Texas Business Report: Lockheed’s F-35 Fighter Jets Cost Too Much
The first fleet of Lockheed Martin’s F-35 fighter jets, which are produced in Fort Worth, are roughly $1 billion more expensive than anticipated.
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The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.
Debt-Beset Jets Net Regrets
The first fleet of Lockheed Martin’s F-35 fighter jets will be about $1 billion more expensive than anticipated, Bloomberg reported this week. The price tag for the 63 jets, which are being manufactured at the company’s aeronautics plant in Fort Worth, is increasing due to engineering changes, software development, and flight testing, according to the Defense Department.
The Bottom Line: The F-35 is the Pentagon’s most expensive program and is expected to cost more than $13 billion a year through 2035, according to government auditors.
One Reason to Stay, a Brazilian Reasons to Leave
Seventeen executives from Chevron and Transocean have been barred from leaving Brazil as officials investigate legal claims related to an oil leak off the coast of Rio de Janeiro. Businessweek reported the 3,000-barrel leak occurred in November at a rig owned by Transocean, which also owned the rig that caused the 2010 Gulf of Mexico oil spill. Chevron discovered another leak of less than one barrel at the site last week and shut down its operations there.
Brazilian prosecutors have filed criminal charges against the executives for environmental crimes, including “failure to realize protocols to contain the leak; failure to take steps to kill the well and stop the drilling process; breach of licenses, legal norms and regulation, including altering documents; and failure to meet legal and contractual duties,” according to Reuters.
The Bottom Line: The allegations could lead to serious consequences for the oil producers, including prison sentences of up to 31 years and the revocation of Chevron’s license to drill in Brazilian waters, Reuters reports. Meanwhile, “past Brazilian oil spills by state-run Petrobras, including some larger ones, have never prompted criminal charges.
TxDOT Tallies Truck Traffic’s Toll
Texas Department of Transportation officials say that damage to rural roads in areas with extensive oil and gas operations is costing the state millions of dollars to repair, according to a report this week from StateImpact Texas.
Engineers told reporters that heavy truck traffic through the Barnett Shale in North Texas and the Eagle Ford Shale in South Texas has led to large potholes and eroded asphalt that could take twenty to thirty years to fix. Industry representatives argue that the companies pay more than $7 billion in state and local taxes, which could help pay for repairs.
The Bottom Line: TxDOT estimates that “the average well requires 1,200 loaded trucks to bring it into production,” and that the trucks have about the same impact on roadways as about eight million cars per year, StateImpact reports.
A New York firm is suing Samsung and Blackberry maker Research in Motion for infringing on a patented feature that makes it easier to insert smiley faces, or emoticons, into text messages and emails.
According to the suit, several smartphones made by RIM, which has its U.S. headquarters in Irving, and Samsung, which bases its American operations in Richardson, feature similar menus to streamline the process of creating the virtual smilies. The U.S. Patent and Trademark Office granted the patent to Varia Holdings in 2007, tech blog Ars Technica reported.
The Bottom Line: Samsung was recently on the other end of a smartphone patent dispute, suing Apple “over four new patents, one of which related to emoticons,” PC Magazine reported. Varia brought up that point in its lawsuit as evidence that Samsung “actively monitors PTO filings on technologies related to Samsung products” and thus would have been aware of its 2007 emoticon patent.
Winners of the Week: House Flippers
Speaking at a real estate conference in El Paso this week, Coldwell Banker CEO Jim Gillespie said that house flipping — the practice of buying low-cost homes, fixing them up, and reselling them in a short period of time — is making a comeback.
The investment strategy has been regarded as one factor that drove the collapse of the housing market four years ago, but Gillespie believes it can now be used as a way to boost sales and bring the market back up to pre-bubble levels. “Flipping got us into this trouble. But flipping is a good thing now,” Gillespie told the El Paso Times.
Loser of the Week: United Airlines
United Airlines’ fight to prevent Southwest Airlines from offering international flights out of Hobby Airport is taking a turn for the dramatic.
United, which is lobbying Houston’s City Council to block the proposal, unwittingly sparked an ill-timed spat with Mayor Annise Parker last week when she was delayed on two of the airline’s flights to and from San Francisco. Upon arrival the mayor vented her frustrations on Twitter: “Just landed from spring break trip with girls. 1.5 hours late leaving Houston and 8 hours late coming back from SF. Great merger, United!”
The Houston Chronicle reported that the drama continued Thursday at an industry luncheon sponsored by both airlines: “United weighed in as a platinum level sponsor, distinguishing itself as a top-tier contributor to the event. Southwest was a gold sponsor, one step down. But Southwest caused more of a stir in the lobby with its little red gift bags for attendees,” some of which contained vouchers for free flights.