Tag Archives: commerce

Business

Emerson sells part of business, says it would consider leaving St. Louis

Leave a comment

FERGUSON — Emerson announced it is selling another piece of its business and that its company headquarters could move from its longtime home in the St. Louis region. 

Emerson said it plans to sell a majority stake in its Climate Technologies business to private equity funds managed by Blackstone, a New York-based investment firm. Climate Technologies will be structured as a joint venture between Emerson and Blackstone.

As part of the transaction, Emerson will sell ownership of its Ferguson campus to the new joint venture, and enter a three-year lease on the headquarters, where about 1,300 employees work. The company would have the option to extend the lease two years.

During that time, CFO Frank Dellaquila said during a call with investors Monday morning, the company will undertake “a comprehensive assessment of potential headquarter locations.” A company spokesperson said Emerson is evaluating potential headquarters “both inside and outside the St. Louis area,” and the decision “will be made based on the best strategic interest of the company.”

People are also reading…

Jason Hall, CEO of Greater St. Louis, said he spoke with Emerson President and CEO Lal Karsanbhai Monday morning, and made the case for Emerson to stay in the region.

“But we compete in a global market for talent and investment,” Hall said in a statement. “All of us in St. Louis must work together with urgency to capitalize proactively on our strengths and roll up our sleeves to address our challenges. Our future depends upon it.”

Karsanbhai called Monday’s announcement a “critical milestone” in the company’s efforts to become a pure-play business fully focused on its automation brands. 

In the past year the company has jettisoned two businesses from the commercial and residential solutions side: InSinkErator, the garbage disposal brand, and Therm-O-Disc, a maker of parts and sensors for temperature control systems.

Karsanbhai led the company’s automation solutions segment before he became chief executive in February of 2021, succeeding longtime CEO David Farr.

Jeff Windau, an industrials analyst with Edward Jones, said he viewed the Climate Technologies sale as a win for investors. It’s a move toward higher growth and profitability, he said, though with a narrower portfolio there may be more volatility in the stock price.

The Climate Technologies business manufactures HVAC and refrigeration compression products. Its brands include Copeland, Vilter, Dixell, White-Rodgers and Sensi. It brought in $5 billion in revenues during the 2022 fiscal year and employs about 18,000 people.

The deal values Climate Technologies at $14 billion. The sale is expected to close in the first half of 2023. Emerson will receive cash proceeds of $9.5 billion and retain a non-controlling ownership interest.

The proceeds from the deal will be used to invest in growth and acquisition. Pressed by an analyst for more detail during Monday’s conference call, Karsanbhai responded: “I know you want me to start listing names of companies. I can’t do that.” But, he added, “Clearly we’re looking for sizeable opportunities in large markets.”

Emerson reported quarterly earnings on Monday. Revenues were $5.4 billion for the quarter that ended on Sept. 30, up from $4.9 billion during the same quarter last year. Net earnings were $740 million, up from $670 million during the same quarter last year.

Taxing question: Missouri’s Legislature is considering a reduction in the state’s income tax rate. David Nicklaus thinks the cut will help the state’s economy, but Jim Gallagher argues that Missouri should first spend money to shore up basic public services.

David Nicklaus
, 

Chris Drury


Read original article here

Business

Centene’s cuts pleased investors, but may be ‘disastrous’ for St. Louis’ office market | Local Business

Leave a comment

Steph Kukuljan
, 

Annika Merrilees

CLAYTON — For decades, managed health care company Centene Corp. focused on scale. Now one of the largest in its industry, Centene is recalibrating for efficiency.

The shift in strategy brought an abrupt end this week to its plans for an East Coast headquarters in North Carolina, stunning local leaders there but pleasing Wall Street. With 90% of its workforce now fully or partly remote, the company has been quietly relinquishing most of its once expansive office footprint in St. Louis and across the country.

The company may not have had a choice: Investors wanted the company to cut costs and improve profit margins. With a new CEO at the helm, the company has been aggressively slimming its real estate portfolio across the country — moves that are likely to improve its bottom line but leave cities, like the St. Louis region, grappling with dozens of vacant office buildings.

People are also reading…

“Making sure that Centene delivers on its promises of margin expansion is something that investors take very seriously,” said Julie Utterback, senior equity analyst at Morningstar Research Services. “It sounds like this management team is taking that very seriously as well, which is appreciated.”

The East Coast campus wasn’t Centene’s only casualty. The company already said it was no longer going to finish its $770 million headquarters expansion in Clayton that would have added nearly 1 million square feet of office space, hundreds of apartments or condos, retail shops, a 1,000-seat civic auditorium and a hotel near South Hanley Road and Forsyth Boulevard.

And Centene has vacated nearly its entire real estate footprint here — approximately 1 million square feet of office space — according to marketing materials shopping those properties for lease or sublease:

• Roughly 300,000 square feet in Chesterfield.

• 180,000 square feet in Des Peres.

• 100,000 square feet in Richmond Heights.

• 100,000 square feet in Creve Coeur.

• More than 60,000 square feet in St. Louis city.

The company confirmed in a statement that it will vacate “several leased locations,” though it did not state which ones. The Centene spokesperson also said it will maintain its headquarters in Clayton, operations center in Ferguson and its Home State Health headquarters in St. Louis — despite a marketing brochure advertising the entire building for sublease.

It’s an about-face to how the company previously operated, gobbling any block of office space in the region that was 75,000 square or feet more. And it comes on the heels of the pandemic that cooled the office market as companies rethought their needs, commercial real estate experts said.

“The Centene effect, combined with the COVID effect, is disastrous for the St. Louis market,” said Kevin McLaughlin of KMA Commercial Real Estate.

And the Centene offices are coming on the market at a time when St. Louis already has a surplus of office space.

“There’s tons of competition you didn’t have three to five years ago,” McLaughlin said.

Centene’s expansive real estate portfolio was a product of its former CEO, Michael Neidorff, who led the initial plans for the East Coast headquarters that was to bring 3,900 jobs to North Carolina.

For years under Neidorff, Centene succeeded through growth. Neidorff expanded the company from a $40 million health plan to a giant in the managed care industry, bringing in $126 billion in revenues last year. Neidorff took a medical leave of absence in February, and Sarah London was named as his replacement in March. Neidorff died in April at the age of 79.

After years of acquisitions, investors have been looking for change. Analysts said the company’s stock price was underperforming, relative to its peers. Last year the company announced a plan to improve margins and shed non-essential assets. After an activist investor stepped in last year, the company agreed to overhaul its board of directors.

During an earnings report in July, Centene said it planned to decrease its domestic leased space by 70%, which it expected would save $200 million in rent each year.

“From my perspective, having two corporate headquarters is not a way to gain efficiency,” Utterback, the Morningstar analyst, said.

The company also announced plans to sell a Spanish hospital business and a company that runs radiology clinics in Slovakia and the Czech Republic.

Investors seem pleased with the moves. After news broke that Centene was scrapping its East Coast headquarters plans, Wall Street reacted with enthusiasm: Centene stock rose 1.6% on Friday, closing at $96.90.

In Clayton, where officials are still dismantling its development agreement with the company, Mayor Michelle Harris said the company’s presence is a real positive for the region.

And its decision to not carry out its East Coast campus brought “some closure for the community” that Centene isn’t going to leave the St. Louis area.

“I’m hoping their employees come to lunch in Clayton,” Harris said.

Read original article here

US

US Commerce Secretary says “there’s no expiration date” on sanctions against Russia

Leave a comment

Ginaa Raimondo, U.S. commerce secretary, during a meeting with business leaders and governors in the Eisenhower Executive Office Building in Washington, D.C., on Wednesday, March 9. (Ting Shen/Bloomberg/Getty Images)

US Commerce Secretary Gina Raimondo said Wednesday that the export controls that have been leveled against Russia by the United States and its allies in response to Vladimir Putin’s invasion of Ukraine have “no expiration date.”

“We’re in it for the long haul and our allies are in it for the long haul,” Raimondo told CNN, adding that the Biden administration is prepared to stick with the measures designed to inflict economic pain on Russia for “as long as it takes.”

“There’s no expiration date,” Raimondo said. “We’re in it to win it and our allies are too.”

The comments, coming from a member of President Joe Biden’s Cabinet, is yet another indication that the administration is bracing for a potentially prolonged and protracted conflict in Europe that has already roiled financial markets and that the White House has assessed would hurt American consumers’ wallets.

“This is going to be messy and probably extremely long term,” Raimondo predicted about the crisis.

Raimondo also warned that any country that does not abide by US restrictions on exporting to Russia would pay a heavy price — including China. She said her administration was prepared, for example, to cut China off from American or European equipment and software that are necessary to make semiconductors.

“We’re going to prosecute any company, wherever they are, in China or elsewhere, who violates the rules,” she said. “So our expectation is that China won’t violate the rules, and if they do, there will be consequences.”

White House Press Secretary Jen Psaki said Wednesday that the administration had observed China “largely [abiding] by the sanctions that have been put in place.”

“I would note, though, that if any country tries to evade or work around our economic measures, they will experience the consequences of those actions,” Psaki said.  

Read original article here

Business

Commerce secretary says U.S. House needs to pass CHIPS Act immediately to ease semiconductor shortage

Leave a comment

US Commerce Secretary Gina Raimondo discusses the impact of the semiconductor chip shortage at UAW Region 1A office in Taylor, Michigan on November 29, 2021.

Jeff Kowalsky | AFP | Getty Images

DETROIT – Commerce Secretary Gina Raimondo on Monday urged the U.S. House to immediately pass legislation that supports American production of semiconductor chips to avoid future supply interruptions and lower the country’s dependence of the parts from China.  

Speaking in the Motor City, Raimondo used an ongoing global shortage of chips that has depleted vehicle inventory levels and caused rolling shutdowns of U.S. auto plants as proof that the country needs to onshore its supply chains for critical components such as semiconductor chips.

“If we want to compete globally, we invest domestically, and specifically in revitalizing the semiconductor industry,” Raimondo said during a speech Monday at the Detroit Economic Club. She noted U.S. chip assembly only represents 12% of the global production, down from 40% in the 1990s.

The U.S. Innovation and Competition Act or USICA passed the Senate with bipartisan support in June but has stalled in the House of Representatives. The Creating Helpful Incentives to Produce Semiconductors for America Act or “CHIPS Act,” which is tucked inside the broader competition bill, includes $52 billion for domestic semiconductor production, incentives to invest in new semiconductor manufacturing facilities in the U.S. and establishes a National Semiconductor Technology Center.

“We need the House to pass the CHIPS Act immediately so we can get to the business of doing this,” Raimondo said.

The chip shortage has caused problems throughout the global automotive industry, but Detroit automakers have been impacted more than others. It’s expected to shave $210 billion in revenue from the automotive industry this year, according to consulting firm AlixPartners.

Automakers such as Ford Motor and General Motors have announced plans to work more closely, even partner, with semiconductor suppliers in an attempt to avoid such shortages in the future.

While many believe the worst of the semiconductor shortage is behind the automotive industry, the Biden administration has pushed for more U.S. production of critical components such as chips for the U.S. automotive industry and other sectors.

Raimondo said increasing the domestic production of chips is critical as the automotive industry starts producing more electric vehicles.

The Biden administration has given the industry a sales target of half of new U.S. vehicles to be EVs by 2030. Raimondo called it an “excellent goal” but the “truth of the matter is that requires a lot of chips.”

She said the average EV has about 2,000 chips, roughly double the average number of chips in a non-electric car.

Overall, Raimondo used the event to urge passing of the semiconductor bill as well as to tout Biden’s Build Back Better Act that’s in the Senate.

Raimondo said she remains “bullish” on the U.S. economy and American manufacturing.

Read original article here

Business

Citadel Outlets in Commerce open early for Black Friday shopping

Leave a comment

COMMERCE, Calif. (KABC) — The Citadel Outlets opened on Thanksgiving for Black Friday shopping, the first time since the start of the pandemic that they opened early for the holiday tradition.

“We are hoping we return to some return normalcy, that we have a big crowd, that people are happy to be back,” said outlets manager David Blagg.

According to Blagg, the outlets did not open early for Black Friday shopping in 2020 – which usually happens on Thanksgiving night.

This year, they opened the gates to the property at 4 p.m. to let shoppers in, but the stores opened at 8 p.m.

Lines were long as shoppers waited for the chance to buy merchandise at discounted prices and thousands of people showed up to the mall.

In light of recent flash mob thefts that have been going on across California, Blagg said they’re taking a different approach with security this year.

“We do have some new security measures that are in place,” said Blagg. “Let’s just say that within a minute to two minutes of an alarm being sounded, needing to close the centers as far as access in or out we are very capable of doing that,” said Blagg.

Copyright © 2021 KABC Television, LLC. All rights reserved.



Read original article here