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Investing in an electric utility is a lot like buying the Electric Company in Monopoly. Neither has huge growth potential, but both offer steady payouts: a reliable source of income during a recession or the beginning of a long game.

In 2009 alone, however, three large utilities have chopped their dividends, dimming the prospects for the traditionally safe sector. Since Constellation Energy (CEG, Fortune 500), Great Plains Energy (GXP), and Ameren (AEE, Fortune 500) cut their payouts, their stocks have sunk an average of 31%.

"Now that we’ve already seen three dividend cuts this year - the most in one year since 2003 - there’s more investor anxiety," says David Burks, an analyst at Hilliard Lyons. "People are wondering, is this the start of a trend?"

For now, most utility dividends look secure. While three operators have made cuts over the last year, 36 raised their dividends, and 19 haven’t made changes. JP Morgan analyst Andrew Smith told investors in a note that Great Plains and Ameren’s decreases "were driven by company specific issues and do not point to systemic financial weakness in the industry."

But that doesn’t mean that more dividends cuts won’t happen, says Ryan McLean, a Morningstar analyst. "For the most part, they’re safe. But they’re less safe than they used to be," he says.

Over the last few years, electric utilities have amped up their spending on new power plants to spur growth, driving them deeper into debt. John Kohli, the manager of Franklin Utilities Fund, says the companies that cut their dividends were probably hesitant to tap unfriendly credit markets - bonds of Great Plains for example, are trading with 10.5% yields.

They were also anxious because of slowing sales. Great Plains blamed its dividend cut in part on reduced consumer demand and the weak economy.

Investors typically view electricity as a recession-proof product, but operators have reported a drop in consumption and a rise in delinquent accounts, particularly in hard-hit regions like the Southeast and Midwest.

"Most of the companies we follow are forecasting flat to negative sales in 2009," says Burks. "People think of electric utilities as defensive investments, but recessions do impact them."

But while operators with weaker balance sheets will struggle to raise or keep their dividends steady amidst such pressures, stronger companies will outperform the market, wrote Smith. "We continue to believe that utilities offer investors stable, attractive earnings and cash flow."

A steady earnings current

Electric utilities come in three flavors: regulated, partially regulated, or completely unregulated. A company is "regulated" if it dominates a region. The government dictates how much the utility can raise its rates, which is supposed to protect consumers from wild swings. Because a regulated utility doesn’t have to lower its rates when power prices drop, it’s typically less sensitive to economic volatility - but it also misses out on fat margins in boom times because it has to wait in line for rate increases.

"Companies across the world have been cutting their dividends, but a bright spot has been regulated utilities," says Thomas Forsha, co-manager of Aston/River Road’s Dividend All Cap Value Fund. None of the operators that cut their rates this year are purely regulated.

Because regulated utilities must appeal to their state governments for rate increases, it’s possible that a populist outcry might cause regulators to turn down requests for bumps. Burks doesn’t think this will happen. He notes that Florida just granted its first rate increase in 16 years to Tampa Electric, part of Teco Energy (TE).

If the regulatory environment stays friendly, all regulated operators will benefit paydayloans. But some, says McLean, still won’t achieve the level of profits they’re permitted to earn each quarter. "A few regulated utilities are under-earners, like Hawaiian Electric (HE)," he says. McLean projects that Hawaiian Electric, along with diversified utility PNM Resources (PNM), may sacrifice its dividend this year.

Most regulated utilities, however, are unlikely to cut their payouts, says Kohli. One operator he likes is Southern Company (SO, Fortune 500), which is currently trading at about 13 times estimated earnings. "Picking up that company and its 6% dividend yield makes tremendous sense no matter what direction the economy is going in," he says.

For value hunters, Burks prefers CMS Energy (CMS, Fortune 500), a smaller Michigan outfit that has improved its balance sheet over the last few years and recently boosted its dividend by 40%. "Their debt was downgraded to junk seven years ago, but now it’s back at investment grade," he says. Nevertheless, the company’s price to earnings ratio is just 7.5, a significant discount to its competitors.

Higher voltage stocks

If the economy rebounds, integrated operators stand to benefit more than regulated utilities. They sell both regulated and unregulated, or merchant, power, so they’re more sensitive to variables like demand and commodities prices. "As an investor, you need to be aware that their earnings will move up and down," says McLean.

Merchant utilities suffered last year because of decreases in the price of power, says McLean. He thinks that will reverse this year. "Power prices hinge on natural gas, and we’re forecasting an increase."

One integrated utility on a number of buy lists is FPL Group (FPL, Fortune 500). Its stock has taken a 17% hit over the last year, due in part to its location in recession-ravaged Florida. But McLean says FPL’s geography is actually a boon. "They have a highly residential customer base, and individuals are far less likely to resist rate increases," he says. While just 0.3% of residential customers cut back on consumption last year, 2.6% of industrial users decreased their usage.

Other analysts like FPL for its diverse holdings. "They’re the largest generator of wind power in the U.S.," says Burks. "They have growth potential."

Electric utilities face potential political headwinds in the form of proposed cap and trade restrictions, which would force them to purchase credits for higher emissions. While regulated operators might be able to pass along those costs to customers, integrated utilities with diverse holdings are better positioned to withstand widespread environmental legislation.

One such operator is Entergy (ETR, Fortune 500), which has a large nuclear portfolio. "Entergy was impacted by lower power prices, and now it looks attractive on a valuation basis," says Burks.

Another integrated standout is Sempra (SRE, Fortune 500), a California utility that also builds pipelines and trades commodities. "They have the best balance sheet in the industry - a 55% equity to capital ratio, which is much higher than the industry average," says Kohli. The company recently raised its dividend by 11%, and how offers a 4% yield.

"For the most part, utilities are in a good position," says Kohli. "The vast majority are well-capitalized, and should be able to withstand the credit cycle." For less flush operators, a continued downturn could be challenging - and put the lights out on dividends. 

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Retirees should have less than half of their assets exposed to stock market volatility, according to a rule of thumb used by financial planners.

So, why do many older people have 80 to 100 per cent of their savings in the stock market?

Last year, I heard from a widower who spends his winters in Florida. He had been managing his own money at a discount broker, but moved the account to an independent investment dealer.

Though he had asked for a balanced portfolio, he found 80 per cent of his retirement plan was in equity funds. And with the deferred sales charges, he would have to pay $15,000 to cash them in.

The investment dealer said the retiree had no grounds for complaint, so he went to the Investment Industry Regulatory Organization of Canada.

"You authorized every trade processed in your account, including the purchase of mutual funds," said an IIROC enforcement officer.

About 25 per cent of his money was in segregated funds, which were invested in equities. But the amount was guaranteed and had additional insurance benefits, he was told.

IIROC said there was no evidence of a regulatory breach and closed the case last November.

"The one thing that I am grateful for is I got out from under before the meltdown of the stock market," the retiree says.

He now holds money market funds with the same manager (thus avoiding DSC fees). He has also moved his money out of the segregated funds to a self-directed retirement fund with a bank.

As his case illustrates, retirees often have risky portfolios because they don’t watch their investments as they get older and spend more time away from home.

When they hire commission-paid financial advisers, they’re often steered into products that offer more compensation. Equity funds have higher management expense ratios than do bond funds and money market funds fast payday loans. Higher MERs mean higher annual service fees paid to sellers.

Commission-paid advisers make little from selling income investments – such as individual bonds, guaranteed investment certificates and exchange-traded bond funds. That’s why older investors often end up with equity funds, with a higher risk than they want or need.

"Are there are any consequences for people who give inappropriate advice? No," says Susan Eng, vice-president of advocacy for CARP, which lobbies for the 50-plus age group.

"There’s greater risk for older people. The regulatory system is not sufficient to protect them from sharp practices."

CARP wants to see a fully funded, independent advocate to champion small investors’ causes, such as plain-language contracts.

Retirees are often induced to borrow money for investments. As their mortgages are paid off, they have home equity that can be converted to equity funds.

"Advisers can double up on the commissions they get from an old person by selling mutual funds on a leveraged basis," says Stan Buell, head of the Small Investor Protection Association.

"Older people don’t need the extra risk. If the stock market goes down 40 per cent, their leveraged portfolios go down 80 per cent, plus the cost of borrowing."

Borrowing requires getting into higher-risk investments, since the return must be higher than the interest rate on the loan.

Buell, too, wants to see more rules to safeguard investors from unscrupulous advisers.

Next week, we look at Canada’s regulatory system. Why is it so weak when it comes to investor protection?

eroseman@thestar.ca

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The Federal Reserve’s effort to unfreeze markets for securities backed by loans kicked off with requests for $4.7 billion of financing, a total that officials hope will surge to as much as $1 trillion after investors resolve contract terms with dealers and other concerns.

Investors could have used the Term Asset-Backed Securities Loan Facility to finance purchases of as much as $8.3 billion of securities. They asked for $1.9 billion in loans to buy securities backed by auto loans and $2.8 billion for debt linked to credit-card loans, the New York Federal Reserve Bank said yesterday.

“It’s an encouraging start given all the mechanics people had to work through in a short space of time,” said Richard D’Albert, co-chief investment officer of hedge fund Seer Capital Management LLC in New York. He didn’t participate in the TALF’s first round.

The Obama administration and the Fed are counting on the TALF to unfreeze credit and help bring an end to what may be the worst recession in the postwar era. Fed and Treasury officials are expanding the scale of the program by adding leases of business equipment and other types of loans.

The Fed’s efforts to lure hedge funds and other investors may be complicated by increasing anger among lawmakers and taxpayers over federal rescues of financial companies, said Julian Mann, who helps manage $4 billion in bonds at First Pacific Advisors LLC in Los Angeles.

The House of Representatives approved a bill yesterday that would set a 90 percent tax on bonuses paid to employees of companies that received at least $5 billion in federal bailout funds, targeting American International Group Inc. workers.

‘Congressional Tampering’

“Given the daily, evolving nature of congressional tampering with established contracts, it’s difficult to imagine how a fiduciary could prudently deploy capital into these instruments that appear to be heavily subject to ex post facto modifications,” Mann said.

Differences between dealers and investors and other delays in the TALF may have prompted the Fed on March 18 to announce it will begin buying Treasuries next week and more than double purchases of housing debt to $1.45 trillion, former Fed official Vincent Reinhart said.

“In an environment of a deteriorating economy, opening up your window doesn’t necessarily mean that you’ll get takers,” said Reinhart, former Fed monetary-affairs director and now resident scholar at the American Enterprise Institute. “They’re going to have to expand the scope of what goes into TALF.”

Eligible Assets

The first round of the program didn’t include securities linked with loans to students or small businesses, assets eligible under the TALF.

The Fed announced yesterday that the TALF will next month start accepting securities backed by car-rental fleets and three other asset types online cash advance. The Federal Open Market Committee said on March 18 the program would probably expand to cover “other financial assets.”

The finance arms of Ford Motor Co. and Nissan Motor Co. sold debt backed by auto loans for the TALF, as well as Huntington National Bank. Citigroup Inc. was the only issuer to sell credit-card backed securities.

“This is a good start for a program that we will continue to build on in the future,” New York Fed President William Dudley said in a statement yesterday. “It is encouraging that the spreads in the areas where the program is now focused have narrowed significantly. Our goal is to get the securitization market working again.”

Hitting Records

Spreads on credit-card-backed debt have narrowed since hitting record highs in December, though have widened in recent weeks. The spread on AAA credit-card-backed securities increased to about 320 basis points more than the one-month London interbank offered rate, or Libor, from 250 basis points in mid- February, according to JPMorgan Chase & Co. data on March 12.

Top-rated auto-loan bonds are trading at about 350 basis points more than Libor, compared with 425 basis points in mid- February.

Investors can take out a fixed-rate loan of 2.73 percent or floating rate of 1.52 percent to buy the securities. Depending on the collateral, investors borrow $84 to $95 for every $100 in asset-backed securities and put up $5 to $16 of their own capital.

“The standoff on the customer agreement is still a pretty significant issue,” said Brant Brooks, a partner at Good Hill Partners LP based in Westport, Connecticut. “People on the ‘buy’ side are waiting for a standardized agreement.”

First Phase

The first phase of the TALF will lend as much as $200 billion to finance the purchase of AAA rated securities containing loans for autos, education, credit cards and small businesses.

The Fed originally planned to start the TALF in February, then delayed the debut to ensure “all our legal and procedural steps had been taken,” Bernanke said in congressional testimony Feb. 25. On March 3, the Fed and Treasury said applications for the first deals would be due March 17, then extended the deadline by two days.

The Fed will disburse the loans on March 25 and accept applications once a month through at least year end. The next round of loan requests is due April 7, and the Fed will on March 24 provide “additional details” on the April loans.

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NEW YORK–Bernard Madoff’s longtime accountant was arrested on fraud charges Wednesday, accused of aiding the man who has admitted cheating thousands of investors out of billions of dollars in the past two decades.

The charges against David Friehling, 49, come as federal authorities turn their attention to those who they believe helped Madoff fool 4,800 investors into thinking that their long-time investments were growing comfortably each year.

Friehling is the first person to be arrested since the Madoff scandal broke three months ago.

Friehling ran an accounting office in a nondescript suburban building north of New York City, and quickly drew scrutiny.

Experts in accounting said it would be preposterous for such a tiny firm to audit properly an operation the size of Madoff’s.

He had served as Madoff’s auditor from 1991 through 2008 while he worked at the sole practitioner at Friehling & Horowitz.

He was paid a tidy sum by Madoff: Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007, coming out to $144,000 to $174,000 a year.

Friehling faces up to 105 years in prison if he is convicted.

He is charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports with the U.S. Securities and Exchange Commission.

Friehling’s lawyer, Andrew Lankler, did not immediately return a phone call Wednesday.

The accountant had a court appearance Wednesday afternoon in federal court.

Acting U.S. Attorney Lev L. Dassin said in a release that Friehling is not charged with knowing about Madoff’s Ponzi scheme.

However, Dassin said: "Mr. Friehling’s deception helped foster the illusion that Mr. Madoff legitimately invested his clients’ money."

The SEC said Friehling did not meaningfully audit Madoff’s business or confirm that securities purportedly held by Madoff’s company on behalf of its customers even existed.

The SEC said Friehling instead pretended to conduct minimal audit procedures of certain accounts to make it seem he was conducting an audit and then failed to document his purported findings and conclusions as he was required to do no credit check payday loan.

The agency said if Friehling had done his job, Madoff’s financial statements would have shown his company owed tens of billions of dollars to his customers and was insolvent.

The SEC accused Friehling of lying to the American Institute of Certified Public Accountants for years, denying he conducted any audit work, because he was afraid that his work for Madoff would be subject to peer review.

Prosecutors said Friehling as far back as 1995 failed to maintain professional independence from Madoff.

They said he or his wife had an account with Madoff that exceeded $500,000, the maximum amount under SEC rules that an auditor can invest with a client and still maintain independence.

The strain of the Madoff scandal on Friehling began to show in recent months as he put his luxury home in Rockland County on the market.

A listing posted on the Web site of Prudential Rand Real Estate said the family is seeking $995,000 for the five-bedroom Colonial. The home was built in 1990 and has a swimming pool and 4,437 square feet of space.

Madoff, 70, pleaded guilty to securities fraud, perjury and other charges on Thursday and was immediately sent to prison to await a June sentencing, when he faces up to 150 years in prison.

During his plea, Madoff said he began a Ponzi scheme in the 1990s in response to the pain of a recession, thinking it would be a short-lived solution. He said he never recovered, though, and knew prison awaited him.

As recently as November, Madoff notified investors that they had about $65 billion in their accounts. Investigators say they have recovered only about $1 billion.

Prosecutors have said they believe Madoff’s fraud started in the 1980s.

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Canadian realtors are anxiously waiting to see if the key spring market will show signs of a thaw in property sales.

But with vendors ready to list their homes in warmer weather, the Canadian Real Estate Association reported yesterday that existing sales in Canada fell 31 per cent in February compared with a year earlier, the smallest year-over-year decline since last October.

"It looks like the Category 5 hurricane which had been pounding the home resale market has been downgraded to `just’ a Category 4," BMO Capital Markets deputy chief economist Doug Porter stated in a note.

On a seasonally adjusted basis, sales increased 8.6 per cent in February compared with January, the first monthly increase since last September and enough to elicit a cautious burst of optimism from some analysts.

"The Canadian housing market sprung to life in February," says Millan Mulraine, an economics strategist with TD Securities.

It’s too early to determine whether the momentum will last, since an unusually cold January may have repressed sales.

"Typically the spring market we’re moving into generates more activity," CREA president Calvin Lindberg said.

The national average home price was $281,972, down 9.2 per cent compared with February 2008.

Windsor, which posted the highest jobless rate in the country last month at 12 creditreport.6 per cent, recorded the biggest drop, down 15.7 per cent year over year, followed by Vancouver, down 13 per cent, and Calgary, down 10.8 per cent.

The Toronto area fared relatively well in February, with an average resale price of $361,305, down 5 per cent from a year earlier.

"Consumer confidence will continue to be depressed from the barrage of negative economic news in the months ahead," said CREA chief economist Gregory Klump. "Heightened job insecurity will keep many buyers on the sidelines."

Listings, meanwhile, remain high but have trended down 10.9 per cent compared with a year earlier as some buyers have decided to take their homes off the market.

"Even with a moderate improvement in February home sales from the exceedingly weak levels at the turn of the year, it’s still a clear-cut buyer’s market in most regions of the country, and that doesn’t look likely to change anytime soon," Porter said.

Globally, Canada ranked 32nd in house price appreciation in the fourth quarter of last year, according to a report by London-based Knight Frank.

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BOSTON — It’s not the sexiest investment, but the money-market mutual fund has become a high-demand haven for those who can no longer stomach the stock market.

Think again, however, if you believe you’ve found quiet refuge among the growing ranks of play-it-safe types who have nearly $3.9 trillion stashed in these investments.

Money funds are generally safe places to park cash because they invest in the safest types of debt. Many buy government bonds such as Treasury bills, while so-called prime funds seek slightly higher yields but accept marginal risk by venturing into short-term corporate bonds.

The downside of such risk hit home last fall when a soured investment in Lehman Brothers debt spooked investors who suddenly pulled cash out of the Reserve Primary Fund. Although that run was triggered by the fund’s institutional clients, individual investors could end up losing about 8 cents on each dollar invested.
To prevent another such debacle, industry and government regulators are weighing changes in how money funds operate. Their moves could make money funds even safer, but trim their already tiny yields.

A program to temporarily provide money funds with government guarantees similar to FDIC bank deposit insurance is due to expire April 30, although it’s expected to be extended. And some observers expect fund companies to eventually replace the government backing with their own industry insurance program.

Meanwhile, yields on taxable money funds — a category that includes Treasury funds and prime funds — fell to an all-time low average of 0.29 percent this week, according to the Money Fund Report, published by

iMoneyNet.

The extended period of low yields has triggered a competitive shakeup. When it’s over, the number of companies offering the more than 1,700 funds is expected to shrink, reducing consumers’ money fund options.

The changes are swirling around an investment that’s usually so low-profile it’s typically compared with bank certificates of deposit.

"Everybody will look forward to a time when money funds are boring again," said Peter Crane, publisher of the newsletter Money Fund Intelligence.

Experts say there are no indications that investors will suffer losses anytime soon in any other money funds. But the Reserve mess spurred proposals for changes that are just beginning to ripple across the money fund industry, which now holds about 40 percent of the total $9 no fax needed payday loans.4 trillion in all U.S. mutual fund assets. Some of the changes:

— Guarantees can be fleeting: With money fund assets at a record high, the guarantee program prompted by the Primary Fund’s troubles is expected to be extended, perhaps to Sept. 18 — a year after the guarantees started.

Fund companies have paid more than $800 million in fees to extend government backing to their funds and bolster investor confidence. No claims have been paid out — the Reserve Primary Fund didn’t meet the coverage criteria.

— Dollar-for-dollar rule challenged: Money funds are supposed to hold at least $1 in assets for each investor dollar put in. That’s the safety benchmark that the Primary Fund violated when it "broke the buck" after a rush of investor redemptions forced it to quickly unload assets.

Some critics argue the dollar-for-dollar target is too strict, and should allow fluctuations. That way, the thinking goes, investors afraid of seeing a fund break the buck would be less inclined to suddenly pull out.

Federal Reserve Chairman Ben Bernanke touched on the issue on Tuesday, saying that policymakers "should consider how to increase the resiliency of those funds that are susceptible to runs." Bernanke said possible approaches include tighter restrictions on the type of investments funds can make, and an insurance system to prevent instances of breaking the buck.

— Yield shakeup: With money fund yields near zero, some companies’ returns are barely enough to offset expenses to run their lowest-yielding funds. That’s led to several recent cases of providers closing Treasury-only funds to new investors, or limiting new investments by current clients. Others are trimming or waiving management fees to ensure clients see modest returns. But eventually, providers may pass on higher fees to investors.

Crane, of Crane Data, said the competitive balance will increasingly tip in favor of bigger providers.

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OPEC ministers in Vienna this weekend will debate whether the best policy is strict compliance with existing output curbs or a new set of cuts as they balance the issues of bulging oil stocks and a bruised world economy.

Ministers arriving ahead of Sunday’s talks have said the first item on the agenda was tighter enforcement of agreements since September to lower supply targets by 4.2 million barrels per day (bpd).

“Compliance is very good,” Saudi Arabian Oil Minister Ali al-Naimi told reporters. “We’d like to see compliance as high as possible. It is over 80 percent now, it can be better.”

Naimi said the output cuts were proving effective in reducing oversupply, but demand was expected to stay weak.

“Inventories are coming down and will come down in due time,” he said.

“You have to understand that the world economy is not as healthy as it should be. We should expect demand world-wide to be down.”

Sources have said some members of the 12-member producers’ club would favor more decisive action than just complying with existing output curbs.

But the ministers who have so far spoken in Vienna have focused on compliance easy payday loans.

“First we have to check the commitment, then we can discuss what we should do in the future,” Qatari Oil Minister Abdullah al-Attiyah said.

Whatever the outcome of Sunday’s meeting, Saudi Arabia, the world’s leading exporter and the best-placed to add or subtract barrels of oil could decide unilaterally how much it thinks the market needs.

Independent observers have said Saudi Arabia is already pumping less than its implied target.

HISTORIC CUTS

The cuts since last September are the deepest and most rapid yet and the rate of compliance is historically high.

They have helped to pull prices up from a low of $32.40 in December to around $46 now for U.S. crude — a level that is just over $100 below last year’s record high.

But inventories are still brimming and weak demand, especially heading into the second quarter when fuel consumption is typically at its lowest after the end of the northern hemisphere winter, could lead to further stock builds. 

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The Puget Sound Regional Council decided on Thursday how to dole out $78 million in federal stimulus dollars. The agency’s Executive Board voted to approve a list of projects in King, Kitsap, Pierce and Snohomish counties.

That group was originally slated to meet on March 26 but decided to speed up the process.

The executive board approved the list recommended earlier the same day by the PSRC’s transportation policy board, which included a few changes from previous drafts.

The final version removed a paving project on Orville Road in Pierce County and cut $400,000 from the Port of Tacoma’s Lincoln Avenue grade separation, which would have allowed freight traffic to cross over railroad tracks. Those changes made room for an $825,000 project in Eatonville in Pierce County.

Here is the list:

KING COUNTY

Total funding: $40.4 million

Northeast 36th Street Bridge in Redmond, $11 million.

Renton Rainier Avenue South (State Route 167) Project in Renton, $2 million.

South Spokane Street Viaduct in Seattle, $15.4 million.

North Creek Trail - Section 1, Stage 2, in Bothell, $500,000.

Fourth Avenue Southwest Pedestrian Safety Project in Burien, $625,000 payday loans.

Southwest 98th St - Phase I, Pedestrian Corridor, $1.5 million.

East Valley Highway - State Route 167 to South 212th Street in Kent, $2 million.

First Avenue - Phase IIA, between Southwest 192nd Street and Southwest 200th Street in Normandy Park, $3.8 million.

East Lake Sammamish Parkway Northeast - Northeast Inglewood Hill Road to Northeast 28th Place in Sammamish, $3.5 million.

KITSAP COUNTY

Total funding: $3.95 million

Viking Avenue Improvements Phase II (McDonald’s to State Route 305) in Poulsbo, $3.8 million.

Core 40 Shoulder Widening Program - Blakely Non-Motorized Project Phase II in Bainbridge Island, $150,000.

PIERCE COUNTY

Total funding: $18.7 million

State Route 162 Rechannelization in Orting, $420,000.

Shaw Road Extension Phase III in Puyallup, $2 million.

Lincoln Avenue Grade Separation at the Port of Tacoma, $15.4 million.

Rural Town Center and Corridor Program in Eatonville, $825,000.

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Fleetwood Enterprises Inc., a maker of recreational vehicles and manufactured housing that has been restructuring for about three years, said Tuesday it has filed for voluntary Chapter 11 bankruptcy protection.

The 59-year-old company, which has been coping with slowing sales, said it has already started closing its travel-trailer division, which employs about 675 people in three manufacturing facilities and two service facilities instant payday loan. The company said it is also laying off an additional 65 corporate employees.

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The Netherlands showed the most improvement in competitiveness last year among the European Union’s 14 largest economies, a study showed.

Even as the Dutch economy entered its first recession in almost three decades, the Netherlands jumped six places to third in a ranking of progress on a set of EU economic goals known as the Lisbon targets, according to a report published today by Brussels-based research group Lisbon Council and insurer Allianz SE. The Netherlands, the sixth-largest economy in the EU, is home to Royal Philips Electronics NV, the world’s biggest light-bulb maker, and ArcelorMittal, the largest steel producer.

Finland remained at the top of the list and Poland held onto the No. 2 spot. The Lisbon Council measures competitiveness using indicators such as economic and productivity growth, employment, investment and public finances. The Lisbon goals were adopted by EU policy makers in 2000 with the aim of turning the bloc into the “most competitive knowledge-based economy” by 2010, a deadline that was abandoned halfway through the decade.

The worst global economic slump since World War II is devastating economies across the continent, forcing companies to cut output and jobs and boosting government spending. The European Central Bank on March 5 lowered its key interest rate by half a percentage point to a record low 1.5 percent and indicated more cuts are likely to combat the worsening recession.

“Declines in growth rates and labor productivity will be followed by deterioration in employment and public finances,” according to today’s report. The competitiveness table reflects “a severe downward trend, which will continue.”

Biggest Contraction

Ireland, which is facing the biggest contraction among the 16 euro-area nations after a decade-long boom, dropped the most in the competitiveness rankings, today’s report showed. “Its reliance on external trade and the importance of its financial- services sector in national output made it particularly susceptible to the global economic downswing and international financial turmoil,” according to the report payday loan lenders.

“The economic recession will be very damaging to the labor market in the course of 2009,” the authors said in the report. The employment markets in Italy and Poland were the least competitive, while Denmark led the job-market rankings.

As companies throughout Europe cut production and lay off workers to deal with the recession, unemployment increased in January in all but four EU countries, the European Commission, the bloc’s executive arm, said in a labor-market report on March 6. Europe’s jobless rate rose to the highest in more than two years in January.

Budget Deficits

With governments committing billions of euros to lessen the impact of the economic slump, budget deficits have ballooned across the region. The EU, which forecasts that the 27-nation bloc’s overall budget shortfall will more than double this year to 4.4 percent of output, warned national leaders on Feb. 18 to bring their surging deficits back in line as soon as possible.

“The economic crisis has wreaked havoc with public finances,” the authors said in today’s report. “The full brunt of this will not be felt in the public deficits until this year and next.”

While Spain also moved up six places in the overall competitiveness rankings, reaching No. 6, its “success is somewhat ambiguous,” according to the report. Spain’s biggest improvement was in labor productivity, which came “mostly on the back of rapidly rising unemployment,” the authors said.

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