Business news in brief

Friday, November 9, 2012

QUOTE OF THE DAY

“Underneath the surface, job destruction has been trending very low. Layoffs aren’t the problem - it’s the relatively weak pace of job creation.”

Scott Brown,

chief economist at Raymond James & Associates Inc.

Article, 1D

USA Truck initiates poison pill plan

USA Truck Inc. of Van Buren said Thursday that it is implementing a stockholders’ rights plan to avoid any hostile takeovers and is making changes to its board of directors. The moves are part of a strategy to turn around the struggling trucking company, which posted its biggest net quarterly loss ever, $6.1 million, at the end of September.

“Our board recognizes the value we can create for shareholders long-term by turning this company around,” Cliff Beckham, the CEO and president, said Thursday.

The stockholders’ rights plan, also known as a poison pill, floods the market with new shares of stock if a hostile takeover starts. That can make purchasing a large stake prohibitively expensive. Beckham said there is no hostile takeover currently on the horizon. The company refused a merger offer about a year ago.

The company also said that board member Robert Peiser has been appointed chairman to succeed Terry Elliott, who will remain on the board. Peiser has CEO and CFO experience with companies involved in turnaround actions, according to a USA news release. Also appointed to the board Thursday was Robert Creager, formerly with PriceWaterhouseCoopers.

Stock for USA Truck, which transports general commodities, closed before the company’s announcement Thursday at $2.82, down 17 cents. Shares have traded between $2.65 and $10.08 in the past year.

30-year loan rate inches up to 3.4%

WASHINGTON - The average U.S. rate on the 30-year fixed mortgage changed little this week, staying slightly above its record low. Cheaper mortgages are helping drive a modest housing recovery.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose to 3.40 percent from 3.39 percent last week. Five weeks ago, the rate touched 3.36 percent, the lowest level on records dating to 1971.

The average on the 15-year fixed mortgage slipped to 2.69 percent. That’s down from 2.70 percent last week and close to the record low of 2.66 percent reached three weeks ago.

To calculate average mortgage rates, the Federal Home Loan Mortgage Corp., or Freddie Mac, surveys lenders across the country on Monday through Wednesday of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also remained at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged up to 2.59 percent from 2.58 percent. The fee for oneyear adjustable rate loans was steady at 0.4 point.

The average rate on a five-year adjustable-rate mortgage dipped to 2.73 percent from 2.74 percent. The fee was unchanged at 0.6 point.

Ford Motor Co. has added about 5,200 jobs this year in its U.S. factories, and its North American plants are operating at 114 percent of capacity, the highest in more than three decades.

“Our manufacturing costs have gone down this year,” Jim Tetreault, Ford’s vice president of North American manufacturing, told reporters Thursday at a factory in Wayne, Mich.

“Two things are driving that: capacity utilization and entrylevel workers. No question, those two things have lowered our costs.”

Ford’s contract with the United Auto Workers union allows the automaker to pay new hires about $16 an hour, less than 60 percent of what veteran workers receive. Ford has added about 4,800 of those entry-level workers to its payroll this year, said Todd Nissen, a company spokesman. The remainder of the new jobs went to workers transferring from other Ford factories or coming out of the “jobs bank” of employees who didn’t have job assignments. Ford’s jobs bank is now empty, Tetreault said.

The company is running its factories at their highest level of utilization in more than 30 years, he said. Ford has added third shifts of workers at five North American assembly plants.

Ford also is adding a shift of 1,200 workers at its Flat Rock, Mich., factory next year. Asked if Ford will need more workers and capacity as U.S. auto sales grow, Tetreault said: “Stay tuned.” - Bloomberg News

OPEC predicts falling sales into ’16

Demand for OPEC’s crude will decline through 2016 because of the weakening economic outlook and growing reliance on competing sources such as U.S. shale oil deposits and natural gas liquids, the organization said Thursday.

Global need for fuel from the Organization of Petroleum Exporting Countries will shrink to 29.7 million barrels a day in 2016, 1.4 million fewer than this year, OPEC said in its annual World Oil Outlook. The estimate for 2015 is 1.6 million barrels lower than that forecast in last year’s report.

World markets are currently “very well supplied,” OPEC Secretary-General Abdalla El- Badri said.

The U.S. this year is set to achieve its highest level of energy independence in more than 20 years amid booming oil shale output in North Dakota and Texas, according to the U.S. Department of Energy.

Overall, OPEC said that global consumption in 2016 will advance to 92.9 million barrels a day, or 4.7 percent higher than consumption from last year.

Sales up as Wendy’s goes high-end

NEW YORK - Wendy’s push to remake itself as a higherend hamburger chain is starting to pay off, with a key sales figure rising for the sixth straight quarter.

The company, based in Dublin, Ohio, said premium food offerings - such as the Son of Baconator and the Asiago Ranch chicken sandwich - helped lift revenue by 2.7 percent at restaurants open at least 15 months.

For the three months ended Sept. 30, Wendy’s reported early Thursday a wider net loss, in part because of a charge related to the early payoff of debt. It lost $26.2 million, or 7 cents per share. It posted a loss of $4 million, or a penny per share, a year ago when it incurred costs related to the spinoff of the Arby’s chain.

Not including one-time items, Wendy’s said it earned 3 cents per share. Analysts had expected 5 cents.

Total revenue rose 4 percent to $636.3 million, which fell short of the $640.6 million Wall Street expected.

The Wendy’s Co. has more than 6,500 restaurants, primarily in North America.

Wendy’s shares rose 13 cents, or 3.1 percent, to $4.39 in Thursday trading.

Business, Pages 28 on 11/09/2012