Up Front
Edited by Sheridan Prasso
Talk Show
"I see a Republican breeze blowing." -- Senator John McCain (R-Ariz.), early on election night.
WIGGLE ROOM
What Does "May" Mean, Anyway?
Remember Bill "It depends on what the meaning of the word `is' is" Clinton? Perhaps his influence is still being felt at the Securities & Exchange Commission, where officials have been spending a fair bit of time pondering the meaning of the word "may."
Why the debate? New financial disclosure rules will soon require companies to reveal off-balance-sheet transactions--à la Enron--that "may" have a material effect on their financial condition. So SEC commissioners, the chief accountant, and the general counsel all spent at least 15 minutes debating the word at an Oct. 30 meeting. They settled on this: "May" should mean a "more than remote" chance of having a material impact. Then again, "more than remote" still leaves considerable room for interpretation.
SEC Commissioner Paul Atkins says his English professor would have loved the semantics discussion. "There will always be scoundrels who try to twist the meaning of words," he says. "We just have to catch them and bash them on the head." Now that's clear.
By Peter Coy
SEX ABUSE
The UAW Answers a Cry for Help
In a highly unusual move, the United Auto Workers is going after Lufthansa airlines and Subway sandwich shops to protest alleged abuses. It's leafleting at ticket counters and stores on behalf of nonunion female workers at a Connecticut dough factory owned by Lufthansa subsidiary Chef Solutions, breadmaker for Subway and others.
The 200 employees, mostly Hispanic and many illegal, claim that top managers engaged in sex abuse such as threatening to fire them or turn them or family members in to U.S. authorities if they didn't submit to sex. Five managers--including the plant manager, who is a woman--were fired or moved over the past year after the workers filed civil-rights charges and sought help from the UAW, says the union, which also represents non-auto workers.
The workers still have more grievances--including alleged firings for trying to join the union. "If you listen to these women's stories, it will make you cry," says Phil Wheeler, UAW Region 9A director. Trish Beck, vice-president for human resources at Chef Solutions, says the company has been investigating the complaints.
Read a Letter to the Editor about this story.
By Aaron Bernstein
ON THE WATERFRONT
Slow Boat to California
The lockout by west coast dockworkers claimed some unsuspecting victims. Even after it ended on Oct. 10, a huge backlog of cargo remained stuck at sea for weeks. And not just car parts and rotting bananas. Other items that didn't make it off the boat were 57,000 cameras from Hong Kong that the San Francisco Giants intended to give away at game four of the World Series.
The game went on, but others weren't so lucky. The University of California at Los Angeles had to postpone an Oct. 23 production of the play Quick Lime when sets and costumes got held up. Carpenters built a new set from scratch, and two of the three performances went on as scheduled. Still, the university lost more than $10,000 in potential ticket sales.
The Los Angeles Opera had its own drama. Sets for Lady Macbeth of Mtsensk did not arrive from Russia in time for a late-October opening night. So a messenger from the Kirov Opera hand-delivered a 30-pound roll of blueprints to L.A., so designers could recreate the set. "When you sell a half-million dollars' worth of tickets, you don't want to cancel," says opera spokesman Gary Murphy. Indeed, the show must go on--and did.
By Arlene Weintraub
THE LIST
Q&A
The NJSE? Fuhgedaboutit
The New York Stock Exchange is committed to staying in New York. So said NYSE Chairman Dick Grasso in an interview with Editor-in-Chief Stephen Shepard on Oct. 31 as part of BusinessWeek's ongoing "Captains of Industry" series with the 92nd Street Y in Manhattan. Here are some excerpts:
Before September 11, the NYSE had planned a new building near its headquarters at 11 Wall St. The attack put an end to that. What are you going to do now?
We have been proud to have New York as half our name for 211 years. So that's not going to change....I will tell you, being a native New Yorker, the institution being the anchor of New York's financial district...we have no desire to move out of the city of New York. Building a [secondary] facility outside of New York is the last of our last options.
The last resort would still be in New York State?
No question. There is no N.J. in my future.
You're mentioned as a possible successor to Treasury Secretary Paul O'Neill. Would the job interest you?
I walked into 11 Wall St. on Apr. 10, 1968, and I fell in love with the place. It's the... only job I ever will have. When I'm finished--and some say the sooner the better--I'm going to work with sick kids--kids with cancer.
Growing up, did you have a role model?
I worked in a pharmacy. The pharmacist, Harry Rosenbaum, taught me how to fill prescriptions so that he could spend all his time looking at the Standard & Poor's guide [and investing in stocks]....The more Harry said, "You'll be a great pharmacist," the more I wanted to understand what he was doing in the stock market. That's where I caught the bug actually.
AS THE DOWNTURN TURNS
Have We Got a Deal for You: Office Space
Will Rogers once advised folks to buy land because they aren't making any more of it. But these days, no one seems to want the space that's already here. In a reverse land rush, tenants across the U.S. are vacating offices--often paying penalties for canceling leases--as they retrench or close shop.
The result: Big-city vacancy rates, which were mostly in single digits two years ago, average more than 15% today. Real estate experts say they're likely to rise further.
For companies shopping for new space, this spells bargains. In San Francisco and Silicon Valley, rents have tumbled by 50% or more since their 2000 peak. New tenants there are demanding--and typically getting--goodies, such as discounts on remodeling, that work out to about a year or two of free rent. "It has turned from a landlord's market to a tenant's market," says Jacque Ducharme, president of leasing agent Julien J. Studley Inc.
One standout, for now, is New York. While its downtown is suffering--vacancy rates have quadrupled since 2000, to 13%--Midtown has remained strong, with the vacancy rates still in single digits.
Equity Office Properties Trust, the nation's biggest office-building owner, reports tenants handing back 1.8 million square feet of floor space in the third quarter. CEO Samuel Zell doesn't see improvement until job growth picks up. When will that happen? Judging by the last "jobless recovery" a decade ago, Zell says, maybe a year from now.
By Michael Arndt
AS THE DOWNTURN TURNS
THE BIG PICTURE
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Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
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