Crude oil production roars ahead in Iraq - The Global Journalism ...
Crude oil production roars ahead in Iraq - The Global Journalism ...
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economy companies bus<strong>in</strong>ess WITH<br />
New <strong>in</strong>sight<br />
on funds for<br />
retirement<br />
Gretchen<br />
Morgenson<br />
FAIR GAME<br />
NEW YORK If recent stock market gyrations<br />
have takenabite out of their<br />
401(k) retirement plans, participants<br />
should get ready formore discomfort.<br />
<strong>The</strong>yare about to learn how much they<br />
are pay<strong>in</strong>g justtoma<strong>in</strong>ta<strong>in</strong> those accounts.<br />
New U.S. LaborDepartment rules<br />
will require fuller disclosure about the<br />
fees charged on401(k)’s. Fees,of<br />
course, can be an enormous dra<strong>in</strong> on<br />
retirement sav<strong>in</strong>gs, but theyareoften<br />
obscured, giv<strong>in</strong>g many Americans the<br />
impression thatthe accountsare somehow<br />
cost-free.<br />
A surveypublished<strong>in</strong>February by<br />
AARP, an association of middle-aged<br />
and older Americans, for example,<br />
found that71percentof those polledbelieved<br />
thatthey did not pay fees on<br />
their 401(k)’s. Six percent said they did<br />
not know whetherfees were levied.<br />
Sothe com<strong>in</strong>g disclosures, scheduled<br />
to show up on third-quarterstatements<br />
this autumn, may come asashock.<br />
Still, it is better to know than to be <strong>in</strong><br />
the dark.<br />
<strong>The</strong>re are an estimated483,000 <strong>in</strong>dividual<br />
retirement account plans, cover<strong>in</strong>g<br />
72 million participants,the Labor<br />
Department said. <strong>The</strong>se accountshold<br />
about $3 trillion<strong>in</strong>assets. Greater<br />
transparency could not be more important.<br />
<strong>The</strong> new rulesare <strong>in</strong>tended to ensure<br />
thatthe fees<strong>in</strong>401(k) plans are reasonable.<br />
<strong>The</strong> LaborDepartment said it<br />
hoped thatthe disclosures would help<br />
<strong>in</strong>vestors comparevarious<strong>in</strong>vestment<br />
offer<strong>in</strong>gs and see how costscaneat<br />
away at account balances.<br />
Two ma<strong>in</strong> feesareextractedfrom<br />
401(k) plans: <strong>in</strong>vestment management<br />
fees and adm<strong>in</strong>istrative costs.Under<br />
As worries <strong>in</strong>crease, eyes are on the Fed<br />
Economic<br />
Outlook<br />
JASON LANGE<br />
REUTERS<br />
WASHINGTON <strong>The</strong> European debt<br />
crisis has frayed nerves around the<br />
world for months. Now signs of weakness<br />
<strong>in</strong> the U.S. jobs market and <strong>in</strong><br />
Ch<strong>in</strong>ese factory output are giv<strong>in</strong>g policy<br />
makers evenmore reason to be afraid.<br />
A dark cloud will hang over the Federal<br />
Reserve Board chairman, Ben S.<br />
Bernanke, whenhetestifiesbefore lawmakers<br />
Thursday.<br />
As if the euro zone’s struggles to<br />
avoid dissolution were not enough, U.S.<br />
job creation slowed for the fourth consecutive<br />
month<strong>in</strong>May.<br />
‘‘Itwould be hard to believe the Fedis<br />
not concerned,’’ said Thomas Lam, an<br />
economist at DMG &Partners Securities<br />
<strong>in</strong> S<strong>in</strong>gapore.<br />
<strong>The</strong> United States was a relative<br />
bright spot <strong>in</strong> the global economy dur<strong>in</strong>g<br />
the past year. But last week, good<br />
economic news was hard to f<strong>in</strong>d <strong>in</strong> almost<br />
any corner of theworld.<br />
India’s first quarter economic growth<br />
sank to a n<strong>in</strong>e-year low, while agaugeof<br />
eurozone manufactur<strong>in</strong>g also slipped.<br />
Especially worrisome for the global<br />
economy, a measure of activity at<br />
Ch<strong>in</strong>a’s private factories contracted for<br />
the seventhmonth<strong>in</strong>May.<br />
That could help push Ch<strong>in</strong>a — the<br />
biggest s<strong>in</strong>gle provider ofgrowth<strong>in</strong>the<br />
global economy —toundertake astimulusprogram<br />
to combat aslowdown.<br />
Just asasour U.S. economy looms<br />
over President Barack Obama’sre-election<br />
bid,the possibility of ris<strong>in</strong>g joblessness<br />
<strong>in</strong> Ch<strong>in</strong>a frightens the Communist<br />
Party withapower transition scheduled<br />
forlater this year.<br />
In his testimony to Congress, Mr.<br />
Bernanke could provide clues on what<br />
the Fed could do tohelp growth, especially<br />
if the European crisis growsmore<br />
acute. Whether the Fed acts at its next<br />
meet<strong>in</strong>g June 19 and 20 could well depend<br />
on events<strong>in</strong>Europe.<br />
WithGreece’smembership <strong>in</strong> the currency<br />
union possibly hang<strong>in</strong>g <strong>in</strong> the balance<br />
of a June 17 election, European<br />
politicians are struggl<strong>in</strong>g to put together<br />
plans that would keep Greece from<br />
abandon<strong>in</strong>g theeuro and othercountries,<br />
<strong>in</strong>clud<strong>in</strong>g Spa<strong>in</strong>, fromfollow<strong>in</strong>g it out.<br />
TopEuropean Union officials are now<br />
openly question<strong>in</strong>g whether the currency<br />
union will even survive, a warn<strong>in</strong>g<br />
that time is runn<strong>in</strong>g out for the region<br />
to resolve itsdebt problems.<br />
‘‘It’s crunch time,’’ said Nicolas Véron,<br />
aspecialistonEuropean bank<strong>in</strong>g at<br />
the Peterson Institute for International<br />
Economics <strong>in</strong> Wash<strong>in</strong>gton.<br />
<strong>The</strong> European Central Bank is likely<br />
the new rules, companies adm<strong>in</strong>ister<strong>in</strong>g<br />
401(k)’s —oftenmutual fund concerns<br />
— must provideemployers who<br />
sponsor the plans withdetails ofall<br />
feesassociated withrunn<strong>in</strong>g the accounts.<br />
For example, feesforgeneral<br />
plan adm<strong>in</strong>istrative services, like legal<br />
work, account<strong>in</strong>g and record keep<strong>in</strong>g,<br />
will have to be disclosed.<br />
Plan sponsors are supposed to use<br />
this <strong>in</strong>formation to analyze whether the<br />
fees<strong>in</strong>their plans are too high. But<br />
they will not have to pass along all of<br />
this data to participants. Instead,the<br />
sponsors will be required to calculate<br />
expense ratiosfor the <strong>in</strong>vestments<br />
offered <strong>in</strong> a plan, show<strong>in</strong>g participants<br />
the chargesper$1,000 <strong>in</strong>vested.<br />
Accord<strong>in</strong>g to astudy released last<br />
NovemberbyDeloitte and the Investment<br />
Company Institute, the median<br />
401(k)expense ratiowas 0.78 percent.<br />
But the rangeofratiosiswide, the report<br />
noted: from 0.28 percentto1.38<br />
percent.<br />
Expense ratios on401(k) plans are<br />
supposed to be lower than thoseon<strong>in</strong>vestments<br />
offered to <strong>in</strong>dividuals. That<br />
is becausethe comb<strong>in</strong>edassets<strong>in</strong><br />
many retirement<br />
‘‘Most of the<br />
fiduciaries of<br />
these plans<br />
don’t want to<br />
do what they<br />
are supposed<br />
to do.’’<br />
plans should be large<br />
enough to qualify for<br />
lower-cost <strong>in</strong>stitutional<br />
funds. In general,the<br />
greater the<br />
assetsheld <strong>in</strong> a plan,<br />
the lower the fees.<br />
Brent L. Glad<strong>in</strong>g,<br />
founder of the Glad<strong>in</strong>g<br />
Group, aconsult<strong>in</strong>g<br />
firm that analyzes401(k)’s, said he<br />
welcomed the disclosure requirements<br />
but feared thatthe new rules would<br />
confuse plan participants. Employers<br />
mustwork much harder to educate<br />
participantsabout costs and benefits of<br />
variousfund offer<strong>in</strong>gs, he said.<br />
Unfortunately, he added,employers<br />
are not up to thetask. ‘‘<strong>The</strong> disclosure<br />
is go<strong>in</strong>g to make <strong>in</strong>dexfunds lookbetter<strong>in</strong>some<br />
cases, and that’s f<strong>in</strong>e,’’ he<br />
said. ‘‘But you will f<strong>in</strong>d many active<br />
managers withfees that are justifiable<br />
becausetheir performance outperforms<br />
the <strong>in</strong>dex. It is clearly go<strong>in</strong>g to<br />
bethe responsibility of the plan sponsor<br />
to help participants understand<br />
what it all means, andIamnot sure<br />
theyare preparedforit.’’<br />
If plan sponsors aretohelp their employees<br />
usethe disclosures to make<br />
better<strong>in</strong>vestment choices,theyhave a<br />
lot ofbon<strong>in</strong>g up to do.<br />
A study issuedbythe Government<br />
Accountability Office <strong>in</strong> April found that<br />
half of the 1,000 sponsors surveyed<br />
either did not know whether they or<br />
their participants paid <strong>in</strong>vestment management<br />
fees orbelieved, <strong>in</strong>correctly,<br />
to keep <strong>in</strong>terest rates steady at a Wednesday<br />
meet<strong>in</strong>g to keeppolitical leaders<br />
under pressure tof<strong>in</strong>dasolution to the<br />
crisis.<br />
<strong>The</strong> European Commission has suggested<br />
us<strong>in</strong>g a eurozone rescue fund to<br />
recapitalize distressed banks directly.<br />
That could be especially helpful for<br />
Spa<strong>in</strong>.<br />
‘‘Spa<strong>in</strong> is go<strong>in</strong>g down the dra<strong>in</strong>,’’ said<br />
Charles Wyplosz, aprofessor of<strong>in</strong>ternational<br />
economics at the Graduate Institute<br />
<strong>in</strong> Geneva.<br />
Madrid facesacrucial testof<strong>in</strong>vestor<br />
confidence when it auctions bonds<br />
Thursday. <strong>The</strong> sale is expected to come<br />
at aheftycosttothe government aftera<br />
steepsell-off <strong>in</strong> debt marketsdur<strong>in</strong>g the<br />
ONLINE: LATEST MARKET NEWS<br />
Indexes, stock quotes and currency<br />
rates. global.nytimes.com/bus<strong>in</strong>ess<br />
FRANK FRANKLIN II/THE ASSOCIATED PRESS<br />
An AARP event <strong>in</strong> New York focused on help<strong>in</strong>g older workers hone job-search<strong>in</strong>g skills.<br />
Many such workers, the AARP has found, are unaware of fees applied to retirement funds.<br />
that fees werewaivedbyproviders.<br />
Investment management feesare a<br />
rather large costtobeunsure about.<br />
Accord<strong>in</strong>g to the Deloitte/I.C.I. study,<br />
these feesmakeup 84percentof total<br />
401(k)expenses.<br />
Such ignorance might beunderstandable<br />
forsponsors of small plans, but<br />
overseers of large plans can also be<br />
clueless.Accord<strong>in</strong>g to the G.A.O. study,<br />
31 percentof large-plan sponsors did not<br />
know whether they or their participants<br />
paid <strong>in</strong>vestment management fees.<br />
<strong>The</strong> report also said 29 percentof<br />
plan sponsors did not know whether<br />
their plans paid for trustee, legal or<br />
audit services.<br />
If plan sponsors do not evenknow<br />
that feesare levied,theyare surely not<br />
putt<strong>in</strong>g any effort <strong>in</strong>to aggressively<br />
manag<strong>in</strong>g the costs thattheir employeesare<br />
pay<strong>in</strong>g <strong>in</strong> their 401(k)’s. <strong>The</strong><br />
G.A.O. study confirms that.<br />
While almost half the plans surveyed<br />
by the G.A.O. reported thatthey did not<br />
know whether they or their participants<br />
paid transactioncosts, 95 percentof<br />
those said they had not even<br />
asked their service providers for <strong>in</strong>formationregard<strong>in</strong>g<br />
these costs.<br />
Whensponsors do receive an account<strong>in</strong>g<br />
of variouscosts,theyrarely<br />
<strong>Global</strong> economic <strong>in</strong>dicators<br />
Top economic releases expected this week, <strong>in</strong>clud<strong>in</strong>g the median forecast<br />
of analysts surveyed by Reuters and the last reported figure.<br />
MEDIAN PRIOR<br />
PERIOD<br />
DAY COUNTRY INDICATOR<br />
FORECAST<br />
Mon. Euro zone Producer prices* for April 0.2% 0.5%<br />
Mon. U.S. Factory orders* for April 0.2% –1.9%<br />
Tue. Euro Markit services P.M.I.** for 46.5 46.5<br />
zone May<br />
Tue. Euro zone Retail sales* for April –0.1% 0.3%<br />
Tue. Germany Industrial orders* for April –1.0% 2.2%<br />
Tue. U.S. I.S.M. nonmanufactur<strong>in</strong>g <strong>in</strong>dex 53.5 53.5<br />
for May<br />
Wed. Euro Gross domestic product revised ‡ for Q1 0.0% 0.0%<br />
zone<br />
Wed. Germany Industrial output* for April –1.0% 2.8%<br />
Thu. Brita<strong>in</strong> Markit/C.I.P.S. services P.M.I. for May 52.5 53.3<br />
Thu. Brita<strong>in</strong> Bank of England <strong>in</strong>terest rate decision for June 0.5% 0.5%<br />
Thu. U.S. Initial jobless benefit claims 377,000 383,000<br />
Thu. U.S. Consumer credit for April (<strong>in</strong> billions) $12.00 $21.36<br />
Fri. Italy Industrial output* adjusted for April –0.5% 0.5%<br />
Fri. Brita<strong>in</strong> Producer output prices* for May 0.1% 0.7%<br />
Fri. U.S. International trade for April (<strong>in</strong> billions) –$49.50 –$51.83<br />
*Month on month **Purchas<strong>in</strong>g managers’ <strong>in</strong>dex ‡ Quarter on quarter<br />
Economy watch<br />
A snapshot of key figures for the world's largest economies.<br />
CURRENT<br />
COUNTRY G.D.P. <strong>in</strong> billions G.D.P. GROWTH ACC’T/G.D.P. INFLATION JOBLESS<br />
<strong>in</strong> 2011 Year over year <strong>in</strong> 2011 Year over year<br />
2.3% United States $15,094 1.9% ‡ –3.1% 8.2%<br />
Euro zone 13,115 0.0 0.3 2.4 11.0<br />
Ch<strong>in</strong>a 7,298 8.1 5.1* 3.4 4.1 §<br />
Japan 5,869 4.1 ‡ 2.0 0.4 4.6<br />
Germany 3,577 1.7 5.7 2.1 6.7<br />
France 2,776 0.2 –2.2 2.4 9.8<br />
Brazil 2,493 0.8 –2.1 0.64 6.0<br />
Brita<strong>in</strong> 2,418 –0.1 –1.2 3.0 8.2<br />
Italy 2,199 –1.3 –3.1 3.5 † 10.2<br />
Russia 1,850 4.9 5.5 0.3 5.8<br />
Canada 1,737 1.9 ‡ –2.8 2.0 7.3<br />
India 1,676 5.3 –3.3* 7.2 n.a.<br />
Mexico 1,035* 4.6 –0.3** 3.4 4.9<br />
South Korea 1,015* 2.8 2.9* 2.5 3.4<br />
*Actual figures of **Actual 2009<br />
2010 figures of † Harmonized figures ‡ Quarter on quarter annualized § Urban end March<br />
Sources: Governments, I.M.F., World Bank<br />
Reuters<br />
past weekpushed upborrow<strong>in</strong>g costs.<br />
Markets have been disturbed bydata<br />
show<strong>in</strong>g more than ¤66 billion, or$81.7<br />
billion, was withdrawn from Spanish<br />
banks and sent abroad <strong>in</strong> March, add<strong>in</strong>g<br />
to nervousness about f<strong>in</strong>anc<strong>in</strong>g of a ¤19<br />
billion bailout for Bankia.<br />
Spa<strong>in</strong> would prefer that the E.C.B.<br />
buy it some time by reactivat<strong>in</strong>g its<br />
bond-buy<strong>in</strong>g program. But the E.C.B.<br />
president, Mario Draghi, is likely to rema<strong>in</strong><br />
unfl<strong>in</strong>ch<strong>in</strong>g at anews conference<br />
Wednesday out of hope politicians can<br />
tiethe region<strong>in</strong>to a tighter union.<br />
If the politicians fail, an unravel<strong>in</strong>g of<br />
the euro zone could follow with potentially<br />
devastat<strong>in</strong>g f<strong>in</strong>ancial consequences<br />
that could easily take acool<strong>in</strong>g global<br />
economy and plunge it <strong>in</strong>to recession.<br />
‘‘What we’re see<strong>in</strong>g now would be a<br />
walk <strong>in</strong> the park,’’ said Amit Kara, an<br />
economist atUBS <strong>in</strong> London.<br />
use ittopush forlowerfees,the G.A.O.<br />
found. For example, the LaborDepartment<br />
requiressponsors to identify <strong>in</strong>dividuals<br />
receiv<strong>in</strong>g at least $5,000 <strong>in</strong> compensationforservicesrendered<br />
to a<br />
401(k) plan. But the G.A.O. noted that<br />
89percentof the sponsors surveyed<br />
said they did not usethe <strong>in</strong>formation to<br />
compare fees with those chargedby<br />
othercompanies.And 83percent said<br />
they did not usethe data to negotiate<br />
lowerfeesfromcurrent providers.<br />
‘‘<strong>The</strong> realityis, mostof the fiduciaries<br />
of these plans don’t wanttodowhat<br />
theyare supposed to do,’’ Mr. Glad<strong>in</strong>g<br />
said. ‘‘<strong>The</strong>ysay, ‘It doesn’t save money<br />
for the company, sowhy do Icare?’<br />
<strong>The</strong>re has to be agroundswell from the<br />
employees.’’<br />
Perhaps thatwill bethe ma<strong>in</strong> benefit<br />
of the new disclosures. It may just be<br />
thatwhen workers beg<strong>in</strong> to see how <strong>in</strong>vestment<br />
fees and adm<strong>in</strong>istrative costs<br />
are ravag<strong>in</strong>g their retirement sav<strong>in</strong>gs,<br />
they will start prodd<strong>in</strong>g the managers<br />
oversee<strong>in</strong>g these plans to behave like<br />
the fiduciaries theyare.<br />
<strong>The</strong> fact is, fund companies and otherproviders<br />
of401(k)sare gett<strong>in</strong>g rich<br />
off these plans.And <strong>in</strong> this zero-sum<br />
game, future retireesare def<strong>in</strong>itely the<br />
poorerforit.<br />
IN THE NEWS ✴ WORLD BUSINESS<br />
BEIJING<br />
DATA SHOW SLOWER GROWTH<br />
IN CHINESE SERVICES SECTOR<br />
Expansion<strong>in</strong>the servicessector<strong>in</strong><br />
Ch<strong>in</strong>a slowedfor the second consecutive<br />
month<strong>in</strong>May, an official survey of<br />
nonmanufactur<strong>in</strong>g purchas<strong>in</strong>g managers<br />
showedSunday.<br />
<strong>The</strong> datafrom the Ch<strong>in</strong>a Federation<br />
ofLogistics and Purchas<strong>in</strong>g came just<br />
days after two surveys of the country’s<br />
vast factory sectorshowedmomentum<br />
slow<strong>in</strong>g last month. Comb<strong>in</strong>ed,the data<br />
illustrate a worse-than-forecast deterioration<strong>in</strong>demand<br />
at home and abroad,<br />
which <strong>in</strong>creases the likelihood ofmore<br />
policy eas<strong>in</strong>g fromBeij<strong>in</strong>g.<br />
<strong>The</strong> federation’snonmanufactur<strong>in</strong>g<br />
purchas<strong>in</strong>g managers’ <strong>in</strong>dexfell to 55.2<br />
from56.1<strong>in</strong>April and 58.0 <strong>in</strong> March.A<br />
read<strong>in</strong>g below 50 <strong>in</strong>dicatesacontraction<br />
<strong>in</strong> activity,while aread<strong>in</strong>g above 50<br />
showsanexpansion.Asub<strong>in</strong>dexfor<br />
new orders edgeddown to 52.5,weighed<br />
by an eas<strong>in</strong>g <strong>in</strong> the services <strong>in</strong>dustry.<br />
<strong>The</strong> federationsoughttoplay down the<br />
decl<strong>in</strong>e, say<strong>in</strong>g the <strong>in</strong>dexreflected<br />
healthy activity. (REUTERS, BLOOMBERG)<br />
STUTTGART<br />
VW REVAMPS GROUP MANAGEMENT<br />
TO HELP IT REACH TARGETS<br />
Volkswagen elevated Ch<strong>in</strong>a’sstatus<br />
with<strong>in</strong> its sprawl<strong>in</strong>g empire and reassertedcontrol<br />
overits wayward trucks<br />
brands withanextensive overhaul ofsenior<br />
management dur<strong>in</strong>g the weekend,<br />
as it sought global market dom<strong>in</strong>ance.<br />
<strong>The</strong> company said Saturday that it had<br />
created a management board position<br />
dedicatedsolely to Ch<strong>in</strong>a — its s<strong>in</strong>gle<br />
largest market—which will be filledby<br />
JochemHeizmann,who has beenlead<strong>in</strong>g<br />
itscommercial vehiclesbus<strong>in</strong>esses.<br />
Volkswagen was the first overseas<br />
carmaker to enter Ch<strong>in</strong>a three decades<br />
ago, and withits two local partners is <strong>in</strong>vest<strong>in</strong>g<br />
¤14 billion,or$17.3 billion,to<br />
build factories. S<strong>in</strong>cetak<strong>in</strong>g charge <strong>in</strong><br />
2007, the chief executive, Mart<strong>in</strong> W<strong>in</strong>terkorn,<br />
has transformedit fromacompany<br />
sell<strong>in</strong>g 5.7 million vehiclesayear to<br />
onethat sells nearly 8.4 million. (REUTERS)<br />
DUBAI<br />
IRAN SIGNS ACCORD TO INCREASE<br />
ELECTRICITY EXPORTS TO PAKISTAN<br />
Iran has made adeal with Pakistan to<br />
<strong>in</strong>creaseelectricity exports to its eastern<br />
neighbor to 1,000 megawatts,the<br />
state-runFarsnewsagency reported.<br />
<strong>The</strong> Iranian deputy energy m<strong>in</strong>ister,<br />
Mohammad Behzad, said thatthe countries<br />
would build a transmission l<strong>in</strong>e for<br />
electricitybetween the city of Zahedan<br />
<strong>in</strong> southeastern Iran and Quetta<strong>in</strong><br />
western Pakistan, Fars reported on<br />
Saturday.<br />
<strong>The</strong> projectwill require an <strong>in</strong>vestmentof$700<br />
million and will be jo<strong>in</strong>tly<br />
f<strong>in</strong>ancedbythe two countries,theofficial<br />
Islamic Republic News Agency<br />
said. Earlier, Iran had doubledits<br />
power exports to Pakistan to 70 megawatts<br />
a day. (BLOOMBERG)<br />
TOKYO<br />
IN JAPAN, IMPASSE ON TAX INCREASE<br />
PROMPTS OVERHAUL OF CABINET<br />
PrimeM<strong>in</strong>ister Yoshihiko Noda ofJapan<br />
was to make changes<strong>in</strong>the cab<strong>in</strong>et<br />
on Monday<strong>in</strong>anefforttow<strong>in</strong> opposition<br />
back<strong>in</strong>g fordoubl<strong>in</strong>g the consumption<br />
tax, after his bid to healabreach <strong>in</strong><br />
the govern<strong>in</strong>g party failed.<br />
<strong>The</strong> prime m<strong>in</strong>istermaybow to oppositionpressuretofire<br />
TransportM<strong>in</strong>isterTakeshi<br />
Maeda and DefenseM<strong>in</strong>isterNaoki<br />
Tanaka,whowere censured<br />
by Parliament’s upperhouse <strong>in</strong> April.<br />
<strong>The</strong> prime m<strong>in</strong>ister said he had been unableonSunday,<br />
for the second time <strong>in</strong> a<br />
week,topersuadethe govern<strong>in</strong>g party<br />
powerbroker IchiroOzawa to drop his<br />
opposition to a tax <strong>in</strong>crease <strong>in</strong>tended to<br />
pay for ris<strong>in</strong>g welfare costs. (BLOOMBERG)<br />
HARUYOSHI YAMAGUCHI/BLOOMBERG<br />
Prime M<strong>in</strong>ister Yoshihiko Noda of Japan.<br />
OMAHA, NEBRASKA<br />
LUNCH WITH MR. BUFFETT PERHAPS?<br />
<strong>The</strong> 13th annual onl<strong>in</strong>e charityauction<br />
to w<strong>in</strong> lunch with the <strong>in</strong>vestor Warren<br />
E. Buffett got under way Sunday with<br />
bidd<strong>in</strong>g on eBay to cont<strong>in</strong>ue <strong>in</strong>to Friday<br />
even<strong>in</strong>g. <strong>The</strong> previousfour w<strong>in</strong>n<strong>in</strong>g<br />
bids have each exceeded $2 million.<br />
Onew<strong>in</strong>ner, Ted Weschler,was offered<br />
ajobbyMr. Buffett afterhe had paid<br />
nearly $5.3 million over two years to<br />
chew the fatwith him. (AP)<br />
Build<strong>in</strong>g pride by be<strong>in</strong>g vocal with praise<br />
<strong>Global</strong><br />
Manager<br />
JULIA WERDIGIER<br />
ULRIK GARDE DUE, 49, has been chief executive<br />
of Georg Jensen, the Danish maker of<br />
jewelry and silverware, s<strong>in</strong>ce 2007.<br />
Q. When did you first get the idea that<br />
you might become a leader?<br />
A. Igrew up sail<strong>in</strong>g a lot, and somehow<br />
I was always the capta<strong>in</strong> of the boat. I<br />
enjoyednot only the competitive aspect<br />
of the sport but really mak<strong>in</strong>g theteam<br />
work together. In sail<strong>in</strong>g and rac<strong>in</strong>g it’s<br />
all about articulat<strong>in</strong>g what you feelis<br />
right <strong>in</strong> a very shorttime, because you<br />
depend onso many outside factors that<br />
constantly change. As the capta<strong>in</strong> ona<br />
boat it feltvery natural to metogive orders<br />
and to bethe person who helped<br />
create the rightteamwork spirit.<br />
Also, whenIwas 13 years old, Istarted<br />
mak<strong>in</strong>g my first moneyhelp<strong>in</strong>g out <strong>in</strong> a<br />
grocery store. Istarted off putt<strong>in</strong>g groceries<br />
<strong>in</strong> bags, but Ireally quickly ended<br />
up manag<strong>in</strong>g the store. <strong>The</strong> local owner<br />
saw and noticedhow I embracedmerchandis<strong>in</strong>g<br />
ideas and sales techniques.<br />
Q. Can you give an example?<br />
A. At the beg<strong>in</strong>n<strong>in</strong>g I was quite nervous<br />
to be atthe cash registerbecause math<br />
was not my strong po<strong>in</strong>t. <strong>The</strong>nIfigured<br />
out thatthe dialogue you had with the<br />
customer was really important and<br />
how it could very quickly add to your<br />
basket size. Questions like, ‘‘Have you<br />
seen this new chocolate we’ve got?’’ or,<br />
‘‘Shouldn’t you ratherbuy two packets<br />
ofcereal?’’ So becom<strong>in</strong>g a boss was<br />
thenanatural transitionforme because<br />
s<strong>in</strong>ce my early days it’sbeena<br />
natural way of work<strong>in</strong>g withpeople.<br />
Forme, leadership is about work<strong>in</strong>g<br />
withpeople, not necessarily hav<strong>in</strong>g<br />
peoplework foryou. Enhanc<strong>in</strong>g and<br />
build<strong>in</strong>g team work<strong>in</strong>g spirit has always<br />
been partofmyupbr<strong>in</strong>g<strong>in</strong>g.<br />
Q. When th<strong>in</strong>k<strong>in</strong>g about former bosses,<br />
were there th<strong>in</strong>gs that made you swear<br />
to do it differently, once you became a<br />
boss?<br />
A. WhenIwas <strong>in</strong> my 20sIworkedfora<br />
famousFrench luxury company and I<br />
was responsible for sales<strong>in</strong>Southeast<br />
Asia.Myboss — agreat personality —<br />
came out to do a tour of the countries.Of<br />
course I organized thattrip, and I was<br />
very exited to show all the greatth<strong>in</strong>gs<br />
we had done. At one po<strong>in</strong>t I was asked<br />
to cometomy boss’ssuite and unpack<br />
hersuitcases. Sothere I was with this<br />
regional responsibilityforrevenue <strong>in</strong><br />
the most important partof theworld for<br />
this particular company,unpack<strong>in</strong>g<br />
suitcases withlayers ofbeautiful<br />
clothesallwrapped <strong>in</strong>dividually <strong>in</strong> silk<br />
paper and hang<strong>in</strong>g them<strong>in</strong>the closet.<br />
Icould laugh about it atthetime, but<br />
wheneverIthought about it s<strong>in</strong>ce, it’s<br />
really this very important borderl<strong>in</strong>e<br />
betweenpersonal and professional.<br />
While Ibelieve a very personal management<br />
style is key to success, it’s very<br />
important alsotohave that separation.<br />
GEORG JENSEN<br />
Ulrik Garde Due said managers must balance<br />
the personal and the professional.<br />
Q. What about the other extreme? What<br />
do you remember be<strong>in</strong>g really impressed<br />
by <strong>in</strong> a boss?<br />
A. My biggest and most important<br />
mentor<strong>in</strong>mycareer has beenRose<br />
Marie Bravo, for whomIworkedat<br />
Burberry for almost 10 years. Imet her<br />
<strong>in</strong> New York whenshewas at Saks<br />
Fifth Avenue. You walked<strong>in</strong>to Saks and<br />
askedsomebody how itwas to work for<br />
Saks, and heorshe would say, ‘‘I work<br />
for Ms. Bravo.’’ So somehow that message<br />
and that <strong>in</strong>dividual connection<br />
camethrough with everyone <strong>in</strong> that<br />
store feel<strong>in</strong>g they werework<strong>in</strong>g for Ms.<br />
Bravo and will<strong>in</strong>g to gothatextra mile.<br />
Thatwas really a fantastic, positive<br />
way formetosee how you can runa<br />
very big company but also stay closeto<br />
theemployees.<br />
Q. How do you get people to follow you<br />
and the company strategy and culture?<br />
A. It’s important as soonaspossibleto<br />
figure out people’sstrengths and<br />
weaknesses and makeeveryoneunderstand<br />
how importantteamwork is.<br />
At Georg Jensen, for example, it has<br />
been very <strong>in</strong>terest<strong>in</strong>g formetowork<br />
out of differentoffices. It’salways<br />
about be<strong>in</strong>g as personable as you can<br />
whendeal<strong>in</strong>g withpeople and just gett<strong>in</strong>g<br />
under that bureaucratic layer,especially<br />
<strong>in</strong> Asia,through that feel<strong>in</strong>g of<br />
authority.<br />
<strong>The</strong> big challenge has been that at<br />
Georg Jensen, and often<strong>in</strong>Denmark, I<br />
feel there’s this way of work<strong>in</strong>g <strong>in</strong> a<br />
very understated, sometimeshumble,<br />
way. It’sabout not be<strong>in</strong>g as loudasyou<br />
would be <strong>in</strong> America or othercountries<br />
about how to be successful, about how<br />
to drive the bus<strong>in</strong>ess, giv<strong>in</strong>g prideto<br />
theteam for whattheyhave achieved<br />
and bevocal about it.<br />
In theold Georg Jensenculture, we<br />
tendednot to talk about itwhen we did<br />
greatth<strong>in</strong>gs and didn’t praise people<br />
enough to keep themmotivated. Sothat<br />
was oneof the firstth<strong>in</strong>gs I did whenI<br />
jo<strong>in</strong>edGeorg Jensen,toreally praise<br />
people and to make surethat people<br />
also know when they didn’t dotheir<br />
work well.<br />
Q. So what was miss<strong>in</strong>g was feedback.<br />
How did you decide that that was important?<br />
A. Iknow myself thatthere’snoth<strong>in</strong>g<br />
more importantthanapatonyour back<br />
whenyou’ve donewell. Everybody deserves<br />
thattobe stimulated.WhenI<br />
th<strong>in</strong>k of the different bosses I had<br />
throughout my career, someof them<br />
werevery goodat prais<strong>in</strong>g and I saw<br />
how that helped to build my self confidence<br />
and how I wanted to do evenbetter.<br />
Q. How do you deal with big decisions<br />
and how do you make them when times<br />
are difficult?<br />
A. It’s very importantwhen we go<br />
through a difficulttime, and we all do,<br />
to communicate with theteam about<br />
whereweprioritize and whereweput<br />
ourfocus. Communicationiskey<br />
throughout manag<strong>in</strong>g the company <strong>in</strong><br />
difficulttimes.Mak<strong>in</strong>g sure you set the<br />
agenda and communicate itwell and<br />
mak<strong>in</strong>g surethat everyone buys <strong>in</strong>to it<br />
and then executes accord<strong>in</strong>gly. In difficulttimes,there<br />
is even a biggerneed<br />
to stand on the box and communicate<br />
withpeople becauseof theuncerta<strong>in</strong>ty<br />
thatexists.<br />
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