Wednesday PM January 28th, 2009
by: Ed Mayberry, January 28, 2009 5:01:24 pm
ConocoPhillips is reporting an almost $32 billion loss in the fourth quarter of 2008, but still made more money last year than in 2007. The Houston-based company says it lost $31.8 billion in the final three months of last year. But triple-digit crude oil prices in the first nine months led the third-largest U.S. oil company to an annual profit of $16.4 billion. That's up from $15.15 billion in 2007. The company's refining segment earned $289 million in the fourth quarter--down from over a billion dollars in the same period of 2007. Chairman and CEO Jim Mulva says the fourth-quarter numbers reflect the depressed economic conditions impacting his industry. ConocoPhillips recently announced plans to lay off four per cent of its global work force, affecting about 1,350 jobs. The year included a $4.5 billion write-down in the second quarter, as ConocoPhillips chose to walk away from Venezuelan operations rather than agree to new terms wHEN the state-run oil company took control.
The government says the number of layoffs involving 50 or more workers jumped by one-third in 2008 from the previous year, and the pace of job cuts appears to have quickened since then. The Labor Department says 21,137 mass layoffs took place last year, up from 15,493 in 2007. That's the highest annual total since 2001, the last time the economy was in recession, and the second-highest since the department began tracking mass layoffs in 1995. Texas companies had 95 mass layoffs in December, and the agency says more than 10,000 Texas workers filed initial claims for unemployment insurance in December as a result. The department says more than 2.1 million workers were fired nationwide as a result of last year's mass layoffs. Mass layoffs did drop slightly in December, to a seasonally adjusted 2,275, from 2,328 in November.
Amid widening unemployment, home foreclosures and credit woes, union membership jumped to 12.4 per cent of the work force last year. The Bureau of Labor Statistics says the ranks of organized labor rose by 428,000 workers — the biggest annual gain since the government began compiling such data in 1983. It's also the second year in a row that unions have added to their ranks. Membership rose by 311,000 members in 2007, to account for 12.1 per cent of workers. Overall, union membership remains well below the peak of 35 per cent during labor's heyday of the 1950s. Membership was about 20 per cent in 1983, the first year the bureau began compiling the numbers. Unions have moved aggressively to bolster organizing efforts in recent years, a move that apparently offset the loss of 2.6 million jobs from payrolls in 2008.
General Motors says its “jobs bank” program will end Monday. The program gives union workers at the Detroit automakers most of their pay and benefits while they are laid off. The jobs bank was the target of much ire during the companies' requests for a federal bailout. The program's elimination was one of the conditions the government set when it agreed to lend GM $13.4 billion. GM spokesman Tony Sapienza said that the 1,600 GM workers in the jobs bank will be placed on layoff and will need to file for unemployment. They'll receive about 72 per cent of their salaries, which will be paid for by state unemployment benefits and GM subsidies. The length of time workers can receive the benefits varies from state to state but usually amounts to about 48 weeks.
Two former Enron officials have settled charges with the Securities and Exchange Commission, according to the Oil and Gas Journal. Former Enron vice president and general counsels Jordan Mintz and Rex Rogers were ordered by a federal court to each pay $1 million plus $25,000 civil penalties on Tuesday to settle charges that they didn’t disclose transactions with partnerships controlled by former Chief Financial Officer Andy Fastow.
The House has defeated a bill to postpone the upcoming transition from analog to digital television broadcasting by four months to June 12th. House Republicans succeeded in scuttling a bill to delay the transition, which is scheduled for February 17th, less than two days after the Senate unanimously passed the plan. The defeat is a setback for the Obama administration and Democrats on Capitol Hill, who fear too many Americans are not ready for the switchover. A delay would have meant higher power costs for network affiliates, keeping analog signals working for four more months. The Nielsen Company estimates more than 6.5 million U.S. households that rely on analog television sets to pick up over-the-air broadcast signals could see their TV sets go dark next month if the transition is not postponed.
President Barack Obama says businesses and workers are counting on Washington for “bold and swift” action to steady the struggling economy. After a meeting with a group of business executives, Obama publicly acknowledged skepticism about “the size and scale” of the $825 billion economic recovery plan. He said earlier he was confident that the measure would make it through the House. And in his appearance at the White House before reporters and business leaders, Obama said national leaders must “create a favorable climate in which workers can prosper, businesses can thrive and our economy can grow.” Earlier today, the top-ranking Republican said GOP lawmakers are worried about the level of domestic spending in the bill. House Republican Leader John Boehner said Republicans are “for more than just cutting taxes.” But he also told ABC that the bill before lawmakers contains spending that “has nothing to do with creating jobs or preserving jobs.”
President Obama has invited Republican and Democratic lawmakers for drinks at the White House as they consider his economic recovery bill that still faces opposition. White House aides say about two dozen key members of Congress were invited to the executive mansion Wednesday evening. The guest list includes six House Democrats, six House Republicans and five Senators from each party. The event is expected to start after the House considers Obama's $825 billion economic recovery bill that he has championed virtually daily in his young presidency. Obama went to Capitol Hill Tuesday to meet with Republicans, some of whom have called some parts of his plan “insane.”
Hoping to keep distressed borrowers in their homes, the Federal Reserve is moving ahead on a number of relief options. The program would include lowering the amount borrowers owe on their mortgages, cutting the interest rate or lengthening the loan's terms. Fed Chairman Ben Bernanke detailed the program in a letter to Massachusetts Congressman Barney Frank. It's unclear how many homeowners would be able to take advantage of the program. But it would apply to billions of dollars worth of mortgage assets the Fed picked up in last year's bailouts of Bear Stearns and American International Group.
The Federal Reserve says the economy has weakened further and signaled it will keep a key interest rate near zero for quite “some time” to cushion the fallout. The Fed agreed--with one dissent--to keep the targeted range for the federal funds rate at a record low of between zero and 0.25 per cent. The funds rate is the interest banks charge each other on overnight loans. Economists predict the Fed will leave rates at that range through the rest of this year. Having taken the unprecedented step of slashing its key rate to near zero at its previous meeting in December, the central bank pledged anew to look to other unconventional ways to revive the economy.
Postmaster General John Potter says the massive deficits facing the US Postal Service could force the agency to cut out one day of mail delivery per week. In testimony for a Congressional panel, Potter asked for an end to the requirement that the agency deliver mail six days a week. Faced with dwindling mail volume and rising costs, the Post Office was $2.8 billion in the red last year. It doesn't mean that Saturday would be the day that's lost. Previous post office studies have looked at the possibility of skipping another day when mail flow is light--such as Tuesday.
Wind power has seen historic growth and the blessing of President Barack Obama--but it's far from recession proof. The American Wind Energy Association reports that the amount of electricity generated by wind turbines grew by 50 per cent last year and 55 new manufacturing facilities were built to make turbine components. But the association sees storm clouds ahead. Denise Bode, the group's top executive, says “the financial downturn has begun to take a serious toll on new wind development,” with layoffs reported at a number of manufacturing plants. Last year, the industry gained 13,000 jobs. But the association says hundreds of people have recently lost their jobs because the credit crunch is delaying wind projects.
The international economic crisis is weighing heavily on the World Economic Forum in Davos, Switzerland. The usually glitzy affair is decidedly toned down, with no big name celebrities in sight. And some of the biggest contributors to the economic slide steered clear of the gathering, as did top economic policy makers in President Barack Obama's administration. Economists at the event are warning that the massive stimulus plans being passed by developed nations can't solve the crisis alone. South African Finance Minister Trevor Manuel says governments are following a “lemming like approach” without “any idea what that money will do.” Economist Stephen Roach expects worldwide growth for the next three years will be an anemic 2.5 per cent--what he calls a “near recession.” Over the past four and a half years, there was five per cent growth worldwide.
Plans are proceeding for a national convention in Detroit on manufacturing, technology, energy and the environment despite worsening economic woes. Registration began online for the national summit, scheduled for June 15th through the 17th at Ford Field. Ford Executive Chairman Bill Ford and CEO Andrew Liveris announced plans in September to co-host the summit. Since then, there have been broad layoffs across the industries. Two of Detroit's automakers have received billions in government loans to survive. Economic Club President Beth Chappell says organizers have lowered attendance estimates from 5,000 to about 4,000. But they are pleased that more than 40 CEOs have accepted speaking invitations--more than half from outside Michigan.
Venezuela's state oil company says it's taking control of an oil rig owned by contract driller Ensco International. Petroleos de Venezuela alleges the Dallas-based company abandoned operations. It adds that its joint venture with the Italian oil company Eni has begun drilling with the rig off Venezuela's Caribbean coast. Of the company's 46-rig fleet, the offshore rig known as Ensco 69 is the only one operating in Venezuela. PDVSA said Ensco had refused to accept certain methods of payment for services that began in December 2008, suspending operations. Under President Hugo Chavez, Venezuela nationalized four major oil projects in 2007, pushing Irving-based ExxonMobil and Houston-based ConocoPhillips to leave the country, while others stayed on.
American Airlines won't need to furlough flight attendants during a schedule reduction because enough workers took leave or other voluntary steps. Details were announced by the Association of Professional Flight Attendants. The union earlier said it expected there would be 200 to 400 extra flight attendants because American is cutting capacity during the recession. American last week announced it plans to cut capacity more than six per cent this year. The union now says American Vice President Lauri Curtis told employees the Fort Worth-based company fell slightly short of its goal for voluntary departures. But the union says Curtis said the company would offer more leave and vacation slots to make up the difference.
American Airlines is limiting the number of passengers on some planes while it orders additional life rafts. The Fort Worth-based airline needs the rafts in case of a water landing like the one a US Airways jet made this month on the Hudson River. American will allow no more than 228 people, including passengers and crew, on its Boeing 767-300 aircraft. Those jets normally hold 236 people, including a crew of 11. The planes are mostly used on flights over the Atlantic to Europe, and to Latin America. American spokesman Tim Wagner says the airline is taking the step to make sure it complies with Federal Aviation Administration rules on raft capacity. Wagner says the problem arose after American added additional seats when redesigning the business-class cabins of the 767s between 2005 and 2007. The airline discovered the shortage this week when it reviewed life raft capacity on new Boeing 737 aircraft, then decided to re-examine the situation on other planes in its fleet. The 767-300s make up nine per cent of American's fleet of 625 planes. Wagner said all of American's other planes meet FAA requirements for life rafts.
Toyota is recalling 1.3 million vehicles worldwide due to a seat belt defect. The recall includes more than 130,000 Yaris models sold in the U.S. Toyota Motor Sales USA says it is working with the National Highway Traffic Safety Administration to recall 134,900 model-year 2006 and 2007 Yaris subcompact cars. The automaker says in severe front-end collisions, the seat belt is at risk of causing a foam pad in the vehicle to ignite. Toyota spokesman Brian R. Lyons says no one has reported a case where that has actually happened. He says consumers who own the vehicle will receive letters next week. They can then take the car to their dealer to perform an hour-long fix of the problem.