MPs have questioned the ability of the Post Office's management to boost profits, a day after Royal Mail workers backed plans for strike action.
The trade and industry select committee outlined a number of worries it had about the postal network and called for the government to play a greater role.
Members urged management to show more "imagination and entrepreneurial flair in developing new areas of business".
Royal Mail-owned Post Office aims to shut 2,500 of its 16,000 outlets.
The closures would be made across the UK under modernisation plans.
'Low morale'
The MPs called on the government to get involved and help boost the competitiveness of the network, and not just "manage its decline".
"The post office network cannot be left as it is, with low morale among sub-postmasters and the likelihood of significant numbers of closures which leave gaps in provision," the select committee said.
"We therefore welcome the government's determination to establish a comprehensive national network," it continued.
"However, we want that network to be sustainable, and we are yet to be convinced that either the government or Post Office has thought through what to do in the event of future closures," it added.
Strike action
The MPs also said that there was a lack of a coherent plan "to make post offices more profitable and less dependent on continued public subsidy".
"Without this, there is a real danger that we will be faced with an inadequate network within a few years," they concluded.
The comments came a day after postal workers voted strongly in favour of taking industrial action over pay, in what would be the first national postal strike since 1996.
The union is in dispute with the Royal Mail over its 2.5% pay offer, and it is expected that about 130,000 CWU members will now stage walk-outs.
Saturday, June 9, 2007
Bank claims deluge legal service
The government's Money Claim Online small claims service (MCOL) is being overwhelmed by claims for bank charges. So many people are using the website to reclaim overdraft charges that at times it has slowed almost to a standstill.
The MCOL help-desk blames "very high traffic" and advises callers to log in to the site outside office hours.
A member of staff told the BBC: "We are getting thousands, hundreds of thousands, of cases since the bank charges cases started."
The government's Courts Service does not record what a claim is for.
But with MCOL now handling 600 new cases every day - more than twice the rate seen in 2006 - the bank claims cases appear to be the reason for the recent upsurge.
Kevin Westall, a senior manager in the Courts Service, said extra computer equipment would be installed within two months which would let it handle much more data.
"The numbers of claims have increased recently," he said.
"It's like any web system, such as an internet bank, there will be times when it will be relative easy to get in and times when it will be very busy."
County courts
The flood of claims against banks is also placing an increasing burden on the county courts around the country, where claims are heard if the banks choose to defend them.
"They are increasing in number all the time," said an official at Southend county court.
"All courts are being inundated with them."
Some courts, such as Southend, have adopted a strategy of block booking claims for a particular day so they can all be dealt with at once.
But practice varies around the country.
Some judges will award judgement to a claimant even before a hearing is arranged if they think the banks will not turn up.
Meanwhile a Judge in Hull, as revealed exclusively by the BBC News website, has taken the opposite tack and is threatening to strike out 20 claims on the grounds that they have no chance of winning.
Judges
A number of judges around the country have become increasingly annoyed at the tactics used by the banks.
Once the legal procedure has been started by a claimant, the banks typically tend to settle claims just before the hearing, or on the day of the hearing itself, or simply fail to turn up in court at all to substantiate their written defences.
Judge Stephen Gerlis, who speaks for county court judges in the London area, told the BBC's Money Box programme last week that the legal system had no way of dealing with this "mass litigation".
He pointed out that the banks could not be forced into court to defend themselves if they agreed to settle.
Writing for the Times Online, he added: "There has been nothing like it in the history of civil litigation" and described the present situation as "bizarre".
Judge Gerlis called for a change in the law so that the judicial authorities could have a mechanism to drag the matter into a senior court to establish whether or not the banks' overdraft charges are illegal or not.
The MCOL help-desk blames "very high traffic" and advises callers to log in to the site outside office hours.
A member of staff told the BBC: "We are getting thousands, hundreds of thousands, of cases since the bank charges cases started."
The government's Courts Service does not record what a claim is for.
But with MCOL now handling 600 new cases every day - more than twice the rate seen in 2006 - the bank claims cases appear to be the reason for the recent upsurge.
Kevin Westall, a senior manager in the Courts Service, said extra computer equipment would be installed within two months which would let it handle much more data.
"The numbers of claims have increased recently," he said.
"It's like any web system, such as an internet bank, there will be times when it will be relative easy to get in and times when it will be very busy."
County courts
The flood of claims against banks is also placing an increasing burden on the county courts around the country, where claims are heard if the banks choose to defend them.
"They are increasing in number all the time," said an official at Southend county court.
"All courts are being inundated with them."
Some courts, such as Southend, have adopted a strategy of block booking claims for a particular day so they can all be dealt with at once.
But practice varies around the country.
Some judges will award judgement to a claimant even before a hearing is arranged if they think the banks will not turn up.
Meanwhile a Judge in Hull, as revealed exclusively by the BBC News website, has taken the opposite tack and is threatening to strike out 20 claims on the grounds that they have no chance of winning.
Judges
A number of judges around the country have become increasingly annoyed at the tactics used by the banks.
Once the legal procedure has been started by a claimant, the banks typically tend to settle claims just before the hearing, or on the day of the hearing itself, or simply fail to turn up in court at all to substantiate their written defences.
Judge Stephen Gerlis, who speaks for county court judges in the London area, told the BBC's Money Box programme last week that the legal system had no way of dealing with this "mass litigation".
He pointed out that the banks could not be forced into court to defend themselves if they agreed to settle.
Writing for the Times Online, he added: "There has been nothing like it in the history of civil litigation" and described the present situation as "bizarre".
Judge Gerlis called for a change in the law so that the judicial authorities could have a mechanism to drag the matter into a senior court to establish whether or not the banks' overdraft charges are illegal or not.
3-Day Slide Ends as Bond Yields Fall
Stocks closed higher yesterday after a three-day slide as bond yields retreated and oil prices fell, easing worries about rising borrowing costs and inflation.
A flurry of encouraging corporate reports, including a strong monthly sales report from McDonald’s, lent support.
Shares in National Semiconductor, the computer chip maker, rose 14.7 percent after the company reported higher-than-expected profit, adding to optimism about technology spending and helping lift the Nasdaq more than 1 percent.
Even with yesterday’s gains, stocks finished the week with their heaviest losses since the week ended March 2 as bond yields rose on concerns that global growth will raise inflation. Rising yields can cut into corporate profits and make takeovers more expensive as borrowing costs rise.
Stocks also got a lift from falling crude oil prices after a storm that threatened Mideast supplies dissipated.
“After having been spooked by the rapidity with which long rates were rising, the market is regaining its footing, which makes some sense, seeing as the fundamentals haven’t changed at all,” said Michael T. Darda, chief economist at MKM Partners in Greenwich, Conn.
“What we essentially had was a bond market that was absurdly valued, priced for several rate cuts, and we found out that those assumptions were as wrong as wrong could be. I see weakness in stocks as a buying opportunity.”
The Dow Jones industrial average rose 157.66 points, or 1.19 percent, to 13,424.39. The Standard & Poor’s 500-stock index jumped 16.95 points, or 1.14 percent, to 1,507.67. The Nasdaq composite index climbed 32.16 points, or 1.27 percent, to 2,573.54.
For the week, the Dow declined 1.78 percent, the S.& P. 500 fell 1.87 percent and the Nasdaq lost 1.54 percent.
The benchmark 10-year Treasury note rose 6/32, to a price of 95 10/32. The note’s yield, which moves in the opposite direction from the price, retreated to 5.11 percent from 5.13 percent late Thursday.
Utility stocks, battered in the sell-off, climbed as the 10-year note’s yield declined. Utilities and other large-dividend payers had become less attractive to investors as bond yields rose during the week.
Shares of Constellation Energy gained $1.01, or 1.2 percent, to $83.92. Entergy rose $2.49, or 2.4 percent, to $106.80.
Shares of industrial conglomerates, particularly those sensitive to increases in oil prices, rose as crude oil futures fell more than $2 a barrel. Alcoa advanced 73 cents, or 1.9 percent, to $39.66, and helped lift the Dow. United Technologies rose $1.36, or 2 percent, to $70.23, while Boeing gained $1.35, or 1.4 percent, to $98.19. Together, they ranked as the Dow’s biggest gainers.
McDonald’s stock climbed $1.20, or 2.4 percent, to $51.41, posting its largest monthly comparable sales increase in more than three years.
Tyco International was up $1.17, or 3.6 percent to $33.80, after it formally approved its separation into three publicly traded companies through a spinoff to shareholders.
Semiconductor shares helped the Nasdaq composite index, with National Semiconductor shares up $3.79, to $29.58. The Philadelphia Stock Exchange index of semiconductors rose 3.1 percent.
Shares of Qualcomm gained 85 cents, or 2.1 percent, to $41.87, after the company said demand for wireless chips is better than expected.
A Russian Energy Exchange
The New York Mercantile Exchange is in talks to create a Russian energy exchange in St. Petersburg, according to its chief executive, James E. Newsome.
“We’re working with the Russian government to develop a futures exchange in St. Petersburg,” Mr. Newsome said yesterday while in St. Petersburg to sign a memorandum of understanding and begin the project.
Russia’s deputy economic development and trade minister, Kirill Androsov, said this week that he expected futures trading in the Russian export blend of crude oil, known as Rebco, to move to St. Petersburg by the end of 2007.
A flurry of encouraging corporate reports, including a strong monthly sales report from McDonald’s, lent support.
Shares in National Semiconductor, the computer chip maker, rose 14.7 percent after the company reported higher-than-expected profit, adding to optimism about technology spending and helping lift the Nasdaq more than 1 percent.
Even with yesterday’s gains, stocks finished the week with their heaviest losses since the week ended March 2 as bond yields rose on concerns that global growth will raise inflation. Rising yields can cut into corporate profits and make takeovers more expensive as borrowing costs rise.
Stocks also got a lift from falling crude oil prices after a storm that threatened Mideast supplies dissipated.
“After having been spooked by the rapidity with which long rates were rising, the market is regaining its footing, which makes some sense, seeing as the fundamentals haven’t changed at all,” said Michael T. Darda, chief economist at MKM Partners in Greenwich, Conn.
“What we essentially had was a bond market that was absurdly valued, priced for several rate cuts, and we found out that those assumptions were as wrong as wrong could be. I see weakness in stocks as a buying opportunity.”
The Dow Jones industrial average rose 157.66 points, or 1.19 percent, to 13,424.39. The Standard & Poor’s 500-stock index jumped 16.95 points, or 1.14 percent, to 1,507.67. The Nasdaq composite index climbed 32.16 points, or 1.27 percent, to 2,573.54.
For the week, the Dow declined 1.78 percent, the S.& P. 500 fell 1.87 percent and the Nasdaq lost 1.54 percent.
The benchmark 10-year Treasury note rose 6/32, to a price of 95 10/32. The note’s yield, which moves in the opposite direction from the price, retreated to 5.11 percent from 5.13 percent late Thursday.
Utility stocks, battered in the sell-off, climbed as the 10-year note’s yield declined. Utilities and other large-dividend payers had become less attractive to investors as bond yields rose during the week.
Shares of Constellation Energy gained $1.01, or 1.2 percent, to $83.92. Entergy rose $2.49, or 2.4 percent, to $106.80.
Shares of industrial conglomerates, particularly those sensitive to increases in oil prices, rose as crude oil futures fell more than $2 a barrel. Alcoa advanced 73 cents, or 1.9 percent, to $39.66, and helped lift the Dow. United Technologies rose $1.36, or 2 percent, to $70.23, while Boeing gained $1.35, or 1.4 percent, to $98.19. Together, they ranked as the Dow’s biggest gainers.
McDonald’s stock climbed $1.20, or 2.4 percent, to $51.41, posting its largest monthly comparable sales increase in more than three years.
Tyco International was up $1.17, or 3.6 percent to $33.80, after it formally approved its separation into three publicly traded companies through a spinoff to shareholders.
Semiconductor shares helped the Nasdaq composite index, with National Semiconductor shares up $3.79, to $29.58. The Philadelphia Stock Exchange index of semiconductors rose 3.1 percent.
Shares of Qualcomm gained 85 cents, or 2.1 percent, to $41.87, after the company said demand for wireless chips is better than expected.
A Russian Energy Exchange
The New York Mercantile Exchange is in talks to create a Russian energy exchange in St. Petersburg, according to its chief executive, James E. Newsome.
“We’re working with the Russian government to develop a futures exchange in St. Petersburg,” Mr. Newsome said yesterday while in St. Petersburg to sign a memorandum of understanding and begin the project.
Russia’s deputy economic development and trade minister, Kirill Androsov, said this week that he expected futures trading in the Russian export blend of crude oil, known as Rebco, to move to St. Petersburg by the end of 2007.
Ample Jobs, but Youths Are Choosy
For youths who want to work this summer, the job market is strong, offering a wide range of employment opportunities. The bigger question seems to be, Who is going to take them?
“At Yellowstone, you could show up today and probably be in a dorm room and go to work tomorrow morning,” said Bill Berg, a founder of the job board Coolworks.com, which contracts with employers in the national parks and other travel destinations to promote job opportunities. “In many cases, you can write your own ticket now, particularly if you’re a cook or a chef.”
Other traditional jobs like lifeguards and hot-dog vendors at the ballpark also go wanting.
“Not as many kids want to do that kind of work,” said Howard Feldstein, director for the Arlington Employment Center, which for the last 11 years has held a summer job fair for 13-to-23-year-olds in the Washington area. “I think the desire for summer jobs has changed a little bit; kids are looking not only for income, but what makes them look good for the next step in their life.”
Increasingly, students are seeking out internships, both paid and unpaid, or jobs that will provide training for a future career.
In response, employers who rely on teenagers and college students are adapting their jobs to make them more attractive.
Summer camps, for example, are creating internships and working with universities to allow students to earn college credits, said Ann Sheets, president of the American Camp Association.
“When you think of working at summer camp, you normally think of recreation activities,” she said. “But there are many other positions that have nothing to do with recreation.”
For example, Ms. Sheets said, a student interested in nutrition could work as a dietitian with a camp. A business major can help in purchasing and operations.
“The camp directors I know have packaged opportunities so they apply to a number of types of students,” she said.
Darcie Strohmaier, a 21-year-old psychology major at Ramapo College in New Jersey, will be working as a cabin counselor at Camp Echo in the Catskills, for college credits. Ms. Strohmaier wants to be a teacher after graduation. She will be using the experience to do fieldwork with children.
As part of the cooperative program offered by her college, she will live with and supervise a group of 8-year-old girls. She will write weekly journals on her experience, followed by a term paper at the end of the summer. Her focus will be conflict resolution and motivation in children.
She pays the college $250 for each of four credits she will earn, but she will also be paid about $1,800 by the camp.
“It’s almost like taking a course you don’t go to school for,” Ms. Strohmaier said. “And the experience with these children will prepare me to be a better teacher.”
Marla Coleman, an owner and director of Camp Echo, said she was seeing more counselors who were interested in internship and arrangements like the ones for college credits.
“There are all kinds of variations and models,” she said.
Internships are also popular in numerous other areas, including accounting, finance and health care.
In recent years, according to the Bureau of Labor Statistics, the number of youths age 16 to 24 working from April to July has grown to 24.6 million in 2006 from 24.1 million in 2003. The percentage of youths participating varies slightly from 67.3 percent to 66.7 percent during that period.
The number of youths working this summer is expected to remain about the same and a wealth of online job sites like SummerJobs, SnagAJob, Teens4Hire are available to aid teenagers and college students in their search.
A sampling of job listings range from working in the dining room of Jordan House at Acadia National Park — “should be in good condition, expect to carry trays of dishes weighing more than 50 lbs 100 times a day” (pay $6 an hour, plus tips) — to canvassing communities to raise awareness for environmental groups ($4,000 to $6,000 for the summer) to performing and working as a character at Walt Disney World.
Still, there are concerns about unemployment, particularly in light of increases in the minimum wage.
The number of unemployed youths age 16 to 24 increased by 658,000 last summer, according to the Labor Department . And, the department’s monthly job report for May showed that the teenage unemployment rate was about three and a half times the national rate of 4.5 percent.
Some predict the situation will worsen with the passage of an increase to the federal minimum wage. In May, Congress passed and President Bush signed a law increasing the minimum wage to $7.25, from $5.15. The increase will occur in three steps. The first increase, to $5.85, will occur in July, two months after the bill was signed by the president. It will increase to $6.55 one year after that, and to $7. 25 a year later.
“With the minimum wage hike, people who hire lower-skilled, entry-level workers are saying, ‘Hmmm, maybe I don’t hire that extra worker or maybe I hire someone in the job market a little longer,’ ” said Dr. Jill Jenkins, chief economist for the Employment Policies Institute, a nonprofit research group that studies issues of entry-level employment.
“You’re going to see fewer teens who are going to be employed when you bump up the wage rates. More people are going to come out looking for those jobs.”
Such attitudes typically pit student workers against retirees and immigrants, with child labor laws working against teenagers when it comes to employment.
“When you hire a teen you have to follow all the rules for the department,” said Nadia Conyers, youth employment program coordinator with the Arlington Employment Center. “A lot of places now, if you’re under 18, it’s a little bit harder to find a job.”
Ms. Conyers said the employment center compiled a list of retailers that would hire younger teenagers and provided workshops to help those who cannot find a job to create one for themselves, like baby-sitting, lawn mowing and running errands.
Chelsea Straughn, 15, who attended the Arlington job fair, résumé in hand, agreed the options were limited, but she still put in an application for seven jobs. Her favorite was a receptionist job with United Parcel Service that would require typing and answering phones, although most of the jobs she applied for centered around pools, either as a lifeguard or working at the gate.
“There wasn’t a lot to choose from, most jobs you had to be 16,” said Chelsea, who will be a sophomore at Bishop Ireton High School in Alexandria, Va., next fall.
Still, both she and her mother, Pam Straughn, said just getting out and exploring the job market provided a valuable experience.
“It’s good to get out there and get a sense of what it is like to look for a job,” Ms. Straughn said. “This summer if she hears back from an employer that will be great. If not, that’s fine, too. We’ll be out there next year when there will be many more opportunities.”
“At Yellowstone, you could show up today and probably be in a dorm room and go to work tomorrow morning,” said Bill Berg, a founder of the job board Coolworks.com, which contracts with employers in the national parks and other travel destinations to promote job opportunities. “In many cases, you can write your own ticket now, particularly if you’re a cook or a chef.”
Other traditional jobs like lifeguards and hot-dog vendors at the ballpark also go wanting.
“Not as many kids want to do that kind of work,” said Howard Feldstein, director for the Arlington Employment Center, which for the last 11 years has held a summer job fair for 13-to-23-year-olds in the Washington area. “I think the desire for summer jobs has changed a little bit; kids are looking not only for income, but what makes them look good for the next step in their life.”
Increasingly, students are seeking out internships, both paid and unpaid, or jobs that will provide training for a future career.
In response, employers who rely on teenagers and college students are adapting their jobs to make them more attractive.
Summer camps, for example, are creating internships and working with universities to allow students to earn college credits, said Ann Sheets, president of the American Camp Association.
“When you think of working at summer camp, you normally think of recreation activities,” she said. “But there are many other positions that have nothing to do with recreation.”
For example, Ms. Sheets said, a student interested in nutrition could work as a dietitian with a camp. A business major can help in purchasing and operations.
“The camp directors I know have packaged opportunities so they apply to a number of types of students,” she said.
Darcie Strohmaier, a 21-year-old psychology major at Ramapo College in New Jersey, will be working as a cabin counselor at Camp Echo in the Catskills, for college credits. Ms. Strohmaier wants to be a teacher after graduation. She will be using the experience to do fieldwork with children.
As part of the cooperative program offered by her college, she will live with and supervise a group of 8-year-old girls. She will write weekly journals on her experience, followed by a term paper at the end of the summer. Her focus will be conflict resolution and motivation in children.
She pays the college $250 for each of four credits she will earn, but she will also be paid about $1,800 by the camp.
“It’s almost like taking a course you don’t go to school for,” Ms. Strohmaier said. “And the experience with these children will prepare me to be a better teacher.”
Marla Coleman, an owner and director of Camp Echo, said she was seeing more counselors who were interested in internship and arrangements like the ones for college credits.
“There are all kinds of variations and models,” she said.
Internships are also popular in numerous other areas, including accounting, finance and health care.
In recent years, according to the Bureau of Labor Statistics, the number of youths age 16 to 24 working from April to July has grown to 24.6 million in 2006 from 24.1 million in 2003. The percentage of youths participating varies slightly from 67.3 percent to 66.7 percent during that period.
The number of youths working this summer is expected to remain about the same and a wealth of online job sites like SummerJobs, SnagAJob, Teens4Hire are available to aid teenagers and college students in their search.
A sampling of job listings range from working in the dining room of Jordan House at Acadia National Park — “should be in good condition, expect to carry trays of dishes weighing more than 50 lbs 100 times a day” (pay $6 an hour, plus tips) — to canvassing communities to raise awareness for environmental groups ($4,000 to $6,000 for the summer) to performing and working as a character at Walt Disney World.
Still, there are concerns about unemployment, particularly in light of increases in the minimum wage.
The number of unemployed youths age 16 to 24 increased by 658,000 last summer, according to the Labor Department . And, the department’s monthly job report for May showed that the teenage unemployment rate was about three and a half times the national rate of 4.5 percent.
Some predict the situation will worsen with the passage of an increase to the federal minimum wage. In May, Congress passed and President Bush signed a law increasing the minimum wage to $7.25, from $5.15. The increase will occur in three steps. The first increase, to $5.85, will occur in July, two months after the bill was signed by the president. It will increase to $6.55 one year after that, and to $7. 25 a year later.
“With the minimum wage hike, people who hire lower-skilled, entry-level workers are saying, ‘Hmmm, maybe I don’t hire that extra worker or maybe I hire someone in the job market a little longer,’ ” said Dr. Jill Jenkins, chief economist for the Employment Policies Institute, a nonprofit research group that studies issues of entry-level employment.
“You’re going to see fewer teens who are going to be employed when you bump up the wage rates. More people are going to come out looking for those jobs.”
Such attitudes typically pit student workers against retirees and immigrants, with child labor laws working against teenagers when it comes to employment.
“When you hire a teen you have to follow all the rules for the department,” said Nadia Conyers, youth employment program coordinator with the Arlington Employment Center. “A lot of places now, if you’re under 18, it’s a little bit harder to find a job.”
Ms. Conyers said the employment center compiled a list of retailers that would hire younger teenagers and provided workshops to help those who cannot find a job to create one for themselves, like baby-sitting, lawn mowing and running errands.
Chelsea Straughn, 15, who attended the Arlington job fair, résumé in hand, agreed the options were limited, but she still put in an application for seven jobs. Her favorite was a receptionist job with United Parcel Service that would require typing and answering phones, although most of the jobs she applied for centered around pools, either as a lifeguard or working at the gate.
“There wasn’t a lot to choose from, most jobs you had to be 16,” said Chelsea, who will be a sophomore at Bishop Ireton High School in Alexandria, Va., next fall.
Still, both she and her mother, Pam Straughn, said just getting out and exploring the job market provided a valuable experience.
“It’s good to get out there and get a sense of what it is like to look for a job,” Ms. Straughn said. “This summer if she hears back from an employer that will be great. If not, that’s fine, too. We’ll be out there next year when there will be many more opportunities.”
Caution: Lower Truck Sales Ahead
DETROIT, June 8 — For most of their history, pickups have been to auto companies what they were to their customers: reliable workhorses, with Detroit counting on them for big sales and profits even as flashier cars came and went.When paired with sport utility vehicles, pickups provided auto makers with a one-two punch of profits and a measure of insulation from foreign competitors, which have struggled to make headway in a market dominated by General Motors, the Ford Motor Company and the Chrysler Group.
By the late 1990s, pickups became more than just work trucks. Loaded with the same expensive features found on cars, like leather seats, booming stereos and big passenger compartments, pickups shared the same cachet as S.U.V.’s, bought by consumers who parked them in suburban driveways, not at construction sites.
But as with sport utilities, the popularity of pickups is in decline. Sales have dropped, rebates and other incentives are climbing, even for companies like G.M. and Toyota that have the newest models on the market.
In March, Bucky Hacker traded his 2002 Dodge Ram Quad Cab pickup for a subcompact car, the Mazda 3. Mr. Hacker, a student from Oak Ridge, Tenn., originally bought the Ram to tow a boat, and also thought its macho appearance would help him attract girls.
But there were drawbacks. “Gas was ridiculous,” Mr. Hacker, 24, said. “The thing got 13 miles per gallon.” His Mazda averages twice that, or 26 miles per gallon in city and highway driving, and it will be easier to fit into tight parking spaces at the University of Tennessee, where he plans to study political science this fall.
Mr. Hacker touches on a reason sales have dropped: a growing sense of environmental responsibility that has flared along with gas prices. That, and an uncertain housing market, which is prompting many contractors to delay buying new trucks, have combined to cut into pickup truck sales, which are down 5 percent so far this year from a weak market last year. That is more than double the overall decline in industry sales, which are down 2 percent this year.
Because of the decline, automakers expect pickups to post their lowest sales this year since the beginning of the decade, even with incentives.
The average discount on a Dodge Ram is $6,000, up $500 since January, according to the Power Information Network, which tracks industry trends. Chevrolet is paying an average of $2,343 in incentives on each Silverado pickup, double its discounts at the beginning of the year, when the truck was new.
Even Toyota is discounting the Tundra, which it introduced in February, by an average of $2,000, the Power data showed.
“We used to have a lot of people getting out of an S.U.V. and into a truck,” said Scott Satiritz, general sales manager at Massey-Yardley Chrysler Dodge in Hobe Sound, Fla. Now, he said, “the average customer is not buying a pickup.”
“They’re into economy cars because of the mileage. Gas prices have really hurt.”
In fact, Ford’s trade-in data shows a number of customers have exchanged F-series pickups for cars like the smaller Ford Focus or the Fusion sedan, said the company’s chief sales analyst, George Pipas. That suggests customers who do not need pickups are not returning for them.
“The people who are buying trucks are buying them because they have to, not because they want to,” said Steve Magers, general manager of Elmhurst Ford in Elmhurst, Ill., about 20 miles west of Chicago.
His F-series sales have dropped 10 to 12 percent since the beginning of the year, with commercial users, like owners of construction companies and landscaping firms, making up the bulk of his truck business.
Gone are the customers who purchased big trucks because they were “a status symbol thing,” Mr. Magers said.
Six years ago, 28 percent of consumers nationwide who bought pickups did so because they liked the way they looked, according to data from CNW Marketing Research, which follows industry trends. This year, only 16 percent of customers purchased big trucks primarily for their appearance.
As for the buyers who have defected, Art Spinella, the president of CNW, said: “They won’t come back. They’re finding other vehicles that make fashion statements.”
Mr. Spinella said contractors, farmers or ranchers who need pickups for their businesses will continue to buy them, but not so often as in the past.
That is a reason a Lehman Brothers analyst, Brian Johnson, predicts that the truck market may continue to decline. If so, it will mean more problems for Detroit auto companies, all trying to rebound from billion-dollar losses in 2006.
By the late 1990s, pickups became more than just work trucks. Loaded with the same expensive features found on cars, like leather seats, booming stereos and big passenger compartments, pickups shared the same cachet as S.U.V.’s, bought by consumers who parked them in suburban driveways, not at construction sites.
But as with sport utilities, the popularity of pickups is in decline. Sales have dropped, rebates and other incentives are climbing, even for companies like G.M. and Toyota that have the newest models on the market.
In March, Bucky Hacker traded his 2002 Dodge Ram Quad Cab pickup for a subcompact car, the Mazda 3. Mr. Hacker, a student from Oak Ridge, Tenn., originally bought the Ram to tow a boat, and also thought its macho appearance would help him attract girls.
But there were drawbacks. “Gas was ridiculous,” Mr. Hacker, 24, said. “The thing got 13 miles per gallon.” His Mazda averages twice that, or 26 miles per gallon in city and highway driving, and it will be easier to fit into tight parking spaces at the University of Tennessee, where he plans to study political science this fall.
Mr. Hacker touches on a reason sales have dropped: a growing sense of environmental responsibility that has flared along with gas prices. That, and an uncertain housing market, which is prompting many contractors to delay buying new trucks, have combined to cut into pickup truck sales, which are down 5 percent so far this year from a weak market last year. That is more than double the overall decline in industry sales, which are down 2 percent this year.
Because of the decline, automakers expect pickups to post their lowest sales this year since the beginning of the decade, even with incentives.
The average discount on a Dodge Ram is $6,000, up $500 since January, according to the Power Information Network, which tracks industry trends. Chevrolet is paying an average of $2,343 in incentives on each Silverado pickup, double its discounts at the beginning of the year, when the truck was new.
Even Toyota is discounting the Tundra, which it introduced in February, by an average of $2,000, the Power data showed.
“We used to have a lot of people getting out of an S.U.V. and into a truck,” said Scott Satiritz, general sales manager at Massey-Yardley Chrysler Dodge in Hobe Sound, Fla. Now, he said, “the average customer is not buying a pickup.”
“They’re into economy cars because of the mileage. Gas prices have really hurt.”
In fact, Ford’s trade-in data shows a number of customers have exchanged F-series pickups for cars like the smaller Ford Focus or the Fusion sedan, said the company’s chief sales analyst, George Pipas. That suggests customers who do not need pickups are not returning for them.
“The people who are buying trucks are buying them because they have to, not because they want to,” said Steve Magers, general manager of Elmhurst Ford in Elmhurst, Ill., about 20 miles west of Chicago.
His F-series sales have dropped 10 to 12 percent since the beginning of the year, with commercial users, like owners of construction companies and landscaping firms, making up the bulk of his truck business.
Gone are the customers who purchased big trucks because they were “a status symbol thing,” Mr. Magers said.
Six years ago, 28 percent of consumers nationwide who bought pickups did so because they liked the way they looked, according to data from CNW Marketing Research, which follows industry trends. This year, only 16 percent of customers purchased big trucks primarily for their appearance.
As for the buyers who have defected, Art Spinella, the president of CNW, said: “They won’t come back. They’re finding other vehicles that make fashion statements.”
Mr. Spinella said contractors, farmers or ranchers who need pickups for their businesses will continue to buy them, but not so often as in the past.
That is a reason a Lehman Brothers analyst, Brian Johnson, predicts that the truck market may continue to decline. If so, it will mean more problems for Detroit auto companies, all trying to rebound from billion-dollar losses in 2006.
Trade Deficit Narrowed a Bit in April
The United States’ trade imbalance with the rest of the world narrowed slightly in April, providing a tentative sign that less-lopsided trade could help lift the economy this year.With economic growth expected to be only about two-thirds the pace of last year, trade could be an important factor in keeping the economy from stalling, economists said. Growth has slowed in the United States, but economies in Asia and Europe are surging and snatching up more and more American exports.
The amount of goods and services sold to foreign countries increased in April by $247 million, to $129.5 billion, the Commerce Department said yesterday; imports fell by $3.6 billion, to $188 billion.
Those shifts put the trade deficit at $58.5 billion for the month — $3.9 billion smaller than it was in March.
To be sure, the trade deficit is still huge. For January through April, it was a cumulative $235.3 billion. But it is growing less rapidly, even after inflation is taken into account. In real terms, the deficit for the first four months of the year fell by 3 percent compared with the period last year.
“The big picture is we’re seeing improvement,” said Michael Carey, chief economist for North America with Calyon, who predicted that trade would add almost a point to growth in gross domestic product in the second quarter. “That should help because we have other sectors of the economy that are not performing so well.”
In the first quarter, trade subtracted a full point from the G.D.P., which expanded just 0.6 percent, the slowest in more than four years. While trade has occasionally aided growth for a quarter, it has not added to a full year’s growth since 1995.
But growth overseas, helped by a weak dollar and slower domestic growth, should help pull the deficit tighter. Economists expect that trade will contribute — if only slightly — to the G.D.P. this year. (The dollar rose, however, to a two-month high against the euro in trading yesterday, driven in part by the trade report.)
“The weaker dollar and the buoyancy of demand overseas should boost United States exports,” said Paul Ashworth, senior United States economist for Capital Economics. “And slightly slower U.S. economic growth will help curb import growth. We are seeing it already a little.”
There were some signs in the monthly trade report that consumer spending was cooling. The $3.6 billion drop in imports in April was concentrated in consumer goods, which declined by $1.5 billion. Imports of pharmaceutical products, electronics, clothing and jewelry all decreased. Imports of automobiles, auto parts and engines declined $1 billion.
Businesses also pulled back on import spending, purchasing less telecommunications equipment, industrial machinery and building materials.
Americans also imported less oil in April, according to the Commerce Department figures, but rising prices caused the overall value to rise.
The price of imported crude oil jumped in April to $57.28 a barrel, from $53 a barrel a month earlier. That pushed up the value of crude oil imports to $17.5 billion, from $17.2 billion in March. But imports averaged about 10.2 million barrels a day, down from 10.5 million in March.
Still, hugely imbalanced trade remains a problem, as the deficit with China showed. It stood at $19.4 billion in April — by far the largest deficit with any single country. Last April, it was $17.1 billion.
Economists said the growing deficit with China underscored just how difficult it will be for the United States to even out its trade relationship with the rest of the world.
“About a third of the deficit comes from China,” said Timothy Rogers, chief economist with Briefing.com. “Unless you get some real progress there, it’s unlikely you’ll see a real turn.”
Indeed, while trade is expected to improve this year, long-term improvement will be more difficult, economists said. “It’s something that’s been there for quite a while, and something that’s likely to last for quite a while. I don’t think there’s a quick fix.”
The amount of goods and services sold to foreign countries increased in April by $247 million, to $129.5 billion, the Commerce Department said yesterday; imports fell by $3.6 billion, to $188 billion.
Those shifts put the trade deficit at $58.5 billion for the month — $3.9 billion smaller than it was in March.
To be sure, the trade deficit is still huge. For January through April, it was a cumulative $235.3 billion. But it is growing less rapidly, even after inflation is taken into account. In real terms, the deficit for the first four months of the year fell by 3 percent compared with the period last year.
“The big picture is we’re seeing improvement,” said Michael Carey, chief economist for North America with Calyon, who predicted that trade would add almost a point to growth in gross domestic product in the second quarter. “That should help because we have other sectors of the economy that are not performing so well.”
In the first quarter, trade subtracted a full point from the G.D.P., which expanded just 0.6 percent, the slowest in more than four years. While trade has occasionally aided growth for a quarter, it has not added to a full year’s growth since 1995.
But growth overseas, helped by a weak dollar and slower domestic growth, should help pull the deficit tighter. Economists expect that trade will contribute — if only slightly — to the G.D.P. this year. (The dollar rose, however, to a two-month high against the euro in trading yesterday, driven in part by the trade report.)
“The weaker dollar and the buoyancy of demand overseas should boost United States exports,” said Paul Ashworth, senior United States economist for Capital Economics. “And slightly slower U.S. economic growth will help curb import growth. We are seeing it already a little.”
There were some signs in the monthly trade report that consumer spending was cooling. The $3.6 billion drop in imports in April was concentrated in consumer goods, which declined by $1.5 billion. Imports of pharmaceutical products, electronics, clothing and jewelry all decreased. Imports of automobiles, auto parts and engines declined $1 billion.
Businesses also pulled back on import spending, purchasing less telecommunications equipment, industrial machinery and building materials.
Americans also imported less oil in April, according to the Commerce Department figures, but rising prices caused the overall value to rise.
The price of imported crude oil jumped in April to $57.28 a barrel, from $53 a barrel a month earlier. That pushed up the value of crude oil imports to $17.5 billion, from $17.2 billion in March. But imports averaged about 10.2 million barrels a day, down from 10.5 million in March.
Still, hugely imbalanced trade remains a problem, as the deficit with China showed. It stood at $19.4 billion in April — by far the largest deficit with any single country. Last April, it was $17.1 billion.
Economists said the growing deficit with China underscored just how difficult it will be for the United States to even out its trade relationship with the rest of the world.
“About a third of the deficit comes from China,” said Timothy Rogers, chief economist with Briefing.com. “Unless you get some real progress there, it’s unlikely you’ll see a real turn.”
Indeed, while trade is expected to improve this year, long-term improvement will be more difficult, economists said. “It’s something that’s been there for quite a while, and something that’s likely to last for quite a while. I don’t think there’s a quick fix.”
Quantifying the Role of Old-School Ties in Investing
A new study circulating through hedge funds and university campuses points to the powerful role that old-school ties play in the world of investing.Mutual fund managers invest more money in companies that are run by people with whom they went to college or graduate school than in companies where they have no such connections, the study found. The investments involving school ties, on average, also do significantly better than other investments.
The authors of the study offer two possible explanations — one benign and one decidedly not. Fund managers may simply know more about their old classmates, including which ones are likely to make good executives. The alternate explanation is that those executives may be passing along inside information to the fund managers.
The researchers do not take a position about which explanation is more likely.
“Everything we have is consistent with both explanations,” said Andrea Frazzini, an assistant professor at the University of Chicago and one of the study’s three authors. But he added, “We have no evidence of wrongdoing by any of these fund managers.”
Officials from the Securities and Exchange Commission have asked the authors to present their findings next month at one of the regular seminars held within the commission’s Office of Economic Analysis.
The paper is the latest example of an approach that might be called investigative economics, in which researchers dig through enormous amounts of data to look for patterns. In 2005, this kind of research helped uncover the widespread backdating of stock options, a scandal that has resulted in criminal complaints against some company executives and the resignations of a number of others. Other research led Eliot Spitzer, then New York’s attorney general, to crack down on illegal after-hours trading by mutual funds.
It remains unclear whether the latest paper will have any similar impact or whether it has pointed to improper trading. But some other economists who have read the paper said they believed that it probably had, even if the extent of such trading might be relatively small.
“It’s a very good paper,” said Michael S. Weisbach, a finance professor at the University of Illinois. “It suggests that there is illegal activity going on, but it doesn’t provide the S.E.C. a road map. You certainly can’t prosecute someone for having a good return on a company by somebody they went to college with.”
The study is being distributed by the National Bureau of Economic Research, a nonprofit group in Cambridge, Mass., that helps finance work by many of the country’s top economists. The authors have submitted the paper to The Journal of Political Economy, where it is being reviewed.
The authors have also been presenting it at academic seminars, as well as to the hedge fund arm of Goldman Sachs and to AQR Capital Management, another hedge fund. Regardless of their cause, the patterns are of potential interest to other investors, who could track the investments of mutual fund managers and mimic those strategies that seemed to work especially well.
“Something about these social networks is allowing portfolio managers to better predict the future returns of companies within the network,” said Lauren Cohen of Yale, another author.
The study looked only at mutual funds, which are required to report their holdings and performance regularly. It did not examine hedge funds, which are investment pools for wealthy individuals and institutions; hedge funds do not have to disclose their holdings publicly.
Mr. Cohen, Mr. Frazzini and the third researcher, Christopher Malloy of London Business School, are all in their late 20s or early 30s. They were inspired to do the study partly by how often they noticed people talking about their alma maters when they were introduced to each other in the business world, Mr. Cohen said. The economists wondered whether these social networks affected investment choices.
Their study, titled “The Small World of Investing,” examined 85 percent of the total assets under management from 1990 to 2006 and looked at different levels of university connections.
In the weakest kind of connection, a fund manager and one of a company’s top three executives shared nothing more than an alma mater. They could have attended different schools within the university and have been on the campus decades apart.
In the strongest connection, a fund manager and one of the top three executives attended the same school at the same university, and their time on campus overlapped. The most common shared school in the study, by far, was Harvard Business School.
On average, investments in companies where there was no connection returned 11.7 percent a year before fees, according to the economists’ estimates. Investments in companies with the closest level of connection — when a fund manager attended school with an executive — returned 20.1 percent a year.
As might be expected, investments with weaker connections had returns that fell somewhere in between, with returns of more than 11.7 percent and less than 20.1 percent.
The most benign explanation for the pattern is simply that fund managers who attended school with executives have an easier time learning about the companies where those executives work. They are more likely to travel in similar social circles and may even remember their old classmate’s strengths and weaknesses.
“The results are much more consistent with the story that you went to college with Person X and know they’re really smart,” said Steven N. Kaplan, a finance professor at the University of Chicago. “My guess is that the whispering is going on, too, but the question is the relative amounts.”
Supporting Mr. Kaplan’s view, the paper does not offer clear evidence that the investments by the fund managers did unusually well in the weeks and months immediately after a stock was purchased.
On the other hand, investing based on school ties seems to have become less popular recently, which could suggest that financial regulations passed after the demise of Enron cut down on the exchange of inside information.
Last year, 7.1 percent of fund managers invested in at least one company that had a top executive with whom they had gone to school, down from 15 percent in 2002. The average during the 1990s was 11 percent.
The paper did highlight one specific example — to the displeasure of the company involved. Toward the beginning, the paper describes a mutual fund run by a graduate of Harvard Business School that did well by investing in Cummins Engine in the late 1990s. Two large purchases of Cummins stock happened in the months before it jumped in price, and the sale of those shares came in the months before it dropped.
(Mutual funds are required to disclose their holdings every quarter, meaning that the economists could not examine shorter time periods.)
A number of top officials at Cummins also attended Harvard Business School, though not at the same time as the fund manager.
The research paper does not identify the mutual fund, but public records make it clear that it is one run by Fidelity Investments.
Scott Beyerl, a Fidelity spokesman, said yesterday that he did not want to comment directly on the study. “Our equity portfolio managers continue to select stocks for their funds the way they always have — using a bottom-up approach focused on the relative attractiveness of company fundamentals and stock valuations,” Mr. Beyerl added.
Jean Blackwell, the chief financial officer at Cummins, said she was unhappy that the paper had singled out the company. “The linkages were weak,” she said. “It impugned our integrity without establishing that anything happened, and I take that really seriously.”
The authors of the study offer two possible explanations — one benign and one decidedly not. Fund managers may simply know more about their old classmates, including which ones are likely to make good executives. The alternate explanation is that those executives may be passing along inside information to the fund managers.
The researchers do not take a position about which explanation is more likely.
“Everything we have is consistent with both explanations,” said Andrea Frazzini, an assistant professor at the University of Chicago and one of the study’s three authors. But he added, “We have no evidence of wrongdoing by any of these fund managers.”
Officials from the Securities and Exchange Commission have asked the authors to present their findings next month at one of the regular seminars held within the commission’s Office of Economic Analysis.
The paper is the latest example of an approach that might be called investigative economics, in which researchers dig through enormous amounts of data to look for patterns. In 2005, this kind of research helped uncover the widespread backdating of stock options, a scandal that has resulted in criminal complaints against some company executives and the resignations of a number of others. Other research led Eliot Spitzer, then New York’s attorney general, to crack down on illegal after-hours trading by mutual funds.
It remains unclear whether the latest paper will have any similar impact or whether it has pointed to improper trading. But some other economists who have read the paper said they believed that it probably had, even if the extent of such trading might be relatively small.
“It’s a very good paper,” said Michael S. Weisbach, a finance professor at the University of Illinois. “It suggests that there is illegal activity going on, but it doesn’t provide the S.E.C. a road map. You certainly can’t prosecute someone for having a good return on a company by somebody they went to college with.”
The study is being distributed by the National Bureau of Economic Research, a nonprofit group in Cambridge, Mass., that helps finance work by many of the country’s top economists. The authors have submitted the paper to The Journal of Political Economy, where it is being reviewed.
The authors have also been presenting it at academic seminars, as well as to the hedge fund arm of Goldman Sachs and to AQR Capital Management, another hedge fund. Regardless of their cause, the patterns are of potential interest to other investors, who could track the investments of mutual fund managers and mimic those strategies that seemed to work especially well.
“Something about these social networks is allowing portfolio managers to better predict the future returns of companies within the network,” said Lauren Cohen of Yale, another author.
The study looked only at mutual funds, which are required to report their holdings and performance regularly. It did not examine hedge funds, which are investment pools for wealthy individuals and institutions; hedge funds do not have to disclose their holdings publicly.
Mr. Cohen, Mr. Frazzini and the third researcher, Christopher Malloy of London Business School, are all in their late 20s or early 30s. They were inspired to do the study partly by how often they noticed people talking about their alma maters when they were introduced to each other in the business world, Mr. Cohen said. The economists wondered whether these social networks affected investment choices.
Their study, titled “The Small World of Investing,” examined 85 percent of the total assets under management from 1990 to 2006 and looked at different levels of university connections.
In the weakest kind of connection, a fund manager and one of a company’s top three executives shared nothing more than an alma mater. They could have attended different schools within the university and have been on the campus decades apart.
In the strongest connection, a fund manager and one of the top three executives attended the same school at the same university, and their time on campus overlapped. The most common shared school in the study, by far, was Harvard Business School.
On average, investments in companies where there was no connection returned 11.7 percent a year before fees, according to the economists’ estimates. Investments in companies with the closest level of connection — when a fund manager attended school with an executive — returned 20.1 percent a year.
As might be expected, investments with weaker connections had returns that fell somewhere in between, with returns of more than 11.7 percent and less than 20.1 percent.
The most benign explanation for the pattern is simply that fund managers who attended school with executives have an easier time learning about the companies where those executives work. They are more likely to travel in similar social circles and may even remember their old classmate’s strengths and weaknesses.
“The results are much more consistent with the story that you went to college with Person X and know they’re really smart,” said Steven N. Kaplan, a finance professor at the University of Chicago. “My guess is that the whispering is going on, too, but the question is the relative amounts.”
Supporting Mr. Kaplan’s view, the paper does not offer clear evidence that the investments by the fund managers did unusually well in the weeks and months immediately after a stock was purchased.
On the other hand, investing based on school ties seems to have become less popular recently, which could suggest that financial regulations passed after the demise of Enron cut down on the exchange of inside information.
Last year, 7.1 percent of fund managers invested in at least one company that had a top executive with whom they had gone to school, down from 15 percent in 2002. The average during the 1990s was 11 percent.
The paper did highlight one specific example — to the displeasure of the company involved. Toward the beginning, the paper describes a mutual fund run by a graduate of Harvard Business School that did well by investing in Cummins Engine in the late 1990s. Two large purchases of Cummins stock happened in the months before it jumped in price, and the sale of those shares came in the months before it dropped.
(Mutual funds are required to disclose their holdings every quarter, meaning that the economists could not examine shorter time periods.)
A number of top officials at Cummins also attended Harvard Business School, though not at the same time as the fund manager.
The research paper does not identify the mutual fund, but public records make it clear that it is one run by Fidelity Investments.
Scott Beyerl, a Fidelity spokesman, said yesterday that he did not want to comment directly on the study. “Our equity portfolio managers continue to select stocks for their funds the way they always have — using a bottom-up approach focused on the relative attractiveness of company fundamentals and stock valuations,” Mr. Beyerl added.
Jean Blackwell, the chief financial officer at Cummins, said she was unhappy that the paper had singled out the company. “The linkages were weak,” she said. “It impugned our integrity without establishing that anything happened, and I take that really seriously.”
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