University regents have granted the hurricane-ravaged University of Texas Medical Branch at Galveston a reprieve–provided the Texas legislature comes through with the cash. UTMB leaders presented UT System regents with a plan to rebuild and renovate island-based facilities of the medical school and, over time, restore it to its pre-Hurricane Ike capacity of 550 beds. However, the plan depends on around $300 million from the state, in addition to funds the school expects to get from FEMA and insurance. The regents unanimously approved a resolution supporting the plan if the state appropriates the funds.
Dow Chemical has reached a tentative deal in its disputed $15.4 billion buyout of Rohm & Haas. The two major shareholders in Rohm & Haas, the Haas Family Trust and Paulson & Company, will take a $2.5 billion stake in preferred shares issued by Dow. Dow says they will also make an additional investment of $500 million at Dow’s option. That appeared to be a concession on behalf of Rohm & Haas shareholders, who took the stake instead of cash. Dow had said completing the acquisition in the current economic climate would be disastrous. Other shareholders will receive $78 per share, plus proceeds from a daily $3 million ticking fee that Dow was required to pay for not closing the acquisition after it was approved by regulators. The acquisition is to be completed no later than April 1st.
The Houston Business Journal reports that about 1,000 Stanford Financial Group employees in Houston were terminated over the weekend, as the company begins selling off assets. That’s about 85 per cent of the company’s total U.S. head count. The Securities and Exchange Commission froze company assets in mid-February. A small number of employees in Houston will be retained to assist with winding down operations and selling the receivership estate.
The recession has claimed 4.4 million jobs but the economy has created others, many of them for highly trained and specialized professionals. According to government data, more than two million job openings now exist across a range of industries. Job seekers beware, though: an average of nearly five people are competing for each opening. That’s up sharply from a ratio of less than 2-to-1 in December 2007, when the recession was just starting and nearly four million openings existed. Human resources executives say companies that are hiring are benefiting from a top-notch talent pool as applications pour in from a larger base of job seekers. The number of unemployed Americans has soared, to 12.5 million last month, from seven million when the recession began. The Labor Department says jobs are being added in education, health care and the federal government, with the government adding 9,000 new jobs last month alone.
Most respondents to Korn/Ferry Institute’s latest study have never experienced a lengthy job search, but expectations are changing. The majority of some 1,000 unemployed executives who were polled predict it will take job seekers more than four months to find a new career opportunity. Twenty-eight per cent have been unemployed for less than a month, and 36 per cent have been without work less than three months. About 18 per cent indicate they’ve been searching for career opportunities for seven months or longer. Forty-three per cent say they are considering or are already going back to school to “wait out” the downturn.
AAA Texas plans to add more than 100 full-time positions. Within the next four months, AAA Texas is hiring 30 sales professionals to sell memberships and insurance products, mostly in the Dallas/Fort Worth area. About 75 are needed in their Emergency Road Service call center in Irving. A lesser number of sales candidates are needed in Houston.
Businesses slashed inventories at the wholesale level for a fifth straight month in January, a warning signal that companies likely will be cutting production even more to cope with a deepening recession. The Commerce Department says wholesale inventories fell 0.7 per cent in January, the longest stretch of declines since the last recession in 2001. Sales at the wholesale level dropped 2.9 per cent in January–the seventh consecutive decline. The inventory decrease was slightly smaller than the one per cent fall economists had expected. It followed a 1.5 per cent decrease in December that was initially reported as a 1.4 per cent decline.
A Texas legislative proposal would create a new office to monitor and investigate state spending of federal stimulus dollars. The bill was filed by House Democratic Leader Jim Dunnam of Waco. The measure would create the State Fiscal Responsibility Office to oversee and investigate spending. It also would require monthly status reports on stimulus funds. Dunnam, chairman of the House Select Committee on Federal Economic Stabilization Funding, says the legislature must “protect Texas taxpayer dollars.”
The Federal Reserve chairman is acknowledging that the recession is turning out to be more severe than the Fed expected. Ben Bernanke adds that he’s hopeful that the economy will rebound if the government succeeds in getting financial markets to operate more normally again. During a speech in Washington, he’s been calling for an overhaul of the entire U.S. financial regulatory system. He’s urging especially tough supervision of “too big to fail” companies whose collapse could affect the whole economy. Bernanke says bailing out such companies can be “an enormous problem.” That’s why he says the Fed is trying to identify “best practices” to help companies detect trouble spots and better manage their risks.
The Treasury Department says it has provided $284.7 million to 22 banks in the latest payments from the government’s $700 billion financial rescue fund. The government is buying preferred stock in banks as a way to bolster their balance sheets in hopes of getting them to resume more normal lending. With the new payments, the government has spent $197 billion on this part of bailout.
The federal government wants to require companies for the first time to disclose how much greenhouse gases they’re releasing. The Environmental Protection Agency is proposing mandatory reporting of the gases blamed for global warming at approximately 13,000 facilities nationwide. The facilities include refineries, automobile manufacturers, power plants, coal mines and large manure ponds at farms. Together, the facilities account for about 85 to 90 per cent of the country’s greenhouse gas emissions. The EPA requires no reporting of greenhouse gases. The information will be needed if it decides to control greenhouse gases or if Congress passes a law limiting the pollution. Companies would have to file their first reports in 2011.
Delta Air Lines says it will cut the number of its international flights by ten per cent starting in September. In a memo to the airline’s employees, Chief Executive Richard Anderson and President Edward H. Bastian said the worsening global economy is putting further pressure on the airline industry, especially in international markets. The reductions are in addition to a December announcement to reduce systemwide 2009 capacity by six to eight per cent year-over-year and will be targeted to areas where Delta says it has seen the most revenue weakness — the Atlantic and Pacific networks. Anderson and Bastian said Delta will reassess its staffing needs in light of the capacity cuts.
The chief executive of Southwest Airlines says travel slumped in early March from February’s already sluggish pace. And Gary Kelly says the airline industry hasn’t yet hit bottom amid a recession. He said that a key measure of revenue fell seven per cent in the first week of March. That followed a six percent slump in traffic during February, which Kelly said was much weaker than January. Kelly says business travel in particular has dropped off, and those customers often buy tickets late and fly at full fare. When companies cut costs, he says “one of the first things they attack is the travel budget.” Kelly said the current airline downturn resembled one from 1991 but could be worse. Kelly said unit revenue, or revenue divided by capacity, fell seven per cent in the first week of March. That’s a closely watched number in the airline industry. Dallas-based Southwest has been cutting unprofitable routes and plans to reduce capacity four per cent this year.