grumman about a possible investment.

SpaceX has big goals — to make space travel, including missions to other planets, more reliable and affordable by a factor of 10. With three failed launches, it clearly has a way to go on when it comes to reliability, but apparently it’s not unusual to see these kinds of problems during the early stages of a rocket’s developent. SpaceX already has plans for 11 missions.

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July 15, 2008

Iraq to open consulate in San Diego

The Los Angeles Times reports that Iraq will open a consulate in San Diego to assist Iraqis with documentation, passports, visas and other consular services.

Coming soon to California: a consulate of Iraq. To take the strain off the Iraqi embassy in Washington, D.C., and help expatriates scattered around the United States, the Iraqi Foreign Ministry plans to place consulates in Detroit and San Diego. Detroit and San Diego? “Yes, there’s quite a big community in Detroit,” Labid Abbawi, Iraqi foreign undersecretary, said. “Also we have quite a big number in San Diego as well,” Abbawi said. “There are also in Los Angeles a lot, but we thought San Diego was more suitable.” There were 3,705 Iraqis in Detroit, 2,039 in Los Angeles and 822 in San Diego, according to the 2000 U.S. Census.

But there are also Iraqi communities in east San Diego County, particularly Christian Chaldeans. Many small market owners and professionals in the area are Iraqi. Some estimate that, including second generation, there are 25,000 Iraqis in the county. Those numbers are likely to increase as the U.S. State Department gears up its post-war refugee program. The Bush administration set a goal of admitting 12,000 Iraqi refugees this year.

The San Diego consulate should open before the end of the year, Abbawi said. It will assist Iraqis with documentation, passports, visas and other consular services. Americans flying from the West Coast to Iraq will also find it convenient. Now they will be able to pick up their visas in San Diego, which could be preferable to waiting a day or two in Amman, Jordan, to get the necessary papers. For now, it may be only reporters and military contractors who would care, but Abbawi thinks wider need could be coming soon. If Iraq has turned the corner on security, as Abbawi believes, tourism should follow.

“We hope the day will not be too long where you’ll be able to come and have a walk in Baghdad quite freely,” Abbawi said. “I hope this will not be long.”

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June 17, 2008

California signs MOUs with Chile

Representatives for the State of California have signed a series of Memorandums of Understanding (MOU) the Republic of Chile. In a speech before the California Assembly, Chilean President Michelle Bachelet Jeria urged stronger ties between Chile and the United States. The two countries share a respect for freedom, human rights and fair trade, she said. Speaking of Chile, she said, “We aim to take a giant step and become a developed nation in the span of one generation.”. “We have not come to ask for aid,” she told legislators. “We have come to form a partnership for development.”

According to a press release from the Governor’s office, the first MOU was signed by officials from the Republic of Chile’s Ministry of Foreign Affairs and California’s Environmental Protection Agency, Resources Agency and Department of Food and Agriculture. It is an agreement establishing a California-Chile “Partnership for the 21st Century” that is based on the desire of both parties to open collaboration between their institutions, organizations, universities, research centers, companies and citizens.

Schwarzenegger, in a prepared statement, said that Chile and California are “natural partners, given our longstanding history of educational exchange, our excellence in agriculture and our similar geography and climate.”

“President Bachelet’s visit marks a continuation of our efforts to promote collaboration through cooperative actions and initiatives focused on issues of mutual interest, including education and workforce development, environmental protection, clean energy, agriculture, information technology and trade,” Schwarzenegger said.

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Wells Fargo gives $100K to Hispanic chamber

Wells Fargo made a $100,000 grant to the California Hispanic Chambers of Commerce, of which $25,000 will be used to start a CHCC Foundation. Since 2000, the bank has given more than $1 million to the chamber. The CHCC says it represents the interests of more than 600,000 Hispanic-owned businesses and more than 60 Hispanic chambers and business organizations throughout California.

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May 26, 2008

State Public Employee salaries soaring under Schwarzenegger

The state of California’s payroll is skyrocketing under Govern Schwarzenegger, even as its budget deficit has grown to billions of dollars, according to an analysis by the San Francisco Chronicle.

In Gov. Arnold Schwarzenegger’s first four years, the total bill for state workers salaries jumped by 37 percent, compared with a 5 percent increase in the preceding four years under then-Gov. Gray Davis, a Chronicle analysis of state payroll records shows.

One month before Schwarzenegger took office in November 2003, just eight state employees earned more than $200,000 a year working in the core state government, which excludes universities and the Legislature. In April of this year, there were nearly a thousand, according to records.

And the number of state employees making six-figure salaries has more than doubled since 2003, to nearly 15,000. Meanwhile, the number of state workers has grown by 26,000 under Schwarzenegger after being cut by Davis, who was recalled from office in the midst of a severe budget crisis.

Some of the pay increases in recent years have been out of Schwarzenegger’s control, including previously negotiated pay raises for some employee unions and court-ordered pay hikes for medical workers in the state prison system that are estimated to have cost the state hundreds of millions of dollars.

Also fueling the spurt in payroll growth: salary increases for employees in a few politically powerful labor unions, including the state’s prison guards, as well as pay hikes for workers in the upper echelons of state government. Elected members of the Legislature, who will decide in the coming weeks how to resolve the state’s $17.2 billion deficit for the fiscal year beginning July 1, also received increases last year.

“Salaries have only gone one way – up,” said Charles Murray, chair of the California Citizens Compensation Commission, which sets pay for the state’s top elected officials. Murray, a Republican from San Marino (Los Angeles County), has called for a pay cut for legislators and other elected officers in light of the state’s huge deficit.

“If we had control over the janitors, I’d ask them to take a pay cut, too,” he said. “The reasoning is very simple: We’re in big trouble moneywise.”

Legislators, gubernatorial aides and top medical professionals have received pay hikes in the last 12 months. And as the state looks at drastic cuts in many programs, the governor is proposing about $260 million in salary increases for the state’s prison guards, whose pay jumped about 34 percent in five years under their previous contract.

At the same time, pay for many lower-ranking civil service workers has not kept up with the 15 percent increase in the state’s consumer price index in the past four years, according to an analysis by the state Legislative Analyst’s Office. Most civil service workers saw their pay rise by only 12 percent over that time.

The winners of the payroll race seem to be the unions with the strongest political ties or those who spend big bucks on political contributions and lobbying, said Christina Lokke of California Common Cause, a good-government watchdog group.

“There’s lobbying going on among all these groups of state employees – and the outcomes are pretty imbalanced,” she said. Sometimes, politics and money beat good policy, that’s when the public loses out.

Schwarzenegger spokesman Aaron McLear said much of the blame rests with the Davis administration, which negotiated some contracts in which workers deferred initial pay raises for bigger gains in later years. Essentially, when the governor came into office, many of these promises had already been made, he said.

California Highway Patrol officers got a 32 percent pay increase over four years through a contract negotiated by the Davis administration that linked their pay to the five largest police departments in the state. The average officer now makes $73,000 a year. The state’s professional engineers received a 31 percent pay raise through a similar automatic-increase mechanism negotiated by Gov. Gray Davis’ administration.

Examples of the salary hikes revealed in the state’s payroll database and compensation documents include:

* More than 100 physicians and surgeons working in state prisons saw their pay increase from an average of $129,000 to $238,000 in four years, and salaries for supervising psychiatrists jumped to $236,000, after a federal court-appointed receiver, Robert Sillen, determined that pay had been so low that the system was having difficulty attracting competent medical workers.

* Legislators’ annual pay climbed from $99,000 in 2003 to $116,000 this year, while the state attorney general’s increased from $148,000 to $184,000. The governor’s salary also rose, from $175,000 to $212,000, but Schwarzenegger declines to accept his salary. The state citizen’s compensation commission sets these pay rates, and some of its members are now looking at whether it can lower them.

* Eleven top advisers in the governor’s office got hefty pay increases in August, a week after the governor signed a budget that slashed programs for the homeless, mental health services and parks. Chief of staff Susan Kennedy received a $32,000 pay raise, boosting her government salary to $175,000. Four years ago, the top aide in the governor’s office earned a base pay of $138,000.

* At the top of the state’s salary list were chief officers for the California Public Employees Retirement System and the state’s stem cell research facility in San Francisco, known as the Institute for Regenerative Medicine, each of which is controlled by a separate board that is independent of state elected officials.

CalPERS Chief Investment Officer Russell Read made a base salary of $555,000 – plus incentive pay that pushed his total earnings to more than $900,000, according to a spokeswoman for the system. Alan Trounson, a renowned biologist appointed last year to head the stem cell agency, is paid $490,000. Four years ago, the top employee in the retirement system made a base salary of $360,000, and the stem cell agency didn’t exist.

H.D. Palmer, a spokesman in the governor’s Department of Finance, said state pay rates often aren’t competitive with those in the private sector and in city and county governments throughout the state. This year, the three top investment officers at CalPERS, including Read, announced they will leave to pursue private-sector investment jobs, many of which pay millions of dollars a year.

While the public needs to be concerned with the salaries being paid out to state employees, it also needs to know the state is in a competitive market and we need to find ways to attract and keep the best people, said Jason Dickerson of the Legislative Analyst’s Office, which has recommended that the state keep a tight lid on any further pay increases.

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May 19, 2008

More corporate gifts for Schwarzenegger and his associates

In the most recent in a series of endless reports about Corporate gifts being given to our Governor and his associates – ostensibly in the “public interest”, the LA Times has reported that General Electric will be sponsoring a glitzy Governors Conference this August at Universal Studios in Hollywood.

The event could cost more than $3 million between GE and other private sponsors, according to participants in the planning of the conference, who requested anonymity because they were not authorized to discuss the arrangements. That would make it an expensive example of a technique Schwarzenegger has embraced to bring the glitzy style he appreciates to ceremonial state functions: getting corporations and wealthy supporters to pay for them. The governor’s aides say the practice saves taxpayers money.

Government watchdog groups argue that it may compromise the administration’s independence from corporate interests. Schwarzenegger’s phone call with Immelt was arranged by a GE executive, formerly an advisor to the governor, who oversees the company’s lobbyists in Sacramento.

“It’s a governmental conference, with governmental officials,” said Robert Stern, president of the Center for Governmental Studies in Los Angeles. “If GE is paying for it, the question is what does GE expect for their contribution? And they are certainly going to expect good will.” A spokesman for General Electric said the size and nature of the company’s contribution have not been finalized, and administration officials said there is no budget yet. Schwarzenegger’s office has accepted millions of dollars in private gifts for things such as state dinners, international travel and ornaments on state Christmas trees.

The cross-border conference, held each year in one of the 10 participating U.S. and Mexican states, is an important event for Schwarzenegger because it is the first to be hosted in California in eight years, and the only one while he is governor. “We are going to take this important annual event to a whole new level,” Schwarzenegger said last month in a statement announcing the partnership…

The bulk of private support received by Schwarzenegger’s office has come from the California Protocol Foundation, a nonprofit group affiliated with the California Chamber of Commerce that does not disclose the names of its donors or the details of specific expenditures.

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California agricultural products face shipping squeeze

Big farm products exporters are finding it more difficult and more expensive to ship their products overseas. The problem apparently is a result of high fuel prices a weakening economy- which is buying fewer foreign products resulting in fewer empty containers are heading out of U.S. ports. As reported in Sacramento Bee:

As the weak dollar makes the fruits of California farms ever more attractive to overseas buyers, big exporters like Sacramento’s Blue Diamond Growers are finding it tougher to get their products to far-off customers. The high price of oil and shifts in the global balance of trade have made space on container ships hard to come by. Cargo rates are up sharply. Delays of several months have become routine.

“It’s really put a crunch on U.S. ag exporters,” said Tammy Rossi, Blue Diamond’s manager of logistics and operations, as a forklift driver parked the last of 22 tons of almonds in a shipping container at the company’s

If all goes well, the 40-foot-long box will sail from the Port of Oakland through the Golden Gate on Monday and reach Germany 30 days later. A tangle of economic trends, however, has made the journey from Sacramento to Hamburg far less routine than it was just two years ago. From 2001 through 2006, a growing trade imbalance meant more and more containers reached U.S. ports full but left empty. Cargo carriers hungry to fill their ships offered rock-bottom prices and quick service to exporters.

“If the alternative is to send an empty container back, you put your hands on any customer you can,” said Asaf Ashar, co-director of the University of New Orleans’ National Ports and Waterways Institute. But the tide has shifted. The slumping U.S. economy has lowered demand for imports, while booming global demand for food commodities has boosted exports. The weak dollar, which has lost 24 percent of its value against the euro since early 2006, has made imports more expensive for U.S. buyers and exports cheaper for customers abroad.

As a result, fewer empty containers are heading out of U.S. ports. “The market power is changed,” Ashar said. “Shipping lines are putting the squeeze on (exporters) now.” The base cost of shipping a 20-foot-long container – the industry benchmark – from the Port of Oakland to Europe has risen 25 percent in the past year to around $2,500, according to David Enberg, a manager with the freight-forwarding firm EFI Logistics. He expects prices to rise another 20 percent by year end.

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Craigslist charges eBay with corporate espionage

Two California-based Internet icons- Craigslist and eBay have become involved in a bitter legal dispute. Ebay, which owns about 28 percent of Craigslist, fired the first salvo by filing suit in Delaware state court that that accused Craigslist of discriminating against eBay as a shareholder and using “clandestine meetings” to dilute eBay’s ownership stake. Craigslist has now filed a countersuit charging that eBay used its position to gather competitive information that was used to help lauch Kijiji, which many consider to be a direct competitor to Craigslist. The complaint charges that eBay code-named this its “Craigslist killer” in internal strategy discussions. Craigslist’s also alleges a plot by eBay to use its position as a minority shareholder and its position on the board to pressure Craigslist into a full-scale acquisition deal by eBay. “In the months leading up to the launch of its competing Kijiji site … eBay used its shareholder status to plant on Craigslist’s board of directors the individual responsible for launching and/or operating Kijiji,” the suit alleges. “Using the pretext that the information was necessary for Craigslist board-related matters, eBay made constant demands for confidential information in excess of what was required for that purpose”.

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May 12, 2008

Schwarzenegger calls for more junkets

Governor Schwarzenegger, who has displayed incredible ineptitude in developing international trade and economic development policies for California, has brazenly called for State officials to take more junkets with Corporate money. As reported in a L.A. Times article entitled “See the world, let special interests pay”:

Gov. Arnold Schwarzenegger on Wednesday encouraged lawmakers — especially those from small towns — to do more globe-trotting on the dime of special interests. Speaking at a forum on global economics held by the nonprofit Milken Institute, the governor suggested lawmakers would be more willing to embrace his plans to privatize the building of roads, schools, high-speed rail systems and other public works if they could see how effectively it has worked in other countries.

“Some of them come from those little towns, you know what I am saying, they come from those little towns and they don’t have that vision yet of an airport or of a highway that maybe has 10 lanes or of putting a highway on top of a highway,” Schwarzenegger said. “They look at you and say, ‘We don’t have that in my town. What are you talking about?’

“So they are kind of shocked when you say certain things. So I like them to travel around.” Such travel is typically paid for by a combination of special interests with business before the Legislature and foreign governments.

It usually involves stays at luxury resorts, high-end dining and the option of bringing a spouse along. Schwarzenegger has jetted around the world on “trade missions” paid for by donors whose identity is not disclosed. Campaign finance reformers are troubled by the ethical issues raised by such trips. Schwarzenegger said he is not.

“I am always against when the media beats up” on lawmakers “for traveling around because someone else is paying for their trips,” he said. “I mean, so what. If they were to take the money from the taxpayers,” then the media “would complain about using tax dollars to travel around the world and live in luxury and all this stuff.

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May 10, 2008

Long Beach customs agents seize 18,560 pairs of fake shoes

U.S. Customs and Border Protection officers discovered 18,560 pairs of fake Nike sneakers inside two shipping containers that arrived from China, Associated Press has reported. The ship’s manifest listed the containers as holding drainage pipeline fittings, but when officers at the Port of Long Beach opened them they found the shoes instead. “The average consumer who walks into a store I think would be fooled by them,” said Bonnie Lemert, U.S. Customs and Border Protection acting port director for the Los Angeles/Long Beach Seaport. So far this year, the customs agency has seized at least eight containers of footwear, mostly the Nike brand, said the federal agency’s spokesman Mike Fleming. Last year, agents seized $20.6 million dollars of counterfeit merchandise, and 80 percent of the fakes come from China, authorities said.

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April 21, 2008

Schwarzenegger to meet with Afghan governors

Governor Schwarzenegger is meeting with eight governors from Afghanistan as part of a U.S. State Department exchange program, Associated Press has reported. The governors are spending five days in California during their three-week visit to the U.S. to learn about federalism, American elections and agriculture. Schwarzenegger plans to meet briefly with the governors on Monday. He will talk about his job and how he works with local and federal officials. The Afghan leaders also were meeting with state lawmakers and agriculture and trade officials. e U.S. State Department says the governors are among hundreds of world leaders who have taken part in the International Visitor Leadership Program.

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California signs MOU with U.N. to help China curb greenhous gasses

As reported in the San Francisco Chronicle. It certainly sounds like a good idea- afterall, California has spent a huge amount of time and money to reduce the smog and pollution in our major cities, only to find that we are now the recipients of Chinese pollution. It remains to be seen whether this agreement will be purely symbolic or not. I am especially curious as to how the State intends to “encourage private entities in California to support climate change projects in China”. The State of California has few effective business programs. Will these projects go mostly to business associates of of the Governor, or channeled through shadowy lobbying organizations such as the California Foundation on the Environment and the Economy?

California’s top environmental official on Tuesday plans to sign an agreement with the United Nations to help China reduce its greenhouse gas emissions. The memorandum of understanding drafted by the U.N. Development Programme pairs California with one of the world’s largest emitters of greenhouse gases. California produces more greenhouse gases than any other state but also has taken strides to significantly reduce its output. That includes attempts to roll back auto and factory emissions, while trying to institute an emissions-trading system for industry.

California promises to share policy ideas and research for curbing greenhouse gas emissions, according to the four-page agreement to be signed on Earth Day in Beijing. The state also would mobilize public agencies and encourage private entities in California to support climate change projects in China.

“I think it will help show them they can indeed reach set targets and move forward on environmental protection and maintain a strong economy as California has,” Linda Adams, California’s Environmental Protection Agency secretary, said…

California’s agreement with the development program, a subsidiary of the U.N. that promotes economic development, follows several years of international outreach by the state. In 2005, Gov. Arnold Schwarzenegger signed an environmental agreement with the Beijing Municipal Environmental Protection Bureau to help improve air quality and water quality. The agreement was amended in 2007 to further bolster California’s support of Beijing’s air quality programs.

Schwarzenegger also has entered agreements with other states and parts of Canada to implement a carbon-trading program. The governor has said those agreements will help California meet the goals of a 2006 law seeking to cut greenhouse gases roughly a quarter by 2020.

On Monday, Schwarzenegger said the state’s agreement with China recognizes that climate change requires a global solution. “America has to lead, and we are doing so with or without Washington,” Schwarzenegger said in a statement. “California is not waiting for the federal government to take action.”… While California is pursuing its climate change goals, state regulators and politicians are bickering over how best to implement the landmark 2006 greenhouse gas law.

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April 8, 2008

Google to help United Nations track refugees

Mountain View-based Google is working with the U.N. High Commissioner for Refugees on a mapping service that tracks the movement of refugees. The project is expected to help humanitarian work by focusing attention on millions of refugees who have been forced from their homes because of hardship or violence. “All of the things that we do for refugees in the refugee camps around the world will become more visible,” U.N. Deputy High Commissioner for Refugees L. Craig Johnstone said. Google Earth can be focused on areas such as Darfur, Iraq and Colombia, and the U.N. will provide information on the problems faced by refugees.

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Two arrested for attempting illegal camera exports from LAX

Two men stopped from boarding a plane to China were charged with trying to illegally export sensitive infrared cameras that authorities say are restricted because of their potential military uses. As reported in the San Francisco Chronicle:

Beijing residents Zhi Yong Guo, 49, and Tah Wei Chao, 52, were named in a criminal complaint alleging they knowingly exported or attempted to export restricted items without a license, the U.S. attorney’s office said.

Prosecutors said both men were a flight risk and asked that they be held without bail. Both were scheduled to be arraigned on April 28. Chao’s attorney Richard Goldman said he did not yet know how his client planned to plead. “I believe in the presumption of innocence,” Goldman said..

Guo and Chao each face up to 20 years in federal prison if convicted. The men were arrested Saturday at Los Angeles International Airport after they tried to board a plane to China with 10 thermal imaging cameras in their luggage without the proper export licenses, the government said.

The cameras, which are primarily used by law enforcement, fire departments and the military, are carefully controlled for national security reasons, and are treated as munitions under the International Trafficking in Arms Regulations. They produce heat-based images invisible to the naked eye.

Federal authorities had been investigating the men since last August, when an Oregon-based company informed them of an order for three of the cameras from a new customer — Printing Plus Graphics of San Gabriel, Calif., according to an affidavit from Special Agent Steve Huerta of the Department of Commerce. The company, Flir Systems of Wilsonville, Oregon, repeatedly warned the customers that they could not export the cameras without a license, and shared Chao’s e-mail address and other documents with authorities.

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Disney to buy Chinese game developer

The Walt Disney Co.’s video game arm will buy a Chinese game developer as the U.S. entertainment giant expands in China. As reported in the San Francisco Chronicle, Disney Interactive Studios plans to buy Chinese company Gamestar, Founded in 2002, Gamestar has offices in the Chinese cities of Shanghai and Wuhan, according to the company. The acquisition will contribute to his Disney’s “global growth plans” and new products, said Graham Hopper, general manager for Disney Interactive. Gamestar had previously done outsourcing work for Disney, according to the Chronicle report and terms of the deal were not disclosed. Following the acquisition, Gamestar will help with existing projects but may move on to developing original games for the Chinese market. Walt Disney Internet Group has also reached a deal with China’s Shanda Interactive Entertainment to launch Disney-themed Internet-based video games.

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Another California Gold Rush?

As everyone knows, California ‘s modern history began with the gold rush of 1849. Now, because of the soaring price of gold, it may be happening again. As reported in the New York Times:

Driven by record high prices and a suburban thirst for new outdoor activities, tens of thousands of ’08ers are taking to historically rich streams and hills all across the West in search of nuggets, flecks and — more often than not — specks of gold. “Anywhere gold has been found in the past,” said Corey Rudolph, the field operations director for the Gold Prospectors Association of America. “That’s where they’re going again.”

Perhaps nowhere is the rush more spirited than in California, home of the Sierra’s famed Mother Lode, where the discovery of gold in 1848 caused a national migration. Like their forebears, many of today’s prospectors have little more than a pan, a shovel and a dream.

Unlike the original forty-niners, though, some of today’s caravans involve minivans, wetsuits and cellphones. And while many current prospectors say they hold out hopes of big scores, their clubs also act as social networks, where members exchange stories of the joys of sluicing and the unexplainable, often unattainable, thrill of shouting “Eureka!” at the sight of a nugget.

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Intel starts $500 million China investment fund

Intel Corp.’s venture capital arm announced that it has set up a new $500 million fund to invest in Chinese technology startups. The new fund, Intel Capital China Technology II, will invest in Chinese companies involved in wireless broadband, technology, media, telecommunications and environmentally friendly technologies. Intel Capital President Arvind Sodhani said the company’s second China fund plans to invest its US$500 million over five to seven years. The company set up in June 2005 its first fund targeting China, the $200 million Intel Capital China Technology Fund. That fund was meant to spend its allotment over the same period as the new fund but ended up spending all its capital in less than three years.

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California shown as part of Mexico in Absolute Vodka advertisment

Absolute vodka company set off a minor controversy by showing California, Texas and much of the Western part of Mexico in advertisements in Mexico. As reported in the San Francisco Chronicle:

The campaign, which promotes ideal scenarios under the slogan “In an Absolut World,” showed a 1830s-era map when Mexico included California, Texas and other southwestern states. Mexico still resents losing that territory in the 1848 Mexican-American War and the fight for Texas independence.

But the ads, which ran only in Mexico and have since ended, were less than ideal for Americans undergoing a border buildup and embroiled in an emotional debate over illegal immigration from their southern neighbor. .. Absolut said the ad was designed for a Mexican audience and intended to recall “a time which the population of Mexico might feel was more ideal.”

“As a global company, we recognize that people in different parts of the world may lend different perspectives or interpret our ads in a different way than was intended in that market, and for that we apologize.” Vin & Sprit, Absolut’s Sweden-based parent company, will be acquired by French spirit maker Pernod Ricard SA under a deal reached last week.

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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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