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Wire & Cable ASIA – May/June 2008
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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
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❖
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
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❖
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.
The economy
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.
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%.
Automotive
The WTO rules against China
on car-part import taxes
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.