Thursday AM March 13th, 2008

Southwest Airlines grounds 43 planes following FAA penalty on missed inspections…University of Houston to offer carbon trading course next spring…Forbes ranks Houston as #4 Up and Coming Tech City in the U.S…

Southwest Airlines says it grounded 43 planes as the airline deals with fallout from using aircraft that had not gone through a required inspection for possible structural damage. That’s about eight percent of their fleet. By noon on Wednesday, Southwest canceled nine inbound and 13 outbound flights from Hobby. Southwest has hired an outside expert to review its maintenance procedures. The airline also says it has promised federal regulators that it will fix any shortcomings in its system of tracking maintenance work.

Southwest Airlines’ chief executive says he’s concerned by findings from an internal investigation into the missed inspections. Gary Kelly says the airline also put three employees on paid leave after being notified of the penalty by the Federal Aviation Administration. Last week, the FAA proposed a $10.2 million civil penalty–the largest ever against an airline. The fine came after finding that Southwest had missed safety inspections for dozens of planes and kept flying some of them before they could be examined. Southwest did not identify the employees who were placed on leave by name or position. The airline said it was cooperating with the investigation. The FAA says Southwest operated nearly 60,000 flights with nearly 50 Boeing 737 aircraft that had missed a required inspection of their fuselage or body for small cracks. Such signs of metal fatigue have been considered an important safety concern since a deadly accident in 1988.

Meanwhile, documents released by Congressional investigators paint a picture of FAA inspectors being too cozy with the airlines they regulate. Two whistle-blowers told the House Transportation and Infrastructure Committee that FAA supervisors and colleagues blunted their attempt to force Southwest to follow an FAA order to re-inspect the planes.

East Texas poultry producer Pilgrim’s Pride says it’ll lay off 1,100 workers and close six distribution centers and a chicken-processing plant. The company will shut a processing plant in Siler City, North Carolina, idling 830 employees. It’ll also close distribution centers in Oskaloosa, Iowa; Plant City and Pompano Beach in Florida; Jackson, Mississippi; Nashville, Tennessee, and Cincinnati. Should economic conditions improve, it says some work may shift back to the Siler City facility in other forms. The Pittsburg, Texas-based company says the moves are calculated to counter soaring feed costs and an oversupply of poultry. It says it’s already reviewing other facilities for potential closure, consolidation or product shifts. It said Monday that it’s getting out of the turkey business because of slim profits. Pilgrim’s Pride says it expects charges of $35 million from the closures. The amount is $21.7 million dollars, net of taxes.

The University of Houston will offer a course in carbon trading beginning next spring. It’s a joint venture between the C.T. Bauer College of Business and the UH Law Center. The European carbon market is worth about $60 billion a year. Companies trade a shrinking allotment of carbon dioxide emission points—part of a trend in which energy, mortgages, agricultural products and information have become tradable commodities. If the U.S. adopts a similar system, an exchange could provide a marketplace for trading of CO² emissions credits based on voluntary but legally binding emissions reductions.

A survey by Ernst & Young and Rice University indicates the talent shortage has become one of the top five business issues facing oil and gas companies. About 88 percent of human resources executives at 22 international oil and gas companies said not finding enough talent could impede the growth and financial performance of the companies. Respondents say recruiting and retention is threatened by competition, and that’s driving up compensation. Solutions indicated in the survey include recruiting and retaining younger generations, hiring in bulk and providing training and creating more appealing retirement packages.

Forbes magazine ranks Houston as the #4 Up and Coming Tech City in the United States. The article by George Mason University professor Philip Auerswald quotes Houston Technology Center CEO Walter Ulrich. He says Houston has diversified its economy and assets are now being developed, resulting in a tremendous transition. The rankings were based on looking at specific areas of science that most experts consider the most promising frontiers of innovation. Researchers looked at the number of patents filed in each technical area for each city. Houston is fourth behind Columbus, Ohio; Santa Fe, New Mexico; and Palm Beach County, Florida.

The Senate has voted to extend the current farm law for another month, and the House is expected to do the same. Negotiations over a new bill to extend and expand farm and nutrition programs have stalled. Both the House and Senate passed versions of the legislation last year, but farm-state lawmakers have not been able to agree on a plan to pay for it. The current program, which includes farm subsidies and food stamps, will cost an estimated $280 billion over the next five years and about $600 billion over the next ten. The Bush administration wants Congress to stick to that and has threatened to veto the larger bill. Negotiators are now looking at spending an extra $10 billion over ten years. That’s less than the bills passed by the House and Senate. The Bush administration has said it would consider that figure.

President Bush says Congress needs to approve a free trade agreement with Colombia, or it will embolden U.S. adversaries like Venezuelan President Hugo Chavez. In a speech to the U.S. Hispanic Chamber of Commerce meeting in Washington, Bush said failure to pass the agreement would also send a signal to Latin America that the U.S. cannot be trusted to stand by its allies. He says Congressional delays should not be allowed to turn into inaction. Bush acknowledged concerns about violence in Colombia, attacks on trade unionists and the need for labor and environmental standards. But he said Colombian President Alvaro Uribe is taking action to address those issues and needs U.S. support. He also accused Chavez of threatening Venezuela’s neighbors while squandering the nation’s oil wealth and leaving Venezuelans to deal with food shortages.

The Houston Independent School District school board considers acceptance of nearly $10 million in grants at its meeting this afternoon. The grants are for performance under the “Governor’s Education Excellence Award Program.” Each qualifying campus is eligible for a one-year grant award ranging from $40,000 to $210,000, depending on enrollment. One hundred and four schools in HISD qualify. Seventy-five percent of the awards must be used only for awards to classroom teachers, and must be issued to teachers by October 15th, 2009.

HISD has been awarded more than $1 million by the Texas Education Agency to benefit physical education programs for sixth through eighth grade students. The board votes on acceptance of the funds this afternoon. The Texas Fitness Now Program hopes to help 30,000 children at 46 schools with the purchase of sports-related equipment to combat childhood obesity and type II diabetes.

NASA has issued a contract extension worth up to $78.25 million to Raytheon Technical Services of Webster. The contract is for operations at the Neutral Buoyancy Laboratory/Space Vehicle Mockup Facility, used in astronaut training at the Johnson Space Center and Sonny Carter Training Facility.

101 ParklaneA new 37,000-square-foot office building is under construction in the Sugar Creek Office Park in Sugar Land. A leasing agent has been selected for 101 Parklane, according to real estate services and investment firm Grubb & Ellis. The building, located in a park-like setting, will offer space ranging from 2,100 to 36,980 square feet in size, designed for small- to medium-sized businesses.  Interior features will include granite flooring, glass and wood accents.  Construction began in November 2007, and delivery/opening is planned for October 2008.

The head of a federal safety board says snow-like accumulations of industrial dust were reported at a Georgia sugar refinery that exploded last month. U.S. Chemical Safety Board Executive William Wright says simple housekeeping at the Imperial Sugar refinery near Savannah probably would have prevented the deadly blast. Imperial Sugar headquarters are in Sugar Land. In Congressional testimony, Wright said the agency is still investigating the February 7th blast that killed 12 people at the Port Wentworth, Georgia, plant and injured dozens more. In remarks set to be delivered at a hearing, Wright said the explosion fit a pattern of similar incidents in recent years and was preventable.

Employees have until Saturday to use the money in their 2007 Flexible Spending Accounts, and any money not claimed will be forfeited. The IRS extended the period by two months and 15 days into 2008. An FSA reduces an employee’s taxes by allowing them to set aside a portion of their paycheck to pay for most health, dependent care and adoption expenses before taxes are taken out. Companies are not required to offer the two-and-a-half month grace period, however.

Enrollment spiked to the highest level in three years this month in the state’s low-cost health insurance program for children of the working poor. But fewer children were covered by Medicaid. About 24,000 children were added to the Children’s Health Insurance Program. That’s an increase of about 7 percent over last month. Statewide, about 382,000 are enrolled in CHIP. The program’s benefits are available to families who can’t afford private insurance but earn too much to qualify for Medicaid. That’s the federal health insurance program for the poor. A spokeswoman for the Health and Human Services Commission says the state expected enrollment to rise after the legislature extended CHIP coverage from six months to a year. The enrollment period was cut in half five years ago in a budget-cutting move.

Is 3-D really the next big thing? Dreamworks Animation CEO Jeffrey Katzenberg says it will create a “new era” in movie going. He’s talking about the increased effort by Hollywood studios to produce 3-D movies for theaters, many of which are installing digital technology. Speaking at the Las Vegas conference Showest, Katzenberg said the transition is the biggest deal for the movie business “since the advent of color 70 years ago.” His presentation came after the announcement of a deal calling for the conversion of 10,000 more theater screens for the digital technology needed to accommodate 3-D. One estimate puts the cost of the conversion at as much as $700 million.

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