INDUSTRIAL
Strike prompts layoffs at Maine shipyard
Navy shipbuilder Bath Iron Works is laying off an undisclosed number of workers because of a strike that’s in its third week. The workers who were laid off belong to Machinists’ Local S7, not the production workers who are on strike, Machinists Local S6, according to a memo from Dirk Lesko, the company’s president. The memo said the production slowdown is causing work to dry up for other workers in the shipyard. “The first functions impacted by this are surveyors and trade inspectors,” he wrote Tuesday. More than 4,000 production workers went on strike on June 22 after overwhelmingly rejecting the company’s final contract offer. The three-year proposal would have given the workers a 3 percent wage increase in each year, but the dispute focuses more on seniority, subcontractors, and work rules than on pay and benefits. The union met Monday with a federal mediator. The company was also expected to meet with the mediator this week. The company had no comment on negotiations, or the layoffs. Bath Iron Works is one of the Navy’s largest shipbuilders and a major employer in Maine, with 6,800 workers. The company builds Navy destroyers, the workhorse of the fleet. — ASSOCIATED PRESS
HEALTH CARE
Insurers may enjoy brief high note of profitability
Second-quarter profits could prove to be the best ever for health insurance companies as delayed surgeries and doctor visits promise to keep costs in check — for now. If analyst estimates are to be believed, industry bellwether UnitedHealth Group Inc. is poised to show record-high adjusted earnings per share when it reports quarterly results on July 15. Record-breaking profit reports may be in store for Anthem Inc. and Centene Corp. as well. But when Americans resume seeking regular health care services, costs will certainly pick back up for insurers. And while COVID-19 wanes in some places and infections surge in California, Texas, Florida, and Arizona, a recovery in surgical procedures is anyone’s guess. Estimates compiled by Bloomberg suggest third-quarter earnings will drop off from second-quarter highs. Given the uncertain outlook, companies may offer “conservative” forecasts for the rest of the year, RBC analyst Frank Morgan wrote in a note to clients. — BLOOMBERG NEWS
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Peloton in yet another legal skirmish
Peloton Interactive is facing a new threat from a competitor —- this time at the US Patent and Trademark Office. Echelon Fitness Multimedia LLC, which Peloton has accused of offering a cheap knockoff of its fitness bikes, has launched an all-out battle to undermine Peloton’s claims that its service is unique. It’s filed petitions in the past week claiming two Peloton patents at the heart of a lawsuit against Echelon are just rehashed ideas from other people. Peloton markets its high-end exercise bikes to home fitness enthusiasts and has used patents to go after rivals it says are cutting into its business. Peloton has also sued NordicTrack maker Icon Health & Fitness Inc., and in February settled a fight with Flywheel Sports Inc., in which it forced Flywheel to shut down its online cycling classes. Echelon’s invalidity arguments are similar to those raised by Flywheel over related patents. The patent office had said three of the Peloton patents challenged by Flywheel were likely to be found invalid, but the settlement with Flywheel put an end to those reviews before a final decision was reached. — BLOOMBERG NEWS
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TELECOMMUNICATIONS
Following merger, T-Mobile rolling out high-speed service in rural areas
T-Mobile US Inc., taking a first step in its long-promised assault of cable and phone companies’ landline businesses, is launching wireless broadband service to homes in rural areas. For $50 a month, customers in three western Michigan counties can sign up for Internet service with speeds of about 50 megabits per second. Cable providers and rural phone companies may shrug at the limited size of the offering, which builds on a pilot program. But the move makes T-Mobile a new competitor in home broadband. T-Mobile previously took on wireless carriers Verizon Communications Inc. and AT&T Inc. by branding itself the “uncarrier” and eliminating two-year contracts. It also dangled free Netflix service to attract subscribers, putting more pressure on its formerly far-larger rivals. In the span of seven years, T-Mobile has grown from the smallest national carrier to No. 2. Its latest growth spurt was fueled by the $26.5 billion takeover of Sprint Corp. in April. To gain approval, T-Mobile had to agree to several conditions, including the expansion of service to rural and underserved customers. T-Mobile’s broadband offer in Michigan consists of a 4G wireless signal beamed into a home, where a receiver creates an indoor Wi-Fi hot spot. The company says speedier 5G service will follow. — BLOOMBERG NEWS
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Pipeline operator not yet complying with judge’s shutdown order
Energy Transfer LP said it’s not moving to empty its Dakota Access oil pipeline after a judge on Monday ordered the conduit shut while a more robust environmental review is conducted. The Dallas-based company said it’s also accepting requests for space on the pipeline in August. The US District Court for the District of Columbia had ordered it drained by Aug. 5. “We are not shutting in the line,” Energy Transfer spokeswoman Vicki Granado said, noting that the company believes Judge James E. Boasberg “exceeded his authority and does not have the jurisdiction to shut down the pipeline or stop the flow of crude oil.” The Dakota Access crude pipeline drew months of on-the-ground protests four years ago from environmental groups and tribes opposed to the project’s route across Lake Oahe near the Standing Rock Indian Reservation in the Dakotas. “Energy Transfer is playing a very dangerous game,” said Earthjustice lawyer Jan Hasselman, who represents the Standing Rock Sioux Tribe against Dakota Access. “They don’t get to ignore a federal court order just because they disagree with it.” Energy Transfer is asking a US District Court to suspend the decision, and it’s pursuing an appeal. If Energy Transfer opts to bypass those traditional routes and instead simply refuses to shut down the pipeline, the district court could hold the company in contempt. An outright violation of a court order could result in fines or jail time. —BLOOMBERG NEWS
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Bonds behind failed Wirecard at fire-sale prices
Wirecard AG convertible bonds are being sold at a fraction of their original value, unwinding a deal at the heart of the collapsed German payment processor’s brief alliance with SoftBank Group Corp. The securities will be offloaded at 12 percent of their notional worth after an auction that took place Wednesday, according to a notice sent to bidders. Credit Suisse Group AG, the bank handling the sale, received bids exceeding the 900 million euros ($1 billion) of notes on offer, the document shows. The convertible bonds were collateral for complex securities that helped SoftBank offload risk on its Wirecard investment last year. That deal is now being unwound after the company’s collapse triggered a liquidation of the notes’ underlying collateral. — BLOOMBERG NEWS
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