Confused by Conglomerates? Consider These Three Things When Researching Corporate Ownership.

There is a difference between brand identity and corporate identity but finding the latter may prove to be more difficult than reading the name on a label. While the average consumer in a retail store may not know—or indeed have a desire to know—who owns each product in their shopping cart, there are legitimate reasons why the matter of corporate ownership may become important.

Whether by a series of opportune mergers and acquisitions, the planned purchase of an entire supply chain, or through strategic efforts to saturate a given category, the portfolio of brands a parent company may own can be confusing—if not nearly impossible—to track down.

This can create a challenge for researchers trying to match brands to corporations or a local sales manager to their global c-suite leaders. Consider the difficulty an academic researcher might have evaluating potential conflicts of interest whenever any given funding source could have financial interest in dozens of varying industries. In other cases, one industry behemoth may have acquired most—if not all—of the supply chain. How might a small- or mid-sized competitor evaluate that and engage with potential suppliers without the risk of supporting their primary competition?

Navigating the web of corporate ownership and affiliation can be complex, but there are certain paths to take to find clarity.

Follow the Trail of Reporting

Activities that bring varying brands under new parent company ownership often attract some level of media attention—even smaller acquisitions tend to get listed in local business publications. For much larger companies, however, M&A activity is likely to be covered heavily in local, national and industry-specific news.

Determining the parent company of a certain product or organization can often require looking beyond the current news cycle. A parent company may have made headlines for acquiring a brand a decade ago, but that brand could still operate the same today with little or no mention of its parent entity.

Duracell—the worldwide battery company with headquarters in the United States and Switzerland—is an example of how this happens. While the brand itself has existed continuously since the 1920s, there have been many changes in its ownership that might be hard to track, especially when only evaluating today’s reporting on the company.

The current owner of Duracell, Berkshire Hathaway, Inc., is a clear example of the diverse holdings a single company today may own. Beyond batteries, the company operates in industries as varied as insurance, building materials, food condiments and media outlets. While stories from the time of its acquisition of Duracell provide context to better understand the details of the Berkshire Hathaway transaction, even stories published in highly specific battery-industry trade journals don’t mention the brand’s ownership today.

Don’t Be Fooled by Apparent Competitors

Belgian beverage company Anheuser-Busch InBev has practically stacked the shelves in their favor when it comes to global beer consumption. While beer brand loyalists may feel a competitive rivalry between what they consider domestic or imported, craft or classic, many of these beer brands—as diverse as Budweiser, Corona and Stella Artois—originate from this same parent company.

In fact, owning seemingly competing products in the same category isn’t all that uncommon. U.S.-based Proctor and Gamble owns two diaper brands, at least four fabric detergents, multiple shampoos and several competing detergents and cleaners… among many others. This is an “illusion of choice” that often goes unnoticed by consumers.

For researchers, the challenge comes from finding quality source materials that bypass branding in favor of data.

Use Resources to Help Connect the Chain of Ownership

Researching corporate ownership may feel a lot like genealogy and following the trail of corporate affiliation can certainly branch out like a family tree. One brand’s parent company can have another parent company that is held by yet another organization on top of that. This can go on for many “generations,” and can potentially complicate research. Especially as partially owned companies, sister companies and joint partnerships come into play, bypassing information geared toward consumers and looking at more direct industry filings can prevent research from being derailed by chaos.

The information exists, but finding it can be difficult. Public financial records, regulatory disclosures, press releases and investor reports all disclose information that—when analyzed together—can help determine corporate affiliations. Additionally, researching executive and board staffing can provide hints to corporate affiliations as well. While many legal entities can exist in the chain of corporate ownership, because they have unified operations, they will often have the same people in positions like chief executive or chairperson.

Using research tools that bring these information sources together can help make the corporate ownership research process less manual than mapping out an entire corporate tree and scouring company biographies and announcements.

Governors in Brief - January 21 2019

DESANTIS WANTS MAJOR CHANGE TO FL MEDICAL WEED LAW

Saying he wants to see people “be able to have their suffering relieved,” FLORIDA Gov. Ron DeSantis (R) urged Sunshine State lawmakers to allow medical marijuana patients to smoke their weed if they so choose. If lawmakers do not go along by March, he said he would drop a state appeal filed by the administration of former Gov. Rick Scott (R) of a court decision that says banning it violates a constitutional amendment. (TAMPA BAY TIMES, ORLANDO WEEKLY)

 

CUOMO PITCHES NY PLASTIC BAG BAN

After legislation he proposed last year died without a vote, NEW YORK Gov. Andrew Cuomo (D) inserted a ban on single-use plastic bags into his 2019 budget. Cuomo said he is also proposing an expansion of the Empire State’s so-called “Bottle Bill” – which encourages people to recycle used plastic bottles - by making most non-alcoholic drink containers eligible for the 5-cent redemption. (NEW YORK TIMES, ALBANY TIMES-UNION)

 

KS, OH GOVS EXPAND LGBTQ PROTECTIONS

KANSAS Gov. Laura Kelley (D) and OHIO Gov. Mike DeWine (R) each issued executive orders last week barring discrimination against LGBTQ people in state hiring and other areas. Kelley’s order also applies to companies that do business with the state. (LAWRENCE JOURNAL-WORLD, DAYTON DAILY NEWS)

 

BAKER REFILES MA PUBLIC SAFETY BILL

Calling public safety “a fundamental responsibility of government,” MASSACHUSETTS Gov. Charlie Baker (R) re-filed legislation that would make it easier for Bay State judges to keep someone in jail on the grounds that they are dangerous. Baker filed a similar bill last year but did so after the formal session had ended for the year, and the measure died with lawmakers taking it up. (MASSLIVE.COM)

 

-- Compiled by RICH EHISEN

Janus Ruling Not Hurting Union Membership

In June the U.S. Supreme Court ruled in Janus v. AFSCME that unions could no longer require public workers who choose not to join a union to pay union fees even if they benefit from union efforts.

 

That ruling has adversely impacted union finances. For example, in Pennsylvania, unions had to refund about 15 percent of the $42.5 million in union fees they collected from nonmembers and executive branch members last year.

 

But the Janus ruling hasn’t led to the mass defections some had predicted. And in some unions, membership has actually increased since the verdict.

 

At the time of the ruling, 50,072 state executive branch employees in Pennsylvania were union members. Now 51,127 are members. New union memberships have outnumbered defections in Oregon’s Local 503 chapter of the Service Employees International Union (SEIU) by a margin of three to two. And membership in the Chicago chapter of SEIU has increased from 23,800 members to 26,000 since August 2017.

 

“I think the right wing thought this would decimate public-sector unions, and they were clearly wrong,” said Kim Cook of the Cornell University Worker Institute, which supports union and worker rights.

 

One reason union membership hasn’t dropped is because unions stepped up their efforts to attract new members even before the Janus decision. Democratically controlled states have also recently taken actions to bolster union membership. For instance, New Jersey, limited the period of time during which public workers can leave their union. And New Jersey, California and Washington have prohibited public employers from discouraging union membership.

 

But Ken Girardin, an analyst for the fiscally conservative Empire Center for Public Policy in New York, said significant membership declines will be coming in the next few years.

 

“Based on what we’ve observed, you will likely see a multi-year drop in membership, driven chiefly by the fact that people aren’t going to join in the first place,” he said. “The next cohorts of employees won’t join at the same rate as the retirees they are replacing.” (GOVERNING)

Business - July 24 2017

Business In Massachusetts

The MASSACHUSETTS House and Senate agree on a bill that would impose significant changes in the voter-approved law legalizing recreational marijuana sales in the Bay State. Under the legislation, the maximum tax on retail marijuana sales would go from 12 percent to 20 percent, with oversight of both the retail and medical weed industries being placed under a five-person commission. The ballot measure called for a three-person panel. The bill moves now to Gov. Charlie Baker (R), who is expected to sign it into law (BOSTON GLOBE, STATE HOUSE NEWS SERVICE [BOSTON]).

Massachusetts Approves HB 3816

Also in MASSACHUSETTS, the House gives final approval to HB 3816, which requires employers to offer pregnant women reasonable accommodations, including “more frequent or longer paid or unpaid breaks, time off to recover from childbirth with or without pay, acquisition or modification of equipment, seating, temporary transfer to a less strenuous or hazardous position, job restructuring, light duty, break time and private non-bathroom space for expressing breast milk, assistance with manual labor, or modified work schedules.” The bill moves to Gov. Baker (STATE HOUSE NEWS ERVICE [BOSTON]).

Growth Lag And Budget Caution In The States

The U.S. economy is expanding for a ninth consecutive year, unemployment is low, stock indices are near record highs, despite an early August slump, and the Great Recession of 2007-09 is a distant memory. Despite these positives, state budgets for fiscal 2018 are “extra cautious as states contend with slow revenue growth, limited budget flexibility and substantial federal uncertainty,” according to an annual report by the National Association of State Budget Officials (NASBO). Adjusting for inflation, 19 states have failed to reach the revenue levels they enjoyed before the recession.

 

A recent analysis of state trends by the Pew Charitable Trusts underscored the NASBO findings. “The slow pace of tax revenue growth has left many with little or no wiggle room in their budgets,” Pew found.

 

There are several explanations for the tight budgets. “The most prominent reason is the slow economic recovery,” said John Hicks, executive director of NASBO. Although the recovery is the third longest in U.S. history, growth has been weaker than in other post-recession rebounds. The annual growth rate — “real GDP,” which is gross domestic product adjusted for inflation — has never reached 3 percent in any of the recovery years. This year growth was a dismal 1.2 percent in the first quarter and 2.6 percent in the second.

 

Other reasons include a slump in sales-tax revenue and the ever-present shadow of unfunded pension liabilities for state and local government workers and teachers. The gap between the benefits promised to workers and pension fund assets was $1.1 trillion in 2015, the last year for which full figures are available. This was a 17 percent increase from 2014.

 

Meanwhile, sales tax revenues have fallen below estimates, and states are finding it difficult to collect taxes on Internet sales, Hicks said. Americans are spending less on goods, which are taxed in most states, and more on services, which are broadly taxed in few states. This year bills were introduced in 23 legislatures to align tax codes with the modern service economy and tax such activities as personal care, home repair, funeral services and computer maintenance. So far, none have passed. According to Pew, states with service taxes have found them so complicated that tax offices are writing clarifying memos, such as one in North Carolina to distinguish between roof repair (taxable) and roof replacement (not taxable).

Nonetheless, overall tax revenue is up in 31 states. Most of these states have also rebuilt their rainy-day funds, which are reserves they can draw on during a natural disaster or the next economic downturn.

 

There are wide variations among the states, reflecting differences in economic conditions and tax policy. The nation’s most contentious fiscal situation is in Illinois where legislators in July overrode the veto of Gov. Bruce Rauner (R) and passed the state’s first complete budget in more than two years. The repercussions from this budget and an accompanying income tax increase continue to rock the Prairie State. Illinois has more than $14 billion in past-due bills and missed a payment to schools this month. Its credit rating is shaky.

 

States in the nation’s oil patch remain under pressure from declines in production that began with the 2014 oil price collapse. Tax revenue has fallen and job growth stagnated in energy-producing Alaska, Louisiana, New Mexico, North Dakota, Oklahoma and Wyoming, according to an analysis by S&P Global Ratings. Texas, another energy-producing state, has managed to weather the downturn in energy revenue because of economic diversification.

 

Apart from oil-patch states and Illinois most states have shied away from general tax hikes except for gas taxes. Eight states raised taxes on motor fuels this year, bringing to 26 the number of states that have done so during the past four years.

 

“There’s nothing more fundamental in the business of government than making sure the roads and bridges don’t fall apart – and they are falling apart,” California Gov. Jerry Brown (D) said in support of a 12-cent hike in the Golden State’s gas tax that is estimated to raise $5 billion.

 

California is a liberal, Democratic bastion, but the gas-tax raising states this year include fiscally conservative Tennessee and South Carolina, where Republicans are in charge.

 

“We’ve seen more bipartisan agreement on raising gas taxes than almost any other tax out there,” said Jared Walczak, senior policy analyst at the right-of-center Tax Foundation, quoted by Pew.

 

The neglect of roads and bridges that brought about these tax increases was also arguably bipartisan. Another factor is continuing improvement in fuel efficiency for cars and trucks, which reduces gas sales and the taxes that go with them.

 

CNBC rates Rhode Island, New Hampshire, Maine, Connecticut, New Jersey, New York and West Virginia as the seven worst states on infrastructure. Four of these states have Republican governors and three have Democratic governors, but the infrastructure deficiencies began long before any of the present occupants held office.

 

Some governors are trying hard to overcome past shortcomings. Rhode Island Gov. Gina Raimondo (D) has won plaudits for pushing through the Ocean State legislature a repair program called RhodeWorks. It is funded by charging large commercial trucks a toll. In New Jersey the outgoing governor, Chris Christie (R), although generally unpopular, persuaded the legislature to pass a gas tax increase to fund an additional $400 million a year in road repairs.

 

The seven best states for infrastructure on the CNBC list are Texas, Tennessee, Indiana, Georgia, Ohio, Kentucky and Florida. These states have long spent heavily on infrastructure and continue to do so. A notable example is Tennessee, where Gov. Bill Haslam (R) in June signed the IMPROVE Act, which relies on gas taxes and user fees to fund nearly a thousand highway projects, while ultimately cutting state and local taxes by $500 million a year.

 

There are various ways to measure states’ economic health. The Mercatus Center at George Mason University ranks states by financial condition based on tests that include short and long-term budget solvency and unfunded pension and healthcare liabilities. The top five states in 2017 on the Mercatus rating are Florida, North Dakota, South Dakota, Utah and Wyoming. The bottom five are Maryland, Kentucky, Massachusetts, Illinois and New Jersey.

 

The Wall Street Journal (WSJ) ranks states on pension stability based on the percentage of future retirement benefits that are funded. Illinois is last on this list with only 47 percent of its pension obligations funded. Kentucky also has funded less than half of its obligations. The surprise is Connecticut, which has the nation’s highest per capita income but has funded only 48 percent of its pension liabilities. Alaska and Kansas round out the bottom five.

 

South Dakota government workers and retirees can breathe easy. The WSJ notes that the Coyote State funds 100 percent of its pension liabilities. Wisconsin, Washington, North Carolina and Oregon come close, financing more than 95 per cent of their liabilities.

 

U.S. News and World Report rated states this year using more than 60 metrics to measure them on their economic growth and opportunities as well as health, education, safety and much more. The seven top states on the 2017 list are Massachusetts, New Hampshire, Minnesota, North Dakota, Washington, Iowa and Utah.  The seven bottom states are Oklahoma, South Carolina, New Mexico, Alabama, Arkansas, Mississippi and Louisiana.

 

Such lists are interesting but should be read with large grains of salt and understanding. Louisiana, for instance, at the bottom of the U.S. News and World Report list, has been among the most burdened of states. It had not fully recovered from the devastation of Hurricane Katrina in 2005 when the oil price collapse put a heavy dent in state revenues. Small wonder that the Pelican State is facing a $1.2 billion budget gap in 2018, according to Gov. John Bel Edwards (D).

 

The rankings reflect the dangers inherent in hyper-partisanship. Illinois and New Jersey, as examples, are struggling in part because Republican governors have battled for years with Democratic-controlled lower houses of the legislature with little willingness to compromise on either side. Contrast that with Massachusetts where Gov. Charlie Baker (R) works productively with a Democratic legislature. Or with California, where Democrats have a super-majority and a governor who prides himself on fiscal restraint. Gov. Brown, liberal on environmental and social issues but tight-fisted on the budget, acts as a brake on the spending tendencies of a Democratic legislature.

 

Given the weakness and duration of the current recovery and the weight of unfunded pension liabilities, fiscal caution is advisable in any state.