Four of its 12 casinos have closed in the last year, including the Revel, the newest and glitziest, despite a $260 million, taxpayer-funded gift courtesy of Gov. Chris Christie. A fifth, the Trump Taj Mahal, is on the brink. The gaming industry—proponents never call it gambling—has lost nearly 8,000 jobs since the beginning of the year and its revenue, which hit a high of $5.2 billion in 2006, is down nearly 50 percent. Add to that the city’s $65 million budget shortfall, pending layoffs of as many as 300 city workers and a tax base in free fall.
Sure, the still-sluggish U.S. economy is a factor. The loss of the East Coast gambling monopoly that Atlantic City enjoyed for nearly 20 years is another. Poor planning, lack of foresight and the failure to expand the city’s attractions beyond casinos are part of the mix. Even acts of God played a role: Though the city wasn’t devastated in 2012 by Hurricane Sandy the way other Jersey Shore towns were, tourism plunged in the immediate aftermath at a time when the city could least afford it.
But there is something else at play, something in the city’s DNA that is painfully obvious to anyone who’s lived or worked there.
Even during its halcyon days, Atlantic City was an enterprise built around blue smoke and mirrors. Think, Nucky Johnson, the inspiration for HBO’s Boardwalk Empire, and the wide-open rackets of gambling, booze and prostitution during Prohibition.
It was all about grabbing whatever you could, whenever you could from whomever you could. The city worked on a 12-week economy, Memorial Day to Labor Day. Get the tourists and vacationers into town. Sell them the beach and the Boardwalk and then send them home broke. The Miss America Pageant, held in Atlantic City for most of its years, was part of that con. It was the 1920s brainchild of a city huckster looking for a way to extend the summer season for another week. The city was born as a come-on, a fugazy.
Wonder why Atlantic City is failing? The better question, the one asked by people who know the town: Why did anyone think it would ever succeed?
The community that epitomizes the pollution warehouses can bring is Mira Loma.“Our quality of life is in the tubes,” said Gene Proctor, 73, who has lived in Mira Loma Village for 43 years. “I wish people shopping in Tucson, Arizona, in other places, I wish they could see the little kids around here, their respiratory problems.” His great-granddaughter has asthma, and his 3-year-old great-grandson, he said, “coughs like a smoker.”
Population 21,000, Mira Loma is so small and poor it doesn’t have a movie theater, a community center, or even a moderately upscale restaurant. What it does have are 90 warehouses and a whole lot of big rigs: Trucks rumble through 15,000 times every day. In just half an hour on a recent afternoon, 269 trucks passed by the big plate glass window in the front of the Farmer Boys truck stop on Etiwanda Avenue.
That is more than one every seven seconds.
Avol, the professor at the USC Keck School of Medicine, began visiting the town in the early 1990s as part of a study of air pollution and children’s health across Southern California. Back then, he said, researchers chose Mira Loma because it sits at the “end of the tailpipe” of the Los Angeles basin, meaning the prevailing winds off the Pacific Ocean blow L.A.’s infamous smog east until much of it arrives in Mira Loma. So it was rural yet had a lot of ozone and smog. Other places in the study, such as Santa Barbara and Long Beach, were picked because they were thought to boast clean air or because they were in industrial areas.
When the study began, Mira Loma residents complained to researchers about the smell of dairy cows, herds of which clustered on vast pastures and cow yards. But in 1987, Riverside county supervisors revamped the general plan for Mira Loma, clearing the way for massive warehouse development.
“In the course of a few years, the dairies disappeared,” and what had been “open pasture became streets and warehouses, lined with trucks,” Avol said. “Mira Loma turned out to be a very interesting place to study.”
The trucks made the already bad air worse, bringing in diesel particulates, very small particles that can enter the lungs and travel to tissues throughout the body. They are associated with asthma, heart disease, neurological problems, and cancer.
In Mira Loma, children were found to be growing up with stunted lungs compared with children living in places with better air. Their lungs were growing at a rate that was 1 to 1.5% slower, Avol said, so that “after their teen years, they were about 10 to 12% lower in lung function than children who had grown up in cleaner places.”
He added: “We have no information at this point that supports the idea that they ever catch up.”
Studies from other Inland Empire communities are also dire. In a neighborhood near the BNSF rail yard in the city of San Bernardino, Loma Linda University researchers found that adults have more respiratory problems, and children alarmingly high rates of asthma, even when compared with other polluted communities.
There are more than forty thousand Chinese restaurants across the country—nearly three times the number of McDonald’s outlets. There is one in Pinedale, Wyoming (population 2,043), and one in Old Forge, New York (population 756); Belle Vernon, Pennsylvania (population 1,085), has three. Most are family operations, staffed by immigrants who pass through for a few months at a time, living in houses and apartments that have been converted into makeshift dormitories. The restaurants, connected by Chinese-run bus companies to New York, Chicago, and San Francisco, make up an underground network—supported by employment agencies, immigrant hostels, and expensive asylum lawyers—that reaches back to villages and cities in China, which are being abandoned for an ideal of American life that is not quite real.
Rain, who asked that I use his adopted English name to protect his identity, is reedy and slight, with a wide face and sloping cheekbones. He is observant, in no hurry to speak, but he is more cagey than timid. Like his boss, and like everyone else who works at the restaurant, he is primarily concerned with saving as much money as possible. He needs to pay the snakehead that got him to the U.S. and send money to his family in China. He harbors the vague suspicion that everyone around him is angling for more money, less work, or some other benefit at his expense. So, instead of conversation, Rain occupies himself with the math of a transient cook: the time it takes to clean the shrimp, the days before he can visit his girlfriend in New York, and the balance of his debts. At night, he lies on a cot in his boss’s otherwise empty living room, mulling the slow processing of his green card. During the day, if he’s feeling bold, he walks across the strip-mall parking lot to order lunch at Subway, pointing at the menu when he doesn’t know the English word for something.
“I understand why he acts like this,” Rain told me, about his boss. “He’s been working in that restaurant for almost twenty years. He goes back and forth between the restaurant and the dorm where we live. Back and forth, back and forth, every day for years.” The boss’s wife and kids are in China. “You do this kind of work for that long, and you start to lose perspective.” Rain pinched his fingers together. “Your world is this small.”
It can get kind of better
Six mornings a week, the boss picks up Rain and the other workers from their dorm and takes them to the restaurant. Their preparations have a catechistic order: first the rice cooker, then dishes for the buffet, then those for the lunch rush. Twice a week, a Chinese-run company brings supplies, and everyone gathers to butcher meat, hacking it into small pieces for quick cooking. They put on rubber gloves and pour salt and cornstarch over the meat, mix it by hand, then seal it and put it into the freezer. Chinese kitchens in the U.S. have none of the badinage that makes for good reality TV. In Rain’s kitchen, the only person who talks is the boss, complaining. When a buffet tray gets low, a waiter calls through an intercom, set at a startling volume: “We need more pineapple chicken up front!”
When Rain arrived in the U.S., he assumed that he had a fair proficiency with Chinese food. His father had prided himself on his culinary skill, and his mother was a capable cook, too. She taught him when to add spice to a dish, when to temper it with Chinese celery. Rain worked briefly as a fry cook in his village, and found that he had absorbed some of his parents’ knowledge. “Even if I’ve never cooked a dish before, I can think about it and draw from my experience,” he said. Having grown up on his father’s subtly flavored fish soups, he was surprised by American Chinese food. Americans seemed to eat like kids: they love starches and sweet things, and are frightened of meat and fish with bones in it. “Americans eat all that fried stuff,” he told me. “It’s not healthy.” Real Chinese food is more refined: “You have to spend a lot of time studying and really understanding it.”
In Maryland, most of the patrons seem to come for the buffet and eat as much as they can. Still, Rain loves watching people in the dining room. “I like seeing a clean plate,” he said. “I like it when people take the first bite of my food and they start nodding their head.” He spends hours trying to create a perfectly round Chinese omelette. “There’s a lot of kung fu in making egg foo young,” he told me. “If you have time, you’ll make it really perfect. You’ll make it bigger, better-looking, rounder. They’ll think, I spent so little money and I got such good food, and on top of that it’s good-looking. And then maybe they’ll come back.”
Rain viewed the job in Maryland as an opportunity to expand his repertoire. “In a takeout restaurant, people order the same dishes over and over,” he said. At a bigger restaurant, he could learn new dishes. And his salary—twenty-eight hundred dollars a month—was good, but not good enough to arouse concern. “If you come across a job paying three thousand, you think there must be something wrong with that restaurant,” he told me.
Rain lives with five co-workers in a red brick town house that his boss owns, part of a woodsy development near the restaurant. The house is tidy; there are three floors covered with white carpeting, and each worker has been supplied with an identical cot, a desk, a chair, and a lamp. “Some bosses don’t take care of the houses,” Rain said. “If they’re renting the house, especially, they don’t care. The rooms will actually smell.” Every restaurant worker has a story of sleeping in a dank basement or being packed in a room with five other people. Many complain of living in a house that has no washing machine, and being forced to spend their day off scrubbing their grease-spattered T-shirts in a sink.
So this is why he stays
For many restaurant workers, the decision to come to the U.S. is irrevocable. But, as the disappointments of immigrant life accrue, it can be hard not to imagine that things might be better elsewhere. Chinese-Americans, despite a good public image, suffer higher rates of poverty than the general public. Mental-health problems are an increasing concern in New York’s immigrant communities. In parts of China where the growing economy has given people more options, the allure of working in the U.S. has faded. This February, in a hostel in Queens, I met a woman who had just returned from a difficult day of job hunting. “I thought America would be heaven, and all it is is cold!” she complained. She returned to Beijing after four months. In Fuzhou, a taxi-driver told me that he was glad his attempts to emigrate had failed. “My father says that having a son in the United States is like having no son at all,” he said.
Rain tried not to dwell on returning to Maryland, where he was due in a few days. Everyone else who had worked at the restaurant when he started had been driven off by the boss’s temper. “And it’s so far away,” Rain said. If he could find a job somewhere closer, he could see Annie every weekend. As his family’s only son, Rain feels increasing pressure to send money home to his mother. But, he reasoned, everyone who comes to the U.S. should be prepared for hardship. “Everything we do, we do for the next generation,” he said, and added, “No matter what, it beats sitting around in the village.”
Interesting article on what happens when your corporate culture goes bad.
Meanwhile, in arguably one of the worst decisions ever made by a major corporate CEO, Zander struck a deal with his Silicon Valley friend Steve Jobs, the CEO of Apple. Together their companies created a Motorola iTunes phone, the first phone connected to Apple’s music store. “We can’t think of a more natural partnership than this one with Apple,” Zander said at the time. Named the Rokr, the phone launched in the fall of 2005. Jobs, who introduced it, called it “an iPod Shuffle right on your phone.”
Zander says he believed that by working with Apple, Motorola could become cool again. But much as it had taught the Chinese to compete with it years before, Motorola was teaching one of the most creative, competitive, and consumer-savvy companies of all time how to make a phone.
Two years later, when Jobs introduced the first iPhone, Zander’s Motorola was still pushing Razrs, pumping up sales by taking new variations further and further downmarket. The result: ever-lower profit margins. One analyst calculated that the company made, on average, only about $5 per device.
Partly because of the huge layoffs of recent years, Motorola’s innovation machine was stalling. The company had long numbered among the top 10 American firms registering U.S. patents, notes analyst Joan Lappin; by 2006 it dropped to No. 34.
Zander insists that he saw the smartphone onslaught coming but that Motorola “didn’t have the DNA or the people” to understand the software involved. He also blames a less-than-speedy Motorola supplier that, he says, caused the company to miss nearly a year in the product cycle. “We should have just broken the contract” with the supplier, he says now. “The one regret I have is that I should have taken myself out of the CEO job and run the [phone] division [myself].”
Another mistake: Zander never engaged in China the way the Galvins had, leaving the details to his division heads and country managers. When China upped its networks to 3G, his managers pushed what they had—older 2G phones—at steep discounts in order to preserve market share, unbeknownst to the CEO. The collapse of the China business in 2007 left Zander dumbstruck. That year the South Korean company Samsung topped Motorola in phone sales for the first time, and it never looked back.
It’s bad news for content providers because AOL makes no money from them at all. Instead they make all of their money from old AOL dial-up subscribers who haven’t looked at their credit card statement in a very long time.
AOL beat Wall Street’s Q2 revenue and profit numbers. And, like the last few quarters, the company says that its content business — sites like Huffington Post and TechCrunch — was profitable, if you’re willing to accept a fuzzy definition of profit.
But as always, the most amazing thing about AOL’s business is the thing that drives AOL’s business: Millions of people, who started paying the company a monthly fee for Internet access more than a decade ago, who continue to pay the company a monthly fee for Internet access, even though they likely aren’t getting Internet access from AOL anymore.
AOL doesn’t break out precise earnings numbers for this business, but it gives you enough hints to understand that it’s enormously profitable. As it should be!
Tim Armstrong’s company says its subscription business generated $143 million in “Adjusted OIBDA” – its proxy for operating income — last quarter. That’s more than the $121 million in Adjusted OIBDA that the entire company generated.
Here’s how it makes that money: Getting a shrinking number of subscribers — 2.34 million this quarter, down from 3.62 million at the beginning of 2011 — to pay an increasing amount — the average AOL subscriber now pays $20.86 per month, up from around $18 a few years ago.
“You came, you shopped, you dressed nice – you went to the mall. That’s what people did,” says Lawless, a pseudonymous photographer who grew up in a suburb of nearby Cleveland. “It was very consumer-driven and kind of had an ugly side, but there was something beautiful about it. There was something there.”
Gazing down at the motionless escalators, dead plants and empty benches below, he adds: “It’s still beautiful, though. It’s almost like ancient ruins.”
Dying shopping malls are speckled across the United States, often in middle-class suburbs wrestling with socioeconomic shifts. Some, like Rolling Acres, have already succumbed. Estimates on the share that might close or be repurposed in coming decades range from 15 to 50%. Americans are returning downtown; online shopping is taking a 6% bite out of brick-and-mortar sales; and to many iPhone-clutching, city-dwelling and frequently jobless young people, the culture that spawned satire like Mallrats seems increasingly dated, even cartoonish.
According to longtime retail consultant Howard Davidowitz, numerous midmarket malls, many of them born during the country’s suburban explosion after the second world war, could very well share Rolling Acres’ fate. “They’re going, going, gone,” Davidowitz says. “They’re trying to change; they’re trying to get different kinds of anchors, discount stores … [But] what’s going on is the customers don’t have the fucking money. That’s it. This isn’t rocket science.”
Of course it didn’t help that they were built with no urban planning principles in mind.
For mid-century Americans, these gleaming marketplaces provided an almost utopian alternative to the urban commercial district, an artificial downtown with less crime and fewer vermin. As Joan Didion wrote in 1979, malls became “cities in which no one lives but everyone consumes”. Peppered throughout disconnected suburbs, they were a place to see and be seen, something shoppers have craved since the days of the Greek agora. And they quickly matured into a self-contained ecosystem, with their own species – mall rats, mall cops, mall walkers – and an annual feeding frenzy known as Black Friday.
“Local governments had never dealt with this sort of development and were basically bamboozled [by developers],” Underhill says of the mall planning process. “In contrast to Europe, where shopping malls are much more a product of public-private negotiation and funding, here in the US most were built under what I call ‘cowboy conditions’.”
Shopping centres in Europe might contain grocery stores or childcare centres, while those in Japan are often built around mass transit. But the suburban American variety is hard to get to and sells “apparel and gifts and damn little else”, Underhill says.
Same thing in the largely empty Confederation Mall. The mall emptied out after rents skyrocketed in Saskatoon. What used to be disposable income is now needed for rent. In that way, malls are a reflection of the economic health of the surrounding communities.
Although some countries and cities have managed to profit from well-run major sports events such as the FIFA World Cup and the Olympics, they’re far from the norm, a prominent professor of economics says.
Victor Matheson, a professor of economics at the College of the Holy Cross in Newton, Mass., says prospective hosts need to think twice about whether the massive outlays of cash are worth it in the long run.
“The economic benefit is typically zero,” Matheson says in an interview set to air on CBC’s Lang & O’Leary Exchange on Tuesday. And even when there is a modest gain, “it’s not enough to justify the price tag,” he says.
I think we know who to blame
Because the IOC and FIFA make their money from selling TV and merchandising rights, they have no incentive to keep costs from ballooning, Matheson says.
“On paper, the IOC and FIFA don’t care whether it costs $51 billion to host the Olympics in Sochi or $14 billion to host the World Cup in Brazil, because ‘I’m not paying those costs,'” Matheson says.
Construction has not begun on a massive trade and exhibition centre South of Saskatoon.
“I think with a project of this magnitude, there are small delays that are along the way and I think they just want to make sure they got all their bases covered,” said Rural Municipality of Dundurn Reeve Fred Wilson on Monday.
The first phase of the Dundurn International Exhibition Centre is expected to start this spring, but repeated requests for an update from Brightenview Development International Inc. have gone unanswered.
Last fall, crews were doing pre-construction work like filling sloughs and clearing brush on the piece of land that was purchased from the rural municipality.
In November, Lorne Nystrom, public affairs with Brightenview, said the project was advancing as planned.
“Different builders are being interviewed over the fall and early winter, that will all be in place in time for starting construction sometime in the spring,” he said back on Nov. 1, 2013.
The first phase of the project is expected to take 18 to 24 months to build at an estimated cost of $120 million. The building will be 300,000 sq. ft., and hold 350 showrooms for businesses from China.
Help me out here. Saskatoon has a nice looking airport but it is no where near busy enough to be a hub which means we don’t get a lot of flights from major cities where retailers are headquartered. This is supposed to be a business to business enterprise centre but why build one in a location that would require a layover in Toronto, Calgary, or Edmonton and then an additional drive. These places are traditionally built near airport hubs and are normally located in China where retailers and companies can liaison with the factories easily. In fact infrastructure means so much to these deals that Chinese cities are going deep into debt to facilitate them getting built.
I know land is cheap around Dundurn but this deal makes no sense. This feels like so many of those Devine era ideas that never happened for one reason or another.
The stunning collapse of Heenan Blaikie LLP, once one of Canada’s largest and most prestigious law firms, stemmed from a “loss of trust” in management over international business activities including dubious forays into Africa, where former partner Jacques Bouchard and former prime minister Jean Chrétien lobbied governments on behalf of clients, former Heenan partners and associates say.
Founded in Montreal in 1973, Heenan grew from 18 lawyers to more than 500, in offices across Canada and in Paris, where it established a beachhead in 2009. It was considered a rock-solid full-service firm — and a favourite of the Canadian establishment — until a crisis of confidence caused its foundations to crack. Lawyers began leaving, first in a trickle, then in droves, and the whole enterprise came crashing down this month.
Increasing financial pressures and friction between partners in Montreal and Toronto were key factors behind Heenan’s failure, the biggest ever for a law firm in Canada. “Montreal didn’t understand Toronto; Toronto felt the Montreal office was way overpaid and overpraised,” said one former partner.
But many also agree that Heenan’s excursions into Africa caused so much tension and tumult that partners began shaking their heads and taking their leave. “People like me said to themselves, ‘I want to work at a firm that values the practice of law in Canada, not international dictators,’” another former Heenan partner told the National Post. “It’s not what I signed up for.” He quit the firm last year.
There came “a point where confidence and faith started to disappear,” said Jean-Francois Mercadier, managing partner of the firm’s former group in Paris, Heenan Blaikie AARPI. “Partners started to lose any kind of faith in the management of the firm. There was a loss of trust in the partnership, and I think the origin is in the Jacques Bouchard story.”
While the story is about Wal-Mart, the interesting point is that failure comes very, very quickly in retail.
Wal-Mart recently reported that it will be laying off 2,300 workers at its Sam’s Club subsidiary, reportedly to cut the fat of middle management. Layoffs in and of themselves aren’t uncommon at any large company — competitor Target (NYSE: TGT ) also recently said it would lay off nearly 500 employees and keep hundreds more positions vacant — but such personnel reductions also aren’t something a growing company does very often.
What’s worth keeping an eye on is whether the Sam’s Club layoffs are a symptom of much larger problems at Wal-Mart. The company has been a giant of retail for decades, but there are signs that its reign is coming to an end.
Retail is a tough business to be in.
It doesn’t take long for a retailer to go from the top of the world to bankrupt. Kmart lost just $22 million in the second quarter of 2001, but was bankrupt by Jan. 22, 2002. In the four months leading up to bankruptcy, same-store sales fell 1.8%, 4.4%, 2.6%, and 1%, respectively, from a year earlier. You don’t need a big decline in sales to suck up all of your profits in retail.
Circuit City reported a 4.2% rise in same-store sales as late as December 2006, even raising its fiscal-year guidance to growth of 7%-8% in U.S. stores. But by December 2007, same-store sales were down 11% for the month and the company would be out of business by November 2008. From optimism to bust in less than two years.
The reason that retailers are sensitive to declines in sales is that there is a lot of overhead that goes into selling in brick-and-mortar stores. Wal-Mart spent $89.2 billion on overhead over the past year, and based on current margins and overhead spending, it would only take a 13.6% decline in sales to eat up all of Wal-Mart’s profits.
Amazon is Wal-Mart’s biggest competitor
What makes Amazon a bigger threat today is the company’s sheer size. It’s now bigger than Target, and every percentage point of growth takes growth away from Wal-Mart. In fact, Wal-Mart’s budget-conscious consumers are probably more likely to shop on Amazon than Target’s consumers.
My friend Bryn Rawlyk is opening a bakery called the Night Oven Bakery at 629-b 1st Avenue North which I think will be an important part of the North Downtown revitalization. It opens next month but I decided to link to the site now and also this great post showing the wood oven under construction. I can’t wait until it is finished and open for business.
What the hell happened here? Seven floors above the iced-over Dallas North Tollway, Raghib (Rocket) Ismail is revisiting the question. It’s December, and Ismail is sitting in the boardroom of Chapwood Investments, a wealth management firm, his white Notre Dame snow hat pulled down to his furrowed brow.
In 1991 Ismail, a junior wide receiver for the Fighting Irish, was the presumptive No. 1 pick in the NFL draft. Instead he signed with the CFL’s Toronto Argonauts for a guaranteed $18.2 million over four years, then the richest contract in football history. But today, at a private session on financial planning attended by eight other current or onetime pro athletes, Ismail, 39, indulges in a luxury he didn’t enjoy as a young VIP: hindsight.
“I once had a meeting with J.P. Morgan,” he tells the group, “and it was literally like listening to Charlie Brown’s teacher.” The men surrounding Ismail at the conference table include Angels outfielder Torii Hunter, Cowboys wideout Isaiah Stanback and six former pros: NFL cornerback Ray Mickens and fullback Jerald Sowell (both of whom retired in 2006), major league outfielder Ben Grieve and NBA guard Erick Strickland (’05), and linebackers Winfred Tubbs (’00) and Eugene Lockhart (’92). Ismail (’02) cackles ruefully. “I was so busy focusing on football that the first year was suddenly over,” he says. “I’d started with this $4 million base salary, but then I looked at my bank statement, and I just went, What the…?”
Before Ismail can elaborate on his bewilderment—over the complexity of that statement and the amount of money he had already lost—eight heads are nodding, eight faces smiling in sympathy. Hunter chimes in, “Once you get into the financial stuff, and it sounds like Japanese, guys are just like, ‘I ain’t going back.’ They’re lost.”
At the front of the room Ed Butowsky also does a bobblehead nod. Stout, besuited and silver-haired, Butowsky, 47, is a managing partner at Chapwood and a former senior vice president at Morgan Stanley. His bailiwick as a money manager has long been billionaires, hundred-millionaires and CEOs—a club that, the Steinbrenners’ pen be damned, still doesn’t include many athletes. But one afternoon six years ago Butowsky was chatting with Tubbs, his neighbor in the Dallas suburb of Plano, and the onetime Pro Bowl player casually described how money spills through athletes’ fingers. Tubbs explained how and when they begin earning income (often in school, through illicit payments from agents); how their pro salaries are invested (blindly); and when the millions evaporate (before they know it).
“The details were mind-boggling,” recalls Butowsky, who would later hire Tubbs to work in business development at Chapwood. “I couldn’t believe what I was hearing.”
What happens to many athletes and their money is indeed hard to believe. In this month alone Saints alltime leading rusher Deuce McAllister filed for bankruptcy protection for the Jackson, Miss., car dealership he owns; Panthers receiver Muhsin Muhammad put his mansion in Charlotte up for sale on eBay a month after news broke that his entertainment company was being sued by Wachovia Bank for overdue credit-card payments; and penniless former NFL running back Travis Henry was jailed for nonpayment of child support.
In a less public way, other athletes from the nation’s three biggest and most profitable leagues—the NBA, NFL and Major League Baseball—are suffering from a financial pandemic. Although salaries have risen steadily during the last three decades, reports from a host of sources (athletes, players’ associations, agents and financial advisers) indicate that:
• By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.
• Within five years of retirement, an estimated 60% of former NBA players are broke.
It is not a petty fit of pique by a mad Bavarian aristocrat. The 72-year-old count, the eighth in a long line of pencil makers, just wants to prove how durable the pencils that carry his family name are.
The Faber-Castell family has been making wooden pencils by the hundreds of millions here in a storybook setting, bisected by the swift Rednitz River, which was once the main source of power here. A torrent of brightly colored pencils flows from clattering machines in a century-old factory with a tile roof and windows framed in pastel hues.
Faber-Castell is the largest maker of wood-encased pencils in the world and also makes a broad range of pens, crayons and art and drawing supplies as well as accessories like erasers and sharpeners. About half the company’s German production is exported, mostly to other countries in the euro zone. That means that Faber-Castell contributes, at least in a small way, to Germany’s large and controversial trade surplus — which now rivals China’s for the world’s largest.
Faber-Castell illustrates how midsize companies — which account for about 60 percent of the country’s jobs — are able to stay competitive in the global marketplace. It has focused on design and engineering, developed a knack for turning everyday products into luxury goods, and stuck to a conviction that it still makes sense to keep some production in Germany.
“Why do we manufacture in Germany?” the count asked during an interview at the family castle near the factory. “Two reasons: One, to really make the best here in Germany and to keep the know-how in Germany. I don’t like to give the know-how for my best pencils away to China, for example.
“Second, ‘Made in Germany’ still is important.”
Not all its factories are in Germany. But when Faber-Castell, which is privately held and had sales of 590 million euros, or about $800 million, in its last fiscal year, manufactures in places like Indonesia and Brazil, it is at its own factories.
In contrast to many American companies, like Apple, that have outsourced nearly all production to Asia, Faber-Castell and many other German companies make a point of keeping a critical mass of manufacturing in Germany. They see it as central to preserving the link between design, engineering and the factory floor.
Chances are that you have never set foot inside the best grocery store in America: Aldi. And even if you are lucky enough to be in one of the 32 states where Aldi is, perhaps you were put-off by the cardboard boxes in lieu of shelves, or the row upon row of suspicious-looking off-brands. What is this place? Why do I have to put down a deposit to check out a cart? What is the weird giant shelf by the exit? And what do you mean, I have to pay for a bag?
Calm your hormones, meine Schatzis: Aldi, which is short for Albrecht Discount, is the American incarnation of a German grocery chain that is so ubiquitous in the Vaterland that almost 90 percent of Germans shop there. (Not all German imports are luxury cars, beer, and super-cool glasses.)
Aldi is part of a charming subset of Teutonic trade: the brother-run company that cleaves in twain. Shoe aficionados already know the story of the Dassler brothers, Adolf and Rudolf, whose bitter feud resulted in the creation of Adidas and Puma. (Germans pronounce Adidas differently—some might say correctly—AH-dee-das, from Adi Dassler.) But outside Germany, few know about grocery-store kingpins Karl and Theo Albrecht (who was kidnapped in 1971!)—even though Karl, with a reported net worth of more than 17 billion euros, is the richest man in Germany (Theo’s descendants are a close second).
The Brüder founded their discount-store empire together. A disagreement in 1960 over selling cigarettes hastened a partition, and an epic game of grocery-store Risk: Theo would rename his business Aldi Nord, and would control territories north of the Rhine, plus a healthy chunk of Europe. Karl would head up Aldi Süd, and get southern Germany, more of Europe, plus the U.K. and Ireland. But both companies operate stores in the United States—Aldi Süd operates as Aldi, and Aldi Nord as the now ubiquitous Trader Joe’s.
But whereas Trader Joe’s employs just one major cost-saving device—private labeling—everything else about it is Americanized. The place is swarming with upbeat employees; cashiers stand at the till and bag your products for you; you just grab a cart willy-nilly and they trust you to put it back. Aldi also private-labels (those $1.99 “Millville” Rice Squares are Chex, you guys!), but what makes it a more exciting venture—and even cheaper than Trader Joe’s—is that it has imported the entire German grocery experience (aside, alas, from employees yelling at you if you do something wrong).