EoW January 2008

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Taken by itself, the SoCal manufacturing base would rank third among states, after California as a whole and Texas. According to the Los Angeles County Economic Development Corp, the 808,000 factory jobs in Southern California account for just over 11% of total employment in the region. Los Angeles County itself is the nation’s largest manufacturing centre, and its 462,300 jobs in the sector top the Chicago-area total by more than 72,000. These manufacturers are primarily small businesses. More than two-thirds of all manufacturing jobs in Los Angeles County are at companies with fewer than 250 employees.

California has suffered from the nationwide attrition in manufacturing in recent years, having lost a net 464,000 factory jobs since 1990. Almost 350,000 of these losses were in Southern California, according to the California Economic Forecast, a private economic research firm based in Santa Barbara.

Automotive

General Motors hits a massive speed-bump along the road to recovery

After three straight quarters of profit- ability, the Detroit auto giant General Motors Corp on 7 th November posted a stunning third-quarter 2007 loss of $39 billion. By way of comparison, its year-earlier loss was $147 million. The results were all the more startling for their emergence from a stream of good news for GM last year. Not only had the company taken back its position as the world’s biggest car maker from Toyota Motor Corp, of Japan; it had also concluded a landmark labour deal with the United Auto Workers that would greatly ease a crushing burden of responsibility for long-term health care for retirees. Almost all of the staggering loss – some $38.6 billion – was attributed by GM to the loss of deferred tax assets in the US, Canada, and Germany. To qualify for deferred tax assets, a company must be reasonably confident it will have taxable income. GM could not give that assurance, its confidence having been shaken by slow earnings growth in its core North American market and in its lending unit. Overall, the company sold 4% more cars and trucks in the third quarter, raising its automotive revenue to $43.1 billion from $39.6 billion in second-quarter 2007. GM linked the rise to ‘exceptionally strong’ demand in emerging markets and improving developed-market demand. GM’s adjusted net income in the Asia Pacific region rose to $138 million in the quarter from $57 million, on strong export growth from GM Daewoo, continued strong sales and profitability in China, and improved earnings in India and Australia. Even after the third-quarter results were posted, not all industry servers soured on General Motors.

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EuroWire – January 2008