Labor Costs

People are still eating Hostess Twinkies and Wonder bread, but the problem for Interstate Bakeries is that they are eating less of them. Interstate Bakeries Corp., the nation's largest wholesale baker, said yesterday that it had filed for bankruptcy protection. Many consumers seem to have lost their taste for the company's bread and pastries, many of which have been a staple for more than 70 years. But high expenses were also a factor. Interstate said it had hired a corporate turnaround specialist, Tony Alvarez II, of Alvarez & Marsal - a New York-based consulting firm that has also assisted HealthSouth Corp.

WASHINGTON - The productivity of U.S. workers grew at a 2.9 percent annual rate from April through June, a pace that might be solid enough for companies to limit hiring, the Labor Department reported yesterday. Labor costs accelerated. The second-quarter increase followed a 3.7 percent rate of growth in the first quarter and was the slowest in almost two years, the department said. Productivity was higher than the median forecast of 2 percent in a Bloomberg News survey of 61 economists, and strong by historical standards.

WASHINGTON - U.S. worker productivity grew at a 3.8 percent annual rate from January through March, faster than the final quarter of 2003, as investment in equipment helped employers become more efficient. Labor costs rose. The government's measure of the work done by one employee in an hour showed a 2.5 percent annual rate of increase in October-December, the Labor Department said. The first-quarter rate also was higher than the 3.5 percent initially reported in May. Gains in productivity, aided by higher spending on equipment and software, may help companies hold down costs and safeguard profits, economists said.

WASHINGTON - Fresh signs of a bustling U.S. economy emerged yesterday, spurring expectations of a rise in interest rates, with productivity up solidly and new unemployment-benefit claimants at a 3 1/2 -year low. In the first quarter of this year, businesses boosted productivity at a solid, seasonally adjusted annual pace of 3.5 percent, the Labor Department said. Output rose at an annual rate of 4.9 percent, while the number of hours worked climbed 1.3 percent. The resulting productivity gain was in line with private economists' expectations, and it was up from a gain of 2.5 percent in the last quarter of 2003.

As Giant and Safeway grocery workers in the region cast their ballots and overwhelmingly approved a new union contract this week, they may have been voting on more than just their own future: The settlement that played out here, coupled with the aftermath of a harrowing supermarket strike in California, may have reverberating effects for workers around the country. The five-month strike and lockout in Southern California wore on both sides in the Baltimore-Washington area as they worked to reach an accord.

Bethlehem Steel Corp. plants at Sparrows Point in Baltimore County and elsewhere are expected to become some of the lowest-cost producers of American steel under a new labor deal that will significantly reduce Bethlehem's work force. The deal announced yesterday between the United Steelworkers of America and Bethlehem's buyer, International Steel Group Inc., would drastically loosen traditional work-rule restrictions in the plants and tie worker compensation to productivity and profitability.

CHICAGO - United Airlines flight attendants said yesterday that they won't consider contract concessions that parent UAL Corp. wants from unions as part of a plan to recover from record losses. The pilots said they're willing to work with the carrier on the plan. The responses follow a meeting yesterday between John Creighton, chief executive of the world's No. 2 airline, and unions for the flight attendants, pilots and flight dispatchers. UAL had a record loss of $2.1 billion last year as sales fell 17 percent, and expects a loss this year as well.

US Airways' recent exit from Pier D at Baltimore-Washington International Airport is symbolic of the challenges facing Chief Executive Officer David N. Siegel as he tries to bring the nation's seventh-largest airline back from the brink before it runs out of cash. Pier D is where the Arlington, Va.-based carrier launched its MetroJet division in 1998 and made its stand against budget airlines flooding the East Coast with low fares. Hamstrung by higher operating costs than the competition, the Metro- Jet strategy proved to be a money loser as Dallas-based Southwest Airlines and others systematically attacked US Airways where it was most vulnerable.

Bethlehem Steel Corp.'s board of directors has some distinct tasks in mind for the new chairman and chief executive it hired in a surprise move this week. Robert S. "Steve" Miller, a former Chrysler Corp. executive known for turning around troubled companies, will be expected to work with the unions to reduce labor costs; with banks to secure financing for the troubled steel maker; and with government officials to win tighter restrictions on steel imports. Bethlehem officials had reason to hope that the last item might be achieved.

WASHINGTON - U.S. worker productivity posted its sharpest fall since 1993 during the first quarter of the year, while labor costs jumped sharply, raising fresh concerns about the underlying strength of the economy. The Department of Labor, in a revised estimate, said productivity in the nonfarm business sector dropped by 1.2 percent during the first three months of 2001. Earlier, the department had reported only a 0.1 percent drop. Unit labor costs, an indicator of possible inflation, increased by 6.3 percent - the biggest spike since 1990.