Monday PM October 30th, 2006

Goodyear announces plans to close Tyler plant...Internal documents show budget cuts contributed to safety problems at BP Texas City refinery...U.S. airlines rescind $6 per round trip fare increase...

About 1,100 workers at Tyler's Goodyear Tire and Rubber plant are facing unemployment. That's after the Akron, Ohio-based company's announcement that it plans to close the Tyler plant. The Tyler workers have been among more than 12,000 Goodyear workers who have been on strike since October 5th. Among the disputes between Goodyear and the United Steelworkers Union have been possible plant closings. Goodyear isn't specifying a closing date in a statement issued today. Goodyear North American Tire President Jon Rich says the shutdown would be timed to minimize the effect on customers. The statement says the closing is part of Goodyear's previously announced plan to leave some segments of its private label tire business. Goodyear says it expects to save about $50 million a year with the closing of the 44-year-old plant. The plant has produced about 25,000 passenger and light truck tires per day.

Internal documents show budget cuts and a lack of leadership contributed to significant safety problems at BP's Texas City refinery. In preliminary findings, the U.S. Chemical Safety and Hazard Investigation Board says BP management knew about maintenance, spending and infrastructure problems well before the explosion. Board chairwoman Carolyn Merritt says BP did respond before the explosion with a variety of measures aimed at improving safety. She says that while the focus of many of the moves was on improving compliance and reducing work injury rates, "catastrophic safety risks remained.'' She says "unsafe and antiquated equipment designs were left in place, and unacceptable deficiencies in preventative maintenance were tolerated.'' BP officials say they're surprised by the findings. They say they hope the federal board's final written report will further explain them. Last December, BP's internal report blamed the blast on failures by management at the refinery--saying it didn't make safety a priority, tolerated risks and failed to communicate. But BP added that it found no evidence of anyone consciously or intentionally taking actions or decisions that put others at risk.

Safety experts reportedly warned of the potential for a "major site incident'' two-and-a-half years before a deadly explosion at the BP refinery in Texas City. CBS' "60 Minutes'' says the manager at the Texas City plant told his bosses at headquarters in London that most workers at the refinery felt the plant was unsafe. Fifteen people were killed and 180 people injured in the March 2005 explosion. BP's top refinery executive has said under oath he didn't know of serious safety concerns until the explosion. The explosion occurred when faulty sensors did not warn of gathering vapors near a unit that boosts the level of octane in gasoline. The vapors ignited as the unit was starting up. The CSB concluded that the unit had a history of problems and that the explosion could have been prevented or minimized.

Several U.S. airlines have given up on trying to raise fares by $6 per round trip. That's after United Airlines, which had initiated the move, retreated to its earlier rates over the weekend. Travel industry expert Terry Trippler says Fort Worth-based American Airlines and Houston-based Continental Airlines—along with Delta Air Lines and Northwest Airlines--all canceled increases yesterday. That's a day after United did so. United had cited high fuel prices in instituting the increase Thursday on flights to some cities also served by lower-cost carriers. The suburban Chicago-based hasn't explained what caused it to back down. U.S. Airways and Dallas-based Southwest Airlines didn't match the move, and Northwest's increase wasn't disclosed until moments before United canceled its increase. Airlines have raised fares many times in the past two years, partly to cover higher fuel costs. But such attempts generally fail to stick when not all competitors join in bumping up prices.

Growth in manufacturing cooled in October in Texas, Northern Louisiana and southern New Mexico. So says the Federal Reserve Bank of Dallas. The Dallas Fed said today its production index for its district fell from 11.1 to 8.4 in October. The bank's General Activity Index fell from 9.7 in September to minus 1.7 in October. Readings above zero indicate growing activity, and the higher the number, the more broad-based the gains. Manufacturers saw ebbing inflationary forces during October. The bank reported that its index of prices paid for raw materials moved to 18.4, versus 30.2 the month before. Meanwhile, the prices received index hit zero, after September's 4.9. Hiring in the Dallas Fed district grew more quickly, with the employment index at 8.4--up from 6.3 a month ago. Manufacturing in the Dallas Fed district represents a notable portion of total U.S. output and is concentrated in energy production and electronic goods. The index data are not seasonally adjusted.

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