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WBC

February 2009 :: Volume 52

In the Headlines

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Chicago's UAE Connections Strengthen:
Business Delegation Visits UAE, Etihad Airlines Announces Direct Abu Dhabi-Chicago Flight

World Business Chicago's executive director, Rita Athas, recently traveled to the United Arab Emirates with a delegation of Chicagoland business leaders led by Mayor Richard M. Daley.

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The Foray into Social Media: WBC Tweets, Mayor Daley Launches YouTube Channel

World Business Chicago (WBC) and the city of Chicago are stepping into the social media arena in order to connect with Chicago's citizens and potential citizens.

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Student Scientists Challenged: International FIRST Robotics Competition

Students from the Chicago area and throughout the Midwest have worked diligently for six weeks to prepare robots for the FIRST Robotics Competition Midwest Regional at the UIC Pavilion in Chicago Feb. 26-28.

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Chicago's UAE Connections Strengthen: Business Delegation Visits UAE, Etihad Airlines Announces Direct Abu Dhabi-Chicago Flight

World Business Chicago's executive director, Rita Athas, recently traveled to the United Arab Emirates with a delegation of Chicagoland business leaders led by Mayor Richard M. Daley. The "city-to-city exchange," planned in partnership with the Chicagoland Chamber of Commerce, aimed to reinforce existing relationships and position Chicago as a global city, investment location and strong business service provider.

The business delegation included Maggie Daley, Chicago's First Lady; George Efstathiou, Skidmore, Owings & Merrill LLP; James P. Andrews, The Boston Consulting Group; Howard Tullman, Flashpoint Academy; and Lance Pressl, Chicagoland Chamber of Commerce. The purpose of the trip was the raise awareness of Chicago as a primary US location to establish a business, consider investment, and/or obtain outstanding, world renound professional services. The group shared best practices in innovation, education, collaboration and environment that have contributed to Chicago's position as a global leader.

Highlights of the exchange included meetings with the Abu Dhabi Chamber of Commerce Board of Directors and the Women's Business Council. The Women's Business Council was interested in specific Chicago connections in order to distribute Chicago merchandise in their city. The delegation also met with the Abu Dhabi Investment Council, and Chief Executive Officer, Nazem Fawwaz Al Kudsi, CFA. The group expressed strong interest in Chicago and its investment opportunities.

"The global economy is here to stay. We no longer compete just with other cities in our own countries, we compete with cities all over the world for jobs, for business, for tourism," said Mayor Daley. "In these hard economic times, we need to be doing everything we can to make sure our city is competitive globally, and we have a lot to gain by strengthening our ties with the United Arab Emirates."

Mayor Daley discussed the process of reforming the public school system, abandoning the one-size-fits-all model and creating targeted schools that focus on specific academic areas, like world languages and math and science. He also noted CPS's strong Arabic language program, which has grown from 297 students last year, to 1,000 this year. The Mayor emphasized the importance of communicating with our neighbors around the globe and noted that a strong school system makes Chicago a more attractive location for new and existing businesses.

The business delegation also highlighted Chicago's unified global strategy enacted by World Business Chicago and the city's Office of International Relations. The organizations have recently hosted numerous forums, bringing mayors and municipal leaders from across the globe to Chicago to share ideas and best practices. The city hosted a U.S.-Arab Cities Forum last April, which was the first time that mayors and municipal leaders from the United States, Canada and the Arab world came together to seek solutions to current problems faced by cities across the world.

And, this April, leaders from 27 Sister Cities and other leading cities will converge in Chicago for the "Chicago Global Cities Forum: An International Dialogue for Mayors," a series of discussions aimed at helping build local economies that are competitive globally.

The business relationship between Chicago and the United Arab Emirates is already strong. The Chicago Customs District had $20 million in imports and $217 million in exports with the U.A.E. last year. Chicago companies in the U.A.E. include Aon, Abbott, Jones Lang LaSalle, CMA, Culligan, ITW, Motorola, Global Hyatt, USG Corporation, Veolia, A.T. Kearney and more than 20 others. U.A.E. companies in the Chicago area include retailers Loehmann's and Barney's New York and DP World, the investment banking firm of Faliaka Advisors.

Additionally, Chicago's architects, engineers and designers have a strong presence in the U.A.E. Burj Dubai, the world's tallest structure, is a project of Chicago's Skidmore, Owings and Merrill. And, the Chicago firm of Adrian Smith-Gordon Gill Architecture will design the headquarters at Abu Dhabi's zero-carbon emission, zero waste Masdar City project.

As a result of the recent business exchange, officials from the Masdar project will visit Chicago to tour and learn from the city's innovative Center for Green Technology the first week in March.

The business delegation to the United Arab Emirates discussed the importance of the environment in attracting a modern workforce and driving sustainable development. Chicago's initiatives are aimed at making it the most environmentally friendly city in the world, which shows up in a company's bottom line.

The Mayor also highlighted plans to further enhance the reputation and role of Chicago as a great global city, by bringing the Olympic and Paralympic Games to the United States in 2016. He explained a recent economic impact study showing the games are expected to stimulate $13.7 billion of incremental economic activity in Chicago from 2011 through 2021.

"We decided to pursue the Games for a simple reason: they have vast potential to help us improve life for all Chicagoans," Mayor Daley said.

In related news, beginning in September Chicago's O'Hare International Airport will offer direct service from Abu Dhabi on Etihad Airlines, the national airline of the United Arab Emirates. Chicago will be the Abu Dhabi-based airline's second U.S. destination. Chicago is currently home to one of the largest Arab-American communities in the U.S., with an estimated Arab American population of more than 230,000.

"Starting flights to Chicago is a very proud moment in the history of Etihad Airways, and upholds our ambitious plans to link Abu Dhabi with key strategic cities around the world," said James Hogan, Etihad Airways' CEO, "The new service will enhance commercial and cultural ties not only between Abu Dhabi and Chicago but also between the UAE and USA, providing a daily flight for business and leisure travelers." Currently, there are 21 daily flights between Chicago and Dubai on three different airlines, and Emirates Airlines operates a sales office near O'Hare International Airport.

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The Foray into Social Media: WBC Tweets, Mayor Daley Launches YouTube Channel

World Business Chicago (WBC) and the City of Chicago are stepping into the social media arena in order to connect with Chicago's residents, both present and future.

WBC recently established a Twitter account, which offers real-time short messaging that works over multiple networks and devices. In countries all around the world, people follow the sources most relevant to them and access information via Twitter as it happens--from breaking world news to updates from friends.

World Business Chicago will send the latest news and information about Chicago's business community and economic environment via Twitter under the user name WorldBizChicago. Simply logon to twitter.com/worldbizchicago.

Additionally, Mayor Richard M. Daley recently joined officials at Google Chicago to launch his own YouTube channel: www.youtube.com/mayordaley.

"I set up my YouTube channel so residents and visitors can see some of the great things the city is doing on a daily basis to help improve the quality of life for our residents and how we are working to compete in our global economy," said Mayor Daley. "I'm proud of our city and all we have accomplished by working together, and this site is a chance for me to talk with residents directly."

The YouTube channel offers a behind-the-scenes look at the Mayor's duties by highlighting courtesy visits from various heads of state, offering a personal tour of his City Hall office and learning about his travels in the United States and abroad.

According to Nielsen NetRatings, YouTube is the fourth largest Internet destination. "YouTube has become a worldwide phenomenon, allowing people to watch hundreds of millions of videos a day that create discussion and spark debate by sharing thoughts and ideas within minutes around the world," said Mayor Daley.

The Mayor also noted that technology has been key to moving the city forward, and no one is more innovative than Google - which purchased YouTube three years ago - for its globally recognized approaches to changing the way people interface with the Internet.

Founded in an apartment in Lincoln Park, Google Chicago had less than 100 employees in 2005. Today, it has more than 500 local employees working in the areas of sales, advertising and engineering. In addition, the company has assisted with Chicago's bid to host the 2016 Olympic and Paralympic Games, and just recently hosted 40 Chicago Public School students to educate them about engineering and computer science as part of the company's "Introduce a Girl to Engineering Day." "I'd like to thank the team at Google Chicago for partnering with us to make this channel a reality," said Mayor Daley. "My YouTube channel is another tool to help communicate to residents why Chicago is a great place to live, work and raise a family. I hope everyone enjoys this channel and has a chance to visit it often."

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Student Scientists Challenged: International FIRST Robotics Competition

The non-profit organization FIRST (For Inspiration and Recognition of Science and Technology) organizes the robotics competition to inspire an appreciation of science and technology in young people. In January, FIRST revealed game rules for this year's competition and delivered a standard kit of parts to each of the 54 teams entering the Midwest Regional. This year, 22 high schools from the Chicago Public Schools system - a record number - will be among those participating in the regional competition.

In honor of the 40th anniversary of the first lunar landing, FIRST developed the game "Lunacy" for the 2009 competition. The game challenges students to contend with the laws of physics and build a robot that will compete on a low-friction playing field, simulating the surface of the moon.

Students worked with coaches and mentors from engineering and technology fields to design and build a robot out of the parts provided by FIRST. Applying principles of engineering to create the robot, students also learn the importance of teamwork, leadership and self-confidence.

At the regional competition, the 54 teams are measured by the effectiveness of each robot, the power of collaboration and the determination of students involved. Winners go on to compete in the Championship Event to be held in Atlanta in April.

The competition is an action-packed event where teams play in numerous matches that feature two three-team robot alliances. With multiple opportunities to improve their robots, students develop new strategies and use problem-solving skills during the competition. They are also cheered on by a large crowd of supporters - fellow students, parents, teachers, mentors and even school mascots.

Many Chicago businesses and academic institutions are long-time sponsors and mentors to the area high schools participating in FIRST, including Motorola, Baxter Healthcare, Underwriters Laboratories, the University of Illinois at Chicago and the Illinois Institute of Technology. Boeing is announcing a major sponsorship this year of more than 100 high schools nationally, with six Chicago Public Schools among them.

World Business Chicago has been a strong advocate for FIRST Midwest in past years and continues to be actively involved in this year's competition. WBC Director of Technology Development, Dan Lyne is on FIRST Midwest's executive planning committee.

FIRST has been able to grow significantly since it was founded in 1992. In 2009, 1,686 teams will be competing world-wide.

Dean Kamen, founder of FIRST, hopes that student participation in the program will "transform our culture by creating a world where science and technology are celebrated and where young people dream of becoming science and technology heroes."

To learn more about FIRST, go to http://www.usfirst.org/ or contact:

Paul Battaglia
Director, Technology
Burson-Marsteller
(312) 596-3616
paul.battaglia@bm.com

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In The Headlines

On February 18, President Barack Obama announced a $275-billion plan that aims to resuscitate the U.S. housing market, which has been battered by the ongoing financial-market crisis and the broader economic downturn.There is little debate that the housing market has declined, and done so to an unprecedented extent. But just how far and how fast has it fallen since its early 2006 peak? Answers in the media generally cite one of two national housing price indices:

Office of Federal Housing Enterprise Oversight's (OFHEO) Housing Price Index, and
Standard & Poor's (S&P)/Case-Shiller Home Price Index.

However, the two indices have been giving different answers to the same question, as illustrated in the graph & table below.

	OFHEO Index⁽¹⁾	Case-Shiller Index⁽²⁾
Most Recent Peak Month	April 2007	May 2006
Change vs. Peak Month	-10.9%	-26.7%
Change vs. January 2006	-7.6%	-25.9%

Purchase-only index for the U.S., seasonally adjusted through 12/08.
20-City Composite Index (broadest available on a monthly basis), seasonally adjusted through 12/08.

The Case-Shiller Index peaked 11 months earlier than the OFHEO index & has shown a much steeper decline in the months that followed, ending December 2008 at a level nearly 26% lower than in January 2006 (vs. a nearly 8% drop for the OFHEO index). The OFHEO index also shows a slight month-over-month uptick in December 2008 (+0.1%), while the Case-Shiller continued to fall (-2.0%). Why do the results seemingly tell two different stories? The simplest answer is that each index is measuring price changes (a) using differing data sources, (b) for a different set of homes & (c) by making different adjustments to the data. Each index looks at a particular slice of the housing market that its creators (OFHEO or S&P) believe to be most representative of broad, overall trends. Both indices measure prices for single-family detached homes using a "paired sales" method, which compares the sale price for a given unit now versus the last time that it was sold. In addition, neither index considers it a "sale" when a lender assumes possession of a foreclosed property. Subsequent sale of that property to a new owner, however, is included in the indices.Beyond those basics, these two respective market "slices" have many more differences than similarities, the most significant of which are outlined below:

	OFHEO Index⁽¹⁾	Case-Shiller Index⁽²⁾
(a) Data Source	Records of loans acquired by Fannie Mae & Freddie Mac	Deeds recorded locally, collected by Fiserv, Inc.
(b) Housing Included
i. By Sale Type	Sales involving conforming, conventional mortgages purchased by Fannie Mae or Freddie Mac - generally $417,000 or less	Arm's-length sales that occur at least 6 months apart No constraints on loan size or subprime mortgages
ii. By Geography	All 50 states 381 metropolitan areas	20 metropolitan areas 13 states w/ zero coverage Additional 7 states w/ less than 50% coverage
(c) Data Adjustments	Discounted weighting: As much as -75% when interval between repeat sales is long Methodology for additional adjustments unclear	Discounted weighting: -20% to -45% when interval between repeat sales is long When signs of non-market, idiosyncratic factors in a sale (size varies)

Purchase-only index for the U.S.
20-City Composite Index

Two things are particularly important to note, given current housing market conditions:

The OFHEO index does not include home sales that involved non-conforming mortgages - those that are above the $417,000 Fannie/Freddie limit, involve subprime borrowers &/or are government-insured through the Federal Housing Administration (FHA), Veterans Administration (VA) or other federal agencies. Because jumbo & subprime loans have been among those most affected by foreclosures, price changes measured by the OFHEO index exclude what are likely the poorest-performing properties.
The Case-Shiller index provides only limited geographic coverage - only 19 states are 75%+ covered - resulting in a U.S. housing price index that has a limited ability to reflect trends nationwide.

The bottom line on the OFHEO & Case-Shiller indices is that neither one provides complete information on the status of national housing price levels. Because of limitations inherent to the complex housing data, the indices' creators have made trade-offs when establishing methodology & coverage, as they deem appropriate for their audiences. Being aware of what aspects of the housing market OFHEO & Case-Shiller address provides a necessary context for interpreting their results.

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