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Times are Ford tough

National | The service economy and Ford take a hit, while AOL Time Warner and FERC centralize power

Issue: "Interview with Larry King," July 28, 2001

Ford falls
More woes for Ford Motor Company: The automaker has announced a voluntary recall of 1.4 million 2001-model cars and trucks because their seat belts may not buckle properly. No deaths have been reported from the problem, according to Ford spokesman Mike Vaughn, but the company is aware of two minor injuries. The Ford Crown Victoria, Mercury Grand Marquis, and Lincoln Town Car are among the vehicles included in the recall. Also affected: The company's flagship F-series trucks, as well as its full-size SUVs Excursion, Expedition, and Lincoln Navigator. The recall comes as Ford picks up the pieces from last year's Firestone tire debacle. Already facing further regulatory scrutiny, the carmaker recently plummeted to last place in a J.D. Power & Associates initial quality survey for 2000-model vehicles. Service sector slide
Job cuts spread last month as corporate strategists further tightened their belts in an effort to stave off declining profits. The unemployment rate rose a tenth of a percent to 4.5 percent, according to a Commerce Department report released last week, while layoff announcements bled over from the manufacturing sector into service industries. It is the early whiff of a service sector slump that worries analysts. Factories slashed 119,000 jobs in June-no surprise, given manufacturing's long-term downsizing-but service firms also cut 19,000 positions, only the second such drop since the mid-1990s. Meanwhile, an index that measures the number of firms hiring versus those laying off workers dipped below the halfway mark in June. Until March, the index hovered above 50 percent, meaning that more than half of U.S. companies were adding instead of decreasing manpower. But last month, firers outpaced hirers, and the index fell to 44.6 percent. Media monolith
The AOL Time Warner behemoth is set to gobble up another pair of media outlets. In its first European acquisition, the company's Time, Inc., division is nearing a deal to purchase IPC Media, a United Kingdom-based magazine publisher, according to the Financial Times. With a 25 percent market share, Time, Inc., is already the largest magazine publisher in the United States. The $1.5 billion IPC buyout would add more than 100 publications to the company's roster, including popular newsstand monthlies such as Marie Claire and Family Circle, and dozens of niche publications like Cycling Weekly and Country Life. In a separate mega-deal, AOL-along with CBS and Sportsline.com-will assume control of the NFL Internet Network. AOL wrested control of the Web-based venue from ABC/Disney for the sum of $110 million over five years, making it the biggest online sports deal to date. Regulating deregulation
The Federal Energy Regulatory Commission (FERC) on July 11 ordered the establishment of two regional authorities to assume control of the electricity transmission grid for the eastern United States. With deregulation of the nation's electricity industry underway, the agency had been seeking a way to ensure equitable access and proper maintenance of transmission lines, while ensuring a fair playing field for companies competing to sell energy. More centralized control of the nation's transmission lines would enable energy firms to compete in territories where locally based companies had long enjoyed power monopolies. Until now, the idea of centralization had been voluntary. But federal regulators, including new Bush appointees to FERC Patrick H. Wood III and Nora Brownell, ordered mediators to negotiate the creation of the two eastern authorities, and to submit a report in two months. The move led some, including FERC commissioner Linda Breathitt, to question how a voluntary concept had become "almost a mandate." The move toward centralized control was a victory for companies like Enron Energy Systems, Inc. Based in Houston, Enron sells electricity in other regions of the country, including energy-starved California. But while the firm may have won the transmission line battle, California's two public university systems scored a victory of their own. The school systems last week reached a tentative settlement with Enron to buy cheap power, ending a federal lawsuit that accused the company of attempting to sell electricity at exorbitant rates.

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