Illinois Public Media News

AP - Illinois Public Media News - July 21, 2011

Impact of American Airlines’ Purchase on Boeing

AMR Corp.'s American Airlines is claiming to have made the largest purchase on Wednesday of airplanes in aviation history, but it is raising some questions over how the purchase will affect American's relationship with the Chicago-based Boeing company.

American has had an almost exclusive relationship buying planes from Boeing, or companies Boeing bought out, for years. But that all changed when American announced today that it's buying 200 new planes from Boeing and 260 planes from Boeing's rival, Airbus.

"I think it's hurtful to Boeing," said Aaron Gellman, who follows the airline industry at Northwestern University.

He said the higher ups at Boeing should be raising questions about how Airbus struck such a lucrative deal with American Airlines.

But Florida-based aviation consultant Stuart Klaskin said the order does not mean there is a broken relationship between American and Boeing.

"There's no way they can say they're disappointed," Klaskin said. "They just sold 200 airplanes to American Airlines. I mean, God. It's a massive - by any other standard it's a massive order."

Klaskin said if anything, American caught up with other airline companies by diversifying its fleet of planes so as to not have all its eggs in the Boeing basket.

Meanwhile, Joe Schwieterman, who follows the aviation industry at Chicago's DePaul University, said, "This is really making a statement that they're going to have an equal mix of Airbus and Boeing and I think it's a bit of a wake up call for Boeing, as well, that they shouldn't count on the majority of orders from the big guys here in the U.S."

Schwieterman said there is no need for Boeing to panic. Buying 200 planes is still a huge order and it should give Boeing confidence to make further improvements to its aircraft.

Categories: Business, Transportation

WILL - Illinois Public Media News - July 19, 2011

Borders Stores to Close by Late September

Borders says it plans to end its operations by the end of September.

The Ann Arbor-based company announced plans Monday to sell off its assets after not receiving any bids to stay in business. At its peak in 2003, Borders ran more than 1,200 stores, but by the time the company filed for bankruptcy protection in February, that number was cut in half.

Technology played a big role in the company's demise, according to Dilip Sarwate, a professor in business administration at the University of Illinois.

"It's certainly difficult to compete with the likes of Amazon," Sarwate said. "I'm not sure this could be completely avoided. Fewer and fewer people are visiting bookstores. They are going to their computers and buying books."

But Lisa Bayer, who is the marketing director for the University of Illinois Press, said while technology did play a role in Border's downfall, it could have been avoided. She said Borders simply was not prepared for the onslaught of digital reading devices.

"They didn't position themselves to take advantage of various changes," Bayer said. "Barnes and Noble has the NOOK. Amazon developed the Kindle. Borders did really nothing."

Borders did come out with an e-reader last year, known as a Kobo. Produced by an electronic company in Canada, the Kobo will still be available to people who use the software to purchase and read books.

Up until Monday, the University of Illinois Press was still doing business with Borders. Bayer said the publishing company has been distancing itself from the retail giant over the last five years for various reasons, including "very questionable" decisions by the company's management.

Bayer said the University of Illinois Press' involvement with Borders was so minimal that she does not think the bookstore's failure will have a huge impact on the publishing company.

"It's very likely they hadn't even ordered any of our books in a while," she said, noting that many of the University of Illinois Press' books are scholarly journals. "We're not as much of an interest to them as some other kinds of publishers."

Of the nearly 400 Borders bookstores slated to close, three are in Champaign, Mattoon and Peoria.

Mary Beth Nebel runs an independent retail bookstore in Peoria called "I Know You Like a Book." She said she does not think Border's demise is a sign that other retailers are destined to fail.

"I hate to see any bookstore close," she said, reflecting on Border's closure. "I think independent bookstore like I have is much different than a chain store. It's more of a community-based place. I think more people will enjoy that sort of atmosphere."

With Peoria's Borders expected to close and a Barnes and Noble still running, Nebel said she has no intention of changing the way she runs her five-year-old business.


WILL - Illinois Public Media News - July 19, 2011

Heat Wave Affects Illinois Crop Conditions

(With additional reporting from The Associated Press)

Monday's U.S. Department of Agriculture crop report showing a decline in the condition of Illinois' corn crop has been followed by a rise in corn futures prices Tuesday on the Chicago Board of Trade.

In early trading, December corn rose 20 cents to $7.16 and 1/4 cents a bushel. University of Illinois agricultural economist Darrel Good said that is the market reaction he expected.

"We know there's a large number of factors that influence the value of corn," Good said. "But at this time of year, crop conditions and perspective production is the dominant factor. And I think that's influencing the market behavior this week, as there are some increasing concerns about the size of the crop."

The USDA reported 61 percent of the state's corn crop to be in good or excellent condition, which is down from recent weeks. Some fields have started to turn brown. Good said that shows the impact of hot, dry weather on the nation's number two corn-producing state. And with the heat wave continuing this week, he said Illinois crop conditions could take another hit when the Agriculture Department releases another report next Monday.

Good said while weather forecasters are not making many long-term predictions, some models call for at least limited relief from the hot, dry weather in the coming weeks. That could improve crop conditions.

(AP Photo/Seth Perlman)

Categories: Business
Tags: business

WILL - Illinois Public Media News - July 19, 2011

Blood Service Agencies Serving C-U, Springfield, Quad Cities Merge

A trend toward consolidation is working its way through the industry that provides blood to hospitals. Urbana-based Community Blood Services of Illinois is merging with a larger firm, Quad Cities-based Mississippi Valley Regional Blood Services.

The Urbana center's chief executive, Pat Kovar, said the jobs of the 71 employees under his watch are safe.

"Realistically we would expect over time you always have some normal attrition, and candidly there may be some employees here who just won't want to continue even though they'll have a job and maybe even doing the same thing, so we'll see," Kovar said, "Right now there are no planned reductions or layoffs as a result of the merger."

Kovar said blood agencies around the countries are considering consolidation as hospital systems merge and the health care industry prepares for big changes in the years ahead. He says the Urbana office will still supply blood for the five hospitals currently in its service area, including Urbana, Danville, Mattoon and Effingham.

Officials hope to complete the regulatory process and make the merger official by November.

Categories: Business, Health

WILL - Illinois Public Media News - July 18, 2011

Casino Opens In Des Plaines

After a decade of legal battles, Illinois 10th casino has finally opened.

Gamblers flocked to the Rivers Casino's grand opening in Des Plaines Monday. The license had long been dormant since originally being approved for the city of Rosemont in 1999.

In 1997, a gambling boat failed in East Dubuque, freeing up a 10th casino license. That began the saga of communities wrangling to sweep it up, with cities betting on a casino's ability to increase municipal revenues. For a time, Rosemont was going to be the spot, until fears of mob ties required a bidding redo. The Illinois Gaming Board finally awarded the coveted license to Des Plaines in 2008.

Gov. Pat Quinn says he respects that drawn-out process.

"I think that is a model that we need to keep an eye on," Quinn said. "It was a very competitive process and the gaming board, our Illinois Gaming Board, the regulators oversaw that process and ensured maximum competition."

The opening of the Des Plaines casino comes after lawmakers recently passed a measure that would massively expand gambling in the state for Chicago, Danville, Rockford, a south Chicago suburb, and Lake County.

The measure still has not been sent to Gov. Quinn, who has not indicated what action he will take on the bill when he gets it. Though, Quinn has been less enthusiastic about the plan, calling it "top heavy."

Gaming Board Chairman Aaron Jaffe has been highly critical of letting politicians decide casinos' locations.

It is expected Rivers Casino's success could be hampered by adding more casinos in and around Chicago.


AP - Illinois Public Media News - July 18, 2011

Borders Seeks Approval to Liquidate

There will be no storybook ending for Borders. The 40-year old book seller could start liquidating its 399 remaining stores as early as Friday.

The chain, which helped pioneer the big-box bookseller concept, is seeking court approval to liquidate its stores after it failed to receive any bids that would keep it in business. The move adds Borders to the list of retailers that failed to adapt to changing consumers' shopping habits and survive the recession, including Circuit City Stores Inc., Mervyn's and Linens `N Things.

Borders is expected to ask a judge to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. Liquidation sales could start as soon as Friday if the U.S. Bankruptcy Court of the Southern District of New York approves the move at a scheduled hearing on Thursday. The company is expected to go out of business by the end of September.

Borders attempt to stay in business unraveled quickly last week, after a $215 million "white knight'' bid by private-equity firm Najafi Cos. dissolved under objections from creditors and lenders. They argued the chain, which has 399 stores and 10,700 employees, would be worth more if it liquidated immediately.

"We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now,'' said Borders Group President Mike Edwards in a statement.

Simba Information senior trade analyst Michael Norris said a Borders liquidation could have far-reaching effects, putting thousands of people out of work at a time of high unemployment, even possibly cause sales of electronic books to fall.

"Bookstore employees don't just sell books, they sell the activity of reading, and this decision throws thousands of them out of work,'' said Simba Information senior trade analyst Michael Norris. "This industry is going to slowly figure out that a lot of e-book readers still use bookstores all the time to discover what's new before heading home to buy it for their e-reading device.''

Borders entered the electronic book market with Canada's Kobo Inc. last year. Owners of the Kobo e-reader will still be able use Kobo software to buy and read books. A Borders spokesperson declined to comment about what would happened to e-books bought from Borders.com

It has been a long fall for Borders since Tom and Louis Borders opened their first store in 1971, selling used books in Ann Arbor. At the time, the brothers were mostly interested in offering other bookstores a system they developed for managing inventory.

But in 1973, the store moved to a larger location and shifted its focus to selling new books and expanding, helping pioneer the big-box bookstore concept along with Barnes & Noble Inc. At the time, Waldenbooks and B. Dalton mall chains, with small stores and 20,000 to 50,000 titles, were growing rapidly. The new superstores, by contrast, offered between 100,000 and 200,000 titles, as well as enticements to linger like comfortable chairs and attractive lighting.

Kmart Corp. saw the potential and acquired Borders in 1992, forming a book unit with Waldenbooks. It then spun the bookstores off as a separate company in 1995, the same year Amazon started selling books online.

Borders was slow to adapt to the changing industry and lost book, music and video sales to the Internet and other competition. Sales sales began to fall, leading to a revolving door of CEOs. By the time Borders' current CEO, financier Bennett LeBow, came aboard in May 2010 after investing $25 million in the company, bankruptcy was already looking like a strong possibility.

Borders filed for bankruptcy protection in February after being hurt by tough competition from online booksellers and discounters. It hoped to successfully emerge from bankruptcy protection by the fall as a smaller and more profitable company, but pressure from creditors and lenders eventually led the chain to put itself up for sale and finally, seek approval to liquidate.

At its peak, in 2003, Borders operated 1,249 Borders and Waldenbooks, but by the time it filed for bankruptcy protection in February that had fallen to 642 stores and 19,500 employees. Since then, Borders has shuttered more stores and laid off thousands.

Borders says it expects to be able to pay vendors for all expenses incurred during the bankruptcy cases.

(AP Photo/Carlos Osorio, file)

Categories: Business, Economics


WILL - Illinois Public Media News - July 12, 2011

Union Workers Protest Pay Raise Freezes

Illinois Governor Pat Quinn said he had no choice but to cancel pay raises for some 30,000 employees of 14 state agencies.

Union workers were expecting a 2 percent pay raise, but were blindsided earlier this month when the governor scrapped the raises to save the state approximately $75 million.

Members of the labor group AFSCME picketed across the state Tuesday to protest the governor's decision. About a dozen of them showed up along Mattis Avenue in Champaign. Wayne Matthews, a 33-year employee with the Illinois Department of Public Health, was at the rally. He said union members have made plenty of sacrifices over the last few years, and he said they deserve their salary increases.

"Two percent is still better than no percent, which is what we've had for a long time," Matthews said. "We've actually - in this contract - pushed back our raises, and volunteered furlough days and other things to save the state money. This is how we're rewarded."

Tara McCauley, a staff representative for AFSCME local 31, was also in Champaign during the picket. McCauley said the governor's decision to cancel the raises was unprecedented.

"We've negotiated contracts with Illinois governors for decades," McCauley said. "We've never had a governor try to go back on a raise that he's negotiated. You know, we've got a signed contract, so we feel that this isn't Wisconsin, this isn't Ohio. We're not going to allow our governor to take away people's legal rights to collectively bargain. So, it is about a bigger issue for us as well."

Speaking to reporters earlier in the day, Governor Quinn defended his actions.

"The General Assembly did not provide any money for pay raises for the AFSCME state workers," Quinn said. "That is the long and the short of it. I cannot give them money that the General Assembly hasn't appropriated in terms of a raise."

AFSCME had supported Quinn, a Democrat, in the November election. Just prior to that endorsement, the union agreed to defer raises while Quinn guaranteed two years without layoffs.

The union filed suit in federal court in Springfield last week to block the pay freeze. The group contends the pay raise rejection was illegal, and it is bringing in an arbitrator to settle the dispute.

The Illinois Federation of Teachers has also joined in AFSCME's lawsuit.


WILL - Illinois Public Media News - July 12, 2011

Urbana City Council Takes Initial Step to Approve Union Pay Raises

The Urbana city council has given preliminary approval for two tax increases to help boost the salaries of union employees.

The 1 percent sales tax on package liquor, and hiking the city's hotel-motel tax from 5-to 6-percent are both on next Monday's agenda. They would pay for raises through AFSCME and the Fraternal Order of Police, as well as an additional officer.

Alderman Dennis Roberts cast the only no vote in Monday night's committee of the whole meeting, but only because he felt residents needed time to weigh in on the measure.

"We're not in a crushing situation," Roberts said. "The need to jump ahead a month to acquire one month's revenue doesn't seem to serve the city, citizens as well as I would like to see it."

The council will also vote next week on Mayor Laurel Prussing's plan to veto Urbana's $72,000 for the Champaign County Convention and Visitors' Bureau. Prussing wants to use the funds for two police positions.

The CVB's Jayne DeLuce spoke out against the plan Monday night, as did Raymond Ceresa of Eastland Suites, who credits the bureau for $70,000 in room revenue in the past year.

Alderman Charlie Smyth said he is looking for new revenue sources if Prussing's plan is approved.

One possible source - the city has received $19,000 for a year's worth of property tax money from Provena Covenant Medical Center.


WILL - Illinois Public Media News - July 01, 2011

AFSCME Urges Champaign to Preserve Police Funding

With about 50 jobs eliminated in Champaign as part of a round of budget cuts over the last few years, AFSCME local 31 says some of those positions should be saved - especially as city department heads and the city manager are poised to receive a two percent pay hike.

One area impacted by recent budget cuts is the Champaign Police Department, which could lose a few positions that would keep the front desk from staying open overnight. At a time when administrator salaries are going up, AFSCME spokesperson Michael Wilmore said the city should do more to keep the front desk open 24 hours a day.

"We are trying to draw attention to the fact that they're giving themselves raises," Wilmore said. "It is really insulting to the workers and to the citizens of Champaign."

The Champaign City Council considered a liquor tax in June to restore funding for three of the department's front desk positions and one of its record services positions, but that measure failed to get enough support.

There are currently two out of three three positions at the police department's front desk that are vacant. No changes in the status of these jobs will occur until the Champaign City Council provides more direction, which means for now, the two vacated positions will not be filled and the third position will not be eliminated. The city council is expected to discuss potential new sources of revenue and the future of those jobs during its July 12th meeting.

Champaign Mayor Don Gerard said he is hopeful that the city will find a way to keep the front desk staffed all the time.

"Those positions are vital to the support of the police staff," Gerard said. "I voted against not giving the city manager a raise not because I didn't think he deserved it, but because from a leadership standpoint in these budgetary times, we need to have shared responsibility."

City Manager Steve Carter, whose salary will go up by two percent, defended the pay increases for non-union employees. Carter has not received a pay raise for the last couple of years. He noted many of the other non-union workers who are expected to make more money this year also did not get a raise last year.

"If there has been a group of employees that have scarified - if you will - recognizing the budget condition, it has been the non-union employees," Carter said. "All the union employees, including AFSCME, have received salary increases all along based on contracts, some in existence and some negotiated."

Union workers from the Fraternal Order of Police and the Plumbers and Pipefitters saw their salaries go up last year, and continue to rise this year. However, no future pay raises have been budgeted for AFSCME workers since contract negations with the city are ongoing.


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