TheState.com: Business - Wire

Machinists union leaders call for Boeing strike

Sat, 30 Aug 2008 08:59 EDT

Leaders of Boeing Co.'s Machinists union called Friday for a strike after rejecting the aerospace giant's "best and final" contract offer. They urged union members to reject the offer in a vote set for Wednesday.

The Chicago-based company hoped the proposal, which provides added pay and incentives to workers over three years, would help it avert a labor standoff. The talks come as Boeing tries to keep up with a backlog of plane orders and avoid more penalties caused by production delays of its next-generation passenger jet.

Tom Wroblewski, district president of International Association of Machinists and Aerospace Workers District Lodge 751, said the company's offer fell short in terms of job security, wages and medical coverage, among other areas.

"We did not take lightly the fact we recommended a strike," he told a news conference. "This is not just talking about 27,000 members. This is talking about 27,000 members and their families."

Boeing spokesmen said the company was "extremely disappointed" by the union's response, but is standing by its offer. The current contract expires Wednesday.

GM sues to recoup $450K in employee discounts

Sat, 30 Aug 2008 10:59 EDT

General Motors Corp. is cracking down on workers and retirees who it says have improperly extended employee discounts to non-relatives and have cost the automaker more than $450,000.

Lawsuits filed by GM say company audits found the discounts had saved buyers anywhere from $1,000 to almost $9,000.

The Detroit News says it isn't clear how many lawsuits have been filed.

The newspapers is reporting Saturday that some of the lawsuits were filed after this month's announcement by GM that it is temporarily extending such discounts to everyone on almost all of its 2008 and some of its 2009 models.

GM spokesman Tom Wilkinson says the timing of the lawsuits and the extended discounts was coincidental. He says that while such uses of employee discounts might have been overlooked in the past, the company now is closely watching its costs.

Stocks end lower on personal income data

Fri, 29 Aug 2008 18:32 EDT

Wall Street tumbled Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. The Dow Jones industrial average fell more than 170 points, while a disappointing profit report from computer maker Dell Inc. weighed on the technology-heavy Nasdaq composite index.

Meanwhile, investors charted the path of Hurricane Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.

Wall Street's retreat following the downbeat news about consumers also comes after several days of sizable gains in stocks and on the final session before the long Labor Day weekend. Pre-holiday trading is generally light and some pullback was to be expected.

As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending fell by 0.4 percent in July. Wall Street has been concerned about Americans' ability to help the economy grow, as high prices for gas and food have strapped many household budgets.

Oil rises in Asia on fears Gustav will hit Gulf

Fri, 29 Aug 2008 05:15 EDT

Oil prices rose above $117 a barrel Friday on expectations tropical storm Gustav will soon enter the Gulf of Mexico area, home to a quarter of U.S. crude supplies and 40 percent of its refining capacity.

Light, sweet crude for October delivery was up $1.44 at $117.03 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell $2.56 overnight to settle at $115.59 a barrel.

Early Friday, the storm was centered on Jamaica's southwest coast, about 60 miles (95 kilometers) west of Kingston, Jamaica after Gustav triggered floods, mudslides and falling trees that killed 59 people in Haiti and eight more in the Dominican Republic. Forecasters said it could strengthen into a hurricane before slamming into Grand Cayman on Friday.

"Until this hurricane hits, the trend has to be higher toward the $120 level," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore. "If this turns out to be a non-event, the market could really come roaring back down."

Traders were also reacting to a report in Britian's Daily Telegraph, citing an unidentified business source, that Russia may cut oil supplies to Germany and Poland as early as this weekend in response to the threat of European Union sanctions over Russia's war with Georgia.

EU opens antitrust probe into airline alliance

Fri, 29 Aug 2008 07:03 EDT

The European Commission has opened an antitrust probe into a revenue-sharing deal between British Airways PLC, American Airlines and Spain's Iberia SA, an EU official said Friday.

EU spokesman Jonathan Todd said the investigation had been opened by European Union regulators under their own initiative and did not arise from any complaints filed from the three airlines competitors.

"It is not a merger investigation and has no specific deadline," Todd said, but added EU officials will conclude their investigation as soon as possible to see whether or not the tie-up between the airlines violates EU competition rules.

If approved by antitrust regulators, the three airlines will set prices together and share seat capacity on trans-Atlantic flights.

The airlines hope they will get worldwide antitrust immunity for their deal.

Wall Street heads for lower opening ahead of data

Fri, 29 Aug 2008 07:46 EDT

Stocks headed toward a lower opening Friday as investors awaited reports on consumer spending and incomes and charted the path of Tropical Storm Gustav.

The Commerce Department is scheduled to release July figures on consumer outlays and how much they earned at 8:30 a.m. EDT. Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets.

Consumer spending, before adjusting for inflation, was expected to edge up 0.2 percent in July, compared with the 0.6 percent increase in June, according to the consensus forecast of Wall Street economists surveyed by Thompson/IFR. That reflects the waning impact of tax rebate checks that Americans received this spring.

Economists expect personal incomes to drop by 0.1 percent in July after posting a slight 0.1 percent rise in June.

Meanwhile, investors were looking at Gustav heading toward the Gulf of Mexico and its oil installations.

Gas prices up as Gustav threatens Gulf refineries

Sat, 30 Aug 2008 00:47 EDT

Retail gas prices swung higher Friday - the first increase in 43 days - as analysts warned that a direct hit on U.S. energy infrastructure by Hurricane Gustav could send pump prices hurtling toward $5 a gallon.

Meanwhile, oil prices ended the day slightly lower, falling for a second straight session. But prices fluctuated sharply as some traders feared supply disruptions and others bet the government will release supplies from the Strategic Petroleum Reserve if Gustav wreaks havoc in the Gulf of Mexico area - home to a quarter of U.S. crude supplies and 40 percent of refining capacity.

Gustav, which regained hurricane strength Friday, was spinning away from Jamaica on a course toward Gulf Coast states including Louisiana - three years to the day since Hurricane Katrina slammed into the state and tore up oil rigs and refineries.

Fears of another monster storm have sent wholesale gasoline prices shooting up in the Gulf region, forcing filling stations to pass on the costs by raising pump prices ahead of Labor Day weekend.

A gallon of regular gasoline jumped about a penny overnight to a national average of $3.669, according to auto club AAA, the Oil Price Information Service and Wright Express.

Hurricane victims rebuild fortress-like homes

Fri, 29 Aug 2008 19:52 EDT

Floodwaters 5 feet deep filled sculptor and retired Navy Cmdr. Robert Noguere's bayfront home when Hurricane Ivan made landfall in 2004.

More than three years of renovations and $200,000 later, friends now jokingly call the 6,000-square-foot home and art studio "Fort Noguere." From watertight ship doors and a 400-pound main door to exterior walls reinforced with concrete and rebar, the home is now ready for the next brutal hurricane - similar homes did well during Ivan and Hurricane Katrina in 2005.

Noguere says he simply doesn't want an even small weakness to wreak havoc on the whole structure. "I'm not trying to prove anything here - I consider this adapting to the environment," he said.

Tired of the anxiety that comes when hurricanes threaten the U.S., some homeowners along the Gulf and Atlantic coasts have opened their bank accounts to make their homes into fortresses that can withstand winds and flooding well beyond what building codes require. Some fortress owners in the possible path of Hurricane Gustav say that will leave them better prepared if the storm strikes.

Gustav made landfall Tuesday as a Category 1 hurricane that battered parts of Haiti. Forecasters say it could strengthen over the Gulf of Mexico's warm waters and pummel the Gulf Coast as an even stronger hurricane next week.

Boeing machinists to issue recommendation

Fri, 29 Aug 2008 12:49 EDT

Boeing Co.'s machinists union plans to issue a recommendation to its members Friday about a proposed labor contract the aerospace company calls its "best and final" offer.

The Chicago-based company hopes the proposal, which provides added pay and incentives to workers over three years, helps it avoid a strike. The talks come as Boeing tries to keep up with a backlog of plane orders and avoid more penalites caused by production delays of its next-generation passenger jet.

Shares of Boeing fell $1.03 cents, or about 1.6 percent, to $65.31, in midday trade.

The two sides have been negotiating over a new 3-year contract since May 9 and began round-the-clock talks at a Seattle airport on Aug. 21. In 2005, about 18,400 machinists in the Seattle area, Wichita, Kan., and the Portland, Ore., area struck for four weeks, forcing the company to halt production of commercial airplanes. The machinists assemble Boeing's commercial planes and some key components.

Union representatives have been poring over the 300-page contract proposal since it was delivered by Boeing on Thursday. The company said the offer increases pay by 11 percent on average over three years for more than 27,000 union workers in Washington state, Kansas and Oregon.

Restaurants to offer more deals in the fall

Fri, 29 Aug 2008 11:55 EDT

Fall's cool winds could make eating out cheap a breeze - depending, that is, on what you order.

After a second quarter of too many empty tables and falling profits, restaurant companies are planning to woo diners back with lower-priced dishes as the weather grows colder.

But consumers won't see discounts across the board, since many chains have either already raised prices on select items like steak or are planning to do so in the next few months to cover still-high food, energy and labor costs.

Boston Market, for example, first offered five of its most popular meals for $4.99 in July. Seven other menu items were lowered to about $5 in August. The meals regularly cost closer to $7.

"We've been able to pick things that offer the biggest value," said spokeswoman Angela Proctor.

Lafley's pay falls for year

Fri, 29 Aug 2008 12:17 EDT

Procter & Gamble Co. Chief Executive A.G. Lafley's total annual pay fell by nearly 15 percent after the company's internal financial performance slowed at the end of a three-year incentive plan, a regulatory filing Friday shows.

Overall, Lafley received compensation totaling nearly $25.6 million for the company's fiscal year ended June 30, compared to the previous year's $30.1 million.

Nearly 90 percent of compensation for the chairman and chief executive of the world's largest consumer products company was tied to topping earnings and sales growth targets and other financial goals. Lafley's salary stayed at $1.7 million, while his annual bonus was increased by $500,000 to $4 million, the company's proxy statement filed with the Securities & Exchange Commission stated.

He received nearly $19 million in stock and option plan awards, and the company's compensation committee stated in the filing that it "has tremendous confidence in Mr. Lafley's ongoing leadership, based in part on his sustained performance and his commitment to strengthen the company for the future."

His compensation declined in the company's business growth plan, which has annual targets for earnings per share growth and a proprietary formula for rate on return involving growth figures and cash flow in what the filing describes as "demanding" goals. While Lafley received a total $11.1 million under the plan in its first two years, the final year caused the three-year total to finish at 120 percent of plan targets, earning him a total of $12.2 million. That left him with compensation of $1.1 million for this year, under the plan's rules.

Restaurants offering deals, but also hiking prices

Fri, 29 Aug 2008 13:13 EDT

Restaurant companies trying to get consumers back into their restaurants are planning to offer lots of deals this fall. But there won't be discounts across the board, since many chains are also raising prices on premium menu items.

Some of the value-focused offers they are making:

Burger King: Cheesy Bacon BK Wrapper and the Spicy Chicken BK Wrapper are now included on the value menu for $1.39.

Boston Market: Offering 11 meals, which include one side, priced at $5 each.

Wendy's: Double Stack Cheeseburger, Junior Bacon Cheeseburger and Crispy Chicken Sandwich now offered for 99 cents.

Stocks fall after personal income data; oil rises

Fri, 29 Aug 2008 11:19 EDT

Stocks declined unevenly Friday after the government said personal incomes fell last month by the largest amount in nearly three years while consumer spending slowed. A disappointing profit report from computer maker Dell Inc. weighed on technology stocks.

Meanwhile, oil prices rose as investors charted the path of Tropical Storm Gustav as it heads toward the Gulf of Mexico and its oil rigs and refineries.

Still, investors were uneasy after the Commerce Department reported that personal incomes fell by 0.7 percent in July - well beyond the drop of 0.1 percent that analysts polled by Thomson IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.

As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending actually fell by 0.4 percent in July. Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets.

US oil and gas rig count up by 33

Fri, 29 Aug 2008 14:45 EDT

The number of rigs actively exploring for oil and natural gas in the United States rose by 33 this week to 2,031.

Of the rigs running nationwide, 1,606 were exploring for natural gas and 416 for oil, Houston-based Baker Hughes Inc. reported Friday. Nine were listed as miscellaneous.

A year ago, the rig count stood at 1,829.

Of the major oil- and gas-producing states, Texas gained 27 rigs, New Mexico 14, Oklahoma three and Wyoming two. Louisiana lost 11 rigs and Colorado lost one. Alaska, North Dakota, California, Arkansas and Alaska were unchanged.

Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

Gold falls as doller gains ground on euro

Fri, 29 Aug 2008 16:00 EDT

Gold prices fell slightly Friday as a stronger dollar prompted selling from investors seeking commodities as an inflation hedge.

The 15-nation euro bought $1.4671, down from $1.4702 late Thursday in New York. A stronger dollar typically encourages investors to shed hard assets like gold, which is viewed as a safe-haven investment used to hedge against inflation and weakness in the U.S. currency.

Gold for December delivery fell $2 to settle at $835.20 an ounce on the New York Mercantile Exchange, after earlier dropping as low as $834.

Other precious metals traded mixed.

December silver inched up 0.2 cent to settle at $13.707 an ounce on the Nymex, while September copper fell 1.35 cents to settle at $3.387 a pound.

Gas prices up as Gustav threatens Gulf refineries

Fri, 29 Aug 2008 16:10 EDT

Retail gas prices swung higher Friday - the first increase in 43 days - as analysts warned that a direct hit on U.S. energy infrastructure by Tropical Storm Gustav could send pump prices hurtling toward $5 a gallon.

Gustav was spinning away from Jamaica on a course toward Gulf Coast states including Louisiana - three years to the day since Hurricane Katrina slammed into the state and tore up oil rigs and refineries.

Fears of another monster storm have sent wholesale gasoline prices shooting up in the Gulf region, forcing filling stations to pass on the costs by raising pump prices ahead of Labor Day weekend.

A gallon of regular gasoline jumped about a penny overnight to a national average of $3.669, according to auto club AAA, the Oil Price Information Service and Wright Express.

Treasurys fall as investors cash in gains

Fri, 29 Aug 2008 17:42 EDT

Treasury prices mostly fell Friday ahead of the long holiday weekend as traders booked profits in an abbreviated session.

Investors examined an apparent improvement in Midwest business conditions, which perhaps dampened demand for the safety of government debt. The Chicago Purchasing Managers' index, which measures business conditions across Illinois, Michigan and Indiana, jumped to 57.9 in August from 50.8 in July.

The index is also considered a precursor to the Institute for Supply Management's manufacturing survey on Tuesday. Strength in manufacturing, fed by demand from abroad, could help support the overall economy and possibly prevent a further slowdown.

And the Reuters/University of Michigan index on consumer sentiment rose to its highest level in five months. Upbeat consumers could ramp up their spending, thereby helping the overall economy.

Treasury investors didn't appear cheered by a Commerce Department report showing that personal incomes fell by 0.7 percent in July. Analysts polled by Thomson IFR had expected a more modest decline of 0.1 percent, even with the effect of tax rebate checks dissipating.

Japan unveils $18 billion stimulus package

Sat, 30 Aug 2008 00:07 EDT

Japan unveiled a 2 trillion yen, or $18 billion, stimulus package Friday, including assistance to small businesses and other pump-priming measures to shore up its flagging economy hit by soaring energy and material prices.

The new measures include discounts on expressway tolls, assistance to farms and help for part-time workers to find better jobs, according to the Cabinet Office. Funds were also earmarked for better medical care, ecological technology, housing loans and education, it said.

Growth in the world's No. 2 economy has come to a virtual halt against the backdrop of higher energy and materials prices, slowing exports and the global credit crunch. Second-quarter gross domestic product, which contracted at a 2.4 percent annual pace, suggests that the country teeters on the brink of recession.

All told, the value of the programs involved comes to 11.7 trillion yen ($107.5 billion). Aside from the $18 billion in cash infusion, most of the package consists of non-spending measures such as lower road tolls and loans to businesses.

Friday's package also did not include tax breaks, but they will be considered as a future measure during this fiscal year through March 2009, the government said.

Japan's inflation rises as leaders unveil package

Fri, 29 Aug 2008 07:33 EDT

Japan unveiled a stimulus package with 2 trillion yen ($18 billion) in fresh spending to shore up its flagging economy on Friday as figures showed that inflation has spiked to its highest in nearly 11 years, denting consumer spending.

Measures in the package span discounts on expressway tolls to assistance to farms and help for part-time workers to find better jobs. Funds are also earmarked for better medical care, ecological technology, housing loans and education, according to the Cabinet Office.

Economists are skeptical that the package will help revive Japan's economy, which shrank 2.4 percent at an annual pace in the second quarter.

And critics call it a publicity stunt to lift Prime Minister Yasuo Fukuda's dismal approval ratings.

"This is just reckless spending," Yukio Hatoyama, leader of the main opposition Democratic Party, said on nationally televised news. "The package is aimed at getting voters' attention in anticipation of the next election."

Euro area inflation falls

Fri, 29 Aug 2008 07:09 EDT

Euro area inflation fell in August from a record high, offering some relief as economic confidence plunged to the lowest level in five years, the European Commission said Friday.

Inflation dropped to 3.8 percent in August, down from a record high of 4 percent in June and July when prices for fuel and food rose sharply from a year ago, the EU statistics agency Eurostat said.

But businesses are gloomy about prospects ahead for the 15 nations that share the euro. Economic confidence fell again in August to 88.8 with industry, the construction sector and retailers more worried than they were last month.

The European economy is slowing as prices at the gas pump and grocery store soar and amid tight borrowing conditions triggered by the global credit crisis as well as a slowdown in major trading partners, Britain and the United States.

The EU figures add pressure on the European Central Bank to hold off an interest rate increase that would make borrowing more expensive and risk hurting a fragile economy. It raised rates from 4 percent to 4.25 percent in June to try to contain rocketing inflation.