Category: Business

More Bumps in the 787 Road to 1st Flight

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We have another delay in the 787 first flight, and this one is for a serious technical reason, “the revelation that the new airplane’s composite wing induced delamination and deformation on body join points during a routine preflight stress test.” (paid subscription required)

So as opposed to flying in the coming week, Boeing is now looking at a 3-6 month delay.

In related news, Qantas is canceling or deferring its 787 ordersdelay, though they are claiming that it’s the air traffic slowdown, and not the delay, that has led to this decision.

Economics Update

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Well, if you are looking for “green shoots”, the New York Fed Empire State Manufacturing Survey is not one of them, they got worse (see picture).

Additionally, the NAHB Builder Confidence fell a bit in June, from 16 to 15, with 50 being neutral, so that remains awful.

When one considers that delinquencies on commercial mortgage backed securities broke 2%, this is a state of mind that accurately reflects the reality out there.

Still, another measure of consumer confidence, this one from the University of Michigan, , which is marginally better, but still well below the 10 year average of 88.2.

We also have two relatively well known business have filed for bankruptcy reorganization, Six Flags amusement parks and the Extended Stay hotel chain.

Meanwhile, in Ireland, deflation has hit an annual rate of -4.7%, which is not surprising. There are a lot fewer dollars (Euros) chasing goods there, now that their bubble has popped.

Still, it appears that foreign investors are more confident about the future on a global level, as they have cut back on purchases of long term US securities, as the flight to safety slowed/reversed.

Meanwhile, we are starting to see some inflation from the recovery in oil prices, with import prices rising 1.3%, largely on oil, though they are down by 17.6% (!) year over year.

This has driven the price of retail gasoline up again, and are now up 63% for the year, though crude oil fell today.

The dollar was up, largely on statements by Russia that it should remain the world’s reserve currency.

Boston Globe Newspaper Guild Rejects Wage Cuts

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So the New York Times Corporation is unilaterally implementing a 23% wage cut.

I think that the National Labor Relations board may have something to say about this.

Absent bankruptcy, a contract is a contract.

I think there have been a number of reasons that this was rejected.

First, the Times‘ financial problems, are not as a result of the declines in the newspaper industry, but because of the enormous amount of debt that they took on to build, and move into, a swanky new headquarters building in 2007, and to pay (borrowed) cash for it.

When they could not roll over the short term loan, because of the financial crisis, they had to take a loan from Carlos Slim at very high rates. (14% !)

It also did not help that management handled communications abysmally, refusing to talk to its employees about the offer, refusing to send New York execs to the newsroom, and getting the math wrong, and then refusing to adjust the deadline, and making the cuts for rank and file about 50% larger than those of management.

This wasn’t a communication of the needs of the corporation, it was a communication of contempt for Boston by the folks in New York.

It should also be noted that the fact that the Times was not looking at New York for any give backs, and in fact continues to spend profligately, and just 2 weeks ago, the gift that keeps on giving, Thomas Friedman, shot his mouth off about how he never had to talk to an editor about what he is doing or spending:

Thomas Friedman, the Times’ chief foreign affairs columnist, lauded the efforts that Arthur Sulzberger, Jr., has made to keep the newsroom intact, saying, “I just have a great deal of admiration for him.” He told me that since taking his current post, in 1995, he has never been asked by Sulzberger what he was planning to write, or how high his travel expenses would be. “To be able to say what I want to say and go where I want to go—other than a Sulzberger-owned newspaper, you tell me where that exists today.”

(emphasis mine)

So, once again, Thomas Friedman, the man who is always wrong, drops another steaming redolent load on people who are ordinary enough that they have to work for a living.

I don’t know why the pay his travel expenses, he can create fictitious taxicab drivers who say exactly what he wants them to say while sitting at his home.

Japan Continues Moves Back Toward Militarism

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They have been ramping up their defense spending, continue to be tin-eared toward considerations of their atrocities in Asia in WWII, have a growing, and increasingly violent, militarist movement, a move toward a first strike “defensive” posture, and now they are looking to rescind their ban on exporting weapons (paid subscription required), which would mean growth for their defense industry, and it was the juxtaposition of the weapon making industrial conglomerates and politics that to a large degree pushed their militarism in the 1930s.

Economics Update

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We have good news on the jobs front, with both new and continuing claims claims falling this week.

Continuing claims fell by 15K to 6,740,000, the first time that they have fallen since January 3.

We also have the rather Dickensian named Challenger Gray & Christmas reporting that corporate layoff plans fell in May.

Meanwhile, the consumer economy continues in the doldrums, with MasterCard announcing that consumer spending continues to fall, though not as quickly as earlier in the year, and the retail chain’s monthly sales reports missing expectations, though the 800 pound evil gorilla in the room, Wal Mart, has stopped reporting monthly sales figures.

Mortgage rates are continuing their climb, with the rate for a 30 year fixed mortgage hitting a 6 month high.

On the other side of the pond, both the European Central Bank and the Bank of England left their benchmark rates unchanged, which drove the dollar down, because there had been some expectation of a rate cut priced in.

Meanwhile, in energy, Goldman-Sachs predicted higher oil prices later this year, which, along with the employment data, pushed the price of oil up.

Thielert Reenters Aero Diesel Engine, Diamond Pursues Their Installed Base

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Thielert (top picture), and Diamond (bottom picture) are now both aggressively competing for market share for aircraft diesel engines. (paid subscription required)

Both engines are based on the same Mercedes diesel engine block, so the real differences are design philosophy and corporate history.

In terms of design philosophy, Diamond’s engine, the AE300, is somewhat heavier, and it is implied, more robust.

In terms of corporate history, Thielert went into bankruptcy, largely driven by the warranty costs on their engine, production ramp-up issues, and financial irregularities, and the trustee basically tried to shake down the installed base by demanding ruinously expensive service and parts.

They have since returned to a going concern status, though their warranty terms are now far less generous, and their engine division has been rebranded “Centurion”.

Diamond aircraft, as Thielert’s best customer, was left in a serious lurch by this, and so developed its own engine, which has now been certified by the EASA, and they are using it on their new build aircraft.

The two main draws of Aero-Diesels are better fuel economy, and the ability to run on Avjet fuel, as opposed to the increasingly expensive and hard to find, particularly in austere locations, Avgas.

I think that for Theilert to compete, it needs to get a handle on reliability, as is evidenced by the line from the article, “By year-end, the company hopes to have doubled the service life of the two vital components to 600 hr,” (emphasis mine) which means that they were operating at a 300 hour life (!!) (IIRC, it’s the reduction gear and clutch).

By comparison, the TBO (time between overhaul) on the 0-360 is 2000 hours.

Both diesels are pushed harder to get their power than current commercially available engines, with he competing Avgas is something like the Lycoming 0-360 (whose origins are more than 50 years old) generating 180 horsepower out of 5.91 liters (361 cubic in) at 2700 rpm, while the Theilert gets 135 hp at (it’s been certified for 155 hp) out of 1.9 liters at 3700 RPM, and the AE300 gets 166 hp out of 1.9 liters at 3800 rpm .

Note also that the prop speed on the diesels is 2300 RPM, while on the direct drive Lycoming it remains 2700 rpm, so propulsive efficiency per hp should be a bit better for the diesels, and their fuel consumption is on the order of ½ that of the gasoline engine.

Morons Trying to Drum Up Billable HOurs

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So, two lawyers specializing in IP litigation have proposed changes in copyright and anti-trust law to bolster newspapers.

Unsurprisingly, their proposals would create an explosion of litigation, which would mean that they could buy that yacht that they have their eye on.

What they propose:

  • Ummm….Making search engines indexing web sites a copyright violation?
    • The idea here is that creating an index is a copyright violation, which means that things like the old index of periodicals in the library, an essential research tool, would be illegal.
  • And allow newspapers to price fix, so that they can all start charging for online content.
    • Let’s note that newspapers are not in the business of selling the content called “news”, they are in the business of selling advertising. The cost of purchasing a paper only covers the cost of the ink, paper, and printing. That’s why, when the chains started buying up newspapers, and cutting newsrooms about 2 decades ago, they could generate those 20%+ margins on a much crappier product.
    • The threat to newspapers is not people reading their news online, it’s Craig’s List. It’s the loss of classified ad revenue that has put these institutions behind the financial 8-ball
      • Oh, yes, there’s also the issue of accumulating insane levels of debt to build these chains in the first place.
  • Federalizing the “hot news” doctrine.
    • This one is just plain stupid. It’s a 1918 decision which says that a news service cannot take a story from another, rewrite it, and pass it off as it’s own, which is a good idea, but they want to make the reporting that a news source broke a story, like, “The Wall Street Journal reported today that sources in the Treasury have determined

As Timothy Karr notes

But consider this. Just a few years ago, the average profit margin for newspapers was 20 percent — with some raking in twice as much or more.

“Did they use these astronomical profits to invest in the quality of their products or to innovate for the future?” asked Free Press’ Craig Aaron on Thursday. “No. They just bought up more newspapers and TV stations.” (On May 12 Free Press released a National Journalism Strategy that outlines forward-thinking policies to save journalism, and not merely prop up the creaking old guard.)

(emphasis mine)

I am not concerned about the future of news papers, I am concerned about the future of journalism……Scratch that…I am concerned about the present of journalism, because the professionals out there, whether covering George W. Bush, the housing bubble, or just publishing this bit of crap, seems to be in a state of incompetent free fall.

Professional journalism today in the United States is a captive of those that they cover, and so people like me go to foreign and not-for-profit sources to find our news.

An Idea So Good, that It Can’t Happen Here

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But it appears that the EU is getting ready to give people the same basic rights with software as they have with other consumer products:

Software companies could be held responsible for the security and efficacy of their products, if a new European Commission consumer protection proposal becomes law.

Commissioners Viviane Reding and Meglena Kuneva have proposed that EU consumer protections for physical products be extended to software. The suggested change in the law is part of an EU action agenda put forward by the commissioners after identifying gaps in EU consumer protection rules.

This would invalidate the bullsh$# license provisions which say, “What, you expected this sh#$ to work? Your problem!”

It would, of course, put Microflaccid out of business.

Economics Update

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So, the Bureau of Labor Statistics has its April employment report out, and non-farm payroll employment continued to decline in down 539,000, though this is a slower decline, and beat expectations though the unemployment rate rose to 0.4% to8.9%, a 25 year high.

Under the less restrictive, and to my mind more accurate U6, unemployment rose to 15.8%.

The picture (click for full size) shows the employment fall from peak compared with other recessions.

Meanwhile, wholesale inventories fell by 1.76%, more than the forecast of 1%, as retailers and manufacturers tried to adjust for reduced demand.

We also have some bad news in the financial industry, with Royal Bank of Scotland posting a loss after writing down risky assets, Commerzbank, Germany’s 2nd largest bank, reporting an €861 million loss, and our old friend AIG posted a loss of $4.5 billion. (AIG is the gift that keeps on giving.)

Meanwhile, all the optimism over the jobs report (Whee! !he 2nd derivative is positive!)has driven the dollar down and driven oil above $58.bbl.

Zimbabwe Update

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Not a whole bunch of movement, just updates such as the fact that the Zimbabwe Central Bank (RBZ) took money from private bank accounts, and that Finance Minister Tendai ordered parliament members who received cars from the RBZ to return them immediately.

It’s probably a prelude to the bank chief’s firing.

There is some relatively bright economic news with gold mining companies restarting operations after the government said that they could sell gold directly on the world market, which cuts off an avenue for Mugabe to pay off his associates, and the UK has pledged $21 million in humanitarian aid, and its African neighbors have pledged $400 million in credit lines.

F$#@ Kindle, This is Something that Will Revolutionize Publishing

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It’s called the Espresso Book Machine, and it prints books on demand.

It literally prints the book and binds it in about 5 minutes from an order.

If you were to integrate a scanner/shredder to do book “returns”, you could eventually run a bookstore without any physical delivery, and only stock those books you sell, plus preprinting stock to put out on your shelves for the things that move faster.

Right now, it’s primarily handling out of copyright works, but the manufacturer is looking to add in copyright works.

List for the machine is about $175,000.00, but that should pay for itself fairly quickly, if just by generating sales that take 5 minutes to deliver, as opposed to 2 weeks, so the customer goes elsewhere.

The big problem, of course, is that book publishers will insist that this new technology will require an even higher profit margin on their part, just like record distributors did with CDs when they came out, even though they were cheaper than vinyl.

Unlike Amazon’s® Kindle®, they can’t turn a book into a $359.00 doorstop because you have a billing or return dispute.

Of course, XKCD was all over this:

Or not, but it’s funny.

More Google Ads Mishugas

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So I come across this add when I bring up my blog, an add offering “Ann Coulter Free” (no link, I don’t want to drive her traffic).

I do not involve myself in what Google® Adsense® serves, I just make fun of them when it they get it wrong, and this ad is very, very wrong.

Truth be told, I don’t want Ann Coulter free, I want Ann Coulter in jail for vote fraud.

Bankruptcy Updates

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The Department Store Chain Gottschalks twill be filing for liquidation, and mall developer General Growth Properties has managed to put off bankruptcy, for a while at least.

I think that it is likely that GGP will go chapter 11, at which point, Thomas Friedman, whose wife is a Bucksbaum, the family that owns the developer, may have to downsize his lifestyle….I’m so sad for him (not).

Finally, the Sun-Times Media Group has filed for bankruptcy, and before you start wringing your hands over how these are dark days for newspapers, note that Conrad Black and His Evil Minions™, most notably David Radler, looted the company, and have gone to jail for doing so.

In a way, it’s a microcosm of what is wrong with the news business: Bankers take over from journalists, generate fantastic profit margins by destroying journalism at these institutions through draconian cuts, and then they walk away, leaving bleached bones.

It’s Alive!!!!

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It’s beginning to look like the leading candidate for purchasing the assets of Eclipse Aviation may be positioning itself to restart the company as a going concern.

Given the relatively large customer base, and given that the debts of the company will be discharged in bankruptcy, they may be in a position to bring them back in some form, though I would be doubtful of full scale production restarting with the current investment environment.

I REALLY Do Not Want to See Your Vacation Pictures

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Least inspired promotional sweepstakes ever!

If you win the CBS Cares® Colonoscopy Sweepstakes:

Welcome to the CBS Cares Colonoscopy Sweepstakes!

This is an actual sweepstakes and, if you are the grand prize winner, we will fly you and a companion to New York where you will receive a free colonoscopy. You will also be given three nights’ accommodation in a suite at the luxurious Loews Regency Hotel, which will include the night before you are “awarded” the colonoscopy.

…….

This is just wrong on so many levels.

People over a certain age should get regular colonoscopies, and they should be checked for polyps, but this contest is the worst idea since the little Johnnie home root canal kit.