Executive Briefing - March 30
- Volvo, Scania Prepared to Cut Jobs
- PG&E May Take $6.9 Billion Charge
- Ford Cutting 830 Jobs at Truck Plant
- Emery Says 99% of Profit Came From Mail Contract
- Ryder Expects Lower 1Q Earnings
- Oshkosh Wins Army Contract
- NTSB Urges Inspection of Trucks
- UPS Begins Direct Flights to China
- U.S. Consumer Spending Rises Slightly in Feb.
- Logistics Management Completes $1 Million Deal
- Venezuelan Oil Strike Ends
Volvo, Scania Prepared to Cut Jobs
Volvo (VOLVY) and Scania said they are prepared to cut jobs and production if demand for trucks in Western Europe continues to fall, Bloomberg reported.
This comes a day after German rival MAN (MAN-FRK) said it was cutting 3.4% from its truck unit due to a reduction in demand.
Scania, the No. 2 maker of heavy trucks in Europe, previously said it is willing to cut its work force by another 10%. It already has cut about 15% of its work force, mostly by dropping temporary employees.
Scania’s fourth-quarter orders fell 15% compared to the year before.
PG&E May Take $6.9 Billion Charge
Utility holding company PG&E Corp. (PGE) said Friday that it may have to take a $6.9 billion charge against fourth-quarter earnings in the absence of a regulatory solution providing for full recovery of its undercollected wholesale power costs.PG&E, which is the parent of Pacific Gas & Electric Co., also said the utility does not have enough cash on hand to pay back all its debts, and that shareholders' equity could fall below zero if California continues to charge the utility wholesale power rates.
In addition, it plans to request a 15-day delay to file its annual report, which is due on Monday.
(Click here for the full press release.)
Ford Cutting 830 Jobs at Truck Plant
n response to slowing sport utility vehicle sales, Ford Motor Co. (F) will cut about 830 jobs from a truck plant in Wayne, Mich., that also makes SUVs, the Associated Press reported.
The job cuts will reduce the plant's capacity to build the Ford Expedition and Lincoln Navigator SUVs by 65,000 vehicles. Many utilities use SUVs for off-road work, and shipping companies can use them to deliver small loads.
Ford CEO Jacques Nasser said that he expects sales to taper off in the second half of the year from their stronger-than-expected level in the first quarter. Transport Topics
Emery Says 99% of Profit Came From Mail Contract
Emery Worldwide got 99% of its 2000 profit from a mail contract that likely will end when a shipping agreement between FedEx and the U.S. Postal Service begins.
Emery, which is the largest air freight company and is owned by CNF Inc. (CNF), had a $28.2 million operating profit last year. However, analysts expect it will be nearly impossible to duplicate that with FedEx’s deal expected to begin in August.
CNF said Emery’s international business was profitable last year, but it lost money in domestic shipping. Transport Topics
Ryder Expects Lower 1Q Earnings
Due to a slowdown in the renting of commercial vehicles and the sales of used trucks, Ryder Systems (R) said it will not meeting earnings estimates for the first quarter.
The Miami-based company now expects earnings to be in the range of 13-17 cents per share, compared with the previous estimate of 20 cents per share.
Earlier this year, Ryder said it planned to cut up to 700 jobs during 2001.
Ryder ranks as No. 13 on the Transport Topics 100 list of largest U.S. trucking operations, based on 1999 data. Transport Topics
(Click here for the full press release)
Oshkosh Wins Army Contract
Oshkosh Truck Corp. (OTRKB) was awarded a contract potentially worth $1 billion from the U.S. Army to build transport and other heavy trucks.
As part of the initial deal, worth more than $120 million, Oshkosh will build 4,000 trucks ranging from tankers to heavy transport tractors, Reuters reported.
Additional contracts over the next coming years could include building at least another 1,500 vehicles including additional Palletized Load System trucks, which haul pallets of ammunition, and the 16.5-ton trailers used with that truck. Transport Topics
(Click here for the full press release)
NTSB Urges Inspection of Trucks
The National Transportation Safety Board is urging inspections of trucks and buses that use the same braking system as a bus involved in a fatal crash in New Jersey.Though investigators did not blame the accident that killed eight people solely on the brakes, they did find a wide disparity in the condition of the left- and right-side brakes on the bus.
Out-of-adjustment brakes can cause a bus to rotate after sudden braking.
The NTSB also has recommended that the National Highway Traffic Safety Administration monitor the progress of Haldex Brake Products, makers of the device, in correcting the problem. (See
Executive Briefing, March 29) Transport Topics
UPS Begins Direct Flights to China
United Parcel Service (UPS) begins direct flights to China on Saturday, giving the biggest delivery company better access to the fastest growing air freight market.
The Atlanta-based company has operated in China since 1988 through weekly flight in and out of Hong Kong.
China’s air-cargo shipments have grown about 20% annually, and are expected to continue growing at that pace.
Although UPS issued an earnings warning earlier this month and is considering cutting spending, its China business increased 45% in 2000. And these new routes will shave a full day off of transit time, which is expected to boost revenue $100 million in the first year.
UPS is ranked number No. 1 in the Transport Topics 100 list of U.S. trucking companies, based on 1999 data. Transport Topics
(Click here for the full press release.)
U.S. Consumer Spending Rises Slightly in Feb.
U.S. consumer spending, which accounts for about two-thirds of total economic activity, rose 0.3% in February, the Commerce Department said.That was in line with analysts’ expectations, but was a slower gain than the 1% rise in January, which was the largest jump in 11 months. Meanwhile, the University of Michigan revised its index of March consumer sentiments to 91.5 from a preliminary 91.8 reading, still up from 90.6 in February.
The fact that consumer spending is still rising and sentiment gauges are strengthening is a major reason some economists think the United States may avert an outright recession, and could already be strengthening. Since goods that consumers buy must be replaced on store shelves, growth in spending can drive future freight shipments.
However, corporate layoffs and earnings warnings have accelerated in recent weeks, showing damage continues to spread in the industrial and service sectors. Transport Topics
Logistics Management Completes $1 Million Deal
Logistics Management Resources (LMRI), a holding company focused on acquiring non-asset based transportation logistics companies, said Friday it has completed the previously announced acquisition of Trans-Logistics.The deal is valued at approximately $1 million.
Also Friday, the Louisville-based company said it has secured a working capital facility in the amount of $2 million, and received a $1 million equity investment. Transport Topics
(Click here for press releases from Logistics Management Resources.)
Venezuelan Oil Strike Ends
Venezuela's oil unions ended a two-day strike on Friday without getting the pay hikes they demanded, the Associated Press reported.Venezuela is the world's third biggest producer and a major U.S. supplier. President Hugo Chavez said that supplies weren't affected and future efforts to paralyze the nation's oil industry are doomed.
The strike ended officially at 6 a.m. local time, though many of Venezuela's 40,000 oil workers had stayed on the job. Transport Topics
