Tuesday PM July 15th, 2008
by: Ed Mayberry, July 15, 2008 5:07:51 pm
Houston area home sales experienced a tenth straight monthly decline, according to the Houston Association of Realtors. Sales slid 14.7 percent on a year-over-year basis, although the number of closed sales was the highest since last August. But the average and median prices of a single-family home hit record highs in June. The average price rose by 4.5 percent to $228,448, and the median rose 1.3 percent to $162,000.
Houston is the second best market for real estate investing, according to Dallas-based HomeVestors of America, as reported by the Houston Business Journal. Dallas was tops in the nation during the second quarter of 2008. Fort Worth placed fifth and San Antonio is sixth.
Facing a steep downturn in sales, General Motors plans to lay off white collar workers, cut truck production and suspend its dividend. The automaker also says it will borrow up to $3 billion. The moves are aimed at raising a total of $15 billion as it tries to engineer a turnaround in North America. GM Chairman and CEO Rick Wagoner calls it a plan "to win," contrasting it with a plan to survive. GM's sales dropped 16 percent in the first six months of the year, much of that because of weak demand for trucks and SUVs. The company's stock has been trading at 50-year lows.
American Airlines is cutting 200 pilot jobs as it sheds eight percent of its work force to cope with higher costs for jet fuel. Fort Worth-based American gave its pilots union a plan that includes incentives for senior pilots to leave voluntarily. A spokesman for the Allied Pilots Association says the union needed time to review the proposal from the nation's largest carrier. Executives told employees two weeks ago that they plan to eliminate eight percent of the work force at American and sister carrier American Eagle, or about 6,800 jobs. Up to 900 flight attendant jobs will be eliminated beginning August 31st. The company has filed notices to cut several hundred jobs at airports around the country. American is a unit of fort worth-based AMR.
East Texas-based chicken producer Pilgrim's Pride says it's cutting 600 jobs at an Arkansas plant and closing a distribution center in El Paso. The Pittsburg-based company says the poultry industry continues to face "unprecedented challenges.'' Pilgrim's Pride will consolidate its tray-pack chicken business from its El Dorado, Arkansas-based processing plant into six other facilities. It says that'll cut 600 jobs by September 19th. Pilgrim's Pride will continue to run the plant as a supply plant. It also plans to close the El Paso Center within 60 days. The distribution center employs 34 workers. In the past year, the cost of animal feed has become more expensive because of rising prices for corn. Some meat producers have cut back on production to help counter the higher costs.
Basic Energy Services says it's called off its proposed takeover of onshore oil and gas driller Grey Wolf. That's after shareholders of Houston-based Grey Wolf voted against the deal. Basic Energy is a Midland-based well site services company. In April, it agreed to pay grey wolf shareholders $1.82 in cash and a quarter share of the new company for each of their shares. Basic Energy holders would receive $6.70 in cash and 0.9195 of a share. Based on the companies' closing stock prices April 18th, the combined company would have been worth $2.9 billion. The deal carries a $30 million breakup fee. Grey Wolf continually rejected overtures from Canada's Precision Drilling Trust in favor of the Basic Energy deal. It said Precision Drilling's proposal undervalued the company and didn't offer a significant premium to shareholders.
Leaders of the oil industry applauded President Bush's announcement that he would lift an executive ban on offshore drilling. No drilling will take place unless Congress lifts its own ban as the U.S. faces record high oil and gasoline prices. The American Petroleum Institute, the industry's trade association, says opening new regions would help boost supplies of oil and natural gas and create more well-paying jobs. The U.S. has had two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by the first President Bush in 1990. Bob Malone, president of BP's American operation, says one-fourth of U.S. oil production comes from the 15 percent of the outer continental shelf not currently off limits. Malone says it's time to open the rest.
For many of the customers who waited outside what is now Indymac Federal Bank, the worries were the same--how much money they would get back and when. The California bank crumbled under liquidity pressure and the federal government is picking up the pieces. The Federal Deposit Insurance Corporation will insure the first $100,000 deposited at the bank. Above that, the government is paying 50 cents on the dollar. Some 10,000 depositors had funds spilling over the insured limit, for a total of $1 billion in potentially uninsured funds. Customers waited as long as seven hours to talk to bank officials and find out the fate of their savings. One woman won a round of applause when she walked out of the bank with a check in hand. The FDIC is asking customers who have uninsured funds to file claims, but says it could be years before it fully addresses all of them.