Thursday, February 18, 2010

The Heimer clan

"Last name?"


"First name?"


"Wait, so you're Mr. Weisen Heimer?"

"I am, as a matter of fact."

"I've heard about you. Kind of a joker, right?"

"Well, I suppose so. But at least I'm not a paranoid agoraphobic like my cousin John."

"Wait, are you talking about John Jacob Jingle--?"

"Yes. Sad case. Didn't take his mother's remarriage to Mr. Schmidt well. Hates that hyphenated last name. Thinks people are always calling him."


"Well, whenever he goes out."

Toyota dealer faces suddenly rocky road

I’m about two-thirds of the way through “Crash Course: The American Automobile Industry’s Road from Glory to Disaster” by Paul Ingrassia of The Wall Street Journal, but I have to put it down for a while because it’s too depressing. “[A] devastating and compelling narrative of the ongoing hubris and miscalculation that felled one of our country’s corporate treasures,” wrote one reviewer. And that’s mild.

Compounding the perplexity of it all is the example set by Japanese automakers. As Detroit worked hard to snatch defeat from victory, Japan slowly and steadily created a dynasty by keeping its eye on the prize: building quality cars that people wanted.

Now it’s finally Japan’s turn in the hotseat. Toyota, which in 2007 pushed the great GM aside as the world’s biggest automaker, has suddenly been hit with a series of recalls that will cost billions to remedy. Worse than the financial cost, the company has acknowledged, is the damage to its reputation for quality.

The question, as Detroit has learned the hard way, is how a company reacts when things go wrong. Here’s what Toyota President Akio Toyoda had to say at his press conference: “We will do everything in our power to regain the confidence of our customers.”

Those are certainly the right words, but will actions speak as loudly? I asked Ted Lucki.

Lucki owns Riverhead Toyota, which since its start in 1994 has become the biggest dealership on the East End, selling some 2,000 cars a year. Frankly, I expected him to dodge the call. Lots of people in tough situations do. But Lucki called right back, and that set the tone.

How’s it going? Well, it’s kind of like an illness in the family. “I’m getting a lot of phone calls,” Lucki said. “A Polish customer dropped off a kielbasa. A priest came in to pray for me. I’m not kidding.”

That family theme kept repeating. “We like to promote from within,” Lucki said. Conversely, facing the onslaught of recalls, there have been demotions within: Two salesmen who started as mechanics have been returned to the shop. “They’re a little shocked, but they realize it makes sense,” Lucki said. “We’re a family. We do what’s got to be done when the family needs it.”

What’s got to be done now is a lot of recall work. Lucki said they’re fixing about 30 cars a day, and extending hours to make it possible. “We’re retraining, regrouping, reorganizing, restaffing,” he said. Toyota is helping by funding it all and providing the necessary parts promptly.

“The difficult part will be, from a business point of view, reinstalling confidence,” Lucki said. Realizing that nourishing positive PR would help, he’s giving owners of cars in for recall work coupons for a free lunch next door at Panera Bread. If both recalls are performed, at a total of 2.5 hours, “that’s a long time to wait,” Lucki said.

This isn’t the only speedbump ever encountered by Riverhead Toyota. “The economy affected us, no question about it,” Lucki said. “Business is way off,” down an estimated 30 percent from 2008 to 2009. On the upside there’s been more service, as more people fixed cars instead of buying new. “And the clunker thing actually helped move things along,” Lucki said. They sold about 150 cars through the federal program, and it was “manna from heaven.” Since then things have been slowly improving. “Now this,” he said.

Slow and steady is the road back, as Lucki sees it. Kind of like Toyota’s path when it was first trying to find its way into an American market completely dominated by Detroit. “Toyota’s into doing it right,” Lucki said. “They think before they act.”

He guesses that the company will pull out of this skid and find traction again before too long. “I could be wrong,” Lucki said. But it’s a pretty good bet he’s right.


This is my last East End column for Long Island Business News. The company has decided to head into more straight news, which I’ve been asked to help supply. Thanks for your three-plus years of readership, and as always, if you have any news tips to share, please e-mail me at

Long Island Business News / February 17, 2010

Thursday, February 11, 2010

North Fork's LIRR riders blow the whistle

Rebels are once again rattling swords and threatening secession. The East End’s awake.

This happens every so often and then dissolves in simmering resentment. Usually it foments a brief resuscitation of the Peconic County movement, which is now probably around 50 years old and getting gray around the muzzle.

Generally the spark is financial, as in too much tax going out and not enough services coming in, but once in a while there are specific flashpoints, such as the Shoreham nuclear plant. When East Enders complained that they wouldn’t be able to escape westward in the event of a meltdown, who can forget then-Suffolk Comptroller Joe Caputo replying something to the effect of, “What’s the problem? They all have boats, don’t they?”

Some feel that kind of nurturing attitude is evident in the latest flare-up. This time it’s not Suffolk but the Metropolitan Transportation Authority playing the heavy. At issue is the MTA’s plan to shut down one Long Island Rail Road train from Brooklyn to Montauk and all service to the North Fork except for summer weekends.

Adding outrage is the timing, coming on the heels of Albany’s approval of the payroll tax to help close the MTA’s monster budget gap. “It’s taxation without transportation” was the snappy battle cry issued by Southold Supervisor Scott Russell at a recent rabble rousing in Greenport. “The East End can no longer serve as a cash cow to fund a system that mainly benefits New York City,” said County Legis. Ed Romaine. If the MTA doesn’t relent, he will call for immediate secession from the MTA and creation of a Peconic transportation authority.

Also backlashing has been William Schoolman, president of Hampton Luxury Liner, who recently wrote a $7,000 check to cover his MTA tax and then filed a complaint challenging the law’s constitutionality. It’s illegal on a number of counts, he contends, but on a personal level it’s “particularly outrageous” because it forces him into the unpleasant position of subsidizing his competition, as he wrote in a recent commentary for Long Island Business News.

This is a sad turn in many ways, but especially for the North Fork, which has had a long love affair with the LIRR, dating back to that joyful July 27, 1844, when an all-day celebration marked the opening of the Main Line to Greenport. That put the North Fork on the agricultural and economic map, and forged an emotional bond that would be severely tattered by this cutback.

But you can’t run a railroad on sentiment. The MTA faces a $400 million budget gap. Deficits have been run up “across the MTA family,” authority spokesman Aaron Donovan told me the other day. Cutbacks are planned “across the region, from the East End of Long Island to Rockland County. New York City is getting the most because that’s where the most service is.”

Of the LIRR cutbacks, the greatest impact is seen in the move from four peak trains to two on the Babylon branch, according to documents supplied by Donovan. There it’s projected that 1,100 passengers would be affected daily and $1.05 million would be saved in 2011. Second greatest would be the Greenport cutback, saving $991,000 but affecting only 190 passengers on weekdays and 160 on weekends.

Parsing those numbers, is it fair to say that the North Fork is the LIRR’s least profitable run? That’s kind of beside the point, MTA and LIRR spokesmen told me. All mass transit runs at a deficit. In the case of the LIRR, fares make up only 44 percent of the cost of the service, the rest coming from government subsidies. So the question isn’t so much revenue as it is ridership, and there the North Fork isn’t big. In 2008, for instance, those 160 weekend passengers meant 960 empty seats.

But still, it’s been a longtime and dedicated ridership, and those riders and their representatives deserve a chance to weigh in on the issue. In an unfortunate example of tone deafness, the MTA scheduled no hearings on the East End, “the latest slap in a long list of slaps in the face,” groused William Lindsay, presiding officer of the Suffolk Legislature.

The hearing is now slated for Monday, March 8, at County Center in Riverhead.

Long Island Business News / Feb. 11, 2010

Friday, February 5, 2010

Watching rentals for signs of life

Are we officially into Recovery yet? The answer may come as quickly as next weekend.

That’s President’s Day weekend, which is a holy day of another sort on the East End: the traditional kickoff of the summer rental season. If you’re thirsty for economic tea leaves, you could do worse than reading these.

“President’s Day weekend is when people really start looking, but last year it didn’t really happen,” Karli Kittine of Corcoran Group Real Estate in Southampton told me this week. “It started much later.”

That’s an indicator. In the wintry grip of the financial crisis, summer people were nervous, like skittish antelopes. Not only did they come late to the watering hole, they came for briefer sips.

“It was still a decent season but [activity started] closer to Memorial Day,” Kittine said. Also, there tended to be more short-term rentals and fewer for the full season.

There’s another force at work and it has to do with plumage. “I think people don’t want to be showy” in this bleak climate, Kittine said, (noting with a laugh that, for herself, that’s not an issue). “Instead of $150,000 for the full season, they might do $50,000 for August through Labor Day. But be a little more conscious about it.”

Laura Holson mentioned that trend in her recent New York Times column.

“Now,” she wrote, “after a year of self-imposed austerity and in what is shaping up as a spectacular bonus season, the Wall Street crowd is shaking off what one luxury retailer called its ‘frugal fatigue.’ Unlike earlier spending sprees, however, the consumption will be a lot less conspicuous.”

That’s widely expected to spark a boost in sales and rentals out east, but an interesting spin might be a continued move toward the North Fork, where lots more living can be had if renters are willing to make do with a little less glam.

Back in the Hamptons, as indicators go, the high-end rental market isn’t much of a bellwether, according to Judi Desiderio, president and chief executive of Town and Country Real Estate. Speaking of the rarefied realm of oceanfront rentals, she said, “You can count them on one hand, so they’re going to go.” More telling is activity in lower price ranges “If you have a four- or five-bedroom north of the highway in the woods with a pool, unless it’s priced right and dressed beautifully, it might not get rented.”

Thus, it’s still a buyers’ market, Desiderio said, and canny renters can use that to their advantage. They know that many owners “would prefer to have a real person in [a house] than leave it vacant,” she said, “so they can negotiate a couple weeks on either side [of a short-term rental] for not much money.”

Desiderio did a study on renters and buyers a few years ago, finding that about 70 percent come from New York City and as many as 25 percent from abroad, mainly Europe. In years past that foreign infusion seemed the least predictable, but now it’s the Gotham escapees who are getting hard to prejudge, as they deal with so many influences, including, of course, post-traumatic stress from the market plunge. There are all the Wall Streeters who lost their jobs and bonuses. More subtle will be the behavior of those financiers who didn’t lose their jobs and bonuses but are wrestling with the fear of seeming ostentatious. The coming weekend “will be a good indicator of what’s going on the city,” Desiderio said.

If the recovery is, in fact, afoot, it’s likely that a lot of the rental picture will be in focus by the end of President’s Day weekend or at least the weekend after, when “close to 50 percent” of the deals traditionally have been done, according to Desiderio. Does she anticipate fireworks?

“I’ve been monotoring the market for close to 30 years,” she said. “Truth be told, a trend started in August. Momentum is building. It’s a good market, not great. Nowhere near the top or bottom.”

So we’re stuck in limbo?

“No, it’s healthy,” she said. “It’s still a buyers’ market, but we’re not seeing the market come down. A floor’s been established and it’s holding strong.”

Long Island Business News / February 4, 2010

Thursday, January 28, 2010

Hamptons needs Wall St. bonuses

If you’re snowed in on the East End and want to fill a few idle hours, try this: Open the Yellow Pages, call all the investment houses in the Hamptons and ask what they think about the big Wall Street bonuses.

First you’ll be struck by the many phones that simply don’t answer. Then there are the brusque deflections. “No, no, we don’t do anything like that,” said one woman at a place that begins with “Citi.”

I was thinking about the bonuses because the health of the Hamptons economy is often linked to the magnitude of the annual Wall Street baksheesh. You don’t have to look hard to find connections between the two out there in the Zeitgeist. In his Wall Street Journal column, James B. Stewart recently wrote that despite the biggest bonuses ever, some Wall Streeters are complaining that not enough will be in cash, causing a liquidity squeeze.

“I’ve been wondering just what kind of squeeze that might be,” Stewart stewed. He then went on to list a mogul’s likely expenses, including, of course, “that shingle-style mansion in East Hampton (not even on the beach) for $6.5 million.” And “two Mercedes SUVs for the Hamptons ($120,000).”

The East Hampton Star has been thinking about it too, as revealed in a recent story subheaded, “Real estate agents hope for Wall Street trickle-down.” Kate Meier’s lede summed up our ethical dilemma neatly: “Whatever the moral implications of doling out bonuses exponentially higher than most Americans’ annual income, real estate professionals agree that big payouts on Wall Street will mean good things for the market here.”

While doing my own stewing about it all, I unexpectedly hit paydirt. A Hamptons financier returned my call.
It was Marc Lowlicht, president of the wealth management division of Further Lane Asset Management. The company has offices in Manhattan, East Hampton, San Francisco and Santa Fe, but Further Lane is in East Hampton, so I think we can claim it as ours. Also, that’s where Lowlicht is based, where his home is and where his two kids are in school.

Lowlicht called the big bonus/big greed screed “a huge generalization.” There are plenty of financiers who aren’t getting these lavish bonuses, he said. Him, for instance.

Also his boss, J. Michael Araiz. “He’s a perfect example,” Lowlicht said. “He’s not taking any pay this year.” Instead, he’s using the money to pay the salaries of his 25 employees.

Furthermore, he said the bonuses are a major part of Wall Street compensation, for which people work hard and do important things. “If we raise $50 million for an alternative energy company that opens a plant in the Midwest and hires 150 new people, I think that’s value added. We’re improving the economy.”

But the AIG bonuses are “a whole different story,” he said. “I don’t think firms bailed out by the public should be in the same boat. You don’t get bonuses for bad management. I think what AIG did is disgraceful.”

As for the Hamptons and its perceived symbiosis with Wall Street greed, he said, “There will always be a love/hate relationship with the rest of the world,” but that’s not the way it feels from the inside. “Kids from families with lots of money go to school with the kids of day workers,” he said. “We’re all intermingled and we all get along.”

And at present, by the way, the Hamptons economy “is not great,” he said. “A lot of people are struggling. I know people who live like multimillionaires whose net worth is 70 grand. One of the most difficult things is to go from a certain lifestyle to a lesser one. People don’t go from driving a Lexus to a Toyota without suffering a lot.”

But as ever, the Hamptons will recover. “I think the market is stabilizing,” he said. And despite the steepness of the plunge, Lowlicht thinks the effects will linger only three to five years, instead of the usual five to seven.

“I think some policies are taking hold,” Lowlicht said.

Growth will be “muted,” but “we always find our way out. I think it’s a good dose of medicine. I think it’s put us back on the track of how to behave responsibly.”

Long Island Business News / January 27, 2010

Wednesday, January 20, 2010

Riverhead’s problems the stuff of myth

The Greeks had their Minotaur, a bull-headed beast who dwelt at the center of the Labyrinth. Every once in a while some tender young citizens would be sent in to be eaten. That’s the way they rolled back then.

We’re much more modern. Our version of the Labyrinth is downtown Riverhead and the Minotaur is all the empty storefronts, recently estimated at a depressing 80 percent of the whole. Instead of youths, we send in supervisors to be sacrificed occasionally.

The latest to be dispatched was Phil Cardinale, who served in Riverhead’s top spot for three terms before he was vanquished by Sean Walter in the recent election. “The fall of downtown” was a key battle cry of the Walter campaign and it resonated.

Of course there were other issues at play as well, and other mythologies too. For instance, the fourth-term curse. This is a malady that’s brought down many a pol over the years, from Southampton Supervisor Skip Heaney to Southold Supervisor Jean Cochran to Congressman Michael Forbes, then of Riverhead. Also falling victim was U.S. Senator Tom Daschle of South Dakota, where there have been so many fourth-term Senate failures that they have a special name for it, “Karl’s Curse,” which is another story.

There are lots of reasons for the fourth-term jinx. The main one is this: The friction of the first three has usually sharpened enough knives to bring almost anybody down.

Now it’s Walter’s turn to take a stab at the bull-headed beast. He used his inaugural address to declare war.

“The complaining and crying about downtown ends today,” vowed the newly minted supervisor, as quoted by The News-Review. “We cannot and I will not accept failure as an option. We are going to dramatically change downtown for the better. Not with futuristic plans that sit on artists’ easels but with a real approach that brings businesspeople, capital sources and creativity together, and allows government to act as a facilitator, not a roadblock.”

That easels remark was a sharp stab at Cardinale, who had such high hopes for the gaudy $500 million Apollo Real Estate Advisors downtown renaissance plan, of which not a stick got built. In a candidates’ forum in October, Walter charged, “Apollo, in my opinion, is the death knell of downtown Riverhead.” (Earlier in the campaign, citing the 2001 failure to transform the Suffolk Theatre into a performing arts center, he said, “That event precipitated the fall of downtown.”)

Whatever killed the place, he made it clear it was all Cardinale’s fault. How will Walter do it differently? How can we know that he won’t be just the latest supervisor thrown to the Minotaur?

Here’s Walter’s plan, as announced at his inauguration: “We will renew downtown the old-fashioned way, with open green spaces and by encouraging the arts, fostering the history of our downtown and creating a reason for people to come downtown.”

Well, good luck with that.

Walter isn’t going into this battle alone; he’ll be backed by an all-Republican town board. Maybe unanimity will help, but political coloration hasn’t made any difference to the Minotaur in the past. Cardinale, a Democrat, had his Apollo (speaking of Greek mythology). A decade before him came Republican Supervisor Jim Stark, under whom Route 58’s Tanger Outlets arrived. And if that mega-mall wasn’t enough, a Tanger food court was eventually (somehow) allowed, eliminating the last flimsy reason for the northern hordes to venture downtown.

In between were Independent Vinnie Villella and Republican Bob Kozakiewicz. Villella campaigned to save downtown and then, once elected, promptly closed his downtown shoe store. Another morsel for the Minotaur.

The point is that downtown Riverhead is a beast of a problem that’s proven itself impervious to everything, especially words hurled by politicians. Despite the new supervisor’s ridicule of easels, it’s going to take some solid plans launched by bold investors. Things like the 101-room Hyatt Palace hotel to be built beside Atlantis Marine World Aquarium, a brave venture now backed by a $2.4 million state grant.

Eventually something like that, along with a global economy no longer in crisis, will start the long-awaited downtown Riverhead renaissance. And whoever’s sitting in the supervisor’s chair will get credit for being the hero who slew the Minotaur.

Long Island Business News / January 20, 2010

Saturday, January 16, 2010

Winterspring music warms venues

Over time, the East End has done an impressive job of expanding its seasons. A brief history:

In the beginning there was summer, when Manhattan tycoons would send their families out east for the cooling breezes and waters, then would follow on the Friday afternoon train.

Eventually our wholesale farms made the transition to retail/agritainment, and presto: Fall was born. When you see our slender east-west roads packed solid all the way back to the LIE in October, you learn the hard way how huge pumpkin season has become.

And yea, there cometh Christmastide, with masses of West Enders piling into Jeeps to slouch east for a day of tree-hunting and last stops at the vineyards for fortification.

All that’s left is the current period, which could be bundled up and called winterspring because it lacks the gusto to do either well. Sometimes there’s snow but, until Riverhead Resorts builds its indoor Aspen (any day now) there’s no ski mountain. Spring is kind of like winter until the temperature suddenly spikes 40 degrees on Memorial Day and it’s “summer” again.

So the question for East End merchants has been, what to do about winterspring? Some retailers simply give up, close down and wait for the hordes to return. Some shops and restaurants stay open, earning our admiration and appreciation. But some entrepreneurial sorts have taken up the cudgel, trying to beat gold from the lead of winterspring.

One such effort is Jazz on the Vine, which is the centerpiece of Winterfest, an East End business collaboration begun five years ago. Winterfest itself “didn’t have a whole lot of success,” in the words of Pat Snyder, executive director of the East End Arts Council. “The idea was, if they did something together, we would support the joint effort, placing music [there].” Such as, “if a B&B and a vineyard got together … It was all kind of fuzzy.”

Clarity came three years ago with Jazz on the Vine, which was and is a straight infusion of free (FREE!) musical performances at East End venues, backed Suffolk County Economic Development, the Long Island Convention & Visitor Bureau, the Long Island Wine Council and the EEAC.

It was an immediate hit. Year one featured five winterspring weekends and 50 concerts at area vineyards. Last year the numbers spiked to six weekends and 66 concerts, boosted by the addition of restaurants and hotels to the venue list. Meanwhile, funding grew to some $100,000.

This year the numbers are staying flat, thanks (or rather, no thanks) to pandemic cuts in arts funding. Nevertheless, Jazz on the Vine has become a big blast of bright in the dark months out east. “Oh my gosh, it’s been enormous,” Snyder said when asked about its impact. “Before this the vineyards were totally quiet during February and March. Now they’re filled to capacity during concerts.” Venue revenue is up 200 percent, she said. She’s heard of vineyard owners out in their icy parking lots directing jazz fans to other vineyards because they were overflowing.

“The energy level is really high throughout the whole period,” Snyder said. Last year, after a performance by Bakithi Khumalo, the renowned South African bassist who’s backed everyone from Cyndi Lauper to Paul Simon, musicians from other concerts flocked to Khumalo’s side and the jamming went on deep into the wintry night.

An addition this year is support and participation by Steinway & Sons. And so, if attendees note an emphasis on piano solos, here’s why: The company is sending Steinways from its new showroom in Melville for piano-centric performances.

Snyder gave up her Christmas vacation for this, making myriad arrangements, finalizing 66 musician contracts, etc. “But it pays off in February and March,” she said. It helps that she’s a big jazz fan.

Styles range all over, from Dixieland to avant garde. And the rewards are rangy too. “Everyone benefits,” Snyder said. “Vineyards, restaurants, hotels, and musicians too.”

This year’s concerts begin with JaLaLa on Feb. 6 at Raphael in Peconic. They end with the last of the Steinway series on March 21, with Nilson Matta Brazilian Voyage Trio at the new Sparkling Pointe in Southold.

Long Island Business News / January 14, 2010