WCA May 2008

New orders remained in negative territory but improved to negative 10.9 from negative 15.2. The release, a week earlier, of official data from several sources had already cast the US economy in a bleak light. The Labor Department reported that prices of imported goods grew in January at the highest annual rate in a quarter-century. The Empire State Manufacturing survey, a measure of business conditions in New York State, reported manufacturing activity has fallen to its lowest level in five years. And a national survey disclosed that American consumers feel more pessimistic about the country’s economy than any time since the recession era of the early 1990s. The Reuters/University of Michigan survey – a closely monitored measure of consumer confidence – fell to 69.6 in February, the lowest reading since February 1992. It had stood at 78.4 in January. And nerves were not soothed by a separate Labor Department report that employers cut 17,000 jobs in January; nor by rising inflation, which is forcing free-spending Americans to cut down on personal outlays. The sole good news for the economy came from the Federal Reserve, which reported that industrial production grew 0.1% in January. Activity at electric and natural gas utilities offset a decline in the automotive sector. Capacity utilisation, which measures the proportion of plants in use, held steady in January at 81.5%. In its first-ever condemnation of Chinese commercial practices, the World Trade Organisation on 13 th February ruled that China was breaking trade rules by taxing imports of auto parts at the same rate as foreign-made finished cars. A copy of the WTO ruling, obtained in advance by the Associated Press, indicated that the overseer of the rules of trade among nations had decided against China on nearly every point raised by the US, Canada, and the 27-nation European Union. The three-member WTO panel found that Chinese measures ‘accord imported auto parts less favourable treatment than like domestic auto parts’ or ‘subject imported auto parts to an internal charge in excess of that applied to like domestic auto parts.’ Beijing was told: “The dispute settlement body requests China to bring these inconsistent measures . . . into conformity with its obligations.” The three complainants had argued that the tariff was discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, they said, car-part companies were induced to shift production to China, taking jobs away from Americans, Canadians, and Europeans. China claims that its actions are fully consistent with WTO rules and do not discriminate against foreign auto parts. It holds that the disputed tariffs are intended only to curb the importation of finished cars into the country. Automotive The WTO rules against China on car-part import taxes

industrial giants for the world’s raw materials. And the Chinalco-Alcoa partnership attests to the readiness of Chinese and American interests to act together in matters of compelling common interest. Pittsburgh-based Alcoa said it is contributing $1.2 billion to the Rio Tinto investment. Alain Belda, Alcoa’s chairman and CEO, described the partnership with Chinalco as one that would ‘allow [Alcoa] to mutually benefit from developments in the sector.’ Mr Belda said in a statement to the press: “We have long believed that Rio Tinto has a world-class portfolio of assets and is very well positioned to prosper in the current mining cycle.” In brief . . . A power outage that plunged large parts of Florida ❖ ❖ into the dark on 26 th February was caused primarily by human error, the state’s largest electric company said. A preliminary report issued by Florida Power & Light blamed a field engineer for the failure which affected more than a million users. The engineer was investigating a malfunctioning switch at one of the power company’s substations in west Miami when he disabled two levels of protection for the system, officials said. Normally, the protection system would have contained the consequences of the short circuit but, because both levels of protection had been disabled, the problem cascaded to other parts of the system. In total, 26 of the company’s 435 transmission lines and 38 of its 600 substations were affected. A full investigation is ongoing. Citing the applicant’s unreadiness, the US Nuclear ❖ ❖ Regulatory Commission said on 13 th February that hearings on the first application in 30 years for an operating license for a nuclear reactor have been delayed indefinitely. NRG Energy (Princeton, New Jersey) had applied in September 2007 for permission to build and operate two General Electric-designed reactors adjacent to the South Texas Project, southwest of Houston. Similar plants are already in operation in Japan. But the commission, after giving opponents to the NRG proposal more time to raise any objections, concluded that the application is not complete enough to proceed, a commission spokesman said. High import costs, weak manufacturing, and constrained consumers make for a depressing outlook US mid-Atlantic factory production in February dropped to its lowest level since the last recession, while an index of future economic activity points to even tougher times ahead. In a reading that was worse than even the most pessimistic Wall Street forecast, the Philadelphia Federal Reserve on 22 nd February published a business activity index of negative 24.0. This was the lowest since February 2001, and down from an already weak negative 20.9 in January. Readings below zero represent contraction in the region’s industrial sector, which many believe could be in recession. The economy

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Wire & Cable ASIA – May/June 2008