Third in a series on the Detroit Three’s incursions in the California market.
Automakers must flow vehicles to where the demand is, which means that General Motors is eager to ship out every specially equipped Chevrolet Volt from its factory in Detroit to California these days.
Many Chevy dealers in the Golden State are absolutely panting to get Volts into their showrooms because a recent change in California law means that the driver of any EV can use the high-occupancy vehicle (HOV) highway lanes even if they’re alone in the car. So the purchase of a Volt not only can cut commute times but also save on fuel costs and make a green statement for the increasing ranks of its fans there.
“To execute against our opportunity in California, it’s really about the product, and on the product side we have launched some very relevant vehicles for the market there,” Alan Batey, the newly promoted vice president of U.S. sales for GM, told me.
Overall, GM has new or freshened vehicles in segments that represent 70 percent of retail sales in California, versus 60 percent nationally. Now, company executives and dealers are bracing to see whether a big recall of all Chevrolet Cruze compacts, at the heart of its California lineup, will retard its progress there.
For GM — mostly, Chevy — in California, the “product story” lately has included multiple successes, not just Volt and Cruze.
But they began with Cruze, the new compact that was introduced in 2010 just before Volt. Thanks to spiffy styling, vastly superior amenities on the inside, and improved fuel economy, Cruze has worked its way up to about a 6-percent share of its segment in California, about triple the share held by the mundane Chevrolet Cobalt that it replaced.
“It’s been a huge success and really has sort of laid the way for us to start to penetrate the California retail market,” Batey said. He noted that average transaction prices for Cruze now are “looking down at a gap of more than $2,000″ over prices for Honda Civic and Toyota Corolla, two of the heavyweights of the compact segment in California. “That obviously will help us in the long run because it will improve resale values. That’s a fundamental shift from where we’ve been struggling in the past in this market.”
Likewise for Chevrolet Sonic, the American-made subcompact that replaced the Korean-made Chevrolet Aveo last fall and similarly has tripled Chevy’s current market share in the segment in California, to about 6 percent.
Even Chevrolet Equinox, a crossover utility vehicle that’s a few years old, has provided some lift lately to Chevy’s fortunes in the Golden State. Equinox, with a share of about 7.5 percent of the segment in California right now, enjoys a share about triple that of just two years ago.
But Volt clearly has created the most significant spike in demand for any GM vehicle in California in a long time. Early this year, Volt sales nationally were in the dumps because the car had just suffered from the flimsy suspicion that under-hood fires were a problem; a federal investigation decisively disproved that fear. Nonetheless, GM decided to idle Volt production for a few weeks last spring (and also for a few weeks this summer). And in May, Volt sold only a mediocre 1,680 units nationwide.
California came to the rescue in February with the new carpool incentive, covering about 1,400 miles of HOV pavement. GM has been scurrying ever since to manufacature enough Volts with the necessary emissions modifications to the small gasoline engine in Volt to supply the mushrooming demand in California. Purchasers of the plug-in Volt also qualify for a $1,500 state tax credit as well as the $7,500 federal-government credit against sticker prices that start around $39,000.
Now, dealers across the state — and in particular in commute-weary metro areas of San Francisco, Los Angeles and San Diego — say they can’t get enough Volts. “I’ve had more people talk to me in the last couple months about the Volt than I have in the last year,” Bill Cumming, general manager of Ron Baker Chevrolet in National City, Calif., a San Diego suburb, told the Detroit Free Press recently. “Currently, I have none in stock.”
In fact, California now accounts for about 20 percent of all Volt sales nationally. “We’re starting to build up the inventory,” said Batey, who most recently ran Chevrolet sales. “There are a lot of Volts on their way to California.”
The tight supplies of Volt are another reason that Chevy dealers in California may be specifically concerned about the impact of a major recall of Cruze that GM announced last week. It is recalling more than 413,000 Cruze units to modify a faulty part that could allow liquids to become trapped in the engine compartment and cause fires.
No crashes, injuries or fatalities have been reported. But two fires have been reported to regulators. And Chevy could be significantly nicked in California by any factor, such as this recall, that interferes with the small-car momentum it has established there. Essentially, all of the Cruzes that GM has built in North America for the last two years are being recalled, and it’s the second time GM has basically recalled the entire Cruze fleet, as Forbes.com contributor Micheline Maynard noted.
Source: www.forbes.com
Stockton, California to file for bankruptcy - Reuters UK
STOCKTON, California |
STOCKTON, California (Reuters) - Stockton, California will become the largest U.S. city to seek protection from its creditors after its leaders approved a budget on Tuesday night based on the city filing for bankruptcy.
A Chapter 9 bankruptcy by the city of nearly 300,000 in California's Central Valley, about 85 miles east of San Francisco, could come as early as Wednesday.
Stockton's city council voted six to one in favor of the 2012-2013 budget after a contentious five-hour meeting where angry retired city workers pressed council members to reject the $155 million spending plan. It proposes eliminating retirees' medical benefits to help fill a $26 million budget deficit.
Retired police department employee Geri Ridge said she fears not being able to afford health-care insurance.
"I don't have that kind of income," said Ridge, 56, noting she is concerned a large share of her $1,895 monthly pension payment could be consumed by large insurance costs due to her history of heart attacks.
The council's vote followed three months of confidential talks between Stockton and its creditors aimed at averting bankruptcy. The negotiations ended on Monday with the city failing to win enough concessions to help close its shortfall for the fiscal year starting on July 1.
That left bankruptcy as the only way for Stockton to balance its budget in the near term while maintaining its current level of services and bringing stability to its battered finances, Mayor Ann Johnston said.
"It's heart-wrenching to think about the implications," she said. "I see no other solution."
Stockton officials have said since February their city's finances are suffering the combined effects of fiscal mismanagement over two decades, too much debt taken on in good times and generous pay and unsustainable benefits for city employees and retirees.
Stockton has also suffered a sharp drop in revenue since the collapse of its once red-hot housing market. The housing boom transformed the farming city into a distant bedroom community of the San Francisco Bay area and its bust put Stockton at or near the top of national foreclosure rankings in recent years.
To keep its budget in balance, Stockton has cut more than $90 million in spending in recent years and slashed its work force, including a quarter of its police officers, a pressing concern with a surge in violent crime in the city.
Deeper cuts to police payrolls would be intolerable, making a financial restructuring in bankruptcy a necessary if painful choice, according to council members who voted for the budget.
The $3.7 trillion U.S. municipal bond market has so far taken in stride Stockton's march toward bankruptcy despite the city's more than $700 million in bond debt. Bondholders and bond insurers are among Stockton's 18 creditors.
LANDMARK FOR U.S. MUNICIPAL DEBT MARKET
Because municipal bankruptcies under Chapter 9 of the federal bankruptcy code are rare, especially for larger cities, Stockton could set important precedents for how different types of creditors are treated in such cases.
In the past, large cities such as Bridgeport, Connecticut, have seen filings for bankruptcy protection rejected by the court. In the most recent case in October 2011, a filing by Harrisburg, Pennsylvania, a city of nearly 50,000, was rejected because a state law barred municipalities of a certain size from seeking legal protection from creditors.
Lawyers representing Stockton also worked for Vallejo, California when it filed for bankruptcy in 2008. The former Navy town emerged last year from bankruptcy with sharply reduced payments for its retiree medical program.
At $4.23 billion, Alabama's Jefferson County last November set the record for the biggest municipal bankruptcy filing, which is still working its way through the court.
Stockton officials have been considering bankruptcy since February and calling for the kind of drastic action in its budget. It suspends $10.2 million in debt payments, a move likely to trigger further downgrades of Stockton by ratings agencies.
Stockton has already defaulted on about $2 million in debt since February, allowing the trustee for one of its bond insurers to seize a building once slated to be its future city hall and three parking garages.
The intentional default prompted Moody's Investors Service and Standard & Poor's Ratings Services to drop their credit ratings on Stockton. Moody's has cut its issuer rating for Stockton to a junk level Ba2 from Baa1 while S&P has cut its issuer rating on the city from BB to SD, one notch above its D default rating.
Stockton's budget would also cut spending on employee compensation and retiree benefits by $11.2 million. About $7 million in savings would come from cutting retiree medical benefits for one year and then phasing them out, an idea that stuns John Skaff, a retired police officer.
Skaff said knee injuries forced him off Stockton's police department after 19 years there and he expects to need knee-replacement surgery, though he is uncertain how to afford it without his health coverage. "It's a big hit for us," he said.
(Reporting by Jim Christie, Editing by Tiziana Barghini, Lisa Shumaker, Tim Pearce)
Source: uk.reuters.com
Lawmakers finish California budget on $15.7B gap - msnbc.com
By JUDY LIN
Associated Press
SACRAMENTO, Calif. (AP) - California lawmakers finished work Wednesday on the state budget, which awaits Gov. Jerry Brown's signature.
Democrats passed 21 budget implementing bills on a majority vote intended to satisfy the governor's demand for deeper cuts to close a $15.7 billion deficit.
Brown has until the end of Wednesday to sign or veto the main budget bill.
"In my view, we are poised to enter a new and better era in California. An era of budget stability with the opportunity to begin building and rebuilding," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said about completing the package.
The spending plan for the fiscal year starting July 1 includes welfare and social service cuts. It also assumes voters will approve Brown's tax hike on the November ballot.
If voters reject the tax initiative, a series of automatic cuts will be triggered, including three weeks less of public school for the next two years.
Brown believes the tax initiative will raise $8.5 billion in the new fiscal year starting July 1 by increasing the sales tax by a quarter cent to 7.5 percent for four years, and boosting the income tax on people who make more than $250,000 a year for seven years.
"This is a game of chicken where you want to swap our educational system for tax increases, tuition for tax increases," said Assemblyman Tim Donnelly, R-Twin Peaks. "This is an abject disaster."
A recent Field Poll found California voters divided on the initiative, with 52 percent in favor and 35 percent opposed.
One of the bills could give the tax initiative top billing on the November ballot ahead of a competing tax hike proposal by wealthy civil rights attorney Molly Munger. The bill would require bond measures and constitutional amendments to appear on the ballot ahead of other initiatives and referendums.
Brown's proposed tax hikes would be temporary but include constitutional changes to local government funding.
Being atop the ballot would help the governor's initiative stand out on what will be a crowded ballot. So far, 12 measures have qualified. A water bond proposal is currently first but is expected to be delayed by the Legislature.
"If the result of this action is that our children's education does not need to be cut by $5.6 billion, so be it," Sen. Mark Leno, D-San Francisco, told senators Wednesday before the legislation passed.
Brown, a Democrat, has delayed taking action on the main budget bill that lawmakers sent him 12 days ago. It would enact a roughly $92 billion state spending plan for the fiscal year starting July 1.
Democratic leaders have agreed to deeper cuts to satisfy the governor's demands, including restructuring the state's welfare program, streamlining health insurance for low-income children, and reducing child care coverage and college aid.
Since then, Democrats who control the Legislature have been scrambling to draft companion legislation needed to implement the budget. Democrats have majorities in both the Assembly and Senate and can pass the budget without any Republican votes.
Democratic leaders agreed to Brown's request to phase in a two-year time limit for new welfare recipients to find work under the state's welfare-to-work program known as CalWORKS.
The two sides also agreed to eliminate Healthy Families, a children's health insurance program for low-income working families, by slowly moving 880,000 children into Medi-Cal, the state's version of Medicaid.
In addition, the state would reduce funding for child care assistance while college aid under the Cal Grants program would be reduced beginning in the 2013-14 school year. Lawmakers targeted for-profit colleges such as ITT Technical Institute and University of Phoenix in requiring higher graduation rates to qualify for state aid.
Democrats also included legislation that would appropriate more money for California's public universities if the University of California and California State University agreed to freeze tuition rates. The funding is contingent upon voter approval of Brown's tax hike measure.
Community colleges would get $50 million more as well.
Other legislation would allow Brown to furlough state workers without an agreement with their unions for a 5 percent reduction in wages. Service Employees International Union Local 1000, the state's largest state employee union, has tentatively agreed to a plan in which covered workers will take 12 unpaid days of leave over 12 months starting July 1.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Source: www.msnbc.msn.com
California anti-foreclosure bills headed for floor vote - Inland Valley Daily Bulletin
A pair of bills that would add new restrictions to the foreclosure process will move to floor votes in the Legislature, following a committee vote this morning.
If made law, the bills would require mortgage servicers to halt the foreclosure process whenever a homeowner applies for a loan modification. The bills would also mandate banks to designate an employee or multiple employees to act as a "single point of contact" for borrowers who may be eligible for a loan modification.
The bills also outline methods for homeowners to sue banks for injunctive relief or damages, but also give banks the right to avoid liability by fixing procedural violations. The bills also do not give homeowners a right to a loan modification.
Trade groups including the California Bankers Association, California Mortgage Bankers Association and California Chamber of Commerce oppose the measures and contend that the bills would encourage frivolous lawsuits.
Supporters, such as state Attorney General Kamala Harris, have said the bills are intended to create due process protections for financially troubled households.
Reach Andrew via email, call him at 909-386-3872, or find him on Twitter @InlandBizz.
Source: www.dailybulletin.com
Embroideries galore in Preeti, Vineet shows - Times of India
The second show on Day 1 of the Wills Lifestyle India Fashion Week Autumn/Winter 2012 saw designer Preeti Chandra translate the 'Matador ruggedness' into 'Matador chic' with her latest collection, while the second half witnessed an explosion of antique embroideries and block prints making up designer Vineet Bahl's 'Caravan'.
Preeti Chandra
Theme: Taking the audience back into the 16th century in the courts of Spain where the torero was known for his elaborately decorated 'Traje de Luces' or the 'Suits of Light', the brilliantly festive line up of embellished jackets, gowns, pants with an emphasis on heavy girdles and collars, capes and corsets, was a sight to behold.
Collection: It was an eclectic line up of fitted knee length dress with jewelled shoes, sheer rose jewelled gown, camel wool dress with jewelled sleeves, net dress with applique work, jewelled velvet shrug with dramatic shoulders and silk dress with layered scalloped shoulder among others in a colour scheme ranging from ivory, black, nude, scarlet, beige, purple, cobalt blue to mustard yellow.
Fabric and detailing: We couldn't have missed the generous use of silk rich in intricate embroidery, and not to mention, the use of jewels and jewel led buttons. Some of the designs stood out for their use of exquisite dabka and fine embroideries on silk including the diaphanous outfits with dainty roes embroidered lending an element of beauty and oomph. Here Preeti's attempt was to transform the jackets worn by the matadors into feminine ones.
Justifying the theme, she says, "There is a feminine angle to every outfit adapted from a matador jacket, and my collection in bold colours is a proof of this."
Rating: 6/10
Vineet Bahl
Theme: Titled 'Caravan', Vineet's Autumn/Winter collection celebrates the world traveller by throwing open a world of vintage Romanian shawls and antique Sardinian embroideries to no-fuss silhouettes of the 60s. Says Vineet, "I have used colours juxtaposed with black in the range. My idea of making the girls wear a black polka dotted, high neck inner with black leggings under every outfit was to create a black canvas on which I could do my painting."
Collection: Baby doll dress found multiple interpretations in Vineet's latest line. Among others he used these little dresses to restore the Sardinian block print, and showcase the fine detailing of Afghan prints. On the emphasis on frocks, the designer says, "Indian winter is not so harsh, and hence a beautifully block printed, colourful short dress teamed with tights and knee-length boots with a jacket thrown on will make a definite fashion statement this season."
The highpoint of the collection were the coffee brown blotch tunic worn over brown stripe wide leg pants, black and white Sardinian black print top with threadwork yoke worn over matching mini, antique print Kantha 60s baby doll dress, ginger vintage print tunic with neon detail, and misty rose brocade 60s shift with diamond brooch embroidery.
Fabric and detailing: Raw silk, brocade, georgette, stretch net and lycra formed the basis of Vineet's love for antique embroideries and hand paintings. Silhouettes were comprehensible with streamlined tunics, dresses, A-lined skirts and wide leg pants. The designer brought in his innovations by way of neon accents in Kantha and intricate stonework on brocade.
Rating: 7.5/10
Source: timesofindia.indiatimes.com
If Obamacare falls, California groups plan a single-payer push - Washington Post
If the Supreme Court strikes down the individual mandate on Thursday, states are left with a vexing question: What next?
A liberal coalition in California wants to make the answer single-payer. The Courage Campaign, a Los Angeles-based alliance of progressive groups, has an advocacy plan ready to roll out should any part of the law fall.
Next exit: Single-payer? (Ken Lund | Flickr)
“In the state of California we think we have a unique opportunity,” says Paul Song, a physician who sits on the Courage Campaign’s board. “Being the eighth-largest economy, and a state that has aggressively implemented the law, it could allow us to bring forward a better law.”
If the health reform law falls, Courage Campaign will blast out its single-payer plan to its 750,000 supporters. If it gets upheld, however, no e-mails go out.
Advocates outside of California have similar plans: Here in Washington, the Progressive Change Campaign Committee plans to hold a Thursday press conference at the Supreme Court advocating for Medicare for all, regardless of the decision. About a dozen members of Congress are expected to attend.
“If the Supreme Court rules against Obamacare, we have to have a substantive policy and political response — in my view, that’s Medicare for All,” Rep. Pete Welch (D-Vt.) tells my colleague Greg Sargent. “Medicare is very popular. People understand it.”
While a single-payer system may be a pipe dream in Washington—almost certain to stall in Congress—that’s not necessarily the case in California.
The state legislature twice passed single-payer bills, in 2006 and 2008, subsequently vetoed by then-Gov. Arnold Schwarzenegger. Now Democrats control the governor’s seat – and think they may have found the “perfect storm” to move a single-payer bill.
Here’s how the thinking goes: If the individual mandate falls, but the rest of the law stands, California still expects to receive a big pile of money to expand insurance coverage. The state has the highest number of uninsured people anywhere, meaning it will get one of the biggest funding boosts. For the Medicaid expansion alone, between 2014 and 2019, the state expects to receive $55 billion.
If California got the necessary waivers from the Obama administration, it could pool those dollars with existing funds to lay a foundation for a single-payer health care system. It’s an approach relatively similar to the one that Vermont is now pursuing.
“In the past, its been hard to approve this with the economic climate,” Song says. “The federal funding could make this work.”
That’s the optimistic outlook, at least. Song admits there are a lot of hurdles in the way. For one thing, the waivers that the state wants do not exist right now. They’re a part of Rep. Jim McDermott’s (D-Wash.) legislation that would allow states to combine all their Medicare, Medicaid and other, federal health dollars into a single-payer system. That’s unlikely to move through a Republican Congress.
The state could, however, use the law’s existing state innovation waivers—the ones that start in 2017—to do a single-payer system for everyone except Medicare patients. This, again, is how Vermont has pursued single-payer: leaving Medicare out.
“We could use universal coverage as a step to single-payer,” Song says.
Then, there are the local politics: A single-payer bill did come up in the California Senate this year, but fell two votes shy of passing out of the Democrat-controlled committee.
This new campaign, if it launches on Thursday, would focus a lot on lobbying those California state senators to rethink their votes. It would also explore the possibility of a ballot initiative on the issue.
Source: www.washingtonpost.com
California Judge Sides with Apple - Yahoo Finance
The U.S. District Judge Lucy Koh in San Jose, California, sided with Apple Inc. (AAPL), imposing a ban on Samsung’s Galaxy Tab 10.1 range of tablets in the country, reported Bloomberg. An earlier ruling in May by the U.S. Court of Appeals for the Federal Circuit favoring the iPad maker related to patent infringements paved the way for the recent ban.
Ruling in favor of Apple, Judge Lucy Koh stated that the Cupertino-based company had a strong case against Samsung in the design-related patent case. The judge also noted that Apple would be "irreparably harmed" if the ban against Galaxy 10.1 tablets was not imposed as the design of iPad and Galaxy 10.1 tabs are indistinguishable.
However, the judge also said that Samsung can contest the aforesaid ban. Apple was ordered to post a $2.6 million bond as damage payment to Samsung if the former loses the case. The trial starts on July 30.
In December last year, Apple had appealed to the District Court in San Jose to ban Samsung’s Galaxy Tab in the U.S. However, the plea was rejected at the time, with the court allowing Samsung to sell its products in the country until the case went to trial.
By banning Samsung tablets in different countries, Apple’s main objective is to stall the growth of Google Inc.’s (GOOG) Android OS. Samsung is leveraging on Android to emerge as one of Apple’s most significant competitors and the company is already the largest vendor of Android-based products. The fact that Android is expected to continue its strong growth all over the world is a major headache for Apple. Adding to the competition, Google has plans to unveil its first tablet at its Google I/O conference, according to Bloomberg.
Despite the threat from Android and lower-than-expected sales in the tablet market, Apple has maintained its leading position in this arena with 68% market share in the first quarter of 2012, which rose significantly from 55% in the fourth quarter of 2011, according to IDC. Samsung came in second while Amazon.com Inc. (AMZN) was third.
Over the last couple of years, Apple has been highly vocal about saving its intellectual property from misuse and violations. The company has been aggressive in filing lawsuits against other handset makers such as Samsung and HTC, in order to protect its patents where Apple has accused these manufacturers of blatantly copying its iPhone and iPad designs.
So far, these lawsuits have yielded mixed results for Apple. Although it won some cases against Samsung, Apple has lost a couple against Motorola recently.
We believe that Apple remains the biggest growth story based on its product pipeline, popular apps, iCloud, iPhone 4S, the new iPad, Apple TV, and loyal customer base. With a solid balance sheet and robust revenues, we expect Apple to outperform its peers in the long run.
We maintain our Outperform recommendation over the long term (6-12 months). Currently, Apple has a Zacks #3 Rank, which implies a Hold rating in the near term.
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Source: finance.yahoo.com
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