Business and Finance

NEW YORK–Albert Wells stood for a long time at the counter of the newly opened Tim Hortons at Penn Station in Manhattan, looking puzzled.

The 48-year-old postal worker, an American who had never heard of Timbits, had read about the iconic Canadian coffee chain’s maple-glazed doughnuts in the newspaper and was eager to try one. But after two attempts in one day, none were available at that site. He consoled himself with a coffee – free yesterday on the opening day for the chain’s 12 locations in Manhattan and Brooklyn.

"This coffee is good. But I’m disappointed about the maple glazed," he said.

It’s not every day Canadian cuisine, in any form, shows up en masse in New York City, but Tim Hortons Inc.’s arrival here, the company’s first foray into this most costly and competitive of locations, was heralded by lengthy stories in the New York Post and New York Times.

The stores are taking over sites formerly occupied by Dunkin’ Donuts, causing some consternation for its long-time, loyal customers.

There are three Tim Hortons sites within Penn Station alone, the bustling train station that welcomes thousands of commuters every day.

Regulars, expecting to find Dunkin’ Donuts, their regular coffee-and-carb fix, in its usual spot, were a little disoriented, even suspicious.

"Who’s this Tim Horton guy and why’s he taking over my Dunkin’ Donuts?" asked Melanie Skunca, 32, a media buyer who rode the subway with two colleagues, one a huge Tim Hortons fan.

"This morning I was so excited!" said Elizabeth Oberlin, 21, a junior ad buyer who has been a three-times-a-week Hortons fan in her native Rochester instant cash advance. "This is awesome. Their iced cappuccino is the best."

A regular commuter who heads for that site bleary-eyed each morning, Skunca said it would be a little tough to alter her routine and switch allegiance.

Tim Hortons is opening its Manhattan locations in conjunction with franchisee Riese Organization, which runs more than 100 restaurants in New York, including TGI Friday’s, KFC and Pizza Hut. Riese will be the franchisee of 12 Tim Hortons restaurants – 10 in Manhattan and two in Brooklyn. The sites were all formerly Dunkin’ Donuts restaurants operated by Riese that closed July 10.

"There’s a lot of excitement, a lot of buzz," said Tim Hortons’ regional marketing manager Anne Pritz, who flew in from Ohio for yesterday’s openings. "There are a lot of Canadians ecstatic to see us. Dozens have come up to us. It’s a little piece of home."

Kevin Gamble, a 34-year-old Vancouver native working in New York, happily waved a small Canadian flag attached to the end of his pencil and had his photo taken at the counter. "I was very excited to come down," he said.

"It means my frantic runs to Canada to buy tins of Tim Hortons ground coffee are over. Everything in New York is fantastic except the coffee. It’s dreadful. It’s watery."

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Analysts and traders gave a cautious welcome on Monday to a request by UBS and the U.S. government to delay a major U.S. tax trial, saying this brings a settlement nearer and could underpin shares.

The U.S. Department of Justice and UBS asked a federal judge on Sunday to delay until August 3 the trial “to continue their discussions seeking a resolution of this matter.”

The case, seen as key to the future of the global offshore banking industry, seeks to force UBS to reveal the identities of 52,000 rich Americans suspected of using secret Swiss bank accounts to dodge taxes.

“The ultimate settlement of this case should remove a key regulatory overhang on UBS stock and serve as a near-term positive even if the ‘green shoots’ of operational recovery may take longer,” said Kinner Lakhani, an analyst with Royal Bank of Scotland.

Shares in UBS were briefly indicated to open 0.6 percent down according to pre-market data by Clariden Leu, but traders later said they expected the shares to open up.

“The United States and UBS are interested in a solution that is sustainable for both sides and have now time to work out a solution,” said one trader. “The shares should rise.”

The Department of Justice said any settlement would necessarily include UBS providing information on a significant number of the 52,000 U.S. clients. But this is against Swiss law and would put UBS at risk of criminal charges.

A personal familiar with the situation told Reuters last week that, to circumvent Swiss law, the Swiss government could agree to disclose UBS bank client data indirectly, possibly by helping the U quick payday loan.S. Internal Revenue Service cross-check U.S. banks’ data about transfers from Switzerland and UBS.

UBS Chairman Kaspar Villiger said last week the focus of the discussions was the client data, not the money and said that speculation of UBS having to pay billions of dollars in the tax dispute were completely unfounded.

The bank has already agreed to pay $780 million and to disclose around 250 U.S. client names when it settled a separate, but linked criminal case in the United States.

A court response to the request for a delay is expected later on Monday, when the trial was initially due to start.

U.S. tax officials have accused UBS of hiding $20 billion of U.S. taxpayers’ money in undeclared offshore accounts.

UBS, which employs 27,000 people in the United States and manages more than $600 billion at its Wealth Management Americas division, is struggling to recover from the subprime crisis.

The bank has written down more than $50 billion in the subprime crisis and had to accept government help last year. It is due to report second-quarter results on August 4.

(Writing by Lisa Jucca; Editing by David Cowell)

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WASHINGTON — The Treasury Department is selling its financial stakes in bailed-out banks for one-third less than they’re worth, potentially shorting taxpayers up to $2.7 billion, a bipartisan congressional watchdog said Friday.

The shortfall estimated by the Congressional Oversight Panel concerns warrants, financial instruments that allow Treasury to buy shares of the firms at a set price in 10 years. If the stock prices of the banks go up, as they are expected to do, taxpayers could reap a healthy profit.

Treasury obtained the warrants when it began injecting billions into the nation’s largest financial institutions in October. They were considered a "deal-sweetener" — a way to help taxpayers benefit from the upside of a financial recovery that depended on billions of federal dollars.

But some banks have started to repay the Treasury Department and been allowed to repurchase the warrants, as well.

Twenty-two smaller banks have repaid their bailout money, and 11 of those have repurchased their warrants business cards. If the warrants for those firms "had been sold for their true market values, taxpayers would have recovered $10 million more," according to a report Friday from the Congressional Oversight Panel, which was created by Congress to oversee the $700 billion bailout fund.

If warrants in the more than 600 banks participating in the bailout were sold at such a discount, that would mean taxpayers received $2.7 billion less than the panel estimates the warrants are worth.

The Treasury Department, however, said banks, including JPMorgan Chase & Co., think the department’s asking prices for the warrants are too high.

Unable to agree on a price, some institutions are letting the department sell the warrants in public auctions, the department said.

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As General Motors emerges from bankruptcy protection, reports are that its famous blue corporate logo will turn green. But it still faces some big hurdles, including:

1

A bad image

Consumers may still think of GM as a company that’s teetering on the brink and take a pass on its vehicles.

2

Reduced sales force

GM plans to close 2,600 dealerships in the U.S. and 290 in Canada starting next year. With fewer showrooms, will car buyers stroll over to a rival?

3

No real change at the top

Career GM man Fritz Henderson is the new chief executive officer car loans for bad credit. He used to be the automaker’s chief financial officer.

4

Product lineup

The new GM will offer just four brands, and observers say it’s still lacking a good quality small car.

5

The Board

Veteran GM directors will be outnumbered by new ones, including one from the United Auto Workers union and another from Canada. How will they steer the company?

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L’AQUILA–Leaders of the world’s largest and richest industrialized countries declared they will keep on spending as long as necessary to prop up a shaky global economy, and will adopt a new approach to cutting global warming that environmentalists say is key.

The G8’s climate change declaration formally committed countries like Canada to act to keep global warming to under 2 degree Celsius.

Late today, Prime Minister Stephen Harper hailed both pledges as major and necessary steps forward.

The joint statement issued today by the Group of 8 leaders said although there are "some signs" the turmoil is stabilizing, the worldwide situation "remains uncertain and significant risks remain to economic and financial stability."

They agreed however that once a recovery takes solid hold, countries should begin to wind down their extraordinary measures taken to ease a worldwide recession.

"We don’t yet have a true recovery," Harper later said, as cameras filmed him heading to the official dinner. "But we have stability and we see some positive signs. It’s necessary that we stick with the program."

Leaders, he said, must meanwhile resist "the forces of protectionism" as unemployment continues to rise, and job creation lags behind the positive signs.

Harper gave most of the credit for what he said was a breakthrough on the climate change issue to United States President Barack Obama, who came to the summit having dropped the previous American resistance to hard cuts to greenhouse gases.

The G8 leaders did not, however, agree to a universal target for all to aim at.

The United States agreed only that countries should cut their emissions by 80% or more by 2050 compared to "1990 or more recent years."

That leaves Canada and the U.S. a lot more wiggle room than the Kyoto treaty which used 1990 as a baseline. Canada has adopted as its base year 2006.

Environmentalists, like those at the Pembina Institute, say the 2-degree warming limit means Canada will have to get tougher.

"Today’s G8 declaration recognized a science-based limit on global warming and the level of 2050 targets needed to get there. This declaration puts new and urgent pressure on Canada to strengthen its national emission targets." said Pemina’s policy analyst Clare Demerse, attending the summit.

Large, poorer countries which rely heavily on burning fossil fuels for their developing economies criticized what they called the G8’s tepid moves, and warned the rich countries that the fight against climate change should not be fought on the backs of their people, who seek the same prosperity as the developed nations.

Hu Jintao, president of China — one of the biggest polluters — left Italy to return to deal with the conflict in the Uighur majority province of Xinjiang, but clearly telegraphed his "resistance," said summit host Italian Prime Minister Sylvio Berlusconi.

"There is agreement (among G8 countries) but China is still skeptical. We have to verify tomorrow with India and China the level of agreement that we can reach," Berlusconi said.

At a news conference, China’s representative and allies from India, Brazil, Mexico, and South Africa urged the G8 to take up their own responsibilities.

Asked if that makes Thursday’s talks between the G8 and the Major Economies Forum, more difficult, Harper was blunt:

"The emerging economies will be hit as hard if not harder by climate change as anyone, so it’s important for them to realize the necessity of making commitments," Harper said.

Heading in to the first day, the G8 leaders were divided over whether a second round of public spending is needed to boost the sluggish global economy, with Harper, Russia and Germany resisting a second round, but calling on the first round to actually be spent payday loans guaranteed no fax.

The final declaration avoids a definitive statement on the need for a second round of stimulus. It simply declares that countries will take whatever steps "are necessary" to jolt their economies back to health.

Harper’s government believes a recovery will take hold in 2010, and with the recession turning a corner, it’s time for leaders to work through coordinated actions to wind down some of the extraordinary spending programs.

As unemployment continues to grow in the U.S. and Britain, those government leaders are sending signals that more may be required.

"We continue to watch what’s going on," said Obama’s press secretary Robert Gibbs.

"I think the bottom line for the President is, if there are steps that he thinks and his team thinks need to be taken to improve our economy, we won’t hesitate to do that.

Before entering the working lunch on the first day of meetings, Harper stood at the foot of a rubble-strewn street today and announced a modest contribution to themassive earthquake reconstruction job here.With a government building crumbling behind him, and nervous Italian civil security officials barking at reporters to keep back, Harper pledged $5 million for a youth centre in this university town at the heart of the Abruzzo province, 90 km northeast of Rome.Harper is one of a parade of world leaders who would pledge funds here today for the rebuilding of L’Aquila, a project estimated to cost between $12-16 billion.

Just three months after the earthquake, with strong tremors every other day, the decision by Italian Prime Minister Sylvio Berlusconi to move the international summit here is a minor attempt at local economic stimulus and a major headache.

Hundreds of residents are still living in tents, the city center remains evacuated, and the summit site is a chaotic police training compound now overhauled for the onslaught of nearly 9,000 foreign delegates, security staff and journalists.

The Canadian prime minister toured the damaged city centre, stopping at auniversity residence where 13 students died in the collapse of their dormitory."Your tears were our tears," Harper told a small gathering of local dignitaries including L’Aquila Mayor Massimo Cialente. The Canadian contribution was welcomed by L’Aquila Mayor Massimo Cialente, who said the university is the "future of the city and at the same time the economic engine of the region."

In truth, the job appears overwhelming, even to several Italian Canadians who travelled here with Harper, but they insisted it was worth the effort, even in a zone still subject to tremors.

"All of Italy is an earthquake zone," countered Mario Cortelluci, a spokesman for a federation of Canadians with origins in Abruzzo.

Various Italian-Canadian groups have raised an estimated more than $1.5 million that is, as yet, unpledged for the rebuilding.

Liberal MP Maurizio said Harper’s gesture, though modest, follows on an all-party resolution passed in Parliament to help L’Aquila.

"The damage is enormous, and the costs are going to be enormous," he acknowledged. "But I think it’s important to understand the historical importance of this Italian medieval town."

Harper answered only one question shouted by reporters about the G8 summit, stressing his priority here is the economy.

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Pension plans have rallied to the relief of retirees, shareholders and taxpayers, yet most plans are still in the emergency room.

A typical plan is about a third of the way back to the health status of mid-2007, thanks to three short months of rising stock prices and interest rates.

Pension consultants say the swift and sharp improvement has reduced the state of panic around all but those companies at risk of a bankruptcy that would lead to the slashing of pension payments.

Yet further improvements in health remain uncertain and, even when things get better, ever fewer young employees may enjoy the sort of company-guaranteed pension benefits their elders enjoyed.

"The level of concern, rightly or wrongly, is much better than in March, when people were horrified," says Mercer consulting actuary Malcolm Hamilton.

His company’s pension health index tracks the percentage of pension benefits a hypothetical company would be able to pay if it were to cease operations and pay benefits earned to date from the interest on government bonds.

Mercer’s index bounced up to 71 per cent by the end of June, up from 59 per cent at the start of the year, thanks to a combination of a 5.6 per cent investment gain and a rise in interest rates that reduced the estimated cost of paying future benefits. Yet the typical plan was still funded at well below the level charted in early 2002.

Meanwhile, a similar index of funding levels produced by Watson Wyatt Worldwide has jumped to 75 per cent from a low of 61 per cent. Watson assumes employers would have started making extra contributions when their plans fell short of funds. The index also incorporates a recent relaxation of actuarial standards.

Watson actuary Ian Markham and Mercer’s Hamilton predict that the upset of a second stock market crash in a decade could drive more employers to cut off new entrants to their pension plans, and to invest more heavily in government bonds to reduce risk cash advance loans.

"We may get to the point where pension sponsors say the risk is too high," Hamilton says. "When you put money in the stock market, you expect to earn a higher return (than on bonds), but stocks do badly at inopportune times."

While stock prices may recover over the next three to five years, Mercer consultant Paul Forestell says many employers will still want to take 10 years instead of the usual five to restore their plans to withstand an insolvency.

He said some employers are faced with paying 30 per cent of payroll to maintain and restore their pension plans over five years, and 20 per cent over 10 years.

Ontario, other provinces and the federal government have offered companies the extra time, provided no more than a third of employees and/or pensioners object.

Forestell said pension-funding levels would improve markedly if interest rates on long-term government bonds were to rise by a percentage point.

The cost of paying earned benefits with bonds would fall by 10 to 15 per cent if rates rose a single point. Plans with more retirees than active workers would save the least.

Few economists foresee such a big change within a year or so, however. So members of poorly funded plans have to hope their companies will stay in business.

Carlos Leitao of Laurentian Bank Securities predicts a decline in interest rates, which would make things worse for pension plans and weak employers.

Leitao says the decline in rates will occur as investors realize how slowly economies are going to grow and how little chance there is of price inflation over the next two or three years.

jdaw@thestar.ca

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STOCKHOLM–A little-known Swedish software firm has snapped up file-sharing website The Pirate Bay with the hope of turning the source of legal controversy into a money-spinner that appeals to both users and content providers.

Global Gaming Factory X AB, which operates Internet cafés and provides software, said yesterday that it had agreed to buy Pirate Bay for 60 million Swedish crowns ($9.04 million Canadian).

The website made world headlines in April when the three Swedish founders and a financial backer were each sentenced to one year in jail and ordered to pay a combined $3.6 million (U.S.) in damages for breaching copyright law with the free downloading site, which was one of the biggest sites of its kind on the Internet.

Swedish News Agency TT cited one of the founders, Peter Sunde, as saying that the money would not go directly to him or any of the others sentenced in April.

Sunde told TT that the money would be placed in a company outside Swedish borders and it would be used for Internet projects other than downloading sites pay day loans.

Pirate Bay could not be immediately reached for comment.

Global Gaming said it believed the website was a viable business with its plans for a new, legal business model.

Global Gaming chief executive Hans Pandeya told a news conference that the revamped website would generate money via advertising, supplying storage space and helping telecom operators optimize Internet traffic.

He also said users would be able to earn money by supplying storage space, which would encourage people to use the site.

Analysts comparing the site to Napster, an online file-share firm that quickly lost popularity after it started to charge its users.

Mark Mulligan, vice-president at research firm Forrester, said that many of Pirate Bay’s 20 million users would move on to other free downloading options.

"Most people who use file-sharing networks use it because it’s free." Reuters News Agency

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It began 41 years ago when a meandering drive through then-rural south St. Louis County landed Orville Roy at the Chrysler assembly plant in Fenton.

Recently discharged from the Marine Corps, Roy decided to fill out an application. A job offer came two days later and, with it, a legacy was born.

Eventually, three of Orville Roy’s sons, a daughter-in-law and a grandson, Michael Roy Jr., would follow him through the Fenton plant gates.

"It’s been our living, our livelihood," said Michael Roy Sr., 48, Orville’s son.

No more.

On July 10, Michael Roy Jr. and 600 other Chrysler workers will punch their time cards and go down in history as the final shift at a location that has turned out the automaker’s products for a half-century.

"There’s no middle class anymore," said Michael Roy Sr., forced to retire from Chrysler in December due to medical problems. "The middle class is gone."

That may be an overstatement from a former worker angered and betrayed by what he sees as the failure of the United Auto Workers and Chrysler to protect local production jobs now outsourced to Mexico and Canada.

But it still rings true for families, like the Roys, who have come to view assembly line positions at Ford, General Motors and Chrysler as a birthright.

Multigeneration families employed by and loyal to a single car manufacturer have long been "part and parcel of the automobile business," said Michael Smith, director of the Walter Reuther Library at Wayne State University and an expert on the labor movement. "That’s why the auto crisis is so devastating."

Matthew Diemer, an assistant professor of counseling at Michigan State University, said it may be premature to declare the "death" of a tradition of children following parents and grandparents into blue-collar manufacturing jobs.

"But maybe," he allows, "what we’re seeing is the death knell."

COMPLICATED OPTIONS

The bell tolled for the Roy family on April 30, the day Chrysler announced it was laying off what remained of Fenton’s Dodge Ram pickup truck work force. (The company halted minivan production at the Fenton location last year.)

After work that afternoon, 24-year-old Michael Roy Jr. and his mother, Cheryl Roy, repaired to a local tavern to consider a series of complicated options.

In mid-May, Cheryl Roy, made her up her mind. An autoworker for 14 years, she rejected a possible transfer to a Chrysler facility in either Illinois or Michigan and took a company buyout.

Cheryl is collecting severance benefits, searching for a job and staying at the family home in Arnold to care for her husband, Michael Sr., who retired following diagnosis of amyotrophic lateral sclerosis — Lou Gehrig’s disease.

Also looking for work, Michael Roy Jr. wonders what the future holds for a young man who aspired to retrace the footsteps of his grandfather and father.

"I’m good with my hands," he said. "And if you’re good with your hands, what can you do now?"

The official answer: Move from the production of goods and services dependent on nonrenewable resources to the production of environmentally sustainable commodities. Manufacturing the blades used in power-generating wind turbines is a commonly cited example.

State and national leaders across the nation, including Missouri Gov. Jay Nixon, contend that so-called "green jobs" represent the next wave of American manufacturing.

Michael Jr. knows that getting a foothold in the clean energy work force means going back to school. A few credits shy of an associate’s degree, he walked away from his education to accept an offer of a part-time Chrysler job that he saw as a stepping stone to full-time employment instant cash loans.

Strapped by declining income as he helps tend to his father, Michael cannot afford, in terms of either time or money, to return to his studies at Jefferson Community College.

Smith agrees that Michael’s best hope rests in furthering his education,

A former autoworker himself, Smith laments that the days when a union membership card served as a portal to a middle class lifestyle are slowly disappearing.

"The jobs that dad and grandpa had, that didn’t require anything more than a high school education, are no longer around," Smith said. "Even auto working is not just about putting on hubcaps anymore. It’s a lot more sophisticated."

ITS OWN REWARD

That was not the case when Orville Roy, now 80, began working his way through various administrative departments, including payroll, in 1968.

"In the old days, if you knew somebody and you wanted to get hired, all you had to do was ask for a recommendation," he said.

All the better if that acquaintance happened to be a blood relative.

Putting aside their disappointment that jobs once performed in Fenton are now held by workers in Canada and Mexico, Michael Sr. and Cheryl Roy acknowledge their family of six has done all right by the nation’s No. 3 domestic automaker.

"We have four kids that wanted to play sports and take dance classes and do all sorts of things," said Cheryl. "Somebody had to pay for it."

Until Cheryl went to work in the pickup plant in 1995, that somebody was her husband, who had started as a "floater" in the chassis department 11 years before.

"I worked on the line, and that was punishment," said Michael Sr.

"I’ve shoved in engines, I’ve thrown tires and I’ve thrown bumpers," said Michael Sr., lapsing into autoworker jargon to describe the tasks he performed at Fenton. The "punishment" of the line, though, had its own reward: By the time Michael Sr. retired late last year, he was earning $29.95 an hour, plus the heralded UAW benefit package.

There was also the intangible benefit, Michael Jr. noted, of spotting a Dodge Ram on the road and thinking, "I made that truck."

TUG OF TRADITION

Michael Jr. never matched his father’s salary.

Nor, because his tenure paralleled Chrysler’s shrinking market share, was Michael Jr. ever offered a full-time position at the plant.

Michael Jr. can lay claim, however, to a dubious distinction: He worked both the last day and night shift to produce a minivan at the South Plant and, later, was assigned to the last North Plant night shift to build a pickup.

Michael Jr. was circumspect last week as he reflected on the irony of a callback has placed him on a shift that will soon assemble the final Chrysler product ever built in Fenton.

"It’s frustrating," Michael Jr. said. "But (unlike his dad and grandfather) I haven’t put my whole life into it."

Resolved that the time has come for him to move forward, the son of Michael Roy Sr. and grandson of Orville Roy nonetheless feels the tug of the tradition that began on a long ago leisurely drive that wound up, improbably, at a car factory.

"I was kind of hoping," Michael Jr. said wistfully, "that my grandkids would work there."

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