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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Northwest companies
June 14, 2012 at 9:55 AM

Opportunity and enigma in Mexico

How much can a country stand and still go on with daily life? Mexico is a prime example. An estimated 50,000 people have been killed since President Felipe Calderon began waging an aggressive fight against the drug cartels — which supply our appetites. At the same time, Mexico is building a middle class that is becoming its majority.

So it’s no surprise that Costco Wholesale is buying out its partner in its Mexican division for $760.4 million. With 112 million people becoming a middle-class nation, that’s plenty of customers. Wal-Mart thinks so, too — enough for the company to face allegations of corrupt business practices. Thus the enigma of Mexico: A rapidly developing country, not least thanks to NAFTA and its displacement of American workers, and yet much corruption in government and business.

Mexico accounted for nearly $1.4 billion in Washington exports in 2011 (It is the state’s 13th largest trading partner and America’s second largest, totaling $280 billion. The recession and anti-immigrant hysteria have slowed the illegal immigration rate; in many cases opportunities are greater at home. The U.S. still imports substantial Mexican oil, although the big fields there, especially Cantarell, are in decline.

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Comments | More in Costco Wholesale, Global economy, International economy, Mexico, Northwest companies, Trade

September 27, 2011 at 10:30 AM

Fourth-quarter watch: Big items for Seattle

Signed, sealed, delivered — it’s yours. The first Dreamliner took off from Everett this morning to begin service for ANA in Japan. It’s a milestone for the Puget Sound. A “finally” for Boeing. And a time to check out some other things to watch as the last quarter of the year unfolds in Seattle:

1. The 737. Although 787 work will keep aerospace employment in the region strong for the next few years, Boeing is under heavy pressure in the narrow-body market. With plans for a 737 replacement shelved, at least for now, in favor of upgrading the venerable 737, the competition is on for where it will be built. Washington state can’t take anything for granted, even if Boeing can count on proven efficiencies and an existing plant in Renton. The next few months should give an idea of how the state and regional strategy is shaping up, or not. Meanwhile, the case before the NLRB over Boeing setting up a factory in North Charleston will play out, with much political strum und drang.

2. The holidays. Traditionally, this is the time for retailers to make most of their money and add jobs. Both seem at risk as consumer confidence is shaky and the unemployment crisis drags on. If things don’t improve in this quarter, expect more declines in tax revenue, which will result in more of a drag on the economy as the public sector continues to contract. Small businesses on the edge may be done for (even some big chains have cut back, e.g. the Rochester Big and Tall store closing in downtown Seattle). On the other hand, strong retailers such as Nordstrom, Costco and Amazon.com will likely profit from their existing market positions. This is a two-track economy and the “haves” will still shop with abandon. The likelihood of retailers adding large numbers of seasonal workers seems dim.

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Comments | More in Aerospace/Boeing, Amazon.com, Northwest companies, Ports of Seattle and Tacoma, T-Mobile, Trade

March 28, 2011 at 10:15 AM

What a pair: Harry & David and Wall Street

Another legendary Pacific Northwest company in trouble, this time with Harry & David’s filing today for Chapter 11 bankruptcy protection. A commenter on the New York Times site wrote, “Hairy & Dead. Who knew selling pears for 20 bucks a piece wasn’t a sustainable model?” And in a recession, at that.

But the story is more complicated and one doesn’t have to look far to find the hands of the Wall Street playerz. Medford, Ore.-based Harry & David hasn’t been a local firm for some time. In 2004, it was sold by Japan’s Yamanouchi to Wasserstein & Co., the private investment outfit founded by Wall Street deal titan Bruce Wasserstein. Its debt at the time was zero, but Wasserstein had added $200 million of debt by the time the Great Recession hit.

The New York Post reported in 2004: “Wasserstein & Co. is attracted to (parent) Bear Creek because of its strong, well-known brand names, such as Harry & David — by far the biggest name in direct marketing, food and gift products — and the company’s stable cash flow. But the company is currently experiencing only modest growth. Wasserstein & Co. seems to be betting it can change that.”

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