May 2009 Archives

Boeing and its supporters have made this argument in the past. It's a very defensive approach. A company that expects to win the contract wouldn't make this argument since they don't want to share the contract with the competing team.

Boeing raises industrial base concerns ahead of AF tanker contest

(HeraldNet.com) The Boeing Co.'s defense programs chief voiced concern Thursday over the country's industrial base as the Air Force tanker competition looms.

"Once you do destroy a capability ... it's very difficult to reconstruct," said Jim Albaugh, who leads Boeing's defense programs, during the company's investors' conference Thursday.

Boeing and its supporters have raised the red flag over the potential of losing the country's industrial base if the Pentagon gives the Air Force tanker bid to its competitor Northrop Grumman and EADS.

Read more on Boeing's tanker bid.

Wyle Holdings Inc., the El Segund-based aerospace services firm, is being sold to a New York investment firm.

Court Square Capital Partners agreed to purchase Wyle from Greenwich, Conn. investment firm Littlejohn & Co.

Terms of the deal were not disclosed.

In Today's Business Casual column.

A claustrophobic feeling welled up inside me almost immediately after I squeezed into the unexpectedly tight helmet.

I actually considered wussing out. Then the race began.

Read the whole Business Casual column.

The Insight will still become a best-seller.

New Insight just isn't that innovative

(Freep.com) The 2010 Honda Insight hybrid is a new car bereft of new ideas.

That's peculiar, because the original 2000 Insight was the first gasoline-electric hybrid sold in the United States. It paved the way for dozens of hybrids that followed and reshaped the global auto industry.

Read more on the Honda Insight.

This is a repost of an earlier guest blog post.

Manhattan Beach Real Estate Prices Likely to Drop Over the Next Three Years.

By Aarchan Joshi

Like many, we could argue at length that Manhattan Beach is an excellent place to live, with a kid-friendly community ethos, award winning schools, easy access to a beautiful beach, excellent commuter location.

This is a community many would want to live in.

Today, though, we will focus on the impact that the real estate boom has had in creating Manhattan Beach's outlandishly unsustainably high home prices, which are likely to plunge dramatically over the next three years, as are other affluent communities in the South Bay.

Using the DataQuick System data set for Manhattan Beach, which comprises 13,852 sales since the inception of the data set in January 1988 through to March 2009, this is what we know:

- The median home price in Manhattan Beach is currently 11.5 times median household income (median home price in MB around $1.4 million and median household income in MB $128,000), down from a peak of about 13 times. At the peak of the last cycle in 1990, this number was around 7.5 times. At the trough of the last cycle in 1994, this ratio was around 4.5 times. Any conservative banker will tell you that a household should spend no more than about 4 times annual pretax income on a home (with slight variance based on interest rates). Using today's median home price, less than 10% of households in Manhattan Beach could afford to live in a median home in Manhattan Beach without substantially stretching their household budgets.

- On average, 665 homes sell in Manhattan Beach each year for this 21-year data set. For 2008, 325 homes sold in MB, the slowest sales volume, by far in 21 years. This low sales volume suggests a large disconnect between what sellers are asking and what buyers can actually afford, given the stricter lending standards.

- If one bought a median priced home at the peak of the last cycle in 1990, , it took 12 years to reach a break-even point of selling it without loosing a substantial amount of money (adjusted for inflation and commissions); at the trough of the market in 1994, a median home was worth 40% less than it was at the peak.

- About half of all homes in Manhattan Beach sell every ten years.

- The mortgage resets (pay-option ARMs, Alt-As) in affluent areas have a built in lag of about two years relative to the subprime mortgages which caused the global financial crisis and are just beginning to reset and will continue to do so for the next three years.

An excellent resource tracking these trends is @: www.mbconfidential.com

-- Aarchan Joshi is a South Bay eye surgeon.

Nissan left Carson a few years ago for cheaper digs in Tennessee. California's high cost of living is a hard nut to crack.

Health firm DaVita's move of HQ a tonic for Colorado

(The Denver Post) Kidney-care giant DaVita plans to move its corporate headquarters to metro Denver from El Segundo, Calif., to become the 12th Colorado-based Fortune 500 company.

DaVita will announce today that members of its executive team, including chairman and chief executive Kent Thiry, will relocate to a yet-to-be-determined office in the metro area.

Read more on DaVita's move.

In the Los Angeles-Long Beach-Glendale area, home prices have decreased 23.40 percent in March compared to a year ago, according to the First American CoreLogic and its Home Price Index.

In February 2009, Los Angeles-Long Beach-Glendale showed a decrease of 24.94 percent compared to one year prior.

Great news for people with kids.

Toyota Hybrid Minivans Could Arrive Soon

(NewsOXY.com) Toyota Motor Sales, USA, Inc could be introducing a 2010 Toyota Sienna Hybrid Minivan sometime next year in the United States. Toyota Hybrid Minivans are in big demand, but it's not sure when the automaker will bring the product to North America. The minivan hybrid is known as the Estima which originally went on sale in Japan in 2001.

Sienna was set to be introduced as a hybrid model in 2010 but that plan was scratched because of the current economic recession. There are numerous signs that the economic recession might be on its way to recovery. The auto industry has been hit the hardest during the past year, taking several losses, and a long road ahead for recovery.

Read more about hybrid minivans.

I wonder if this will give competitors an opening.

Missile Defense Agency Faults Raytheon on Warhead

May 21 (Bloomberg) -- Warheads produced by Raytheon Co. for the U.S. missile defense system were delivered as many as 50 days behind schedule last year because of poor management, the head of the Missile Defense Agency said.

A "lack of discipline during assembly and testing" of the warheads was responsible for the delays, Army Lieutenant General Patrick O'Reilly told a House panel today.

The Raytheon warhead is the critical weapon in the $35.5 billion U.S. network of ground-based interceptor missiles linked by satellites, radar and communications. The 28 missiles are in silos at Fort Greely, Alaska, and Vandenberg Air Force Base, California, as a defense against North Korean missiles.

Read more on Raytheon's Missile Defense Problem.

Keep in mind that DirecTV recently topped a customer service survey ranking.

DirecTV Sued by Consumer Over Pricey Early Cancellation Fees

May 22 (Bloomberg) -- DirecTV Group Inc., the largest U.S. satellite-TV provider, was sued by a New Jersey consumer who claims its early cancellation fees are "unlawfully high and inadequately disclosed."

The complaint claims DirecTV began on March 1, 2006, to lease equipment to consumers, and charged up to $470 for discontinuing service or failing to return equipment, according to the complaint in federal court in Newark, New Jersey.

"DirecTV uses this fee to coerce its subscribers into maintaining DirecTV service, even if the service is poor, or cannot be utilized by the customer," according to the May 15 complaint by consumer Lloyd Cadigan, which seeks class-action, or group status.

Read more on DirecTV's legal challenge.

This week's installment of Business Casual.

MUHAMMED EL-HASAN: The importance of work in our social lives

The recent death of Daily Breeze education reporter Vu Nguyen - and John Bogert's column Thursday wonderfully memorializing our departed friend - got me thinking about the importance of work to our social lives.

Read more of Muhammed El-Hasan's Business Casual column.

Los Angeles County saw 9,867 unique foreclosure filings in April, down about 10 percent from March, according to Default Research, a Mt. Pleasant, Pa.-based tracker of foreclosure activity.

Southern California saw a 4 percent drop in the filings, known as Notice of Defaults or Notice of Trustee Sales, from March to April. That amounted to 31,331 filings in April.

"Southern California, one of the hardest hit areas in the country, seems to have hit bottom as far as foreclosures go," Default Research founder Serdar Bankaci said in a statement.

In Los Angeles County, the city of Los Angeles had the highest number of foreclosures for April, at 1,824. Palmdale was second with 527, followed by Lancaster with 478 and Long Beach with 434.

This could be incredibly disruptive for our everyday lives. On a positive note, maybe this will mean more business for Boeing's satellite facility in El Segundo.

GAO-Predicted GPS Failure Could Have Drastic Consequences

(TechNewsWorld ) The U.S. Department of Defense is likely to take swift action to step up the launch of new satellites to bolster the aging Global Positioning Satellite system. Otherwise, the system could begin failing in 2010, predicts a report from the GAO, and that would have monumental repercussions on national security and businesses worldwide.

Read more about the GPS problem.

No surprise here. Manufacturing is being hit hard.

Honda offers buyouts to workers in Lincoln

LINCOLN, Ala. (AP) - Employees at Honda's vehicle assembly plant in Lincoln have been offered a buyout plan by the Japanese automaker in an effort to cut the 4,500-person work force by 275 positions.

The proposal allows an employee to receive one year's salary and $1,000 for every year worked at the plant plus an additional $17,000 payment.

The buyout incentive is in response to sagging sales throughout the automaking industry. In March the automaker announced other belt-tightening measures including cuts in production to lower inventories at North American plants.

Honda set a June 5 deadline for workers to sign up.

Plant spokesman Mark Morrison said the buyout offer was a tough business decision but said sign-up was going well.

Even if they hit bottom, the rebound will likely be frustratingly slow.

Toyota U.S. Sales Show 'Uptick,' May Mark Bottom

(Bloomberg) -- Toyota Motor Corp., the world's biggest automaker, said "a slight uptick" in its U.S. sales this month may mark an end to the industry's worst slump in three decades.

"I think we've found the bottom," Jim Lentz, president of Toyota's U.S. sales unit, said yesterday in a Bloomberg Television interview in Washington. Still, major improvements are unlikely to happen before next year, he said.

Read more on Toyota's uptick.

Does this mean we'll be seeing big layoffs at aerospace companies in coming years?

Boeing Sees 'High Water Mark' in Defense Spending

(Bloomberg) -- Boeing Co. is making acquisitions and refreshing older product lines to prepare for what may be a peak for military purchases next year as U.S. President Barack Obama shifts priorities, the company's top defense executive said.

"It's possible that 2010 could be the high-water mark as far as defense spending" on new weapons, Jim Albaugh, president of Boeing's Integrated Defense Systems, said in an interview.

Read more on Albaugh's interview.

For the ninth straight year, DirecTV, the El Segundo-based satellite TV service, scored higher for customer satisfaction than all other major cable TV and satellite companies.

The survey is the American Customer Satisfaction Index.

Martin Chevrolet in Torrance will survive a wave of planned closures of General Motors dealerships, said Joe Giacomin, who owns the local car lot.

"We made the cut thanks to all our customers," Giacomin wrote in an e-mail to the Breeze.

GM said Friday that it would close 1,100 of its dealerships by the end of next year to cut costs as the carmaker considers temporarily entering bankruptcy.

Martin Chevrolet, at 23505 Hawthorne Blvd., has been in operation for 61 years.

Toyota has the name recognition and deep association with hybrids in consumers' minds to likely beat Honda in the hybrid race. At least in the short term.

Toyota cranks up heat on Honda with new Prius

TOKYO (Reuters) - Toyota Motor Corp said on Monday its new Prius had received pre-sale orders for 80,000 vehicles in Japan, kicking off what promises to be a fierce battle against hybrid rival Honda Motor Co.

Toyota, which has dominated the market for gasoline-electric cars so far, is looking to take back the crown after Honda's new Insight became the first hybrid ever to top the best-sellers' list in Japan last month.

"The hybrid market is going to be one of the fastest-growing segments in the world," said JPMorgan Securities auto analyst Takaki Nakanishi.

Read more on Toyota's new Prius.

The Jaguar South Bay, at 3111 Pacific Coast Hwy in Torrance, will close on May 22.

Today was the last day for the car lot's service department.

This week's Business Casual column.

By Muhammed El-Hasan Staff Writer

Three months ago, a man skied down an Idaho mountain with music blaring from where his left hand and wrist used to be.

Read the whole Business Casual column.

Raytheon Co. handed out more than 100 layoff notices Thursday to employees in Southern California after the company conducted a re-evaluation of work force needs.

A memo to employees Thursday said that 89 jobs would be cut at Raytheon Space and Airborne Systems in El Segundo.

In El Segundo, 58 of the job cuts will be in engineering and 31 in operations.

Another 20 employees will be cut at a smaller Raytheon site in Goleta, near Santa Barbara, bringing the total layoffs Raytheon announced Thursday to 109.

The job cuts were not related to a specific program, and will not impact any programs, Raytheon spokesman John Barksdale said.

"It's a tough decision to do this ever, but it just has to do with the changing skill mix required by our customers and the particular nature of our programs," Barksdale said. "Some start up. Others end. And as they do, we look at the skill mix of the programs going forward."

Car Pros Chrysler Jeep, at 21126 Avalon Blvd. in Carson, was notified today that they will be among the 789 dealerships that must close.

Chrysler sent letters to about a quarter of its 3,200 outlets informing them that they would have to close.

Malone wants to maintain control of DirecTV as he figures out what to do with it, with some speculating a sale to a phone company.

Investors sue DirecTV to block Liberty merger

(Bloomberg News) DirecTV Group, the largest U.S. satellite-TV provider, was sued by investors who contend a planned combination with Douglas County-based Liberty Entertainment Inc. undervalues the shares.

Plaintiffs, including the Key West Police & Fire Pension Fund, are asking a Delaware Chancery Court judge to stop the transaction and award damages, according to a complaint in Wilmington, Del.

Officials of El Segundo, Calif.-based DirecTV said May 4 that the company would merge with Liberty Entertainment, which would be split from billionaire John Malone's Liberty Media Corp.

Under terms of the deal, DirecTV stockholders will receive one share of single-vote DirecTV Class A common stock for each of their shares and Malone, his wife and associated trusts will get Class B common stock, carrying 15 votes a share.

Read more about DirecTV's legal challenge.

An understandable downsizing. But the company retains the capacity when demand returns and production can increase.

Toyota Cuts Production 28% to 7-Year Low as Auto Sales Plunge

May 13 (Bloomberg) -- Toyota Motor Corp., the world's biggest automaker, will slash global vehicle production by 28 percent in 2009 to the lowest in seven years as worldwide vehicle demand plummets.

Global output will fall to 6.68 million vehicles from 9.24 million in 2008, Hideaki Homma, a company spokesman, said today by phone. Sales will drop 18 percent to 7.34 million vehicles, he said. The figures include the carmaker's Daihatsu Motor Co. and Hino Motors Ltd. subsidiaries.

Toyota, which has enough capacity to build 10 million vehicles a year, has slashed production as rising unemployment and falling wages push U.S. auto sales to near 30-year lows.

Read more on Toyota's production cut.

Manhattan Beach Real Estate Prices Likely to Drop Over the Next Three Years.

By Aarchan Joshi

Like many, we could argue at length that Manhattan Beach is an excellent place to live, with a kid-friendly community ethos, award winning schools, easy access to a beautiful beach, excellent commuter location.

This is a community many would want to live in.

Today, though, we will focus on the impact that the real estate boom has had in creating Manhattan Beach's outlandishly unsustainably high home prices, which are likely to plunge dramatically over the next three years, as are other affluent communities in the South Bay.

Using the DataQuick System data set for Manhattan Beach, which comprises 13,852 sales since the inception of the data set in January 1988 through to March 2009, this is what we know:

- The median home price in Manhattan Beach is currently 11.5 times median household income (median home price in MB around $1.4 million and median household income in MB $128,000), down from a peak of about 13 times. At the peak of the last cycle in 1990, this number was around 7.5 times. At the trough of the last cycle in 1994, this ratio was around 4.5 times. Any conservative banker will tell you that a household should spend no more than about 4 times annual pretax income on a home (with slight variance based on interest rates). Using today's median home price, less than 10% of households in Manhattan Beach could afford to live in a median home in Manhattan Beach without substantially stretching their household budgets.

- On average, 665 homes sell in Manhattan Beach each year for this 21-year data set. For 2008, 325 homes sold in MB, the slowest sales volume, by far in 21 years. This low sales volume suggests a large disconnect between what sellers are asking and what buyers can actually afford, given the stricter lending standards.

- If one bought a median priced home at the peak of the last cycle in 1990, , it took 12 years to reach a break-even point of selling it without loosing a substantial amount of money (adjusted for inflation and commissions); at the trough of the market in 1994, a median home was worth 40% less than it was at the peak.

- About half of all homes in Manhattan Beach sell every ten years.

- The mortgage resets (pay-option ARMs, Alt-As) in affluent areas have a built in lag of about two years relative to the subprime mortgages which caused the global financial crisis and are just beginning to reset and will continue to do so for the next three years.

An excellent resource tracking these trends is @: www.mbconfidential.com

-- Aarchan Joshi is a South Bay eye surgeon.

The rising unemployment rate is mentioned only once in this article. But more people out of work will reduce demand, pushing down prices even as the foreclosure market levels off later this year.

Median home prices fell nationwide in 1Q

WASHINGTON (AP) -- Home prices fell in nearly nine out of every 10 U.S. cities in the first quarter of this year as first-time buyers looking for bargains dominated the market.

The National Association of Realtors said Tuesday that median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago. Prices rose in the other 18 cities.

Nationwide, sales of foreclosures and other distressed properties made up about half of the market. Overall, sales dipped 3.2 percent from the year-ago period.

"I think we're near a bottom, but we're not there yet," said David Resler, chief economist at Nomura Securities. While prices could hit bottom as soon as this summer, he said, they are likely to remain stable and start edging higher slowly.

But the nascent signs of recovery in the housing market could be short-lived if employers continue to lay off workers in bulk.

Ace Clearwater Enterprises, the Torrance area maker of aircraft parts, was featured on CNBC. It's a rare good-news story in this recession.

Here's the link.

Will this hybrids become top-selling vehicles in the U.S. as well?

Honda Insight first hybrid to top Japan auto sales

TOKYO (AP) -- Honda's Insight, billed as the cheapest gas-electric hybrid on the market, ranked as the top-selling vehicle in Japan for April -- the first time a hybrid has clinched that spot. Honda Motor Co. has pitched the Insight as an affordable hybrid though such vehicles have a bigger price tag than gasoline engine cars because they're packed with expensive green technology.

Read more on the Honda Insight.

This week's Business Casual column.

The man some blame for helping ruin political discourse in American journalism may end up helping save the newspaper industry.

Read more on Murdoch and newspapers.

This could help save newspapers.

News Corp will charge for newspaper websites, says Rupert Murdoch

(The Guardian) Rupert ­Murdoch expects to start charging for access to News Corporation's newspaper websites within a year as he strives to fix a ­"malfunctioning" business model.

Read more on Murdoch's plan.

British communications firm BT said Wednesday that it completed its solar photovoltaic system at the company's North American headquarters location in El Segundo.

The 2,862-module system is among the largest systems of its kind in Southern California, and will produce 15-20% of BT's current energy needs for the El Segundo offices and data center.

BT said it expects to generate about 1 million kilowatt-hours (kWh) of clean, renewable electricity and reduce carbon emissions by 700,000 pounds (more than 316 metric tons) annually as well as decrease its overall power costs for the site in future years, helping the company fulfill its global goals for sustainability.

This will come as good news, especially since the DoD plans to stop ordering the Long Beach-built aircraft.

Boeing gets C-17 order worth up to $400 million

WASHINGTON, May 5 (Reuters) - Boeing Co (BA.N) has received a U.S. Air Force contract valued at up to $400 million for two C-17 military cargo aircraft as part of a government-to-government overseas sale, the Defense Department said Tuesday.

The notice in the department's daily contract digest did not identify the buyer.

Jerry Drelling, a Boeing spokesman, said the C-17 Globemaster III aircraft were for an international consortium made up of allies in the North Atlantic Treaty Organization together with Sweden and Finland.

Read more on the Boeing C-17.

Auto shopping website Edmunds.com said Tuesday that online shoppers have increasing seeking Chrysler cars since the company's bankruptcy filing Thursday.

Here's what Edmunds says:

On Thursday, Chrysler filed for Chapter 11 reorganization in bankruptcy court. Since then, the visitors on the Edmunds.com Web site who are shopping for Chrysler models shot up 15 percent. By comparison, GM's shopping consideration dropped 6 percent since Thursday and Ford's was up 7 percent.

"I'd call this 'the Obama bounce,'" remarked Edmunds.com CEO Jeremy Anwyl, referring to the President's recent speech that discussed Chrysler's situation and urged consumers to consider buying an American car.

"Maybe the Chrysler bankruptcy announcement attracted the bargain shoppers, who may think a bankruptcy is the same as liquidation with price-busting clearance sales," reported Edmunds' AutoObserver.com Editor Michelle Krebs.

Dealers say customers are coming into the showroom making outrageously low offers for Chrysler vehicles, expecting dealers to take any price just to sell a car. Edmunds.com's most recent data indicates that Chryslers sell for an average of 18.1 percent below sticker while the industry average discount is 15.6 percent.

Air Force Space Command is now on Twitter.

To follow their tweets, go to www.twitter.com/AFSpace.

However, Ford did have some big mark-downs to lure customers.

Ford April Sales Top Toyota As Rebound Continues

(DOW JONES NEWSWIRES) Ford Motor Co. (F) reported a 32% drop in U.S. sales for April, but the healthiest of the Detroit Three said it continued to outperform rivals with market-share gains, led last month by record sales of the Fusion sedan.

That led Ford to best Toyota Motor Co. (TM) in U.S. monthly sales for the first time in at least a year. Toyota reported a 42% drop, while smaller Japanese auto maker Nissan Motor Co. (NSANY) posted a 38% decline.

Read more about Ford and Toyota.

It seems like government officials are sounding increasingly positive about the economy. I don't know if this is genuine or an attempt to boost consumer confidence to increase spending.

Fed's Bullard says jobless peak won't reach 1982 level

HOT SPRINGS, Arkansas (Reuters) - The U.S. jobless rate will probably not rise to levels reached during the recession of the early 1980s and is likely to crest above 9 percent before declining, St. Louis Federal Reserve President James Bullard said on Friday.

"I'm hopeful that we will stay under the peak hit in 1982, 10.8 percent," he told reporters after speaking to the Arkansas Bankers Association.

Read more on Fed official's thoughts.

This week's installment of my Business Casual column.

Familiar brand names fall victim to recession
By Muhammed El-Hasan

If you happen to be overly sentimental, you may already feel a bit more wistful than usual.

Read the whole Business Casual column.