Boeing plans hundreds of layoffs
Boeing has distributed layoff notices to several hundred people in its Information Technology (IT) unit in the Puget Sound region, according to employees.
The notices, distributed last week, informed affected employees they will be laid off in July. Boeing corporate spokeswoman Lauren McFarland confirmed the layoffs but declined to say how many people will be let go.
Although Boeing’s Commercial Airplanes division is offering voluntary buyouts to reduce the workforce, the layoffs at the IT unit are all involuntary, she said. Boeing’s IT organization provides computer support across the entire company. One local employee said he was among about 200 people who received layoff notices in his network-infrastructure group, one of several units within IT.
Farland said the layoffs are part of a companywide “effort to increase our competitiveness.” “We are making strategic changes to some of the work we do across IT, resulting in the need for fewer IT employees, which reduces overall IT costs,” McFarland wrote in an email response to questions.
Close to 1,000 laid off from Halliburton Duncan plant
Duncan’s Halliburton plant let more employees go throughout the day Tuesday, bringing the number to an estimated 1,000 employees who have been laid off over the last year-and-a-half. Chris Deal, president and CEO for Duncan’s Chamber of Commerce, said that number isn’t concrete, but instead estimated by adding layoff numbers and comparing them to the employment and unemployment rates in the area.
According to Oklahoma Employment Security Commission Documents, the most recent unemployment rate in Stephens County reported was 8.3 percent, the highest rate in the state of Oklahoma. “Before all of this started, they were around 2,900, and if you look at the other layoff rounds and you add them out, I think we’re probably somewhere around 1,900,” Deal said. “It’s based on, ‘OK, we got confirmed,’ and then you look at the employment and unemployment numbers in the workforce and that’s where I come up with the number 1,900.”
Chris Moore, center manager for Duncan’s local office of Oklahoma Employment Security Commission, confirmed workers who had been displaced from Halliburton were in and out of his office throughout the day Tuesday.
“We’ve been getting them all morning,” Moore said. “I don’t have a number exactly from Halliburton but what we are hearing is about 300. Manufacturing, mostly. I’ve only been in one room helping people who’ve filtered through.” Halliburton Director of Public Relations Emily Mir confirmed the layoffs in Duncan, but did not specify numbers of employees pink slipped.
Shell is cutting another 2,200 jobs
Oil prices are up, but the job losses just keep coming. Royal Dutch Shell (RDSA) is the latest oil company to cut back, announcing 2,200 job losses Wednesday as it attempts to cope with "lower for longer oil."
The latest round of cuts brings total job losses at the company to 12,500 since the start of 2015. The Anglo-Dutch firm said the move is aimed at ensuring it's competitive in a market rocked by low oil prices. Shell is also trying to cut costs after its £35 billion takeover of BG Group (BRGYY) was approved earlier this year.
"These are tough times for our industry and we have to take further difficult decisions to ensure Shell remains competitive through the current, prolonged downturn," said Paul Goodfellow, vice president for UK & Ireland.
Shell said that 475 of the new job cuts will be in the U.K. and Ireland. Shell's earnings plunged 58% in the first quarter compared to the same period last year. Company shares were trading around 1% higher in London following the announcement.
Toyota Financial to provide leasing options for Uber drivers
Toyota Motor Corp. has formed a partnership with Uber to provide flexible leasing options to the ride-sharing company’s drivers. Toyota will begin the partnership on a trial basis in countries where ride-sharing is expanding, the company said Tuesday. A Toyota spokesman could not specify whether the leasing program will launch in the U.S.
Toyota and Uber hope to begin providing the new leasing options by the second half of the year, a spokesman said. Uber drivers will be able to lease vehicles from Toyota Financial Services and make payments earned through their Uber compensation.
Many Uber drivers are not eligible for traditional lender financing because of low or poor credit scores, Chris Ballinger, Toyota Financial CFO and global chief officer of strategic innovation, said during a panel discussion at the American Financial Services Association’s Vehicle Finance Conference in Las Vegas in March, ahead of Tuesday’s announcement.
Ballinger said that 85 percent of Uber drivers have FICO scores below 650, which is generally considered to be subprime. Eighty-five percent of Toyota Financial’s new-vehicle borrowers, by contrast, have FICO scores above 650. Uber drivers can use the money they make from cars as a source of repayment for the loan, he said. “It opens up a class of people to new-car ownership who never would have been eligible before,” he said.
Ex-McDonald’s CEO says raising the minimum wage will help robots take jobs
A former McDonald’s chief executive has warned that raising the minimum wage will spur unemployment as companies will instead employ robots that work for less. “I guarantee you if a $15 minimum wage goes across the country you’re going to see a job loss like you can’t believe,” said Edward Rensi in an appearance on Fox Business Network Tuesday. “It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries.”
The minimum wage has been a hot topic this spring, with some states and employers deciding to up their minimum wage to $15 an hour in the coming years. California will raise its minimum wage to $15 an hour by 2022. New York City will get to $15 an hour within three years. Pennsylvania’s largest employer, the University of Pittsburgh Medical Center, will up its minimum wage to $15 an hour by 2021.
Rensi referred to discussion of raising the minimum wage as “nonsense,” and something that would destroy America’s middle class. Rensi said he’d recently attended the National Restaurant Show and saw first hand a range of robotic devices that are making their way into the restaurant industry.
Rensi, who was McDonald’s CEO from 1991 to 1997, isn’t the only fast food executive to be concerned about the consequences of raising wages. Wendy’s is currently testing self-service kiosks in a few of its restaurants and exploring broader uses of technology to mitigate rising labor costs.
Fed: Nearly half in U.S. would have trouble with emergency $400 expense
Nearly half of Americans would have trouble covering an emergency $400 expense, according to a new survey released Wednesday by the Federal Reserve.
Forty-six percent of respondents said that, if they suddenly were faced with an emergency requiring $400, they either could not pay it or would have to cover it by selling something or borrowing money.
Minorities have even less in the way of rainy day funds. Only 38 percent of Hispanics and 36 percent of black respondents said that they would cover the hypothetical $400 expense with cash. While alarming, those results are a slightly improvement from last year, when 47 percent said they'd have trouble coming up with the $400.
The report's findings suggest that, overall, U.S. families are doing better as the economic recovery stretches into a seventh year. Fully 69 percent of respondents said that they were "living comfortably" or "doing OK," up 6 percentage points from 2013. But some aspects of the report, such as the indications that many people don't have savings even for emergencies and that one in five people are working multiple jobs, suggest that a lot of families still face financial difficulty.
DoubleLine's Gundlach: US Stock Market Is 'Dead Money'
Jeffrey Gundlach, the chief executive officer of DoubleLine Capital, said on Tuesday that the rally in U.S. stocks, which began on Monday, feels like a short squeeze and characterized U.S. stocks as "dead money."
"The market is not incredibly healthy," Gundlach said in a telephone interview, noting recent corporate earnings have come in weak. Gundlach, who oversees $95 billion at Los Angeles-based DoubleLine, said the S&P 500 index .SPX "has gone nowhere in the past 12 months to 18 months."
On the Federal Reserve, Gundlach said it is still 50/50 odds that the U.S. central bank will raise interest rates in June. He said many Fed officials are "dying to raise rates," but that it is Fed chair Janet Yellen's opinion that matters the most.
"All that matters is Yellen. She is still there. I feel like we are back in December again, where everyone thinks that there is a super secret that some Fed officials have this knowledge that the economy is really good."
Bill Gross: U.S. Needs to 'Re-Normalize' Interest Rates
Microsoft retreats from phone business with more job cuts
Microsoft is continuing its retreat from the mobile phone business with massive job cuts in its devices division. The company announced Wednesday that it would be axing 1,850 jobs in addition to the 4,500 job cuts that were announced last week, along with the sale of its feature phone business.
The majority of the losses affect employees in Finland, where Nokia, whose phone operations Microsoft purchased in 2014, has always had its base. In addition to the job cuts, the company is writing off $950 million. That nearly billion-dollar hit echoes the much larger financial blast of just a year ago, when Microsoft announced a $7.5 billion write-down tied to the Nokia deal. The acquisition's quick failure showed just how hard it can be for even a deep-pocketed technology giant to go up against the two dynamos of the mobile phone business, Apple's iPhone and the wide array of devices running Google's Android software.
While Nokia once was a dominant force in the phone business, its star was on the wane when the Windows maker moved in. Phones running Microsoft's software today account for only a tiny fraction of the overall market.
Microsoft won't be turning away from phones completely, though. "We are focusing our phone efforts where we have differentiation -- with enterprises that value security, manageability and our Continuum capability, and consumers who value the same," Chief Executive Satya Nadella said in a statement. "We will continue to innovate across devices and on our cloud services across all mobile platforms."
Manufacturing recession goes global
The “strong dollar” has been blamed for the manufacturing doldrums in the US that started over a year ago. But then manufacturing in other countries should boom, or at least not decline, but that’s not the case. Manufacturing is sick and weakening in just about every major economy!
References to 2009 and the Global Financial Crisis keep popping up in the latest spate of reports because that’s how bad it has gotten. US manufacturing gets ugly. On Monday, Markit reported that its US Manufacturing PMI, which tracks the overall health of the manufacturing sector via surveys sent to purchasing managers, dropped to 50.5 (below 50 = contraction) in May, the weakest reading since October 2009.
Production actually declined for the first time since September 2009, “the height of the Global Financial Crisis.” Companies blamed “reduced foreign demand” as new export orders fell for the second month in a row. And they blamed the “uncertainty around the general economic outlook” which had caused their customers “to delay spending decisions,” which then triggered production cuts.
Backlog of work fell for the fourth month in a row, at the same rate as in April, which had been a “post-recession record,” which means that companies “will be poised to cut capacity unless inflows of new work start to pick up again.” The report summarized it this way: “The weak manufacturing PMI data cast doubt on the ability of the US economy to rebound from its disappointing start to the year in the second quarter.”
Fed survey lays bare U.S. economic divide
Almost half of American families say they would struggle to pay for emergency expenses and those with a high school degree or less are most likely to say their well-being has declined, according to a Federal Reserve survey released on Wednesday. The annual survey, in its third year, takes the pulse on the financial situation of U.S. families, which has been a key issue ahead of this year's presidential election.
It found that Americans with a bachelor's degree or higher were "by far" most likely to say that they are doing OK financially or living comfortably and report an improvement in their finances over the past year.
Roughly one third of U.S. adults have achieved at least a bachelor's degree. Among those with a high school degree or less, about one in five respondents said their well-being had improved over the past year, approximately the same number who responded their situation had declined, the Fed said.
A large swathe of Americans struggling with stagnant wages and fewer middle-class jobs have fueled the presidential campaigns of presumptive Republican nominee Donald Trump and Democratic candidate Bernie Sanders. "Despite some signs of improvement overall, 46 percent say they would struggle to meet emergency expenses of $400, and 22 percent of workers say they are juggling two or more jobs," said Federal Reserve Board Governor Lael Brainard in a statement.
TreeHouse Foods plans to close two production plants - 720 jobs eliminated
TreeHouse Foods plans to close two of the manufacturing plants it acquired earlier this year when it bought ConAgra Foods' private label business.
Treehouse says it will eliminate 720 jobs when it closes the plants in Azusa, California, and Ripon, Wisconsin. Most of the job losses will happen in California where the plant employs 660 people making bars and other snack products.
The Wisconsin plant employs 60 people making sugar wafer cookies, but TreeHouse says there isn't enough demand for those to keep the plant open.
TreeHouse says it is working to eliminate excess capacity. The Oak Brook, Illinois, company will offer severance pay.
Helen Chaitman-Big Bank Customers Destroyed in Next Economic Meltdown
Data Breaches Up 22% to Date in 2016
The latest count from the Identity Theft Resource Center (ITRC) reports that there have been 420 data breaches recorded this year through May 24, 2016, and that more than 12 million records have been exposed since the beginning of the year. The total number of reported breaches increased by 42 compared to the prior two weeks.
Earlier this month Wendy’s Co. (NASDAQ: WEN) said that hundreds of franchisees were victims of a hack attack in late 2015 and the company’s investigation cost it some portion of a hike of $3.7 million expenses in the first quarter of this year. About 300 of Wendy’s 6,500 stores appear to have been attacked.
The number of breaches in 2015 totaled 781, just two shy of the record 783 breaches that ITRC tracked in 2014. The 420 data breaches reported so far for 2016 are 22.1% more than the number reported (344) for the same period of last year. A total of more than 169 million records were exposed in 2015.
The government/military sector retained the lead in the number of records exposed in 2016. The sector has suffered 20 data breaches so far this year, representing about 42.9% of the total number of records exposed and 4.8% of the incidents. More than 5.2 million records have been compromised in the government/military sector to date in 2016.
Tiffany’s Sparkle Dims as Q1 Sales Drop 7%
Tiffany on Wednesday posted lower-than-expected results for the first quarter, citing continued weak demand by both domestic customers and foreign tourists. The jeweler said net earnings fell 16.6% to $87 million, including a tax benefit of 5 cents per diluted share related to the settlement of a tax examination.
Excluding one-time items, net earnings were 64 cents a share, four pennies lower than what analysts had expected, according to The Street. Total sales fell 7% to $891 million, well below analysts’ expectations of $915 million and Tiffany’s biggest drop in quarterly sales since the peak of the global financial crisis.
“As expected, this was a difficult quarter in terms of both sales and earnings growth,” Tiffany’s Chief Executive Frederic Cumenal said in a news release. “We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong.”
As Reuters reports, the strong dollar has discouraged tourists from buying Tiffany’s high-end jewelry. Same-store sales in the Asia Pacific region, Tiffany’s second biggest market, slumped 15% in the first quarter. But according to CNBC, analysts are also attributing Tiffany’s struggles to a lack of interest from millennial shoppers, who see the brand as “old world luxury.”
Dear Fed Policymakers: Please Heed Venezuela for Lesson in Hyperinflation
With a U.S. Federal Reserve that's currently chasing inflation, it is important to remember what can happen when inflation goes out of control…
A dangerous phenomenon takes hold, called hyperinflation. It is different from regular inflation because of the very rapid increase in the money supply. The result is an erosion of the purchasing power of a currency. And with that, prices absolutely skyrocket. This is exactly what's happening to Venezuela's economy, where the price of a hamburger just surged to $269.
Currently, 6.3 Venezuelan bolivares are worth one U.S. dollar, according to Bloomberg. And a hamburger costs as much as 1,700 bolivares, the AFP news agency reported. That means even Venezuela's middle class can't afford a simple meal. Inflation in Venezuela is now at staggering 720%, according to the International Monetary Fund.
In fact, hyperinflation is now pushing Venezuela to the brink of economic collapse. And it all started because of some terrible missteps by the Venezuelan government… Since 2003, Venezuela's government and central bank have instituted tough currency controls. This has caused many citizens and businesses to turn to the black market, where they don't need government approval to buy dollars at the legal rate, according to Bloomberg.
Biggest banks in the world list: China dominates, US fades
So what's all this talk about U.S. banks being too big to fail? While regulators and legislators try to find ways to reduce the financial footprint of domestic institutions, American banks continue to lag behind their global competitors.
In fact, fully eight of the top 10 banks in the world are based outside the U.S., according to the most recent rankings from S&P Global Market Intelligence. The biggest American institution, JPMorgan Chase, even has fallen down a notch to seventh. Bank of America is the only other U.S. institution in the global top 10.
The one caveat to the list is that JPMorgan Chase would move up the ladder considerably if it followed the same accounting rules as its foreign competitors. The bank's assets are computed under generally accepted accounting principles, while global banks use international financial reporting standards. The difference essentially is between reporting net derivative assets, as under GAAP, or gross derivative assets, as under IFRS.
If the field was leveled in that regard, JPMorgan would move up No. 2, though that in itself is a decline from the No. 1 spot a year ago. Of the top 20 banks, just four are in U.S., which has only six of the top 50. (Wells Fargo is No. 11, Citigroup is No. 13, Goldman Sachs is No. 28 and Morgan Stanley is No. 38.) By contrast, China occupies the top four slots and 11 of the top 50.
More Syrian Refugees To US: Costs And Consequences
Walmart Ending Price Matching Of Local Competitors’ Ads At 500 Stores
From price-matching local and online competitor prices to its own “Savings Catcher” program, Walmart offers customers a variety of ways to save a few buck on their bill. But shoppers at some stores will soon have one fewer option for saving money, as the big box retailer is ditching in-store price matching at 500 locations, though the company currently refuses to say which stores are on that list.
Under the outgoing policy, Walmart allowed customers to bring in local competitors’ ads and if the prices were lower for a product, they would be able to purchase that item at the cheaper price.
Starting June 9, a rep for Walmart tells Consumerist that 500 stores will ditch that policy as a way to streamline and make saving easier for customers. Since Walmart isn’t saying which stores — or even which regions — are affected by this policy change, the only way for customers to know if they can’t price-match is when they get to the store. The changes will be announced in-store with blue signs at registers, and managers will be on hand to assist customers.
In lieu of the Ad Match program, the 500 stores will offer new “significant, long-term” rollbacks on thousands of items that were commonly price-matched, including consumables, groceries, paper products, and other products.
Five arrested in $36.5 million IRS impersonation scam
As part of a wide-spread scheme that began as early as October 2013, nearly 6,400 Americans have been scammed out of a a total of more than $36.5 million by individuals impersonating Internal Revenue Service (IRS) officials.
Over the course of over 2.5 years, more than 1.2 million calls fraudulent calls have been placed to United States tax payers demanding immediate cash wire transfers in order to resolve impending tax debts that could allegedly lead to immediate arrest.
However, J. Russell George – the Treasury Inspector General for Tax Administration (TIGTA) – announced Tuesday that five individuals had been apprehended in what is being described as an “ongoing investigation” into this extensive scam. The five individuals are all Cuban nationals and were arrested in Miami, Fla., without incident and charged with wire fraud and conspiracy to commit wire fraud. According to documents involved in the case, the five were responsible for defrauding over 1,500 victims out of almost $2 million.
Last July, Sahil Patel, a ringleader for the original scheme was sentenced to 14.5 years in prison and $1 million in forfeiture for his organizational role in the ring of fraud and extortion run through Indian “call centers.”