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Marmon Group UTLX

UTLX Dramatically Scales Back Tank Car Production

(BRK.A), (BRK.B)

The collapse in crude oil prices that has shuttered wells in the United States, and lowered oil train traffic for BNSF Railway, is also impacting the Union Tank Car Company (UTLX).

UTLX has announced that it is cutting its production by 50-percent.

The Berkshire Hathaway-owned company will cut 230 jobs in Houston, Texas, and also plans to lay-off employees at its plant in Alexandria, Louisiana, as well.

UTLX has sent a Worker Adjustment and Retraining Notification letter to the Texas Workforce Commission notifying it that the tank car facility located on Old Beaumont Highway 90 will be the source of the Texas layoffs.

UTLX will still employ 323 people at the Houston facility after the job cuts are completed in June.

Jeremy DeLacerda, UTLX manufacturing general manager, cited the “current market conditions and the industry-wide demand outlook for railroad tank cars,” as the reason for the lay-offs and production cuts.

“When the economy rebounds and greater demand returns, I look forward to increasing our staffing levels accordingly,” DeLacerda added.

Not the First Time

This is not the first time that UTLX has had to dramatically scale back production due to soft demand.

The UTLX manufacturing facility at England Airpark in Alexandria, Louisiana, endured similar lay-offs in 2006.

“You never want to hear news like this, but it’s not a surprise,” notes Jim Clinton, president and CEO of Central Louisiana Economic Development Alliance

“We knew they would have to cut production on some level,” Clinton added. “I’m sure they were hoping it would not be to the extent this apparently is. But the market is what the market is. They’re a good company that’s responding to market conditions.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkadia

Berkadia Buys Cleveland-Based Mortgage-Banking Firm

(BRK.A), (BRK.B)

When people talk about hot real estate markets they usually don’t talk about Cleveland, Ohio, but that may be about to change. At least Berkshire Hathaway seems to think so.

Berkadia Commercial Mortgage, Berkshire Hathaway’s joint venture with Leukadia, has acquired Cleveland-based mortgage-banking firm RiverCore Capital.

RiverCore Capital is headed by managing partner Mark J. Vogel.

Among the company’s major transactions were $84,000,000 in non-recourse bridge financing for the One Cleveland Center Penton Media building, and $92,000,000 in senior debt financing for the Flats East Bank.

“Obviously Cleveland’s an interesting market, and it’s one that doesn’t have a lot of national players,” said Justin Wheeler, chief executive officer at Berkadia.

It does now.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Lubrizol

Lubrizol to Close Latexo Plant in 2017

(BRK.A), (BRK.B)

Lubrizol, a wholly-owned company of Berkshire Hathaway, has decided to close its Latexo, Texas manufacturing facility. The plant was acquired by Lubrizol in December 2014 when it purchased the oilfield chemicals business from Weatherford International PLC.

At the time, the acquisition was valued somewhere in the realm $750-$825 million.

The Latexo facility produces chemical treatments for oil and gas production and produces waters, as well as additives for drilling, work-over and stimulation operations. The facility currently has 40 employees.

Lubrizol anticipates shuttering the Latexo facility in the first quarter of 2017, after it has finished transitioning production to other facilities.

Lubrizol says that everything possible will be done to ensure that the employees are treated with respect and compassion as the transition takes place, and employees affected by the plant closure will be offered severance packages.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Commentary

Commentary: Is a Vote Against Bill Gates’s Berkshire Board Membership Getting Closer?

(BRK.A), (BRK.B)

Having Bill Gates on your board of directors would seem to be a plum thing for any corporation, and for Berkshire Hathaway it’s something they have enjoyed for the last twelve years since he was elected to the board in 2004.

However, according to a report in the Financial Times, UK-based asset management companies Legal & General Investment Management and Aberdeen Asset Management have announced they will vote against board members that have been serving more than fifteen years.

The move is no threat to Bill Gates at this time, but would impact three of Berkshire’s board members that have been serving for more than fifteen years.

Paul Lee, head of corporate governance at Aberdeen, feels that board members “go a bit stale” if they serve for an extended period.

The view that long-term board membership makes a board of directors to compliant and lacking in independence is at the heart of the move to create more turnover. Another issue that often cited is to foster more board diversity, which at most U.S. corporations is overwhelmingly male and white.

Berkshire Hathaway’s thirteen member board has three women, with the most recent one to join being Meryl Witmer, an investment fund manager for Eagle Capital Partners.

So, should you toss Bill Gates off your board after fifteen or twenty years because you have an arbitrary policy on the length of board membership?

Doesn’t make much sense to me.

Corporations should be looking for board members that provides the best advice and oversight. Berkshire’s board will play a key role in the selection and oversight of Warren Buffett’s successor. A deep knowledge and belief in Berkshire Hathaway’s corporate culture is one of the key things they can contribute. They also need to weigh the value of having stability, and in the case of Bill Gates, having a high-profile board member that gets listened to every time he comments, whether it is in the boardroom, or in the press.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Dairy Queen

Dairy Queen Plans Major Northern California Expansion

(BRK.A), (BRK.B)

It seems just about every week now Dairy Queen announces a major expansion. Recently it announced that it would be opening hundreds of new locations in Massachusetts and South Carolina.

Now, the frozen treat and “fan food” purveyor is planning to triple its northern California locations, adding another 200 locations to its existing 98 locations.

Dairy Queen hasn’t been a common sight in the Bay area, with only 12 locations currently open.

In all, Dairy Queen, which has moved from a summer treats business to a year-round food and ice cream business model, plans to add 400 locations in California.

New locations will begin opening in 2017.

For more information read a Mazor’sEdge special report on Dairy Queen.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Energy

Berkshire All-In on Wind Power

(BRK.A), (BRK.B)

Berkshire Hathaway, which is already one of the world-leaders in utility-scale solar and wind power electricity generation, has announced plans for a $3.6 billion, 2,000 megawatt wind farm in Iowa.

The plant, which will feature 1,000 wind turbines, will be owned by MidAmerican Energy Company, a unit of Berkshire Hathaway Energy.

The announcement comes as MidAmerican puts the finishing touches on its just constructed 51 turbine, 119.6 megawatt wind farm located east of the town of Macksburg.

When the Wind XI wind farm is completed, MidAmerican will generate 85 percent of its energy in Iowa from wind.

“We have a dream to deliver 100 percent renewable energy to our customers,” MidAmerican CEO Bill Fehrman said. “For customers, the benefits are clear: clean energy produced right here in Iowa using an abundant natural resource,” Fehrman added. “Unlike coal or natural gas, renewable energy has no fuel costs associated with it. Harnessing the wind is free.”

The Wind XI wind farm will be built utilizing federal 10-year tax incentives, which will enable its construction without the costs being passed on the ratepayers.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
BNSF

New Plastic Resin Packaging Facility to Benefit BNSF

(BRK.A), (BRK.B)

Projected skyrocketing demand for plastic resin has BNSF Railway, resin packaging firm Packwell Inc., and real estate developer Hillwood proposing to build a plastics export packaging facility in North Fort Worth.

The facility will be located at the AllianceTexas development, Hillwood’s18,000-acre master-planned, mixed-use community located in north Fort Worth.

AllianceTexas offers a variety of commercial real estate options, including new industrial, office and retail space, and is anchored by the multi-modal inland port known as the Alliance Global Logistics Hub.

According to the trade association, the American Chemistry Council, export demand for plastic resin will grow dramatically over the next four years, with the demand level of $6.5 billion in 2014 increasing three-fold to $21.5 billion by 2020.

The boom in U.S. resin production is due in part to cheap natural gas available in Texas.

“The advantage of a facility at AllianceTexas is that it offers superior rail connectivity, access to the largest array of ocean steamship lines, and we can deliver the facility to Packwell in time to support the rapidly increasing demand,” notes Hillwood President Mike Berry.

Packwell is already one of the largest resin bagging companies in North America with over 160 thousand square meters of warehouse facilities.

The new facility will allow bulk hopper cars of plastics resins to arrive by BNSF trains from Houston where they will be packaged for shipping. After packing the shipments will again be moved by BNSF to steamship lines that operate between the BNSF Alliance Intermodal terminal and Asia via West Coast ports in Los Angeles, Long Beach and Oakland, California.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Minority Stock Positions Stock Portfolio

BYD Debuts Two New Pure-Electric Cars

(BRK.A), (BRK.B)

When the electricity goes out in your house, you don’t usually look to your car for emergency backup, but two new cars from BYD provide just that.

Chinese battery maker and electric vehicle manufacturer BYD Company Ltd. has added two new pure-electric Sedans to its lineup of EVs, and both cars are equipped to serve as emergency power sources, or even just power for non-emergency setting such as trips or parties.

Currently marketed solely in China, the Qin EV300, will come in four versions with prices ranging from 259,800 to 309,800 Chinese Yuan; and the e5, coming in three versions with prices ranging from 229,800 to 249,800 Chinese Yuan.

According to the company, it based the recent rollouts on a thorough assessment of what EV potential users value the most, and after finding out that range anxiety is still a major factor in purchase decisions, it provided both models with a 300km driving range, although a potential customer, upon testing the Qin EV300, managed to drive 349.5 km on a single charge.

The Qin EV300 is equipped with BYD’s high-efficiency, high-speed permanent magnet synchronous motor, with a maximum power of 160kW and maximum torque of 310Nm, accelerating from 0 to 100 km/h in 7.9 seconds, and features re-generative braking system. The model also features BYD’s signature Insta-Pure Technology, a function that purifies the air in the interior of the vehicle by quickly lowering PM2.5 values.

Emergency Power Supply

Both the Qin EV300 and the e5 are equipped with another of BYD’s signature features: the VtoL function, in which the vehicle serves as a massive mobile electricity supply to power appliances like cookers, refrigerators, power tools and many others, so that users can rely on the vehicle to plan outdoor activities that depend on electricity, or in case of emergencies like power cuts or blackouts.

While BYD has yet to market its cars in the U.S., preferring to focus more on its pure-electric buses in the territory, it has moved into the number one spot worldwide for electric vehicle sales.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares, and today owns roughly 9.1% of the company.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
BH Media

BH Media Group Among Newspapers Outraged By New Browser That Substitutes Advertising

(BRK.A), (BRK.B)

A new browser that substitutes online publishers’ ads with its own ads, thereby denying site owners of revenue, has drawn the ire of a consortium of newspaper publishers, including BH Media Group.

Brendan Eich, one of the founders of Mozilla, is launching Brave, a new Web browser that substitutes its own ads for those of content creators.

The move immediately drew the wrath of newspaper publishers belonging to the Newspaper Association of America, including Newsday, McClatchy Company, The Washington Post, Dow Jones & Company, Gannett Co., Tribune Publishing, The New York Times Co., and Berkshire Hathaway’s BH Media Group.

In a joint letter they accuse Eich of engaging in behavior that takes their creative content and sells advertising in a manner that “everyone else has recognized that it would be blatantly illegal for one company to hijack all the content on the Web for its own benefit.”

They also state, “Your plan to use our content to sell your advertising is indistinguishable from a plan to steal our content to publish on your own website.”

As newspapers struggle with declining print readership, they count on online advertising to continue to keep them viable. Newspapers have invested hundreds of millions in recent years to develop and manage their online platforms.

“We publish some of the most highly valued and widely read sites on the Web. Our sites and mobile applications provide news reporting, photojournalism, video content and feature writing that is researched, reported, edited, and produced at extraordinary cost. Our industry spends more than $5 billion per year on reporting in the United States alone. We distribute that reporting online for free or at highly subsidized rates, in no small part due to revenue from online ads.”

In response, Eich says that the “NAA sent a letter to Brave Software that is filled with false assertions.” And claims that the “NAA has fundamentally misunderstood Brave. Brave is the solution, not the enemy.”

It is unlikely that Eich’s letter will draw any converts, and the whole matter looks headed to court.

The NAA threatened potential legal actions to protect their rights.

“We reserve the right to seek all remedies for this infringement, including but not limited to statutory damages of up to $150,000 per work pursuant to 17 U.S.C. § 504.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy Commentary

Commentary: Is Westar Energy the Next Acquisition for Berkshire Hathaway?

(BRK.A), (BRK.B)

Kansas’s biggest utility, Westar Energy Inc., is looking for a buyer and Berkshire Hathaway Energy is rumored to be among the companies interested in the acquisition.

With a market cap of roughly $7 billion, Westar is in the same price range as NV Energy, which Berkshire acquired in December 2013 for $5.6 billion.

If Berkshire Hathaway Energy proves to be interested, it will reportedly face competing bids from Ameren Corporation, as well as an investor consortium that includes Borealis Infrastructure Management Inc. and the Canada Pension Plan Investment Board.

Based in St. Louis, Missouri, Ameren Corporation was created December 31, 1997 by the merger of Missouri’s Union Electric Company and the neighboring Central Illinois Public Service Company.

As for Berkshire Hathaway Energy, it has already partnered with Westar Energy on Prairie Wind Transmission, LLC, a 108-mile, 345-kilovolt high-capacity electrical transmission line in south-central Kansas that was completed in 2014.

Westar Energy would be a natural fit for both Berkshire Hathaway Energy and for Ameren.

Berkshire Hathaway’s MidAmerican Energy Company currently serves customers in a 10,600 square miles area composed of Iowa, Illinois, South Dakota and Nebraska.

Ameren’s service area in neighboring Missouri also fits well with Westar Energy, which provides power for approximately 687,000 customers in much of east and east-central Kansas.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.