EoW July 2007

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EuroWire – July 2007 42
Transat lant ic Cable
Sarah A Webster reported in the Detroit Free Press (7th May) that
a Ford casting plant in Windsor, Ontario (Canada), will also be
closed this year. And she said the auto maker will defer moving
production of a new 3.5-litre engine at one of its two Cleveland
engine plants to an engine plant in Lima, Ohio, until next spring.
Mr Hinrichs gave an update on the progress Ford has made
in executing its plan, announced in 2006, to shed 44,000 jobs.
In all, 25,000 hourly United Automobile Workers union members
have left the company under a buyout programme. About
10,000 workers who accepted buyouts have not yet left.
Ohio has borne the brunt of the Ford cuts. A stamping plant
in Maumee, near Toledo, and a transmission plant in Batavia,
near Cincinnati, are both set to close next year. In addition,
Ford has said that by the end of 2008 it will have closed or sold
all facilities that it took back as part of a bailout of Visteon Corp,
the Michigan parts supplier it had spun off. A component plant
in Sandusky, Ohio, is among the operations affected. Ford, which
lost $12.7 billion in 2006 and $282 million in the first quarter of
this year, has suffered shrinking demand for its older models.
The nation’s No 2 auto maker is resting its hopes for a return to
profitability on the economies of the Way Forward and a new
product line.
Presidential hopeful Barack Obama
scolds the US auto industry
The election to decide who succeeds President George W Bush
will not be held until November 2008, and at this early stage
aspirants to the office tend to be long on geniality, short on
specifics. Senator Barack Obama, whose beaming smile has
already made him a favourite of political cartoonists, generally
fits that mould. But on 7th May the first-term Democratic senator
from Illinois surprised almost everyone with a stern call for
reform of the US automotive industry, delivered at a meeting
of the Detroit Economic Club in the auto makers’ home town.
“For years, while foreign competitors were investing in more
fuel-efficient technology for their vehicles, American auto
makers were spending their time investing in bigger, faster
cars,” Mr Obama declared on his first campaign trip to the city.
“Here in Detroit, three giants of American industry are
haemorrhaging jobs and profits as foreign competitors answer
the rising global demand for fuel-efficient cars.”
Not content to criticise the auto makers, the senator
commenced to apportion blame to the government: “The
need to drastically change our energy policy is no longer
a debatable proposition. It is not a question of whether, but how
– not a question of if, but when. For the sake of our security,
our economy, our jobs, and our planet, the age of oil must end in
our time.”
A feature of the Obama plan to help US auto makers help
themselves would provide $3 billion to producers over
10 years for re-tooling their plants to make fuel-efficient cars
and trucks. The plan also calls for raising American fuel economy
standards by 4% each year, an initiative that Mr Obama tied in
with global warming and America’s growing reliance on foreign
oil. Focusing on the cars Americans drive and the fuels they use
could, he said, save 2.5 million barrels of oil per day. “It starts
with our cars, because if we truly hope to end the tyranny of
oil the nation must once again turn to Detroit for another great
transformation,” Obama told the sold-out meeting of business
and political leaders.
Metals
The Swiss mining company Xstrata said on 12th April that it
would sell its Noranda Aluminum business to the American
private equity firm Apollo Management for $1.15 billion.
Noranda has a primary smelter and three rolling mills in
Tennessee, North Carolina, and Arkansas, as well as some
other operations. Xstrata gained control of the Canadian
mining company Falconbridge last year, winning out over
Inco, also of Canada, and the copper miner Phelps Dodge
Corp, of the US. The $18.8 billion deal enabled Xstrata
to diversify into nickel and aluminum and to enter the
North American market. Apollo Management is a limited
partnership founded in 1990 in New York, with investments
of over $16 billion in companies in a range of industries
overseas as well as in the US.
Lundin Mining Corp, which has operations in Europe, said it
has agreed to acquire Rio Narcea Gold Mines, also Canadian,
for US$858 million to take advantage of record nickel prices.
The offer was reported to be at a 3.7% premium to the gold
miner’s closing price on 3rd April. Lundin plans to increase Rio
Narcea’s nickel and copper operation in southern Spain and
might, it said, sell its gold mine in Mauritania. Rio Narcea is
based in Toronto; Lundin in Vancouver, British Columbia.
The economy
International Monetary
Fund predicts energetic
world economy, sluggish US
The slowest US growth in four years in the first quarter has
confirmed the International Monetary Fund’s below-consensus
forecast, a deputy chief at the Fund said on 6th May. “Our 2.2%
estimate for US growth this year was already lower than the
consensus, so the recent data is pretty much in line with our
expectations,” deputy managing director Takatoshi Kato of the
IMF said in an interview with Bloomberg News in Kyoto, Japan.
“We still expect US growth to recover into next year after the
housing market picks up.” On 11th April, in the latest edition
of its World Economic Outlook, the IMF had forecast that
the world economy would grow by 4.9% this year and next
– even as the US experiences its weakest growth in five years.
The 2.2% projection for the US economy in 2007 was down
from the 2.9% increase that was forecast in September 2006
– the revision downward attributed by the IMF to the deepening
housing market downturn.
The US housing market started its decline in 2006 after a
five-year boom, and any turnaround in residential construction
‘is still several quarters away,’ according to the IMF in April.
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