PLANYC 2030

PORTLAND, Ore. (AP) — Costco Wholesale said Wednesday that it will start accepting food stamps at its warehouse clubs nationwide after testing them at stores in New York.

It’s a big about-face for a retailer that has catered to bargain-hunting but affluent shoppers, and it’s a sign of the grim reality facing retailers and their customers. The number of Americans relying on government food subsidies to eat recently hit a record 36 million.

Costco (COST), which is based in Issaquah, Wash., began accepting food stamps at two New York stores in Brooklyn and Queens in May under political pressure from officials who worked with the company on opening a club in a redevelopment area in Manhattan.

The company quickly expanded to all six of its stores in New York state.

Company officials said they had doubted many customers would use food stamps but it turned out new members said they were joining precisely because the company accepted the assistance program.

“We recognize these are tough times and more people are food-stamp-eligible,” Costco Chief Financial Officer Richard Galanti said Wednesday.

Costco said it hopes to accept food stamps at half of its 407 stores in the U.S. and Puerto Rico by Thanksgiving and at the remainder as soon as it wins regulatory approval in each state.

While most major grocery chains have accepted the food subsidy for years, more retailers have been accepting food stamps as the process has eased and the number of people using them has soared.

Most users no longer receive stamps, but instead carry the value on a card that can be swiped at checkout much like a bank debit card.

That makes it easier and more discrete for shoppers and speeds the checkout and reimbursement processes for retailers.

Because about half of Costco’s customers are small businesses and the rest tend to be more affluent than shoppers at traditional grocery chains, Galanti said, executives had assumed there wouldn’t be much response to it accepting food stamps but realized that assumption may have been wrong.

“Certainly this economy was a wake-up call,” Galanti recently told investors. “It is not just very low-end economic strata that are using these (who) typically don’t have purchasing power.”

Food retailing consultant Bill Bishop, of Willard Bishop Consulting, said Costco’s decision shows how pervasive the pressure on consumers has become. He said more and more grocers are seeing their sales peak and fall based on when assistance benefits are distributed.

 

 

Standing in a park in central Mexico, he and other trainers were teaching Mexican police cadets to tail a suspect — a “rabbit” in police slang — as part of an unprecedented effort to help Mexico in its crackdown on drug cartels. “Remember, I don’t want you going out all in a big group,” said Barajas, who is from Houston. He reminded the cadets they needed to watch out for their partners — and would be pulled from the exercise if they failed.

Since July, a total of 81 U.S. law enforcement officers have come here on three-week shifts to teach such basic police skills to their Mexican counterparts. The program, part of a $1.4 billion U.S. aid package for Mexico, marks a major escalation in American involvement in the drug war here.

It’s also a first for Mexico, where the government has historically been reluctant to allow U.S. agents or troops on its soil because of animosity that dates to the 1846-48 Mexican-American War.

“This is really historic,” said Noe Sánchez, academic director at the academy. “We’ve never had this kind of international cooperation before.”

The program focuses on teaching investigative skills such as interviewing witnesses, collecting evidence and performing surveillance to Mexico’s newly created Federal Police. The federal force and the Mexican military have played a greater role in anti-drug efforts than local police forces, which are often plagued by corruption , drug addiction, and insufficient training.

All of the U.S. instructors speak Spanish, and they come from an array of agencies including the FBI, Immigrations and Customs Enforcement and the Drug Enforcement Administration, as well as city police departments across the USA.

The Mexican police “are excited; they want to learn,” said Barajas, the U.S. marshal. “You can tell they really want to be here. They want to be part of the change.”

On a recent morning, Dante Servin, a detective from the Chicago Police Department, was quizzing cadets on a tricky case study in Methodology Class. A routine investigation into a shoe store robbery, a state crime, had turned up a counterfeiting operation, a federal offense.

“First of all, let’s decide: Can we legally enter the store?” Servin asked. The students decided they needed a search warrant.

In another class, Paul Lewenthal, an Immigration and Customs Enforcement agent from San Diego, was teaching cadets how to plan an investigation. Down the hall, students in Surveillance Class were learning to operate digital cameras donated by the U.S. government.

Every two weeks, the program flies in U.S. federal prosecutors who run a mock trial exercise. The cadets are put on the witness stand and cross-examined about a case they have studied, a jewelry store robbery.

The trainers are trying to get Mexican police ready for U.S.-style oral trials, which the Mexican government plans to phase in over the next eight years. Mexico’s current legal system relies mostly on the exchange of written documents.

So far, 2,052 Federal Police have graduated from the training program, and an additional 1,051 are taking classes now, program administrator Rafael López said.

The $4.5 million program is funded by the U.S. State Department’s Narcotics Affairs Section and run by Kaseman LLC, a Virginia-based contractor. It also brings in police from Colombia, El Salvador, Spain, Canada, the Czech Republic and the Netherlands. The U.S. government is also providing aid in the form of helicopters, X-ray trucks and computer systems.

More than 10,000 people have died in drug-related violence in Mexico since President Felipe Calderón launched the anti-drug crackdown in 2006.

Colombians make up the bulk of the other foreign instructors. Many are graduates of similar U.S. training efforts in Colombia, where Plan Colombia — a U.S.-backed program — has helped the government beat back leftist rebels and drug traffickers.

Ariel Lozano of the Colombian National Police says he went through basic training with a U.S. instructor four years ago. Now he’s a teacher here.

“We’re hoping these students can learn from what we’ve gone through,” he said.

When I spoke with Rosewood Hotels CEO John Scott, I first asked him about the state of the luxury hotel business. It’s widely know that luxury hotels – Rosewood’s specialty – have been suffering more than any other type of hotel.

The most-expensive hotels and resorts are hurting more than, say, the Holiday Inns of the world because they’re facing a double whammy – the recession coupled with the so-called AIG effect. The term was coined last fall after it was revealed that bailed-out insurance giant AIG hosted a lavish, spa-filled $400,000 corporate retreat at a St. Regis resort just days after receiving billions in federal aid. News about the trip sparked a national debate about corporate entertaining habits and, ultimately, drove an untold number of companies to cancel their five-star hotel gatherings, and luxury cruises.

Q. What is the state of luxury lodging right now?

A. Certainly luxury has come under a lot of pressure, both economic pressure or perception related. (Before the downturn) it was almost a badge of honor to have stayed in the biggest suite and to have paid the most for it.

In the current environment, people are redefining themselves by discretion. Conspicuous consumption is dead, at least in the near term. People are trying to find value. They’re still traveling to luxury hotels, but they’re looking for really unique experiences. In many instances, they really do want to seek out value and they may not be traveling quite as often.

Industry data shows that the luxury segment has been disproportionately hit vs. the other segments, (with revenue per available room) down 25% and even higher in some markets for 2009. We have 18 hotels that are geographically dispersed.

Q. What does the environment mean for Rosewood since you only operate top-rated hotels?

A. How I compare myself in a difficult environment is how we’re doing vs. our competitive set. So, (our revenue per available room is) down overall 20%. If I look at the industry average, it’s usually down 22% to 25%. And then, really what I focus on is not that big economic indicator. I look at each one of my hotels and ask: How are you performing in a down market? Are you continuing to hold your share?

We look at (revenue per available room) on individual hotels compared to their market competitors (for instance, The Carlyle vs. New York City hotels, Rosewood Mayakoba vs. other luxury resorts in Playa del Carmen, Mexico). In each market, we are holding or growing our revpar. I’m quite pleased to say that we are holding or growing against the competitors.

Q. Rosewood isn’t exactly a household name, so does that in some way help you in today’s world?

A. My team and I talk about that. It’s good news, bad news for us. One, we are an emerging brand. We are reasonably well  known to a select group, but we’re certainly not Ritz Carlton or Four Seasons. We’re trying to get there, but we’re not  there yet.

(Last year) we began to see companies red-line top brands as an easy way to save money. They said, “I don’t want to see on your expense account Ritz Carlton or Four Seasons or maybe Mandarin Oriental.” From that perspective, it’s not entirely rational because the prices may be the same (as a Rosewood hotel), but it’s certainly political. A lot of these (companies) are under external pressure, be it from the government or their employees. If you just laid off people and now you’re staying at the Four Seasons, how does that look?

We’ve been broadly painted by the same brush. But that’s part of the story.

Q. What’s the other part of the story?

A. The other side is that there were a lot of aspirational travelers – people from lower levels within organizations who were trading up because of the exuberance of the times. The expectation of readily available credit, of a big year-end bonus. The expectation that the US economy was always going to be strong.

This aspirational group of travelers now has less ability to travel and stay in luxury hotels. We had some of them, and that piece of business has been hurt. But our core traveler tends to be a little bit older, tends to be the most senior and tends to be more affluent and more worldly. 

The world’s largest retailer wants to keep its customers even after they die.

Wal-Mart has started selling caskets on its website at prices that undercut many funeral homes, long the major seller of caskets.

The move follows a similar one by discount rival Costco, which also sells caskets on its site.

Wal-Mart (WMT), based in Bentonville, Ark., quietly put up about 15 caskets and dozens of urns on its website last week.

Prices range from $999 for models like “Dad Remembered” and “Mom Remembered” steel caskets to the mid-level $1,699 “Executive Privilege.” All are less than $2,000, except for the Sienna Bronze Casket, which sells for $3,199.

Caskets ship within 48 hours. Federal law requires funeral homes to accept third-party caskets.

The caskets come from Star Legacy Funeral Network, a company based in McHenry, Ill., that sells the same caskets for about the same price — some less — on its site, along with many others.

Star Legacy CEO Rick Obadiah said the response in the first week has been better than the company or Wal-Mart expected, though he declined to give specifics. A spokesman for Walmart.com also declined to release sales figures and downplayed the venture.

“Several online retailers offer this category on their sites,” spokesman Ravi Jariwala wrote in an e-mail. “We are simply conducting a limited beta test to understand customer response.”

But Obadiah said it is not simply a test. He said more than 200 Star Legacy products, including pet urns and memorial jewelry, and eventually about two dozen caskets, will be sold at walmart.com. The company also supplies similar types of products to online retailer Overstock.com and urns to CostCo’s website.

Other parts of the Wal-Mart empire also sell funeral wares. The company’s samsclub.com site sells casket floral arrangements for about $300.

Part of the business model is to get people to plan ahead: Walmart.com is allowing people to pay for the caskets over a period of 12 months for no interest.

The move gives more power to consumers and helps them avoid high mark-ups on caskets, which can often be several hundred percent, said R. Brian Burkhardt, a funeral director who blogs as “Your Funeral Guy.”

“You can get a quality casket for $1,000 rather than pay $2,000, $3,000 or $5,000 in a funeral home. That’s where it helps the consumer,” he said.

The industry is not too concerned about Wal-Mart entering the market, said Pat Lynch, president-elect of the National Funeral Home Directors Association. Consumers have been able to buy caskets online and from other sources for years, with minimal effect on the business, he said.

Wal-Mart’s prices for caskets don’t differ greatly from those offered at funeral homes, most of which range from $500 to $5,000, Lynch said. He declined to give an average price, saying a casket selection is a personal one.

He said Wal-Mart can’t offer one thing funeral directors do have: the ability to comfort someone during a trying time.

“There’s no question in my mind as a funeral director for nearly 40 years that the most critical element is the human contact,” he said.

Oakland University’s School of Nursing will offer accelerated nursing degree programs through a new program with the St. John Health System.

The Riverview Institute of Oakland University officially opens Nov. 18 at the renovated former St. John Riverview Hospital on East Jefferson Avenue in Detroit.

The institute will now offer bachelor’s degree in nursing in 12 months to students who already have a bachelor’s degree, OU said today in a statement. Graduating nurses will also have opportunities to be hired by a St. Johns area hospital.

The Riverview Institute will also offer training programs for patient care technicians and licensed practical nurses, OU said.

The economic turmoil of the last year has meant that most employees have been concentrating on retaining their job rather than considering job satisfaction. However, a combination of the New Year and reports that the economy is set to improve during 2010 will mean that an increasing number of people will be looking to make a fresh start by starting a new career.

Often the idea of making a new start and embarking on a retraining course can seem expensive and daunting, especially if there are commitments such as a family to support to consider. Many people have found the answer in a franchise opportunity, which not only provides the opportunity for entering a new profession but also provides the independence of owning a business such as an auto franchise, a lawn franchise, or restaurant franchise.

One of the main reasons that so many people wanting a change opt for franchising is that most franchisors provide training and support as part of the franchise package. The reason for this is that many franchisors are supportive of people with little or no previous experience wanting to enter a new industry. Nick Bicknell of Smart ABC, a car paint repair franchise, explains: “No experience is necessary to become a Smart ABC franchise owner. Our systems and technology have been created to offer ease of use for the novice. To qualify, all trainee franchise owners successfully complete repairs during their first week of the three week training course.”

Performing arts franchise LIPA 4:19 also ensures that new franchise owners are provided with thorough training. Kerry Watkins of LIPA 4:19 says: “The franchise owner will have an intensive five day training course and receive an operations manual on how to run the business. Also teachers will undergo LIPA 4:19 training.”

Many franchisors not only provide an initial training programme but also ongoing training and support to ensure that franchise owners are able to develop within the industry. Nick adds: “Part of our training programme is six weeks after a business is launched – the franchise owner returns to our training academy for further assessment and skill refinement. We additionally run weekend refresher and advanced skill courses which are provided at no further expense to the franchise owner.”

Tax and accountancy franchise TaxAssist Accountants also ensures that its franchise owners are provided with ongoing training. David Paulson of TaxAssist Accountants reveals: “Structured training at the support centre plus regular visits from the technical support team provide ad-hoc training both for franchise owners and their staff. We also have regular focus group meetings to trial new services as well as twice yearly regional meetings for updates and training, along with an annual conference.”

Many franchisors also acknowledge the fact that franchise owners with no previous experience of their sector can also benefit their own business. Nick states: “The advantage of franchising is bringing together a group of individuals with varying skills, experiences and ideas. As an innovative franchisor we encourage interaction and idea exchange between our franchise owners and when appropriate we will evaluate at head office and integrate in to the business model.”

Although owning and operating a franchise -like running any business – requires a great deal of hard work it can be the perfect option for those looking to make a new start. David comments: “Individuals that join TaxAssist Accountants from outside the industry are able to be up and running building a successful business far quicker than trying to go it alone.

“As a franchisor we invest heavily in training including tutors from external companies such as BPP. We haven’t bought an off the shelf training package but have tailored it specifically to the needs of our franchise owners, which an individual looking to go it alone simply couldn’t do. With the multitude of regulations that our industry has to adhere to it would be extremely challenging for a non-accountant to set up in practice without the training and support that our franchise offers.”

Robert Hulett, general manager of the 25-year-old Chrysler dealership that was one of 789 franchises to be shuttered in the Chrysler LLC meltdown across the United States, has reopened with a new fleet of Hyundai cars.

There’ll be some familiar faces, too.

“We had about 75 employees at one point, and had to let just about everyone go” over the summer as used cars were sold and a new franchise opportunity explored, Hulett said.

The city of La Quinta approved a temporary zoning permit for the dealer to operate Dodge City Pre-Owned Auto Sales in the interim. On Oct. 19, the service department reopened and the first fleet of new cars rolled in.

Four people in service and two employees in parts were rehired, Hulett said, along with three sales people and two business associates.

Mayor Don Adolph said it’s great that the business was able to launch a new franchise.

“The city and our staff has been working with the dealers that are up there,” he said. “We don’t want to end up with one car dealership. You need several of them in there to make this work.

“We’re happy this is moving forward,” he said. “It benefits the city and the dealers that are in the auto center.”

As of Wednesday, some 45 new cars have been prepped and are on the ground.

“The signs are going up now,” Hulett said, and floor traffic has returned to the franchise.

Within a week, the dealership, owned by Kent B. Sowell, should have 80 new Hyundai vehicles plus 60 used cars on the lot.

“It feels great,” Hulett said as paperwork was being prepared for the dealership’s first probable new car sale — a 2009 Elantra Touring vehicle.

“Last year, the auto industry was very challenging. Every day it got worse and worse — hitting rock bottom when Chrysler told us we lost the franchising rights,” Hulett said. “Now, the economy is starting to show signs of recovery. Hyundai is gaining market share. It’s a great product with a great warranty, and it’s a company that’s growing.

“We feel good about them, and they feel good about us.”

MOGODITSHANE, Botswana — Tiffany and Co.’s iconic blue boxes have long cradled some of the world’s most expensive diamonds. Now, an increasing number contain stones cut by some of the industry’s least-experienced hands.

In a windowless factory in this African village, Tiffany is teaching more than 80 workers to transform raw diamonds into gems for Tiffany engagement rings. As novices recently pressed pea-size stones against whirling blades, a visiting Tiffany executive spied a problem.

“You can see the polishing lines!” said Mark Hanna, an Antwerp, Belgium-based vice president of Tiffany’s diamond unit. “Tiffany diamonds can’t have polishing lines.”

Such are the risks for the New York-based retailer as it strives to transform its diamond business amid a decade of industry boom and bust. Tiffany has decided that to preserve and expand its $2.9 billion-a-year enterprise, it needs this factory — with its high labor costs, low productivity and workers who staged a two-day sit-in this month.

Tiffany’s is an extreme example of an industry shift that started during the recent luxury boom. Like most other diamond retailers, Tiffany long bought the vast majority of its diamonds pre-cut and pre-polished from industry middlemen. But with global diamond-jewelry sales soaring earlier this decade, Tiffany and others worried they would soon be fighting over dwindling supplies.

So Tiffany began venturing into an end of the diamond business it spent much of its 172-year history avoiding — sourcing, cutting and polishing its own diamonds. “We decided to move backward” in the supply chain, says Chief Executive Michael Kowalski.

The retailer invested in mine operators, and in 2002 it began opening cutting-and-polishing plants in Canada, Belgium, South Africa and Vietnam. In the past two years it added similar operations in China and Mauritius. The in-house unit Tiffany founded in 2002 to run these plants, Laurelton Diamonds, now employs 1,100 workers, or 14% of the company’s work force. It will supply more than 50% of Tiffany’s diamonds this year — up from 40% last year and none in 2003.

Others have made similar bets. Privately held retailer Graff Diamonds International owns a majority stake in a South African diamond wholesaler and polisher with facilities from Antwerp and New York to Botswana. Suppliers have made incursions on retailers’ turf. Mining giant De Beers Group operates retail stores in a joint venture with LVMH Moët Hennessy Louis Vuitton SA. Canadian miner Aber Diamond bought a controlling interest in retailer Harry Winston in 2004. Indian jewelry manufacturer Gitanjali Gems Ltd. transformed itself into a global retailer starting in 2006, buying U.S.-based Samuels and Rogers jewelry chains.

Some industry analysts see risk in running operations that span from mining and manufacturing to high-end retailing and marketing. “[They're] all totally different types of activity — and one needs tremendous expertise, skills, infrastructure to be truly competitive” in each, says Chaim Even-Zohar, principal of Tacy Ltd., a Tel Aviv-based industry consultant.

Such companies may miss out on savings that result from competition in these specialized areas, Mr. Even-Zohar adds, and may risk using some parts of their supply chain to subsidize others. “Vertical integration sounds great from a promotion and marketing perspective. But more often than not it doesn’t make economic sense.”

The stakes are especially high now that tight diamond supply has given way to slack demand. The global retail market for diamond jewelry is expected to fall 16% this year, to $65 billion. The U.S. will lose an estimated 900 specialty jewelry stores this year alone, following 1,500 closures last year. Industry players have retrenched: EB Alexander, and Signet Jewelers Ltd., the parent company of retailers Kay Jewelers and Sterling Jewelers, recently stopped buying rough diamonds and polishing them on contract in India, an initiative it started in 2005. A spokesman said the program broke even.

Tiffany is also feeling the pressure. Its inventory has swelled to $1.54 billion this year, up from $1 billion in early 2005. For the first time in recent memory, Tiffany says, it has lowered its prices for diamonds. The engagement rings it sells in the U.S. are priced 10% lower than last year. In all, the company expects a “high teens” decline in sales this year at U.S. stores open at least a year.

Tiffany acknowledges its lack of mining expertise. Although it reaped a large financial gain from its 2004 sale of a minority stake in the 40%-owner of a Canadian mine, it recently disclosed that it wrote off a $12.4 million investment in a small mining project in Sierra Leone. It also has written off loans of about $44 million to a former supplier whose mine has ceased operations. “I think we want to let the miners do the mining,” said Chief Financial Officer James Fernandez.

But Tiffany says its cutting-and-polishing strategy is solid. In slow markets, the company says, it can rein in purchases from outside suppliers. When demand returns, it says, it will have guaranteed, lower-cost stocks. “There were many in the industry who thought we were foolhardy,” Mr. Kowalski says, but the diamond-cutting operations “have exceeded our expectations.”

If there’s a weak link in Tiffany’s global diamond chain, it’s the polishing plant in Botswana. A glimpse into this secretive end of the diamond business shows the high costs, tricky logistics and labor unrest Tiffany is willing to shoulder to maintain its diamond pipeline.

Fancy Goods

Founded in 1837 as a New York stationery and “fancy goods” emporium, Tiffany bought large jewelry collections from French aristocrats fleeing revolution, and in 1878 paid $18,000 — the equivalent today of $400,000 or more — to buy the Tiffany Yellow Diamond in Paris. Co-founder Charles Lewis Tiffany gained the nickname “the King of Diamonds.”

Even so, by 1991, diamonds accounted for only 17% of Tiffany’s sales. To boost profits, the company began pushing diamond jewelry and opening new stores in Europe, Asia and the U.S.

In early 1999, Tiffany’s new CEO, Mr. Kowalski, feared surging global diamond demand could hinder the company’s efforts to stock its expanding retail network. That July, Tiffany purchased a minority stake in the 40%-owner of a mine in Canada’s Northwest Territories.

Tiffany soon saw other openings. De Beers, which long controlled the world’s rough-diamond supply, was paring back after years of sparring with European and U.S. antitrust regulators. When De Beers closed its high-tech diamond-sawing and -polishing operation in Belgium, Tiffany bought some of its machinery and hired former workers including Mr. Hanna, now Laurelton’s vice president.

The new Laurelton unit built a cutting-and-polishing factory in Canada, bought a majority stake in a Johannesburg plant and acquired what would become its largest plant, a 570-person polishing operation in Vietnam.

But the elusive prize was Botswana, the world’s largest producer of gem-quality diamonds since the 1980s. Its Jwaneng Diamond Mine is the world’s richest by value of recovered diamonds. Botswana is also among Africa’s least-corrupt countries, according to an index by nonprofit Transparency International. Securing a supply of stones here would help Tiffany allay mounting consumer concerns over “conflict diamonds,” sold to fund wars or produced under unethical labor conditions.

Tiffany executives made their first reconnaissance trip to Botswana’s capital, Gaborone, in 2004. “Do we need to be in Botswana?” Mr. Hanna recalls asking at the time. “We said, ‘Yes, but we aren’t quite sure how to do it.’”

Sparsely populated and AIDS-ravaged, Botswana has minimal manufacturing infrastructure and few direct flights beyond the continent. Tiffany faced further roadblocks. It couldn’t get into mining, which was controlled by a 50-50 partnership between De Beers and the Botswana government. It couldn’t buy rough diamonds locally, because the state mining venture sold its production only through De Beers’ sales offices in the U.K. and South Africa.

Botswana’s cutting operations were also unattractive: A parcel of diamonds polished here costs about $100 per carat, compared with $30 in India, according to industry estimates.

The calculation changed in 2006. Renegotiating its mining deal with De Beers that year, Botswana announced it would license 16 international cutting firms willing to build factories here. In return for training locals to polish diamonds, the government said, these firms would eventually gain the right to buy rough diamonds in Botswana.

Tiffany jumped. It took a majority stake in one of these firms, Rand Diamonds. Rand set up shop in an unmarked factory amid the used-car dealerships and military barracks of Mogoditshane, a former cattle post at the edge of the capital’s urban sprawl.

With few Batswana versed in diamond polishing, the company put an ad in the Botswana Guardian newspaper for English-speaking applicants with a high-school-level education. To help winnow its 300 hopefuls, Tiffany/Rand screened for math aptitude. It gave candidates tweezers and timed how fast they could place 40 tiny metal sticks into holes set in a board.

When the factory opened in early 2007, its new hires worked on small and low-cost brown diamonds, overseen by experienced cutters imported on short contracts from India and Mauritius. “We are literally parachuting people in from one operation to the other,” Mr. Hanna said.

Bruters and Polishers

Sitting at workstations arranged by task, bruters round the diamond pieces. Polishers add top and bottom facets, looking at magnified images of their diamonds captured by a lens near the whirring polishing wheel.

On the factory floor on a recent afternoon, a worker learning to make facets walked over to a Laurelton-designed training machine to double-check an angle. When he set the diamond in the protractor, a display flashed 35.2 degrees. Over the whir of grinding wheels, Mr. Hanna nodded in approval.

Trainees who learn such basics of bruting and faceting become “qualified” workers in four to six months, Tiffany says. About 30% fail. The rest start handling gem-quality stones, working at a pace of up to one polished diamond a day. Tiffany expects their pace to increase considerably.

For now, the plant’s expatriate and local workers produce about 250 finished gems each week, primarily “round brilliant” stones, with 57 light-reflecting facets, for Tiffany engagement rings. About 85% of the stones are deemed “Tiffany qualified,” and are forwarded to a Tiffany office in Pelham, N.Y., for grading.

Tiffany doesn’t tell its customers where individual diamonds are mined or polished, and declined to say how much of its overall inventory is now sourced and polished in Botswana. “We really want the focus…to be on the quality of the diamond ring, not how it came to be,” said Mr. Kowalski, the CEO.

Tiffany’s payout came in April 2008, when approved cutting firms gained access to about 15% of the country’s raw diamonds, in local sales valued at an estimated $550 million annually by the end of 2010. De Beers began to sell natural diamonds from various mines 10 times a year at bulk sales in Gaborone, where Tiffany’s Mr. Hanna is a frequent buyer. Diamond merchandise now represents 47% of Tiffany’s sales.

But tensions at the Mogoditshane plant are high. Local workers and managers, whose names were provided by a factory partner, said in interviews that the plant’s expat supervisors do too much of the work themselves, slowing Batswanas’ advancement.

Complaint Letter

“We are eager to learn about diamonds — about cutting and polishing and the valuation and stuff like that…[But] it seems certain people are scared [about] sharing information with the locals,” said one local who works in a management position. “It’s a bit of a clash of cultures.”

Workers aired many complaints in an Oct. 7 letter to the plant’s managers, reviewed by Planyc2030. Identifying themselves as “local staff,” they wrote they hadn’t qualified for performance-based raises, but that managers wouldn’t show them the data on which those pay decisions were based. They called their work environment “prisonlike,” writing that they had been threatened by a Belgian production manager they characterized as “corrupt, racist, vulgar, abusive, bully[ing]” and “not professional.”

The next day, all but about five local laborers gathered in the facility’s reception hall, refusing to work until the plant’s director addressed their concerns, according to the plant’s human-resources manager, Meshack Lejuta. The director sent Mr. Lejuta to address the workers. The sit-in stopped in the middle of the next day, Mr. Lejuta says, when he warned his fellow Batswana they could be fired because their strike was unlawful.

Responding to the letter and strike, Tiffany said workers expressed concerns as part of a union organizing effort. It said it intends to address grievances with a union representative, including “any tensions, wrongly characterized as racist, that may have arisen because skilled workers from other African nations and from Asia have been engaged for training purposes.”

Mr. Hanna said Tiffany wants local workers to take over diamond cutting, key decisions and training of other locals. Foreign supervisors, whose numbers once nearly equaled those of the factory’s local workers, now account for about one in five positions.

The Botswana government is pleased with Tiffany’s commitment to train residents, says Akolang Tombale, a government adviser and recently retired secretary of Botswana’s minerals department. Other polishing plants are experiencing strikes and slow training initiatives, Dr. Tombale says.

Tiffany, meanwhile, is pushing ahead. While buying raw diamonds in Gaborone’s diamond district recently, Mr. Hanna looked out a window and pointed to an area of bush. Tiffany plans to begin clearing land there this year to build a 20,000-square-foot factory. Set to open in 2011, it will employ as many as 275 workers.

 

 

This buttoned-down city on the Mexican border feels like a boomtown these days, as entrepreneurs fleeing drug violence in Ciudad Juárez head across the Rio Grande to open hip clubs and hot restaurants here.
 

While the violence has put a damper on tourism and Mexico cruises, it has provided an unexpected economic boost to El Paso, a city of more than 600,000 residents at the westernmost tip of Texas. The unemployment rate here was 9.8% in September, equal to the national average but far lower than in other border towns such as Brownsville and McAllen.

Cindy Ramos-Davidson, chief executive of the El Paso Hispanic Chamber of Commerce, said her staff was swamped with requests from Juárez businesspeople wanting to settle in El Paso. They started more than 200 companies in the 12 months ended July 31, a 40% jump from the same period last year.

“It’s the largest migration of wealthy Mexican nationals [to El Paso] since the Mexican Revolution,” said Beto O’Rourke, an El Paso city councilman, referring to the decadelong rebellion that began in 1910.

Not all newcomers to El Paso are refugees from violence. Other factors helping to boost the city’s economy include a multibillion-dollar expansion of Fort Bliss, a military base that is attracting thousands of soldiers and aiding the local building industry, said Bill Gilmer, a senior economist at the El Paso branch of the Federal Reserve Bank of Dallas.

But El Paso is drawing hundreds, perhaps thousands, of Juárez residents looking for a safe place to live.

There is no official estimate of the influx, but real-estate agents report a bump in home sales to Juárez residents. The apartment occupancy rate is about 92%, higher than in Houston apartments and Dallas apartments where occupancy rates have slipped below 90%, according to MPF Research, which compiles apartment market information.

It isn’t hard to understand why: The number of murders in Juárez exploded in the spring of 2008 and grew to more than 300 a month by August and September 2009, the highest monthly levels in a particularly violent year.

One migrant is Aril Anzures, who recently opened a branch of his family’s burrito business on busy North Mesa Street in El Paso. After several kidnapping attempts, the Anzures family moved north earlier this year, though they still own seven restaurants in Mexico.

“It was getting pretty awful,” Mr. Anzures said. “We’re not rich people, but we had to travel with bodyguards.”

He said he didn’t worry about his safety in El Paso, where Burritos Crisostomo offers the same freshly made flour tortillas and fillings as in Mexico. Many of his clients are fellow Juárez expatriates. Business is so good, said Mr. Anzures, that he expects to open another location in El Paso next month.

Rafael García used to manufacture plastic parts for vacuum cleaners but fled Juárez after being kidnapped. He is now a restaurateur in El Paso, serving dishes such as ravioli stuffed with cuitlacoche, a black corn fungus considered a delicacy in Mexico.

New arrivals like Mr. García are importing a nightlife that didn’t exist in El Paso. In the past, many people who wanted a good time would cross the river into Mexico.

Lariza Varela, a 28-year-old who works for a financial firm, has cut her weekend visits to Juárez in recent months, turning instead to a new El Paso nightclub called 33.

“El Paso is really boring, but here they play music in Spanish and it’s almost like you are over there,” she said. A gaggle of waiters make sure clients don’t have to get up to get more beer, just like in Juárez, and every weekend a jovial musician named Walterio Magdaleno sings mariachi songs.

Carlos Chávez said he and his brother opened the bar to replace the one they closed in Juárez after patrons became too worried about drug violence to go out for drinks.

Despite fears of violence spilling across the border to El Paso, the city remains one of the safest in the nation for its size, according to federal statistics, with 10 homicides in 2009.

In Mexico, some are lamenting the flight of citizens. “You can definitely feel their absence,” said Lucinda Vargas, director of a nonprofit that promotes development in Juárez, noting that the departures further complicate the task of reclaiming the city from the drug lords.

But for certain El Paso residents, the recent arrivals are a clear boon. Jorge Villegas, a contractor, said that more than half of his construction projects are for people from Juárez. And Pedro Gómez, who owns a landscaping business, said he has redone the yards for many recent Juárez transplants.

The housing market and stocks may be looking up, but Americans just can’t shake their job worries.

In a sign that talk of an economic recovery has yet to soothe a recession-battered nation, consumer confidence fell in October and came in well below what analysts were expecting.

For stores, the reading is reason to worry that holiday sales might be even worse than they feared.

In a separate reading, the Conference Board reported shoppers’ sentiments about the state of the economy are the gloomiest in nearly three decades. Americans reported they plan to cut back on spending, in large part because they don’t trust the job market.

The unemployment rate is just under 10 percent, and economists say it could hit 10.5 percent next year.

“It’s hard to get a job, and the ones that are out there don’t pay enough,” said Mitch Hicks, a 33-year-old from Hillsboro, Ore., who lost his job at a cabinet company a year ago and is still struggling to find work.

The board’s index of consumer confidence fell to 47.7 in October from 53.4 in September. Economists were expecting only a small decline, to 53.1. It takes a reading of 90 to indicate an economy on solid footing, 100 or more to indicate growth.

Nearly half the 5,000 households surveyed by the board said jobs were hard to come by, and about one in four said they expected fewer available jobs in the coming months.

“We’ve gone down so far that it’s kind of like when you fall into a deep hole and you’re down 20 feet and you climb up by three feet,” said Brian Bethune, an economist at IHS Global Insight. “You’re better off than you were before, but you’ve still got a long way to go to get out.”

There have been signs of recovery elsewhere: Corporate earnings are getting stronger, the stock market has regained much of its lost ground and figures due out Thursday are expected to show the recession officially ended in June or July.

And there was another indication Tuesday that the housing market is stabilizing. The Standard & Poor’s/Case-Shiller price index showed home prices in August climbed for the third consecutive month, helped by a popular tax credit for first-time homebuyers.

But all the improvements haven’t translated to economic security.

Sharon Jerndt, 47, is trimming her holiday gift list because she’s scared of racking up credit card debt. She’s also eating at home and skipping other indulgences.

“I’m trying to only pay with cash,” said Jerndt, who works as a court reporter in Chicago.

Economists pay close attention to consumer confidence because it’s a good barometer of the attitude of shoppers, whose spending on goods and services ultimately fuels 70 percent of the U.S. economy.

At best, economists expect holiday sales to be flat from a year ago, when businesses recorded their biggest declines in at least four decades.

Americans are “quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.

The confidence index sank to a historic low of 25.3 in February. It’s still well below the reading of 61.4 last fall just before Lehman Brothers collapsed, the beginning of the financial crisis.