region's business 15 november 2012

BANKRUPT CITIES HAVE ONE OPTIONUPDATE ON PHILLY CASINO PLANS

WHAT THE ELECTION RESULTS MEAN TO GOV. TOM CORBETT

A JOURNAL OF BUSINESS AND POLITICSPHILADELPHIA EDITION 8 NOVEMBER 2012

WHARTON GRADS CREATE STARTUP FOR STARTUPS

TACKLING THOSE UNPLEASANT TASKS WITH GUMMY BEARS

It’s a market worth billions and a mix of advanced technology and an appetite for high-end products has created a growingly competitive landscape.

REGION’S BUSINESSTHE RAPIDLY CHANGING FACE OF THE AREA’S SUPERMARKET BUSINESS

A DEEPER LOOK AT ELECTION RESULTS ACROSS THE STATE

RegionsBusiness.com

$2.00 U.S.

3REGIONSBUSINESS.COM15 NOVEMBER 2012

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PRESIDENT AND PUBLISHER James D. McDonaldEDITORIAL DIRECTOR Karl M. SmithASSOCIATE EDITOR Terrence CaseyCONTENT TEAM Brandon Baker, Emily DiCicco, Victoria MarchionyCONTRIBUTORS Chris Weeden, Timothy Holwick, Don LeeADVERTISING DIRECTOR Larry SmallacombeDIRECTOR OF BUSINESS DEVELOPMENT Jim BauerACCOUNT MANAGER Rachel Sollberger

REGION’S BUSINESS

1900 Arch Street

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36A Look OverFiscal Cliff! Action is needed to avoid creating another economic bubble caused by The Fed’s historically low interest rates.

9A Startup For Startups! Two Wharton grads with lots of experience at investment firms and startups now support Philadelphia startups with product development assistance instead of capital.

26More Casino Plans ! Competition is heating up for the city’s second casino. The half-dozen plans display diverse visions, opportunities and challenges.

33One Choice For State’s Bankrupt Cities! Across the state, politicians have put taxpayers in an impossible position, making promises that can only be kept by more and more taxes. That’s not sustainable.

28Gummy Bears Can Help Tackle Unpleasant To Do Lists! As a leader, you must do things you don’t like to do. Why not reward yourself for doing them?

19Gov. Corbett, State GOP Have Work To Do for 2014! Gov. Tom Corbett’s sliding approval ratings look even worse through the prism of last week’s election results. The road to a second term has become even more challenging.

Not Your Parents’ Supermarket

! Technology and changing tasteshave created an increasingly

competitive landscape across the region.

CONTENTS

20

4 REGIONSBUSINESS.COM15 NOVEMBER 2012

Karl Smith is the Editorial Director for Region’s Business. You can contact him at [email protected].

As a former sportswriter, I love presidential election nights. It’s the one time all the networks get hopped up to a Super Bowl-like frenzy and frantically overanalyze every minute detail.

So last Tuesday, I settled in to watch the spectacle unfold, with the added bonus of having my son in the same room for this, the last presidential election for which he is ineligible to vote.

As we were getting comfortable, organizing snacks and drinks, I discussed some of the storylines - Pennsylvania came into play late in the race, it could take two weeks to call Ohio because of the way they count provisional bal-lots, etc.

But before I could even start a discussion about why we use the Electoral College and not a direct popular vote, the news

came across - the networks were calling Pennsylvania for President Obama. Before I could open a sec-ond bag of pretzel chips, it hap-pened - the networks called Ohio for President Obama.

I had barely sent my youngest to bed and it was over.

The TV talking heads were bat-ting around a dozen questions, but I had only one: Were the Republican operatives behind Mitt Romney’s campaign delud-ed, lying or just not very bright.

In the weeks leading up to the election, the Republican mes-sage grew stronger: First that Mr. Romney had the momentum, that he was going to make it a real race. Then came the stance that this race was a dead heat, both in the popular vote and in the only one that really mattered - the elec-toral vote.

Mr. Romney visited my back-yard in Bucks County and the Republican pundits took their rhetoric to a new level - Landslide. Dick Morris, Karl Rove, George Will and Michael Barone said Romney would win in a romp.

So what happened? Which of my three choices - deluded, lying or just not very bright - led to such a public display of looking like a complete fool?

It’s quite possible that the oper-atives aren’t very bright, but these folks didn’t get to the national stage by accident. And maybe they were lying. After all, politics are built on lies, misstatements and half-truths, so in the “by any means necessary” approach to elections, telling a whopper of a lie to help maintain or build momentum wouldn’t be totally out of the question.

However, all signs point to the top of the Romney campaign and pretty much all of the leading GOP pundits and talking heads simply being deluded. They had flawed models that led them to believe that Mr. Romney would not only win, but win big.

In the wake of what turned out to be an Obama landslide, the pundits have been squawk-ing about how the media rigged the election and other nonsense, but Mr. Morris struck right to the heart of the matter: In a nutshell, the GOP is out of touch with the realities of the demographics of 21st century America.

I always tell my kids, there’s nothing wrong with making a mistake, as long as you learn from it and improve.

We’ll see if the GOP learned that lesson.

Lesson Delivered, Republicans Must Learn

EDITOR’SDESK


RESTAURANT

VedgeThe “vegan authority,” VegNews Magazine, has dubbed Washington Square West-located Vedge the Restaurant of the Year, previously being titled “one of” the best restaurants in the country by Philadelphia magazine.

Brauhaus Schmitz

Chef Michael Solomonov will pair with Brauhaus Schmitz Executive Chef Jeremy Nolen for a “Beer vs. Wine Pairing Dinner” November 20 at Brauhaus Schmitz on 718 South St., with attendees voting on winning combinations for the five-course dinner.

Le VirtuTwenty guests can experience a “La Panarda” feast December 16 at Le Virtu. The event will consist of an eight-hour, 40-course meal, which costs $200.

Bainbridge Barrel House

Bainbridge Barrel House opened its doors at 627 Bainbridge St., focusing on house-crafted foods using seasonal ingredients.

DelRossi’s Cheesesteaks

Co.Owners Michael and David Frank opened DelRossi’s Cheesesteaks Co. in Northern Liberties at 4th and Spring Garden streets with weekday hours of 9 a.m. to midnight, and weekend hours of 9 a.m. to 2 a.m.

TRANSPORTATION

Turnpike Plans To Eliminate Toll Plazas, More Than 850 Jobs

The Pennsylvania Turnpike will within five years elimi-nate all toll plazas and use only electronic tolls, acting Chief Executive O!cer Craig Shuey told a joint House and Senate Transportation Com-mittee hearing.

Toll plazas currently cost

the Turnpike Commission about $67 million annually to sta", according to a Patriot-News report.

The electronic conversion would eliminate the need for 755 unionized toll collectors and about 100 associated non-unionized employees.

ATLANTIC CITY

Sandy Delivers A Blow to Jersey Shore Casinos

Atlantic City’s 12 casinos reported revenue of $209.4 million in October, a 20 percent decline from October 2011, according to New Jersey’s Division of Gaming Enforcement.

The drop is attributed to the four-day closure of the casinos following the impact of Hurricane Sandy. The largest decline was felt by the Trump Taj Mahal, which felt a revenue drop of 38 per-cent.

Broken down by category, slot-machine reve-nue fell 21.8 percent to $149.1 million, with table games decreasing 14.6 percent to $60.2 million.

PHILADELPHIA SCHOOL DISTRICT

Schools Sales ‘Imminent’With 12 vacant properties currently listed on

the market by the Philadelphia School District, district o!cials are cited as being encouraged by “robust” interest in the lots.

The former 250,000-square-foot home of West Philadelphia High School, located at 4700 Walnut St., has recently been eyed by developers for a sale of $6 million, according to a News-Works report. The unit would be purchased for a mix of retail and residential use.

The School Reform Commission will vote to approve the sale of certain district buildings dur-ing a scheduled meeting on November 15.

ENERGY

PECO Penalized for ExplosionPECO will pay a $75,000 civil penalty

stemming from a procedural mishandling of a 2009 gas explosion in Upper Merion Town-ship, following a November 8 vote from the Pennsylvania Public Utility Commission.

The gas leak occurred from an overlooked four-inch crack in a cast iron main, which spread to a nearby home on Summit Street in Swedeland.

CREDIT

Moody’s Downgrades Upper Darby District

Upper Darby School District’s $4.3 million General Obligation Bonds rating was down-graded to an Aa3 underlying rating and an A1 enhanced rating by Moody’s Investors Service.

The previously Aa3-rated district was cited as being downgraded because of the district’s $38 million of parity debt. The assessment also took into account the sizable suburban residential tax base bordering Philadelphia.

WHO TO FOLLOW

@StartUpProMartin Zwilling

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and angel investor.

“The best entrepreneurs ask ‘the dumbest questions.’”— November 2, 2012

ECONOMY

September Job Openings Dipped, Still Below Pre-Recession Figures

The number of job openings dropped to its low-est point in five months — 3.56 million nation-wide — in September, according to the U.S. Labor Department.

The decrease in job openings is about 100,000 lower than where it was in August, which had its job openings during the time period revised by the Labor Department to 3.66 million.

Still, job openings have spiked since July 2009, up roughly 63 percent, but slightly below the 4 million jobs available when the recession started in December 2007.

JOBS

Jobs Saved, Added at Navy Yard Site

Rhoads Industries Inc., located at the Navy Yard, announced Novem-ber 9 that it will increase its work-force to 300 in 2015.

The news comes as a result of a 20-year loan through M&T Bank and the Obama administration’s Small Business Jobs Act, which allows for refinancing of long-term, low-interest loans. The new loan is estimated to have saved 180 jobs.

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TRANSPORTATION

KOP District Grant Allows for Commuter Shuttle

In an effort to reduce congested tra!c, the King of Prussia District has received a $500,000 grant from the Delaware Valley Regional Planning Commission to operate a commuter transit shuttle, which connects regional rail service with the King of Prussia Business Park.

The shuttle will run between the

Norristown Transportation Center and the Wayne train station, with fare yet to be announced.

The service will run Monday through Friday starting in Spring 2013.

TELECOMMUNICATIONS

Blue Bell’s UniTek Plans Sale of Wireline Business

Blue Bell, Pa.-based UniTek Global Services, Inc. announced November 8 that it will close a deal to sell its wireline business in its fourth financial quarter.

The announcement came alongside distri-bution of its third-quarter results, which have the outsourced infrastructure services com-pany down to $1.39 per diluted share, for a total loss of $26.1 million.

Total revenue came in at $132.1 million, an increase from $101.9 million during the same period in 2011.

MUST-HAVE APP

Thanks to Apple’s now infamous, Google Maps-crippling iOS 6 update, one of the most simple smartphone applications has now become one of the most demanded.

In addition to serving as a browser and aggregate source of personal data, Microsoft’s search app features a fairly reliable maps service that, if nothing else, trounces Apple’s largely-failed e"orts at GPS service. (Free, iOS 6 and Android)

EXECUTIVE BOOKSHELF

Going Green For GreenToss aside everything you think you know

about your consumer: Green marketing expert Jacquelyn A. Ottman has arrived on the scene to dissect the growing trends of con-

sumerism in the age of “green” with her book, The New Rules of Green Marketing.

Ms. Ottman enlists the new-age rules of emphasiz-ing performance and health quality in marketing in order to capitalize on a changing audience, rules she has already personally put to the test with clients

like Starbucks, Wal-Mart, Nike and other big-business corporations.

Her o"ering demonstrates a unique per-spective on how to turn consumer- and eco-friendly green advertising into the other, more profit-friendly kind of green: money.

“Hurrah for this book showing how going green pays o" in delivering a triple bottom line — profits, people, and planet.”

— Philip Kotler, S.C. Johnson Distinguished Professor of International Marketing, North-western University

THEFT

Survey: Philly Worst City For Theft of Cellphones

Philadelphia is No. 1 on a list by security firm Lookout as the city where owners are most likely to lose their phone, whether it is lost or stolen.

The study also found that two-thirds of phone loss occurs between 9 p.m. and 2 a.m., and that people lose a smartphone about once per year.

DEVELOPMENT

Homes Planned for Former Church SiteAfter demolishing what was for-

merly St. Boniface Church at Diamond and Hancock streets, Norris Square Civic Association has announced that seven single-family homes will be con-structed in the now empty space.

The association had previously called into question a project for the

space that would have included 15 multi-family units, which will be spread across the area with 10 being built on West Susquehanna Avenue and five being scattered across the Norris Square neighborhood.

Thirty units in total are now expect-ed to be built.

Developers Sought for Fishtown Project

Philadelphia Industrial Develop-ment Corp. is currently on the market for development proposals, as it plans to sell o" Fishtown properties at 1049-69 N. Front St. and 1101-19 N. Front St.

The group has outlined the type of pitches it is seeking, a mixture of resi-dential and neighborhood retail.

The city will take proposals until February 8.

Office Tower ProposedLiberty Property Trust has pro-

posed to the Planning Commission, Logan Square Neighborhood Asso-ciation and the Kennedy House a plan to construct a 22-story o!ce tower at 19th and Arch streets.

According to the Philadelphia Business Journal, Liberty pur-chased the parking lot where the tower would protrude during the summer. Liberty Trust has previ-ously been responsible for the con-struction of the Comcast Center.

BUSINESS

Quarterly ResultsVishay Precision — The Malvern, Pa.-

located precision systems maker earned $1.9 million in its third quarter, which ended September 29.

Echo Therapeutics — The developer of the Symphony system, a transdermal continuous glucose monitoring sys-tem, the Philadelphia-based company announced it experienced a net loss of $4.3 million for the quarter ending September 30, with the company citing research and development expenses as the reason for the loss.

Discovery Labs — Based in War-rington, Pa., the biotechnology company announced an operating loss of $10 million and net cash outflows of $9.9 million. The company’s quarter ended September 30.

Inovio Pharmaceuticals — The Blue Bell, Pa.-located pharmaceutical com-pany report-ed revenue of $855,000 for the three-month period ending September 30. The company had a net loss of $2.1 mil-lion, attributed to a change in the fair value of common stock.

UGI — The Valley Forge, Pa.-based gas company reported fourth-quarter results of a $14.7 million loss, translating to $0.13 per share. The company lost $22.4 million during the same period last year.

InterDigital — Located in Wilming-ton, Del., the wireless technologies com-pany reported an anticipated fourth-quarter result of $62 million in revenue, based on royalty reports received to date. This would be a 6 percent increase over its third-quarter results.

WEEKLY BRIEFING


At 21 years old, two Wharton students have transcended the classroom to create their own “startup for startups.”

Randy Rayess and Pratham Mittal are the founders of VenturePact, a University City-based ven-ture that provides product development in place of capital. After working for several startups and invest-ment firms in places like San Francisco and New York, the two came together and agreed upon a com-mon, problematic thread they’d observed in their travels.

“So we both had this startup back-ground, and we both realized a lot of problems entrepreneurs face, and one of the biggest problems is getting technol-ogy built,” Mr. Mittal said. “We realized it’s an inherent problem in the system, and that’s really where our basic idea came from.”

Since the company’s inception in the winter, the students have accumulated 40 post-grad engi-neers to work on the development of customers’ product ideas. They are given project manager roles that give them the responsibilities of giving a client a timeline for his product, building relationships and setting goals.

“We believe we have an edge on [CTOs] in that we work on an equity basis instead of a cash basis,” Mr. Rayess said. “So what that does is it makes us invested in a client’s success.

“What happens in an outsourcing model is they’ll say, ‘I’m going to charge you on a certain basis where I have no incentive to work for you.’ But since we work based on their success, we believe we do it with a better quality — some-thing not guaranteed with an outsourc-ing agreement.”

VenturePact received an influx of about 45 customer applications over the sum-mer from the Philadelphia area and from Harvard-based entrepreneurs, which the two whittled down to three.

“We try to scale intelligently, instead of just saying, ‘We love all of these people, let’s take them all,’ and then not be able to provide for them,” Mr. Rayess said.

To keep up with the talent pool and

draw in new investors, the two frequent Philly Tech Meetup events on weekends and are constantly traveling to garner new engineers, new clients and new ideas. Mr. Mittal, who is natively from India, has recruited from his home coun-try for some of their engineering talent, but insists Philadelphia’s growing stature in the tech community is what keeps him on his toes.

“We grew organically from Philly’s community,” Mr. Mittal said. “At one of our talks, [First Round Capital’s] Josh Kopelman was very clear that

we need to keep people in Philadel-phia, and that it’s not true that innova-tion isn’ t happening here…There’s lots of talent coming out of

Penn, Drexel and Temple. They just don’t always stay here.”

Added Mr. Rayess, “I remember just a year and a half ago when we did these tech meetups, there were 15 or 30 people [at a meeting], and now you go to these events and there’s nowhere to sit. It’s just a completely di!erent environment.”

Though the VenturePact founders con-sider their business model to be a multi-hub venture, they see more than enough reasons to keep Philadelphia as the home for both themselves and their business.

“With New York and San Francisco, they’ve already grown their talent, they’ve hit a wall,” Mr. Rayess said. “The fact that Philadelphia is growing makes it that much more interesting — and compel-ling — to grow ourselves here.”

— Brandon Baker

WEEKLY BRIEFING

Students Put Entrepreneurial Spirit to Work With VenturePact Startup

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THERE’S LOTS OF TALENT COMING OUT OF PENN, DREXEL AND TEMPLE. THEY JUST DON’T ALWAYS STAY HERE.’—VENTURE PACT CO-FOUNDER

PRATHAM MITTAL


SOCIAL MEDIA

Reading Terminal Market Launches Photo Campaign

In an e! ort to promote its delectable prominence during the Thanksgiving holiday, Reading Terminal Market has launched a photo contest that encour-ages market shoppers to share Instagram, Facebook

and Twitter photos with the hashtag #MyMarket.

The contest ends on November 17, and the fi rst and second-place winners will receive gift cards that can be used anywhere in the market.

PHARMACEUTICAL

TEVA Announces New CEOMontgomery County-based Teva Pharmaceuti-

cal Industries Ltd. announced that unit leader Bill Marth will retire at the end of 2013, being replaced by Allan Oberman as the new president and CEO.

Mr. Oberman is expected to play a slightly dif-ferent role as leader of Teva’s western-hemisphere e! orts, reporting directly to the recently-appointed chief executive o" cer, Jeremy Levin.

INSURANCE

New Leadership, Surname ChosenPhiladelphia Insurance Co., based in Bala Cynwyd,

Pa., announced November 12 that it will soon be led by Chief Operating O" cer Sean S. Sweeney — the fi rst time a Maguire will not be at the head of the insurance company, e! ective January 1.

Mr. Sweeney will replace James Maguire Jr., who was preceded by company founder James J. Maguire Sr.

In addition to Mr. Sweeney’s forthcoming takeover, the company will create an “O" ce of the CEO” consist-ing of the company’s top executives in an e! ort to ease the transition.

INVESTING

Advisors to Push in 2013 for Alternative Investing

About 83 percent of advisors are using tactical and alternative investments, with 84 percent described as being “likely to recommend them” going into 2013, according to investment advisor CMG.

The survey also indicated that 87 percent of advi-sors believe a portfolio that includes both tactical and strategic allocations stands to o! er a greater value than one deprived of any one of them.

BUSINESS

Survey: Businesses Missing Talent Management Programs

A survey by talent and career management group Right Management indicated that 12 percent of major organizations have what the expert group describes as a “fully-implemented talent management strategy.”

The survey discovered that 44 percent of those surveyed have a series of separate, unintegrated HR processes that are not completely implemented, with 12 percent admitting to not have any strategy in place.

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DEALBOOK

HEALTH CARE

Hospital Sold, Leased BackBirmingham,

Ala.-based real estate investment trust Medical Properties Trust Inc. has pur-chased the 140-bed facility used by Roxborough Memorial Hos-pital in Philadel-phia from Ontar-io, Calif.-based Prime Healthcare Services for $30 million as part of a $210 million transaction with Prime that included acute-care hospitals in Reno, Nev. and Inglewood, Calif.

Locally, Medical Properties Trust also owns 24-bed Roth-

man Specialty Hospital in Ben-salem, Pa. Prime, which bought Roxborough Memorial in Feb-ruary from Solis Healthcare, will now lease the property from its new owner.

Medical Media Organizations Announce Distribution Plan

On November 7, Warmin-ster, Pa.-based PhysiciansNews.com, a website that pro-vides medical news and practice management advice to an audience of healthcare professionals announced a new marketing and distribu-tion partnership with UBM Medica US, one of the largest media companies in the United States serving the healthcare

industry. UBM delivers integrated and strategic communication

solutions to a comprehen-sive audience of medical professionals and health-care consumers through

online, print, live, and custom pro-grams.

PhysiciansNews.com content will now be delivered to more professionals via the UBM Medica Partner Network.

Malvern’s Auxilium Pharmaceuticals, Pfizer Amend Deal Over Xiapex Drug

Pfizer Inc. is ending a collabo-ration agreement with Malvern, Pa.-based specialty biopharma-ceutical company, Auxilium Pharmaceuticals, Inc. regarding the development, commercial-ization and supply of Xiapex in the European Union (EU) and certain other European and Eurasian countries.

As a result of this mutual deci-sion to conclude the collabora-tion no later than April 24, 2013,

Auxilium will recognize $94 million of deferred revenue and $9 million of deferred costs in the fourth quarter of 2012.

Prior to the termination date, the parties will continue to per-form all obligations as described in the agreement.

After the termination date, rights to commercialize Xiapex and responsibility for regula-tory activities for Xiapex in these countries will revert to Auxilium.

BANKING

Credit Unions MergeThe Collegeville, Pa. branch of UTI

Employees Credit Union has merged with American Heritage Federal Credit Union, which serves customers in Philadelphia, Bucks and Montgomery counties.

American Heritage is the 144th largest credit union in the U.S., with $1.15 billion in assets and 121,000 members.

UTI’s Collegeville branch had 500 members and just over $2.8 million in total assets as of September 30 and is now American Heritage’s 27th branch in the Philadelphia area.

EDUCATION

Drexel University Creates Health Outreach Office

Drexel University College of Medicine has created the O!ce of Urban Health Equity, Education and Research as part of an ongoing e"ort to improve access to quality health-care servic-es for underserved populations.

The o!ce will be lead by Dr. Ana E. Nunez, a professor of medi-cine and the director of the college’s women’s health education program.

Plans to address inequi-ties include; connecting

urban-based health advo-cates and citizens with expert health-care provid-

ers, joining educa-tors and research-ers with local health advocates to bring disease prevention infor-mation to urban communities, convening con-versations with

citizens and health-care providers to seek solutions to complex health-care issues, and promoting an urban culture that values health and wellness.

Nunez

HEALTH CARE

Keystone, CCP Announce DealPhiladelphia-based

Keystone Mercy Health Plan, a member of the AmeriHealth Mercy Fam-ily of Cos., and Cardiology Consultants of Philadel-phia announced Novem-ber 8 that they have entered into a “pay for performance” agreement as part of AmeriHealth Mercy’s PerformPlus program, which offers primary-care physicians, specialists, hospitals and accountable care organi-

zations contracts that aim to reward providers who improve outcomes and e!ciency.

Cardiology Consultants employs 95 physicians in o!ces in all five counties in southeastern Pennsyl-vania and has served Key-stone Mercy members for more than 20 years.

This agreement is the first that Keystone Mercy has made with a cardiolo-gy specialty-care provider.

RETAIL

Exton Square Mall Adds Sports StoresExton Square Mall has

added Pottstown, Pa.-based sporting goods retailer Schuylkill Valley Sports and sports novelty seller Sports Vault to it growing roster of sports related retailers.

Related stores in the 120-store Exton Square Mall include Champs Sports, Finish Line, Foot Locker, Journeys and

Zumiez. Exton Square Mall is

owned by Philadelphia-based Pennsylvania Real Estate Investment Trust and is anchored by Boscov’s, JCPenney, Macy’s and Sears.

HUMAN RESOURCES

Towers Watson Buys DaVinci Consulting

New York-based human resources con-sulting firm Towers Watson announced it has completed its acquisition of Yardley, Pa.-based DaVinci Consulting Group, a boutique actuarial consulting firm that specializes in the long-term-care insur-ance market.

Towers Watson announced its intent to acquire DaVinci on October 15, citing a desire to “increase its competencies and experience in the long-term care insur-ance market.”

The principals and 10-member con-sulting sta" of DaVinci are expected to join the Life practice of Towers Watson’s 1,000-employee operation in the Phila-delphia region.

Towers Watson has approximately 14,000 employees total.

REAL ESTATE

Commercial Buildings SoldThe Center for Neurological and Neu-

rodevelopmental Health bought the two-story, 21,199-square-foot o!ce/flex building at 651 Park Ave. in King of Prus-sia, Pa., for $2.3 million from Dick Ritter, whose advertising and marketing firm, the Ritter Co., had vacated the space fol-lowing Ritter’s retirement.

MVD Entertainment Group has pur-chased 203 Windsor Road in the Limer-ick Airport Business Center in Limerick, Pa. for $1.3 million.

MVD Entertainment plans to move to the new warehouse and o!ce space in early 2013.

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GOP Must Consider Latino Votes For Continued Survival

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.

CONTRIBUTE

Send comments, letters and essays to [email protected]. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

“If Republicans don’t do better in the Hispanic community, in a few short years the Republicans will no longer be the majority party in our state...if that happens, no Republi-can will ever again win the White House.”

Those aren’t the musing of a left-leaning college professor or the hectoring jabs of a RINO. Those are the sobering thoughts of a conservative, Tea Party favorite: Senator-elect Ted Cruz of Texas.

Given the results of recent elections, who can argue his point?

Just eight years ago George W. Bush took roughly 40 percent of the Latino vote. In 2008 the percentage that John McCain was able to garner was down to 35 percent. This year Mitt Romney captured only 27 percent. The dra-matically decreasing percentages are especially troubling when viewed in light of the fact that the Latino population is the fastest growing in the country.

The Latino vote is the most talked-about segment of the population in terms of poten-tially fertile ground for Republicans. After all, less than a decade ago, a sizeable portion of the Latino community was voting Republican.

Those not casting their votes for the top of the GOP ticket still identifi ed themselves as sympathetic to Republican philosophies of economic growth and personal freedom. They tended to be culturally and socially more conservative than other minority populations. Yet the Republican Party continued to lose their a! ection, allegiance and votes.

The African American community was not likely to be swayed to a Romney candidacy. It was fantasy to think that large numbers of blacks were going to vote in 2012 to remove from o" ce the fi rst African-American presi-dent. But what about the future?

There are still those within the leadership ranks of the GOP who argue for a “base” election strategy. Their argument is that if the Republicans get out their base vote in national elections, they win. They correctly point out that the country is still a center-right nation. They remind us that Mitt Romney somehow managed to get more than a million votes less than John McCain did four years ago. And they stare at electoral maps awash in red with blue on the periphery.

Arguably turning out the base might have

worked in 2012. But it didn’t happen. Among other factors, the Republicans were beaten on tactics. The Obama ground game never slowed down after 2008. They merely shifted gears, focused on essential territory and ramped up for 2012. Obama poured more than 25 percent of his spending into fi eld operations. The Republicans put most of their money into television.

What can’t be argued is that as the popula-tion changes, the party seen as the domain of old white men is not going to be vibrant or even existent for very long.

Conservatives don’t need to sacrifi ce their principles or the allies of their current coalition in order to reach into the growing minority populations.

They do need to listen to and hear from those whose votes they seek. They need a commit-ment to old-fashioned, people-to-people campaigns; not just among their “base,” but with those who are not currently with them. Turning out the base isn’t enough. Expanding the base is the key to being a majority party in the future.

POLITICAL COMMENTARY


PHILADELPHIA POLITICS

CITY COUNCIL MATTERS

Timothy Holwick is a freelance writer covering Philadelphia government. Find more coverage at citycouncilmatters.com and follow him on Twitter @CityCouncilBlog.

CONTRIBUTE


City Voters Support Charter Changes With ‘Yes’ Votes on Ballot Questions

While the candidates were the main focus on Election Day in Philadelphia, Philadelphians also voted “yes” on four questions included on the ballot.

Three of the four questions asked voters for permission to amend the Philadelphia Home Rule Charter. In order to amend the Charter, City Council must approve the amendment with a two-thirds major-ity, but first they must present it to the voters for approval. This approval request takes the form of a ballot question, which can either appear on the spring primaries ballot or the November election.

The first question asked for approval to create an independent body for the purpose of setting water and sewer rates.

Currently, the Water Commissioner, who is appointed by the Mayor of Phila-delphia, performs this duty. The proposed change will create a body independent from the Mayor’s Administration and appointed by City Council. While that just trades one elected appointer for another, the real change will be the ability of coun-cil to set procedures for this body, that are required to be open and transparent.

The second question authorizes City Council, via ordinance, to require the Philadelphia Finance Department to provide additional information beyond the current annual budget proposal.

Such information, includes, but is not limited to, cost/benefit analysis of certain expenditures. Back in June 2012, the Philadelphia Finance Department testi-fied that its o!ce, and the mayor, could not support this change at the current time due to technological limitations. However, with this voter approval, and a likely finalization by council, the Finance Department will likely have to be ready to provide the requested additional informa-tion at the budget hearings for next spring.

The third question concerns a civil ser-vice preference for the children of police o!cers or firefighters who died while on active duty.

The proposed change would expand the preference to grandchildren as well. It is no surprise voters approved such a measure as the deaths of police o!cers and firefighters have been at the forefront of local media coverage recently.

Finally, the fourth question on the ballot did not concern the Philadelphia Home Rule Charter but simply asked voters if it was permissible that the city borrow approximately $123 million.

The stated purpose of the money is for it to be spent toward capital projects for Transit, Streets and Sanitation, Municipal Buildings, Parks, Museum, and Economic Development. City Council would have the authority to determine how these dollars are allocated to the proposed or approved uses.

The Philadelphia Home Rule Charter acts as its Constitution, so amending it is no small matter when compared to the typical bills and resolutions passed by City Council.

It is an important exercise in democracy that Philadelphians are asked for their approval before council can continue on with the amendments. That mechanism checks council as it essentially seeks to expand its influence with these sorts of changes, particularly on the water and sewer rates and what kind of information they can require from the Mayor’s O!ce when the annual budget process comes around.

In a time when government is constant-ly pressured to be more transparent and accountable, the residents of Philadelphia apparently felt these measures were a step in the right direction.

VINCENT J. BROWN

OFFICE OF THE CONTROLLER

Commissioner’s Office, Commerce Department Targeted In City Audits

City Controller Alan But-kovitz, who has aggressively targeted fraud and waste in Philadelphia since being elected in 2005, released results of two recent audits .

An audit of the city’s Commis-sioner’s Office found excessive overtime costs totaled around 27 percent of the agency’s $5 million payroll. Just one employee made almost $390,000 in overtime alone since 2000. This employee worked all 14 days in a biweekly pay period, 12 of those during overtime hours. However, none of the overtime was reviewed and approved by a superior.

The audit also found inadequate payroll proce-dures, a lack of enforce-ment of city sick leave rules,

and a failure of certain key employees to submit financial disclosure forms required by Pennsylvania

law. An audit of

the Cultural and Commercial Corridors Pro-gram showed that the Com-merce Depart-ment provided inadequate supervision over

the $135.5 million taxpay-er-funded program.

Included among the findings: The Merchants Fund, a one-employee non-profit group, distributed $1 million in grants to 18 retail locations for renova-tions. One recipient, was no longer in business and has sold the property where renovations were to take place. More information is available at www.philadel-phiacontroller.org.

Butkovitz

COMMISSIONER’S OFFICE

Commissioners’ Chair OustedFollowing months of

tension, City Commis-sioner Stephanie Singer was ousted November 7 in a motion by Republican City Commissioner Al Schmidt, with support from Democratic City Commissioner Anthony Clark.

Ms. Singer said the issue is regarding Deputy Commissioner Dennis Lee’s salary. She said Mr. Schmidt and Mr. Clarke opposed Mr. Lee’s $12,000 pay raise that Ms.

Singer approved after pro-moting him to chief deputy. She was increasing his sal-ary to the amount made by

his predecessor, Noel Kugelmass, an amount with which Mr. Schmidt had agreed.

Mr. Schmidt told City Paper that while Mr. Kugelmass served as “Chief

of Sta" of the Commission,” Mr. Lee is simply “Chief Deputy Commissioner.”

Ms. Singer said Mr. Lee does “exactly the same job.”

Singer


POLITICS

Governor Considering Privatization of Lottery

An agreement to priva-tize the Pennsylvania Lot-tery system in under discus-sion and could be in place before February, according to The Patriot-News of Harrisburg.

Under the plan originally proposed more than a year ago, daily operations of the lottery would be controlled by a private company, but Pennsylvania would main-tain control.

The private company would be able to take no more than 5 percent of the lottery’s profi t, according to federal guidelines.

“We’ve said from day one we’re looking to see what all

we can privatize,” Gov. Tom Corbett said Friday, accord-ing to a Patriot-News report.

“If we can ensure increased funding and pro-tecting our seniors ... then we have an obligation to take a look at privatization.”

PENNSYLVANIA LOTTERY

Days after his re-elec-tion, Senator Bob Casey talked about the “grand bargain,” a fi scal plan in discussion in Congress which would cut deficits by $4 trillion to $5 tril-lion over the next decade, with the Times-Tribune.

Sen. Casey, chairman of Con-gress’ Joint Eco-nomic Commit-tee, said that the “grand bargain” agreement could produce enough revenue to decrease future defi cits because it would give investors and businesses confidence in stabilized

federal tax rates and fi nances.

Tax reform, higher taxes on the wealthy, and deeper spending cuts are

some of the key components of such a plan.

He added that Congressmen can more eas-ily work together post-election.

“I don’t care who you are,

Democrat or Republican, House or Senate, you heard from people on the street about how much they want people work-ing together,” he told the newspaper.

Casey: Congressional Plan Will Steer Clear of ‘Cliff’

ECONOMY

Casey

Since Republicans maintained control of the state House of Representatives, much of the chamber’s lead-ership will remain the same.

Speaker of the House: Sam Smith (R-66th Dist.)Caucus Leader: Mike Turzai (R-28th Dist.)Minority Leader: (D-33rd Dist.)Democratic Caucus LeadershipCaucus Secretary: Ron Waters (191st Dist.)Caucus Administrator: Neal Goodman (123rd Dist.)Appropriations Committee Ranking Member: Joe

Markosek (25th Dist.)Whip: Mike Hanna (76th Dist.)Caucus Chairman: Dan Frankel (23rd Dist.)Policy Committee Chairman: Mike Sturla (96th Dist.)Republican Caucus LeadershipAppropriations Chairman: Bill Adolph (165th Dist.)Whip: Stan Saylor (94th Dist.)Caucus Chairwoman: Sandra Major (111th Dist.)Caucus Secretary: Mike Vereb (150th Dist.)Caucus Administrator: Richard Stevenson (8th Dist.)Policy Committee Chairman: Dave Reed (62nd Dist.)

GOP Maintains House Leadership, Control of Leadership Positions

STATE


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REGION’S BUSINESSA JOURNAL OF BUSINESS & POLITICS

CAPITOL REPORT

Governor Tom Corbett signed seven pieces of legislation Monday that will benefit Pennsylvania’s military veterans and Pennsylva-nia National Guard.

“Today is about honoring a debt; a debt earned in blood and sacri-fice,” said. Gov. Corbett.

Legislation included:— The Veterans Trust Fund,

sponsored by Sen. Lisa Baker (R-Luzerne), will provide for vet-erans’ programs.

— “V” Designation on Driver License, sponsored by Rep. Je! Pyle (R-Armstrong), requires PennDOT to issue a driver’s license or ID card with a “V” for Veteran identifier at no additional cost, for persons who have served in the U.S. Armed Forces.

— Pennsylvania Code of Military Justice, sponsored by Sen. Mary Jo White (R-Butler), substantially

revises the code, enforcing order and discipline for members of the Pennsylvania National Guard who are not in active federal service.

— Uniformed Military Overseas Voting Act, sponsored by Sen. Bob Robbins (R-Butler), simplifies the registration and absentee ballot process for uniformed service vot-ers and overseas civilian voters for all elections within the state.

— Veteran-Owned Business Procurement Program, spon-sored by Sen. Tommy Tomlinson (R-Bucks), encourages state agencies to contract with veter-an-owned and service-disabled veteran-owned small businesses.

— Establishes license plates

for World War II veterans of the U.S. Merchant Marine and for all veterans of U.S. Military Airborne Units, sponsored by Rep. John Bear (R-Lancaster). Prior to this legislation, special plates were available to Word War II veterans of all other military services except the Merchant Marine.

— Municipal Police Officers’ Education and Training Commis-sion, sponsored by Rep. Marcia Hahn (R-Northampton), which provides training for police o"-cers in the state on recognizing and interacting with veterans and other individuals su!ering from Post Traumatic Stress Disorder and Traumatic Brain Injury.

Governor Signs Legislation Benefitting Veterans

Governor Tom Corbett is joined by Maj. Gen. Wesley Craig as he signs a bill into law at the Keystone Conference Center November 12. PENNSYLVANIA NATIONAL GUARD

TODAY IS ABOUT HONORING A DEBT; A DEBT EARNED IN BLOOD AND SACRIFICE.’

— GOVERNOR TOM CORBETT


POLITICAL COMMENTARY

GOP, Corbett Have Work To Do Before 2014

Eric Boehm is bureau chief for PA Independent, an online political news organization.

CONTRIBUTE


HARRISBURG — Republicans seem to have their work cut out for them to get Gov. Tom Corbett re-elected in 2014.

Gov. Corbett and his GOP coun-terparts were soundly beaten in all five statewide races on Election Day, but two of last week’s results are bigger red flags than the others.

The list begins with Kathleen Kane, a former assistant district attorney for Lackawanna County who scored more than 3 million votes (about 140,000 more votes than President Obama received in the Keystone State) as she became the first Democrat and the first woman ever elected as Pennsylva-nia’s attorney general.

The election was viewed by some as a referendum on Gov. Corbett — Ms. Kane made a particular issue of the handling of the Jerry Sandusky investigation, which began while Gov. Corbett was the state’s attorney general — and Republican candidate Dave Freed was person-ally and politically backed by Gov. Corbett during the campaign.

The second concerning loss for the GOP on Tuesday was not really a loss, but more of a slip. Demo-crats were able to reduce a 30-20 GOP majority in the state Senate to a much more narrow 27-23 edge by winning seats vacated by retiring Republicans in Erie, Harrisburg and the Pittsburgh suburbs.

Already more moderate than the state House and the governor, the state Senate figures to move further to the center (or even slightly to the left) when the new session begins in January. That will make it harder for the governor to get some of his more conservative agenda items across the finish line.

Gov. Corbett’s popularity has been hovering around 40 percent in most recent polls, but inside the administration there is only limited concern about that because the governor has two years until he faces the voters — a long time in politics.

After all, former Gov. Tom Ridge was nicknamed “One-Term Tom” by some in the media two years before he coasted to re-election in

1998.So where should Gov. Corbett

begin? First and foremost, by sticking to his “no tax increases” message.

It will be harder than it sounds with increasing pension payments coming down the pike and no dramatic increase in state revenue expected.

The no-tax promise is a winning message — even if it is going to come with some lumps from those who want to see more funding for education and other special interests.

It’s been written ad infinitum for the last two years, but Gov. Corbett also needs to become more of a salesman for his initiatives and needs to be more willing to take praise and do victory laps.

Case in point: Last year, Gov. Corbett wanted to cut higher edu-cation by 10 percent in the budget he proposed in February. But when the final package received his signature on June 30, he had agreed to flat-line funding for the state’s colleges and universities.

The governor took a lot of heat for proposing the cuts, but seemed unwilling to take credit when he agreed to put more money in the pot without breaking his tax pledge.

Observers question how to define the “Corbett agenda” after two years. While he has not made the policy splashes of Gov. Chris Christie in New Jersey or Gov. Scott Walker in Wisconsin, Gov. Corbett is committed to ensuring the state does not spend more money than it takes in.

Now he should stick to that promise — and take every opportu-nity to remind taxpayers why that is good for them.

GOVERNOR TOM CORBETT

CORBETT RATINGS

September 29, 2011

32%Disapproval

50%Approval

June 12, 2012

47%Disapproval

36%Approval

October 16, 2012

42%Disapproval

38%Approval

Corbett: Kane Investigation Should Be Short

Throughout her campaign, Attorney General-elect Kath-leen Kane vowed to thoroughly investigate Governor Tom Corbett’s role in the Jerry San-dusky investigation.

The governor said he wel-comes the investigation but added it should take no more than a few weeks or a few months.

“There is nothing out there,” he said in a recent Radio Penn-sylvania interview.


THE CHANGING FACE OF THE SUPERMARKET BUSINESSPlayers in an increasingly crowded field try to carve out niches as they learn it’s not always about price.

T he powers of the grocery stores are changing, and they’re doing so with a dramatically di!erent approach: Value over price.

Earlier this year, the purchase of Genuardi’s by Giant rep-resented a significant consolidation of a regional brand by a formidable power. Fifteen of 24 stores were rebranded over the summer. Four additional sales and five closings dwindled

the staple to a mere two locations.

Stories by Chris Weeden

Illustration by Don Lee

The inability of Genuardi’s to survive in the current marketplace is the result of several conditions. Large players are entering the market, and they could not adapt to transforming palettes. The emergence of Wegmans, Whole Foods Markets, Giant and Trader Joe’s bring reputations for quality products with reputable customer service at a!ord-able prices. They do not want the aver-age customer, instead catering to the higher-income individuals who grew to resent the inadequacies of industry predecessors.

Wegmans is opening a store in Mont-gomeryville next year and Whole Foods opened one in Glen Mills in March. On November 7, Whole Foods Markets slowly began announcing a $100 mil-lion project in conjunction with a move from Callowhill to Center City. As these give rise, Pathmark, ACME and Super-fresh flounder left to respond to the

dwindling market share that they once revered, proving it’s not just how many you reach but who.

“When we move into an area, we understand that we have competition,” Wegmans spokes-woman Jeanne Colleluori said. “But we keep our heads down and focus on what our strengths are: Customer service and we make sure that our employees are armed with all the knowledge that they need.”

Ventures such as farmers mar-kets, community-shared agri-culture (CSA) and buyers club programs can be credited with the shifting consumer prefer-ences. It began as a grass-roots movement desiring food that was of a higher quality and less industrial than what was avail-able on most grocery-store shelves.

THE CHANGING FACE OF THE SUPERMARKET BUSINESS


Stories by Chris Weeden

Illustration by Don Lee

In an Amazon.com world where people can shop for any-

thing and have it arrive on their doorstep within days, grocery shop-ping is fashioning itself in the same

mold. One of Giant’s sister compa-nies, Peapod, allows registered

users to shop a catalog of items and have these items shipped to their doorstep.

This is convenient for a num-ber of reasons. For many people,

it avoids the headaches of grocery shopping including tra!c jams and checkout lines and everything in between. According to a 2003 report by the Population Reference Bureau, traditional families represented only seven percent of the population, while

two-income families more than doubled it at 16 percent. In an era when both parents are working, often full-time, they simply don’t

have the time to juggle such chores, and this service fits that niche.

Giant did not have the statistics for volume of people utilizing these services, but in 2008, the Internet

Retailer Top 500 Guide reported that the Chicago-based firm grossed $378 million. Just last month, it announced that it was launching 100 new virtual grocery stores along com-muter rail stations in Philadelphia, Boston, Con-necticut, New York, Washington, D.C., and Chicago.

According to a June 14 report by Internet Retailer, Peapod launched

a trial of this service in Philadelphia along 15 commuter lines, allowing commuters to utilize their smart phones to scan items, creating shop-ping lists. Although it sounds for-eign, 90 percent of those who tried it returned for a second use during the 12-week span. A mobile app will further make it easier to shop for gro-ceries from the comfort of wherever you are.

Giant’s role in the marketplace may not generate the same fervor as its competitors from out of state upon entry, but it is poised to remain a player indefinitely due to its own strat-egies. The third-largest chain region-ally o"ers shopping solutions kiosks to expedite the in-store experience. They perform a number of functions including allowing customers to place deli orders as they walk into the store and pick them up prior to checkout. Technologically inclined customers can avoid them altogether. Hand-held scanners available at entrances make it possible to avoid lines during an entire visit.

“Supermarket technology is some-thing we approach from a sense of

innovation for something to enhance the customer experience,” Mr. Brand said. “There are some customers that prefer self-checkout because they like having control over the transaction. Some prefer interaction. It o"ers more options.”

When converting the 15 Genuardi’s stores, Giant needed to ensure that it could make the enhancements both aesthetically and technologically that were required to maintain brand con-tinuity. More than a facelift, it required an overhaul.

As the older regional chains declined, such tools were not imple-mented. An evident dichotomy emerges when perusing the websites of Wegman’s, ShopRite, Trader Joe’s or Giant versus those owned by A&P (Pathmark, Superfresh) or SUPER-VALU’s ACME. The latter’s designs are archaically unappealing and dif-ficult to navigate.

Looks aside, most are adding tools online. At Wegmans.com, once you select a store, you can find the aisle location of a particular item. Virtu-ally all of them allow users to generate shopping lists with several empower-

ing customers to load coupons directly onto bonus cards. Giant, Weg-man’s, Shop-Rite, ACME and Whole Foods Mar-kets all have applications available on the Apple Store with various levels of func-tionality.

BY THE NUMBERS

Biggest seller in PhiladelphiaKeasbey, N.J.-based Shoprite is the region’s top chain in terms of sales.

45Number of ShopRite stores

in Philadelphia area.

$1.85BShopRite sales for the first

half of 2012 nationwide.

23.4%ShopRite’s market share in

the Philadelphia market.

$41MSales per store average for

ShopRite nationwide.

Carlisle, Pa-based Giant Food is second in the region.

48Number of Giant stores in

the Philadelphia area.

$1.77B Sales for first half of year.

22.3%Giant’s market share in the

Philadelphia region.

15Genuardi’s stores acquired

by Giant this year.

Grocery Stores Grapple With Online Demand


As food and health education progress to the front of public consciousness, these small-scale operations continue to thrive.

Demise of the local mainstays

The family-owned Genuardi’s chain was sold to Safeway in 2000. Facing debt and dissatisfied investors, it sold 16 stores to Giant January 5 but the Federal Trade Commission intervened citing lack of competition, so Giant agreed to sell the Newton store to McCa!rey’s.

Throughout June and July, the 15 Genuardi’s stores that Giant added were closed and rebranded, but the future of the remaining eight stores remained less certain as Safeway attempted to secure an owner in an attempt to leave the Philadel-phia market.

Unable to find an investor, the Egg Harbor and Barnegat township stores will close by the year’s end resulting in the loss of 150 jobs, according to an October 17 Press of Atlantic City article. They join stores in Exton, Je!ersonville and Cherry Hill in shutting their doors. Weis obtained locations in Conshohocken, Doylestown and East Norriton. Only two Genuardi’s remain, in Audobon and Marlton, N.J.

ACME, according to last year’s figures, was the No. 2 grocer generating $1.57 bil-lion in sales for a market share of 10.56 percent among its 69 regional stores, but its future is decisively bleak. Owned by Eden-Prairie, Minn.-based SUPERVALU, a September announcement revealed that stores in Sharon Hill, Glassboro and Morrisville will close. This announcement followed a similarly dire declaration in January closing two Pennsylvania stores and three in New Jersey. Seven facilities ceased operations in 2011.

In 2010, A&P filed for Chapter 11 bank-ruptcy, and the NJ-based company closed seven-area stores last year. Super Fresh had purchased a struggling Pathmark in 2007, and by the time it filed for bankruptcy, the debt total neared $1 million.

According to its brands’ websites, there are a combined 42 locations of the stores within 30 miles of Philadelphia: 25 Path-mark and 17 Super Fresh. Just one opened last year, with a Super Fresh debuting in the city neighborhood of Northern Liber-ties.

It is not all gloom, however. ShopRite grossed the largest revenue in the region in 2011 at $1.7 billion between its 43 stores. Privately held by Wakefern in Keasbey, N.J., individual stores are independently owned, which allows them to be adaptive

in the market place. The chain surpassed ACME for the first time last year.

Giant Food Stores was No. 3 in 2011 and certainly passed ACME because of ACME’s store closing and the acquisition of Genu-ardi’s. ShopRite and Giant represent the longest-tenured, thriving food stores in the region.

The corollary between the fall of afore-mentioned grocers and the rise of those coming to the area reveals itself in this year’s Consumer Reports rating 52 of the country’s most popular chains. Rankings were obtained by feedback provided from more than 24,000 customers and 42,000 visits with an evaluative formula utilizing frustrations caused by parking, customer service, checkout speed and food quality, among others, as a gauge of customer satisfaction.

Philadelphia-area chains exposed them-selves for their own vulnerability. Pathmark, while recouping from bankruptcy under A&P ownership, rated an industry worst as Weg-mans logged first for the third straight year. Between them, local companies var-ied, but they were mostly disappointing. ShopRite came in 24th.

Privately-held Wegmans operates five of its supermar-kets in the Philadelphia area. The opening of the King of Prussia store in May and a Montgomeryville location in the imminent future promises greater sales figures. In 2011, with King of Prussia still under construction, the mega-super-market held a 2.54 percent market share and ranked 13th in revenue.

Wegmans, with its massive, diverse selection, offers qual-ity ingredients to suit di!erent tastes, from the price-conscious customers to the “foodies” who yearn for high-quality ingredi-ents necessary to make the next big dish. In the Malvern, Colleg-eville and King of Prussia stores, customers can visit fully serviced Irish-themed pubs. Another one

will open in the Allentown store in sum-mer 2013.

Wal-Mart, the country’s largest grocer, focuses on sales to attract its buyers. Weg-mans strives for always being a!ordable but does o!er adjustments on common items as their demand fluctuates through-

out the year. The emphasis is val-ue, according to Ms. Colleluori.

“We focus on our consistent, low pricing,” she said. It was a phrase she would utilize frequently during a phone interview. “Each season for the last few seasons, we have been identifying products people are buying most often on their visit to the store. They can buy it when they need it because they know

the price is going to be consistent from week to week.

“It varies from season to season,

depend-ing on

BY THE NUMBERS

At the high endAlthough they have fewer stores in the region, Whole Foods Markets and Wegmans generate huge sales in the region.

6Wegmans ranking in the region in terms of sales.

6Number of Wegmans stores

in the region, the fewest stores among chains in the region’s top 10 in terms of

sales.

$380MWegmans sales for the first


4.79%Wegmans market share in the Philadelphia market.

$63MSales per store average for

Wegmans nationwide.

125,000Square feet in an average

Wegmans store.

EACH SEASON FOR THE LAST FEW SEASONS, WE HAVE BEEN IDENTIFYING PRODUCTS PEOPLE ARE BUYING MOST OFTEN ON THEIR VISIT TO THE STORE.’—JEANNE COLLELUORI, WEGMANS


what people feel customers are going to be looking for. [At this time of year], cold and flu medications are going to be on the list. In the summer, you’re going to see produce items and we are going to try to have cer-tain meat items on there to help families get those meals on the table.”

The pitfall of many within the industry has been unsuccessful mergers and acqui-sitions, as when Pathmark was purchased by A&P and SUPERVALU’s stewardship of ACME. Giant, meanwhile must cope with such a transition with the purchase of Genuardi’s, and in doing so, it is rely-ing heavily on its experience locally having formed in Carlisle in 1923.

“Giant is going to be celebrating its 90th anniversary next year,” said Chris Brand, manager of public relations. “Our customers are very responsive to our value equation, which many customers might recognize as quality selection and savings every day. We believe in that approach. We are very fortunate to have a good associate base.”

Thirty-one thousand workers includes 1,700 former Genuardi’s employees that remained with the company.

While Giant needed to rebrand 15 stores and update facilities, Wegmans growth requires a di!erent approach often because of the scale of the operation. The square footage cannot be merely reconfig-ured when the stores are often twice the size of most supermarkets. Balancing such a large, diverse operation forces manage-ment to undertake special measures pro-tecting the integrity of the brand. It does so by having employees of other stores train the new ones in opening markets.

“We focus on our employees,” Ms. Col-leluori said. “Our best investment is our employees, whether it’s training or pro-viding support. It will make the customer experience better.”

Another Wegmans store is opening in Montgomeryville o! of Rt. 309 in the site of a closed Boscov’s at North Wales Road with opening slated for next year.

Trader Joe’s rates nearly as high in the latest Consumer Reports as Wegmans, but the scale of its operations pales in comparison by design. While Wegmans can feel large and overwhelming for the uninitiated or the impatient, Trader Joe’s is small, dynamic and adaptive. At checkout, the carts are handed to the cashier instead of unloaded down a conveyor belt, prompt-ing person-to-person interaction with the intention of resembling a farmer’s market.

The high-end supermarket carousel only gets more complicated. Whole Food Mar-kets just opened a Glen Mills location in

March, an area with a real dearth of a qual-ity large-scale grocery stores compared to neighboring communities. It joined nine other area locations with two in Philadel-phia (South Street and Callowhill), five in the Pennsylvania suburbs (North Whales, Devon, Plymouth Meeting, Jenkintown and Wynnewood) and two in New Jersey (Marlton and Princeton).

On November 7, the Austin-based com-pany announced it will leave Callowhill by 2017 and all indications, despite the hush-hush, are that it will relocate to Center City and become the second-largest store in the area, housing 15,000 square feet of addi-tional retail space and four or five stories of at least 250 apartment buildings above it.

Combating Globalism with Hyper Localism

The advent of the counter-consumerism compounded with greater food education awareness is revolutionizing how consum-ers obtain their food. Frustrated by the one-stop, impersonal model o!ered by Wal-Mart and others, many shoppers have opted for farmers markets, community-shared agriculture groups (CSAs) or buy-ers clubs, avoiding retailers all together.

The popularity of these emerging enti-ties represents a national trend. Many are opting to make the e!orts to make sure it stays within their community. They are also combing for new buying experiences that differentiate themselves from the hordes in supermarket lines.

Tracking data is di"cult because of frag-mentation, but one of the major outfits in the region is Farm to City, which brings 17 di!erent farmers markets together and generates revenue through three di!erent means.

First, it charges farmers space at these markets and then there is a small mark-up on food sold to its winter harvest buying club. It also earns a commission for the customers it refers to di!erent farmers’ CSAs and buyers clubs through FarmToC-ity.org.

CSAs are agreements between the farm-ers and the consumers prior to a season for how much food they are going to purchase. At certain times in the week or month, that consumer picks up the food at a designated location. Often if a certain threshold is reached, it will be delivered, otherwise it must be picked up. Deliveries are often option for o"ces where co-workers sign up and split the food packages among themselves. Quantities and items are not determined by the purchaser but by the farmer’s available crop.

In buying clubs customers pay as they purchase. In this arrangement, customers are more in control of the quantities and types of produce, meat, cheeses, etc., that they receive.

Through these di!erent ventures, Har-vest to City estimates that it will generate $3 million this year with $2 million from the farmers markets. The additional $1 million comes from its commissions from CSAs and buyers clubs as well as its own winter harvest buyers club, which is in its 13th year.

Bob Pierson, the company’s founder and co-director, was first motivated by a trip to Italy in the 1960s where he saw the pride people had in the hand-picked ingredients they picked. In the early 1990s, he set up two markets in Philadelphia, which led to a job with the Food Trust in 1996 before separating and forming Farm to City in 2000.

The scope of expansion has been breath-taking. In his first year at Food Trust with seven markets, the farmers made $40,000. When he started Farm to City over a 12 years ago, its inaugural take was $160,000. While he expects to surpass his 17 farmers markets to generate $2 million in 2012, he said Food Trust with 30-plus markets is still the larger entity and estimates its earnings to be between $2-3 million annu-ally. Pooled together, the two farmers mar-kets account for 125 times more business than in 1996.

“Fifty-eighty percent of people find out about it by seeing it or hearing about it,” Mr. Pierson said. “It has its own momen-tum.”

Often, he said, farmers are empowered to sell directly to restaurants, enabling them to develop long-term partnerships that guarantee business throughout the year and regardless of seasonal production capabilities.

But they are not reaching everyone. Farmers markets don’t work in low-income communities, Mr. Pierson said. Farmers are not available to fetch the high-est price for their goods. By appealing to the wealthy, middle-aged demographic at the height of their careers and cutting out the middlemen, entrepreneurial produc-ers hand-pick who they sell to in order to guarantee profitability.

Mr. Pierson cites one large-scale orchards in favor of a smaller farm because he was able to make just as much money.

“They’ve totally changed their cropping systems and what they grow,” Mr. Pierson said. “Orchards don’t have to grow as many acres if they’re selling it at retail. They don’t have to raise the same amount of apples to

BY THE NUMBERS

At the high endAlthough they have fewer stores in the region, Whole Foods Markets and Wegmans generate huge sales in the region.

8Whole Foods Market ranking

in the region in terms of sales.

9Number of Whole Foods

Market stores in the region, the second-fewest stores

among chains in the region’s top 10 in terms of sales.

$270.9MWhole Foods Market’s sales

for the first half of 2012 nationwide.

3.41%Whole Foods Market’s

market share in the Philadelphia market.

264Whole Foods Market’s rank in the Fortune 500. It is the

eighth largest food and drug chain in the country.


make the same amount of money.”

Community-shared agri-culture has become popular as well. Little formal stud-ies have been commis-sioned researching these ventures, but according to a 2002 national report by the University Massa-chusetts-Amherst and the University of Wisconsin Community Supported Agriculture Entering the 21st Century: Results from the 2001 National Survey, they have proved profitable for the farms.

Three hundred CSA farms from across 43 states responded to a mail survey with results yielding that the farmers are signifi-cantly younger than the national average of the rest of industry and that once they begin the program, they stick with it.

Fifty-one percent of farmers were 45 years old or younger, while just 27 percent of the agricultural industry occupied that demographic. Only 12.5 percent of farm-ers were more than 55 while nation-wide, that represents nearly half (48.8 percent) the workforce. While CSAs comprised just part of the revenue, 94.1 percent planned to continue their involvement in the pro-grams.

They tend to be progressive and well-educated. Farming represents just part of their income with 74 percent holding at least a bachelor’s degree with 23 per-cent boasting completed graduate work. Ninety-six percent of the farms practiced sustainable techniques, whether organic or biodynamic production, targeting custom-ers seeking fresh products without preser-vatives or pesticides.

Harvest Local Foods has been a player serving as a buyers club since 2006 and plans to reach a half-million dollars annu-ally either in 2012 or next year. Harvest Local Foods works with 60 farmers and food artisans delivering 120 packages a week.

Although they did not know each other, co-founders Mary Ann Ford and Pam Nel-son had a vision for a company that filled a void in the market place. Farmers markets and community-shared agriculture initia-tives have reinvigorated the local farming scene, but both had their holes, Ms. Ford said.

Farmers markets offer a communal space where buyers can select their quan-tities, but she felt that markets like those in Center City were sometimes avoided

because of parking and other di!culties. Community-shared agriculture offered food delivery, but many were turned o" by inconsistency and lack of selectivity in the CSAs; occasionally the packages contained great products, other times, the variety was weak or less desirable.

Harvest Local Foods allows members to select quantities of 250 products ranging from pasture-raised meats, fish, produce, dairy, breads, soups and salads, all of which is organically and sustainably procured. Ms. Ford said her company experienced 10-15 percent growth its first four years. Its pace has slowed with the stagnating of the economy. Headquartered in Lansdowne, Harvest Local Food operates within a 50-mile radius, but half of its $500k reve-nue comes from deliveries in Philadelphia.

“It’s incredibly gratifying,” she said. “We got Best of Philly for grocery delivery ser-vice. We’ve gotten other awards too where we’ve seen testimonials from customers. People are excited about being able to get this kind of food and be a part of this kind of undertaking.”

As they come back from economic woes, Philadelphia’s neighborhoods are not yet ready for farmers markets because there is not enough of a presence of this demo-graphic.

This younger, post-college demographic does not purchase foods at enough of a quantity to justify it. Young, single people are more prone to go out to eat. Mr. Pier-son said Farm to City’s prime demographic is females between 35-55 years old.

However, for Ms. Ford, whose business lends itself to people on the go, Harvest Local Foods works perfectly, and she said

she has many customers in these areas that are coming back, noting that in several condominiums, an initial buy results in growth within that building. Such referral mar-keting has been the primary engine of growth. Relying very little on print advertising, her main advertising is her website.

The dynamic space requires consistent updates. On Har-vestLocalFoods.com, you can submit orders, read bios on several of the 60 farms and food artisans being used at the moment, sign up for the

newsletter, obtain recipes and obtain that week’s specials. A blog is also maintained, although it is updated sporadically.

“[Growth] is basically word of mouth,” she said. “We don’t spend a lot on adver-tising. It’s a pretty expensive website and we try to keep up with the social media, so we have a pretty strong web presence — not great, could be better — and very little print. We do attend events occasionally and we do participate in the Landsdowne Farmers Market.”

Landsdowne Farmers Market is a part of the Food Trust network and one of its seven suburban markets. It operates 26 within Philadelphia.

Pushback from the Chains

The emergent market for local, organic products forced the larger retailers to respond, and perhaps nobody has done it as well on such a scale as Giant in this area. While others have roots in nearby states such as New Jersey and New York, Giant’s Pennsylvania roots serve it well, winning multiple awards.

Giant opened in 1923 as the Carlisle Meat Market and was an initial member of the PA Preferred Program developed by the Department of Agriculture. Its goal is to ensure that local product is used through-out the state rather than have it brought in from elsewhere. Agriculture is the state’s largest industry at $5.1 billion annually, according to the program’s website. This involves retailers, food service agencies and others committing to the cause.

Upon the formation of the endeavor in January 2004, Giant earned immedi-ate recognition. It claimed the 2006 PA Preferred Retailer of the Year Award, the inaugural year for the honor, and owns the 2008 Leadership Award for Excellence in Agriculture.

If any chain attempts to usurp Giant’s

BY THE NUMBERS

Local playersHorsham-based Thriftway/Shop N Bag and Reading-based Redner’s Warehouse Markets are in the region’s top 10 in sales.

10Thriftway/Shop N Bag’s

ranking in the region in terms of sales.

17Number of Thriftway/Shop N

Bag stores in the region.

$185.5MThriftway/Shop N Bag’s sales for the first half of

2012 nationwide.

2.34%Thriftway/Shop N Bag’s

market share in the Philadelphia market.

9Redner’s ranking in the

region in terms of sales.

12Number of Redner’s stores

in the region.

$263.5MRedner’s sales for the first


3.32%Redner’s marke tshare in the

Philadelphia market.

Americans spent more than $584 billion in

supermarkets in 2011.


role, it must cultivate relationships with farmers in the state. Sixty percent of the product must be grown, harvested or manufactured in the state. Giant cur-rently has PA Preferred racks designated by stickers, said Mr. Brand. Currently, more than 30 farms comprise Giant’s Pennsylvania supply.

Its organic section has grown as well. In 2005, it opened Nature’s Promise Mar-ketplace, which represents more than 800 natural, organic products. It began in the Camp Hill and has extended into other locations.

“It is a health food store within a store,” Mr. Brand said. “We’re also committed to products that are in need of a special diet.”

He added that other sections have grown. This includes gluten-free choices and other requirements dictated either by health conditions or lifestyle choices made by consumers.

Wegmans has long utilized local farm-ing and its organic section spans many aisles, like Nature’s Promise Marketplace It also formulated its supply chain to

include fresh product, whether it’s pro-duce, meat, dairy or other goods.

“We have worked with local growers in all of our markets for decades,” Ms. Colleluori said. “They deliver directly to the stores. In the growing season, it’s not unusual to have product that was picked fresh that morning. It’s one of the great benefits that we can o!er our customers.”

A&P, emerging from bankruptcy, announced on August 30 that it and BrightFarms reached an agreement to use a 500,000 square-foot Yardley facility to grow produce from under the Superfresh banner as an exclusive retailer. They broke ground during the summer and plan to harvest by the end of the year.

According to BrightFarms’ web site, McCa!rey’s, which purchased the New-ton Genuardi’s, and Jon Vena, Inc., will also procure lettuce, herbs and tomatoes from the greenhouse.

Even with the best of intentions, these relationships sometimes go awry, said Mr. Pierson. One of the great benefits o!ered by Whole Foods on South Street

was to allow local farmers to come and sell outside of its store. From the perspec-tive of the farmers, the results were mixed. Confused customers still went inside to locate items that were available in stands by the entrance.

Whole Foods Markets, he says, still has to depend on items that come from out-side of the region when they are unavail-able locally often because they are out of growing season. While it may not be intentional, it creates inadvertent buyer practices. Larger chains create signage for what they have obtained regionally, but it may not be clear unless the customer is specifically looking for it.

“Every time I check in Whole Foods, they say that they are local, but maybe 10 out of 100 items are identified as being from local farms,” he said.

Still, these large chains are doing the best with what they can. They are expect-ed to have everything because of their size. Their role as industry leaders creates parallel growth with the farmers markets because of the scales of the exposure they

are able to generate.“People that shop there are conscious

of their health and taste, and they want high value from what they are getting,” Mr. Pierson said. “It’s friendly with their hours, far more than farmers markets. It’s traveling the same direction as the local food movement.”

As small business such as Harvest Local Foods aspires to grow, the obstacles are part of the process. The larger chains are now creating the demand, and they both grow consumer tastes evolve.

“It’s creating an awareness of the food system and what the consequences are when they’re eating industrially processed foods,” Ms. Ford said. “My children are grown, but in terms of this business, I was just realizing how it is like raising a child. It is a long-term undertaking but there’s always a new challenge and something else to learn.

“Being a part of this movement and connecting with our colleagues who are doing this in Philadelphia is great. I wouldn’t do anything else.”

RegionsBusiness.com

Philadelphia, 24/7


Developers Betting Big on PhiladelphiaDevelopers are scrambling in a competition over Philadelphia’s second

(and only available) casino license. November 15 was the deadline for developers to submit their proposals to the Pennsylvania Gaming Control Board. So far, at least six di! erent groups have showed an interest in gam-ing in the city.

The most elaborately-detailed plan, and concocted by the most high-profi le of Philadelphia developers, Bart Blatstein’s $700-million Provence would rest on the property of the former Daily News and Philadelphia Inquirer building, featuring French-inspired architecture, a 125-room hotel, a fi rst fl oor of restaurants and shop-ping, a luxury swimming pool, a nightclub and jazz club, a theater, a roof village and a more subdued second-fl oor casino.

Mr. Blatstein’s resort would join the transformation of the Divine Lorraine Hotel and construction e! orts from Tem-ple to jolt the area of North Broad Street back to life.

The Goldenberg Group, of Blue Bell, Pa., proposed building on the site of a surface parking lot at 8th and Market Streets, according to the Daily News.

The Philadelphia-based Parkway Corporation has fi led an impact report with the city at its main headquarters at Broad and Race Streets, according to the Daily News.

Greenwood Gaming and Entertainment Inc. and The Cordish Companies — owners of Parx Casino and Maryland Live!, respectively — are looking to build a “Las Vegas quality” hotel and casino at 800 Packer Avenue, cur-rently the Stadium Holiday Inn.

The 200,000-square-foot site is expected to include 240 rooms; a casino fl oor with 125 table games and 2,000 slot machines and a parking garage consisting of 2,500 spaces.

Steve Wynn, chief executive of Wynn Resorts Ltd., has proposed a Delaware River-front casino resort in a 60-acre Fishtown lot. It would boast a 300-room hotel with a 150,000-square-foot casino that would consist of 2,500 slot machines and 100 table games.

Rep. Bob Brady proposed a massive, 5,000-slot-machine casino with a nightclub and 300-room hotel that the represen-tative believes could generate $40 to $50 million per year and, in turn, contribute to the fi nancing of the struggling Philadel-phia School District.

The casino would be located in South Philadelphia at the still-city-owned, 30-acre lot of the Food Distribution Center.

Rep. Brady’s proposal will not be submitted to the state by Thursday’s deadline.

Penn National Gaming, which runs a casino near Harrisburg, submitted an impact report with the city for a site at 7th Street and Packer Avenue in South Philly, according to the Daily News.


Kane Victory Did Not Come On President’s Coattails

Sometimes row o!ce candidates rely on the top of the ticket to carry them to a win. They tend to be lesser known than, say, the presidential candidates, and count on riding their party’s coattails.

Not Kathleen Kane.She made history twice on Tuesday

when she became the first Democrat and first woman elected Pa. Attorney General. She achieved a fairly impressive perfor-mance across the state.

The map above compares her win mar-gin to that of President Obama. Presi-dent Obama won the state by 5.2 points, 52 percent to 46.8 percent for Mitt Rom-ney. Ms. Kane won by 14.5 points, 56.1 percent to 41.6 percent for Dave Freed.

On election night she exceeded the president’s performance in eastern Pa. and showed none of his weakness in western Pennsylvania

The map below shows how Kane did

compared to another AG hopeful back in 2004. Tom Corbett was running alongside President George W. Bush’s re-election e"ort, which turned out to be the best GOP performance since 1988.

This map below shows Ms. Kane’s 2012 vote share compared to Mr. Corbett’s in 2004. Many of the di"erences reflect Pennsylvania’s basic red-v-blue county dynamic. But Centre County is worth a special look. Ms. Kane campaigned on criticism of Mr. Corbett’s handling of the Jerry Sandusky case and turned the AG contest into a referendum on the inves-tigation.

In the epicenter of Nittany Nation, which Mr. Corbett won by 8 points in ‘04, Ms. Kane won by 17 points this year — a 25 point swing.

She also outperformed his vote share there during the 2010 gubernatorial campaign, by 2 points).

— PoliticsPA.com

Pennsylvania Senate

Pennsylvania Auditor General

Pennsylvania Treasurer

Despite being outspent, Sen. Bob Casey outperformed President Barack Obama sig-nificantly — and not just in western Pa. where the president is weak. President Obama cleared Mitt Romney by 5.2 percent statewide; Sen. Casey beat Tom Smith by 9.1 points.

With little money spent, the York County state representative rode the president’s coattails to a win on Tuesday over GOP colleague John Maher from Allegheny County. He won by a relatively tight 3.2 percent margin.

Rob McCord was an incumbent, and he spent hundreds of thousands on a steady TV presence, making a di"erence in the Pittsburgh, Johnstown and Scranton mar-kets. Statewide, he won by 8.6 percent. He even outperformed the president in his opponent Diana Irey Vaughan’s home County of Washington.

2012ELECTION


IDEAS

How to Attack Those Unpleasant TasksIn the sixties, a psychologist

named David Premack confirmed something that at first blush sounds pretty “NS, Sherlock!’: if you make pleasant things con-tingent upon doing unpleasant things, there's a better chance the unpleasant things will get done.

Premack proved this with stud-ies on cebus monkeys and small children (although, sadly, not together), and so the phenom-enon got his name: the Premack Principle.

If you're a parent, you likely put this principle to work all the time. “Yes, you can play Xbox if you finish your homework.” The promise of Assassin's Creed drives the behavior of toughing out some trigonometry.

All well and good. But what do you do when you don't have any parents?

I don't mean that in a literal,

Oliver Twist way. I mean it in a lonely-at-the-top way (i.e. when you're the boss).

Although even the highest falu-tin' of us have an overseer some-where (e.g., a board of directors) to spur us generally, the challenge of being a leader for a lot of execs is finding ways to motivate your-self day to day, especially around the unpleasant tasks — small and large — of your particular biz.

This is where you can put Premack to work for you person-ally.

The first step is to identify what a reward is to you. You should literally make a list. If my four year-old son were doing this exercise, it would be a short list: gummy bears and the iPad. With a pound of gummy bears and a fully charged iPad I'm pretty sure I could get him to do my taxes.

Your gummy bears might be as

simple as checking your Fantasy Football stats or running to Star-bucks. But the key is in the sim-plicity: make these doable, daily things that you know make you feel good. (One caveat: be careful your small rewards aren't laced. If “quickly” checking eBay for art glass to bid on can too easily turn into an hour of online shopping, that's not a gummy bear, it's a crack pipe.)

Once you have your Gummy Bears List — and it could be 20 or 30 items long — keep it handy on your desk or iPhone. You'll use it as a reference source. Now make your E! Me List (things that when you contemplate having to do, make you go, “Oh, E! me!”).

The E! Me List can be general — weekly one-on-ones, for exam-ple. But optimally, compiling it is as easy as highlighting the things on each daily To Do list that you

find repellent. With your E! Me List identi-

fied, shu"e in items from your Gummy Bear list after each one. At first, this may feel a tad juve-nile, but you'll be amazed at how e!ective it is. All those small, real rewards will keep your wheels of productivity greased all day long.

And it will only get easier. Because here's the interesting thing about Premack's Principle: the more you use dopamine-inducing behavior to reinforce behavior that's less likely to hap-pen on its own, the more likely that not-so-likely behavior gets over time.

So while sorting your T&E receipts will never exactly give you a contact high, paired constantly with fifteen minutes of crossword puzzling, you may almost find yourself looking forward to it.

Brian Farnham was the founding Editor-in-Chief of Patch.com, where he remains on the advisory board.

CONTRIBUTE



MELANIE JOHNSON’S

MARATHON The Executive Director of the Philadelphia Marathon is prepared to showcase the best that the city she loves has to o! er when runners take their mark this weekend.WEEKEND

What’s the elevator pitch for the Philadelphia Marathon?

It’s one of the best marathons in the country. We like to say we treat the whole runner, and we show you our city. We have a whole expo dedi-cated to the City of Philadelphia that shows you not just what you can do as a runner, but also as a visitor.

One thing I’ve learned is runners rarely, if ever, run alone. You’re com-ing with your spouse, your child, your friend, and we have something for all of them.

Runners also frequently have their best times on our course.

What kind of response have you gotten from New York Marathon runners?

It goes back to Philly being the best host city. When we heard what had happened to our neighbor — and New York City is our neighbor — we thought about what we could do to help. Then we had to make sure we could handle it. We also had to make sure it would not impact the other runners.

[Registration for] the race has closed November 1. We opened 3,000 spots [for runners who had signed up for the New York Mara-thon]. We didn’t think we’d get 3,000. We got 1,460.

We’re encouraging our New York runners to wear their New York Marathon shirts for the race as a sign of unity.

How did you get involved with the Marathon?

I fell into it unexpectedly. In 2008 I was working for a candidate for mayor. He won, and he appointed me representative for the City of Philadelphia. Someone came to me after I started and told me that in two weeks we’d be going to California for a conference. I asked, “Why?” She said, “Did nobody tell you? You’re the executive director of the Philadelphia Marathon.” I ran track in high school, but marathons? I watch that in the Olympics. So I really had to learn from the ground up. What I did know was marketing.

When I came in, we had 16,000 runners, and we’ve added 2,000 runners every year. This year we have more than 28,000 runners.

What does the marathon mean for the city in terms of tourism?

In 2011, about 21,000 runners came for the race and 55 percent stayed in hotels. Thirty-two percent of them said they were likely to return to the city for a vacation in the next 12 months.

I love my city. My team loves this city, and I use that love and dedica-tion to the city and this marathon to showcase it.

— Photo courtesy of the City of Philadelphia

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Harrisburg is broke. Literally.So are 26 other cities across the common-

wealth that are stuck in the state's Act 47 program for financially strapped municipali-ties. Many enter in — like Pittsburgh — but very few ever get out. And many more cities are likely to join them in the near future.

While the stories of urban fiscal decline may be unique, the underlying causes of municipal decay are generally the same: toxic combinations of underperforming schools, violent crime, relentless govern-ment unions, outmigration of middle and high income earners, inhospitable business taxes and regulations, woefully underfunded pensions and major financial blunders.

But in every Act 47 case, a common destructive denominator is present: govern-ment unions insisting on higher salaries and costly benefits regardless of a city's ability to pay. Years ago, Scranton tried to renegotiate union contracts, but instead, courts ordered the city to give workers bonuses and raises. Last month, Democrat Mayor Chris Doherty took the desperate measure of cutting all city employees' pay to minimum wage to demonstrate the city's dire financial distress. The unions, of course, took him to court.

In Harrisburg, government employee unions refuse to surrender any ground to help America's most indebted city. And recently, a state court ruled that the mayor and city council must double the local earned income tax in order to pay, in part,

the salaries, pensions, and health care for the city's unionized employees.

In city after city, local elected o!cials — mostly Democrats — are complaining that state law and court rulings have so tipped the balance of power to organized labor that just personnel costs, especially pensions, threaten to bankrupt local governments. While government employees themselves are certainly not to blame for the financial blunders of mayors and city councils, the reality is that the taxpayers cannot keep all of the promises made by politicians to union bosses at the bargaining table.

What these city o!cials are experiencing is why President Franklin Delano Roosevelt — no enemy of organized labor — adamant-ly opposed giving government employees the ability to unionize and collectively bargain with politicians. He understood that once union bosses gained the power to hire and fire the very people they negotiate contracts with, the taxpayers would be victimized. And this is precisely what is happening across Pennsylvania, not only in our cities but particularly in our public schools.

Of course, taxpayers can appreciate government employees and teachers without loving their unions. But unless we address the unfair and una"ordable labor policies and practices, the inevitable end will benefit neither government employees nor taxpay-ers.

In short, cities must cut their spending.

Raising taxes and borrowing more money will only exacerbate the problem. Real solu-tions will require the state legislature and local o!cials to work together and change state laws to give municipalities the ability to control una"ordable and unsustainable personnel costs. Reforms like 401(k)-style retirement plans instead of defined-benefit (guaranteed government income for life) pensions, ending prevailing wage laws that unnecessarily inflate the cost of construc-tion projects, and privatizing functions that should be left to the private sector will help save our cities.

What won't work is increasing taxes and going further into debt. Such "solutions" will do more to aggravate a city's financial woes than ameliorate them. Most cities already have exorbitant taxes and burdensome debt, and when you add in crummy schools and shoddy public services, you can understand why higher income families fled to the sub-urbs years ago. Further increasing the cost to live or work in a city will only encourage another mass exodus and discourage future investment.

Cities will ultimately have to save them-selves from those who benefit when govern-ments spend too much. This will happen only when city o!cials — and state lawmak-ers — are willing to confront the govern-ment union bosses and their una"ordable and unsustainable demands on the taxpayer.

Matthew J. Brouillette is President & CEO of The Commonwealth Foundation. Find out more at CommonwealthFoundation.org.

Bankrupt Cities Must Save Themselves

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OPINION

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VALLEY FORGE CONVENTION AND VISITORS BUREAU

President Stepping Down After 10 Years With Bureau

The Valley Forge Con-vention and Visitors Bureau’s longtime presi-dent will step down after March.

Paul Decker has led CVB since 1992, through the conversion from a 12-employee government agency with a $1.5 million budget into a 21-employee

nonprofit, member-based organization with a bud-get of $4 million.

Today, the CVB pro-motes the Valley Forge area and Montgomery County as a convention site and leisure destina-tion, handling sales and marketing for its 500 member organizations.

PHILADELPHIA-ISRAEL CHAMBER OF COMMERCE

Chamber Undergoes Name ChangeThe America-Israel Chamber of Commerce, Central

Atlantic Region is now known as the Philadelphia-Israel Chamber of Commerce (PICC).

The name, followed by “PA, NJ, DE,” was adopted to make the connection between Israel and Philadelphia explicit.

GREATER PHILADELPHIA ALLIANCE FOR CAPITAL AND TECHNOLOGIES

More than 800 investors and entrepreneurs gathered last week at the Center City Ritz-Carlton hotel to pitch their young businesses or consider investment opportunities as part of the East Coast’s oldest venture conference.

IMPACT 2012 Venture Sum-mit Mid-Atlantic — “the marquee networking event in the city” — has gone by di!erent names over its 20-plus-year existence, but the mis-sion has always been the same, and it has brought billions of dollars of venture funding to the region over the years.

Between Mayor Michael Nutter and the strong university scene in

this city, Philadelphia has the right ingredients to continue to improve its rank among entrepreneur-friendly cities in the United States, said Emily Mendell of the National Venture Capital Association.

Venture capital statistics are improving, albeit slowly, from recent years.

“Venture capitalists are optimistic by nature, and the [NVCA] chooses to be optimistic as well,” she said.

IMPACT 2012 Draws Hundreds of Investors, Entrepreneurs

IMPACT 2012 Venture Summit Mid-Atlantic attendees listen to Emily Mendell of the National Venture Capital Association November 8 at the Center City Ritz-Carlton. REGION’S BUSINESS PHOTO

Just when the investment world came to the conclusion that interest rates in the U.S. could not get any lower, the Federal Reserve, in reac-tion to lingering weak economic data, instituted a third round of quantitative easing measures that it hoped would keep rates very low for the foreseeable future. As has been the case with all of its major easing events since the financial crisis began in 2008, the medicine was e!ective and interest rates, at each tangent along the 30-year yield curve have remained at unprecedentedly low levels. It’s unfortunate that the artificially low interest rates have not done more to stimulate the economy.

One aspect of the economic stimulus that has been positive is that the resulting low interest rates have served to prop up U.S. equity markets and kept alive a more than 30-year bull market in bonds. Absent the stimulus the world’s economic problems would be significantly more problem-atic. The challenges in the eurozone are far from resolved. Growth in the major emerging market economies is decelerating, global corporate earn-ings are under increasing pressure and President Obama and Congress have yet to address the fiscal cli! stando!.

Yet there is reason for hope. Despite the fact that none of these factors would appear to be good for equities, the S&P 500 now stands just 10 percent from its all-time high. Such resiliency has to be at least in part, due to the fact that cash and investment quality bonds o!er investors such painfully low rates of return. In the search for investment return, stocks, particularly those that pay dividends, have become more or less the only game in town.

Without question, the Federal Reserve will alter its low interest rate policy sooner or later. The hope is that the change will be implemented as the result of an improving economy and a declining rate of unemployment. That last happened during the period from 2002-2006, when GDP grew from 1.8 percent to 2.7 percent, and the unem-ployment rate fell from 5.8 percent to 4.6 percent. The bond market sold o! during that span due to higher interest rates, but the stock market rallied.

A far less pleasant catalyst for a change in Federal Reserve policy would be the emergence of inflationary fears. The longer this era of easy money lasts the more likely a bubble will be formed that will require more aggressive action by the central bank. In this scenario, interest rates could move up suddenly and sharply and the damage done to all financial assets would be

severe. It is true that globalization has dampened the threat of a 1970’s style inflation cycle, but after many years of unprecedented stimulus it is dan-gerous to ignore the risk, especially in the event of significant weakness in the U.S. dollar. If the Fed has to adopt inflation fighting measures like it did in the 1970’s, stocks will be punished, but likely not as badly as bonds.

It is well understood that when the time comes for the Fed to allow interest rates to move higher they will attempt to do so deliberately and systematically. The performance of the financial markets will be heavily dependent on an orderly transition. If rates move up sharply as a result of detrimental economic forces, both stocks and bonds will decline sharply. If rates, on the other hand, increase moderately for what is perceived as a constructive reason, stocks and bonds could actually move in opposite directions. Imagine that. Bonds, which have been for so long the investment darling of many investors, would finally go out of style and stocks, which have been vilified by many investors since as far back as the technology crash in 2000, would take center stage. That would be a real game changer.


OPINION

Alan Mandeloff is a partner at Citrin Cooperman where he provides tax services, financial planning and investment advisory services for businesses and high net-worth individuals. Contact him at [email protected]

CONTRIBUTE


Peering At The Fiscal Cliff Through a Crystal Ball

OTHER VOICES

If the Budget Control Act (BCA) goes in to effect, financial markets will feel a major impact due to uncertainty and could resemble a fall similar to 2008. KENNETH WISENEFSKI

OWNER, WEBIMAX

The deal is bigger than the fiscal cliff. The same sort of give-and-take is needed for budget control over the long haul. If they can avoid the fiscal cliff, they can get on the road to further progress.

HENRY J. WATERS III

THE COLUMBIA DAILY TRIBUNE

12 NOVEMBER 2012

Going over the so-called fiscal cliff may, on the face of it, “improve” U.S. public finances, reduce the deficit and slow the rise of America’s debt mountain. But the fiscal cliff will not of itself solve America’s large and deep-seated financial problems.

SATYAJIT DAS

MARKETWATCH

13 NOVEMBER 2012

With the U.S. economy still struggling to crawl out of the economic downturn, it’s important to avoid policies that impede growth and investment. Allowing the nation to go over the fiscal cliff is not the right choice.

MATTHEW GLANS

THE HEARTLAND INSTITUTE

8 NOVEMBER 2012

The longer this era of easy money lasts the more likely a bubble

will be formed that will require more aggressive

action ...


Fiscal Cliff Demands Washington Change Politics As Usual

So much of politics today is about posturing and positioning more about what things look like than what they really are.

So in the aftermath of an elec-tion night that for Republicans can at best be described as disap-pointing and at worst described as a shellacking, one might have expected the GOP to emerge in a mood to compromise.

In the wake of the results, both Mitt Romney and President Obama at least made the polite gesture of suggesting that the two sides needed to work together to solve the signifi cant challenges facing the country.

But as discussion turned to the the upcoming “fi scal cli! ” - the common moniker attached to the combination of expiring Bush-era tax cuts and automatically trig-gered federal spending cuts - both parties retreated to well-worn positions that have repeatedly led to gridlock.

President Obama won the election and claims that the results meant that the American public endorsed his solution to the defi cit problem and the fi scal cli! . For his part, House leader John Boehner (R-Ohio) points out that Ameri-cans left Congress in the hands of the Republicans, so there is an endorsement of the GOP tactics.

It’s time to break that cycle.To President Obama falls the

responsibility of leadership and leadership from the front, not from behind. While winning a second term in the midst of an economic

slide certainly earns him some political capital, it does not, by any means, give him a blank check.

The president is charged with presenting a workable solution while showing the country that he understands that the country’s long-term economic health is tied directly to the ability of businesses to expand and grow.

Mr. Boehner and the rest of the GOP are not o! the hook.

Mr. Boehner is charged with being a counterbalance to the president. However, he is not charged with being a counter-weight. While not expected to lead the discussion, the GOP must be an active participant and bring to the table more than a “Just Say No” response. Instead, now is the time to press key points of the Repub-lican agenda aimed at helping to grow businesses.

Neither side needs to solve all the country’s problems during these negotiations. In fact, the most sensible approach would be to tighten tax loopholes and craft modest spending cuts in order to avert the fi scal cli! . This would be more than simply kicking the can down the road.

Rather, a well-negotiated short-term solution would set the stage for a more lengthy discussion on what the country really needs, namely, a streamlined tax code and system that aggressively rewards businesses for job creation and entrepreneurial tactics.

It’s time to lead, Mr. President.

REGION’S BUSINESSA JOURNAL OF BUSINESS AND POLITICS

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EDITORIAL BOARD

CEO and President James D. McDonaldEditorial Director Karl SmithAssociate Editor Terrence Casey

HOW TO CONTRIBUTE

To contribute, send comments, letters and essays to [email protected]. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

Petraeus Right To Step DownRetired Gen. David H. Petraeus made the right decision in resigning from his post as head of the CIA after admitting he had been involved in an extramarital affair.

If for no other reason, Petraeus needed to step down because, as his former Army spokesman, Steve Boylan, said, “He screwed up, he knows he screwed up; now he’s got to try to get past this with his family and heal.” PHILADELPHIA INQUIRER EDITORIAL,

13 NOVEMBER 2012

Brady’s Casino Idea a Bad BetRep. Bob Brady is pitching

an idea that the city take ownership of a second casino destined for Philadelphia. ... Brady should get credit for the kind of creative thinking that many call “out of the box.” But this one should stay in the box.

PHILADELPHIA DAILY NEWSEDITORIAL, 13 NOVEMBER 2012

GOP Needs to See Real ObamaNonsensical Tea Party rhetoric aside, Obama is a pragmatic centrist who would like some help fending off spendthrift nonsense from his left flank.

CHRIS SATULLO,WHYY’S NEWSWORKS

11 NOVEMBER 2012

Obama Didn’tWin a MandateObama would be foolish to assume a mandate to continue transforming America into a bankrupt

European-style, soft-socialist welfare state. During the campaign, only Gov. Mitt Romney addressed hard economic truths, but, to avoid politically damaging errors, offered few solutions to a voting public hungry for them.

JERRY SHENK, THE PATRIOT-NEWS10 NOVEMBER 2012

@DavidLimbaugh

This CANNOT STAND. This is NOT the America I grew up in. Romney got Zero votes in 59 Philadelphia voting divisions.

12 NOVEMBER 2012

COMMENTARY FROM ACROSS THE WEB

OPINION


BY THE NUMBERS

$82,000Salary for Pennsylvania lawmakers, second only

to California.

$14,186Salary for Rhode Island lawmakers, who receive no per diem allowance.

$160Per diem allowance for

Pennsylvania lawmakers while in session.

$1.3MTotal amount of per

diem payments made to Pennsylvania legislators

in 2011.

$102,00Total amount of per diem

payments made for weekends in 2011.

$6,570Per diem collected in 2011 by Pennsylvania legislator Marc Cohen

of Philadelphia for 43 weekend days,

accounting for 6.4% of the total per diems related to weekends.

$157,000Median annual salary of top

executives at charities in Northeast states.

$150,000Median annual salary of top

executives at charities in mid-Atlantic states, which

includes Pennsylvania.

$133,000Median annual salary of

top executives at charities nationwide.

4.7%Median salary increase for top executives at charities

nationwide in 2008.


nationwide in 2009.


nationwide in 2010.

14Nationwide, the number of

charities that paid their CEO more than $1 million in 2008.

6Nationwide, the number of

charities that paid their CEO more than $1 million in 2012.

15%Percent of Americans who said they had already voted

as of October 28.

33%Percent of Americans who said they had either already

voted or planned to vote before November 6.

113Number of smartphones

that go missing every minute in the United States.

3,560,000Number of jobs open

nationwide in September according to the U.S. Labor

Department.

$500MAmount Rep. Bob Brady

proposes the City of Philadelphia borrow to

fund the GamePoint casino resort.

0.3%Drop in retail sales

nationwide in October. Analysts attribute most of the drop to Hurricane

Sandy’s impact.

1987Year Nancy Pelosi was

elected to Congress. She announced this week that

she will retain the leadership spot for congressional

Democrats, a spot she has held since 2003.

89¢Cost of a gallon of gas in 1987. According to

GasBuddy.com, the average cost of a gallon of gas in

Philadelphia is $3.67 and on the rise.

10%Percent of startups that did not use a capital injection in 2010.

6,500,000New businesses created

nationwide in 2011.

$275 MAmount pledged so far this

year to the crowdfunding site Kickstarter.com. Top categories include film & video ($69 million), music ($45 million), games ($42

million) and design ($41.9 million).

3,834The number of venture-capital

deals struck nationwide in 2011, the largest number since 2008 and a 6.5% increase over 2012.

25%Percent of total angel investments made in healthcare in the first half

of 2011.

8%Percent of total angel investments

made in retail in the first half of 2011. The same amount was

invested in media.

$29.5BAmount of venture capital invested

nationwide in 2011, the largest amount since 2008 and a more than 25% increase over 2012.1,179,287

Computer-related jobs created by venture-capital companies from

2008-2010.

$80,000Average annual owner investment

into young firms in 2011.

31%Percent of small business

owners likely to borrow from family and/or friends.

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region's business 15 november 2012

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