tv Nightly Business Report PBS October 7, 2015 7:00pm-7:31pm PDT
>> announcer: this is "nightly business report" with tyler mathisen and sue herera. the state of our union. the uaw may be close to striking as the teamsters pension fund warns of severe cuts to benefits. economic hit. the cost to the u.s. economy if congress fails to act in the nation's biggest railroad operators have to suspend some service. steaming mad. the auto dealer that's calling volkswagen's emissions scandal the biggest fraud he's ever seen. that and more tonight on "nightly business report" for wednesday, october 7th. good evening, everyone. thanks for joining us, and welcome. we begin tonight with the state of our unions. the clock is ticking tonight on a possible strike by the united autoworkers at some fiat chrysler locations. if that happens, it would be the first time in eight years that the uaw held a strike at a big
three auto plant. meanwhile, one of the largest teamsters pension funds is warning of cuts, big ones, for both workers and retirees in order to shore up its weak finances. we have two reports tonight, and we begin with phil lebeau and the latest on the uaw. >> reporter: in a matter of hours, thousands of chrysler workers could go on strike. the united autoworkers union has given fiat chrysler a strike deadline of 11:59 wednesday night. if the union and chrysler cannot agree to a new labor contract by then, or if there is no progress in talks, some or all of the autoworkers could walk off the job. that would hit chrysler hard. the company builds about 35,000 vehicles every week in the u.s., generating $175 million in revenue every day and more than $1.2 billion in revenue per week. chrysler says the two sides are still in discussions. but if there's a strike, it would likely be targeted at one
or two chrysler plants, likely those that build or supply the bread-and-butter models for chrysler. that means jeep suvs or ram pick-ups. phil lebeau, "nightly business report," chicago. now to the teamsters union and the trouble its central state's pension fund is facing. that fund, one of the teamsters' largest, is warning hundreds of thousands of members that their benefits may be cut. its financial problems have been years in the making, and under a new federal law, it's not just current workers that could take a hit, but retirees as well. >> no cuts! no cuts! >> reporter: the proposal to cut benefits by an average of 23% is just what teamsters president james hoffa feared last month when he came out to support legislation introduced by vermont senator and presidential candidate bernie sanders, designed to create an emergency fund aimed at propping up endangered multiemployer pension funds. >> when a promise is made to
working people, that promise must be kept. we are not going to slash pensions in this country. >> reporter: if nothing else, any benefit cuts by the central state's pension fund promised to be painful. back in the 1960s, when trucking boomed and the interstate highway system was still relatively new, the central states' fund held a lot of financial and political capital. now it's blaming its problems on deregulation in the trucking industry, which it says has led to fewer companies and fewer union members. an aging population is also putting greater demands on the fund. central state says it will run out of money in 10 to 15 years if no changes are made because, it claims, it's paying out $2 billion a year more than it's taking in. instead, it's asking for potentially painful cuts, except for retirees 80 and older, who
won't be affected. multiemployer plans cover about 10 million people, but federal officials say about 1 million of those are in plans that are struggling. multi and single employer plans are both covered by government insurance if they run out of money, but the coverage maximum for a multiemployer plan tops out at more than $13,000 a year. the annual cap for single employers is more than $54,000. if the central state's fund is able to cut benefits, there are fears more plans will follow. the treasury department, which will review the plan, appointed kenneth feinberg, who most recently oversaw compensation in the gm ignition key case, to hear complaints. and there are sure to be a few. union members will get to vote, but even if it's rejected, the treasury department has the legal right to oppose those changes. on wall street, stocks finished the day higher as investors look ahead to the start of earnings season.
the dow jones industrial average rose 122 points to 16,912. the nasdaq gained 42 as the biotech index recovered a bit, and the s&p 500 added 15. democratic presidential candidate hillary clinton says she opposes the pacific rim trade deal. in an interview with pbs, clinton says the agreement reached just days ago does not do enough to create jobs, raise wages for americans or advance u.s. national security interests. well, the numbers are starting to come in when it comes to how much the presidential hopefuls are spending on tv advertising. according to nbc and its ad tra tracker, jeb bush is in the lead, having spent more than $7 million, followed by john kasich and marco rubio. then comes hillary clinton, chris christie and bob jindal, who spent a little more than $2 million. eamon javers has been working through those numbers. good to see you. there's one noticeable candidate who's not on the list, perhaps
predictably so, donald trump. >> yeah, trump is not on this list. he is leading in all the polls in the republican primary. yet, he hasn't spent a dime, he told the "washington post" today, on tv advertising. that is traditional bread and butter of candidates. in fact, most of what candidates raise from all their donors goes into television ad spending, but donald trump has been able to dominate the media without spending any money on tv ads. that must be awfully frustrating to a guy like jeb bush, who's spent $7.3 million so far. >> well, mr. trump calls in to lots of television programs, so he's getting free advertising in effect there. hillary clinton the only democrat in the top six ad spenders. will that change if joe biden gets in the race? and i hear that mr. biden, supporters of his have come up with their own ad urging him to run. >> yeah, that's right. they've come out with an independent ad, saying, run, joe. they want to see joe biden get into this race. and absolutely, hillary clinton has got to worry about her flanks in the democratic
primary. you've got bernie sanders out there drawing enormous crowds, enormous attention, particularly on the left. he has not spent a whole lot of money, if any, on television advertising as well. and joe biden quietly appears to be reaching out to some of the democratic money guys and asking them to hold their fire until he makes a decision about whether he's going to get into this race. that could come as soon as this weekend. so, we'll have to see if hillary clinton has to ramp up her spending in order to deflect what would surely be a barrage of television advertising from the vice president, if he gets into this campaign. >> all right, eamon. we will wait and see. eamon javers in washington. >> that's right. >> thank you. as we reported last night, amtrak told lawmakers it may have to suspend some service, unless congress extends the deadline for implementing safety technology. but it's not just amtrak. some of the biggest freight railroad carriers are also affected. and as morgan brennan explains, there's an economic cost if some service is suspended. >> reporter: come december it
may get tougher to take the train. this week, amtrak became the latest in a growing list of passenger, commuter and freight railroads warning of service shutdowns if congress doesn't act to extend the deadline for key safety technology. that technology, positive train control, or ptc, is a wireless communications system that can override a conductor to slow or stop a train to prevent an accident. congress mandated the implementation of ptc in 2008, setting a deadline of december 31st, 2015. but the government accountability office says most railroads will not meet that deadline and that legislation to extend it is necessary. >> when congress mandated this technology in 2008, they stipulated that it had to be implemented across the network, 60,000 miles of track, 23,000 locomotives, by the end of this year. they did not appreciate the scope and they didn't appreciate the technology that had to be developed. >> reporter: cost of implementing ptc is an estimated $13 billion for the overall
sector. every rail carrier must work together to install the system, because many share tracks, and the technology itself keeps advancing. if the deadline isn't extended, carriers warn, they may have to suspend service or face steep fines and increased liability. for amtrak and commuter lines like new york's metro-north and long island rail road and chicago's metra, service could begin winding down in december. for freight railroads, like bnsf and csx, the process would start in november, a huge disruption ahead of the holiday season. >> all of those containers coming in to the ports of l.a. and long beach are going to sit on the docks. all that grain that's supposed to go to the pacific northwest for export to asia is going to sit in the elevators or on the ground. the new audibtomobiles rolling the assembly line in detroit will just be sitting in the parking lot outside the factory, because freight railroads won't be able to move them. >> reporter: the effects to the economy could be severe. the american chemistry council
recently estimated that a single month of rail service disruptions could result in a more than 2.5% reduction in gdp in the first quarter of 2016, pulling $30 billion out of the economy. unemployment, it says, would rise as 700,000 jobs were lost. and household income would fall by more than $17 billion. the question now, will congress pass legislation in time? the senate approved a highway bill over the summer that includes a ptc deadline extension, but the house has not acted on it. the house transportation and infrastructure committee, however, did introduce legislation of its own last week, but that, too, needs to make its way through congress and on to the president's desk. for service to continue without disruption, all of this needs to happen before the month's end. for "nightly business report," i'm morgan brennan. still ahead, why one car dealer is filled with fury after being in business for 23 years.
new york's attorney general has opened an inquiry into the fantasy sports industry. as we told you yesterday, a draft kings employee leaked proprietary information to the public, the same week he won a fantasy contest on a rival site. eric schneiderman has requested information from both draft kings and fan duel, the two biggest in the country. they have stakes in fan duel. comcast is the parent company of cnbc, which produces npr. the head of the world soccer organization known as fifa has been suspended. according to reports, the
suspension will last 90 days and was imposed by fifa's ethics committee. blatter is under criminal investigation by swiss authorities for alleged mismanagement and misappropriation of funds. volkswagen plans to launch a massive recall in january of its diesel cars that were impacted by that emissions scandal. the automaker's ceo told a german newspaper that the fix for the cars should be completed, but not until the end of next year. for the u.s. market, the remedy will have to be first agreed upon with the epa. this comes one day after volkswagen's ceo said the scandal will cost more than expected and that job cuts may be necessary. the automaker also plans to cut back on capital investments that the company considers nonessential. well, tomorrow the head of volkswagen of america will be on capitol hill for a congressional hearing investigating why the automaker rigged the emissions of almost 500,000 vehicles sold in the u.s. that scandal has vw owners feeling betrayed and one vw dealer calling it the biggest fraud he has ever seen.
phil lebeau is back again tonight with our story. >> reporter: steve califer wants answers. after 23 years selling volkswagens in central new jersey, he wants to know why the automaker lied to him and those customers who bought diesel vws. >> in all of the years that i've been in business, all of the frauds that i've seen, this one just takes the cake. here you have your own manufacturer of products delivering a consumer product to the customer, making certain that it's defective. where does that happen in the world? >> reporter: it happened over the last six years. vw secretly rigged software in engines so they passed clean air tests, when in reality, they polluted at higher than acceptable levels when being driven every day. >> the simple question that evolves after what happened with the cheating on a diesel -- the
next question, simple, is, is my car safe? have they cheated on something else? what else did they not tell us? >> reporter: so far, vw of america's ceo has said little about the scandal beyond "we really screwed up." a vw spokesperson says dealer and customer satisfaction is a top priority, adding, "we have been actively working with our national dealer council to address the immediate needs of our nationwide dealer body." a big concern? getting buyers back into showrooms, especially with the recent survey showing vw's brand favorability plunging. so, the automaker is taking another $2,000 off the price of vehicles. >> we have heard from dealers that the $2,000 cash incentive has reversed the slowdown of the traffic. so, they've seen some uptick in the showroom traffic. >> reporter: still, califer has more than a dozen diesel cars he can't sell, a reminder of how vw once pushed diesel as the answer
for buyers. >> it's turning out to be our titanic. >> reporter: phil lebeau, "nightly business report," chicago. >> tuned read more about why some volkswagen dealers are so furious, head to our website, nbr.com. deutsche bank announcing it will take a big charge in the third quarter, and that is where we begin tonight's "market focus." the bank expects the charge to be around $8 billion. as a result, the company says it could cut or eliminate its dividend this year. shares tumbled in initial after-hours trading. during the regular session, the stock was more than 1% higher at $28.79. we'll look for that number tomorrow. lumber liquidators announcing it will pay $10 million to settle federal charges. the settlement is over its compliance with a wildlife protection act. it's not related to claims that the company's hardwood flooring contains formaldehyde, a known carcinogen. shares shot higher in initial after-hours trading, as you see right there. during the regular session, the stock was 3.5% higher and finished at $14.58.
monsanto will eliminate 2,600 jobs to cut costs because of the slumping commodity market. the full-market outlook came in lower hann estimates. shares finished at $88.06, a fraction higher. constellation brands had adjusted earnings over estimates. they also hiked its full-year outlook. the ceo attributes the strong results and forecast to the firm's mexican beer business. >> we have additional brands like negro madello and pacifico and brands we haven't introduced yet that we can follow on in terms of continuing to drive the business for the future. so, you know, we see a pretty steep growth pattern for quite a while for our company. >> shares rose about 2.5%, $134.57. pure storage making its wall street debut today. the flash-based storage systems
maker priced shares at $17 apiece. the company has a market value of about $3 billion, but shares slipped nearly 6% to $16.01. the back-and-forth between sab miller and anheuser-busch continues. sab rejecting a $104 billion offer from its rival, marking the third rebuff in a month. the company believes the latest proposal still undervalues its firm. anheuser-busch rose more than 1% to $110.96. sab miller trades overseas. a brutal day for shares of yum! the parent company of taco bell and pizza hut, saw shares plummet nearly 19%, second worst day ever for that company. last night we told you the firm missed earnings estimates and cut its profit outlook. and tonight, jane wells explains the challenges yum! faces. >> reporter: the report from kfc's parent yum! brands was finger-licking ugly, and it was a tense conference call between analysts and management. ceo greg cree took full
responsibility for being caught off guard by problems in china. after predicting strong sales in august, things changed quickly on the ground. the chinese markets became volatile, domestic competition heated up with discounted pricing, and the strong dollar walloped the company. instead of same-store sales rising 10%, they rose only 2%, and pizza hut was the problem with bad marketing moves, like offering a premium steak product just as the chinese economy went south. >> in recent weeks, we've seen companies cut back on parties, dinners and entertaining. so, while our weekend business is doing okay, this impacted our weekday dinner results significantly. >> reporter: but analysts asked repeatedly why the company had not updated its rosy outlook from august. they never really got an answer. full-year earnings growth has now been lowered from at least 10% to low single digits, and the stock market today reacted accordingly. still, yum! says the chinese economy is growing, and "we wouldn't trade places with anyone." analysts questioned that, and they wondered if maybe
management should change the corporate structure or change management! ceo creed ended the call this way -- >> everybody at yum! knows we disappointed you and our shareholders this quarter and this year, and we are going to come back stronger and better than ever. >> on the bright side, creed said of taco bell, "this brand is doing all the right things in all the right places," and the dividend is going up 12%. for "nightly business report," i'm jane wells in los angeles. coming up, main street goes digital. how one mom-and-pop shop is modernizing its decades-old business.
here's what to watch tomorrow. the unofficial kickoff to earnings season. alcoa reports results after the closing bell. the fed reports minutes from its november meeting and could have rate hike timing clues. the imf begins its annual meeting and it is down in lima, peru. that's what to watch thursday. mortgage applications surged 25% last week, according to the mortgage bankers association. that spike can be attributed to lower rates and new regulations, which caused borrowers to rush to their lenders. applications to refinance and purchase a home were up double digits. with more people going online to watch programs, rather than watching them on television, digital video is stealing both eyeballs and ad dollars. julia boorstin was at a media gathering yesterday called the grill conference, where everyone was talking about the potential winners and losers of this massive shift.
>> reporter: movers and shakers across traditional and digital media gathered at the grill conference in beverly hills to talk cord-cutting and the future of content. >> it's a moment of cast and uncertainty, but regardless of the platform, whether it's digital, online, mobile, great content has to be there. and so, we're seeing the content. we'll go to the places where people are going to watch. >> one of the biggest winners from shifting viewers and the ad dollars that follow them, youtube. robert kinsel says this is just the beginning. >> if you look at youtube, you know, just on mobile alone, we have bigger reach than any cable networks in the united states. so, clearly, we're attracting people and we're also attracting them on a high-value device. >> while youtube grows its video views 60% year over year, it's also facing more competition than ever, including from facebook. not only does facebook no longer direct a lot of traffic to youtube, it's also making big moves to cash in on its billions of daily video views.
and makers studios along with other big content creators on youtube are looking to build beyond google's video platform, which shares just about half of its ad revenue. >> youtube is a great partner for us, and we do very well there, but it's not -- you know, we're not exclusive to them. and our job is to reach people wherever they are, and not everybody's on youtube all the time. >> reporter: and content creators are eager to work with other distributors, which might be as game-changing as netflix. >> facebook feels like netflix. now, the entire creative community is hoping, is praying that facebook makes that decision, because it will not only create a great, new revenue stream and opportunity, but it's a new and different platform, so that the work, the creativity that takes place on facebook will be different. it has to be different than the long form on netflix, which is great. so, both from a creative perspective and an economic perspective, yes, we're rooting for facebook. >> reporter: with all these options, there may be only one thing that everyone agrees on -- consumers will be the biggest winners. for "nightly business report,"
i'm julia boorstin in beverly hills. some small mom-and-pop shops are also going digital as a new way to connect with their customers. tonight in the second of out three-part series, sharon epperson introduces us to a husband-and-wife team who are taking their decades-old business into the 21st century. >> reporter: hair colorist megan gordon has seen her share of press. >> i was written up in "allure" magazine in 1994 as the best colorist in the country. that issue came out in november, and i was booked solid for about two years from that one little, small write-up. >> reporter: but with numerous online beauty blogs, youtube videos and instagram posts, husband-and-wife team kevin and megan gordon realized that receiving media attention these days is very different. >> everybody's an expert now. everybody's a master now. there's 30 people on 30 different blogs at this every minute that are claiming their
colorist to be the best in the world. and so, you know, people don't know what to believe and don't know what to follow anymore. so, it's all got diluted. >> reporter: in order to stay fresh and relevant, the gordons say it's up to their company, their brand to tell its own story. >> the most compelling way to differentiate yourself from every other small business out there is the story that you tell. the more you can tell a compelling story, an interesting story, the more people are going to want to do business with you. >> we've been working on it for a while to come up with systems to create fresh content easily as part of our operations. >> reporter: the gordons have revamped the company's website to answer frequently asked questions about hair-styling and coloring and feature before-and-after photos. they're also overhauling the front desk at the store, changing the role of a traditional receptionist, allowing clients to book their own appointments online. >> there's some technology that's very specific to your industry. let's say you're a hair salon or a barber. you should stop taking appointments in a hand-written
appointment book. make that stuff go all online so you can save time and give better service to your customers inside your business. >> if we can answer clients' questions online, which is what they want to do, their own research, anyway, and we can get -- and they can book their appointments online, then we can free our receptionist or our salon manager to help service clients and give them a better experience while they're in the salon. >> every day, what we do here is connect with people one on one. that's our job. that's what this career is. that's what this kind of a business is. >> reporter: and its new strategy is all part of the plan to modernize this 22-year-old salon as it evolves and retells its story. for "nightly business report," i'm sharon epperson. and tomorrow, we're going to introduce you to an entrepreneur who is no longer running her fourth-generation business the old-fashioned way, and it's certainly paying off. >> you know, i think there's a
fine line between relying on the internet, which has certainly changed everything -- >> right. >> it makes a lot of things more convenient. and not giving up that human touch. >> right. >> being able to speak to someone on the phone. >> and that personal feeling. >> particularly in a personal service business like that. >> and a competitive one, too. >> you bet. >> it's all about the hair. >> it's all about the hair. >> that does it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> thanks from me as well. i'm tyler mathisen. we hope to see you back here tomorrow night.
sethi: coming up on "quest," a new kind of hybrid hits the streets... cotter: it is electric -- solar electric -- and it is incredibly fun. sethi: then, can bugs help to feed our growing population? man: insects are one of the most efficient converters of raw materials on the planet. sethi: and a fashion trend is cultivated in a corn field. man #2: if we use land to grow more fibers, we will have less land to grow food. announcer: major funding for "quest" is provided by the national science foundation. sethi: this invention lab