|
The Morning Ledger: Strike Could Cost GM $100 Million a Day |
|
|
| |
|
| UAW workers and supporters protest General Motors outside of the Detroit-Hamtramck Assembly plant. NICK HAGEN FOR THE WALL STREET JOURNAL |
|
|
Good morning. General Motors Co. stands to lose as much as $100 million a day if the nationwide strike of auto workers continues. Auto-industry analysts estimate the walkout—which began Monday and involves roughly 46,000 full-time workers in more than 30 factories across 10 states—could dent GM’s profit by between $50 million and $100 million daily. Stalled production could slash more than a tenth of GM’s expected third-quarter operating profit of about $3.5 billion by the weekend, although GM could make up some lost production once the workers return, analysts say. The strike presents a challenge for the company’s leadership team under Chief Executive Mary Barra and Chief Financial Officer Dhivya Suryadevara as they face calls from investors to cut costs amid declining sales in the U.S. and important overseas markets such as China, says Stephen Brown, a senior director at Fitch Ratings leading the firm’s coverage of the North American auto industry. GM’s last U.S. strike took place in 2007, meaning that today’s leaders only have limited experience managing such a situation, Mr. Brown tells CFO Journal’s Nina Trentmann. “This doesn’t happen very frequently, and each time it creates unique challenges for management.” [Continued below…] |
|
|
A prolonged walkout can take a toll on car companies because they book revenue only when a vehicle is shipped to a dealership. An assembly-plant shutdown can cost an auto maker an estimated $1.3 million every hour, according to the Center for Automotive Research in Ann Arbor, Mich. GM’s management is expected to try to offset some of the financial fallout by operating additional and longer shifts, Mr. Brown said. “There are ways to regain lost volume,” he said. The U.S. business is GM’s most profitable, but the strike comes at a delicate time for both the nation’s largest auto maker and the United Auto Workers union. Executives at other U.S. car makers, including at Fiat Chrysler Automobiles NV and Ford Motor Co. will be paying close attention to how GM manages the situation, as they also are negotiating new contracts with the UAW, Fitch’s Mr. Brown said. “Each contract is unique, but there will be the same broad terms across all three automakers,” he said. |
|
|
|
| Lena Shishkina will serve as Red Points Solutions SL's first finance and operations chief. PHOTO: RED POINTS SOLUTIONS SL |
|
|
Brand-Protection Startup Red Points Hires Dual CFO-COO |
|
Red Points Solutions SL has hired its first finance and operations chief, a hybrid position that will focus on adding U.S. staff to the software provider and managing the company’s data operation. The Barcelona-based software-as-a-service company, which provides brand protections such as an intellectual-property-infringement detection and removal service, tapped former Workday Inc. executive Lena Shishkina for the role. Finance chiefs in recent years have absorbed more duties once assigned to chief operating officers. A recent study found that CFOs improve the quality of a company’s financial reporting when they shoulder COO responsibilities. |
|
Otis Names CFO as It Preps for Separation From United Technologies |
|
Otis Elevator Co. hired a new finance chief as it gets ready to separate from industrial conglomerate United Technologies Corp. The Farmington, Conn.-based maker of elevators and escalators said that Rahul Ghai is its new chief financial officer. Mr. Ghai is expected to focus on reducing costs across departments and on pruning the independent entity’s portfolio, Joshua Aguilar, an analyst at Morningstar Inc., tells CFO Journal’s Nina Trentmann. Otis in its latest quarter reported a 6% drop in new equipment orders compared to the same prior-year period. Some of that decline is down to slowing economic growth in China, an important market for Otis, resulting in pricing pressure for the manufacturer. “Pricing has been a big detriment for Otis,” said Sheila Kahyaoglu, an equity analyst at investment bank Jefferies LLC. |
|
|
The Federal Reserve is expected to release U.S. industrial production data for August. Adobe Inc. and FedEx Corp. are among the companies scheduled to release earnings. |
|
|
| Inside an Amazon fulfillment center. PHOTO: KRISZTIAN BOCSI/BLOOMBERG NEWS |
|
|
Amazon.com Inc. has adjusted its product-search system to more prominently feature listings that are profitable for the company, said people who worked on the project—a move, contested internally, that could favor Amazon's own brands. Late last year, these people said, Amazon optimized the secret algorithm that ranks listings so that instead of showing customers mainly the most-relevant and best-selling listings when they search—as it had for more than a decade—the site also gives a boost to items that are more profitable for the company. U.S. Antitrust Enforcers Signal Discord Over Probes of Big Tech |
|
|
WeWork’s parent is expected to postpone its initial public offering after investors questioned how much the company is worth and its corporate governance. SeaOne Holdings, founded by the former chief of shale giant EOG Resources, has new technology for shipping U.S. natural gas abroad—and a plan to build natural-gas power plants in Colombia. Endeavor Group Holdings Inc. said it plans to raise as much as $712.3 million in its initial public offering, the entertainment company said in a securities filing. Frontier Communications Corp. was set to make roughly $320 million of debt payments, at least temporarily easing fears of a near-term bankruptcy filing for the wireline telecom company. Shares of New Relic Inc. plunged after the software company cut its yearly revenue outlook and said two top executives are departing. The cloud company, whose software helps website and app owners track the performance of their services, said that technology chief Jim Gochee and Chief Revenue Officer Erica Schultz have resigned. The founders of Aspect Ventures, a prominent female-led venture-capital firm, are parting ways to launch separate firms. Sony Corp. said it rejected a proposal from activist hedge fund Third Point LLC to split its image-sensor business from its entertainment business and list the chip unit. Anheuser-Busch InBev SA, the world’s largest brewer, is taking a second shot at listing its Asian business, seeking to raise up to $4.84 billion in Hong Kong, even as the city reels from a summer of protests and from trade tensions between the U.S. and China. SeaWorld Entertainment Inc. said that Chief Executive Gustavo Antorcha is leaving the company, seven months after taking the helm. The amusement park chain named Marc Swanson, its current chief financial officer, as its interim CEO. Elizabeth Castro Gulacsy, the company’s chief accounting officer, will become interim CFO. Specialty glassmaker Corning Inc. lowered its sales and volume expectations for materials found in TV sets and optical-communication cables, citing weaker demand. |
|
|
| Prudential Financial offices in Newark, N.J. PHOTO: VICTOR J. BLUE/BLOOMBERG NEWS |
|
|
Prudential Financial Inc. agreed to pay $32.6 million to settle claims that it didn’t disclose how a reorganization of its mutual-fund business would cost the funds millions in lost interest income. The Securities and Exchange Commission said the 2006 reorganization—intended to engineer tax benefits for Prudential—created a conflict of interest because the company benefited while the funds lost income from securities lending. They also paid higher taxes in certain foreign jurisdictions. In addition to paying the fines, Prudential reimbursed over $155 million to the funds, the SEC said in a settlement announcement. |
|
|
A panel of international air-safety regulators is finishing a report expected to criticize the initial U.S. approval process for Boeing Co.’s 737 MAX jets, according to people briefed on the conclusions, while urging a wide-ranging reassessment of how complex automated systems should be certified on future airliners. The Justice Department said it has charged a former and two current JPMorgan Chase & Co. precious-metals traders for their alleged participation in a racketeering conspiracy involving precious metals futures contracts over an eight-year period. OxyContin maker Purdue Pharma LP’s bankruptcy filing sets up a showdown with law-enforcement officials seeking to rein in the industry they blame for causing the national opioid epidemic. Cognizant Technology Solutions Corp.’s former chief operating officer agreed to pay a $50,000 fine to settle civil charges that he helped authorize and conceal a bribe paid to an Indian official. Fifth Third Bancorp is the latest company to seek supervision from Trump-appointed regulators who have struck a friendlier tone with the banking industry. The Office of the Comptroller of the Currency, a national bank regulator, last week approved Fifth Third’s application to be primarily regulated by the OCC. The Cincinnati-based bank is currently overseen by Ohio regulators. California Gov. Gavin Newsom said he would sign a bill banning flavored e-cigarettes if the state legislature sent one his way. |
|
|
| Pilots and crew members greet an Airbus passenger plane after it finishes its first flight at a factory in Toulouse, France, in 2016. PHOTO: BALINT PORNECZI/BLOOMBERG NEWS |
|
|
|
|
| Although a major oil shortage isn’t imminent, a long outage in Saudi Arabia is likely to keep oil prices elevated. The Daqing oil field in China. PHOTO: CHINA STRINGER NETWORK/REUTERS |
|
|
Oil prices logged one of their largest rallies ever, highlighting anxiety that weekend attacks on the heart of Saudi Arabia’s oil industry could cause supply shortages and pose a new threat to the global economy. Brent crude futures, the global gauge of oil, soared 15% to $69.02 a barrel, the largest-ever percentage gain for the front-month contract on a closing basis, according to Dow Jones Market Data analysis of figures going back to 1988. Front-month U.S. crude futures ended 15% higher at $62.90 a barrel, their largest one-day surge in more than a decade. Oil Prices Steady as Global Stocks Waver |
|
|
Pixelworks Inc. said it named Elias Nader chief financial officer. The San Jose, Calif., provider of visual processing solutions said Mr. Nader succeeds Steven Moore, who is resigning after more than 12 years in the post but will remain as a consultant through February. |
|
|
Pixelworks said Mr. Nader has served as interim president and chief executive of Sigma Designs Inc. since January 2018 and will continue to serve as an independent contractor to Sigma. Pixelworks said Mr. Nader will receive a base salary of $290,000 and will be eligible for an annual bonus with a target of 50% of his base pay. A-Mark Precious Metals Inc. named Kathleen Simpson-Taylor chief financial officer, effective Sept. 30. The El Segundo, Calif., precious metals trader said Ms. Simpson-Taylor succeeds Cary Dickson, who served as CFO since November 2015 and is leaving to pursue an opportunity closer to his home. Ms. Simpson-Taylor has served as A-Mark’s executive vice president, controller and assistant secretary since 2017. Protective Insurance Corp. said it named John Barnett chief financial officer, effective Sept. 30. The Carmel, Ind., specialty insurance company said Mr. Barnett succeeds William Vens, who earlier this year announced plans to leave in August. Protective said Mr. Barnett was most recently CFO of auto insurance underwriter First Acceptance Corp. Protective said Mr. Barnett will receive an annual base salary of $385,000. |
|
|
|