U.S. Economic/Financial News
Manufacturers Announce More Layoffs and Plant Closings
Further decimated by adherence to the insanity of "free trade" and globalization, under conditions of a systemic economic breakdown:
* General Motors will temporarily shut down five plants starting Jan. 3. This means that more than 9,000 workers are facing layoffs ranging from one week to four weeks at factories that make SUVs and pickup trucks, in Arlington, Texas; Janesville, Wisconsin; Lansing, Michigan; and Oklahoma City.
* Ohio: Auto supplier Dana Corp. warned of "significant" and permanent layoffs by the end of the year at its Caldwell plant, the largest private employer in Noble County, with more than 300 workers. MT Picture Display Corp., the largest industrial employer in Troy (north of Dayton), is eliminating nearly 300 hourly and salaried workers at its picture tube plant.
* Illinois: Amerock Corp. is closing its Rockford factory, sending layoff notices to all 450 employees who make hardware for cabinets and windows.
ATA: First Bankrupt 'Low-Budget' Airline
ATA Airlines announced bankruptcy on Oct. 27, despite having no unions, relatively new aircraft stock, and the lowest wages in the airline business. ATA is partially merging with AirTranthe rebirth of ValuJet of 1990s infamywhile declaring bankruptcy. The ATA failure, which will shrink its hub at Chicago's Midway Airport, is the sign of the ongoing collapse of the air carriers irrespective of size and union-busting, because of fuel costs. Delta's low-budget "Song" airline is also losing money, for example, and is one reason Delta is on the edge of bankruptcyalthough on Oct. 27, it announced it had lined up some new financing and debt restructuring to skate for another month or so.
Labor is no longer the airlines' chief cost, as they have cut it down so much; but that has done them no goodtheir new number-one cost, fuel, is dragging them down. United and American, for example, were each losing money in the third quarter at a $1.2 billion annual rate, simply from the difference between what fuel was a year ago, and what it is now.
San Diego: Now, 'Enron by the Sea'
San Diego, Calif., once a model of fiscal responsibility and efficiency, is suddenly forced to admit the possibility of bankruptcy, according to USA Today Oct. 24. Actually, 79% of all U.S. cities, according to a survey by the National League of Cities, admit to the erosion of their fiscal health through circumstances similar to those which afflict San Diego.
The economic downturn and stock-market collapse cut income from pension-fund investments, forcing cities to cover gaps from their general revenues. Many, like San Diego, resorted to heavy borrowing, while deliberately underfunding the pension funds and, at the same time, hiding their shenanigans from the Wall Street bond underwriters. Now, "with interest on that borrowing compounded every year, the city's ability to ever repay is a serious question which must be addressed," says a report by the pension-reform committee, created by the City Council.
San Diego is now the focus of investigations by the FBI, the U.S. Attorney's Office, and the Securities and Exchange Commission. Wall Street has downgraded the city's bond rating, preventing it from issuing bonds to raise revenue.
The city manager and the city auditor have quit, so the depth of the city's financial hole is unclear, especially since San Diego has not released its financial audits in the last two years. The new auditing firm will not report on this until after the election, in which the city considers reelection of its Mayor, Dick Murphy.
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