U.S. Steel Tubular Products Inc. in Lone Star, Texas, a unit of U.S. Steel Corp. will stop making certain steel pipe and tube to focus on its main sheet and tubular steel products. The production lines to be closed sometime this quarter make drawn-over-mandrel (DOM) mechanical-grade pipes bought by auto makers, mine operators, fluid power component manufacturers and steel distributors.
DOM mechanical pipes account for less than 3% of the tubular steels, or about 50,000 tons, shipped by U.S. Steel last year. The plan to exit the DOM mechanical pipe markets follows a tough period for the mining industry, which stumbled in late 2008 as housing, automobile and other manufacturers that use metals cut back amid a global recession.
Also, U.S. Steel Tubular Products is idling indefinitely a welded tube plant in Bellville, Texas, due to reduced oilfield customer orders. Bellville produces oil country tubular goods, line pipe and specifically high-strength production tubing.
2009年1月20日星期二
Baoshan, Chinese Steelmakers Gain on Price Increase
Baoshan Iron & Steel Co. paced a rally by Chinese steelmakers in Shanghai trading as increases in product prices spurred optimism demand may recover.
Baoshan Iron, the country’s largest steelmaker, said it increased prices of cold-rolled products by 300 yuan ($44) a metric ton for March delivery, confirming an earlier report by researcher Umetal.com. That’s a gain of 8.7 percent, according to Bloomberg calculations. Hot-rolled coil prices were also raised by a similar amount, or a 7.8 percent boost.
The company’s stock added 1.7 percent to 5.35 yuan at the close, the highest since Dec. 11. The gain was more than twice the benchmark CSI 300 Index’s 0.6 percent rise today.
“The price hike reflects expectations for a pick up in demand after the Spring Festival,” wrote Guotai Junan Securities Co. analysts Cui Jingyi and Jiang Qiu in a note. They have a “neutral” rating on the steel industry.
The festival refers to the Lunar New Year holiday next week.
China’s State Council, or cabinet, banned steelmakers from expanding capacity between Jan. 20 and Dec. 31 this year and said last week it will encourage mergers and acquisitions in the industry as part of measures aimed at bolstering the industry.
China’s biggest mills posted combined losses in the fourth quarter as steel prices fell faster than raw material prices.
Hunan Valin Steel Co., part-owned by ArcelorMittal, climbed 6.8 percent to 5.63 yuan. Wuhan Iron & Steel Co., the fifth- largest Chinese steelmaker, added 3.5 percent to 6.24 yuan.
Baoshan Iron, the country’s largest steelmaker, said it increased prices of cold-rolled products by 300 yuan ($44) a metric ton for March delivery, confirming an earlier report by researcher Umetal.com. That’s a gain of 8.7 percent, according to Bloomberg calculations. Hot-rolled coil prices were also raised by a similar amount, or a 7.8 percent boost.
The company’s stock added 1.7 percent to 5.35 yuan at the close, the highest since Dec. 11. The gain was more than twice the benchmark CSI 300 Index’s 0.6 percent rise today.
“The price hike reflects expectations for a pick up in demand after the Spring Festival,” wrote Guotai Junan Securities Co. analysts Cui Jingyi and Jiang Qiu in a note. They have a “neutral” rating on the steel industry.
The festival refers to the Lunar New Year holiday next week.
China’s State Council, or cabinet, banned steelmakers from expanding capacity between Jan. 20 and Dec. 31 this year and said last week it will encourage mergers and acquisitions in the industry as part of measures aimed at bolstering the industry.
China’s biggest mills posted combined losses in the fourth quarter as steel prices fell faster than raw material prices.
Hunan Valin Steel Co., part-owned by ArcelorMittal, climbed 6.8 percent to 5.63 yuan. Wuhan Iron & Steel Co., the fifth- largest Chinese steelmaker, added 3.5 percent to 6.24 yuan.
U.S. January auto sales pace weakens - exec
DETROIT, Industrywide U.S. auto sales have weakened a bit after being relatively strong in the first half of January, Ford Motor Co's (F.N: Quote, Profile, Research) marketing and sales chief said on Tuesday.
"We did see a strengthening in the first week and a half or two weeks across the brands, but we have seen a little bit of weakening since then," Jim Farley told reporters on the sidelines of the Automotive News World Congress in Detroit.
He said industrywide January sales appear to be tracking about where Ford expected -- an annual rate of about 10 million vehicles.
Ford, the No. 2 U.S.-based automaker by sales volume behind General Motors Corp (GM.N: Quote, Profile, Research), has sought a $9 billion line of credit from the U.S. government as insurance against the economy worsening.
Farley said that of Tuesday, Ford had enough liquidity to fund its product plans.
He said he believes the new Obama administration will put in place some type of program to spur consumer demand, whether with a direct stimulus package or some other strategy.
"We did see a strengthening in the first week and a half or two weeks across the brands, but we have seen a little bit of weakening since then," Jim Farley told reporters on the sidelines of the Automotive News World Congress in Detroit.
He said industrywide January sales appear to be tracking about where Ford expected -- an annual rate of about 10 million vehicles.
Ford, the No. 2 U.S.-based automaker by sales volume behind General Motors Corp (GM.N: Quote, Profile, Research), has sought a $9 billion line of credit from the U.S. government as insurance against the economy worsening.
Farley said that of Tuesday, Ford had enough liquidity to fund its product plans.
He said he believes the new Obama administration will put in place some type of program to spur consumer demand, whether with a direct stimulus package or some other strategy.
2009年1月18日星期日
Government's delay over auto industry loan decision is costing jobs
A credit loan scheme could prove a jobs lifeline at JLR, says Alan Duncan, Conservative Shadow Business Secretary.
On September 8 last year, Gordon Brown and Alistair Darling visited the Jaguar Land Rover factory in Castle Bromwich to launch their new manufacturing strategy. The Government would, they pledged, help British car manufacturers remain competitive by delivering ‘Macroeconomic Stability – allowing businesses to plan for the long-term’.
Since that announcement, the economy has entered a serious recession and UK car production has fallen by at least 25 per cent. Last week, following a 30 per cent drop in sales, Midlands-based Jaguar Land Rover announced that it will cut 450 staff, on top of around 850 jobs lost before Christmas.
Unions say these losses could be “the tip of the iceberg” and the firm’s Chief Executive has warned the situation may not improve “for some time”. Despite the plunging value of the pound, the UK’s trade deficit in motor vehicles has soared by more than 240 per cent since 1996. Even Gordon Brown has said he plans to scrap his own official Jaguar and replace it with an electric car.
As other car manufacturers such as BMW, Nissan, Honda and Aston Martin also lay off staff, it is clear that the UK car industry is in serious trouble.
Every job lost is not only a tragedy for the individual involved, but also represents a further reduction in the UK’s manufacturing capacity which could have serious implications for the future structure of our economy. Jaguar Land Rover, for example, does not just provide 75,000 jobs but is also a centre of engineering excellence in the Midlands, spending around £3billion a year on research and development.
Future economic recovery and growth will depend on retaining the skills and expertise needed to develop and produce a range of innovative new products. If manufacturing skills and expertise are killed off by Labour’s mismanagement of the economy, they could be lost to Britain forever.
In normal times, if a business fails the Government should not be expected to step in and bail it out. Taxpayers’ money must not be used to prop up businesses which have simply been badly run or sell inferior products.
However, today’s unique circumstances call for unique measures. Many good firms are struggling not because of a lack of customers, but because they cannot obtain the finance they need to stay in business, are having their overdraft facilities withdrawn overnight or are facing interest rates they cannot possibly afford.
At Jaguar Land Rover, Chief Executive David Smith says the main reason for recent problems is not a lack of good products to sell or worker expertise but “a lack of bank funding and liquidity” and “an inability to access the credit markets”.
This is exactly why, in December, the Conservatives proposed a National Loans Guarantee Scheme to underwrite loans made by banks to businesses and help get credit flowing through our economy.
Our plan would focus on vital short-term credit lines, overdrafts and trade credit; helping banks resume provision of some of the services on which businesses depend. For firms like Jaguar Land Rover, a large-scale loan guarantee scheme could help provide the credit needed to prevent further job losses. Business groups including the CBI have praised our suggestion, saying the scheme “could make a real difference on the ground”.
Countries around the world have already taken swift action to support their motor vehicle industries. In France, the President has pledged large-scale support for ailing car manufacturers, on top of an emergency package announced before Christmas. In Spain, the Prime Minister has announced millions of euros in aid for the struggling auto industry.
In Sweden, the Government is providing over $3billion in support. In Germany, car manufacturers including Opel have received over €1billion in Government loan guarantees. In Brazil and Japan, tax cuts are planned to stimulate demand for new cars. In Romania, the Prime Minister has confirmed aid for car parts suppliers. In America, major car manufacturers have negotiated billions of dollars in emergency assistance.
In Britain, however, the Government has wasted weeks dithering while companies go to the wall. The Government’s much-vaunted Manufacturing Strategy, launched in Birmingham last year, hardly mentioned the vehicle manufacturing industry.
As the Federation of Small Businesses has noted, some 6,000 British businesses have closed while the Government failed to act. Ministers have bluntly dismissed our loan guarantee proposal as “not worth the paper that it has been press-released on” (Harriet Harman), “nothing but a cruel con” (Stephen Timms) and “an empty promise... [which] is wrong, muddled and would not help the British economy” (Alistair Darling).
This week, Ministers finally bowed to pressure and performed a swift u-turn to adopt a watered-down version of our policy. However, rather than the £50billion of guarantees which our plan proposed, the Government’s version will provide only “up to £11billion” of guarantees. Crucially, the Government’s scheme provides cover only for small and medium firms, and not for bigger businesses.
Larger firms like car manufacturers will not be covered, leaving their employees facing anxious and uncertain futures. Citibank economists have dubbed the Government’s scheme “relatively insignificant” and the CBI says: “The scale of the problem goes well beyond what the government has announced.”
In short, the Government’s answers to the challenges facing the auto industry remain woefully inadequate.
For Jaguar Land Rover in particular, Government help is still not forthcoming. Weeks of talks with Business Secretary Lord Mandelson have failed to reach a conclusion and the firm’s Chief Executive has complained that “The frustrating thing ... is that we have been talking for a couple of months and in the interim we have seen the French take action, the Swedes take action, while clearly the US has taken some major action for GM and Chrysler... We do need access to credit facilities otherwise we will be disadvantaged versus some of our competitors”.
There is no way of knowing how many jobs might have been saved had Ministers acted quickly.
After making such an almighty mess of the economy, Gordon Brown has a duty to everything he can to get credit flowing again and prevent further job losses and bankruptcies. This is not the time for unconditional bailouts or nationalisation. But a large-scale loan guarantee scheme like the one we are proposing could prevent the collapse of good firms which, if destroyed, could not readily set up afresh in the future.
It is not just individual jobs which are at risk but the whole country’s future manufacturing capacity. If he is serious about ensuring a long-term future for our car manufacturing industry, Gordon Brown will stop dithering and adopt radical policies like those which the Conservatives are suggesting as soon as possible
On September 8 last year, Gordon Brown and Alistair Darling visited the Jaguar Land Rover factory in Castle Bromwich to launch their new manufacturing strategy. The Government would, they pledged, help British car manufacturers remain competitive by delivering ‘Macroeconomic Stability – allowing businesses to plan for the long-term’.
Since that announcement, the economy has entered a serious recession and UK car production has fallen by at least 25 per cent. Last week, following a 30 per cent drop in sales, Midlands-based Jaguar Land Rover announced that it will cut 450 staff, on top of around 850 jobs lost before Christmas.
Unions say these losses could be “the tip of the iceberg” and the firm’s Chief Executive has warned the situation may not improve “for some time”. Despite the plunging value of the pound, the UK’s trade deficit in motor vehicles has soared by more than 240 per cent since 1996. Even Gordon Brown has said he plans to scrap his own official Jaguar and replace it with an electric car.
As other car manufacturers such as BMW, Nissan, Honda and Aston Martin also lay off staff, it is clear that the UK car industry is in serious trouble.
Every job lost is not only a tragedy for the individual involved, but also represents a further reduction in the UK’s manufacturing capacity which could have serious implications for the future structure of our economy. Jaguar Land Rover, for example, does not just provide 75,000 jobs but is also a centre of engineering excellence in the Midlands, spending around £3billion a year on research and development.
Future economic recovery and growth will depend on retaining the skills and expertise needed to develop and produce a range of innovative new products. If manufacturing skills and expertise are killed off by Labour’s mismanagement of the economy, they could be lost to Britain forever.
In normal times, if a business fails the Government should not be expected to step in and bail it out. Taxpayers’ money must not be used to prop up businesses which have simply been badly run or sell inferior products.
However, today’s unique circumstances call for unique measures. Many good firms are struggling not because of a lack of customers, but because they cannot obtain the finance they need to stay in business, are having their overdraft facilities withdrawn overnight or are facing interest rates they cannot possibly afford.
At Jaguar Land Rover, Chief Executive David Smith says the main reason for recent problems is not a lack of good products to sell or worker expertise but “a lack of bank funding and liquidity” and “an inability to access the credit markets”.
This is exactly why, in December, the Conservatives proposed a National Loans Guarantee Scheme to underwrite loans made by banks to businesses and help get credit flowing through our economy.
Our plan would focus on vital short-term credit lines, overdrafts and trade credit; helping banks resume provision of some of the services on which businesses depend. For firms like Jaguar Land Rover, a large-scale loan guarantee scheme could help provide the credit needed to prevent further job losses. Business groups including the CBI have praised our suggestion, saying the scheme “could make a real difference on the ground”.
Countries around the world have already taken swift action to support their motor vehicle industries. In France, the President has pledged large-scale support for ailing car manufacturers, on top of an emergency package announced before Christmas. In Spain, the Prime Minister has announced millions of euros in aid for the struggling auto industry.
In Sweden, the Government is providing over $3billion in support. In Germany, car manufacturers including Opel have received over €1billion in Government loan guarantees. In Brazil and Japan, tax cuts are planned to stimulate demand for new cars. In Romania, the Prime Minister has confirmed aid for car parts suppliers. In America, major car manufacturers have negotiated billions of dollars in emergency assistance.
In Britain, however, the Government has wasted weeks dithering while companies go to the wall. The Government’s much-vaunted Manufacturing Strategy, launched in Birmingham last year, hardly mentioned the vehicle manufacturing industry.
As the Federation of Small Businesses has noted, some 6,000 British businesses have closed while the Government failed to act. Ministers have bluntly dismissed our loan guarantee proposal as “not worth the paper that it has been press-released on” (Harriet Harman), “nothing but a cruel con” (Stephen Timms) and “an empty promise... [which] is wrong, muddled and would not help the British economy” (Alistair Darling).
This week, Ministers finally bowed to pressure and performed a swift u-turn to adopt a watered-down version of our policy. However, rather than the £50billion of guarantees which our plan proposed, the Government’s version will provide only “up to £11billion” of guarantees. Crucially, the Government’s scheme provides cover only for small and medium firms, and not for bigger businesses.
Larger firms like car manufacturers will not be covered, leaving their employees facing anxious and uncertain futures. Citibank economists have dubbed the Government’s scheme “relatively insignificant” and the CBI says: “The scale of the problem goes well beyond what the government has announced.”
In short, the Government’s answers to the challenges facing the auto industry remain woefully inadequate.
For Jaguar Land Rover in particular, Government help is still not forthcoming. Weeks of talks with Business Secretary Lord Mandelson have failed to reach a conclusion and the firm’s Chief Executive has complained that “The frustrating thing ... is that we have been talking for a couple of months and in the interim we have seen the French take action, the Swedes take action, while clearly the US has taken some major action for GM and Chrysler... We do need access to credit facilities otherwise we will be disadvantaged versus some of our competitors”.
There is no way of knowing how many jobs might have been saved had Ministers acted quickly.
After making such an almighty mess of the economy, Gordon Brown has a duty to everything he can to get credit flowing again and prevent further job losses and bankruptcies. This is not the time for unconditional bailouts or nationalisation. But a large-scale loan guarantee scheme like the one we are proposing could prevent the collapse of good firms which, if destroyed, could not readily set up afresh in the future.
It is not just individual jobs which are at risk but the whole country’s future manufacturing capacity. If he is serious about ensuring a long-term future for our car manufacturing industry, Gordon Brown will stop dithering and adopt radical policies like those which the Conservatives are suggesting as soon as possible
Stainless steel producers want nickel duty abolished
Concerned that the import duty on ferro nickel has made it dearer by Rs 2,400 a tonne and was reducing the competitiveness of domestic stainless steel industry, the stainless steel producers have pleaded with the Steel Ministry to recommend abolition of the said duty.
In a letter to the Steel Ministry, the Indian Stainless Steel Development Association (ISSDA) pointed out that import duty on ferro alloys was restored earlier this month which included ferro nickel, a key ingredient in making stainless steel, which is not available domestically and hence has to be imported. "Paying 5 per cent import duty for such a product is a great disadvantage. Our competing nations do not pay any such duty. The duty is all the more uncalled for as ferro nickel is only used for steel making and not for any other purpose," ISSDA President N C Mathur told The Indian Express.
So concerned is the ISSDA, that its key office-bearers are meeting the ministry's top brass tomorrow to air their views and seek that the ministry ask Finance Ministry to do away with the said duty. "In view of large imports of stainless steel into India at low price, we will request Steel Ministry to ask Finance Ministry to consider abolishing import duty on ferro nickel items," Mathur said. When contacted Steel Secretary Pramod Kumar Rastogi said "let them come and let us see what they have to say."
Endorsing the sentiments of ISSDA, the Indian Ferro Alloys Producers Association said while the import duty on ferro alloys was welcome, ferro nickel is imported entirely from abroad and hence it should be exempted from customs duty. "We understand that ISSDA have requested Government to reverse the customs duty on ferro nickel to zero. We support ISSDA's request to reverse the duty as nickel is not produced in the country in any form. Since ferro nickel is the basic input for manufacture of stainless steel we request you to kindly recommend to the Finance Ministry to abolish the duty," IFAPA said in a letter to Rastogi.
In a letter to the Steel Ministry, the Indian Stainless Steel Development Association (ISSDA) pointed out that import duty on ferro alloys was restored earlier this month which included ferro nickel, a key ingredient in making stainless steel, which is not available domestically and hence has to be imported. "Paying 5 per cent import duty for such a product is a great disadvantage. Our competing nations do not pay any such duty. The duty is all the more uncalled for as ferro nickel is only used for steel making and not for any other purpose," ISSDA President N C Mathur told The Indian Express.
So concerned is the ISSDA, that its key office-bearers are meeting the ministry's top brass tomorrow to air their views and seek that the ministry ask Finance Ministry to do away with the said duty. "In view of large imports of stainless steel into India at low price, we will request Steel Ministry to ask Finance Ministry to consider abolishing import duty on ferro nickel items," Mathur said. When contacted Steel Secretary Pramod Kumar Rastogi said "let them come and let us see what they have to say."
Endorsing the sentiments of ISSDA, the Indian Ferro Alloys Producers Association said while the import duty on ferro alloys was welcome, ferro nickel is imported entirely from abroad and hence it should be exempted from customs duty. "We understand that ISSDA have requested Government to reverse the customs duty on ferro nickel to zero. We support ISSDA's request to reverse the duty as nickel is not produced in the country in any form. Since ferro nickel is the basic input for manufacture of stainless steel we request you to kindly recommend to the Finance Ministry to abolish the duty," IFAPA said in a letter to Rastogi.
Nippon Steel to ally with Posco on coal deals
Nippon Steel Corp., the world’s second-largest steelmaker, said it will cooperate with Korea’s Posco in talks with suppliers over iron ore and coking coal contract prices for this year.
“Sure, we already have [an] alliance with Posco,” Akio Mimura, chairman of Tokyo-based Nippon Steel told reporters in Seoul on Saturday when asked if the company plans to cooperate with the Korean steelmaker in raw material negotiations with miners. They have not started talks yet, he said without elaborating.
Baosteel Group Corp., China’s biggest steelmaker, started talks to set annual contract prices with Rio Tinto Group last week in Shanghai.
Prices, which have risen the past six years to a record, may fall 30 percent, according to a Bloomberg News survey of 11 analysts last week, trimming profits for London-based Rio and BHP Billiton Ltd. of Melbourne, the world’s No. 2 and 3 iron ore exporters respectively.
Coking coal producers from Australia, Canada and Russia will begin talks with steelmakers next week in Japan to settle contract coking coal prices for the year starting April 1, the Tex Report said on Jan. 16 without citing anyone.
Goldman Sachs JBWere Pty predicts annual contract prices of coal will fall 60 percent and iron ore 30 percent from April. There may be a “wide gap” between prices that steelmakers and miners want for this year’s contracts when talks begin, Lee Ku-taek, outgoing chief executive of Pohang-based Posco, said on last Thursday.
Nippon Steel does not plan to shut down a blast furnace at the moment because of weakening demand, Mimura also said.
“Sure, we already have [an] alliance with Posco,” Akio Mimura, chairman of Tokyo-based Nippon Steel told reporters in Seoul on Saturday when asked if the company plans to cooperate with the Korean steelmaker in raw material negotiations with miners. They have not started talks yet, he said without elaborating.
Baosteel Group Corp., China’s biggest steelmaker, started talks to set annual contract prices with Rio Tinto Group last week in Shanghai.
Prices, which have risen the past six years to a record, may fall 30 percent, according to a Bloomberg News survey of 11 analysts last week, trimming profits for London-based Rio and BHP Billiton Ltd. of Melbourne, the world’s No. 2 and 3 iron ore exporters respectively.
Coking coal producers from Australia, Canada and Russia will begin talks with steelmakers next week in Japan to settle contract coking coal prices for the year starting April 1, the Tex Report said on Jan. 16 without citing anyone.
Goldman Sachs JBWere Pty predicts annual contract prices of coal will fall 60 percent and iron ore 30 percent from April. There may be a “wide gap” between prices that steelmakers and miners want for this year’s contracts when talks begin, Lee Ku-taek, outgoing chief executive of Pohang-based Posco, said on last Thursday.
Nippon Steel does not plan to shut down a blast furnace at the moment because of weakening demand, Mimura also said.
2008 estimate of 7.7 million tonnes.
Crusader said the average grade at Posse was 43.5 per cent and the mineralisation was easily upgradeable to smelter grade, the Perth-based miner said in a statement on Monday.
The miner said it had increased the iron ore resource after remodelling the geology and extending the inferred resource boundary.
The company says there are now 4.83 million tonnes of indicated iron ore at 47.39 per cent average grade and 31.18 million tonnes of inferred deposits at a 42.89 per cent grade.
"The large upgrade to the resource inventory at Posse highlights the potential for a viable mining operation with a much longer life," Crusader chief executive Rob Smakman said in the statement.
"Our focus has always been to confirm sufficient, near-surface, high-grade resources to start mining at Posse.
"A larger resource means we can expand the longer term potential of the project."
Crusader aims to conclude a scoping study and secure the necessary permits to begin mining at the project in central Brazil
The miner said it had increased the iron ore resource after remodelling the geology and extending the inferred resource boundary.
The company says there are now 4.83 million tonnes of indicated iron ore at 47.39 per cent average grade and 31.18 million tonnes of inferred deposits at a 42.89 per cent grade.
"The large upgrade to the resource inventory at Posse highlights the potential for a viable mining operation with a much longer life," Crusader chief executive Rob Smakman said in the statement.
"Our focus has always been to confirm sufficient, near-surface, high-grade resources to start mining at Posse.
"A larger resource means we can expand the longer term potential of the project."
Crusader aims to conclude a scoping study and secure the necessary permits to begin mining at the project in central Brazil
2009年1月16日星期五
Vale, Baosteel End Brazilian Steel-Slab Joint Venture
Cia. Vale do Rio Doce and China’s Baosteel Group Corp. canceled plans to build a Brazilian steel- slab plant after a global economic slowdown reduced demand for metals and environmental rules blocked use of mill sites.
The companies will liquidate Cia. Siderurgica Vitoria, a joint venture set up to build a $3.6 billion mill that would have been able to produce 5 million metric tons of slabs a year, Vale said today in an e-mailed statement. Baosteel, China’s largest steelmaker, owns 80 percent of the CSV venture and Rio De Janeiro-based Vale holds the rest.
Vale sought the partnership to guarantee sales of iron ore from its Brazilian mines, while Baosteel aimed to reduce shipping costs. Transporting steel is cheaper than shipping ore.
“The world economic crisis that has affected the production chain, causing steelmakers all over the world to cut steel production, as well as changes in the outlook for CSV itself, led Baosteel to propose cancellation of the project,” Vale said in the statement.
In December, the government of Espirito Santo state said CSV could not build its plant at a proposed site in Anchieta, on the Atlantic Ocean in the southern part of the state, because of regional pollution limits. Environmental concerns had led Baosteel and Vale to drop previous plans to build the mill in Brazil’s Northeastern state of Maranhao, Vale said.
A call to Baosteel’s office in Rio de Janeiro was not immediately returned.
Vale preferred shares, the company’s most-traded class of stock, rose 17 centavos, or 0.6 percent to 26.57 reais at 4:53 p.m. in Sao Paulo trading.
The companies will liquidate Cia. Siderurgica Vitoria, a joint venture set up to build a $3.6 billion mill that would have been able to produce 5 million metric tons of slabs a year, Vale said today in an e-mailed statement. Baosteel, China’s largest steelmaker, owns 80 percent of the CSV venture and Rio De Janeiro-based Vale holds the rest.
Vale sought the partnership to guarantee sales of iron ore from its Brazilian mines, while Baosteel aimed to reduce shipping costs. Transporting steel is cheaper than shipping ore.
“The world economic crisis that has affected the production chain, causing steelmakers all over the world to cut steel production, as well as changes in the outlook for CSV itself, led Baosteel to propose cancellation of the project,” Vale said in the statement.
In December, the government of Espirito Santo state said CSV could not build its plant at a proposed site in Anchieta, on the Atlantic Ocean in the southern part of the state, because of regional pollution limits. Environmental concerns had led Baosteel and Vale to drop previous plans to build the mill in Brazil’s Northeastern state of Maranhao, Vale said.
A call to Baosteel’s office in Rio de Janeiro was not immediately returned.
Vale preferred shares, the company’s most-traded class of stock, rose 17 centavos, or 0.6 percent to 26.57 reais at 4:53 p.m. in Sao Paulo trading.
SW Chinas Guangxi makes room for new steel mill
A southwestern Chinese region pledged to dismantle 10 million tonnes of outdated iron and steel plant, in speedy compliance with a central government order that should allow it to build a new mill, just as big.
China's state council announced on Wednesday that it would not allow new steel units, even as industry figures revealed a massive overcapacity thanks to aggressive expansion during boom times
The pledge by Guangxi's reform and development commission, reported by the Xinhua news agency on Friday, seems designed to keep plans to build a new, 10-million-tonnes, state-of-the-art steel mill on track.
The new mill, proposed by Wuhan Iron and Steel and local mill Liuzhou Iron and Steel (Liugang), will be built at the port of Fangchenggang.
The Fangchenggang project, and a rival plant of the same size proposed by Baosteel Group in neighboring Guangdong Province, have been delayed for years as the central government seeks to remove some of the country's excess capacity. They received approval in principle in early 2008.
Chinese mills have been quick to heed Beijing's calls to invest in better facilities and move up the value chain, but have been far slower to shut old furnaces as an economic boom kept construction steel demand strong.
In late 2005, Wuhan Iron and Steel Group, the parent of Wuhan Steel (600005.SS), announced that it would buy into Liugang, parent of listed Liuzhou (601003.SS) and that the two would jointly build the 10 million-tonne mill as part of Beijing's drive to build large steel mills along the coast.
An official at the commission told Xinhua that Guangxi would also tear down other polluting plants, including 64,000 tonnes of paper mill and 10,000 tonnes of ethyl alcohol capacity
China's state council announced on Wednesday that it would not allow new steel units, even as industry figures revealed a massive overcapacity thanks to aggressive expansion during boom times
The pledge by Guangxi's reform and development commission, reported by the Xinhua news agency on Friday, seems designed to keep plans to build a new, 10-million-tonnes, state-of-the-art steel mill on track.
The new mill, proposed by Wuhan Iron and Steel and local mill Liuzhou Iron and Steel (Liugang), will be built at the port of Fangchenggang.
The Fangchenggang project, and a rival plant of the same size proposed by Baosteel Group in neighboring Guangdong Province, have been delayed for years as the central government seeks to remove some of the country's excess capacity. They received approval in principle in early 2008.
Chinese mills have been quick to heed Beijing's calls to invest in better facilities and move up the value chain, but have been far slower to shut old furnaces as an economic boom kept construction steel demand strong.
In late 2005, Wuhan Iron and Steel Group, the parent of Wuhan Steel (600005.SS), announced that it would buy into Liugang, parent of listed Liuzhou (601003.SS) and that the two would jointly build the 10 million-tonne mill as part of Beijing's drive to build large steel mills along the coast.
An official at the commission told Xinhua that Guangxi would also tear down other polluting plants, including 64,000 tonnes of paper mill and 10,000 tonnes of ethyl alcohol capacity
Johnson Controls CEO:Europe May Lead Auto Sector Out Of Slump
The top executive at Johnson Controls Inc. (JCI) said Friday that consumers in Europe rather than North America could lead the global industry out of recession.
Stephen Roell, chief executive officer of one of the world's largest auto suppliers, remained more bearish than most in the sector about sales this year.
But he told analysts on a conference call that the larger European market was likely to rebound first, in contrast to most industry observers.
"European consumers don't have credit card debt, they don't have the housing problem in Germany and France and the unemployment levels are not historically out of balance," he said. "I have reason to believe that Europe could actually lead us out of this thing if we can get the consumers there confident about going forward."
Milwaukee-based Johnson Controls is one of the world's largest suppliers of automotive seats and batteries. It also provides commercial building services such as heating and air conditioning.
Roell predicted the European market could fall a further 30% this year, while North American industry light vehicle sales could hit 9.2 million after dropping to 13.2 million in 2008.
His views contrast with comments made by executives from General Motors Corp. (GM), BMW AG and Daimler AG (DAI) at the North American International Auto Show in Detroit this week.
They said the U.S. was expected be the leader, and GM Chief Financial Officer Fritz Henderson said Thursday that Europe usually lags the U.S. economy by four to five months.
European registrations for new passenger cars slumped to a 15-year low in 2008 as weak consumer confidence ate into demand for new cars amid the worldwide financial crisis.
New-car registrations, which reflect sales, fell 7.8% to 14.7 million last year from 2007, the European Automobile Manufacturers Association said Thursday.
New vehicle sales in the U.S. dropped to 13.2 million in 2008 and are expected to fall again in 2009 to a range of 10.5 million to 12.2 million, according to assumptions used by the Detroit Three manufacturers.
An unexpected European recovery would pressure auto makers and parts suppliers to switch more focus to overseas markets to keep production in line with demand.
Roell also said the company was taking more work in-house because a third of its own supplier base was in "financial distress."
His remarks came as Johnson Controls swung to a fiscal first-quarter loss of $ 608 million, or $1.02 a share, which included $562 million in write-downs. Net income a year-earlier was $235 million, or 39 cents a share. Net sales slumped 23% to $7.34 billion.
Its shares were down 7.8% at $15.74 in afternoon trade.
Stephen Roell, chief executive officer of one of the world's largest auto suppliers, remained more bearish than most in the sector about sales this year.
But he told analysts on a conference call that the larger European market was likely to rebound first, in contrast to most industry observers.
"European consumers don't have credit card debt, they don't have the housing problem in Germany and France and the unemployment levels are not historically out of balance," he said. "I have reason to believe that Europe could actually lead us out of this thing if we can get the consumers there confident about going forward."
Milwaukee-based Johnson Controls is one of the world's largest suppliers of automotive seats and batteries. It also provides commercial building services such as heating and air conditioning.
Roell predicted the European market could fall a further 30% this year, while North American industry light vehicle sales could hit 9.2 million after dropping to 13.2 million in 2008.
His views contrast with comments made by executives from General Motors Corp. (GM), BMW AG and Daimler AG (DAI) at the North American International Auto Show in Detroit this week.
They said the U.S. was expected be the leader, and GM Chief Financial Officer Fritz Henderson said Thursday that Europe usually lags the U.S. economy by four to five months.
European registrations for new passenger cars slumped to a 15-year low in 2008 as weak consumer confidence ate into demand for new cars amid the worldwide financial crisis.
New-car registrations, which reflect sales, fell 7.8% to 14.7 million last year from 2007, the European Automobile Manufacturers Association said Thursday.
New vehicle sales in the U.S. dropped to 13.2 million in 2008 and are expected to fall again in 2009 to a range of 10.5 million to 12.2 million, according to assumptions used by the Detroit Three manufacturers.
An unexpected European recovery would pressure auto makers and parts suppliers to switch more focus to overseas markets to keep production in line with demand.
Roell also said the company was taking more work in-house because a third of its own supplier base was in "financial distress."
His remarks came as Johnson Controls swung to a fiscal first-quarter loss of $ 608 million, or $1.02 a share, which included $562 million in write-downs. Net income a year-earlier was $235 million, or 39 cents a share. Net sales slumped 23% to $7.34 billion.
Its shares were down 7.8% at $15.74 in afternoon trade.
2009年1月14日星期三
China Approves Support Package for Steel, Auto Makers
China, the world’s biggest steel producer and second-largest auto market, will implement tax cuts and offer subsidies as part of measures to bolster the industries as the economy slows.
The government will cut the sales tax on vehicles with engines smaller than 1.6 liters to 5 percent between Jan. 20 and Dec. 31, and ban expansion of steel-making capacity, the State Council said in a statement on its Web site. The government also said it would encourage mergers and acquisitions in both sectors, the statement said.
China is spending 4 trillion yuan ($584 billion) to stimulate its economy through infrastructure projects as it faces the weakest economic expansion since 1990 after trade growth collapsed because of the global recession. Waning demand has curbed China’s car sales and cut steel prices, causing losses among the major mills.
“The impact on consumption and on these industries remains unclear because of lack of details about how it will be executed,” Ricon Xia, analyst at Daiwa Associate Holdings Ltd., said by phone from Shanghai today. “Restructuring in the auto industry will take time.”
The government will give 5 billion yuan in subsidies from March 1 to Dec. 31 to farmers to upgrade light vehicles or buy small passenger cars with engines under 1.3 liters, the statement said. The government also earmarked 10 billion yuan for technological innovation and the development of alternative fuel cars and components over the next three years.
Falling Sales
The government has already axed some road taxes to help spur car sales, which have fallen in four of the past five months because of the cooling economy and rising job insecurity. The decline has hit domestic carmakers as well as General Motors Corp. and Volkswagen AG, which are counting on emerging-market sales to offset slumping U.S. and European demand.
China vehicle sales may climb about 5 percent this year, the slowest pace since 1998, the China Association of Automobile Manufacturers said Jan. 12.
Sales of cars, trucks and busses increased 6.7 percent last year to 9.38 million, said the group, which represents automakers active in the country. A year earlier, sales jumped 22 percent.
China will also adopt flexible steel export taxes to maintain the industry’s share of the international market, today’s government statement said.
China’s biggest mills posted combined losses in the fourth quarter as steel prices fell faster than raw material prices. Baoshan Iron & Steel Co., may post its first quarterly loss when it reports in March, said JPMorgan Chase & Co.
The government will cut the sales tax on vehicles with engines smaller than 1.6 liters to 5 percent between Jan. 20 and Dec. 31, and ban expansion of steel-making capacity, the State Council said in a statement on its Web site. The government also said it would encourage mergers and acquisitions in both sectors, the statement said.
China is spending 4 trillion yuan ($584 billion) to stimulate its economy through infrastructure projects as it faces the weakest economic expansion since 1990 after trade growth collapsed because of the global recession. Waning demand has curbed China’s car sales and cut steel prices, causing losses among the major mills.
“The impact on consumption and on these industries remains unclear because of lack of details about how it will be executed,” Ricon Xia, analyst at Daiwa Associate Holdings Ltd., said by phone from Shanghai today. “Restructuring in the auto industry will take time.”
The government will give 5 billion yuan in subsidies from March 1 to Dec. 31 to farmers to upgrade light vehicles or buy small passenger cars with engines under 1.3 liters, the statement said. The government also earmarked 10 billion yuan for technological innovation and the development of alternative fuel cars and components over the next three years.
Falling Sales
The government has already axed some road taxes to help spur car sales, which have fallen in four of the past five months because of the cooling economy and rising job insecurity. The decline has hit domestic carmakers as well as General Motors Corp. and Volkswagen AG, which are counting on emerging-market sales to offset slumping U.S. and European demand.
China vehicle sales may climb about 5 percent this year, the slowest pace since 1998, the China Association of Automobile Manufacturers said Jan. 12.
Sales of cars, trucks and busses increased 6.7 percent last year to 9.38 million, said the group, which represents automakers active in the country. A year earlier, sales jumped 22 percent.
China will also adopt flexible steel export taxes to maintain the industry’s share of the international market, today’s government statement said.
China’s biggest mills posted combined losses in the fourth quarter as steel prices fell faster than raw material prices. Baoshan Iron & Steel Co., may post its first quarterly loss when it reports in March, said JPMorgan Chase & Co.
Leng Brings Good Chemistry To Rio Tinto
Tata steel exec with history of raising margins will be chairman of miner under pressure.Known for his "good vibes" and for delivering high margins to the companies he has worked for, Jim Leng, the current Tata Steel deputy chairman, has been appointed chairman of miner Rio Tinto.
The company said Leng, who has a vast experience in the specialty chemicals sector, would assume his tasks as chairman in April when the current chairman, Paul Skinner, retires.
His appointment was well regarded among analysts who recalled his years as chief executive of Laporte, the specialty chemicals company in the 1990s. "In the chemicals sector, Leng was recognized as one best chief executives of the time because he brought high margins, good growth rate and had a record of bringing good products," said Ian Armstrong, an equity analyst with Brewin Dolphin in London.
"He came across as a very good chief executive. He was very much behind the [launch of new] products and very hands on," said Armstrong, who used to cover Laporte when Leng was its chairman.
Leng will have to deal with a fall in iron-ore prices as the global recession has undermined production in China and other developing economies. In October, the mining giant warned about the effects of slowing Chinese demand on its business and pondered postponing the sale of $10 billion in assets that would go toward debt reduction. (See "Rio Tinto's Fortunes Tied To China's Deceleration.")
Ever since Corus Group was acquired by Tata in 2007, Leng has been deputy chairman of India's Tata Steel. He is also chairman of Tata Steel Europe, a position he has held since 2003.
"I am absolutely delighted to be joining Rio Tinto and taking up the chairmanship. Rio Tinto has a superb set of assets and strong prospects," Leng said.
The company said Leng, who has a vast experience in the specialty chemicals sector, would assume his tasks as chairman in April when the current chairman, Paul Skinner, retires.
His appointment was well regarded among analysts who recalled his years as chief executive of Laporte, the specialty chemicals company in the 1990s. "In the chemicals sector, Leng was recognized as one best chief executives of the time because he brought high margins, good growth rate and had a record of bringing good products," said Ian Armstrong, an equity analyst with Brewin Dolphin in London.
"He came across as a very good chief executive. He was very much behind the [launch of new] products and very hands on," said Armstrong, who used to cover Laporte when Leng was its chairman.
Leng will have to deal with a fall in iron-ore prices as the global recession has undermined production in China and other developing economies. In October, the mining giant warned about the effects of slowing Chinese demand on its business and pondered postponing the sale of $10 billion in assets that would go toward debt reduction. (See "Rio Tinto's Fortunes Tied To China's Deceleration.")
Ever since Corus Group was acquired by Tata in 2007, Leng has been deputy chairman of India's Tata Steel. He is also chairman of Tata Steel Europe, a position he has held since 2003.
"I am absolutely delighted to be joining Rio Tinto and taking up the chairmanship. Rio Tinto has a superb set of assets and strong prospects," Leng said.
Nissan U.S. Auto Plants on 4-Day Week ‘Indefinitely’
Nissan Motor Co., paring production as sales slump, will keep its U.S. auto-assembly plants on a four-day workweek for the foreseeable future in a step that means less pay for factory employees.
A reduced schedule that began in late 2008 will continue “indefinitely,” spokesman Steve Parrett said today. Hourly workers in Smyrna, Tennessee, and Canton, Mississippi, are being paid only when on duty, not their usual five-day week, he said.
The lack of a timetable to resume normal production shows the strain on Tokyo-based Nissan after posting an 11 percent drop in U.S. sales last year. Japan’s third-largest automaker joined Toyota Motor Corp. and Honda Motor Co., the two biggest, in trimming 2008 North American production.
“This is the kind of business scenario companies need to operate under,” said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “Sales stink, and all manufacturers are being impacted.”
While Japan’s biggest automakers haven’t followed U.S.- based competitors in shutting factories or cutting jobs, they’re under pressure to adjust to the prospect that deliveries in the world’s biggest auto market will fall again in 2009.
Japan’s Yomiuri newspaper, citing unidentified sources, reported in its Jan. 15 edition that Nissan expects an operating loss for the fiscal year that ends in March. Toyota also is forecasting an operating loss, its first in 71 years.
Altima, Titan
Nissan builds models including the Altima sedan in Smyrna and the Titan pickup in Canton. Parrett didn’t give specifics on how U.S. production volumes would be affected by the shortened workweek.
“We don’t know when it might change or if it might change,” Parrett said.
The Smyrna plant has more than 5,000 assembly workers, and Canton has more than 3,700, according to Nissan’s Web site. They aren’t represented by the United Auto Workers.
Nissan offered early-retirement incentives last year to employees in Tennessee to shrink the workforce and pare output, the company’s second such program in as many years. Virag said Toyota and Honda may have to follow Nissan in further slowing North American production.
Honda has no plans at present to go to a four-day workweek, spokesman Ron Lietzke said today.
“We’ve announced a reduced production schedule through the first quarter,” said Lietzke, who is based in Marysville, Ohio. “We’ll continue to make adjustments based on what’s going on in the marketplace.”
‘Long Way to Go’
Toyota “is doing all it can to reduce costs,” and has “a long way to go” before a move such as laying off workers would be considered, Jim Wiseman, vice president of external affairs for the automaker’s North American production unit, said in a Jan. 12 interview at the Detroit auto show.
Wiseman declined to say whether Toyota was considering an early-retirement program similar to Nissan’s. Toyota suspended production at its San Antonio truck plant and a line in Indiana for three months last year. Employees continued to receive full pay during that time.
Nissan’s U.S. operations are based in Franklin, Tennessee. The company’s American depositary receipts fell 7 cents, or 1 percent, to $6.90 at 5:20 p.m. New York time in Nasdaq Stock Market composite trading.
An engine plant in Decherd, Tennessee, also will reduce production, using a different approach, Parrett said. He was checking on whether Nissan’s two Mexico auto factories would be affected.
A reduced schedule that began in late 2008 will continue “indefinitely,” spokesman Steve Parrett said today. Hourly workers in Smyrna, Tennessee, and Canton, Mississippi, are being paid only when on duty, not their usual five-day week, he said.
The lack of a timetable to resume normal production shows the strain on Tokyo-based Nissan after posting an 11 percent drop in U.S. sales last year. Japan’s third-largest automaker joined Toyota Motor Corp. and Honda Motor Co., the two biggest, in trimming 2008 North American production.
“This is the kind of business scenario companies need to operate under,” said Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “Sales stink, and all manufacturers are being impacted.”
While Japan’s biggest automakers haven’t followed U.S.- based competitors in shutting factories or cutting jobs, they’re under pressure to adjust to the prospect that deliveries in the world’s biggest auto market will fall again in 2009.
Japan’s Yomiuri newspaper, citing unidentified sources, reported in its Jan. 15 edition that Nissan expects an operating loss for the fiscal year that ends in March. Toyota also is forecasting an operating loss, its first in 71 years.
Altima, Titan
Nissan builds models including the Altima sedan in Smyrna and the Titan pickup in Canton. Parrett didn’t give specifics on how U.S. production volumes would be affected by the shortened workweek.
“We don’t know when it might change or if it might change,” Parrett said.
The Smyrna plant has more than 5,000 assembly workers, and Canton has more than 3,700, according to Nissan’s Web site. They aren’t represented by the United Auto Workers.
Nissan offered early-retirement incentives last year to employees in Tennessee to shrink the workforce and pare output, the company’s second such program in as many years. Virag said Toyota and Honda may have to follow Nissan in further slowing North American production.
Honda has no plans at present to go to a four-day workweek, spokesman Ron Lietzke said today.
“We’ve announced a reduced production schedule through the first quarter,” said Lietzke, who is based in Marysville, Ohio. “We’ll continue to make adjustments based on what’s going on in the marketplace.”
‘Long Way to Go’
Toyota “is doing all it can to reduce costs,” and has “a long way to go” before a move such as laying off workers would be considered, Jim Wiseman, vice president of external affairs for the automaker’s North American production unit, said in a Jan. 12 interview at the Detroit auto show.
Wiseman declined to say whether Toyota was considering an early-retirement program similar to Nissan’s. Toyota suspended production at its San Antonio truck plant and a line in Indiana for three months last year. Employees continued to receive full pay during that time.
Nissan’s U.S. operations are based in Franklin, Tennessee. The company’s American depositary receipts fell 7 cents, or 1 percent, to $6.90 at 5:20 p.m. New York time in Nasdaq Stock Market composite trading.
An engine plant in Decherd, Tennessee, also will reduce production, using a different approach, Parrett said. He was checking on whether Nissan’s two Mexico auto factories would be affected.
2009年1月12日星期一
AK Steel unit ratifies new labor agreement
Steel producer AK Steel Holding Corp. said Monday union members have ratified a new labor agreement with its subsidiary AK Tube LLC.
The agreement brokered with United Steelworkers of America Local 1915 will replace a contract scheduled to expire on Jan. 25. The contract covers about 100 hourly production and maintenance employees at its Walbridge, Ohio, facility.
Among the terms of the new agreement, include: a freeze on wage increases for the first year of the contract, significant work force flexibility and health care cost-sharing provisions.
Wage increases have been included for the second and third years of the contract, according to AK Steel.
"This agreement addresses costs and other concerns that our company faces in today's challenging market conditions," said James Wainscott, president and chief executive of AK Steel, in a statement.
AK Steel shares fell 76 cents, or 6.8 percent, to $10.33 in afternoon trading.
The agreement brokered with United Steelworkers of America Local 1915 will replace a contract scheduled to expire on Jan. 25. The contract covers about 100 hourly production and maintenance employees at its Walbridge, Ohio, facility.
Among the terms of the new agreement, include: a freeze on wage increases for the first year of the contract, significant work force flexibility and health care cost-sharing provisions.
Wage increases have been included for the second and third years of the contract, according to AK Steel.
"This agreement addresses costs and other concerns that our company faces in today's challenging market conditions," said James Wainscott, president and chief executive of AK Steel, in a statement.
AK Steel shares fell 76 cents, or 6.8 percent, to $10.33 in afternoon trading.
Toyota Will Buy Posco’s Steel for Japanese Factories
Jan. 12 (Bloomberg) -- Toyota Motor Corp. will buy steel from South Korea’s Posco for its Japanese factories, seeking to reduce costs as Asia’s biggest automaker faces the first annual operating loss in 71 years.
The Japanese carmaker will use the steel from February to make some of its models, said Hideaki Matsubara, a Tokyo-based spokesman for Toyota. This is the first time Posco’s steel would be used in making Toyota’s cars in Japan, he said.
The accord with Posco, benefiting from a cheaper won, may pressure Japanese steelmakers in price talks with Toyota as the global recession intensified competition. Toyota is seeking to lower steel purchasing costs after falling sales forced it to close domestic factories for 11 days and cut temporary staff.
“Given that the auto industry is sputtering and there are concerns over its loss, Toyota wants to cut costs through cheaper purchases from Posco,” Cho In Je, a steel analyst with KB Investment & Securities Co., said in Seoul. “The carmaker may use it to pressure Japanese steelmakers to cut prices.”
Posco dropped 3 percent to close at 383,000 won in Seoul. The Asahi newspaper said yesterday that Toyota will buy steel from South Korea’s Posco for its domestic plants for the first time. Japan’s stock market is closed today for a holiday.
“We’ll supply steel to Toyota’s plants in Japan,” Choi Do Jin, a spokesman for the Pohang, South Korea-based steelmaker, said, without giving details.
Cheaper Won
Posco’s products are gaining a competitive edge against Japanese rivals because of the cheaper won. The Korean won lost 26 percent against the U.S. dollar last year, the worst performance among Asia’s 10 most-traded currencies.
Toyota has bought steel from Posco for its factories in Thailand and Indonesia since 2003, spokesman Matsubara said. The Korean steelmaker sells to other Japanese carmakers including Nissan Motor Co. and Mitsubishi Motors Corp. and competes with Nippon Steel Corp. and JFE Holdings Inc.
“The deal looks positive for Posco given that it could secure one more end-user at this difficult time and it’s not just anyone but Toyota, which has been quite reluctant to buy steel from foreign makers,” said KB’s Cho.
Global steel demand from carmakers and builders has dropped with a slowdown in the U.S., Europe and Japan. Posco cut output for the first time in its 40-year history. Nippon Steel, the world’s second-largest maker, may double its planned production cuts, four industry executives said Jan. 9.
The Japanese carmaker will use the steel from February to make some of its models, said Hideaki Matsubara, a Tokyo-based spokesman for Toyota. This is the first time Posco’s steel would be used in making Toyota’s cars in Japan, he said.
The accord with Posco, benefiting from a cheaper won, may pressure Japanese steelmakers in price talks with Toyota as the global recession intensified competition. Toyota is seeking to lower steel purchasing costs after falling sales forced it to close domestic factories for 11 days and cut temporary staff.
“Given that the auto industry is sputtering and there are concerns over its loss, Toyota wants to cut costs through cheaper purchases from Posco,” Cho In Je, a steel analyst with KB Investment & Securities Co., said in Seoul. “The carmaker may use it to pressure Japanese steelmakers to cut prices.”
Posco dropped 3 percent to close at 383,000 won in Seoul. The Asahi newspaper said yesterday that Toyota will buy steel from South Korea’s Posco for its domestic plants for the first time. Japan’s stock market is closed today for a holiday.
“We’ll supply steel to Toyota’s plants in Japan,” Choi Do Jin, a spokesman for the Pohang, South Korea-based steelmaker, said, without giving details.
Cheaper Won
Posco’s products are gaining a competitive edge against Japanese rivals because of the cheaper won. The Korean won lost 26 percent against the U.S. dollar last year, the worst performance among Asia’s 10 most-traded currencies.
Toyota has bought steel from Posco for its factories in Thailand and Indonesia since 2003, spokesman Matsubara said. The Korean steelmaker sells to other Japanese carmakers including Nissan Motor Co. and Mitsubishi Motors Corp. and competes with Nippon Steel Corp. and JFE Holdings Inc.
“The deal looks positive for Posco given that it could secure one more end-user at this difficult time and it’s not just anyone but Toyota, which has been quite reluctant to buy steel from foreign makers,” said KB’s Cho.
Global steel demand from carmakers and builders has dropped with a slowdown in the U.S., Europe and Japan. Posco cut output for the first time in its 40-year history. Nippon Steel, the world’s second-largest maker, may double its planned production cuts, four industry executives said Jan. 9.
Brilliance Auto focuses on growth in China, Europe
Brilliance Auto's general manager said Monday the Chinese automaker still has a lot of work to do before it will be ready to sell in the U.S.
Long Shan told The Associated Press in an interview Monday at the North American International Auto Show that Brilliance Auto plans to expand, but for now is focused on growth in its home market and Europe.
"America is a very huge automobile market," he said through a translator. "It's hard for us to position our products properly, to find out which part of the market will open up to us. That's a little difficult."
He expects the global economic downturn to pressure sales in China this year, leaving them flat or slightly down compared with 2008.
Overall, he says Shenyang-based Brilliance Auto's sales should grow nearly 19 percent to 338,000 in 2009 from 285,000 last year.
Brilliance Auto brought four vehicles, including a luxury sedan, to display for its first show in Detroit. Shan said Brilliance Auto has been preparing for about a year to showcase its cars this week.
Brilliance Auto sells its Zhonghua brand of vehicles and builds, among other lines, the 3 Series and 5 Series for Germany's BMW AG to sell in China.
Long Shan told The Associated Press in an interview Monday at the North American International Auto Show that Brilliance Auto plans to expand, but for now is focused on growth in its home market and Europe.
"America is a very huge automobile market," he said through a translator. "It's hard for us to position our products properly, to find out which part of the market will open up to us. That's a little difficult."
He expects the global economic downturn to pressure sales in China this year, leaving them flat or slightly down compared with 2008.
Overall, he says Shenyang-based Brilliance Auto's sales should grow nearly 19 percent to 338,000 in 2009 from 285,000 last year.
Brilliance Auto brought four vehicles, including a luxury sedan, to display for its first show in Detroit. Shan said Brilliance Auto has been preparing for about a year to showcase its cars this week.
Brilliance Auto sells its Zhonghua brand of vehicles and builds, among other lines, the 3 Series and 5 Series for Germany's BMW AG to sell in China.
AK Steel chief to chair industry board
AK Steel Corp. president, chairman and CEO Jim Wainscott has been elected as chairman of the American Iron and Steel Institute.
"We welcome Jim's leadership at a critical time for the North American steel industry," said AISI president and CEO Thomas J. Gibson. "Jim's skills in gaining consensus on diverse issues before the industry, fiscal responsibility and effective advocacy will greatly benefit AISI and our members."
The appointment comes at a crucial time for American steelmakers, which have been hit hard by the economic downturn. AK has been no exception, seeing its stock drop from more than $73 to $10.11 at the close of the market Monday, Jan. 12.
Wainscott said he would work as an aggressive advocate of the American steel industry. He indicated that steelmakers would be in support of an economic stimulus package.
"The package should support and stimulate infrastructure projects to jump start recovery and fuel job growth," he said. "We are a globally competitive, resilient industry and we look forward to working with the incoming administration and Congress to help shape America's economic revitalization."
In his role as chairman of the AISI, Wainscott will act as spokesman for the industry on issues such as strengthening pro-manufacturing public policies and maintaining the competitiveness of the North American steel industry.
Wainscott has worked in the steel industry for more than 25, beginning in 1982 with the Midwest division of the former National Steel Corp. He joined AK Steel in 1995 as vice president and treasurer. In 2003, he was named president and CEO of the company and was named chairman of the board of directors in 2006.
At the AISI, he has served as chairman of the policy and planning committee, as well as its finance committee.
The appointment to AISI was effective Monday. Wainscott will serve in the role until May 2010, said institute spokeswoman Nancy Gravatt.
"We welcome Jim's leadership at a critical time for the North American steel industry," said AISI president and CEO Thomas J. Gibson. "Jim's skills in gaining consensus on diverse issues before the industry, fiscal responsibility and effective advocacy will greatly benefit AISI and our members."
The appointment comes at a crucial time for American steelmakers, which have been hit hard by the economic downturn. AK has been no exception, seeing its stock drop from more than $73 to $10.11 at the close of the market Monday, Jan. 12.
Wainscott said he would work as an aggressive advocate of the American steel industry. He indicated that steelmakers would be in support of an economic stimulus package.
"The package should support and stimulate infrastructure projects to jump start recovery and fuel job growth," he said. "We are a globally competitive, resilient industry and we look forward to working with the incoming administration and Congress to help shape America's economic revitalization."
In his role as chairman of the AISI, Wainscott will act as spokesman for the industry on issues such as strengthening pro-manufacturing public policies and maintaining the competitiveness of the North American steel industry.
Wainscott has worked in the steel industry for more than 25, beginning in 1982 with the Midwest division of the former National Steel Corp. He joined AK Steel in 1995 as vice president and treasurer. In 2003, he was named president and CEO of the company and was named chairman of the board of directors in 2006.
At the AISI, he has served as chairman of the policy and planning committee, as well as its finance committee.
The appointment to AISI was effective Monday. Wainscott will serve in the role until May 2010, said institute spokeswoman Nancy Gravatt.
2009年1月7日星期三
Auto sales outlook: Running on empty
Detroit automakers are no longer in the driver's seat when it comes to their own recovery. The U.S. economy is.
No matter what further concessions the United Auto Workers union makes, what debt relief the automakers win in talks with creditors and what kind of additional federal help is made available, U.S. consumers have to start buying cars again.
And a rebound in sales will be difficult, if not impossible, to come by for General Motors (GM, Fortune 500), Ford Motor (F, Fortune 500) and Chrysler LLC as long as the unemployment rate keeps rising.
This Friday's jobs report is likely to show how difficult it will be for the Big Three to complete their promised turnarounds, even with billions of dollars in loans from the government.
Economists are forecasting a loss of 475,000 jobs in December. The outlook for employment for the rest of this year is similarly grim. The minutes of the most recent Federal Reserve meeting show that staff at the central bank expect the unemployment rate "to rise significantly into 2010."
Faced with this backdrop, independent auto analyst Erich Merkle said that even if auto sales bottomed out in early December, a month when all the major car manufacturers posted sales declines of at least 30%, it's not certain when there will be a sustainable rebound in demand.
"It's when we'll have a meaningful upturn, that is the big question. We could conceivably crawl along the bottom for some time," he said.
To that end, J.D. Power & Associates is now forecasting 2009 industrywide sales of 11.4 million vehicles for the year.
While that's up from the tremendously weak sales pace in the fourth quarter, it would be down 14% from the full year 2008 sales, and below the sales targets set by Ford and GM in their turnaround plans submitted to Congress.
It is clear that no automaker can make money with auto sales at currently depressed levels. Even industry sales and profit leader Toyota Motor (TM) has warned it is about to report its first operating loss as a public company.
Ford director of sales and industry analysis George Pipas said that Ford factored in lousy job reports when it presented its plans to Congress. But he added that it is possible industrywide sales could be better than expected, given that the Fed, Congress and the incoming Obama administration are all focused on stimulating the economy.
"When things are bad, the presumption is it will get worse or always be bad," he said. "That's no more correct than the assumption in good times that things will always stay good."
In fact, some economists are forecasting a much sharper rebound in auto sales than now being assumed even by the automakers. Joseph Carson, chief economist at AllianceBernstein, said industrywide sales should reach 13 million this year, and that second-half sales could climb to above a 14 million annualized sales rate.
He said the massive economic stimulus plan likely to be passed by Congress, coupled with low interest rates, should lead to a much stronger rebound than many are expecting.
"If you go back and look at the severe recessions of the mid '70s and early '80s, from the trough to one year later, car and truck sales were up 30%," he said.
Carson added that the sharp cuts in production by the automakers in the past year will also set the stage for an eventual recovery.
But others think auto sales won't be able to bounce back as fast this time given the depth of this recession.
Wilbur Ross, the private equity investor who is chairman of auto parts maker International Automotive Components Group, says that U.S. automakers should have been cutting production sooner.
Instead, he said they offered easy financing terms and cash back offers for too long in order to move cars at below cost. Those sales stole from future demand for their vehicles, he said.
"When you borrow from the future, eventually you run out of future," he said.
Because of that, Ross said the only way for the automakers to survive is to win further concessions from unions and creditors and shed excess dealerships. He is not predicting a major upturn in sales anytime soon.
"We don't know for how long we're likely to stay at these reduced levels," he said
No matter what further concessions the United Auto Workers union makes, what debt relief the automakers win in talks with creditors and what kind of additional federal help is made available, U.S. consumers have to start buying cars again.
And a rebound in sales will be difficult, if not impossible, to come by for General Motors (GM, Fortune 500), Ford Motor (F, Fortune 500) and Chrysler LLC as long as the unemployment rate keeps rising.
This Friday's jobs report is likely to show how difficult it will be for the Big Three to complete their promised turnarounds, even with billions of dollars in loans from the government.
Economists are forecasting a loss of 475,000 jobs in December. The outlook for employment for the rest of this year is similarly grim. The minutes of the most recent Federal Reserve meeting show that staff at the central bank expect the unemployment rate "to rise significantly into 2010."
Faced with this backdrop, independent auto analyst Erich Merkle said that even if auto sales bottomed out in early December, a month when all the major car manufacturers posted sales declines of at least 30%, it's not certain when there will be a sustainable rebound in demand.
"It's when we'll have a meaningful upturn, that is the big question. We could conceivably crawl along the bottom for some time," he said.
To that end, J.D. Power & Associates is now forecasting 2009 industrywide sales of 11.4 million vehicles for the year.
While that's up from the tremendously weak sales pace in the fourth quarter, it would be down 14% from the full year 2008 sales, and below the sales targets set by Ford and GM in their turnaround plans submitted to Congress.
It is clear that no automaker can make money with auto sales at currently depressed levels. Even industry sales and profit leader Toyota Motor (TM) has warned it is about to report its first operating loss as a public company.
Ford director of sales and industry analysis George Pipas said that Ford factored in lousy job reports when it presented its plans to Congress. But he added that it is possible industrywide sales could be better than expected, given that the Fed, Congress and the incoming Obama administration are all focused on stimulating the economy.
"When things are bad, the presumption is it will get worse or always be bad," he said. "That's no more correct than the assumption in good times that things will always stay good."
In fact, some economists are forecasting a much sharper rebound in auto sales than now being assumed even by the automakers. Joseph Carson, chief economist at AllianceBernstein, said industrywide sales should reach 13 million this year, and that second-half sales could climb to above a 14 million annualized sales rate.
He said the massive economic stimulus plan likely to be passed by Congress, coupled with low interest rates, should lead to a much stronger rebound than many are expecting.
"If you go back and look at the severe recessions of the mid '70s and early '80s, from the trough to one year later, car and truck sales were up 30%," he said.
Carson added that the sharp cuts in production by the automakers in the past year will also set the stage for an eventual recovery.
But others think auto sales won't be able to bounce back as fast this time given the depth of this recession.
Wilbur Ross, the private equity investor who is chairman of auto parts maker International Automotive Components Group, says that U.S. automakers should have been cutting production sooner.
Instead, he said they offered easy financing terms and cash back offers for too long in order to move cars at below cost. Those sales stole from future demand for their vehicles, he said.
"When you borrow from the future, eventually you run out of future," he said.
Because of that, Ross said the only way for the automakers to survive is to win further concessions from unions and creditors and shed excess dealerships. He is not predicting a major upturn in sales anytime soon.
"We don't know for how long we're likely to stay at these reduced levels," he said
China's Plan to Assist Mills With Steel Stockpile Founders
BEIJING -- China has shelved a proposal to create a steel stockpile, first publicly broached in early December to help flagging mills, as consensus fell apart on how much steel to buy, an industry official said Tuesday.
The government's discussions with the industry foundered on the proposed purchase volume, said Shan Shanghua, secretary-general of the China Iron and Steel Association.
"It's a complicated question. After investigation, it was decided that the steel reserve policy would be revoked. It will not proceed for now," he said.
Mr. Shan said there was also disagreement on what type of steel or ore-related products to stockpile.
Initial proposals were floated for a stockpile of five million metric tons and then it rose to 15 million tons, an analyst with a Beijing-based metals consultancy said.
But even the increased volume would be minimal compared with China's annual steel consumption of about 495 million tons, roughly the same as its production level.
"There was a question of whether they shouldn't go ahead with a stockpile, because if it's too small, it won't affect the market, and if it's too large, it would cost a lot," the analyst said.
At late December prices, 15 million tons of hot-rolled sheet would have cost Beijing roughly 55.3 billion yuan, or about $8 billion.
Beijing also faced a dilemma on whether to step in to rescue an industry that appears to be slowly mending on its own.
China's steel demand has climbed on the back of Beijing's four trillion yuan stimulus package, mostly to be spent on steel-reliant infrastructure and housing.
Officials from the Ministry of Industry and Information Technology, whose head first broached the idea, declined to comment Tuesday.
Separately, the European Commission will place temporary duties on imported steel wire rods from China and Moldova while it investigates if permanent duties are necessary, European Union diplomats said Tuesday.
The move comes in response to a complaint from the European Confederation of Iron and Steel Industries, or Eurofer, whose members include steel firms such as ArcelorMittal and Thyssen Krupp AG. The European companies said Chinese and Moldovan producers were dumping their products into the EU at prices below the cost of production.
The duties will be about 25% on rods from China and about 4% for rods from Moldova, the diplomats said.
The government's discussions with the industry foundered on the proposed purchase volume, said Shan Shanghua, secretary-general of the China Iron and Steel Association.
"It's a complicated question. After investigation, it was decided that the steel reserve policy would be revoked. It will not proceed for now," he said.
Mr. Shan said there was also disagreement on what type of steel or ore-related products to stockpile.
Initial proposals were floated for a stockpile of five million metric tons and then it rose to 15 million tons, an analyst with a Beijing-based metals consultancy said.
But even the increased volume would be minimal compared with China's annual steel consumption of about 495 million tons, roughly the same as its production level.
"There was a question of whether they shouldn't go ahead with a stockpile, because if it's too small, it won't affect the market, and if it's too large, it would cost a lot," the analyst said.
At late December prices, 15 million tons of hot-rolled sheet would have cost Beijing roughly 55.3 billion yuan, or about $8 billion.
Beijing also faced a dilemma on whether to step in to rescue an industry that appears to be slowly mending on its own.
China's steel demand has climbed on the back of Beijing's four trillion yuan stimulus package, mostly to be spent on steel-reliant infrastructure and housing.
Officials from the Ministry of Industry and Information Technology, whose head first broached the idea, declined to comment Tuesday.
Separately, the European Commission will place temporary duties on imported steel wire rods from China and Moldova while it investigates if permanent duties are necessary, European Union diplomats said Tuesday.
The move comes in response to a complaint from the European Confederation of Iron and Steel Industries, or Eurofer, whose members include steel firms such as ArcelorMittal and Thyssen Krupp AG. The European companies said Chinese and Moldovan producers were dumping their products into the EU at prices below the cost of production.
The duties will be about 25% on rods from China and about 4% for rods from Moldova, the diplomats said.
UPDATE: US Steel Cuts Output At Slovak Unit Due To Gas Cuts
LONDON -(Dow Jones)- U.S. Steel Corp. (X) said Wednesday it has reduced its production in the eastern Slovakian town of Kosice after gas supplies from Russia to Ukraine were brought to a halt.
"We have adjusted our production in line with the restrictions" imposed by the Slovakian government, a company spokesman said, following a halt in gas deliveries from Russia via the Ukraine.
He declined to disclose how much production was cut at the plant. U.S. Steel Kosice is able to produce 4.5 million metric tons of pig iron a year.
Meanwhile ArcelorMittal (MT), the world's largest steel producer in the world, Wednesday said it has temporarily suspended production at its Bosnian Zenica steel plant due to the gas supply disruption. The plant is able to produce 2 million tons of steel a year.
Austrian specialty steelmaker Voestalpine AG (VOE.VI) said it would need to alter its method of steel production if the gas cuts continued beyond this week, but the company doesn't expect it will lead to lower steel production unless the gas cuts persist for several weeks.
"We have adjusted our production in line with the restrictions" imposed by the Slovakian government, a company spokesman said, following a halt in gas deliveries from Russia via the Ukraine.
He declined to disclose how much production was cut at the plant. U.S. Steel Kosice is able to produce 4.5 million metric tons of pig iron a year.
Meanwhile ArcelorMittal (MT), the world's largest steel producer in the world, Wednesday said it has temporarily suspended production at its Bosnian Zenica steel plant due to the gas supply disruption. The plant is able to produce 2 million tons of steel a year.
Austrian specialty steelmaker Voestalpine AG (VOE.VI) said it would need to alter its method of steel production if the gas cuts continued beyond this week, but the company doesn't expect it will lead to lower steel production unless the gas cuts persist for several weeks.
2009年1月5日星期一
U.S. Steel to close tubing unit in Dallas
U.S. Steel Tubular Products Inc., a subsidiary of Pittsburgh-based U.S. Steel Corp., announced Monday it will exit the drawn-over-mandrel (DOM) tubular products business. It plans to close its DOM lines at its Texas Operations Division in Lone Star, Texas.
According to a release from U.S. Steel (NYSE:X), about 50 employees will be affected by the closure of the DOM lines.
All current booked orders will be produced and shipped consistent with original commitments, the company said, and U. S. Steel Tubular Products is notifying its customers of its decision to exit the business.
DOM products are used by automotive manufacturers, mining operations, fluid power component manufacturers and steel service centers.
In December, U.S. Steel announced plans to idle three facilities and lay off 3,500 employees in Minnesota, Detroit and St. Louis. The company announced plans in November to lay off 675 employees in the U.S. and Canada, including 78 in Pittsburgh.
According to a release from U.S. Steel (NYSE:X), about 50 employees will be affected by the closure of the DOM lines.
All current booked orders will be produced and shipped consistent with original commitments, the company said, and U. S. Steel Tubular Products is notifying its customers of its decision to exit the business.
DOM products are used by automotive manufacturers, mining operations, fluid power component manufacturers and steel service centers.
In December, U.S. Steel announced plans to idle three facilities and lay off 3,500 employees in Minnesota, Detroit and St. Louis. The company announced plans in November to lay off 675 employees in the U.S. and Canada, including 78 in Pittsburgh.
U.S. Steel to close tubing unit in Dallas
U.S. Steel Tubular Products Inc., a subsidiary of Pittsburgh-based U.S. Steel Corp., announced Monday it will exit the drawn-over-mandrel (DOM) tubular products business. It plans to close its DOM lines at its Texas Operations Division in Lone Star, Texas.
According to a release from U.S. Steel (NYSE:X), about 50 employees will be affected by the closure of the DOM lines.
All current booked orders will be produced and shipped consistent with original commitments, the company said, and U. S. Steel Tubular Products is notifying its customers of its decision to exit the business.
DOM products are used by automotive manufacturers, mining operations, fluid power component manufacturers and steel service centers.
In December, U.S. Steel announced plans to idle three facilities and lay off 3,500 employees in Minnesota, Detroit and St. Louis. The company announced plans in November to lay off 675 employees in the U.S. and Canada, including 78 in Pittsburgh.
According to a release from U.S. Steel (NYSE:X), about 50 employees will be affected by the closure of the DOM lines.
All current booked orders will be produced and shipped consistent with original commitments, the company said, and U. S. Steel Tubular Products is notifying its customers of its decision to exit the business.
DOM products are used by automotive manufacturers, mining operations, fluid power component manufacturers and steel service centers.
In December, U.S. Steel announced plans to idle three facilities and lay off 3,500 employees in Minnesota, Detroit and St. Louis. The company announced plans in November to lay off 675 employees in the U.S. and Canada, including 78 in Pittsburgh.
Nissan dealers back out of the Detroit auto show
Nissan’s car and trucks will not have any presence at the 2009 North American International Auto Show — not even a dealer supported presence.
Nissan Motor Co. announced a decision in November to pull out of the show, but that was followed quickly by a group of local Nissan dealers saying they would provide vehicles and staffing for the space that their corporate parent previously planned to occupy.
At Nissan’s request, those plans have changed.
“The dealers were going to support a presence and had all stepped forward,” said Doug Fox, auto show co-chairman and owner of Ann Arbor Nissan. “But the week before Christmas we received a request from Nissan to please respect their decision to not have a presence at the North American International Auto Show.”
The dealers were disappointed, Fox said, but agreed to respect Nissan’s decision. Fox said Nissan did not provide a reason for the request.
“They just said they had made a national decision not to participate in this show and they asked us to respect that,” Fox said.
Nissan Motor Co. announced a decision in November to pull out of the show, but that was followed quickly by a group of local Nissan dealers saying they would provide vehicles and staffing for the space that their corporate parent previously planned to occupy.
At Nissan’s request, those plans have changed.
“The dealers were going to support a presence and had all stepped forward,” said Doug Fox, auto show co-chairman and owner of Ann Arbor Nissan. “But the week before Christmas we received a request from Nissan to please respect their decision to not have a presence at the North American International Auto Show.”
The dealers were disappointed, Fox said, but agreed to respect Nissan’s decision. Fox said Nissan did not provide a reason for the request.
“They just said they had made a national decision not to participate in this show and they asked us to respect that,” Fox said.
UPDATE: Auto Executives See Help From Credit Mkts, Stimulus Plan
Sales managers from Ford Motor Co. (F) and Toyota Motor Corp. (TM) said the conditions in the auto sector should be brighter by the second half as improvements in the credit markets and a government stimulus package help boost consumer confidence.
In its monthly sales call Monday, Ford, the No. 3 U.S. auto maker by sales, said it is optimistic about the opportunity for growth in the "small car market" this year, though the company again warned the first quarter is going to be " bad, no matter how you look at it."
Earlier Monday, Ford reported its December U.S. light-vehicle sales fell 32% to 138,325 units, but noted its December market share rose to 14.6%, up 0.7 percentage point from a year ago - the first time since 1997 it had achieved a market share increase for three straight months.
General Motors Corp. (GM) reported a 31% drop in light-vehicle sales for the month, while Toyota Motor Corp. (TM) sales declined 37%.
In the short term, Jim Lentz, president of Toyota sales in the U.S., said he believes sales will be driven by the combined factors of low interest rates and improved consumer confidence.
Looking ahead, Lentz said there were some positive signs the economic climate could improve, including government talks about a consumer-stimulus plan, but said that this along with the steep drop in gas prices wouldn't be enough to push consumers back to SUVs and trucks.
Ford's senior economist, Emily Kolinski Morris, also said the existence of a stimulus package is a key factor to supporting the industry's second-half recovery.
GM and Chrysler LLC were granted $17.4 billion in low-interest loans from the government last month. Ford passed on accessing the loans but said it may come back at a later date if the economic situation turns worse.
Meanwhile, in GM's monthly sales call, executive director of global product planning, Michael DiGiovanni, said there was "no question the lower gas prices" were helping light truck sales. DiGiovanni said consumers of large and mid-sized SUVs were generally more resilient to having access to credit, but he said buyers of small compacts were being priced out.
Mark Laneve, GM's North America vice president of vehicle sales, service and marketing, said the company would unveil "very strong, competitive programs" in early 2009 with the focus on being competitive on a segment-to-segment basis, not using incentives to correct inventory problems.
"Hopefully 2009 will be a year that improves rather than deteriorates, even while starting at a relatively low level from the end of 2008," Laneve said.
GM received $4 billion of its total $13.4 billion payout on Dec. 31 and is scheduled to receive more money during the next two months. Its financial arm, GMAC LLC, also received $6 billion in federal aid. Chrysler received its $4 billion loan Friday.
Chrysler Chief Financial Officer Ron Kolka said the auto maker had enough money to make it through March, even when taking into consideration slowing sales.
The auto-industry loans were carved out of the government's $700 billion Troubled Asset Relief Program that originally was earmarked for ailing banks and other financial institutions.
Shares of Ford were up 1.6% to $2.62 in after-hours trading as GM's shares rose 1.1% to $3.75. Toyota's shares were down 13 cents after-hours.
In its monthly sales call Monday, Ford, the No. 3 U.S. auto maker by sales, said it is optimistic about the opportunity for growth in the "small car market" this year, though the company again warned the first quarter is going to be " bad, no matter how you look at it."
Earlier Monday, Ford reported its December U.S. light-vehicle sales fell 32% to 138,325 units, but noted its December market share rose to 14.6%, up 0.7 percentage point from a year ago - the first time since 1997 it had achieved a market share increase for three straight months.
General Motors Corp. (GM) reported a 31% drop in light-vehicle sales for the month, while Toyota Motor Corp. (TM) sales declined 37%.
In the short term, Jim Lentz, president of Toyota sales in the U.S., said he believes sales will be driven by the combined factors of low interest rates and improved consumer confidence.
Looking ahead, Lentz said there were some positive signs the economic climate could improve, including government talks about a consumer-stimulus plan, but said that this along with the steep drop in gas prices wouldn't be enough to push consumers back to SUVs and trucks.
Ford's senior economist, Emily Kolinski Morris, also said the existence of a stimulus package is a key factor to supporting the industry's second-half recovery.
GM and Chrysler LLC were granted $17.4 billion in low-interest loans from the government last month. Ford passed on accessing the loans but said it may come back at a later date if the economic situation turns worse.
Meanwhile, in GM's monthly sales call, executive director of global product planning, Michael DiGiovanni, said there was "no question the lower gas prices" were helping light truck sales. DiGiovanni said consumers of large and mid-sized SUVs were generally more resilient to having access to credit, but he said buyers of small compacts were being priced out.
Mark Laneve, GM's North America vice president of vehicle sales, service and marketing, said the company would unveil "very strong, competitive programs" in early 2009 with the focus on being competitive on a segment-to-segment basis, not using incentives to correct inventory problems.
"Hopefully 2009 will be a year that improves rather than deteriorates, even while starting at a relatively low level from the end of 2008," Laneve said.
GM received $4 billion of its total $13.4 billion payout on Dec. 31 and is scheduled to receive more money during the next two months. Its financial arm, GMAC LLC, also received $6 billion in federal aid. Chrysler received its $4 billion loan Friday.
Chrysler Chief Financial Officer Ron Kolka said the auto maker had enough money to make it through March, even when taking into consideration slowing sales.
The auto-industry loans were carved out of the government's $700 billion Troubled Asset Relief Program that originally was earmarked for ailing banks and other financial institutions.
Shares of Ford were up 1.6% to $2.62 in after-hours trading as GM's shares rose 1.1% to $3.75. Toyota's shares were down 13 cents after-hours.
2009年1月4日星期日
Steel Industry, in Slump, Looks to Federal Stimulus
The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes — and it is now in collapse — so will go the national economyThat maxim once applied to Detroit’s Big Three car companies, when they dominated American manufacturing. Now they are losing ground in good times and bad, and steel has replaced autos as the industry to watch for an early sign that a severe recession is beginning to lift.
The industry itself is turning to government for orders that, until the September collapse, had come from manufacturers and builders. Its executives are waiting anxiously for details of President-elect Barack Obama’s stimulus plan, and adding their voices to pleas for a huge public investment program — up to $1 trillion over two years — intended to lift demand for steel to build highways, bridges, electric power grids, schools, hospitals, water treatment plants and rapid transit.
“What we are asking,” said Daniel R. DiMicco, chairman and chief executive of the Nucor Corporation, a giant steel maker, “is that our government deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a ‘buy America’ clause.”
Economists in the Obama camp said the president-elect’s proposals to Congress will include significant infrastructure spending that draws on heavy industry.
New spending should provide an immediate jolt to the steel business, which has already gone through the painful makeover now demanded of automakers. Steel mills were closed, companies were consolidated, hundreds of thousands lost their jobs and the survivors agreed to concessions. As a result, productivity shot up and so did profits, to record levels in the first nine months of this year. Even as the economy wobbled, steel held its own.
But then the recession hit in force. Steel goes into nearly everything made in America, from homes and office buildings to cars, appliances and light bulb sockets, and as construction and manufacturing wound down, so did the output of steel, plunging 50 percent since September.
The steel industry’s collapse closely tracks the alarming late-autumn swoon in the national economy, as the housing bust and the credit crisis converted a mild downturn into “a severe one that has much further to run,” says Nigel Gault, chief domestic economist at IHS Global Insight, offering a view increasingly shared by forecasters.
Through August, steel production was actually up slightly for the year. The decline came slowly at first, and then with a rush in November and December. By late December, output was down to 1.02 million tons a week from 2.1 million tons on Aug. 30, the American Iron and Steel Institute reported. The price of a ton of steel is also down by half since late summer.
“We are making our steel at four mills instead of six,” said John Armstrong, a spokesman for the United States Steel Corporation, adding that two mills were recently idled and the four still operating are running at less than full capacity.
“The third quarter was one of the best in U.S. Steel’s history,” Mr. Armstrong added. “And it has been a very precipitous drop from there.”
The cutback has been particularly hard on workers at the big integrated mills like those at U.S. Steel and Arcelor Mittal USA, with their blast furnaces and coke ovens converting iron ore and other materials into steel. Operated at less than full capacity, these mills are less efficient than the equally large “minimills,” like Nucor, whose electric arc furnaces can be operated efficiently at lower speeds.
So the plant closings have been mostly at the integrated mills, whose 50,000 workers — roughly 40 percent of the nation’s steelworkers — are represented by the United Steelworkers. The union says that early this year it expects 20,000 workers to be on furlough.
Ten thousand already have been. Kathleen Loepker, a millwright and mechanic, is among the most recent to join their ranks. She was laid off on Dec. 19 from the U.S. Steel plant in Granite City, Ill., which shut, putting more than 2,000 employees out of work. With nearly 30 years seniority, Ms. Loepker, 48, has worked through bankruptcies, union concessions and consolidations during which her mill was acquired by U.S. Steel in 2003.
Her income today is tied more to incentive bonuses than in the past. On layoff, she is collecting $20 an hour, which is 80 percent of her base pay of $25.12 an hour. That base pay, rather than rising significantly, is fattened by incentive bonuses tied to amounts of steel produced and to profits. It had been averaging an additional $7 an hour — money now gone until the mill reopens. “No one knows when that will happen,” said Ms. Loepker, who lives by herself in a four-bedroom home she bought in nearby Belleville, three blocks from a married sister. “The company tells us the end of March, but they don’t know either,” Ms. Loepker said. “The uncertainty has everyone fearful.”
Not since the 1980s has American steel production been as low as it is today. Those were the Rust Belt years when many steel companies were failing and imports of better quality, lower cost steel were rising.
Foreign producers no longer have an advantage over the refurbished American companies. Indeed, imports, which represent about 30 percent of all steel sales in the United States, also are hurting as customers disappear.
The industry, in response, is lobbying the Obama transition team for infrastructure projects that would require big amounts of steel. Mass transit systems are high on the list, and so is bridge repair.
“We are sharing with the president-elect’s transition team our thoughts in terms of the industry’s policy priorities,” said Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute.
The Obama team has not yet revealed details of the president-elect’s soon-to-be-announced recovery plan other than to indicate that most of the package will probably go into infrastructure spending rather than tax breaks.
“If the president-elect really follows through, he’ll fund a lot of mass transit projects,” said Wilbur L. Ross Jr., the Wall Street deal maker who put together the steel conglomerate known as Arcelor Mittal USA. “All the big cities have these projects ready to go.”
The sharp slide in steel production has several causes. Construction and auto production have fallen sharply; between them, they account for 57 percent of the steel bought each year in the United States, according to the Iron and Steel Institute. Appliances, machinery and other electrical equipment account for an additional 13 percent, and the fall-off in production of these goods has also reduced steel orders.
Then there are the wholesalers, known in the steel industry as service centers. They buy in huge quantities from the mills, building up inventories and selling to customers like a construction company that needs I-beams to build a shopping center, or a manufacturer of auto parts in need of steel tubing.
Until recently, the inventories were bought on credit, and the service centers constantly replenished these stockpiles as steel was sold to end users. But now the service centers, unable to borrow money easily and reluctant to borrow anyway in these hard times, have stopped buying from the steel mills. They are selling off their inventories instead, raising cash in the process. It is a tactic that annoys Mr. DiMicco, the Nucor chief, no end.
“They don’t want to be without cash when they go into whatever the black hole is that is being created by the financial crisis,” he said, and faulted the nation’s lenders for collecting billions in government bailout money and then, in his view, refusing to lend it to the service centers on reasonable terms. “Credit completely dried up,” Mr. DiMicco said, “and it is still hard to get.”
The industry itself is turning to government for orders that, until the September collapse, had come from manufacturers and builders. Its executives are waiting anxiously for details of President-elect Barack Obama’s stimulus plan, and adding their voices to pleas for a huge public investment program — up to $1 trillion over two years — intended to lift demand for steel to build highways, bridges, electric power grids, schools, hospitals, water treatment plants and rapid transit.
“What we are asking,” said Daniel R. DiMicco, chairman and chief executive of the Nucor Corporation, a giant steel maker, “is that our government deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a ‘buy America’ clause.”
Economists in the Obama camp said the president-elect’s proposals to Congress will include significant infrastructure spending that draws on heavy industry.
New spending should provide an immediate jolt to the steel business, which has already gone through the painful makeover now demanded of automakers. Steel mills were closed, companies were consolidated, hundreds of thousands lost their jobs and the survivors agreed to concessions. As a result, productivity shot up and so did profits, to record levels in the first nine months of this year. Even as the economy wobbled, steel held its own.
But then the recession hit in force. Steel goes into nearly everything made in America, from homes and office buildings to cars, appliances and light bulb sockets, and as construction and manufacturing wound down, so did the output of steel, plunging 50 percent since September.
The steel industry’s collapse closely tracks the alarming late-autumn swoon in the national economy, as the housing bust and the credit crisis converted a mild downturn into “a severe one that has much further to run,” says Nigel Gault, chief domestic economist at IHS Global Insight, offering a view increasingly shared by forecasters.
Through August, steel production was actually up slightly for the year. The decline came slowly at first, and then with a rush in November and December. By late December, output was down to 1.02 million tons a week from 2.1 million tons on Aug. 30, the American Iron and Steel Institute reported. The price of a ton of steel is also down by half since late summer.
“We are making our steel at four mills instead of six,” said John Armstrong, a spokesman for the United States Steel Corporation, adding that two mills were recently idled and the four still operating are running at less than full capacity.
“The third quarter was one of the best in U.S. Steel’s history,” Mr. Armstrong added. “And it has been a very precipitous drop from there.”
The cutback has been particularly hard on workers at the big integrated mills like those at U.S. Steel and Arcelor Mittal USA, with their blast furnaces and coke ovens converting iron ore and other materials into steel. Operated at less than full capacity, these mills are less efficient than the equally large “minimills,” like Nucor, whose electric arc furnaces can be operated efficiently at lower speeds.
So the plant closings have been mostly at the integrated mills, whose 50,000 workers — roughly 40 percent of the nation’s steelworkers — are represented by the United Steelworkers. The union says that early this year it expects 20,000 workers to be on furlough.
Ten thousand already have been. Kathleen Loepker, a millwright and mechanic, is among the most recent to join their ranks. She was laid off on Dec. 19 from the U.S. Steel plant in Granite City, Ill., which shut, putting more than 2,000 employees out of work. With nearly 30 years seniority, Ms. Loepker, 48, has worked through bankruptcies, union concessions and consolidations during which her mill was acquired by U.S. Steel in 2003.
Her income today is tied more to incentive bonuses than in the past. On layoff, she is collecting $20 an hour, which is 80 percent of her base pay of $25.12 an hour. That base pay, rather than rising significantly, is fattened by incentive bonuses tied to amounts of steel produced and to profits. It had been averaging an additional $7 an hour — money now gone until the mill reopens. “No one knows when that will happen,” said Ms. Loepker, who lives by herself in a four-bedroom home she bought in nearby Belleville, three blocks from a married sister. “The company tells us the end of March, but they don’t know either,” Ms. Loepker said. “The uncertainty has everyone fearful.”
Not since the 1980s has American steel production been as low as it is today. Those were the Rust Belt years when many steel companies were failing and imports of better quality, lower cost steel were rising.
Foreign producers no longer have an advantage over the refurbished American companies. Indeed, imports, which represent about 30 percent of all steel sales in the United States, also are hurting as customers disappear.
The industry, in response, is lobbying the Obama transition team for infrastructure projects that would require big amounts of steel. Mass transit systems are high on the list, and so is bridge repair.
“We are sharing with the president-elect’s transition team our thoughts in terms of the industry’s policy priorities,” said Nancy Gravatt, a spokeswoman for the American Iron and Steel Institute.
The Obama team has not yet revealed details of the president-elect’s soon-to-be-announced recovery plan other than to indicate that most of the package will probably go into infrastructure spending rather than tax breaks.
“If the president-elect really follows through, he’ll fund a lot of mass transit projects,” said Wilbur L. Ross Jr., the Wall Street deal maker who put together the steel conglomerate known as Arcelor Mittal USA. “All the big cities have these projects ready to go.”
The sharp slide in steel production has several causes. Construction and auto production have fallen sharply; between them, they account for 57 percent of the steel bought each year in the United States, according to the Iron and Steel Institute. Appliances, machinery and other electrical equipment account for an additional 13 percent, and the fall-off in production of these goods has also reduced steel orders.
Then there are the wholesalers, known in the steel industry as service centers. They buy in huge quantities from the mills, building up inventories and selling to customers like a construction company that needs I-beams to build a shopping center, or a manufacturer of auto parts in need of steel tubing.
Until recently, the inventories were bought on credit, and the service centers constantly replenished these stockpiles as steel was sold to end users. But now the service centers, unable to borrow money easily and reluctant to borrow anyway in these hard times, have stopped buying from the steel mills. They are selling off their inventories instead, raising cash in the process. It is a tactic that annoys Mr. DiMicco, the Nucor chief, no end.
“They don’t want to be without cash when they go into whatever the black hole is that is being created by the financial crisis,” he said, and faulted the nation’s lenders for collecting billions in government bailout money and then, in his view, refusing to lend it to the service centers on reasonable terms. “Credit completely dried up,” Mr. DiMicco said, “and it is still hard to get.”
China Construction Bank grants Hebei Steel 50 bln yuan credit line
China Construction Bank Corporation (SHA 601939; HK 0939) said it has signed an agreement with newly established Hebei Iron and Steel Group (HBIS), the country's largest steel producer for a credit line worth 50 bln yuan.
In a statement published on its website, the bank said it will provide HBIS comprehensive financial services, including individual banking services for employees of HBIS.
In a statement published on its website, the bank said it will provide HBIS comprehensive financial services, including individual banking services for employees of HBIS.
Auto Industry Still Coming to Grips With the Damage of 2008
DETROIT — Carmakers will close out one of the most tumultuous and miserable years in their history Monday when they report what is certain to be another dreadful batch of monthly sales figures.
Each of the six largest automakers, including foreign and domestic brands, is expected to say that its sales in the United States fell at least 30 percent in December. The bleakest numbers will most likely come from General Motors and Chrysler, which both received billions of dollars in loans from the federal government at the end of December to help them remain solvent.
Over all, analysts say 2008 will end up as the worst year for selling cars and trucks since 1992. But that comparison does not capture how quickly business deteriorated in recent months, as credit markets tightened and consumer confidence sank.
“This is the kind of automotive recession that, quite frankly, many of us have never been through,” Erich Merkle, an automotive analyst in Grand Rapids, Mich., with the consulting firm Crowe Horwath, said Sunday. “We know that people who have lost their jobs aren’t in the market for a new car, but even those who have jobs aren’t in the market right now, because they’re concerned if they’ll still have a job in three, six or nine months.”
George Pipas, Ford Motor Company’s chief sales analyst, projected total industry sales for 2008 of about 13.5 million, a full three million fewer than in 2007. Not since 1974 has the market collapsed that much in a single year, he said.
Analysts said December’s sales rate would probably be worse than even the 26-year lows reached in October and November.
“And since the early ’80s, there are 70 million more people that can drive a vehicle,” Mr. Pipas told reporters during a briefing Friday. “So this is even worse per capita than 1982.”
Though high gas prices significantly affected the number and types of vehicles sold throughout much of 2008, the rapid drop of prices recently has done little to help the industry rebound. Sales from September through November were 31 percent lower than the same period in 2007, even as gas prices plummeted by 54 percent. Sales of sport utility vehicles, which used to generate huge profits for the Detroit automakers, were down 51 percent.
Mr. Pipas said passenger cars outsold S.U.V.’s and other light trucks last year for the first time since 2000. The sudden shift in consumers’ buying habits has left the automakers scrambling to build more cars and fewer trucks.
Ford is retooling three former truck factories so they can make compact and subcompact cars; Toyota now plans to make its Prius hybrid sedan in a new plant where it had intended to build S.U.V.’s. Last month, the company said it would delay the plant’s opening because of the market’s decline.
“In the late ’90s, our assumption was that light trucks could just continue, and would never turn back,” Mr. Pipas said. Now, he added, “we don’t think passenger cars will ever look back again.”
Sales of trucks and S.U.V.’s were probably higher in December than in the preceding months, most likely even outselling cars, analysts said, but that is primarily driven by big discounts on many larger models. The average value of incentives per vehicle was almost $1,000 higher in December than a year ago, but on trucks the increase was nearly $1,500, Mr. Pipas said. Full-size pickup trucks now are being discounted by an average of $7,000 to $8,000.
G.M. last week began offering zero percent or low-rate loans on many vehicles in a bid to attract shoppers who had been scared off by a lack of credit. Its lending arm, GMAC Financial Services, received a $5 billion investment from the Treasury Department and immediately reduced its minimum credit-scoring requirements for customers.
Edmunds.com, a Web site that gives car-buying advice to consumers, cited that news in noting an unusual flurry of inquiries on its site and at dealers in the final days of December. Edmunds said some dealers reported making 40 percent of their entire month’s sales in the last week and that site research on G.M. vehicles rose more than for other brands.
“Normally, I would say that such an increase in the last week of December is just at the high end of the usual seasonal pattern, but in the current environment I would say that it is dramatically good news,” David Tompkins, a senior analyst with Edmunds, said.
Yet the automakers are not optimistic about even a modest recovery in vehicle sales for at least several more months. Recent jobless numbers show continued weakening in the economy, and consumer confidence remains at historic lows.
“Consumer confidence, of all the factors you look at, that’s the No. 1 driver of new vehicle business,” Mark LaNeve, G.M.’s vice president for North American sales and marketing, said in a conference call last week.
Still, Mr. LaNeve said, “you’ve got to believe that 2009 is going to be a better year than 2008 was.”
Each of the six largest automakers, including foreign and domestic brands, is expected to say that its sales in the United States fell at least 30 percent in December. The bleakest numbers will most likely come from General Motors and Chrysler, which both received billions of dollars in loans from the federal government at the end of December to help them remain solvent.
Over all, analysts say 2008 will end up as the worst year for selling cars and trucks since 1992. But that comparison does not capture how quickly business deteriorated in recent months, as credit markets tightened and consumer confidence sank.
“This is the kind of automotive recession that, quite frankly, many of us have never been through,” Erich Merkle, an automotive analyst in Grand Rapids, Mich., with the consulting firm Crowe Horwath, said Sunday. “We know that people who have lost their jobs aren’t in the market for a new car, but even those who have jobs aren’t in the market right now, because they’re concerned if they’ll still have a job in three, six or nine months.”
George Pipas, Ford Motor Company’s chief sales analyst, projected total industry sales for 2008 of about 13.5 million, a full three million fewer than in 2007. Not since 1974 has the market collapsed that much in a single year, he said.
Analysts said December’s sales rate would probably be worse than even the 26-year lows reached in October and November.
“And since the early ’80s, there are 70 million more people that can drive a vehicle,” Mr. Pipas told reporters during a briefing Friday. “So this is even worse per capita than 1982.”
Though high gas prices significantly affected the number and types of vehicles sold throughout much of 2008, the rapid drop of prices recently has done little to help the industry rebound. Sales from September through November were 31 percent lower than the same period in 2007, even as gas prices plummeted by 54 percent. Sales of sport utility vehicles, which used to generate huge profits for the Detroit automakers, were down 51 percent.
Mr. Pipas said passenger cars outsold S.U.V.’s and other light trucks last year for the first time since 2000. The sudden shift in consumers’ buying habits has left the automakers scrambling to build more cars and fewer trucks.
Ford is retooling three former truck factories so they can make compact and subcompact cars; Toyota now plans to make its Prius hybrid sedan in a new plant where it had intended to build S.U.V.’s. Last month, the company said it would delay the plant’s opening because of the market’s decline.
“In the late ’90s, our assumption was that light trucks could just continue, and would never turn back,” Mr. Pipas said. Now, he added, “we don’t think passenger cars will ever look back again.”
Sales of trucks and S.U.V.’s were probably higher in December than in the preceding months, most likely even outselling cars, analysts said, but that is primarily driven by big discounts on many larger models. The average value of incentives per vehicle was almost $1,000 higher in December than a year ago, but on trucks the increase was nearly $1,500, Mr. Pipas said. Full-size pickup trucks now are being discounted by an average of $7,000 to $8,000.
G.M. last week began offering zero percent or low-rate loans on many vehicles in a bid to attract shoppers who had been scared off by a lack of credit. Its lending arm, GMAC Financial Services, received a $5 billion investment from the Treasury Department and immediately reduced its minimum credit-scoring requirements for customers.
Edmunds.com, a Web site that gives car-buying advice to consumers, cited that news in noting an unusual flurry of inquiries on its site and at dealers in the final days of December. Edmunds said some dealers reported making 40 percent of their entire month’s sales in the last week and that site research on G.M. vehicles rose more than for other brands.
“Normally, I would say that such an increase in the last week of December is just at the high end of the usual seasonal pattern, but in the current environment I would say that it is dramatically good news,” David Tompkins, a senior analyst with Edmunds, said.
Yet the automakers are not optimistic about even a modest recovery in vehicle sales for at least several more months. Recent jobless numbers show continued weakening in the economy, and consumer confidence remains at historic lows.
“Consumer confidence, of all the factors you look at, that’s the No. 1 driver of new vehicle business,” Mark LaNeve, G.M.’s vice president for North American sales and marketing, said in a conference call last week.
Still, Mr. LaNeve said, “you’ve got to believe that 2009 is going to be a better year than 2008 was.”
More auto industry-linked businesses eligible for bailout
The U.S. Treasury threw the door open to taxpayer financing for more companies and industries by drafting broad guidelines on auto industry aid. The guidelines, published Wednesday, would let officials provide funds to any company they deem important to making or financing cars. That leaves room to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors (GM), GMAC and Chrysler.
"There are going to be other industries that are going to have just as good a case," as the auto companies, former St. Louis Federal Reserve Bank president William Poole said in an interview. "We don't know what those other industries are going to be. Where does this process stop?"
The Motor & Equipment Manufacturers Association has been lobbying for use of federal funds as a backstop for parts makers in case they can't collect money owed by automakers.
The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.
FIND MORE STORIES IN: Barack Obama Detroit Connecticut General Motors Chrysler LLC Washington-based Enterprise Institute Stamford Delphi Himanshu Patel Lyle Gramley Troubled Asset Relief Program Stanford Group William Poole Vincent Reinhart Equipment Manufacturers Association Treasury officials "much prefer discretion, and so they would view the statement as being constructively ambiguous," Reinhart said.
The guidelines don't bind the government, so President-elect Barack Obama will have plenty of leeway to decide who succeeds and fails when he takes office. The bailout originally designed to buy assets from banks has become a fund to prop up lenders, insurers, carmakers and their finance arms and, now, any company that's important to those industries.
"The further you go, the slipperier the slope becomes, the more you open the door to anyone who says, 'Look, my firm is in trouble, I need help, too,' " said Lyle Gramley, a former Fed governor and now a Washington-based senior economic adviser for Stanford Group. "We don't want to go any further down that road than we absolutely have to."
The Treasury already has provided $6 billion in aid to GMAC, the financing arm of GM, and up to $17.4 billion for GM and Chrysler from the $700 billion bank rescue fund. GM on Wednesday got the first $4 billion loan of a $13.4 billion package. Chrysler is still negotiating details for its $4 billion.
As for expanding the program, the guidelines state: "Treasury will determine the form, terms and conditions of any investment made pursuant to this program on a case-by-case basis. Treasury may consider, among other things, the importance of the institution to production by, or financing of, the American automotive industry."
This week's deal between the Treasury and GMAC opened a new rescue program for the auto industry as part of the TARP. Treasury said then that the GMAC agreement was "part of a broader program to assist the domestic automotive industry in becoming financially viable."
There's been speculation that GM's bankrupt former parts unit Delphi might qualify for aid. "We would not be surprised to see additional government funds to GM to support a Delphi solution," JPMorgan Chase analyst Himanshu Patel said in a report.
With the GMAC loans, the Treasury has now earmarked $358.4 billion of the $700 billion bailout, though actual payouts have been less. When Congress OK'd TARP in October, it gave the administration the first of two $350 billion installments. After injecting capital into GMAC on Dec. 29, the Treasury called again for release of the rest.
The auto-rescue program could range from full bailouts of companies to merely keeping others going while in bankruptcy to ensure production continues, said Kirk Ludtke, an analyst at CRT Capital Group in Stamford, Conn.
"The Detroit 3 are still at risk," Ludtke said. "The government is acknowledging it needs to assure at least an orderly restructuring of the key players in the auto industry."
"There are going to be other industries that are going to have just as good a case," as the auto companies, former St. Louis Federal Reserve Bank president William Poole said in an interview. "We don't know what those other industries are going to be. Where does this process stop?"
The Motor & Equipment Manufacturers Association has been lobbying for use of federal funds as a backstop for parts makers in case they can't collect money owed by automakers.
The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington.
FIND MORE STORIES IN: Barack Obama Detroit Connecticut General Motors Chrysler LLC Washington-based Enterprise Institute Stamford Delphi Himanshu Patel Lyle Gramley Troubled Asset Relief Program Stanford Group William Poole Vincent Reinhart Equipment Manufacturers Association Treasury officials "much prefer discretion, and so they would view the statement as being constructively ambiguous," Reinhart said.
The guidelines don't bind the government, so President-elect Barack Obama will have plenty of leeway to decide who succeeds and fails when he takes office. The bailout originally designed to buy assets from banks has become a fund to prop up lenders, insurers, carmakers and their finance arms and, now, any company that's important to those industries.
"The further you go, the slipperier the slope becomes, the more you open the door to anyone who says, 'Look, my firm is in trouble, I need help, too,' " said Lyle Gramley, a former Fed governor and now a Washington-based senior economic adviser for Stanford Group. "We don't want to go any further down that road than we absolutely have to."
The Treasury already has provided $6 billion in aid to GMAC, the financing arm of GM, and up to $17.4 billion for GM and Chrysler from the $700 billion bank rescue fund. GM on Wednesday got the first $4 billion loan of a $13.4 billion package. Chrysler is still negotiating details for its $4 billion.
As for expanding the program, the guidelines state: "Treasury will determine the form, terms and conditions of any investment made pursuant to this program on a case-by-case basis. Treasury may consider, among other things, the importance of the institution to production by, or financing of, the American automotive industry."
This week's deal between the Treasury and GMAC opened a new rescue program for the auto industry as part of the TARP. Treasury said then that the GMAC agreement was "part of a broader program to assist the domestic automotive industry in becoming financially viable."
There's been speculation that GM's bankrupt former parts unit Delphi might qualify for aid. "We would not be surprised to see additional government funds to GM to support a Delphi solution," JPMorgan Chase analyst Himanshu Patel said in a report.
With the GMAC loans, the Treasury has now earmarked $358.4 billion of the $700 billion bailout, though actual payouts have been less. When Congress OK'd TARP in October, it gave the administration the first of two $350 billion installments. After injecting capital into GMAC on Dec. 29, the Treasury called again for release of the rest.
The auto-rescue program could range from full bailouts of companies to merely keeping others going while in bankruptcy to ensure production continues, said Kirk Ludtke, an analyst at CRT Capital Group in Stamford, Conn.
"The Detroit 3 are still at risk," Ludtke said. "The government is acknowledging it needs to assure at least an orderly restructuring of the key players in the auto industry."
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