NEWS AT A GLANCE
Cerberus stung by auto industry gambles
Stephen Feinberg’s Cerberus Capital Management is working overtime to salvage its multimillion-dollar investments in Chrysler and GMAC, the financing arm of General Motors. Chrysler, which saw its sales drop by a third in August, was overtaken as the No. 4 U.S. automaker by Honda yesterday, and Nissan isn’t far behind for the No. 5 slot. Cerberus says it is committed to making its $7.4 billion Chrysler investment pay off. (The New York Times) Weak car sales are also damaging the $600 billion auto loan industry, with an assist from high gas prices and rising unemployment. (CNNMoney.com) GMAC, 51 percent owned by Cerberus, said yesterday it is closing all 200 retail offices and laying off 5,500 workers. (AP in Los Angeles Times)
Boeing machinists approve, defer strike
Boeing’s largest labor union, the International Association of Machinists and Aerospace Workers, rejected the aerospace giant’s “best and final” contract offer, but gave it 48 hours to sweeten the deal before union workers go on strike. (MarketWatch) A strike could set back the already-delayed launch of Boeing’s 787 Dreamliner, which has drawn a record $275 billion in orders. (Bloomberg) Boeing and union negotiators will meet today with federal mediators. If the talks fail, almost 27,000 workers will strike Friday, costing Boeing about $100 million in lost revenue per day. “The union is flexing its muscles,” said Richard Aboulafia at the Teal Group. “It virtually guarantees that Boeing is going to have to pay more, and feel some pain.” (Reuters)
BP settles with Russian partners
Oil giant BP settled an eight-month-old dispute with its Russian partners in TNK-BP, Russia’s No. 3 oil producer. In the increasingly bitter dispute, BP accused the Russian shareholders of state-aided harassment, while the Russians accused BP of running TNK-BP as a British-leaning subsidiary. (Reuters) Under the settlement, BP-nominated CEO Robert Dudley will be replaced and the board, now split evenly between BP and the Russian billionaires, will have three independent directors along with four each from BP and the Russians. BP will still own 50 percent of the venture. (MarketWatch) “Any settlement is good news,” said Edward Collins at New Star Asset Management. “It removes a cloud from the shares.” (Bloomberg)
Wind turbines go residential
Wind turbines come in home sizes now, but those who install them won’t recover the investment cost anytime soon. Larger, powerful turbines being installed on wind farms are starting to become cost effective now, and their power is becoming competitive with that produced by natural gas. But rooftop turbines, like the $5,000-a-pop ones affixed to the garage of Chris Beaudoin in California, produce so little electricity that they may never make sense economically. That doesn’t deter its advocates. “You can say, ‘That’s not a lot,’ or ‘Every bit helps,’” said late-night talk-show host Jay Leno, who has a wind turbine attached to his Burbank garage. (The New York Times)
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