TPT July 2008

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From the AmericaS
July 2008 94 ›
Cleveland, Ohio-based company said 5 May. Its investment in the
30 per cent-owned Amapa iron ore mine in Brazil cut income by $6.9
million, Cleveland Cliffs said. Increased spending on infrastructure
projects in regions including the Middle East has caused a surge in
prices for the raw materials of steel production. Cleveland-Cliffs said
it expects to sell ore for $78 per ton this year in the US, 18 per cent
more than in 2007.
› President Hugo Chávez of Venezuela has signed a decree
formalizing the nationalization of Venezuela’s largest steel maker
Ternium Sidor, with the intention of transforming it into a socialist
enterprise. Mr Chávez had complained that the Argentine-controlled
company has not put a high enough priority on supplying the home
market. On a 12 May visit to a Sidor plant, he told workers that
his government plans to reduce Sidor’s exports and increase steel
supplies for domestic consumption. Sidor was previously controlled
by Luxembourg-based Ternium SA, whose main operations are in
Mexico, Venezuela, and Argentina. The Venezuelan government
was reported planning to compensate Ternium for the takeover
before 30 June.
Automotive
Rising gasoline prices and falling truck sales
nip Ford’s recovery in the bud
Less than a month after reporting a surprise first-quarter profit,
Ford Motor Co on 22 May said that it would drastically scale back
production and step up its cost-cutting efforts in response to a sharp
drop in sales of pickups and sport utility vehicles (SUV’s). Ford
executives also retreated from their pledge of delivering a full-year
profit in fiscal 2009.
Ford now forecasts industry-wide demand for cars and light trucks
of only 14.7 million to 15.1 million vehicles – the lowest point in
more than a decade. The revision downward reflects the toll that
high gasoline prices and weak economic conditions have taken on
auto sales in the US.
The slide in pickup sales – tied closely to housing starts and
construction activity – is particularly jarring for Ford and its domestic
rivals General Motors and Chrysler, which all rely on that sector for
much of their profits. In 2007, pickups accounted for about 14 per
cent of the overall US market; they now represent 9 per cent.
Ford will cut its overall North American production by 15 per cent in
the current quarter from year-ago levels, as well as by 15 to 20 per
cent in the third quarter and 2 to 8 per cent in the fourth quarter.
In light of this forced retrenchment, Ford’s beating Wall Street
expectations with a first-quarter profit of $100 million rings hollow.
But it was a creditable performance, as surging sales in South
America and Europe helped offset a loss in the company’s core
North American division. Analysts attributed the results, which
marked the Ford’s first profitable quarter since the second quarter
of last year, at least partly to the restructuring.
First-quarter revenue was $39 billion, Ford said, down from $43
billion in the corresponding period a year earlier. But ongoing cost-