Monday PM December 21st, 2009

BAE Systems reiterates opposition to Army decision to switch to Wisconsin company for truck manufacturing…Shopping season on final run-up to Christmas…AP poll: economy, auto industry’s troubles top 2009 business stories…


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A Texas defense contractor has restated its opposition to a U.S. Army decision to award a $3 billion contract to a Wisconsin company for 23,000 military trucks and trailers. Addressing reporters, the president of Sealy-based Tactical Defense Systems of BAE Systems said he supported a U.S. Government Accountability Office ruling that the Army evaluation of its bid and those from Wisconsin-based Oshkosh Corporation and Illinois-based Navistar Defense was flawed. The BAE bid was nearly $3.5 billion, while the Oshkosh bid was about $3 billion. The Army said it based its decision on the difference in price. In a statement, Oshkosh said it won the contract because of its competitive price and excellent evaluations for meeting vehicle production and delivery requirements.

The East Coast blizzard proved a good one for online retailers, with Web shopping jumping from the same days a year ago. And now, retailers are pushing back deadlines and offering free express shipping as the days until Christmas wane. The heavy snow kept shoppers away from stores along the eastern seaboard, and many are extending sales into this week. Analysts expect a frenzied final few days of buying, and some malls are considering extending their hours to make up for lost time. Stores outside the hard-hit areas are reporting strong turnout on the final weekend before Christmas.

Shoppers are getting creative this holiday season in an effort to keep their credit cards in their wallets. They’re paying with cash or direct debits from bank accounts. They’re taking advantage of free financing and even cashing in frequent flier miles. Layaway also is booming. It’s an old-fashioned method that allows shoppers to pay over time, interest free, and pick up their goods when they’re paid in full. A desire to stick to a budget and to avoid higher interest rates have helped drive the shift away from credit cards. One economist says the new spending behavior is a response to “a very scary economy.” The switch to cash or debit cards often means lower costs for stores. Layaway and other payment methods increase costs, but stores may grab sales from customers who would otherwise not able to buy.

U.S. Customs and Border Protection officials are warning holiday shoppers to stay away from imported toys that might be dangerous for kids or violate copyright laws. Items intercepted this year so far include black toy guns that could be easily confused for real firearms, yellow toy ducks with lead paint and bright green, frog-shaped lighters without safety mechanisms. At a press conference in Miami, customs officials said authorities last year seized more than 1,000 shipments of products that violated either intellectual property rights laws or Consumer Product Safety standards. Officials said the majority of the seized cargo came from China.

Homeowners who get a substantial cut in their monthly mortgage payments still stand a good chance of falling behind again, a report by two federal regulators says. Nearly 40 per cent of homeowners who received a loan modification that reduced monthly loan payments by 20 per cent or more were at least two months late again within a year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said. That’s an ominous sign for the Obama administration’s plan to stem the foreclosure crisis, which was launched in March. Only about 31,000 modifications have been made permanent under that plan.

Even though Texas has received millions of federal dollars from the economic-stimulus package to help poor Texans cut their energy bills, only seven homes had been weather-treated as of the end of last month. The Dallas Morning News reports Texas has spent $1.8 million of $163 million available over the past four months and most of that went to administrative costs like salaries for state workers. In Texas, the Department of Housing and Community Affairs has the task of figuring out how to get the money to local agencies and governments. State officials acknowledge the slow start but say they’re trying to ensure there is no waste or fraud. They also say federal red tape has been a problem.

The economy and the auto industry’s troubles are the top business stories of 2009. In the Associated Press annual poll of U.S. editors and news directors, the economy and the millions of jobless Americans was the top business story of 2009. Unemployment topped ten per cent, but layoffs eased. The troubled auto industry was voted as the number two business story. General Motors and Chrysler filed for bankruptcy, GM’s CEO Rick Wagoner was ousted by the government, and Chrysler was pressured into an alliance with Italy’s Fiat. Ford avoided bankruptcy, but its worldwide sales–like its competitors’–fell sharply.

Ford says it is offering buyout and early retirement incentives to all of its 41,000 U.S. hourly workers to further reduce its factory work force. Company spokesman Mark Truby would says Ford still has too many factory workers for its current sales levels. He would not say how many workers the company wants to leave but said Ford is working that out with the United Auto Workers Union. Ford currently has about 600 blue-collar workers laid off but available for recall. The buyout offer includes $50,000 cash plus a $25,000 car voucher or $20,000 more in cash. The retirement package includes $40,000 cash for skilled trades and $20,000 for production workers.

There may be fewer horror stories from now on involving passengers who’ve been stranded for hours at a time on planes waiting to take off. The Obama administration is placing a three-hour limit on delays before passengers have to be allowed to get off. The only exceptions are in cases of safety or security, or if air traffic control says returning to the terminal would disrupt airport operations. The rules also require airlines to provide food and water for passengers within two hours of a plane being delayed on a tarmac, and to maintain operable lavatories. From January to June this year, 613 planes were delayed on tarmacs for more than three hours, their passengers kept on board. The new regulations go into effect in 120 days. Airlines would be fined $27,500 per passenger for each violation of the three-hour limit. Airlines have strongly opposed a time limit. They say forcing planes to return to gates so that passengers can get off could cause more problems than it cures. They predict more flights will be canceled, further delaying passengers.

OPEC’s Secretary General says there is a consensus among members of the oil-producing bloc not to adjust its production targets when it meets Tuesday. OPEC Secretary General Abdalla Salem el-Badri also says any potential change in 2010 is “not on our radar” for now. The 12-member Organization of the Petroleum Exporting Countries is meeting in the Angolan capital, Luanda. Several members countries have said the group doesn’t plan to change oil production targets that were put in place a year ago. When asked about Tuesday’s meeting, el-Badri told reporters “there is a consensus that there is no change.”

The World Trade Organization’s top arbitrators have upheld a ruling that China is illegally restricting the import of U.S. music, films and books. Monday’s ruling by the WTO’s appellate body confirms the landmark decision in August that came down decisively against Beijing’s policy of forcing American media producers to route their business through state-owned companies. If China fails to bring its practices in line with international trade law, the U.S. can ask the WTO to authorize commercial sanctions against Chinese goods. Also, Washington pushed forward with a new case accusing China of manipulating the prices for key ingredients in steel and aluminum production. The WTO set up a panel to rule in the dispute sometime next year.

The federal government is encouraging farmers to spread a chalky waste from coal-fired power plants on their fields to loosen and fertilize soil even as it considers regulating coal wastes. The material produced by power plant “scrubbers” that remove acid rain causing sulfur dioxide from plant emissions is a synthetic form of the mineral gypsum. It also contains mercury, arsenic, lead and other heavy metals. The U.S. Environmental Protection Agency says those toxic metals occur in only tiny amounts and pose no threat to crops, surface water or humans. But some environmentalists say too little is known about how the material affects crops, and ultimately human health, for the government to encourage farmers to use it on their land.

Laredo isn’t losing its only bookstore without a fight. City and state lawmakers unveiled a “Laredo reads” campaign. The campaign’s aimed at luring another bookstore to the busy border city. The campaign launch comes less than a month before Laredo’s only bookstore closes and leaves the city some 150 miles from the nearest one. The B. Dalton Bookseller in Laredo is scheduled to close January 16th. It’s among 49 stores in the mall chain that parent company Barnes & Noble is phasing out next year. Nearly a quarter-million people live in Laredo. When the B. Dalton closes, Laredo will become perhaps the largest city in the U.S. without a bookstore.

It’s a short holiday week for the markets, but there will still be plenty of date to pore over. New and existing home sales figures will come out this week, along with tomorrow’s revised government reading on third-quarter growth. Updates on personal income and spending are also on tap, plus reports on durable goods and initial jobless claims.

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