Ground Control to Major Thom

From LATimes:
Long Beach rocket launch venture files for bankruptcy

Sea Launch fires satellites into space from a floating platform at sea and a land facility in Kazakhstan. Its owners include Boeing as well as Russian, Norwegian and Ukrainian partners.
June 24, 2009

Sea Launch Co., a Long Beach-based rocket venture that is 40% owned by aerospace giant Boeing Co., has filed for Bankruptcy Court protection, citing recurring losses from operations.

The unusual company, which includes Russian, Norwegian and Ukrainian partners, said lower demand for lifting commercial satellites into space and a recent inability to secure financing to pay a $52-million arbitration ruling against it led to the Chapter 11 filing.

The venture, which launches rockets at sea from a floating platform, said in a statement that it "intends to maintain all normal business operations."

"Subject to court approval, Sea Launch will initially use its cash balance to meet operational requirements during the reorganization process," it said. It has about 130 employees based in Long Beach.

In the filing, Sea Launch listed assets of up to $500 million and liabilities of more than $1 billion.

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Boeing is not having a good month. California, a bad decade.

759%!

Seven hundred and fifty nine percent. It doesn't quite roll of the tongue but that's how much California Bank & Trust has in outstanding commercial loans relative to their net worth. Details in this LATimes report.

As commercial loans go bad, it will be particularly hard on regional banks, said Joe Morford, a San Francisco-based analyst for RBC Capital Markets, because their main customers are the small and medium-size businesses whose ranks include many developers.

"They exist for the small-business customer, the real estate developer and the entrepreneur," Morford said, a role that makes their health crucial for the greater economy. Morford has warned investors to be cautious about all three of the biggest L.A. County-based banks: East West, City National, and Cathay General Bancorp of Los Angeles.

Morford said in a report last week that commercial real estate and business lending problems are worrisome at Zions Bancorp, a Salt Lake City lender that is the parent of California Bank & Trust and operates in 10 Western states; and Umpqua Holdings Corp., an Oregon bank that operates from Napa, Calif., to Bellevue, Wash.

Paintball season Opens!

LATimes:

The 800,000-square-foot warehouse in Rialto has all the proper pedigrees: easy access to the 10, 215 and 60 freeways, state-of-the-art fire control, secured truck court, spacious parking. It's got the kind of neighbors -- Unilever, FedEx, Home Depot, Energizer -- that show it's in the sweet spot of the nationwide cargo distribution system.

The only thing it doesn't have is a tenant.

Update:

A Lotta Lots

Seems there's a bubble in auto dealerships according to CoStar

According to the National Automobile Dealers Association (NADA), approximately 900 dealerships closed and 200 dealerships opened in 2008, for a net loss of 700 dealerships, leaving the country with approximately 20,000 franchised auto dealers. According to Detroit-based research and advisory firm, Urban Science, 2008's decline in auto dealership count is the largest the firm has recorded since it started collecting data in 1991. For 2009, the NADA forecasts a net loss of 900 additional dealerships.

I'll take the over on that 900.

Considering the NADA's estimate that 900 dealerships could close in 2009, this translates into another 13 million to 16 million square feet of buildings and 3,600 to 4,500 acres of land becoming vacant.

Breuer added that the industry is over-saturated with domestic brands (approximately 70% of the 20,000 dealerships are domestic brands), so even if the "Big Three" pull through, there will inevitably be a high level domestic dealership closures. At most risk are dealerships selling only one brand of domestic cars. Of dealership closures last year, 66% were single-brand, and according to Urban Science, about 80% were domestic-brand.

The municipal sales tax revenue declines for some local governments is going to definitely trigger defaults.

Aloha No Moah

No, this is not the absolute end and despite the picture no bottom is in sight.
Hawaii tourism marketers regrouping

Six months ago when Hawaii's major tourism marketers gathered the outlook was bleak; however, now most of the performance graphs for the state's major visitor source markets look like red lightning bolts that have hit ground and begun to burrow deeper.

Hawaii hotel room rates tumble

The statewide average daily room rate fell 8.2 percent to $196.38, the steepest monthly decline in room rates since January 1993, according to Hospitality Advisors LLC. The statewide hotel occupancy rate, meanwhile, dropped to 66 percent in January, the lowest rate for the month since 2002, when Hawaii was recovering from the Sept. 11, 2001, attacks.

Bears repeating: "...markets look like red lightning bolts that have hit ground and begun to burrow deeper."

Wal*mart Requiem

In addition to being downright evil Wal*mart is in fer a whoopin' because its business model broke this year. Cheap transportation and municipal "assistance" for but two legs on their stool are gone, not wobbly, gone. Another leg of their stool, how about cheap goods from China? Oooops. How's that workin' fer ya Ghost of Sam? I can see it in their pricing structure of different goods segments. DVDs cost 4¢-10¢ to manufacture.

Rights/distribution for places like Wal*mart are a buck or two or three maybe. These have room for using price points to draw and they are. Bins in the aisle full of second rate movies $4 and $5 each. But, slide on over to spark plugs or light bulbs and there is no margin left to cut. Those are little items. Last year big mold blown plastic toys (kiddie teahouses or forts) were inexpensive. This year, let's see; Chinese wage inflation, oil product materials input, transportation, handling. All saw monster price inflation. Christmas this year may not be an orange and new sneakers but it sure ain't gonna be like 2002 either.

Two final points on the evil octopuses' tentacles getting chopped off. They bought a whole lotta CRE for themselves and as anchor (them) adjacent investment in the boom years. Those two don't look so hot going forward. Lastly, is the most important but least quantifiable. Their business model generally relies on externalizing costs and internalizing control. For decades they've been clearcutting and strip mining supplier expertise for uncompensated export to "other" unnamed countries with fewer restrictions on things like human rights and pollution controls. American businesses are wising up to this transfer of expertise and its true costs.