Correction: The Teamsters recently completed negotiations with UPS Freight and ABF Freight Systems Inc., a subsidiary of Fort Smith-based Arkansas Best. A brief below incorrectly stated which organization negotiated the contracts with UPS and ABF.
QUOTE OF THE DAY
“The price data continue to deliver the same message: no signs of inflation pressures in the U.S. economy.”
Laura Rosner, BNP Paribas economist, on December’s consumer price index Article, 1D
YRC, Teamsters back at contract talks
YRC Worldwide Inc. has resumed talks with the Teamsters after a contract proposal was recently rejected by its union employees.
A contract proposal from the Kansas-based trucking firm was voted down 61 percent to 39 percent by Teamster employees last week. YRC and the Teamsters have been evaluating modifications to their current contract since October.
Renegotiating the contract is critical to YRC’s refinancing or paying down on $1.4 billion in debt. Employees have begun expressing concern about job security, CEO James Welch said in a statement released on Thursday.
“It is clear the Teamsters understand the urgency of the current situation,” Welch said. “Although the company must achieve operational costs savings in the agreement, we also understand that simply re-voting the same proposal is not an option.”
A statement released by the Teamsters said the union has no interest in reconsidering the previously rejected proposal and will only consider modifications that “protect our members and enhance the company’s financial position, but it must contain meaningful improvement over the last proposal.”
Teamster employees at UPS Freight approved a new five year deal on Jan. 12. Arkansas Best and the union reached a five-year agreement in October.
YRC is a competitor to Fort Smith’s Arkansas Best and attempted a merger with its rival last year.
U.S. to sell chunk of Ally Financial stock
WASHINGTON - The Treasury Department announced Thursday it plans to sell 410,000 shares of Ally Financial for $3 billion as part of its ongoing effort to recoup the costs of the financial crisis’s $700 billion bailout.
The shares will be offered in a private offering at $7,375 each.
After the completion of the stock sale, the department said, the U.S. government will have recovered about $15.3 billion, or 89 percent, of the $17.2 billion it provided to Ally during the financial crisis. The government will still hold about 37 percent of the bank holding company’s stock.
Ally, based in Detroit, makes loans to General Motors customers and finances dealer inventories. The government first bailed out the company, then known as GMAC Inc., in late 2008 as part of the Bush administration’s aid to the auto industry. The Obama administration provided additional funding in May and December 2009.
The company said in a statement that the sale is a key step in the company’s plan to repay U.S. taxpayers in full for the money it received from the government bailout fund, the Troubled Asset Relief Program.
30-year mortgages falls to 4.41%
WASHINGTON - Average U.S. rates for fixed mortgages declined this week, edging closer to historically low levels.
Mortgage buyer Freddie Mac said Thursday that the average for the 30-year loan fell to 4.41 percent from 4.51 percent last week. The average for the 15-year loan eased to 3.45 percent from 3.56 percent.
Mortgage rates have risen about a full percentage point since hitting record lows a year ago. The increase was driven by speculation that the Federal Reserve would reduce its bond purchases. The Fed determined last month that the economy was strong enough to start trimming those purchases, which have kept long-term interest rates low.
To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., surveys lenders across the country between Monday and Wednesday each week.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan rose to 0.7 point from 0.6 point.
- The Associated Press
CSX sees tougher road to profit targets
OMAHA, Neb. - CSX warned Thursday that it will be more difficult to reach its own profit targets for double-digit growth over the next two years because of ongoing weakness in demand for coal and because last year’s results included several large but one-time benefits.
The railroad last year booked gains from real estate sales, as well as damage payments from utilities that didn’t ship enough coal under their contracts. Waning coal demand has gone on for longer than was expected, with many utilities switching to less expensive domestic natural gas.
Chief Financial Officer Fredrik Eliasson said Thursday that those factors will make it more difficult to deliver on CSX’s projected 10 percent to 15 percent growth in earnings per share from 2013 through 2015.
The company’s fourth-quarter earnings declined 5 percent to $426 million on $3 billion revenue, which was short of Wall Street expectations.
CSX shares fell nearly 7 percent to close Thursday at $27.24.
CSX is the first major freight railroad to release quarterly earnings.
- The Associated Press
China diaper-maker gears up for boomlet
SHANGHAI - Chinese diaper-maker Hengan International Group Co. will increase its production capacity and introduce premium goods this year as the government eases a more-than-3-decade-old one-child rule.
The company will raise diaper-making capacity by 20 percent and start selling Q-Mo, a more expensive range of the products, in the second half of this year, Hui Lin Chit, deputy chairman and chief executive officer, said in an interview in the southern Chinese province of Fujian, where Hengan is based.
On Nov. 15, the Communist Party said, beginning in March, it would allow couples have a second child if either spouse is an only child, Xinhua News Agency reported Wednesday. The initial one child law was put in place after the death in 1976 of leader Mao Zedong.
The step may increase China’s child-related spending by 22 percent annually over the next five years, Goldman Sachs Group Inc. estimated, benefiting companies from Hengan to China’s biggest make of infant formula, Mead Johnson Nutrition Co., and Japan’s baby-product company Unicharm Corp.
“Diapers are only in its take-up phase in China, and with China easing up population controls, the growth will be very fast,” Hui said Wednesday. “We want to roll out better and more products to tap this.”
Business, Pages 32 on 01/17/2014