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Trade Wars
Caterpillar Leaders Say New Tariffs Will Add Another $100M to Q3 Costs
The Trump administration’s latest wave of tariffs will cost machinery and equipment giant Caterpillar Inc. an extra $100 million this quarter, executives said Aug. 28. Early this month, CEO Joe Creed and his team told analysts and investors they expected tariffs, including reciprocal measures on products from dozens of countries that were about to be enacted, would add $400 million to $500 million to Caterpillar’s third-quarter costs. In a filing with the Securities and Exchange Commission, they said that range is now $100 million higher and also raised their full-year estimate for tariff-related costs to somewhere between $1.5 billion and $1.8 billion. The midpoint of that range is $250 million higher than their forecast of a few weeks ago.
“While the company continues to take initial mitigating actions to reduce this impact, trade and tariff negotiations continue to be fluid,” the company said in its SEC filing. In raising their tariff cost targets, Caterpillar executives have joined several other big names. The team at Ford Motor Co., for instance, late last month added $500 million to their 2025 estimate, which now stands at $2 billion.
Read more at IndustryWeek
Mortgage Refinancing Starts to Thaw as Rates Trend Down
It has been a frustrating wait for people who bought homes in the past few years when rates have been elevated. The 30-year mortgage rate peaked at almost 8% in the fall of 2023. A mortgage with that kind of rate can cost hundreds of dollars or more a month for an owner, versus the sub-3% rates during the height of the pandemic. The average 30-year fixed mortgage rate dropped to a 10-month low of 6.56%, mortgage giant Freddie Mac said Thursday. The rate has inched down for nine of the past 12 weeks, tracking expectations that the Federal Reserve will cut its own rates next month.
More than two million owners could now save money by refinancing, according to ICE Mortgage Technology, up from 1.7 million at the end of July. If rates keep falling to 6%, nearly six million people would reduce their rate by at least 0.75 percentage point in a refinancing, a common threshold at which homeowners would save enough to justify the associated costs. It is still a small share of homeowners who could benefit right now from trading in old loans for new ones. But there have been signs of a broader thaw in the mortgage market as rates have fallen.
Read more at The WSJ
Over 600 UAW Members at GE Aerospace Begin Strike
GE Aerospace workers represented by UAW Local 647 are officially on strike across two facilities in Erlanger, Kentucky, and Evendale, Ohio. The strike began at midnight on Thursday after no deal was reached and the current contract expired. The UAW cites job security, health care costs and time off as core issues. “We are simply demanding things that every worker deserves: decent healthcare and a secure future. We are going to stand together as a united membership until we win what we are owed,” says UAW Local 647 President Brian Strunk. According to the UAW, GE Aerospace made counteroffers which would increase health care costs for employees by 36% over four years.
The Evendale plant builds marine and industrial engines, and the Erlanger site is a distribution center. In recent weeks, both sites have organized mass plant solidarity walks every Wednesday throughout bargaining in support of a fair contract. “We are deeply disappointed that the Detroit-based UAW leaders have chosen to send you out on strike without allowing you the opportunity to review and vote on this offer,” GE Aerospace said in a statement. “Every employee deserves the right to make their voice heard and evaluate the terms that directly impact their livelihood, careers, and families. That’s why we are sharing details of that offer here and encouraging you to ask UAW leadership for the chance to vote on the company’s best offer.”
Read more at Industry Week
Boeing Ices Strike Talks Indefinitely After $36 Billion Deal
Boeing's defense unit on Tuesday halted negotiations with the machinists union that began striking on Aug. 4. Reuters reported that Boeing had no plans to restart discussions until "at least after Labor Day." The news followed the company's announcement of a deal estimated around $36 billion with Korean Air. BA stock cracked an early entry within a developing base pattern. Reuters quoted union officials who claimed Boeing on Tuesday walked away from negotiations with the International Association of Machinists, with no immediate plans for when to return to the table. Talks had resumed Monday for the first time since the Aug. 4 start to the strike.
Boeing said Monday it had not yet reached a deal with the union, representing 3,200 workers who went on strike at Boeing Defense's St. Louis-area facilities after rejecting a four-year contract offer in early August, following negotiations stretching back to late July. Boeing said that almost 30% of the union members did not vote on that offer. Boeing's prior offer remained in place, with the exception of a ratification bonus. That offer includes 40% average wage growth, increases to vacation and sick leave, and a "faster path to the top of the pay scale," according to the company.
Read more at Investor’s Business Daily
IBM and AMD Join Forces to Build the Future of Computing
Last Week, IBM and AMD announced plans to develop next-generation computing architectures based on the combination of quantum computers and high-performance computing, known as quantum-centric supercomputing. AMD and IBM are collaborating to develop scalable, open-source platforms that could redefine the future of computing, leveraging IBM's leadership in developing the world's most performant quantum computers and software, and AMD's leadership in high-performance computing and AI accelerators.
In a quantum-centric supercomputing architecture, quantum computers work in tandem with powerful high-performance computing and AI infrastructure, which are typically supported by CPUs, GPUs and other compute engines. In this hybrid approach, different components of a problem are tackled by the paradigm best suited to solve them. For example, in the future, quantum computers could simulate the behavior of atoms and molecules, while classical supercomputers powered by AI could handle massive data analysis. Together, these technologies could tackle real-world problems at unprecedented speed and scale.
Read more at IBM
Nippon Steel Bets On $11 Billion Investment, Tech Transfer To Lift U.S. Steel Profit
Japan's Nippon Steel plans to increase profit at U.S. Steel through an $11 billion investment and the transfer of its operational techniques and advanced technologies to expand capacity and add more high-grade products, a senior executive said. Nippon Steel's $14.9-billion acquisition of U.S. Steel closed in June, ending an 18-month process that had been caught up in the shifting political landscape during the transition between the Biden and Trump administrations.
There are plans for a new hot-rolling mill at U.S. Steel's Mon Valley Works in Pennsylvania, the refurbishment of the No. 14 blast furnace at Gary Works in Indiana, and new electromagnetic steel sheet lines and other capacity expansions. "Real effects from the investment will appear after 2028," Nippon Steel Vice Chairman Takahiro Mori told Reuters on Thursday, adding that profitability could even grow beyond 250 billion yen.
Read more at Reuters
EV Deals Are Booming Ahead of Tax-Credit Expiration
The final days of the $7,500 federal tax credit for electrical-vehicle purchases, which expires Sept. 30, have set off a frenzied last-ditch car-buying spree, with buyers trying to get an EV at a steep discount before it is too late. The deal bonanza marks the end of an era in the U.S. auto industry: After years of pushing electric cars to customers, automakers are readying for a world without the federal government’s hefty incentive to support EV adoption or fuel-efficiency rules that reward EV sales.
That change will have ramifications around the country, with dealers who leaned heavily into electrification having to adjust on the fly and automakers pulling back on EV production. General Motors laid off about 360 employees at a plant in Detroit for at least a month to reduce production of the GMC Hummer EV and battery-powered Cadillac Escalade IQ. GM said it regularly updates schedules to align production with inventory needs. For now, dealers are preparing for an electrifying sales month, especially in Colorado, where EVs sell more briskly than in other states.
Read more at IndustryWeek
'AI Can’t Install An HVAC System': Why Gen Z Is Flocking To Jobs In The Trades
Before the pandemic, the trade school market “had been largely stagnant,” according to a March report from the higher education marketing and research firm Validated Insights. Now, fall enrollment at trade schools is expected to grow 6.6% a year. Trade schools are just one option for people looking to get into work like welding, plumbing, and HVAC installation. Enrollment at public two-year community college programs focused on vocational and trade programs has surged nearly 20% since 2020, compared to a 2.1% increase at public four-year institutions, according to the National Student Clearinghouse Research Center. And registered apprenticeships, where trainees can earn money while they learn, have similarly been on the rise over the past several years.
Jasmine Escalera, a career expert at Zety, sees this shift as part of an overall “AI-xiety pivot,” where young people are rethinking their careers and whether a degree is worthwhile. She noted that on top of fears about AI replacing entry-level positions, young people may also be less interested in climbing the corporate ladder and eager to avoid the woes of the jobless college grads they see on social media.
Read more at Yahoo Finance
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