Texas A&M announced this week that it has partnered with IBM on a long-term initiative to support “$1 billion-plus in research capability over the next several years,” according to A&M Chancellor John Sharp. The Texas Tribune reports IBM will provide the university with advanced supercomputing systems that vastly exceed the capability of the school’s current equipment. Also, about thirty of the company’s researchers will move to College Station and work closely with A&M professors to “make strides in the areas of food sustainability, tracking the spread of disease, the development of new materials and energy resource management.”
The Bottom Line: The updated technology promises to make an immediate difference in A&M’s data-crunching research. In a trial run, the new high-performance computing systems took seventeen minutes to solve a problem that took the university’s existing equipment several weeks to complete.
Whence the Beef?
Texas ranchers, meatpackers, and others in the livestock industry are upset about new federal rules requiring beef and other meat products to be labeled with the countries where each animal was born, raised, and slaughtered. The U.S. Department of Agriculture tightened the regulation last year in an effort to provide consumers with more transparency about where their food comes from, Bloomberg News reports. Industry trade groups—which contend the rule change creates more work, cuts into profits, and harms relationships with trade partners in Mexico and Canada—have been lobbying legislators to scale back the restrictions in this year’s Farm Bill.
However, the National Cattlemen’s Beef Association and National Chicken Council announced this week that their negotiations have fallen through, vowing to “actively oppose final passage of the Farm Bill … if these issues are not addressed,’’ according to Bloomberg.
The Bottom Line: If the regulations stand, they may cost the U.S. livestock industry more than $190 million, based on government projections. Livestock producers in Mexico and Canada are also opposed to country-of-origin labeling because they stand to lose business from buyers who would rather not take on the extra cost of separating out their animals by birthplace. The Canadian government has threatened to impose high tariffs on U.S. exports in retaliation to the policy change.
The Oilmen and the Sea
Kinder Morgan Energy Partners is getting closer to becoming a major supplier of Texas oil on the West Coast, Businessweek reported this week. The Houston-based pipeline operator is on the verge of buying a pair of companies that own five crude oil tankers (plus another four under construction), which would give Kinder Morgan the resources to launch a major shipping operation from the Gulf of Mexico to California by way of the Panama Canal.
A federal law requiring domestic oil to be transported only on American-owned vessels has increased the cost of shipping from one U.S. port to another, causing West Coast refiners to import cheaper oil from Saudi Arabia and other Middle Eastern countries. But a number of factors—including declining oil production in California, a surplus of crude in the Gulf, and a growing fleet of American ships—are helping Texas producers become more competitive from a price standpoint.
The Bottom Line: High domestic shipping costs have led many companies to transport oil via pipeline or by rail—but there are no pipelines connecting California to the Texas coast, and it’s been almost two years since the last West Coast-bound crude shipment set sail from the Gulf, according to Businessweek.
Winner of the Week: D.R. Horton
Fort Worth homebuilder D.R. Horton reported a promising start to its fiscal year this week, notching a four percent increase in first-quarter sales and a net income of $123 million, its highest in eight years. The Wall Street Journal reports the company had considered offering discounts and incentives to entice prospective buyers during its spring sales push, but “sales were strong enough to allow it to hold prices steady and raise them in some markets.” D.R. Horton’s average home price last quarter ($275,600) is already ten percent higher than it was in the same period last year.
Loser of the Week: Michaels
In the wake of the recent digital heists at Target and Neiman Marcus, credit card hackers have apparently set their sights on the crafting world. Michaels Companies Inc. told customers this week that its system may have been compromised in a security breach, potentially exposing the payment information of thousands of shoppers, Reuters reports. The Irving-based retailer alerted the FBI after noticing “an increase in fraud involving cards of customers who had shopped at its stores”—but investigators have not yet determined whether a data breach actually occurred or how many card numbers might have been exposed.
Michaels, which is preparing for an IPO this year, dealt with a similar incident in 2011 when hackers accessed nearly 100,000 customers’ credit card numbers.