We'll see if it is bullpuckey or not. Earlier I wrote to AMAT about the news and asked for a clarification. No response yet. Jeff
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Subj: AMAT Layoffs in Texas
Date: 7/20/99 8:05:56 AM Pacific Daylight Time
From: JSD
To: Investor_Relations@amat.com
I read the following Businesswire article and it indicates that due to low chip prices AMAT is laying off people in Texas. Is that true? Thank you, Jeff D
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Rising Oil Prices Lift Texas Economy Amid Manufacturing Downturn; Business Services Will Add Most Jobs, Standard & Poor's DRI Projects
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Story Filed: Monday, July 19, 1999 9:58 AM EST
LEXINGTON, Mass., Jul 19, 1999 (BUSINESS WIRE via COMTEX) -- A rebound in oil prices and burgeoning financial, business and consumer service industries are expected help Texas post another strong year for economic growth, although the Asian crisis has dampened the manufacturing sector, according to a report released today by Standard & Poor's DRI, the world's leading provider of economic information, forecasting and consulting services.
Total non-farm payrolls are expected to expand by 2.8% this year, lower than last year's increase of 3.8% but still brisk enough to rank Texas 10th in the nation. The report, however, projects a steady slowing of job growth to about 1.65% over the next couple of years, coinciding with a projected slowing of the national economy.
Financial, business and consumer services will produce most of the new jobs, but those gains will be partly offset by losses in export-dependent manufacturing jobs, according to the Standard & Poor's DRI forecast. At the same time, higher oil prices following OPEC's March agreement on production cutbacks could help strengthen the oil, gas and petrochemicals industries - a traditional mainstay of the Texas economy that has been ailing in the past year.
"With a well-educated workforce, relatively low costs and business-friendly government, Texas has consistently outperformed the nation in employment growth, with high-technology and service industries playing an increasingly important role," said Sara Johnson, chief regional economist for Standard & Poor's DRI and editor of its U.S. Markets Review. "Threats to the state's economic growth stem primarily from excess supply in the global oil and semiconductor markets."
Standard & Poor's DRI expects oil drilling and exploration activity to recover slowly later this year - if OPEC members keep to their quota agreements. Following the March OPEC meeting, oil prices rose to almost $19 per barrel from a low of $11. Prices have since fallen to $16, and are expected to stabilize, but uncertainty in the oil market could delay drilling expansion, and Texas could experience a 5% loss in oil industry jobs this year.
Low prices continue to plague the semiconductor markets, leading to layoff announcements at Applied Materials and Texas Instruments and delays in expansion plans by San Antonio-based VLSI Technology. At the same time, PC-makers like Dell Computer have benefited from lower component costs. Chip prices are expected to level off rather than rise in the short term, but as Asia's economies recover employment growth may stabilize in the Texas semiconductor industry.
Total manufacturing employment will fall by 0.9% this year--reducing last year's 2.1% gain--because of defense cutbacks and weaker Asian demand for industrial machinery and electronic equipment. For example, defense contractor Raytheon is reducing its Texas work force by 5,300. The report forecasts a loss of 1.2% in manufacturing employment in 2000, then a few years of losses of less than1%.
Texas will continue its heavy trade with Mexico, which since the passage of NAFTA in 1995 has increased by 18% a year. Mexico's fiscal condition is stable and the bulk of its trade is northward, so Mexico should not feel the effects of recessions in Brazil and Argentina.
In other projections, Standard & Poor's DRI forecasts real estate markets will soften in Dallas and Houston, where a fast building pace has led to an oversupply of apartments and office space. Steady population growth of 1.4% annually for the next five years will rank Texas sixth in the nation in that category. But housing prices will remain relatively low - eighth lowest among the states -- with the median new home price rising from $112,000 last year to $149,000 in 2003.
The Texas forecast is part of the Standard & Poor's DRI U.S. Markets Review, which provides detailed economic analyses and forecasts for all 50 states and the District of Columbia. The report includes information and quarterly projections for the next five years, covering statistics on employment, population, labor markets, income, prices, wages and other economic activity. Those interested in the U.S. Markets Review or any other Standard & Poor's DRI services should call the Client Resource Center at 1-800-933-3374.
Standard & Poor's DRI is headquartered in Lexington, Mass., and maintains offices in New York, San Francisco, Chicago, Atlanta and Washington, D.C., and outside the United States in Canada, Belgium, France, Germany, Italy, and the United Kingdom. The company also maintains strategic partnerships with firms throughout Asia and Latin America. Standard & Poor's DRI is a unit of Standard & Poor's Financial Information Services Group, which provides integrated insight and customized information to corporations and global financial markets.
Copyright (C) 1999 Business Wire. All rights reserved.
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