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Saturday, July 25, 2009

charlotteobserver.com/business

SECTION D

BusinessContact Us: Business Editor Patrick Scott,

704-358-5176; pscott@charlotteobserver.com

Money & Markets: A look at what sectors are

driving the current rally. 4D

DOW9,093.24+23.95

NASDAQ1,965.96-7.64

S&P 500979.26+2.97

10-YR T-NOTE3.67%-.03

CRUDE OIL$68.05+.89

GOLD$952.80-1.70

By Kirsten Vallekvalle@charlotteobserver.com

Unemployment in the Char-

lotte area continued to climblast month, despite some posi-tive signs s tatewide, accordingto new data released Friday.

The metropolitan areas un-employment rate was 12.4 per-cent in June the highest levelof this recession up from 11.9percent in May, the N.C. Em-ployment Security Commis-sions numbers show. Meck-lenburgs unemployment wasat 11.5 percent, up from 11 per-cent in May, and most countiesin the area had similar jumps.

Nearly 53,000 people inMecklenburg County were outof work in June.

In the Charlotte area, the

bright spots for jobs were lei-sure/hospitality and thebroader category of natural re-sources, mining and construc-tion.Those areas adding 300and 700 jobs, respectively. Thefinance, manufacturing andgovernment sectors continuedto lose jobs about 20,700 over

the last year.Unemployment rates were

up in more than half of NorthCarolinas 100 counties,though rates decreased in 32counties and stayed flat in 12,the ESC found. Statewide, thejobless rate was 11.2 percent in June, about the same as the

month before. The nationalunemployment rate was a littlelower, 9.5 percent in June.

N.C. State University econo-mist Mike Walden earlier thismonth predicted that thestates unemployment rate willclimb to 13 percent in the firstquarter of 2010 before it beginsto improve.

In one hopeful sign, the rateof increase in joblessnessslowed a bit. . Catawba Coun-tys unemployment, for in-stance, climbed just 0.1 per-centage points from May to June; it had gone up 0.5 per-centage point from April toMay. Iredell Countys jobless

rate remained flat from May toJune.Outside of a few counties,

there wasnt a lot of change inrates going up or down, ESCChairman Moses Carey Jr. saidin a statement Friday. wevehad gains in both employmentand unemployment.

Unemployment risesagain in Charlotte areaMetro areas jobless

rate up to 12.4 percent

in June, outstripping

state, national rates.

N . C .

S . C .

CountyunemploymentratesJobless rates

increased in

most areacounties in June.

CATAWBA

LINCOLN

IREDELL

MECK.

CABARRUS

STAFF MAP

+0.1

+0.2

+0.3+0.5

+0.3

11.7%

+0.5+0.5

+0.7 +0.7

Nochange

15.5%

14.6%

15% 11.5%

11.3%14.6%

21.9% 19.1%

12.8%

Change fromprevious month

Junes rate

UNION

GASTON

YORK

CHESTERLANCASTER

that it did anything close toan adequate job of what it wasdesigned to do, Geithnertold the House FinancialServices Committee. He citedthe collapse of the housingand credit markets because of

high-risk subprime mortgag-es made to bor-rowers whodidnt under-stand andcouldnt affordthem.

Bernanke,appearing be-fore the samecommittee after Geithner, ar-gued that the Fed should re-tain its consumer protectionpowers regarding mortgages,credit cards and checkingand savings accounts.

Without extensively en-tering the debate, Bernankesaid, Congress should be

aware of some of the bene-fits that would be lostthrough this change, includ-

By Anne Flaherty

Associated Press

WASHINGTON TreasurySecretary Timothy Geithnerand Federal Reserve Chair-man Ben Bernanke stakedout opposing sides Friday in aturf war over who shouldprotect Americans from sha-dy mortgage lending, abusivecredit card fees, payday loansand other high-cost or riskyfinancial products.

The White House wants tocreate a new Consumer Fi-nancial Protection Agency tooversee a vast range of finan-cial products, stripping theFederal Reserve and other banking regulators of their

current authority for policingthem.

I think its very hard tolook at that system and say

Consumertug-of-warbreaks out

Geithner, Bernanke at

odds over who should

police risky and pricey

financial products.

SEE CONSUMERS, 2D

Geithner

By Cameron Steelecameronsteele@charlotteobserver.com

Intepoint LLC is an exampleof how defense contracts canhelp a company grow.

The Charlotte companymakes software that creates avirtual model for how a singleevent such as a terrorist at-tack, power outage or comput-

er virus can affect a city. Gov-ernment contracts have helpedIntepoint grow from a one-man show in 2003 to a businesswith 10 employees and count-ing. More than 90 percent ofthe companys contracts have been for top secret agencies within the Defense Depart-ment.

That government relation-ship has increased Intepointsrevenue by 25 percent to 30percent every year since 2003.But Mark Armstrong, Inte-points chief executive andfounder, said those govern-ment contracts were all grant-

ed under the Bush administra-tion and he doesnt know whatto expect in the future.

Despite recent contracts,Charlotte defense companiessay theyre not sure whetherthe trend will continue.

The continuing wars in Iraq

and Afghanistan have prevent-ed major defense cuts.

As President Obama andCongress finalize the federalbudget, companies are keepingtheir fingers crossed.

Theres going to be a lot ofpressure inside the budget;

some of the decisions that hadbeen fairly easy will now betough, said Bill Lennox, seniorvice president of Washingtonoperations for Goodrich Corp.,a Fortune 500 aerospace com-pany based in Charlotte thatmakes airplane parts and sup-plies for the defense and airlineindustries.

Federal law requires U.S.military supplies to be made inAmerica, giving a boost to do-mestic plants from major cor-porations to small operations

as some commercial manufac-turing has migrated to othercountries in recent years.

And the recession hasnt leftmuch of a mark on the defenseindustry, while other Charlottesectors such as banking havebeen on the chopping block.

But under priorities outlinedin April by Defense SecretaryRobert Gates, the Pentagon isfocusing more spending on weapons needed to fight theinsurgencies it faces in placessuch as Afghanistan. Thatmeans less of an appetite

DAVID T. FOSTER III dtfoster@charlotteobserver.com

Technician Noel Cruz applies corrosion protection to a landing gear retraction actuator at the Goodrich customer service center

in Monroe. Defense firms are watching Washington to find out how changes in defense spending will affect them.

Local defense companies

hope boon can continueFirms that rely on

federal contracts have

their fingers crossed.

GENERAL DYNAMICS CORP. PHOTO

The Joint Service Lightweight Standoff Chemical Agent

Detector (JSLSCAD) provides the military with ground-based,

remote chemical agent detection and identification, alerting

operators of threats with audible and/or visual alarms.

SEE DEFENSE, 2D

By Ken ThomasAssociated Press

WASHINGTON Got an oldgas guzzler in the garage? Ifyoure shopping for a new car,you might take advantage ofnew government incentivesworth $3,500 to $4,500.

Owners can scrap theirclunker in exchange for amore fuel-efficient vehicleand lop off thousands of dol-lars from the sticker price.Congress approved the Car

Allowance Rebate System,or CARS, program lastmonth to boost new vehiclesales and try to retire someinefficient cars and trucks. Alook at the program:

Q: Which vehicles qualify?Cars and trucks must be

1984 models or newer to beeligible for a trade-in rebate.They also must get 18 milesper gallon or less in com- bined highway/city rating based on the Estimated NewEPA MPG ratings availableat www.fueleconomy.gov.The vehicle must be drivableand insured and have been li-censed for at least a year soforget about buying a clunkerthis summer for $500 andflipping it through the pro-gram. Violators face penaltiesif they submit false informa-tion.

Q: How do I qualify for theincentives?

For passenger cars, con-sumers can get $3,500 if the

Cash-for-clunkersprogram worksfor some, not allQ&A discusses federal

rebate program meant

to boost new car

sales, scrap gas hogs.

SEE CLUNKERS, 2D

By Jason Fosterjfoster@heraldonline.com

FORT MILL One of the larg-est indoor flea markets in theSouth opens this weekend inFort Mill.

Trader Marcs part-fleamarket, part-farmers market debuted at noon Friday. About 70 vendors spreadaround a 318,000-square-foot warehouse off Interstate 77across from Baxter that theowners hope will become aregional destination andlaunching pad for small busi-

nesses.Inside, shoppers can find

rows of booths organized

along corridors marked bystreet signs such as Gold-mine Avenue, Treasure Al-ley and Trader Marc Blvd.

The usual flea marketwares are for sale clothes,jewelry, collectibles and an-tiques but more distinctiveitems can be found, such ashomemade mustard. Thefarmers market portion fea-tures fresh produce, cut flow-ers and more; a food court ca-ters to shoppers with themunchies.

While other, more estab-lished flea markets in South

This flea market isanything but smallWarehouse in Fort Mill

opened Friday for

farmers, vendors.

JIM STRATAKOS jstratakos@heraldonline.com

Larry Milburn arranges his products in Trader Marcs, a

318,000-square-foot warehouse off Interstate 77.

SEE FLEA MARKET, 3D

8/14/2019 Local defense companies hope boon can continue

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2D Saturday, July 25, 2009 charlotteobserver.com The Charlotte ObserverBUSINESS

for the big weapons used tofight conventional wars, suchas giant warships, expensivefighter jets and hulking Army vehicles. The Pentagon is ex-pected to give further detailson its future strategy this sum-mer.

Defense firms are still trying

to figure out the long-term im-pact of the changes in defensespending.

A target for growth

Defense and security com-panies have been a target forthe Charlotte Regional Part-nership, the regions businessrecruitment group, and forN.C. state officials, who held ameeting in Raleigh this monthto push businesses to competefor military and defense con-tracts to stimulate economicgrowth. Companies in Char-lotte and 16 nearby countieslast year secured more than1,800 contracts with the De-fense Department 200 morethan in 2007 and almost fourtimes as many as in 2000 worth more than $540 million,according to data from thepartnership.

There are 551 defense con-tractors in MecklenburgCounty from uniform manu-facturers to helicopter enginebuilders to computer softwareprogrammers that have wonmore than 3,000 governmentcontracts totaling more than$2.6 billion for the past eightyears, according to partnershipdata.

Obama has set aside about$534 billion for the 2010 de-fense budget, which is about2.1 percent higher than the2009 budget after inflation. And costs for special-opera-tions programs and the in-creasing number of the armedforces, which had been paidthrough supplemental appro-priations, will now be includedin the regular budget.

David Swenson, partnership vice president, said Charlottedefense companies will flour-ish because the governmentwill still want to give projectsto companies with immediate,skilled labor such as Good-rich and General Dynamics, which has an armament andtechnical products division in

Charlotte.But until the 2010 budget is

finalized, Intepoint and otherdefense companies large andsmall operate in limbo, hop-ing for continued Defense De-partment business even as thegovernment looks at the bot-tom line for cost. Thats a big-ger risk as competition for con-tracts increases because thesupplemental budget willprobably be cut, Lennox said.

We may be in a pretty goodposition, but thenwe may bein trouble because the budgetis going to shrink, said Arm-

strong, who plans to commer-cialize his software program ifhe begins to lose defense con-tracts.

Watching Washington

The Defense Department is-sued more than $3.6 billion incontracts to N.C. companies

last year, up 22 percent from2007. Those deals, though, usu-ally end up somewhere otherthan Charlotte. In the pasteight years, less than 13 percentof contracts won by N.C. andS.C. companies went to Char-lotte-area businesses, accord-ing to data from the regionalpartnership.

The partnership is trying tochange that as a way to reverseclimbing unemployment andoffice closures that have shak-en the areas once-sturdy busi-ness foundation.

The opportunities are

there with defense spendingthe way its been for the lastnumber of years, Swensonsaid. Since the recession, (thedefense industry) is not less ofa priority; its more.

This week, Goodrich report-ed second-quarter revenues of$177 million up from just un-

der $170 million in the firstquarter but down 5.1 percentfrom the same period in 2008.The decrease came as salesdipped 8 percent to $1.7 billion.But defense sales whichmake up 27 percent of totalsales rose 11 percent.

Lennox said he expects hiscompany to come out on topwhen the 2010 budget is final-ized because it specializes inthe areas that Obama has pri-oritized: helicopter manufac-turing and intelligence surveil-lance reconnaissance, which isa way to discover information

about an enemy through pas-sive observation.

Goodrich employs about 400 people in the Charlottearea and has only had to lay offa small number of commercialworkers, Lennox said.

General Dynamics Arma-ment and Technical Productsdivision in Charlotte has alsoavoided layoffs.

Gail Warner, the senior di-rector of communications forthe armament division, saidrather than firing people, bothCharlotte plants are hiring.

Since January, General Dy-namics armament division hassecured more than $495 mil-lion in defense contracts. Mostof these are extensions on ex-isting contracts under theBush administration, but Warner isnt worried about business dropping off whenthe 2010 final budget comesout. She said General Dynam-ics plans to adjust its prioritiesaccording to what Washingtonwants.

But for smaller companiessuch as Intepoint that donthave the funds or manpower toadjust on a dime, the new bud-get may force them to turn tocommercial customers to helpfill the void. But without the

made-in-America requirementfor those contracts, companieswould be less immune to thelingering recession. Still, Arm-strong thinks Intepoints soft-ware once designed for com-mercial use will help thecompany to reduce reliance ongovernment business.

Last year, Intepoint secureda contract with Wachovia tohelp the bank test some of itsown computer programs.

Im hopeful, because agen-cies outside the DoD are also beginning to be interested inour software, Armstrong said.

DEFENSEfrom 1D

DAVID T. FOSTER III dtfoster@charlotteobserver.com

Technician Carl Boyden oversees the final diagnostic testing of an autopilot servo motor for an

Airbus A300-600 at the Goodrich Corporation Customer Service Center in Monroe.

Recent government contracts won by localcompanies

GOODRICH COR P.

March 24, 2009: $750 million commercial contract for Bom-bardier Inc.

GENERAL DYNAMICS ARMAMENT AND TECHNICALPRODUCTS DIVISION

June 24, 2009: $2 million for production of aircraft noses forU.S. Navy

May 26, 2009: $150 million for production of vehicle armorMay 7, 2009: $37 million for production of vehicle armorMay 6, 2009: $34 million for Joint Biological Point Detection

System production and support

CURTISS-WRIGHT CONTROLSSept. 25, 2008: $80 million contract for Saab Aerostructures

NORTHROP GRUMMAN SPACE & TECHNOLOGY

Dec. 23, 2008: $14 billion contract for nuclear-poweredsubmarines for U.S. Navy (along with General Dynamics)

new vehicle gets at least 4 mpgmore than the trade-in and$4,500 if the new vehicle gets atleast 10 mpg more than thetrade-in. For sport-utility vehi-cles, pickups or minivans,owners can get a $3,500 rebateif the new vehicle gets at least 2mpg higher than the old vehi-cle. The rebate improves to

$4,500 if the new vehicle gets atleast 5 mpg higher than thetrade-in. Large work trucksweighing at least 6,000 poundscan also qualify for rebates of$3,500 to $4,500.

Q: Can I buy any kind ofvehicle through the program?

This wont subsidize a newFerrari. The new vehicle mustmeet the fuel-efficiency re-quirements and have a manu-facturers suggested retailprice of less than $45,000. Itcan be a domestic or foreignmodel. Used car purchases donot qualify under the program.

Q: Can I get the clunker re-bate plus the value of mytrade-in?

No.

Q: My old car or truck isworth more than $4,500.Should I use this program?

Probably not. The programessentially guarantees a mini-mum trade-in for a vehicle. Sosomeone with an old beatervalued at $1,000 that meets themileage requirements standsto gain the most. But many au-tomakers and dealerships areoffering additional incentives,

so its worth watching newspa-per ads or talking to a dealer.

Q: What happens to my oldvehicle?

The trade-in vehicle will bescrapped. Dealers are requiredto use a government-approvedsalvage facility for the vehicledisposal. Vehicles must beshredded or crushed within sixmonths.

Q: What do I need to do toparticipate?

Go to your local car dealer.Dealer registration for the pro-gram began Friday. Ownersmust bring their vehicle, title,proof of registration and proofof insurance.

Q: How will this programaffect other dealer and manu-

facturer incentives?Dealers must use the rebate

in addition to instead of as a

substitute for other rebatesand discounts available to con-sumers. Many automakers arecombining internal incentiveswith the government rebates tolure customers to showrooms.For example, Chrysler also isoffering $4,500 in cash towardthe purchase of a new vehicle.Dealers are also required todisclose the best estimate ofthe salvage value of each vehi-cle.

Q: Does any money changehands?

No. If a consumer qualifiesfor a government rebate, theamount of the rebate is deduc-ted from the vehicles stickerprice and the dealer is later re-imbursed by the NationalHighway Traffic Safety Ad-ministration.

Q: How many clunkers areexpected to be traded in

through the program, andhow much will it cost the

government?The program will cost $1 bil-

lion to remove about 250,000 vehicles from U.S. roads. Itsunclear if Congress will seekmore money when the pro-gram ends later this year. Somelawmakers, led by Sen. DianneFeinstein, D-Calif., have said ifCongress provides more fund-ing, the program should re-quire consumers to buy vehi-

cles with higher fuel efficiencythan the current programs re-quirements.

Q: How long does the pro-gram last?

It ends on Nov. 1, or when the$1 billion in funding runs out. Jack Nerad, executive marketanalyst for Kelley Blue Book,makes this suggestion: Iwould look to see if I qualifyright away. A lot of people wont qualify because of thespecific requirements, he said.Nerad said automakers may of-fer additional incentives beforethe program ends.

Q: Where can I find moreinformation?

Visit the governmentsCARS Web site (www.cars.gov) or call the governmenthot line at 866-CAR-7891. Autocompanies and Web sites suchas Edmunds.com (www.edmunds.com/cash-for-clunkers); Kelley Blue Book atwww.kbb.com/kbb/cash-for-clunkers/default.aspx and Au-toTrader at www.autotrader.com/cash-for-clunkers.jsp have compiled additionaldetails and eligible vehicle listsfor consumers.

CLUNKERSfrom 1D

SPENCER PLATT GETTY IMAGES

If your car is a 1984 model or newer and gets 18 mpg or less,

you may qualify for a trade-in rebate from the CARS program.

Its a Toast Chee economy:Lance triples earnings in 2Q

Lance Inc. on Friday said that earnings more than tripledin the second quarter, which they attributed to stepped-upadvertising and a recent acquisition.

Net income at the Charlotte-based snack company rose to$9.5 million, or 30 cents per share, up from $2.7 million, or 9cents per share, in the same period last year.

Net revenue climbed to $236.4 million, up 11 percent overthe second quarter of 2009.

Lance officials cited the success of the companys brandedand non-branded products, as well as their first nationwidetelevision advertising campaign and revenue from the acqui-sition of Archway Cookies, which was completed in Decem-ber.

The branded products, which represented about 59 per-cent of the total second-quarter sales, increased about 5percent from the same quarter last year. Nonbranded prod-uct sales grew by about 20 percent compared to the samequarter last year.

We are very pleased to be reporting another solid quar-ter with strong, profitable growth, chief executive DavidSinger said in a statement. We remain focused on in-tegrating and growing the Archway brand and drivingcontinued sales growth. CAMERON STEELE

Horizon announces $31 million loss for quarterA $20 million legal settlement and the struggling econo-

my pushed Horizon Lines to a $31.1 million loss in the sec-ond quarter.

That compares with earnings of $5.8 million a year earlierfor the Charlotte-based shipping company. Revenues fell 16percent to $278.5 million as the volume of container ship-ments fell nearly 10 percent. Chief executive Chuck Ray-mond said the unabated global recession continued todampen consumer sentiment and spending throughout ourmarkets. STELLA M. HOPKINS

Charlotte Coke bottler declares dividendCharlotte-based Coca-Cola Bottling Co. Consolidated, the

nations second-largest Coca-Cola bottler, on Friday de-clared a dividend of 25 cents a share for the third quarter, thesame as in at least the previous three quarters. Applicable tocommon and class B common stock, the dividend is payableon Aug. 21 to shareholders as of the close of business Aug. 7.

Shares of Coke Consolidated closed at $55.18 Friday, up 32cents. The company serves 11 states, mostly in the Southeast. JEN ARONOFF

Carolinas Roundup

ing the Feds consolidated re-sources for also ensuring thesafety and soundness ofbanks.

Geithner brushed aside theFed chairmans concerns aspart of a typical Washingtonturf battle.

Other regulators testifyingwith Bernanke said they, too,had concerns about the ad-ministrations plan. SheilaBair, chairwoman of the Fed-eral Deposit Insurance Cor-poration, suggested that thenew agency be allowed towrite rules that protect con-sumers, but that existing reg-ulators be tasked with enforc-ing them.

When asked by Rep. Caro-lyn Maloney, D-N.Y., whethersuch an arrangement would work, Geithner said no, be-cause enforcement would re-main uncoordinated acrossthe government.

The House committeeschairman, Rep. Barney Frank,D-Mass., and Senate BankingChairman ChristopherDodd, D-Conn., both supportthe plan to create a new Con-sumer Financial Protection Agency. But the effort hasslowed amid opposition from bankers and other financialindustry leaders, as well asthe regulators, Republicansand some Democrats.

Frank has delayed a vote onthe measure until after theAugust recess but maintainshe has the votes to pass it.

Rep. Ron Paul of Texas andother Republicans on thepanel said Friday theythought it was foolish to giveunelected bureaucrats theauthority to determine whatfinancial products are fair.

They will be empoweredto decide which credit cardswe can receive, which homemortgages we are permittedto possess, and even whetherwe can access an ATM ma-chine, Paul said.

CONSUMERSfrom 1D

Ritz Camera Centers,Inc., the largest U.S.camera-store chain when itentered bankruptcy inFebruary, won court ap-proval to sell virtually all ofits assets for about $24 mil-lion to a group led by CEODavid Ritz. The Beltsville,

Md.-based company, to becalled Ritz Camera andImage, agreed to continueoperating at least 163 of 375stores, under several names,according to court papers. Itcurrently has stores in morethan 40 states, includingnine Wolf Camera stores inthe Charlotte area.

This is great for us,David Ritz said in a courtinterview. Im really happyfor all the people that workfor us.

As part of the bankruptcy,a group of liquidators inApril won the right to con-duct closing sales at morethan 300 stores with in-ventory valued at $50 mil-lion. Charlotte-area loca-tions in Dilworth, UniversityCity and uptown closed as aresult. STAFF REPORTS

Mignon Clyburn wasunanimously approved onFriday by the Senate toserve a five-year term onthe Federal Communica-tions Commission. She hadbeen nominated by Presi-dent Obama.

The Senate confirmationvote places the eldestdaughter of a powerful con-

gressman, House Majority

Whip Jim Clyburn, D-S.C.,on a key oversight agency ata turbulent time for mediaand other telecommunica-tions industries.

Senate Commerce Com-mittee Chairman Jay Rocke-feller, a West Virginia Dem-ocrat, noted the decade-plusthat Mignon Clyburn, 47,

served on the S.C. PublicService Commission. Shefills one of three Democraticseats on an agency withbroad authority to regulateInternet communications,the allocation of airwaves,public broadcasting stan-dards and media ownership. ASSOCIATED PRESS

Regulators have shut sixbanks in Georgia and asmall bank in New Yorkstate, boosting to 64 thenumber of federally in-sured banks to fail thisyear.

The Federal Deposit In-surance Corp. was appoint-ed receiver of the banks: Sixbank subsidiaries of SecurityBank Corp., based in Macon,Ga., and Waterford VillageBank of Clarence, N.Y.

The six Security bankshad assets of $2.8 billion anddeposits of $2.4 billion as ofMarch 31. State Bank andTrust Co., based in Pine-hurst, Ga., has agreed toassume all deposits and$2.4 billion of the assets, theFDIC said Friday. EvansBank, based in Angola, N.Y.,will assume all assets anddeposits of Waterford Vil-

lage Bank. ASSOCIATED PRESS

Business Digest