Archive for Tuesday, September 11, 2001

Business briefcase for Tuesday

September 11, 2001

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Michelin North America Inc. is cutting 2,000 jobs, or about 7 percent of its work force, citing a downturn in tire markets and a need to increase its long-term competitiveness.

The company said it hoped to complete many of the cuts through normal attrition and voluntary severance programs.

Cuts will affect all aspects of Michelin's operations, spokeswoman Nancy Banks said. Michelin has 23 plants in North America -- including one, above, in Greenville, S.C. -- and has 26,500 employees.

The job cuts had been expected for months after Michelin North America announced this spring it would cut $125 million in operating costs.

ECONOMY

Consumers pull back credit

Consumers, worried about job prospects in a weakening economy, remained cautious in July about taking on extra debt, the government reported Monday.

The Federal Reserve said that consumer borrowing essentially was unchanged in July after falling 1.3 percent at an annual rate in June. The June decline marked the first time consumer borrowing had fallen in nearly four years.

Analysts said the weakness in borrowing shows that consumers, the main force keeping the economy out of a recession, have grown much more cautious in the face of the yearlong economic slowdown.

MANUFACTURING

Boeing shares fall

on appeal warning

Boeing Co. shares fell 4 percent to a 14-month low Monday after the company said it could take a $1.4 billion charge if it loses a legal appeal over the government's termination of a contract for the A-12 stealth fighter.

The company also said it decided to appeal the latest ruling in the decade-old legal battle, an Aug. 31 federal court decision that upheld the government's 1991 action.

Boeing said in a filing with the Securities and Exchange Commission that it sees about a $1.4 billion effect on earnings from its repayment obligations if it ultimately loses.

Its stock fell $1.72 to close at $43.46 on the New York Stock Exchange.

Boeing previously had said it either would appeal or ask for a reconsideration of the decision by the U.S. Court of Federal Claims. The court upheld the government's default termination on the grounds the contractor team of McDonnell Douglas, which Boeing has since purchased, and General Dynamics Corp. couldn't meet the revised schedule.

BANKRUPTCY

Economy wipes out

tissue manufacturer

American Tissue Inc., the fourth-largest maker of tissue in the United States, filed for Chapter 11 bankruptcy protection Monday.

American Tissue's products include toilet paper, facial tissue, napkins, towels, paper plates and paper bags that are sold as store brands and are also supplied to institutions like schools, malls and hospitals.

The Hauppauge, N.Y.-based company's filing includes 27 of American Tissue's U.S. subsidiaries, from Oregon to New Hampshire.

The move followed a decision last week by Moody's Investors Service to lower American Tissue's credit rating in part because of accounting irregularities that led to the resignation of its chief financial officer.

Company officials have cited cyclical downturns in the pulp market and other factors for recent layoffs at mills in Wisconsin, Tennessee, New Hampshire and New York.

GUCCI

Ownership squabble settled

A two-year legal battle for ownership of Gucci ended Monday with LVMH Moet Hennessy Louis Vuitton agreeing to let retailer Pinault-Printemps-Redoute take control of the prized Italian fashion house.

Under the settlement terms, Pinault-Printemps-Redoute, or PPR, will buy LVMH's shares for just over $800 million, raising its stake in Gucci to 53.2 percent from 42 percent.

PPR will offer to buy out other shareholders late and hopes to own about 70 percent of the style icon when the three-stage deal is completed in 2004.

The settlement marked the end of a legal battle between two of France's richest men: Bernard Arnault of the LVMH luxury empire, and Francois Pinault, a self-made billionaire who built his fortune in retail chains.

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