Friday PM December 12th, 2008
by: Ed Mayberry, December 12, 2008 9:12:43 pm
The United Auto Workers is welcoming the Bush administration's vow to prevent the possible failure of any U.S. automakers in the next few weeks. At the same time, UAW President Ron Gettlefinger accuses Senate Republicans of trying to "pierce the heart'' of organized labor. GOP Senators were demanding steep wage cuts as part of a $14 billion emergency aid bill for the auto industry last night. When negotiations with the UAW over the concessions failed, so did the legislation. Gettlefinger says it's vital the automakers get the money as quickly as possible to keep parts suppliers and creditors from demanding cash on delivery. Gettelfinger also says he thinks the White House recognizes the UAW has been "very responsible." He would not rule out the possibility that autoworkers might have to take wage cuts.
After the Senate last night rejected a $14 billion rescue plan for the industry, the White House says the economy "could not withstand a body blow" that a "disorderly bankruptcy in the auto industry" would create. Bush press secretary Dana Perino says Congress doesn't "have the votes to do anything," so the White House will have to consider other options. The Treasury Department says it "will stand ready to prevent an imminent failure until Congress reconvenes" and takes action. Tapping the $700 billion financial rescue is one of the few remaining options for General Motors and Chrysler, which have said the could run out of cash within weeks. Ford is considered to be a stronger position. About $15 billion remains uncommitted from the first half of the fund. To begin tapping the second half, the administration would have to first notify Congress. Lawmakers could block it or put new conditions on how the money is used. White House press secretary Perino says the president "would prefer that markets determine the ultimate state of private firms" under normal economic conditions. But she says allowing a "disorderly bankruptcy" of one of the Big Three automakers would further weaken the economy and prove "irresponsible." GM says it's "encouraged" by the White House's willingness to consider other options. But while the Bush administration says it's ready to step in to avoid an auto industry collapse, several administration officials say nothing is imminent.
A key Republican negotiator on the failed auto rescue package is blaming the White House for undermining attempts to reach a deal. Tennessee Senator Bob Corker says the Bush administration undercut his negotiating power with the UAW by making clear the auto industry would get an emergency lifeline even if talks in Congress collapsed. Corker says that's what happened Thursday night. He says UAW negotiators felt there was no point in conceding the final point toward striking a deal because they believed the automakers would get money from the White House. Corker told reporters that the deal probably fell through because the union knew "that the White House at the end of the day would probably blink."
President-elect Barack Obama is encouraging the White House and Congress to keep working on a rescue plan for the auto industry. Obama said in a statement that he's disappointed the Senate could not agree on a temporary assistance plan for the industry. He says reviving the economy should not be a partisan issue. Obama says he's frustrated with industry mismanagement that helped create the current crisis, but he also says millions of American jobs rely on a viable auto industry. He said his hope is that a deal can be reached to provide temporary assistance while demanding long-term restructuring.
Members of Michigan's Congressional delegation have urged the Bush administration to immediately use its authority under the bailout law to provide loans to domestic automakers. In a letter, they said such a move was necessary to "ensure their continued operations" until Congress reconvenes in early January. The letter noted that one or more companies "now face the real possibility of failure" before the end of the year unless financial assistance is immediately forthcoming.
General Motors says it will cut 250,000 vehicles from its first-quarter production schedule by temporarily closing 20 factories across North America. The move affects most plants in the U.S., Canada and Mexico. Many will be shut down for the whole month of January. Spokesman Tony Sapienza said normal production would be around 750,000 cars and trucks for the quarter. GM and nearly all automakers who sell in the U.S. are mired in the worst sales slump in 26 years.
Congresswoman Sheila Jackson Lee has requested funds to improve the Houston transportation infrastructure out of the economic stimulus package expected with the 111th Congress. She wrote to the chairman of the House Transportation and Infrastructure Committee requesting the funds. Jackson Lee says Houston has $1.5 billion in transit projects that could be under contract within 90 days of enactment of the legislation.
The national consumer health organization Families USA says an economic stimulus package scheduled for approval in January could give Texas an additional $2.6 billion in federal Medicaid matching funds. A proposal likely to be contained in the initiative could mean funds that would help create 51,400 new jobs with $1.9 billion in new wages and spur an estimated $5.4 billion in new business activity in Texas.
Federal employees: no need to hustle back to work the day after Christmas. The president just cleared you to stay home. In an executive order, President George W. Bush declared that executive branch agencies and departments will be closed on Friday, December 26th. That means federal workers will get that day off, with pay. The order does not apply to postal service employees. And it allows agency directors to require that their employees still come to work that day if their service is needed for national security, defense or some other essential public need. The White House says that since 1952, federal workers have been excused from duty eight straight times on December 26th when Christmas fell on a Thursday. The last time was in 2003, when Bush issued the same kind of executive order.
The Federal Emergency Management Agency has extended the deadline for homeowners, renters and business owners who suffered damages from Hurricane Ike to register for state and federal disaster assistance. The new deadline is Saturday, January 10th, 2009. The extension was requested by Governor Rick Perry and Congresswoman Sheila Jackson Lee.
The headquarters of Weatherford International is being moved from Houston to Switzerland. Houston will become a regional headquarters for Weatherford. Some managers and engineers will move to a new office in Geneva. Weatherford says in 2009, more than half of its business will be in the Eastern Hemisphere. Halliburton relocated its top executives to Dubai in 2007 to be closer to its markets.
A bankruptcy judge says KB Toys can use its existing cash management system and continue to pay employees as it prepares for going-out-of-business sales. The nation's largest mall-based toy retailer has filed in Delaware for Chapter 11 bankruptcy protection and announced it will begin liquidation sales. Judge Kevin Carey granted all of the Pittsfield, Massachusetts-based company's first-day motions but indicated he wants to see more details of the company's bankruptcy plan. The judge wondered why the retailer waited until just two weeks before Christmas to seek bankruptcy protection. An attorney for KB Toys says the company did its best to try to plug a looming liquidity problem but was beset by slow holiday-season sales.
Texas Hydraulics is closing its Athens, Texas, factory and eliminating 144 jobs. Plant manager Scott Jones said the plant in the Interstate 75 Industrial Park will be shuttered by March. The company makes hydraulic components for the construction, utility and mining industries, according to the corporate Web site. The company has operated in Athens since 1979 and occupied its current plant since 2000. Jones told the Daily Post-Athenian that sales at the plant are down 25 to 30 per cent. He said the company is consolidating its operations and moving all of its production to its headquarters in Temple, Texas.
The U.S. economy may be cratering, but the wealthiest folks in the nation are still living large in Southlake. That's what Forbes magazine says, in finding the Dallas-Fort Worth suburb to be the most affluent in the nation. Home to former NFL broadcaster Pat Summerall, several Dallas Cowboys and top business executives, Southlake's estimated median household income is $172,945. Two other Texas cities made the Top 10 in the list released this week. The Dallas County community of University Park ranked number seven while Colleyville, located near Southlake, ranks number nine. Forbes based its findings on average median household income estimates that the U.S. Census Bureau released December 9th. Forbes focused on communities with populations between 20,000 and 64,999 from 2005 to 2007.
Domestic airlines will see nine per cent fewer flyers over the holiday season, according to a report from the Air Transport Association of America. The ATA says 43 million people will fly between December 18th and January 7th—down from more than 47 million in the same period last year. Domestic airlines have cut capacity by nine per cent since that time, so flights are expected to be full.
Continental Airlines outranked all other U.S. carriers to be chosen the Best Airline for North American Travel in Business Traveler magazine's 2008 Best in Business travel survey. Continental also placed highest for Best Flight Attendants in North America.