A Wall Street analyst says Schlumberger’s decision to cut about five per cent of its North American work force is likely the right move. The world’s biggest oilfield services company announced that it’ll lay off up to 1,000 of its 19,000 North American employees due to sliding oil prices and demand. As many as 100 of its 5,000 workers in the Houston area will be among those to be let go. In the wake of crude oil’s price plunge, oil and gas companies have since scrapped many exploration and production projects. That’s reduced work for companies like Schlumberger and rival Halliburton. Wall Street analyst Phil Weiss says about 150 to 200 oil rigs have gone offline over the year-ago period. Halliburton also has confirmed it will begin laying off workers but hasn’t said how many or when. Last month, Weatherford International Chief Executive Bernard Duroc-Danner said job cuts would likely be unavoidable amid a sharp downturn in North American activity. Among the jobs being cut at Schlumberger are administrative support positions, field operations personnel and contract workers.
The government says the nation’s unemployment rate bolted to 7.2 per cent in December, the highest since January 1993, as employers slashed 524,000 jobs. The Labor Department’s report underscores the terrible toll of the deepening recession and highlights the hard task President-elect Barack Obama faces in resuscitating the flat-lined economy. For all of 2008, the economy lost 2.6 million jobs. That was the most since 1945, when nearly 2.8 million jobs were lost, although the number of jobs in the U.S. has more than tripled since then.
Congressman Kevin Brady of Texas, Senior House Republican on the Joint Economic Committee, says these job losses confirm a profound lack of confidence in the economy by both families who are restraining their spending and businesses who are doing the same with investment. But he says he’s not convinced that confidence can be restored with a massive “borrow and spend” binge by Congress.
Online advertised job vacancies declined, according to the Conference Board — falling below four million for the first time since July 2006. The nonprofit Conference Board is a business membership and research organization. It produces the Consumer Confidence Index and Leading Economic Indicators.
Boeing plans to cut about 4,500 jobs this year due to the global economic slowdown. The Chicago-based company says the cuts will be made in its commercial aircraft business, which has factories in the Seattle area. It says many of the cuts will be in areas not directly associated with aircraft production. Most of the job cuts are expected to occur in Washington state in the second quarter of the year. Boeing says employees will receive 60-day notices starting in late February. The cuts will enable Boeing to continue focusing on development programs, airplane deliveries, productivity improvements and quality, as well as customer support, the company says.
The developer of the twin Mosaic condominium towers near Hermann Park—5925 Almeda North Tower — has filed for bankruptcy protection, according to the Houston Chronicle. Assets are listed at $85 million and debts at almost $52 million. The second tower—Montage–is still under construction.
Trinity Industries is laying off nearly 300 workers at its rail tank car production facility in the Longview area. The move was confirmed by John Stroud, executive director of Longview Economic Development Corporation. A Trinity spokesman didn’t immediately respond to messages left by the Associated Press on Friday. The Longview News-Journal reports that Stroud said the Dallas-based company attributed the layoffs to a weakening national economy. Trinity had nearly doubled its Longview-area work force to 1,100 workers in the past three years. Stroud says a reduction of 297 employees will leave the facility with about 850 workers. Last year, the company told the state it planned to cut 278 people by shuttering two facilities in the Dallas area.
Verizon Wireless has completed its $5.9 billion purchase of Alltel, making Verizon the nation’s largest mobile phone company. Verizon says it will retain Alltel employees below the executive level as the company assesses its staffing needs. As a condition of the purchase, regulators forced Verizon to sell overlapping properties in 105 markets across 24 states. Verizon picks up nearly 13 million Alltel customers.
The House has passed legislation to assure that employers live up to their four-decade-old legal promise to provide equal pay for equal work. Democrats led lawmakers in approving a bill making clear that women who are victims of gender-based discrimination can sue for compensatory and punitive damage. The chamber was also voting on a bill in response to a Supreme Court decision that workers must file a discrimination claim within 180 days of a pay violation. Supporters of changing the law said many workers don’t find out about wage disparities for years. The two bills, coming in the first week of the new Congress, attest to the worker rights agenda of the Democratic-led Congress and the incoming Democratic president, Barack Obama. Congresswoman Sheila Jackson-Lee of Texas says women in the U.S. still only earn 78 cents on the dollar compared to men more than 45 years after passage of the Equal Pay Act of 1963.
Businesses slashed wholesale inventories for a third straight month in November as sales continued to plummet by record amounts, further evidence of the severe recession gripping the country. The Commerce Department reported that wholesale inventories dropped 0.6 per cent in November while sales were down a record 7.1 per cent. Businesses are expected to keep paring inventories in coming months as sales weaken further in the midst of a recession that is already the longest in a quarter century. Many economists do not expect a recovery to begin until the second half of this year.
President-elect Barack Obama says America is facing a “devastating economic crisis” and the time to act is now. Obama, holding a news conference to discuss additional appointments for his administration, said “this is the moment to act and act without delay.” He spoke just hours after the government reported that the national unemployment rate spurted to 7.2 per cent of the labor force last month. He said those figures constitute “a sharp reminder” of just how troubled the economy is. He said, “the situation is dire.” Obama is urging congress to “act boldly and act now,” saying that if the government doesn’t step in “this recession could linger for years.” He says that when it comes to his stimulus plan, he remains confident that “we’re going to get it done”–despite objections from some Democratic Senators over his tax proposals. Obama says there will be a “whole host of good ideas” about how to help the economy, but that what’s important is that the stimulus plan not be delayed. He says he’s going to make sure Congress “stays focused in the weeks to come.” Obama says he expects to “hone and refine” his $800 billion stimulus package aimed at creating or saving nearly 3 million jobs in the coming weeks. Obama’s aides and others have been at work for weeks on the measure. The details are subject to change, seen by the fact that the costs of various provisions seem to be bouncing around daily.
After listening to his dire warnings, Democratic and Republican lawmakers remain skeptical of Obama’s plan to revitalize a weakened economy. Leading lawmakers have set an informal goal of mid-February for enacting tax cuts and government spending that could cost as much as $1 trillion. But they are letting the president-elect know they plan to put their own fingerprint on the economic recovery effort. Some democrats argue the proposed tax cuts are too small to get consumers drowning in debt out shopping. Republicans are fearful of a deficit that soars beyond $1 trillion. Democrats such as Budget Committee Chairman Kent Conrad complained that many of the incoming administration’s proposed tax cuts wouldn’t work. Republicans warned against excessive new spending.
Small businesses are feeling the full effects of the recession, according to the Houston Business Journal, and many entrepreneurs expect tougher times ahead. In a national survey by the National Association for the Self-Employed, 43 per cent of self-employed individuals and micro-business owners say this is the worst economic downturn they’ve experienced. More than half expect lower 2008 year-end gross revenues compared to 2007. Respondents say they’re scaling back equipment and inventory purchases, cutting staff or refraining from hiring, and lowering prices of their products and services.
Texas lawmakers soon will consider legislation that would temporarily freeze tuition at state universities. But some higher education leaders are warning the move could blow a hole in their budgets and lower the value of a diploma from schools in Texas. The legislature convenes Tuesday. Lawmakers six years ago, facing a $10 billion budget shortfall, gave universities broad latitude in setting tuition rates. The Associated Press reports that helped spark a steady climb in college costs — including a 53 per cent rise for tuition and fees at state universities. State Senator Juan Hinojosa of McAllen has filed a bill that would put a two-year moratorium on tuition hikes at public universities. The plan would also peg future increases to the cost of living and require that most fee hikes be approved by a majority of students. Representative Geanie Morrison of Victoria sponsored the 2003 legislation that allowed universities to set their own tuition rates. She said it would be a mistake to force tuition lower over time — without offsetting the losses in revenue.
The head of a Congressional panel overseeing the $700 billion bailout program says she is “shocked” that officials trying to follow where the money has gone still have many unanswered questions. Harvard University Law professor Elizabeth Warren, appearing on national television as her panel released a critical report on the rescue fund, said Congress “may want to take a very hard look” at how the money has been used by the banks that got the bulk of the initial disbursements. Warren told ABC’s Good Morning America that the Treasury Department “didn’t put any tracking mechanisms on it.” Warren also said “they didn’t tell the banks what they had to do in order to get the money. It might be used for lending, it might be used to buy other banks…or it might just be stuffed in vaults and left there.”
A key lawmaker says he expects the House to act soon to impose conditions on any new release of the second $350 billion in federal bailout funds. Representative Barney Frank, who heads the House Financial Services Committee, said he planned to issue a draft of his proposal to attach strings to spending of the money by either the Bush administration or the incoming Obama government. The new conditions would include substantial efforts to reduce mortgage foreclosures and a better method for the government to track whether banks are using the federal money they receive to boost lending. The Massachusetts Democrat said his bill could be voted on by the House as soon as next week.
The Federal Reserve says commercial banks borrowed more, while investment firms drew less over the past week from its emergency lending program. The Fed report shows commercial banks averaged $87.9 billion in daily borrowing over the week ending Wednesday. That was up from $86.6 billion in average daily borrowing logged over the week that ended December 31st. Investment firms drew nearly $36 billion over the past week. That compared with an average of $38.5 billion the previous week. This category includes any loans that were made to the U.S.- and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch.
The municipal bond market’s self-regulatory body is calling for greater government oversight of the industry as federal authorities investigate corruption among brokers that advise states and cities. The Municipal Securities Rulemaking Board recommends federal regulation of certain municipal bond brokers to eliminate even the appearance of possible wrongdoing when professionals advise state and local governments about how to raise money. The IRS, FBI and Securities and Exchange Commission for years have been looking into whether financial firms have bribed officials or otherwise illegally steered business to particular brokers.
A provision of General Motors’ $13.4 billion in federal loans automatically places them in default if GM’s union workers go on strike, and newspaper reports say Chrysler’s $4 billion loan includes similar terms. A General Motors filing with the Securities and Exchange Commission detailed the loan provision. The Detroit Free Press and the Detroit News, citing unnamed sources, that Chrysler’s loan deal has a similar provision. Chrysler spokeswoman Lori McTavish declined to comment on the newspaper reports. The United Auto Workers Union isn’t a party to the deal and hasn’t threatened a strike, its most potent weapon against the Detroit automakers. The UAW and the automakers have a February 17th deadline to agree to concessions to lower labor costs.
NATO’s top commander says the global financial crisis could force U.S. allies to scale back their efforts in Afghanistan, or possibly even pull out. Supreme Allied Commander General John Craddock said that at least two nations–Canada and The Netherlands–already have signaled they will leave by 2011. That means the U.S. and other allies will have to cover the costs of securing Afghanistan, which the incoming Obama administration has called a top priority. Speaking with reporters, Craddock said NATO nations already were stretched thin before the financial meltdown hit last year. Now, he said, nations will be “challenged even more greatly.”
The chief of Russia’s Gazprom says the company could resume natural gas shipments to Europe if EU observers begin monitoring Ukrainian pipelines. Alexei Miller says a final agreement on sending the team is being signed. He says the Russian state gas monopoly will resume European shipments right after that. Russia has vowed to restore supplies of natural gas through Ukraine if its officials are included in the monitoring mission. Ukraine says it will allow Russian experts to join the EU mission to monitor gas flow through the country as part of a deal that would end a cutoff of Russian gas supplies to Europe. European monitors have arrived in Kiev. Valentyn Zemlyansky, spokesman for Ukraine’s state gas company Naftogaz, said they will tour gas pumping stations together with Russian experts. Gazprom stopped natural gas shipments to Ukraine on January 1st amid a debt and pricing dispute, and to Europe via Ukraine’s pipelines on Wednesday. Russia said it made the move because Ukraine siphoned gas intended for European customers — a claim Ukraine denied.
A judge has frozen the assets of an oil securities firm that promised revenue from wells to be drilled in Kentucky and three other states. U.S. District Judge Joseph H. McKinley’s order requires Heartland Resources of Bowling Green, Kentucky, along with its officers, to give the court a list of assets within 20 days. Some investors have sued Heartland Resources — accusing the company of securities fraud. McKinley says oil wells planned for Knox County, Kentucky, were not completed. Heartland Resources solicited investments in oil and gas wells in Kentucky, Kansas and Texas and working interests in oil and gas wells in Oklahoma. The 53 plaintiffs, who are from 16 states, sued in September.
Dozens of transportation and trade experts are attending and speaking at the first annual Harris County International Trade and Transportation Conference in Houston beginning Monday at the Westin Galleria on Alabama. Harris County Judge Ed Emmett organized the event to address current events in trade and transportation, with a special focus on U.S./Mexico trade. The conference was originally set for September, but was postponed due to Hurricane Ike.
Dell could have used a home run at the Consumer Electronics Show in Las Vegas. After all, it trails Silicon Valley-based Hewlett-Packard in worldwide sales. Instead, the Round Rock-based computer maker came to Vegas with a model and a mirage. At a news conference, Dell executives said the company would launch a luxury line of computers under the brand name Adamo. A model stood and removed a thin, black laptop from a bag and posed “project runway” style for photographers. She didn’t turn on the computer, though, and Dell gave no details about what’s under the hood. Dell and HP have excelled in delivering functional, powerful, inexpensive computers, but both are racing to meet a new generation of consumers’ desire for a little more flair. In the meantime, Apple has gained share with sleeker designs.
Hewlett-Packard insists it’s been complying with all export laws but says it’s clarifying contracts with its distributors “to explicitly” ban the sale of its products in Iran. The Boston Globe reported last week that the computer and printer maker could be in violation of U.S. export laws because of an arrangement it has with a Middle East distributor to sell HPp printers in Iran. The California-based company acknowledges it knew sales were occurring despite U.S. trade sanctions. But in a short statement to the Associated Press, HP says it did nothing illegal and is clamping down to, quote, “go beyond the letter of the law.” HP also says it will monitor its distributors more closely. The company emphasizes that it has not shipped directly to Iran and does not have any employees there. The Treasury Department won’t say whether it’s investigating.
Investment research firm Morningstar named billionaire Warren Buffett the best chief executive of 2008 for his leadership of Berkshire Hathaway. Paul Larson, who edits a Morningstar newsletter, says Buffett was chosen because of the key investments Berkshire made in 2008 at a time when most investors fled the market because of economic turmoil. Berkshire invested $5 billion in Goldman Sachs Group and $3 billion in General Electric, and both companies promised to pay Berkshire a ten percent annual dividend. Berkshire’s bid to acquire Constellation Energy Group failed, but Berkshire walked away with $593 million cash and 20 million shares of Constellation stock. Plus, Berkshire receives 14 per cent interest on its initial $1 billion constellation investment.
Baker Hughes in Houston says the number of rigs actively exploring for oil and natural gas in the U.S. dropped by 34 this week — to reach 1,589. One year ago the rig count stood at 1,744. Texas lost 34 rigs. The working rig count 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.