Aerospace: United Tech buys Rockwell Collins
Industrial giant United Technologies is buying airplane-parts maker Rockwell Collins for $30 billion, “cementing one of the largest deals ever in the aerospace industry,” said Sui-Lee Wee in The New York Times. The deal will add to United Technologies’ already sprawling portfolio, which includes the Otis escalator brand and aircraft engine maker Pratt & Whitney. Rockwell, which is based in Cedar Rapids, Iowa, “produces electronics and avionics for aircraft, including the F-35 fighter jet.” The tie-up is expected to give Farmington, Conn.–based United more negotiating leverage in dealing with airplane manufacturers like Boeing and Airbus.
This deal is happening because fliers “want cheaper plane tickets,” said Jon Ostrower and Jethro Mullen in CNN.com. To meet the demand for cheaper flights, airlines are constantly looking for better deals from Boeing and Airbus, forcing the aircraft makers to battle it out with each other on price. Those deals “increasingly come down to the final price tag, not just the performance of each jet.” That has “prompted the plane makers to seek aggressive cost cuts from suppliers.” The newly combined company will give United Technologies and Rockwell more clout to push back. “Whether Boeing and Airbus will bless the final deal is yet to be seen.”
Autos: Harvey a likely boon for carmakers
Automakers are anticipating a windfall from Hurricane Harvey, said Joseph White and Ankit Ajmera in Reuters.com. Shares of the Big Three Detroit manufacturers rose last week, “despite lackluster August sales,” with investors expecting a surge in buying by Gulf Coast residents who need to replace flooded cars and trucks. Houstonians, living in the nation’s fourth-largest city, are hugely reliant on car travel, and have some of the longest commutes in the country. It’s not clear how many vehicles will ultimately need to be scrapped, but estimates range from 200,000 to as many as 1 million.
Banks: Wells Fargo admits to 1.4M more fake accounts
Wells Fargo’s sham accounts scandal is even worse than it originally appeared, said Renae Merle in The Washington Post. The bank said last week that it might have opened as many as 1.4 million more accounts without customers’ permission, 67 percent more than its initial estimates. The updated figures, now up to 3.5 million fake accounts, may still not even capture the entirety of the scandal. In its latest review, Wells Fargo examined data going back to 2009, rather than 2011, as it did initially. “Yet the bank has previously acknowledged that instances of unauthorized accounts have been found as far back as 2002.”
Economy: Weaker jobs growth, but surging GDP
“The U.S. job market hit a lull in August,” said Josh Boak in the Associated Press. Employers added 156,000 jobs last month, fewer than economists expected, but the results extended the economy’s long streak of modest gains. Wage growth also remained sluggish, with average hourly pay rising just 2.5 percent over the past 12 months. “Wage growth typically averages 3.5 percent to 4 percent annually when unemployment is this low.” The economy, however, grew at an annual rate of 3 percent in the second quarter, its best performance in two years.
Media: Tronc takes Manhattan
“Tronc Inc., the publisher of the Los Angeles Times and Chicago Tribune, has gained a presence in the Big Apple,” said Mike Snider in USA Today. The Chicago-based media company, formerly known as Tribune Publishing, announced this week that it’s buying the New York Daily News, the iconic but struggling New York City tabloid founded in 1919. Tronc will pay a grand total of $1 for the moneylosing newspaper, the same price as a weekday copy of the Daily News. It will assume all of its liabilities, including a $26.5 million pension obligation.