Image dousing: Mother Jones takes on Fiji Water

Bottled water's image problems won't be helped by Mother Jones magazine's story on the making of Fiji Water as America’s No. 1 premium imported H2O -- set against the dark reality of the Fiji islands’ social and political conditions.

Fiji Water is owned by Lynda and Stewart Resnick, the Beverly Hills business magnates and marketing whizzes who also control the Teleflora flowers-by-wire service; an agricultural empire in the Central Valley; and POM Wonderful, which produces POM Wonderful pomegranate juice.

Fiji Water, Mother Jones notes, has "positioned itself squarely at the nexus of pop-culture glamour and progressive politics."

But "nowhere in Fiji Water's glossy marketing materials will you find reference to the typhoid outbreaks that plague Fijians because of the island's faulty water supplies; the corporate entities that Fiji Water has -- despite the owners' talk of financial transparency -- set up in tax havens like the Cayman Islands and Luxembourg; or the fact that its signature bottle is made from Chinese plastic in a diesel-fueled plant and hauled thousands of miles to its ecoconscious consumers."

The author, Anna Lenzer, is most vexed by what she regards as the company's unwillingness to challenge the oppressive military junta that has been in control of the country since 2006. For the junta, Lenzer writes, "Fiji Water is a major source of global recognition and legitimacy."

Of course, if U.S. companies could be counted on to challenge oppressive regimes, American retail shelves would be devoid of anything made in China. Try to imagine that.

Bottled water has been under attack by environmentalists for years for the carbon footprint involved in transporting the stuff around the globe. Lenzer addresses that issue, too, noting how Fiji Water insists that it's part of the carbon solution, not part of the problem.

The full Mother Jones story is here. If you drink Fiji you'll probably learn some things, even if you don't come away convinced that the company is actively abetting a dictatorship.

Fiji Water's response to Lenzer is here.

Why do people shell out so much for "premium" bottled water, anyway? More consumers must be asking themselves that question: The Washington Post reports that the bottled-water boom overall appears to have peaked, in part because newly penny-pinching consumers have found it to be such an easy expense to cut.

-- Tom Petruno

Five views of Obama's move on Wagoner and GM

Was it an unconscionable power grab by the Obama administration -- or exactly the right decision to try to save a company that has been careening toward catastrophe for years?

Here are five of the more interesting reactions I read to the White House’s decision to boot General Motors Corp. CEO Rick Wagoner and give the company two months to come up with a long-term plan for survival:

Marc Ambinder, The Atlantic magazine online:

A review of the government's explanation for why it deems GM and Chrysler "unviable" demonstrates precisely the sort of micro-level intervention in the two companies that the Obama administration had previously sought to avoid.

For example, although the administration disputed GM's contention that the global market conditions would arrest the rate of GM's market share decline, it also blamed the company for retaining "too many unprofitable nameplates" that "tarnish its brands" and "demand increasingly scarce marketing dollars."

Further, GM is slammed for producing cheap cars and selling them too cheaply. "These lower price points are an important impediment to enhanced GM profitablility and need to be reversed over time in order for GM to bring its margins into line with its-best class peers." What that means, in essence, is that the government wants to see GM produce fewer, more expensive cars.

Glenn Hall, editor, TheStreet.com:

The most outrageous part of all of this is that the government had to do the dirty work for GM's board, which repeatedly backed Wagoner until the very end. The writing was on the wall, considering the performance of the century-old automaker since Wagoner became CEO in 2000 and chairman in 2003.

For the Obama administration, change was clearly not coming fast enough. They grew tired of waiting for Wagoner and the GM board to get into gear.

It's a nearly impossible task for any executive to be bold enough to undo all he had done, to tear down all he had built and to admit that what might have been right before is wrong now. Inevitably, this requires new blood, a fresh perspective and someone at the helm with no love of the past.

Sen. Bob Corker (R-Tenn.):

With sweeping new power the White House will be deciding which plants will survive and which won't, so in essence, this administration has decided they know better than our courts and our free market process how to deal with these companies.

It’s been a long time since Washington has seen the kind of kowtowing that’s about to occur among members of Congress trying to curry favor with the administration to keep plants in their states open, and it will be interesting to see if the administration makes these decisions based on a red state and blue state strategy or based on efficiency and capable, skilled workers at each plant.

This is a marked departure from the past, truly breathtaking, and should send a chill through all Americans who believe in free enterprise. I worry that in one fell swoop we’ve lost our moral high ground throughout the global community as it relates to chastising other countries that use strong arm tactics to invade on private property rights.

Larry Kudlow, economics editor for National Review Online:

In President Obama’s speech about the Wagoner firing, as well as in Treasury term sheets for GM and Chrysler, there are multiple references to "the next generation of clean cars," to new CAFE-standard mileage increases, and to green power-train developments. All this is a big green climate-change priority for the new administration.

But the simple fact is, small, tinny, and expensive green cars just don’t work for consumers. And even if those cars are designed better, the cost structure of the carmakers will have to be brought down so far that UAW wages will be forced below those of the non-union shops in Detroit south (including Honda, Toyota, and other foreign carmakers who are now producing in the United States).

So add the green revolution to the industrial-policy plans of the White House. Expect a big increase in CAFE fuel standards, even though small cars are simply not profitable. And plan on bailout nation taking a new left-turn toward the kind of central planning that has held down economic growth in Europe and Japan for so very long.

Paul Ingrassia, one-time Detroit bureau chief for the Wall Street Journal, writing in the Journal:

What's good for General Motors really is good for America after all. And vice versa.

That's the best way to read the sad but necessary -- in fact, long overdue -- departure of GM CEO Rick Wagoner. Give the Obama team credit, too, for replacing most of GM's pet-rock board of directors, which put loyalty to Mr. Wagoner above duty to shareholders while the company

Meanwhile, the two key questions for General Motors are who should lead the company and whether it really can successfully restructure without filing for bankruptcy.

On the first question, I'd vote for an outsider. Fritz Henderson, the company's president and GM lifer who's replacing Mr. Wagoner, might be very capable, but the plain fact is that GM is far too inbred. Over the years the company has launched successful innovations ranging from a joint-venture plant with Toyota in California to the Saturn subsidiary to modular auto-assembly techniques in Brazil, but has failed to capitalize on any of them.

As for bankruptcy, President Obama and task force chief Steve Rattner clearly would rather avoid that, for both GM and Chrysler. Politically, it's a savvy move for them to give the companies one more chance to avoid bankruptcy. The president's words yesterday will make it hard for him to back down.

-- Tom Petruno

Solar stocks soar after China offers to subsidize projects

The bear market apparently didn't kill off the last speculator: They were out in force today in solar stocks after China offered new subsidies to promote solar power.

From Bloomberg News:

Chinese solar stocks rose the most ever in New York trading after China, the world’s biggest greenhouse-gas emitter, introduced a subsidy to promote the use of alternative energy.

The government will offer this year 20 yuan ($2.93) per watt for solar projects with generating capacity of at least 50 kilowatts, the Ministry of Finance said in a statement posted today on its website.

“We believe meaningful upside potential exists if government support for domestic solar sector continues,” Barclays PLC analyst Vishal Shah wrote in a note to clients.

Among the day's big gainers: Suntech Power Holdings, China's largest solar-components maker, soared $3.44, or 44%,to $11.29; LDK Solar, which manufactures solar wafers, jumped $1.87, or 32%, to $7.76; Yingli Green Energy, which makes photovoltaic cells, surged $1.86, or 45%, to $6.01.

U.S. solar companies also got a lift on the news. First Solar jumped $16.41, or 12.2%, to $150.39.

Besides China's new incentives, growing optimism about the Obama administration's plans to boost renewable energy projects also may be pulling investors back to solar stocks.

Chinese solar stocks had been one of the market's biggest bubbles in 2007, before collapsing last year. Suntech had reached a high of $88.35 at the end of 2007. Yingli's record high was $41.40, also at the end of 2007.

But as manias go, that one at least had a fundamental underpinning: Suntech, LDK, Yingli, First Solar and many other solar players have been making real money for the last two years as sales have boomed.

Suntech is expected to earn 60 cents a share this year, the median estimate of 25 analysts who cover the company. That gives the stock an estimated price-to-earnings ratio of 19. First Solar's estimated 2009 P/E is 23. If these still qualify as long-term growth stocks, the P/Es aren't outlandish.

The Motley Fool has some details on the Chinese subsidy announcement, and some cautionary notes. Click here.

-- Tom Petruno

Gauging the costs, and opportunities, of a greener world

The ECO:nomics conference in Santa Barbara last week was all about the free market's collision with sustainability.  Times staff writer Edward Silver filed this report on the meeting:

It's fitting that, at a conference sponsored by the Wall Street Journal, green strategies were held to account for their costs and competitiveness vis-à-vis the carbon economy.

On the other hand, the views aired were refreshingly fixed on the future. That's a sign of evolution because the market gets a bit baffled when pressed to address long-term needs, and the extra costs tend to kick up its allergies. Environmentalists, frustrated with the rampant short-sightedness, habitually ask, "Where’s this company/industry/way of life going after the next quarterly report is filed?"

Many of the presenters at the gathering see it as their mission to extend the market’s attention span and make it work for the environment. A greener world could well cost more, they may say, but think of it as trading up to a sturdier home.

Ignoring the ruin of the Earth’s assets amounts to a "massive market failure," Al Gore declared shortly after his introduction. To take one example offered by the ex-veep, Nobel laureate, Oscar winner and venture capitalist, no one is paying for the use of the atmosphere to dump carbon, which is melting Greenland and other ice bodies. Sea levels will rise, he warned, and newly uncovered water will release methane, an especially menacing greenhouse gas.

At least a partial antidote is attaching a price to carbon. That could take the form of the cap-and-trade system contemplated by the Obama administration, which would impose charges on, and create a market in, the right to emit. Such an approach could, for instance, create incentives for coal plants to capture and inject emissions underground, an unwieldy, unproven blueprint that by some estimates could raise the cost of burning the stuff by 40%.

As these economic blows against fossil fuels land, both producers and consumers could get bruised. In fact, the bills could widen the gulf between energy haves and have-nots. Nevertheless, the cause of energy innovation is likely to prosper, and the planet may curb its quickly mounting losses.

Likewise, revamping the way the market sets prices is the only thing that can prevent a national water calamity, said Disque Deane Jr., chief investment officer at Water Asset Management. Americans still gulp, flush, wash, spray and irrigate with abandon, he lamented, warning that a tsunami of scarcity is ready to hit.  . . .

An ecosystem of ideas at the Clean-Tech Summit

At the annual Clean-Tech Investor Summit in Indian Wells this week, finance, science and imagination mingled, with the aim of fostering industries that preserve the planet. The gathering was produced by Ron Pernick of Clean Edge consultants and Craig Simak of the International Business Forum, and chaired by venture investor Ira Ehrenpreis of Technology Partners.

Times staff writer Edward Silver filed this report on some of the ideas offered by conference speakers, each an innovator in sustainability:

A long road

During a discussion of the roadmap for electric vehicles, Britta Gross, manager of hydrogen and electric infrastructure for General Motors, spoke of the challenge to succeed with the upcoming Volt car along with the rest of the company’s EV agenda.

Producing a quality electric car, she said, isn’t enough to win hearts and minds. To begin with, you need effective charging systems and smart public policy. Suddenly you’re also up against cheaper gasoline.

I got the sense that Gross feels she’s in a bind, and not just because of GM’s financial straits. If there’s no mechanism but the marketplace at work, the entrenched advantages of the petro-driven status quo -- cost, familiarity, convenience -- will be difficult to overcome.

Jason Wolf of Better Place offered his view of the solution, or at least a piece of it. His Palo Alto company proposes to own the EV battery, taking a big chunk out of the price of the car. That becomes a subscription fee instead. The motorist pays to use the battery, rejuicing it at perhaps one-day-ubiquitous Better Place charging stations. During a trip longer than 100 miles, you swap it out for a fresh one. Said Wolf: "We enable mass adoption." . . . .

Will 'green' IPOs get a better reception in '09?

From Times staff writer Edward Silver:

Early in 2008, it seemed venture capitalists would have ample opportunity to cash in some of their stakes in green start-ups. As it turned out, the initial public offering market went into a deep freeze. Only a handful of clean-tech companies went public, and several put their plans on indefinite hold.

As we march nervously into ’09, green fledglings still are virtually barred from the stock exchange. A lot can change in the course of the year, though. Before it’s over, the Obama regime, rolling out its plan to stir growth in sustainable industry, could pry the gate open.

Investors who bought into green IPOs last year were burned. GT Solar International, which makes production equipment, went public at $16.50. Shares of Real Goods Solar were initially priced at $10. Both now are under $5. The slide has not been as steep for Energy Recovery, which has the know-how to conserve energy in water desalination. It went out at $8.50 in July and now is at $6.85.

With Wall Street still on edge, for the moment few investors are keen to take chances on fledglings that have much to prove, even those with much promise. . . .

Need capital? Green start-ups may fare best in tough '09

Start-up companies in green industries stand the best chance of getting venture capital funding in 2009 -- in what will otherwise be a dismal year for entrepreneurs looking for money, a new venture industry survey suggests.

The National Venture Capital Assn., in a 2009 outlook report today, says its survey of 400 venture investors nationwide found that 92% predicted a slowdown in investment next year as the economy continues to contract.

That’s bad news for California, historically a major incubator of new businesses, particularly in technology.

Sixty-two percent of venture investors forecast a decline in funding in 2009 of more than 10% from the expected $30-billion investment total in 2008.

With virtually no appetite on Wall Street for initial public stock offerings, venture capitalists have lost one big incentive for putting money to work: the potential for cashing in on hit companies by selling them to public investors. There have been just 43 IPOs this year, down from 272 in 2007. And only one IPO has come to market since August 31, according to ipohome.com.

Seventy-two percent of venture investors in the survey said they didn’t expect the IPO market to reopen until 2010 or beyond.

Still, venture funds are likely to try to protect investments they’ve previously made, by steering money away from new opportunities in favor of companies already in their portfolios.

"We will likely see a marked slowdown of new investments as venture capitalists turn their attention to supporting existing companies," said Mark Heesen, NVCA president.

Despite the overall slowdown expected in venture funding, 48% of venture capitalists predicted increased investment in clean technology businesses, ranking that sector at the top of list of industries likely to get more funding.

The life sciences industry, including biotech, ranked second.

On the flip side, semiconductor entrepreneurs may go begging for money: 79% of survey respondents predicted a drop in venture investments in that industry next year. And 71% expect less funding for the media/entertainment sector.

-- Tom Petruno

Pelosi stresses tech, green spending in stimulus plan

House Speaker Nancy Pelosi emphasized again today that the coming economic-stimulus spending plan will focus at least in part on boosting the nation’s Internet infrastructure and renewable-energy projects, besides traditional public-works projects like road and bridge construction.

She also signaled that the spending package could reach $600 billion.

In a Bloomberg TV interview, the San Francisco Democrat reiterated her views on using some of the money for technology and green-energy projects. She and President-elect Obama are on the same wavelength on this issue, which ought to encourage Silicon Valley and the green movement as the stimulus package takes form.

From Bloomberg News:

Pelosi said the U.S. House is likely to act next month on a $500 billion to $600 billion economic-stimulus measure aimed at making long-term investments in renewable energy as well as providing a short-term boost for the economy.

"Economists told us that the package had to be strong enough, half a trillion, $600 billion, somewhere near that," Pelosi said in an interview on Bloomberg TV’s "Political Capital with Al Hunt."

She said the legislation will be geared toward some broader Democratic priorities -- such as boosting broadband Internet technology and making environmentally friendly improvements to the nation’s electric-power grid -- in addition to more-traditional road-and-bridge projects. Some of the spending will extend beyond 2009, she said.

"I hear people say, 'Oh, they want a 1930s public works project,' " said Pelosi, 68. "No. Certainly we will have public works projects in it, but it’s about broadband for all Americans. It’s about a smart, modern grid to be able to transmit the new, renewable energy -- wind, solar, biofuels, the rest. It’s about a very modern approach to building the infrastructure of America.

"Some of the money would be spent beyond one year," she said. "It would be about infrastructure, rebuilding America’s infrastructure -- creating good-paying jobs in America; innovation, to do so in a new, green way that causes a green revolution in our country."

Photo: House Speaker Nancy Pelosi. Credit: Alex Wong / Getty Images

The public purse may sustain green industry

The recession and financing freeze have hit renewable energy and clean tech like the plague, only less selectively.

Here’s a sampling of the harm. Wind energy producer Noble Environmental, whose IPO has been shelved, is purging staff. The stock of GT Solar, an equipment maker that posted a solid profit in the fall quarter, slumped below $2 late last month. Energy Recovery, whose technology conserves energy in seawater desalination, has lost about half its value since July, while cash on the balance sheet accounts for almost half the capitalization of solar giant Suntech Power.

Experience suggests that fatalities will occur in a toxic environment like this. In some cases, imprudent or unlucky investors will suffer a total loss. The overpopulated solar sector in particular may witness a few funerals in 2009.

For those with itchy trigger fingers, these wallowing shares may turn out to be profitable trading vehicles. In the near term, even stocks ultimately destined for delisting may leap at evidence of economic improvement, or perhaps indirect but powerful signals such as the appointment of credible environmentalists to run Barack Obama’s EPA and Energy Department.

When hedge funds are done dumping shares to meet margin calls, when mutual funds are finished selling their losses to dress up their portfolios for year-end reports, if fresh news suggests early 2009 will be simply ugly but not dire, these stocks may rally.

And then, perhaps, fall back.

If the most pessimistic economic forecasters are right, corporate failures will proliferate in clean tech and the limping large players will absorb a batch of the smaller ones. But 2009 may not be so painful, thanks to the largess of the public sector.

Stimulus has become the slogan in Washington as the ascendant Democrats prepare their agenda, and they are not talking about stimulating SUV sales or drilling in wildlife refuges. As the financier of last resort, the next government is bound to wield its powers to further a sustainability platform. ...

Ailing autos may be Obama's vehicle

From Times staff writer Edward Silver:

The president-in-waiting doesn’t want to let the American auto sector fail, and not only because that would set off a shock wave in manufacturing and destroy millions of jobs. He and his advisors see the industry as a vehicle for solving America’s energy crisis and steering the economy down the path of green growth.

It’s hard to deny that much of the blame for our energy problem can be laid at Detroit’s doorstep. The carmakers have a history of resisting the kind of change that would ease our dependence on a finite fuel source, one that fortifies unfriendly petro-states and worsens global warming.

Obama clearly seeks to make that dream deferred a reality. His renewables and efficiency agenda would hit a wall if the American automobile industry was put up on blocks. Furthermore, bankruptcies could rob the nation of the chance to build export industries with markets wherever wheels are found.

The president-elect’s agenda was designed to unfold over several years, driven by a mix of policy fiat and cash incentives. Congress already has approved $25 billion to help automakers stay afloat and retool plants. Obama also backs fresh funds for fuel research and generous subsidies for consumers who switch to electric or flex-fuel vehicles.

But plans to prod the marketplace to assemble a solution are colliding with a harsh reality. General Motors, Ford Motor and Chrysler, onetime emblems of American industrial strength, are veering dangerously close to insolvency.

In GM’s case, the money may run out in a matter of months. And the car crash is happening too fast to hope for a transition that doesn’t involve rushed decisions and high costs.

Life support, not evolution, is the task at hand. So Obama has dropped his reticence about taking policy stands before taking office and urged a $50-billion transfusion into the automakers’ dwindling accounts.

On the plus side, the companies now aren’t likely to fight a reinvention program, as they had for so long. When you’re gasping for breath, resistance is futile. . . .