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Oyler School struggles to make a community model work

Tue, 2015-05-26 11:08

On a spring morning at Oyler School, in Cincinnati, Ohio, an announcement comes over the PA system: "Would the following students please report to the cafeteria..." It sounds like someone's in trouble.

But, it's just the opposite. They're being summoned for a  donut breakfast — a reward for making the honor roll, or missing no more than two days of school during the quarter.

Step one in turning around a school like Oyler: getting kids to show up. Children living in poverty get sick more often. They have to take care of brothers and sisters. Families move a lot, or don’t have reliable transportation, and sometimes a little nudge helps.

“Come on up,” principal Amy Randolph tells the students gathered at tables in front of her. “You can have as many donuts as your stomach will allow.”

Jami Luggen (left), resource coordinator at Oyler School, and principal Amy Randolph talk with police officers in Lower Price Hill.

Mary Wiltenburg/Marketplace

The state of Ohio has a minimum attendance requirement, and last year Oyler didn't meet it. So out came incentives like the donuts, and raffles for gift cards to places like Chipotle and H&M.

“School wide, we have increased about 5 percent just in this past school year, so I think that that is an indicator that there’s a little more motivation,” Randolph says.

Can a school really transform a community? Marketplace spent a year following along after the $21 million renovation of Oyler School. Explore the stories and meet the people featured in "One Year, One School."


But it’s going to take a lot more than donuts and gift cards to transform Oyler, which is ranked among the lowest-performing schools in the state. It’s going to take higher scores on state tests. After several years of progress, Oyler has backslid in the last two years. And this year Ohio switched over to new, and by all accounts harder, tests aligned with the Common Core standards.

“Oh, it was a lot harder,” says eighth-grader Justin Justice.

Justin and his classmates spent this spring prepping for the second round of the new math tests. Justin says he did pretty well on the first round back in February.

Still, Rachel Tapp, his teacher, says test scores can’t capture everything Oyler has achieved.

“I agree that we need accountability, but I do wish we had a better way of showing the work that actually gets done around here, because it is amazing,” she says. "It does feel bad to fail over and over and over in the eyes of the state.”

A lot of the work Tapp is talking about happens outside the classroom. Oyler, which serves children from preschool through 12th grade, is built on the idea that before kids can learn, you have to meet their basic needs. In the last 10 years the school has brought in a health clinic and vision center. It has a tutoring program with hundreds of volunteers. Recent additions include a free clothing store and a dental clinic.

Oyler School student Bradley Daniels is treated at the Delta Dental Center, a recent addition to Oyler’s array of services.

Mary Wiltenburg/Marketplace

Tucked away in a former storage space, 11th grade student Bradley Daniels reclines in an exam chair, mouth wide open, getting his first teeth cleaning in years. His mom, Tabitha Gribbins, sits by his side.

“It’s exciting to watch him grow,” she says. “College is next, and I don’t know — moving out and moving on up in the world.”

Not enough kids are taking that step. Today Oyler’s high school graduates 40 to 50 kids every year, but Principal Randolph says only about half of students who start as ninth-graders finish in four years.

“We should be graduating 95 to 100 percent of the kids that start,” she says. “It’s a small high school. It’s designed for these students. So we’re working on figuring out, what can we do better to make sure we’re doing that?”

Randolph took over last year after the school’s long-time principal resigned. With all the services in place, she can focus more on the academics. This year the school got a three-year, $1 million federal School Improvement Grant. Randolph hired instructional coaches to help teachers and launched a literacy program for the elementary grades.

“There is a direct correlation with third-grade reading levels and high school dropout rates,” she says.

In the high school, kids are taking their first Advanced Placement classes, using new laptops they can bring home. With Oyler, the job doesn't stop inside the school. Part of its mission is to help revive a neighborhood plagued by drugs, prostitution and poverty.

Far left, Oyler School in Lower Price Hill in Cincinnati, as seen from the corner of Neave and Staebler Streets.

Stacy Doose/Marketplace

After school, Randolph takes a walk through streets full of kids and neighbors enjoying a warm spring day. It was a on a day like this last summer when a young man was shot here. In front of a small park, a tree is decorated with stuffed animals and flowers in his memory.

“It was real tragic because it was in the middle of a community cookout,” she says. A toddler witnessed the shooting. “It was pretty horrific.”

Still, there are signs of progress. There's a new pizza place and a community and art space run by a nonprofit ministry. One of the school’s latest partnerships brought free WiFi to the neighborhood. Oyler has started a new project, working with the city and local landlords and developers to create stable, affordable housing for its families.

That’s a lot for a school to take on. But it’s going to take a lot to create the kind of community where kids have little more to worry about than doing well in school.

“Until we build and we have what we need, we’re just going to keep working, keep chipping away," Randolph says.

The Oyler Glee Club performs the “Star-Spangled Banner” at a Cincinnati Cyclones game. From left, Brittney Campbell, Kurtis Moser, Precious Gary and Savannaha Stidham.

Mary Wiltenburg/Marketplace

PODCAST: Beers and board games

Tue, 2015-05-26 03:00

The guy behind the guy at Apple gets a promotion. Marketplace Tech host Ben Johnson explains. Plus, Bernie Sanders officially kicks off his candidacy for the Democratic nomination for the presidency on Tuesday. The senator from Vermont describes himself as a “Democratic Socialist”.  We report that while some see socialism as an improbable platform for a U.S. presidential run, socialist candidates have done better than one might think historically. And there are a handful of these types of pubs starting to open up around the country.  They are basically a bar where you can play board games, video games, party games, etc. and they’re part of what seems to be a growing industry around gaming and broader nerd culture.

Charter moves to acquire Time Warner Cable

Tue, 2015-05-26 03:00

Charter Communication and Time Warner Cable announced today that the two cable providers plan to merge merge in a $55 billion deal that values Time Warner Cable at nearly $79 billion

Charter is also buying a smaller provider, Bright House Networks, which has 2.5 million customers. The three companies combined under the Charter banner will have roughly 24 million customers — just under the 27 million customers of rival Comcast.

Ross Rubin, principal analyst at Reticle Research, says a larger Charter “can negotiate more favorable terms with broadcasters,” possibly creating savings.

“They’re going to argue this is really great for consumers,” says Rob Frieden, a professor of telecommunications and law at Penn State University. But, Frieden predicts that the new competitive landscape would stymie a possible “maverick” company from emerging.

“You also have a situation where two operators control 80 percent of the broadband marketplace,” he says.

The deal may go more smoothly than the failed Comcast-Time Warner Cable merger, partly because Charter could now serve as a competitive check to Comcast.

Where everybody knows your game

Tue, 2015-05-26 02:00

Geek culture is having a bit of a moment. Superheroes are smashing box office records. Comic conventions have become national news. Now, gamers are getting their very own bars. A new pub in Savannah, Georgia is offering a place to throw back a few drinks while you battle it out in video or board games.

Walking into the Chromatic Dragon feels like entering most bars — at first. You decide if you want to sit at the bar or get a table; inside or out. A friendly employee approaches, but he’s not a server. He’s a "game master."

“Are there any board games or card games you guys would like to enjoy while you enjoy your food tonight?” he asks.

On the tables, cards and dice are spread out between plates of food and drinks. Flat-screen TVs with access to XBOX 360, PlayStation 3, and the latest Wii line one of the walls. On the first of several couches, two young guys are engaged in a fierce Mortal Kombat battle. One of them, Patrick Gardner, wears a black t-shirt that says, simply, “KOMBAT.”

Gardner says playing here is more fun than at home. He has his own gaming systems, he says, “but meeting new people is like a new experience.”

In just one month, 153 people pledged almost $21,000 on Kickstarter to help the bar open.

Owner and lifetime gamer Clegg Ivey says all of this socializing is part of the appeal, despite the misconception that gaming is a solitary activity. “But really, it’s not,” he says.

“Anybody who’s ever hung out at somebody’s place with a Nintendo sitting on the table, everyone’s taking turns. Or we’re playing, say, 'Mario Kart' where there might be four or five people all racing at the same time, and it’s a great way to connect with other people," says Ivey.

Gamer pubs like this one are opening in a handful of cities. Ivey says someday he’d like to see gaming bars as popular as sports bars — where each one is a hub for a different game the way many sports bars favor a certain sport or team. For now though, Savannah’s gamers have just the one pub for just about any game.

“This is ‘Epic Spell Wars of the Battle Wizards: Duel at Mt. Skullzfyre!’” Colorado Brown announces in his best wizard voice. He says he’s been looking forward to gaming here for a simple reason:

“I love board games, I love video games, and I love booze and good food.”And now, he can find all that in one place.

Democratic socialist Sanders kicks off campaign

Tue, 2015-05-26 02:00

Bernie Sanders, the two-term independent senator from Vermont, is scheduled to officially kick off his campaign for the Democratic Party’s presidential nomination Tuesday in Burlington, Vermont. (Sanders announced his candidacy for the Democratic nomination on April 30.)

Local celebrities Ben Cohen and Jerry Greenfield, founders of Ben & Jerry’s Ice Cream, are expected to be on hand (and there will be free ice cream). Sanders is expected to share the speaker’s podium with Vermont-based environmentalist Bill McKibben. Mango Jam, a Burlington-based band, will provide music.

Sanders describes himself as a democratic socialist. He caucuses with the Democrats in the Senate and has previously indicated that he does not want to run as a third-party candidate and be a political spoiler for the eventual Democratic nominee.

Democratic socialists (in the U.S. and abroad) historically have advocated a political and economic system in which the government is chosen democratically and subject to the will of the people, while the means of production (factories, farms, and other producers of goods and services) are owned and/or controlled by society as a whole, rather than by individuals or corporations. However, there is no precise and universally accepted definition of democratic socialism. Some democratic socialists advocate for a heterogenous economy with private property and investor ownership, as well as ownership of property and enterprises by cooperatives, employee groups , government, and communities. They favor reform and regulation of the capitalist economic system by a democratically elected government, rather than its replacement with a fully socialist economy.    

The democratic socialist moniker that Sanders proudly claims can be toxic in some parts of the American political landscape, and it will certainly alienate many conservatives as well as some liberals, says presidential historian Julian Zelizer at Princeton University. But, Zelizer points out, over the last century, socialists have at times made a significant mark in national politics and even some presidential campaigns. (Zelizer is author most recently of "The Fierce Urgency of Now: Lyndon Johnson, Congress, and the Battle for the Great Society.") 

In the election of 1912, labor organizer and Socialist Party firebrand Eugene V. Debs pulled in 6 percent of the popular vote nationwide — an all-time high share for a Socialist presidential candidate. The 1912 election saw a four-way contest among national candidates after Theodore Roosevelt split with the Republicans and ran on the Progressive ticket against the Republican incumbent, William Taft. Woodrow Wilson, the Democrat, won the election with 42 percent of the vote. Roosevelt got 27 percent; Taft got 23 percent.

Debs went on to take 3 percent of the vote in the election of 1920 — running from prison, where he was serving time for advocating non-compliance with the draft during World War I.

The Socialists didn’t win any states’ electoral votes in 1912 or in subsequent elections, but their showings in the pre- and post-World War I years were still significant,  Zelizer says. “They didn’t win. They didn’t get huge portions of the electorate. But they put forth a lot of the issues in the early 1900s that would eventually become part of the platform of the Democratic Party.”

Those core Socialist causes included the eight-hour day and 40-hour week, child-labor laws, social insurance, the progressive income tax, as well as labor and political rights for women and African-Americans.

Debs ran for president five times. Norman Thomas took up the Socialist Party mantle in the Great Depression and ran for president six times. With schisms and red scares after World War I, the socialist party and movement gradually lost adherents and influence, though it still succeeded at times in electing local officials, and its positions continued to push labor and civil rights advocacy on the left,  Zelizer says. After World War II, the Cold War and McCarthyism virtually obliterated socialism as a meaningful political force in American politics.

Socialist leader Norman Thomas’s great-granddaughter, Louisa Thomas, has written a book about the family titled "Conscience: Two Soldiers, Two Pacifists, One Family — a Test of Will and Faith in World War I.  She says that like Bernie Sanders, Norman Thomas often referred to himself as a democratic socialist.

“He was running for president to use it as a platform,” says Louisa Thomas. “At one point he said that he was a champion not of lost causes, but of causes not yet won.”

Here's why we care about durable goods

Tue, 2015-05-26 02:00

Why do we care about the durable goods report, which the U.S. Census Bureau publishes each month to tell us how big-ticket item sales are going? Let Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics, explain.

"We get lots of information about what businesses are saying, but they don't always do what they say they're going to do," Shepherdson says.

The durable goods report, he says, is a hard-data antidote to that problem. "The one thing that businesses don't do if they're worried about the future is invest large amounts in new equipment."

The durable goods report is an optimism indicator. It tells us if companies are buying new equipment in order to expand, or merely replacing old equipment, or not buying anything at all.

It measures sales in everything from transportation and communications gear, to primary metals.

In recent months, that measurement has been all over the place. There were more airplanes sold, but less big machinery. Investment in the oil sector, for example, has fallen, thanks to dropping oil prices.

But the report doesn't just measure what businesses are buying. It looks at consumers, as well. And that can tell us a lot, says Gennadiy Goldberg, a strategist with TD Securities.

"Consumers don't really make very large ticket purchases until they feel very secure and they do actually have money saved up," Goldberg says.

In March, consumers bought lots of cars, but not much of anything else. A cold winter in parts of the country may have been a factor. So, analysts are watching to see if sales pick up in things like vacuum cleaners, refrigerators, computers, and TVs.

In Chicago, 26-year-old Jessica D'Andrea is exactly what analysts hope to see more of. On a sunny spring day, she was shopping for furniture.

"I feel like I'm in a stable enough financial place, that I can," D'Andrea says. "And I'm moving out into my own apartment for the first time."

Today in marketing to Millennials: Disney's news site

Tue, 2015-05-26 01:58
$55 billion

That's the value of the deal in which Charter will merge with Time Warner Cable, as announced Tuesday morning. That puts the valuation of Time Warner Cable at almost $79 billion, and brings the companies' combined customer base to 24 million. Charter also bought Bright House Networks, a smaller company, whose numbers figure into the customer base totals.


That's how many drivers Uber is adding each month, according to a company report cited in the Wall Street Journal. In his WSJ column, Christopher Mims picks apart the so-called "sharing economy" – which has become something of a misnomer – and its murky relationship with employees. Or are they partners?

$30 million

That's the latest cash infusion news organization Fusion got from its corporate parent Disney, the New York Times reported. Fusion is both a cable network and a website, and one of several well-funded news outfits going after millennials. But it's not an easy road. The Times notes that despite some big hires, Fusion is doing modest numbers and its coverage of last year's Sony hack rankled its corporate overlords.

$84 million

That's how much was spent within the military last year in food stamps. Veterans are using food stamps too – 7 percent of them in 2012. The issue brings up interesting questions around military pay: when someone's pay is already publicly funded, does it matter if they draw on other publicly funded assistance as well?

43 states

That's how many states allow for prisoners to be charged by the prison system for "room and board," in what is known as "pay-to-stay." Over at Vox, there's a closer look at the widespread practice that often hits families of the incarcerated especially hard.

My First Job: Printing Professional

Mon, 2015-05-25 09:55

When Shahrouz Varshabi was about 17 years old, he was accepted to a college outside of his hometown in Iran.

This was good news for Varshabi, but it also meant a financial strain for his parents.

“I was feeling so bad about the situation because I was coming from a sort of poor family, and I didn’t want to have pressure on my father’s shoulders,” Varshabi says.

 When Varshabi couldn’t find a job in the city where his new school was located, he decided to get entrepreneurial and make one for himself. Varshabi was studying graphic design, and he noticed a common problem he and his fellow students were encountering: a lack of high-quality printers for their projects.

“The price of the printer is like the same as one month’s rent,” Varshabi says. “I paid my rent to buy a printer actually.”

But his risk paid off and, before long, Varshabi had an abundance of student customers for his printing business. "My parents was like, 'Hey you doing all right, you need money?' And I was like 'I don't really need money. If you want money, I can help you, actually,' " he says.

 As Varshabi will tell you, it was his entrepreneurial success in Iran that gave him the confidence to pursue other career goals.   

 “… I started from zero, and I made so much money that I paid my tuition, my rent and I bought a car, I had some savings,” Varshabi says. “So it just gave me so much confidence to do whatever I want to do for myself. I know that there’s no limits now.” 

A shot of 'America's native spirit'

Mon, 2015-05-25 09:24

During the course of writing his book, “Bourbon Empire: The Past and Future of American Whiskey,” Reid Mitenbuler learned a lot about “America’s native spirit,” as it’s known.

According to Mitenbuler — contrary to what you might assume from looking at bottle labels — today’s bourbons aren’t all made by bearded men wearing overalls.

“By the year 2000 you have eight companies, 13 plants, and they make about 99 percent of all the whiskey in America,” Mitebuler says.

Today, even with what Mitenbuler calls a craft distillery boom, smaller distillers only make about five percent of the bourbon in America.

But Mitenbuler says bourbon made by a big company isn’t necessarily bad bourbon.

“This is, for me, where the story really began, because those corporations, they actually do a very good job,” says Mitenbuler. “And they’re sort of an outlier in the food world and a lot of the popular conceptions we have about food where small is best.”

So, as a bourbon expert, what’s Mitenbuler’s advice for bourbon novices?

"It doesn’t have to be expensive to be good. Older isn’t necessarily better. It really kind of finds its sweet spot in the middle somewhere, where it's accessible, affordable and easy to find,” Mitenbuler says.  

To hear Reid Mitenbuler take Marketplace’s Adriene Hill through a bourbon tasting (and to hear a couple of his recommendations) click play on the Soundcloud player below.

Military families turn to food stamps

Mon, 2015-05-25 08:49

growing number of working people use food stamps to help make ends meet. Often they work in retail, food and service industry jobs, where pay is traditionally low. But there’s another group of working people turning to food stamps that might surprise you: active-duty military personnel and their families.

What do we know about food stamp use in the military?   Every year the Department of Agriculture publishes data about where food stamp benefits (officially known as the Supplemental Nutrition Assistance Program, or SNAP) are being spent. The categories range from grocery stores and super stores to convenience stores and farmers markets. Also on the list, surprisingly, are military commissaries — those stores on military bases that sell groceries just above cost to active duty and retired military personnel and their families, as well as those in the reserves and National Guard.   In 2014 more than $84 million-worth of food stamp benefits were spent at military commissaries. That’s just a fraction of a percent of all the food stamps spent in the U.S. last year. But the number is sobering when you think of who is doing this spending — people who served or are currently serving our country and are still having trouble making ends meet.   Do we know how many active-duty military personnel are on food stamps?   The numbers are hard to come by. Neither the military nor the USDA tally those numbers, but recently the USDA estimated that between 2,000 and 22,000 active-duty military members used food stamps in 2012, the latest data available. (There’s an interesting explanation of how those vastly divergent numbers are arrived at in this PDF, a report from the Military Compensation and Retirement Modernization Commission.) These estimates suggest that between 1 percent and 2 percent of active-duty military members used food stamps in 2012.   What about veterans?   The USDA estimates that in 2012, more than 1.5 million veterans used food stamps, or about 7 percent of all veterans.    How low does your income have to be to qualify for food stamps?   Pretty low — though it depends on how big your household is. A single person has to be grossing less than $15,180 a year. For a family of four, the annual income threshold is $31,008.    So what is military pay these days?   If you are a very junior member of the military on active duty, your annual base pay can be less than $19,000. Add in housing and food allowances and it can go up to the high $30,000s. But if you've got a big family, if your spouse isn't working (which, if you're moving around from base to base or if one parent is overseas can often be the case), that money may not go too far. You might very well qualify for food stamps, or at least find yourself struggling to get by.   What kinds of financial challenges face military families?   Jennifer Daelyn grew up in a military family and now runs the Hand Up Youth Food Pantry near Camp Pendleton, the Marine Corps base north of San Diego. When she tells people that she helps a lot of active-duty military families, “often people are really surprised that it's even needed,” she says. “They're like ‘they don't need that — that doesn’t really happen.' But it does.”   Daelyn says she hears common concerns from the military families she serves. “They might have things set up if everything is going as planned, but if unplanned costs arise — someone needed to get new tires for their car, or had an unexpected pregnancy, it's difficult to handle considering the financial situation that they're in.”   And then there’s the added challenge that military families are moved around a lot. “It can be hard to maintain family and social support networks,” Daelyn says. “People who are in different states than their parents, than the kids’ grandparent that was providing support for them emotionally, financially, just with coping.”   Does it matter if military personnel use food stamps?   You could look at the issue of military personnel on food stamps as academic — it’s all government money after all. Does it matter if lower-paid military members are getting part of their paychecks supplemented through one taxpayer-funded program, SNAP, rather than subsisting on their taxpayer-funded paychecks alone?   Others argue it’s just not right that wages for some of those serving in the military haven't kept up with inflation.

Charter near a deal to buy Time Warner

Mon, 2015-05-25 07:13

It's a cable company-eat-cable-company world out there.

The New York Times reports: 

Charter Communications is near a deal to buy Time Warner Cable for about $55 billion, people with direct knowledge of the talks said Monday, a takeover that would create a new powerhouse in the rapidly consolidating American cable industry.

Under the proposed terms of the deal, Charter will pay about $195 a share in cash and stock. That is roughly 14 percent higher than Time Warner Cable’s closing stock price on Friday — and 47 percent higher than Charter’s original bid for its rival from early last year.

You might remember that Comcast failed in it's bid for Time Warner after regulators were unhappy. Official word on the Charter deal could be out on Tuesday.

John Nash's 'beautiful' contribution to economics

Mon, 2015-05-25 06:57

John Nash, who died with his wife, Alicia, in a car crash Saturday at 86, was a mathematician, not an economist. 

But the phenomenon he described — known as Nash's Equilibrium — revolutionized the world of economics and game theory.

Around the end of World War II, game theory was gaining steam in academic circles, says Dale Jorgenson, a professor of economics at Harvard University. "But there really wasn't much evidence that this was having much effect on the way people thought about strategic situations," Jorgenson says. 

Before Nash came along, game theory was about zero-sum games: one party wins, one party loses. Nash provided a mathematical way of understanding games that more closely resemble the real world, where we don't necessarily have clear winners and losers. 

"When [people] look back at the Nash Equilibrium they think, 'Oh my God, this is so simple, it's amazing that it was so groundbreaking because it seems so obvious,' " says Alex Bellos, author of "Alex’s Adventures in Numberland." "And it seems so obvious because it's just become part of culture."

Today, game theory is used to describe myriad social phenomena, including those in business and politics. Bellos says every time someone says "zero-sum game," they owe a little credit to Nash. 

When Roger Myerson, a professor of economics at the University of Chicago, was starting his academic career in the 1970s, Nash’s work was maturing. Even so, Nash had withdrawn from public life as he battled paranoid schizophrenia. 

"At that time I knew he was alive, but there was no hope we could ever meet him," Myerson says. 

Myerson says while Nash was out of the public eye, his work revolutionized the field of economics. 

"It’s moved economics from a focus on resource allocation to a focus on understanding how behavior responds to incentives," Myerson says.

After Nash reentered public life in the 1980s, he was famous. In 1994, he won a Nobel Prize, and in 2001, his life story was fictionalized for the film "A Beautiful Mind."

Takata, Toyota, GM: How do companies survive recalls?

Mon, 2015-05-25 06:53

Takata’s recall of defective airbags in 34 million vehicles – equivalent to two years of sales in the entire U.S. auto market – is a juggernaut.  It isn’t the largest, however.  That title belongs to the 2004 recall of 150 million pieces of Chinese-made toy jewelry that had a high risk of containing lead. 


Nor is it the only major recall this year – Toyota just recalled 110,000 vehicles for faulty software. 


The fact is, recalls happen all the time. Just last week there were 11, including a stove that turns on by itself and a weight-training bench that can break. 


Major recalls can be costly, running into the billions of dollars, especially if lawsuits or fines are involved. And yet, “it’s extremely seldom that a recall leads to the ruin of a company,” says Jonathan Bernstein, president of Bernstein Crisis Management.


Take GM in 2014. It recalled 30 million vehicles. That does not mean, however, that it replaced 30 million vehicles. 


“Almost always in the case of a recall it’s just a part getting fixed,” says David Whiston, an equity analyst with Morningstar. “Honestly, the people who make the biggest deal out of them are usually reporters.”


For GM, the cost so far is $2.5 billion. This shaved profits in North America from 8.9 percent to 6.5 percent in 2014, according to Whiston. Costly for sure, but not company ending. GM also had significant cash from its bailout, Whiston says.  


Between law suits and repairs, recalls also take a while (Takata’s is expected to take years). So does paying for them.


“The financial damage gets spread out over time, it’s not all at once,” Whiston says. Some firms even have recall insurance. 


Takata also has its size and importance going for it.


“The company’s essential to the auto industry,” says David Sullivan, an analyst with AutoPacific. It’s one of the few firms that provide critical safety equipment, including safety belts, to many manufacturers. “They have to survive – they’re too big to fail,” Sullivan says.


Reputational damage can be worse and more enduring than financial damage. 


“Arthur Andersen put themselves out of business because of their reputation,” says Bernstein, referring to the Enron accounting scandal. He counsels companies to be quick and thorough in their announcement of problems, acknowledge the feelings of their customers and then move on as quickly as possible. Stringing things along or having small details or negative news leak out intermittently over time withers a brand and consumers relationship to it. 


Takata didn’t have to worry about brand recognition, at least not until now, because it’s not a consumer-facing company; it sells to auto manufacturers. 


“For a company that’s primarily a business to business, one of their worst nightmares is their name becoming known to consumers in a negative way, because normally their name isn’t known to consumers at all,” Bernstein says. The company may now have to deal with a loss of trust from both consumers and the manufacturers it supplies. Analysts say Takata's recall is survivable, but even given its importance in the automotive industry, it won't be easy. 

Funeral home fraud rose in 2014, FTC probe finds

Mon, 2015-05-25 03:00

Every year, the Federal Trade Commission conducts an undercover investigation to make sure funeral homes are following the FTC’s funeral rule to give customers a price list immediately and to not sell unnecessary, unwanted services.

The idea is for consumers “to be able to take a deep breath and look at a document that says, 'This is what I’m going to pay,' " says Lois Greisman, who heads the FTC’s funeral enforcement. " 'Can I really afford this?' ”

Greisman says in 2014, about a quarter of the funeral homes the FTC investigated broke the rule. 

“It’s certainly higher than we would like to see it,” says T. Scott Gilligan, general counsel for the National Funeral Directors Association. “It’s a complicated rule. It’s very easy to slip up. And the problem is, you’re only as good as your worst staff member.”

Funeral homes face fines of up to $16,000 per rule violation, but they can avoid fines by enrolling in a training program run by the funeral directors association.

PODCAST: Show me the money, airlines

Mon, 2015-05-25 03:00

Asian stocks spring while most of the world's stock takes a breather. More on that. Plus, lower fuel prices have translated into huge savings for airline companies. Very little of those savings are being passed along to customers. So, what are the airlines doing with all of that money? And on a quest to invent a smart smoker, a Harvard engineering class is partnering with Williams Sonoma. We check in on their results.

Your funeral home may be ripping you off

Mon, 2015-05-25 03:00

Every year, the Federal Trade Commission, or FTC, does an undercover investigation, to make sure funeral homes are following the FTC’s funeral rule. 

They're supposed to give customers a price list immediately, and they're not supposed to sell unnecessary services.

The idea is for consumers, “to be able to take a deep breath and look at a document that says, 'This is what I’m going to pay,'" says Lois Greisman, who heads the FTC’s funeral enforcement. "'Can I really afford this?'”

Greisman says in 2014, about a quarter of the funeral homes the FTC investigated broke the rule. 

“It’s certainly higher than we would like to see it,” says T. Scott Gilligan, general counsel for the National Funeral Directors Association. “It’s a complicated rule. It’s very easy to slip up.  And the problem is, you’re only as good as your worst staff member.”

Funeral homes face fines of up to $16,000 per rule violation. 

They can avoid fines by enrolling in a training program run by the funeral directors association.

Cheaper fuel, cheaper flights. But not for you.

Mon, 2015-05-25 02:00

A gallon of jet fuel will cost you around $1.66 a gallon these days. That’s down 40 percent from what it was this time last year.

For airlines, which bought more than 16 billion gallons of fuel in 2014, we're talking about a savings of possibly around $22 billion, says Samuel Engel, who manages the aviation practice at ICF International. In 2012, fuel represented 31 percent of global airline costs, and this year it’s around 25 percent. Fuel isn’t the airlines’ only cost, but it’s their largest.

If you were hoping to see some of that savings in the form of cheaper tickets, get in line. Your group isn’t boarding yet.

“There are some complicating factors to consider,” says Sanjay Nanda, senior vice president at Sabre Airline Solutions. “Many airlines hedge on fuel.”

That is, they buy it in advance at locked-in prices. It saves them from rapid spikes in fuel, but also keeps them from taking full advantage of price declines. About 25 percent of airline fuel was hedged this way, according IFC International. “So I’d say most airlines have benefitted but some more than others,” says Nanda.

Still, they’re clearly saving billions. Where is it going?

“They’re putting that money back into the business in the form of new planes, new services – larger bins, new wifi,” says Jean Medina with Airlines for America, an airline industry group. “Our members will be taking effectively one new airline delivery every day.” U.S. airlines also have $60 billion in debt that needs servicing as well, says Medina.

Another priority group for fuel savings, at least for some airlines, is labor. “Delta, a couple months ago, made the largest profit-sharing payout in history to their workers,” says IFC International’s Samuel Engel. Any labor union with a contract to renegotiate will also likely take a keen interest in fuel cost savings if they’re sustained.

So what about those fare prices?

“As fuel prices come down, it starts to allow airlines to operate more routes, and it allows them to compete against each other and offer discounts,” says Engel. “But it’s not immediate. It doesn’t happen until the competitive dynamic plays out.”

And oil prices come and go, says Sabre’s Nanda. So for airlines, “prices are more tied to supply and demand,” he says.

Supply has increased, according to the Airlines Reporting Corp. “There’s been a 6 percent rise in available seats,” says Chuck Thackston, a managing director at ARC. Airlines are managing to fit more people on each plane, whether by increasing the number of seats or purchasing larger capacity models. “Airlines are competing to fill those additional seats,” he says.

ARC says it’s this supply increase that is affecting fares. “Travel within the United States is largely flat year over year,” says Thackston. “The past several years have seen airfares increasing, and we now see those fares leveling off and going down very slightly for summer travel.”

Summer airfare to Europe has declined by about 3 percent, with some destinations seeing particularly stark drops. Fares to Kona, Hawaii, fell 12.7 percent. Trips to Belgrade, Serbia, are 24.3 percent lower on average. 

Airfare to New York as a domestic destination increased 9.3 percent, and international fares to Berlin increased 10.2 percent.  

So, no, lower fuel prices won't mean a big dip in airfare just yet.  

At Harvard, even the meat smoker is smart

Mon, 2015-05-25 02:00

On a quest to invent a smart smoker, a Harvard engineering class is partnering with Williams-Sonoma. Over the last few months, junior-year engineering students have smoked more than 200 pounds of brisket. The result? Well, as a self-admitted meat lover, I figured the only way to really know was to take a bite.

It wasn't hard to find the class. The mesquite aroma led me right to teaching assistant Peyton Nesmith. The Alabama native is tending a 300 pound, black, hour glass shaped ceramic smoker. The contraption is covered with wires, gadgets and gizmos.

An up-close look at the brisket Nesmith is cooking. (Eliza Grinnell/Harvard SEAS) 

Nesmith gave me the low down, “This brisket’s been cooking since 3 a.m. We probably have a few hours left on it. This is our typical routine. Our cadence of our battle rhythm as our adviser would say.”

That adviser is Professor Kevin Kit Parker. He’s not just an academic—he’s a towering Army Lt. Colonel in the reserves. With, he says, a Southerner's passion for barbecue.

“I was walking around the parking lot of the Memphis Liberty Bowl looking at all these contraptions that people were smoking barbecue in. And I'm thinking none of these things looks the same. And that means we haven't reduced our knowledge of barbecue down to a fundamental set of laws about how to do barbecue right.”

Parker proudly displays the Harvard smoker. (Eliza Grinnell/Harvard SEAS)

Parker says he vetted his ideas with culinary experts,“I talked to some classically trained chefs. They said no one’s done this. No one’s ever taken a scientific approach to barbecue, to smoking."

Parker teaches bioengineering and applied physics at Harvard. So he decided to give his students a real-world assignment. First he introduced them to a client, the high-end consumer retailer Williams-Sonoma. The job: come up with the perfect smoker. After five long, snowy months the data is in. It’s game day.

Students present the design and physics of the Harvard smoker to class-client Williams-Sonoma. (Eliza Grinnell/Harvard SEAS)

The students work up to the last minute to showcase the final product. A parade of guests checks it out in a fancy auditorium in one of Harvard’s engineering buildings. Professors, chefs and top brass from Williams-Sonoma pack the room. 

The students rock. 

All 16 play a part in explaining the smoker’s intricacies using Parker’s mantra—design, build and test. From the unusual shape of the smoker to a smartphone app that keeps you up to date on what temperature the meat is at and if you need to make any adjustments. As he chews, Williams-Sonoma’s Pat Connolly rates the Harvard smoker against other smokers out there.

“If you look at the color you get a much more consistent color here. If you look at the moisture the moisture is fantastic compared to the competition.”

Connolly says the trademarked, patent pending, app wielding, BBIQ smart smoker just might have the right stuff. And make the leap from the classroom to a future Memorial Day celebration.

Members of the Harvard community, representatives from Williams-Sonoma and local celebrity chefs enjoy brisket prepared in the Harvard smoker by students of the class "Engineering Problem Solving and Design Project." (Eliza Grinnell/Harvard SEAS)

Late springs warms up housing

Mon, 2015-05-25 02:00

Spring and summer are often a hopeful time for anyone involved in the housing economy. Houses show well; potential buyers go looking; homebuilders are building.

Bad winter weather in early 2015 made for a poor start to the year for housing. But figures for April suggest the housing economy might finally be on the rebound. “Improvement in housing really has been a missing piece to this recovery,” says Michael Baele, managing director of U.S. Bank’s wealth management division. “And we are encouraged to see some better numbers.”

Here are some key recent housing indicators:

• Housing starts rose 20 percent in April. (U.S. Census)
• Permits were up 10 percent in April. (U.S. Census)
• New home sales have increased from 434,000 units (annualized) in Q3 2014, to 513,000 units in Q1 2015. (U.S. Census)
• Existing home sales fell 3.3 percent in April. (National Association of Realtors)
• The one-month supply of homes rose by 0.7 to 5.3 months in April. (National Association of Realtors)
• The median price of a single-family home rise 10 percent from April 2014 to April 2015. (National Association of Realtors)
• Construction payrolls were up by 45,000 in April. Year-over-year, construction employment has increased by 280,000. (Bureau of Labor Statistics)

The oil economy, as measured in hot dogs and U-Hauls

Mon, 2015-05-25 01:57

You can learn a lot about the economy in Williston, North Dakota, based on Mitch Petrasek’s recent hot dog consumption. 

When I met him in March outside the U-Haul where he was working in Williston, the capital of the state’s oil patch, he had eight dogs lined up on a grill.

“I'll eat two now, two for dinner and two for breakfast,” he says. The remaining two, he says, would be offered to his boss.

Petrasek’s diet includes a few other things, like power bars and granola bars — the kind of stuff that didn't need to be warmed up or refrigerated.

“That's the worst thing off living in a car is the eating situation," he explains.

Petrasek was living out of his car even though he was making nearly $18 an hour at U-Haul. That’s not entirely surprising for a place like Williston. The oil boom pushed wages sky high. Ditto for rents.

“I could pay $1,000 to stay in a crappy apartment with someone or I could save a $1,000 in my bank account,” Petrasek says.

But the economic forces pushing him to sleep in what he called his “house-car” were shifting right under his nose. Petrasek's boss at the Williston U-Haul, Brian Way, says it was getting hard to maintain a decent inventory of moving trucks. A slowdown in the oil patch meant people were renting trucks to leave town.

“The issue now that I see it is that we just don't have many people moving in,” says Way. “We used to have two or three a day, where now we have two or three a week.”

That was at the end of March. Since then, the picture hasn't brightened much for the oil industry. The number of drilling rigs in North Dakota has dropped further to about 80 today.

When I called the U-Haul for an update, I learned neither Petrasek nor Way worked there anymore. Both had transferred to another facility in Fargo, North Dakota, on the other side of the state. Petrasek just moved a couple weeks ago. He says the situation in Williston hadn’t changed much since we last spoke.

“Oh yeah, there [are] still way more people going out than coming in,” he says.

He says he’s making a lower hourly wage now in Fargo, but he can afford housing. He and Brian Way are now roommates, and Petrasek says he's expanded his diet far beyond hot dogs.