Features

Safe and unsound

National | Safety and security market heats up, California raises labor costs, and AOL Time Warner throttles back

Issue: "Roe vs. Wade at 29," Jan. 19, 2002

Land of the free market
The market for safety and security products, hot since Sept. 11, is attracting industrial heavyweights, entrepreneurs-and combinations of both. Maplewood, N.J., adhesive heavyweight 3M is targeting the homeland security market with a new product that will make passports harder to fake. "Confirm ES," a security laminate the firm unveils this month, uses a "retro-reflective" material that is transparent to the naked eye but reveals a complex pattern under direct light. The material breaks easily if someone tries to manipulate it. While waiting to launch that innovation, 3M is also stepping up marketing efforts on existing products such as fire-fighting foams, shatter-resistant window films, and security screens for laptop computers. Meanwhile, Handle with Care, a New York crisis-intervention training-program and equipment-design firm, this month began marketing to airlines its Passenger Volunteer Program, an air-security briefing passengers can take between connecting flights. The one-hour course "organizes a passenger response before the plane leaves the gate," said company CEO Bruce Chapman, in part teaching travelers a two-person restraint method used by law-enforcement officers. Citing last month's passenger heroics aboard American Flight 63, when travelers banded together to keep Richard C. Reid from igniting explosives hidden inside his tennis shoes, Mr. Chapman called air passengers a safety resource "that can no longer be ignored." Heavyweights and entrepreneurs are joining forces in New Mexico. Private-sector startups there, such as MCL Technologies and Stolar Horizons, Inc., are tapping into talent pools at national labs like Sandia and Los Alamos to craft next-generation terror-fighting technologies. Albuquerque-based MCL Technologies is developing pocket-sized sensors that could be used to detect anthrax, chemical agents, and some infections. Stolar Horizons, Inc. makes mining machines that cut coal, but also could be used to locate and display images of enemy tunnels and explosive landmines. Will New Mexico become the Silicon Valley of homeland security? Maybe. Sen. Pete Domenici (R-N.M.) has already proposed that the state's government-backed labs become homeland security chief Tom Ridge's science and technology arm. And more firms like Stolar are on the way: The fledgling firm is the offspring of Technology Ventures Corporation (TVC), a nonprofit business incubator founded by Lockheed Martin Corp. TVC has since 1994 launched 46 new tech startups in New Mexico, and has 31 more in development. California and bust?
It is now illegal in California to work for less than $6.75 an hour. The Golden State this month orders an 8 percent hike in the minimum wage, saddling employers in the state with a $1.60 an hour higher minimum than the federal minimum of $5.15. At $6.90, only Washington state's minimum is higher. Labor leaders, who represent highly paid skilled workers, are happy, but employers say the hike is poorly timed and may send some marginally profitable companies belly-up. "It's ludicrous after the year we've just had to do such a thing right now," said Jeff King, co-founder of King's Seafood Company, which operates 12 restaurants in the state. Between the recession, last year's spiraling power prices, and the post-9/11 economic fallout, Mr. King said many hospitality businesses that rely on minimum-wage labor already are skating on the edge of closure. The state, he said, should "hold off for awhile before putting another nail into the coffin." Expensive goodwill
Is media giant AOL Time Warner mounting a fiscal retreat? The world's largest media conglomerate said last week it would take a mammoth one-time accounting charge of between $40 billion and $60 billion this quarter in order to comply with new accounting rules on how "goodwill" is measured. "Goodwill" is a kind of financial tape-measure companies use when logging the value of acquired companies into their balance sheets. AOL said the one-time accounting charge would reflect overall market declines since its early 2000 merger with Time Warner, and save the firm about $7 billion per year in future accounting adjustments. The revisions mark a step back for AOL, which last year stuck with aggressive growth targets even as the economy sailed south. Though the company eventually lowered its targets, AOL shares have plunged by about half since the Time Warner merger.

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