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Aerospace: Fallout over a military contract

Howls of outrage greeted the Air Force’s decision last week to award a $40 billion contract to build 179 airborne fuel tankers to a consortium that includes Northrop Grumman and Europe’s Airbus Industries, said August Cole in The Wall Street Journal. The big loser in the competition was Boeing. The Air Force said the winning design, which is based on Airbus’ A330 jetliner, has a longer range and can carry 7,000 gallons more fuel than Boeing’s entry. The planes will be assembled at Northrop’s manufacturing center in Alabama, but many parts will be built at Airbus’ facility in Toulouse, France.

Critics of the Air Force’s choice focused their ire on the French connection, said Kevin Drawbaugh in Reuters. “We should have an American tanker built by an American company with American workers,” said Republican Rep. Todd Tiahrt of Kansas, where Boeing has extensive operations. “I cannot believe we would create French jobs instead of Kansas jobs.” Tiahrt and the congressional delegation of Washington state, another Boeing stronghold, said they’d demand a review of the Air Force’s decision.

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Banking: U.S. mortgages batter HSBC

Hong Kong’s HSBC this week became the latest overseas casualty of the U.S. credit crisis, said Jonathan Epstein in The Buffalo News. HSBC’s U.S. banking profit tumbled 87 percent in 2007 to $91 million, after it reduced the value of U.S. mortgage securities in its portfolio by more than $17 billion. In a signal that HSBC expects U.S. economic weakness to continue, the bank also increased the amount of reserves set aside to cover bad debts.

Takeovers: United Technologies wants Diebold

United Technologies Corp. this week offered $2.63 billion, or $40 a share, for Diebold Inc., the leading U.S. maker of electronic voting machines, said Robert Daniel and Christopher Hinton in Marketwatch.com. “United Tech sees complimentary characteristics between several of its businesses and Diebold.” UTC’s Otis Elevator unit, for example, boasts a “400-location network of offices and service centers” that Diebold could use to stay close to purchasers of its retailing systems and ATMs. United Technologies went public with its offer after Diebold rebuffed a private approach in February.

Pharmaceuticals: Baxter pulls tainted heparin

Baxter International last week recalled almost all of its products containing heparin, a blood thinner produced almost exclusively in China, said Walt Bogdanich in The New York Times. The move came as U.S. regulators said they had found “potential deficiencies” at a Chinese plant that supplied Baxter with crude heparin, made from pig intestines. Tainted heparin may be linked to 21 deaths in the U.S., the FDA said, although officials cautioned that many of those patients were already seriously ill when they were administered the drug.

Financial services: A new boss at E*Trade

E*Trade Financial named Wall Street veteran Donald Layton as its new CEO, a move that may signal that the electronic stock brokerage firm will seek a buyer, said Susanne Craig in The Wall Street Journal. Layton was brought in by Citadel Investment Group, a private-equity firm that bought 20 percent of E*Trade last November. “Tapping Mr. Layton is a sign Citadel is getting antsy for results.” TD Ameritrade and Charles Schwab have been mentioned as potential buyers of E*Trade’s brokerage unit.