NEW YORK (CNNMoney.com) -- Ford Motor reported record third-quarter net income Tuesday, far exceeding analyst expectations and continuing a surge in momentum for the recovering automaker.
Dearborn, Mich.-based Ford (F, Fortune 500) posted net income of $1.7 billion, or 43 cents per share, up from $997 million, or 29 cents a share, a year earlier. Analysts surveyed by Thomson Reuters expected Ford to report a 38-cent-a-share profit.
Ford's previous best third-quarter net income was $1.1 billion reported in 1997.
The automaker cited a strong product line, momentum in North America and continued success at Ford Credit as areas of growth.
"It's been the same story all year long," said David Whiston, an automotive analyst at Morningstar. "Better pricing in North America, and that offsets the small losses in Europe. The North American market is a real earnings driver."
Ford also announced plans to further strengthen its balance sheet by paying down its revolving credit line by $2 billion and prepay the remaining $3.6 billion in debt owed to a retiree health care trust.
"Ford sales continue to surge due to a stronger product lineup and improved consumer image," said Jesse Toprak, vice president of auto trends at TrueCar.com, in a statement. "Their retail sales are strong and transaction prices have been increasing this year, contributing to an improved bottom-line for the automaker."
Shares of Ford were flat in Tuesday trading, rebounding from a loss of about 1% earlier in the session. The automaker's stock has soared seven fold since February 2009 when it fell below $2 a share.
At the time, there were serious fears that it could follow General Motors and Chrysler down the road to bankruptcy and restructuring.
Ford avoided that fate, but its success left it with far more debt on its balance sheet than either GM or Chrysler, which used their bankruptcies and bailout billions to shed debt.
Now that Ford is once again turning a profit, it is using the surplus cash to pay down its debt, which will result in lower interest payments and eventually an improved credit rating.
"We are clearly ahead of where we thought we could be on improving our balance sheet, repaying our loans, and it's a very positive development," CEO Alan Mulally said during a conference call for investors.
Ford's debt will be reduced by $10.8 billion this year, Mulally said, which should result in savings of $800 million in annualized interest payments.
Ford's profitability has been accompanied by gains in market share. In the third quarter, Ford gained 1.4% in U.S. sales market share, while GM lost ground. And for the year, Ford is ahead of rival Toyota in U.S. sales.
The third quarter is typically weak for automakers as they discount and clear old inventory to make room for new models.
Ford expressed belief that the winning streak will continue, expecting increases in both cash flow and profitability in 2011.
"The key drivers for improvement in 2011 will be our growing product strength, a gradually strengthening economy and an unrelenting focus on improving the competitiveness of all our operations," Mulally said in a statement.
But the automaker noted that fourth-quarter profit expectations are lower than previous quarters due to depreciation expenses on leased vehicles and smaller improvements in the provision for credit losses.
On Monday, Ford said it will create up to 1,200 jobs in the distressed state of Michigan as it ramps up engineering and manufacturing operations to produce more fuel-efficient cars.
Source: www.cnn.com
October 26, 2010
BP sets out to rebuild reputation
By Jorn Madslien
Business reporter, BBC News, CBI annual conference
UK energy giant BP has outlined a strategy to revive the public's belief in its ability to operate in a responsible manner.
"We will earn back trust in BP and begin to restore the company's battered reputation," chief executive Bob Dudley told business leaders in London.
His comments came in his first external speech since taking the helm of BP.
Six months ago, the Deepwater Horizon rig exploded, causing a massive oil spill in the Gulf of Mexico.
Action taken
Central to attempts to rebuild BP's reputation is the story about its efforts following the leak, Mr Dudley believes.
"The first thing to say is that we have stopped the leak and made huge progress in cleaning up the spill," Mr Dudley said.
"Second, our containment and clean-up efforts have gotten results.
"Third, we are meeting our commitments as a responsible party of this accident."
Mr Dudley insisted BP was "committed to learning the lessons from these shattering events at all levels".
Some of the new knowledge would come from "other hazardous industries, including nuclear and chemicals industries", he said.
The lessons learned, which also included new ways of managing third-party contractors, would be applied across the group's global business, aided by a new safety division that will oversee these efforts.
Deepwater drilling
Mr Dudley was also eager to stress that BP was "part of the American community", and that rather than pull out of the US, the company would get more deeply involved.
After all, he said, BP was the largest producer of oil and gas in the US as well as a major employer, with 23,000 people on its payroll.
"I did not become chief executive of BP in order to walk away from the US. BP will not be quitting America," he said.
BP could soon be back drilling in deep waters off the US coast, after Washington lifted a temporary moratorium, not least because the world will need more oil and gas, he reasoned.
"The deep waters are becoming an increasingly important source of energy to fuel the global economy," Mr Dudley said.
"And we are one of only a handful of companies with the financial and technological strength to undertake development projects in these difficult geographies."
BP's return may be controversial in the US, where many are still angry about the Gulf accident, but Mr Dudley is eager to reassure the American people.
"It can be done safely," Mr Dudley said.
"A silver lining of the event is the significant and sustained advance in industry preparedness that will now exist going forward, [including] the learnings and the equipment and techniques invested by necessity under pressure to contain the oil and stop the well."
Source: bc.co.uk
Business reporter, BBC News, CBI annual conference
UK energy giant BP has outlined a strategy to revive the public's belief in its ability to operate in a responsible manner.
"We will earn back trust in BP and begin to restore the company's battered reputation," chief executive Bob Dudley told business leaders in London.
His comments came in his first external speech since taking the helm of BP.
Six months ago, the Deepwater Horizon rig exploded, causing a massive oil spill in the Gulf of Mexico.
Action taken
Central to attempts to rebuild BP's reputation is the story about its efforts following the leak, Mr Dudley believes.
"The first thing to say is that we have stopped the leak and made huge progress in cleaning up the spill," Mr Dudley said.
"Second, our containment and clean-up efforts have gotten results.
"Third, we are meeting our commitments as a responsible party of this accident."
Mr Dudley insisted BP was "committed to learning the lessons from these shattering events at all levels".
Some of the new knowledge would come from "other hazardous industries, including nuclear and chemicals industries", he said.
The lessons learned, which also included new ways of managing third-party contractors, would be applied across the group's global business, aided by a new safety division that will oversee these efforts.
Deepwater drilling
Mr Dudley was also eager to stress that BP was "part of the American community", and that rather than pull out of the US, the company would get more deeply involved.
After all, he said, BP was the largest producer of oil and gas in the US as well as a major employer, with 23,000 people on its payroll.
"I did not become chief executive of BP in order to walk away from the US. BP will not be quitting America," he said.
BP could soon be back drilling in deep waters off the US coast, after Washington lifted a temporary moratorium, not least because the world will need more oil and gas, he reasoned.
"The deep waters are becoming an increasingly important source of energy to fuel the global economy," Mr Dudley said.
"And we are one of only a handful of companies with the financial and technological strength to undertake development projects in these difficult geographies."
BP's return may be controversial in the US, where many are still angry about the Gulf accident, but Mr Dudley is eager to reassure the American people.
"It can be done safely," Mr Dudley said.
"A silver lining of the event is the significant and sustained advance in industry preparedness that will now exist going forward, [including] the learnings and the equipment and techniques invested by necessity under pressure to contain the oil and stop the well."
Source: bc.co.uk
October 25, 2010
Honda recalling nearly half a million cars
By Aaron Smith, staff writer
NEW YORK (CNNMoney.com) -- Honda has announced a recall of nearly half a million vehicles with brake problems, just days after Toyota announced a similar recall.
The U.S. division of the Japanese automaker Honda Motor Co (HMC). said it was recalling 471,820 Odysseys and Acura RLs, made from 2005 to 2007, due to concerns of possible degradation to the brake systems.
The automaker said it was concerned about the use of non-Honda branded brake fluid. Honda said that its own brake fluid contains polymers that act as lubricants. The use of non-Honda brake fluid could cause a rubber seal in the brake master cylinder to dry out, possibly resulting in a fluid leak, the company said.
"A leak of brake fluid could lead to a change in brake fluid feel and, overtime, a degradation in braking performance, increasing the risk of a crash," said Honda, in its recall notice.
On Oct. 21, Toyota Motor Sales, the U.S. division of Toyota Motor Corp (TM)., said that it is recalling 740,000 vehicles with potentially unsafe brakes. Toyota's description of the problem was very similar to Honda's. Last week, Honda said it would be making a recall announcement similar to Toyota's.
The Toyota recall applied to Avalon models built from 2005 through 2006, non-hybrid Highlanders from 2004 through 2006, the Lexus RX330, and 2006 models of the Lexus GS300, IS250 and IS350.
Source: cnn.com
NEW YORK (CNNMoney.com) -- Honda has announced a recall of nearly half a million vehicles with brake problems, just days after Toyota announced a similar recall.
The U.S. division of the Japanese automaker Honda Motor Co (HMC). said it was recalling 471,820 Odysseys and Acura RLs, made from 2005 to 2007, due to concerns of possible degradation to the brake systems.
The automaker said it was concerned about the use of non-Honda branded brake fluid. Honda said that its own brake fluid contains polymers that act as lubricants. The use of non-Honda brake fluid could cause a rubber seal in the brake master cylinder to dry out, possibly resulting in a fluid leak, the company said.
"A leak of brake fluid could lead to a change in brake fluid feel and, overtime, a degradation in braking performance, increasing the risk of a crash," said Honda, in its recall notice.
On Oct. 21, Toyota Motor Sales, the U.S. division of Toyota Motor Corp (TM)., said that it is recalling 740,000 vehicles with potentially unsafe brakes. Toyota's description of the problem was very similar to Honda's. Last week, Honda said it would be making a recall announcement similar to Toyota's.
The Toyota recall applied to Avalon models built from 2005 through 2006, non-hybrid Highlanders from 2004 through 2006, the Lexus RX330, and 2006 models of the Lexus GS300, IS250 and IS350.
Source: cnn.com
October 22, 2010
How safe are Chile's copper mines?
The accident at the San Jose mine, where 33 men remained trapped underground, is a reminder that digging for copper in Chile can be a dangerous business, particularly when the price of the metal is high.
Chile produces a third of all the copper in the world. The country's economic welfare is heavily dependent on exports of the metal to Europe, the US and, increasingly, India and China.
When the copper price is low, multi-national companies like BHP Billiton, Anglo American and Xstrata - along with Chile's state-owned mining giant Codelco - account for the lion's share of production, because they are big enough to ride out the depressed prices.
But when the price is high, as it has been in recent years, smaller companies enter the market too. Speculative part-time miners - some with only limited experience - head out into the Atacama Desert and the foothills of the Andes.
Mines that had long since closed because they could no longer turn a profit suddenly find that they can. They reopen, often with no better safety standards than those in place on the day they closed.
The mine at San Jose is owned by San Esteban, a medium-sized mining company which is now being sued by families of some of the miners trapped underground, who claim the company failed to make safety improvements despite three deaths at its mines over six years, and dozens of accidents.
They are also suing Sernageomin, the state regulator of mines, for allowing the company to reopen in 2008 following its closure a year earlier over a death.
"There is undoubtedly a link between the price of metal and the number of people operating in the business, particularly in the small and medium-sized mines," said Miguel Angel Duran, president of Chile's Mining Council, which represents 16 of the biggest mining companies operating in Chile.
In 2007 and 2008, at the height of the boom in copper prices, there were more deaths in Chilean mines than in any other years during the decade. In 2007, when the copper price averaged a record $3.24 per lb, 40 miners died in accidents. In 2008, when copper was at $2.88 per lb, the death toll hit 43. The average for the decade was 34.
In contrast, the safest year in the history of Chilean mining was 1999, when the average copper price fell to just 72 cents, its lowest level in over 10 years, a consequence of the Asian crisis.
For the industry's smaller players, whose safety standards tend to be the poorest, there was simply no incentive to mine copper.
"It shouldn't be the case that when the price rises, the number of accidents rises too," said Andy King, national co-ordinator for health and safety at the massive North American trade union, United Steelworkers.
"In fact, the opposite should be the case," said Mr King, who visited the San Jose mine last month and has been deeply critical of safety standards at Chilean mines. "The higher the price of the metal, the safer the mine should be, because the company has more funds to improve safety."
Despite the fluctuations in both the price of copper and the number of accidents, the long-term trend is positive. There are far fewer serious accidents at Chilean mines than in the past.
The National Geology and Mining Service (Sernageomin), the state body tasked with regulating the industry, says there was an average of 0.41 deaths in Chilean mines for every one million hours worked during the 1980s. By the 1990s that figure had dropped to 0.28 and by the past decade to 0.13.
Figures from Chile's Department of Social Security suggest that mining is among the safest industries in the country.
Last year, there were 2.2 accidents in Chile's mines for every 100 workers, compared to 5.7 in the construction industry and 7.2 in agriculture and fishing. That is largely because mining is dominated by foreign companies with stringent internal safety procedures.
In the wake of the San Jose accident, the government has said it will more than double the number of mine inspectors in Chile, ensuring that on average, the country's mines are inspected every eight months. Until now, there were just 18 inspectors at Sernageomin charged with overseeing an industry which employs 175,000 people.
In addition, President Sebastian Pinera has established a commission to look into safety standards at Chilean workplaces across the economy. The commission has 90 days to come up with proposals to make Chile a safer place in which to work. It is due to report its findings on 22 November.
Whatever the commission proposes, mining in Chile will remain a risky business. In the first eight months of this year, 31 Chilean miners died in accidents caused by cave-ins, electrocution, explosions, asphyxiation and falls from heights.
If all goes to plan in the next few days and weeks, the names of the 33 men trapped at the San Jose mine will not be added to that lamentable death toll.
By Gideon Long BBC News, San Jose mine, Copiapo
www.bbc.co.uk
Chile produces a third of all the copper in the world. The country's economic welfare is heavily dependent on exports of the metal to Europe, the US and, increasingly, India and China.
When the copper price is low, multi-national companies like BHP Billiton, Anglo American and Xstrata - along with Chile's state-owned mining giant Codelco - account for the lion's share of production, because they are big enough to ride out the depressed prices.
But when the price is high, as it has been in recent years, smaller companies enter the market too. Speculative part-time miners - some with only limited experience - head out into the Atacama Desert and the foothills of the Andes.
Mines that had long since closed because they could no longer turn a profit suddenly find that they can. They reopen, often with no better safety standards than those in place on the day they closed.
The mine at San Jose is owned by San Esteban, a medium-sized mining company which is now being sued by families of some of the miners trapped underground, who claim the company failed to make safety improvements despite three deaths at its mines over six years, and dozens of accidents.
They are also suing Sernageomin, the state regulator of mines, for allowing the company to reopen in 2008 following its closure a year earlier over a death.
"There is undoubtedly a link between the price of metal and the number of people operating in the business, particularly in the small and medium-sized mines," said Miguel Angel Duran, president of Chile's Mining Council, which represents 16 of the biggest mining companies operating in Chile.
In 2007 and 2008, at the height of the boom in copper prices, there were more deaths in Chilean mines than in any other years during the decade. In 2007, when the copper price averaged a record $3.24 per lb, 40 miners died in accidents. In 2008, when copper was at $2.88 per lb, the death toll hit 43. The average for the decade was 34.
In contrast, the safest year in the history of Chilean mining was 1999, when the average copper price fell to just 72 cents, its lowest level in over 10 years, a consequence of the Asian crisis.
For the industry's smaller players, whose safety standards tend to be the poorest, there was simply no incentive to mine copper.
"It shouldn't be the case that when the price rises, the number of accidents rises too," said Andy King, national co-ordinator for health and safety at the massive North American trade union, United Steelworkers.
"In fact, the opposite should be the case," said Mr King, who visited the San Jose mine last month and has been deeply critical of safety standards at Chilean mines. "The higher the price of the metal, the safer the mine should be, because the company has more funds to improve safety."
Despite the fluctuations in both the price of copper and the number of accidents, the long-term trend is positive. There are far fewer serious accidents at Chilean mines than in the past.
The National Geology and Mining Service (Sernageomin), the state body tasked with regulating the industry, says there was an average of 0.41 deaths in Chilean mines for every one million hours worked during the 1980s. By the 1990s that figure had dropped to 0.28 and by the past decade to 0.13.
Figures from Chile's Department of Social Security suggest that mining is among the safest industries in the country.
Last year, there were 2.2 accidents in Chile's mines for every 100 workers, compared to 5.7 in the construction industry and 7.2 in agriculture and fishing. That is largely because mining is dominated by foreign companies with stringent internal safety procedures.
In the wake of the San Jose accident, the government has said it will more than double the number of mine inspectors in Chile, ensuring that on average, the country's mines are inspected every eight months. Until now, there were just 18 inspectors at Sernageomin charged with overseeing an industry which employs 175,000 people.
In addition, President Sebastian Pinera has established a commission to look into safety standards at Chilean workplaces across the economy. The commission has 90 days to come up with proposals to make Chile a safer place in which to work. It is due to report its findings on 22 November.
Whatever the commission proposes, mining in Chile will remain a risky business. In the first eight months of this year, 31 Chilean miners died in accidents caused by cave-ins, electrocution, explosions, asphyxiation and falls from heights.
If all goes to plan in the next few days and weeks, the names of the 33 men trapped at the San Jose mine will not be added to that lamentable death toll.
By Gideon Long BBC News, San Jose mine, Copiapo
www.bbc.co.uk
October 21, 2010
Hyundai: We're more American than Detroit
NEW YORK (CNNMoney.com) -- By next year about 80% of the vehicles Korean automaker Hyundai sells in the United States will be built here, the CEO of the automaker's U.S. arm told CNNMoney.
That percentage would likely put Hyundai at the top of the "Made in the USA" rankings among all automakers operating in the U.S., including Ford, Chrysler and General Motors.
Hyundai has been on a tear lately. The 2011 Sonata earned a top safety rating earlier this month, its vehicles have been getting rave reviews and its U.S. sales are booming.
Hyundai was one of the very few automakers to manage a sales increase in 2009, and last month they were up again by nearly half from the year before.
Considering its fast-moving success in the American market, CNNMoney asked Hyundai Motor America chief John Krafcik if he feared a "buy American" backlash.
Krafcik pointed out that Hyundai plans to move production of its popular Elantra from Korea to the automaker's Montgomery, Ala., plant later this year.
"I'm going to build my three best selling cars in the U.S.," Krafcik said. "Ford builds its best selling car in Mexico."
Test your knowledge: Which car is more American?
The Elantra is Hyundai's second most popular model. The Hyundai Sonata mid-sized sedan, Hyundai's biggest seller, and the Santa Fe SUV, which together make up half of Hyundai's U.S. sales, are already built here.
Ford Motor Co. builds the Fusion mid-sized sedan in Mexico. Ford was not able to say what percentage of the cars it sells in the U.S. are built here.
Popular Ford models, such as the Edge SUV and the Fiesta sub-compact, are built in Mexico and Canada. Even though the top sellers are built elsewhere, the bulk of Ford cars sold in the U.S. are built here. Still, they tally up to less than 80%.
Ford's not terribly bothered by the comparison, though.
"I think we're encouraged that, overall, American manufacturing is competitive," said Ford spokesman John Stoll.
Ford has also "in-sourced" a number of manufacturing jobs recently, bringing thousands of jobs back to the U.S. as it works with the United Autoworkers Union to make its older plants more competitive, he said.
Chrysler also didn't provide an exact figure, but some of Chrysler's most popular models, including its minivans and large sedans such as the Chrysler 300 and Dodge Charger, are built in Canada. That would put their U.S. production below 80%.
General Motors said between 60% and 70% of the cars it sells in the U.S. are assembled here.
Automakers generally don't break out the percentage of cars they sell that are built in the U.S. because, with free trade agreements, cars built in Canada, Mexico and the U.S. are counted together as "North American production."
Playing with numbers. Although Hyundai's 80% goal sounds impressive, the actual number of vehicles it builds domestically pales in comparison to major U.S. automakers.
For example: If GM only built about 66% of the vehicles it sold in the U.S. domestically in 2009 that would mean that GM would have more than tripled the 400,000 cars Hyundai expects to build in the U.S. next year.
Also, production figures like these deal only with "final assembly." In the case of Chrysler, for instance, engines and transmissions for many of the cars it assembles in Canada are built in U.S. factories and shipped north. With most major automakers, various components and parts move back and forth among Canada, Mexico and the United States, making it difficult to point to one place where a car is "built."
Analysts at J.D. Power and Associates don't quite share Krafcik's expectations for U.S. production.
"I don't have it at 80%," said J.D. Power analyst Jeff Schuster. "I have it closer to 70%."
Making Krafcik's "80%" prediction come true would require a big increase in Elantra and Santa Fe sales, similar to the boost that Sonata sales got after that model's recent redesign.
Schuster says sales of the Elantra and Santa Fe should rise significantly with their coming redesigns. The question is: By how much?
It's not about PR, it's about the dollar. Krafcik boasted of Hyundai's commitment to local market production. While it may offer some public relations benefit, that isn't the main reason for such a move, said auto analyst Todd Turner of Car Concepts.
"This corporation doesn't really make decisions based on PR," he said.
For foreign automakers, making cars in the U.S. provides two big benefits. For one, it protects them against changes in the value of their own currency relative to the dollar. Paying to build cars in South Korean Won then selling them in U.S. dollars can be difficult if the dollar loses value against the Won.
Second, it makes it easier to adjust to rapid shifts in consumer demands. If U.S. gas prices shoot up and car buyers start demanding more Elantra's and fewer Sonatas, production can be shifted and deliveries to dealers can start almost immediately. Not so when factories are an ocean away.
By Peter Valdes-Dapena, senior writer
Source: www.cnn.com
That percentage would likely put Hyundai at the top of the "Made in the USA" rankings among all automakers operating in the U.S., including Ford, Chrysler and General Motors.
Hyundai has been on a tear lately. The 2011 Sonata earned a top safety rating earlier this month, its vehicles have been getting rave reviews and its U.S. sales are booming.
Hyundai was one of the very few automakers to manage a sales increase in 2009, and last month they were up again by nearly half from the year before.
Considering its fast-moving success in the American market, CNNMoney asked Hyundai Motor America chief John Krafcik if he feared a "buy American" backlash.
Krafcik pointed out that Hyundai plans to move production of its popular Elantra from Korea to the automaker's Montgomery, Ala., plant later this year.
"I'm going to build my three best selling cars in the U.S.," Krafcik said. "Ford builds its best selling car in Mexico."
Test your knowledge: Which car is more American?
The Elantra is Hyundai's second most popular model. The Hyundai Sonata mid-sized sedan, Hyundai's biggest seller, and the Santa Fe SUV, which together make up half of Hyundai's U.S. sales, are already built here.
Ford Motor Co. builds the Fusion mid-sized sedan in Mexico. Ford was not able to say what percentage of the cars it sells in the U.S. are built here.
Popular Ford models, such as the Edge SUV and the Fiesta sub-compact, are built in Mexico and Canada. Even though the top sellers are built elsewhere, the bulk of Ford cars sold in the U.S. are built here. Still, they tally up to less than 80%.
Ford's not terribly bothered by the comparison, though.
"I think we're encouraged that, overall, American manufacturing is competitive," said Ford spokesman John Stoll.
Ford has also "in-sourced" a number of manufacturing jobs recently, bringing thousands of jobs back to the U.S. as it works with the United Autoworkers Union to make its older plants more competitive, he said.
Chrysler also didn't provide an exact figure, but some of Chrysler's most popular models, including its minivans and large sedans such as the Chrysler 300 and Dodge Charger, are built in Canada. That would put their U.S. production below 80%.
General Motors said between 60% and 70% of the cars it sells in the U.S. are assembled here.
Automakers generally don't break out the percentage of cars they sell that are built in the U.S. because, with free trade agreements, cars built in Canada, Mexico and the U.S. are counted together as "North American production."
Playing with numbers. Although Hyundai's 80% goal sounds impressive, the actual number of vehicles it builds domestically pales in comparison to major U.S. automakers.
For example: If GM only built about 66% of the vehicles it sold in the U.S. domestically in 2009 that would mean that GM would have more than tripled the 400,000 cars Hyundai expects to build in the U.S. next year.
Also, production figures like these deal only with "final assembly." In the case of Chrysler, for instance, engines and transmissions for many of the cars it assembles in Canada are built in U.S. factories and shipped north. With most major automakers, various components and parts move back and forth among Canada, Mexico and the United States, making it difficult to point to one place where a car is "built."
Analysts at J.D. Power and Associates don't quite share Krafcik's expectations for U.S. production.
"I don't have it at 80%," said J.D. Power analyst Jeff Schuster. "I have it closer to 70%."
Making Krafcik's "80%" prediction come true would require a big increase in Elantra and Santa Fe sales, similar to the boost that Sonata sales got after that model's recent redesign.
Schuster says sales of the Elantra and Santa Fe should rise significantly with their coming redesigns. The question is: By how much?
It's not about PR, it's about the dollar. Krafcik boasted of Hyundai's commitment to local market production. While it may offer some public relations benefit, that isn't the main reason for such a move, said auto analyst Todd Turner of Car Concepts.
"This corporation doesn't really make decisions based on PR," he said.
For foreign automakers, making cars in the U.S. provides two big benefits. For one, it protects them against changes in the value of their own currency relative to the dollar. Paying to build cars in South Korean Won then selling them in U.S. dollars can be difficult if the dollar loses value against the Won.
Second, it makes it easier to adjust to rapid shifts in consumer demands. If U.S. gas prices shoot up and car buyers start demanding more Elantra's and fewer Sonatas, production can be shifted and deliveries to dealers can start almost immediately. Not so when factories are an ocean away.
By Peter Valdes-Dapena, senior writer
Source: www.cnn.com
October 16, 2010
More details surface on Apple's next-generation MacBook Airs
By Kasper Jade
Published: 11:00 AM EST
A few more alleged details on Apple's forthcoming revamp of the MacBook Air line continue to trickle in, with one data point likely providing an explanation for the photo of a unreleased 13.3-inch MacBook Air design that surfaced overnight.
One of the people who helped flesh out some of the specifics in AppleInsider's report friday on the 11.6-inch MacBook Air has added a bit more color to story. According to this person:
* The 11.6-inch MacBook Air won't replace the 13.3-inch model, but will instead complement it as a more aggressively-priced option.
* Both the new 11.6- and 13.3-inch models sport matching outfits in the form of new, all-unibody designs and single button trackpads.
* The port door found on the existing MacBook Air is gone from the new designs, which feature a port layout similar to the existing MacBook Pros.
* The new "SSD card" storage is based off an SATA connection.
* The base component of both models is just slightly thicker than a standard USB port at its thickest point.
As such, AppleInsider believes the photo of the mysterious 13.3-inch MacBook Air that appeared on Engadget last night is indeed a prototype (from back in April) of the new 13.3-inch MacBook Air and is architecturally very close to what Apple plans to release next week alongside the new 11.6-inch model.
From that image, along with one also published of the machine's system profile, it appears that:
* The new SSD card-based storage sits above and to the left of the new battery chamber, which appears to include 4 separate battery components.
* The unit has dual USB ports, one on each side
* Other I/O include a MagSafe power adapter, mini DisplayPort, and SD card reader
* The prototype from April is running the same 1.86GHz Core 2 Duo SL9400 processor found in the current generation MacBook Air
* It also has 2GB of memory as standard
* Bus speed clocks in at 1.07GHz
* The unit identifies itself as MacBook Air 3,1
Published: 11:00 AM EST
A few more alleged details on Apple's forthcoming revamp of the MacBook Air line continue to trickle in, with one data point likely providing an explanation for the photo of a unreleased 13.3-inch MacBook Air design that surfaced overnight.
One of the people who helped flesh out some of the specifics in AppleInsider's report friday on the 11.6-inch MacBook Air has added a bit more color to story. According to this person:
* The 11.6-inch MacBook Air won't replace the 13.3-inch model, but will instead complement it as a more aggressively-priced option.
* Both the new 11.6- and 13.3-inch models sport matching outfits in the form of new, all-unibody designs and single button trackpads.
* The port door found on the existing MacBook Air is gone from the new designs, which feature a port layout similar to the existing MacBook Pros.
* The new "SSD card" storage is based off an SATA connection.
* The base component of both models is just slightly thicker than a standard USB port at its thickest point.
As such, AppleInsider believes the photo of the mysterious 13.3-inch MacBook Air that appeared on Engadget last night is indeed a prototype (from back in April) of the new 13.3-inch MacBook Air and is architecturally very close to what Apple plans to release next week alongside the new 11.6-inch model.
From that image, along with one also published of the machine's system profile, it appears that:
* The new SSD card-based storage sits above and to the left of the new battery chamber, which appears to include 4 separate battery components.
* The unit has dual USB ports, one on each side
* Other I/O include a MagSafe power adapter, mini DisplayPort, and SD card reader
* The prototype from April is running the same 1.86GHz Core 2 Duo SL9400 processor found in the current generation MacBook Air
* It also has 2GB of memory as standard
* Bus speed clocks in at 1.07GHz
* The unit identifies itself as MacBook Air 3,1
Faegre & Benson Unveils International Business Trends Report
A survey by international law firm Faegre & Benson LLP suggests many leading U.S. multinational companies are focused on overseas investment and expansion as a means of driving growth. More than half of survey respondents view China as the most promising country in which to grow sales and add production capacity over the next three years.
Drawing on information provided by nearly 400 C-level executives and general counsel, Faegre & Benson compiled the International Business Trends 2010 report. The report looks at a variety of trends, including markets in which these companies have operations or plan to establish operations, recent transaction activity and outlook, challenges to doing business across borders, and international revenue expectations.
Survey respondents represent global companies such as Target, 3M, General Mills, Ecolab, Best Buy, Boston Scientific, International Dairy Queen, and Cargill, as well as smaller public and private enterprises.
Other notable findings in the report include:
* More than 70 percent of survey respondents consider international investment and expansion to be a “primary” or “significant” focus of their company’s long-term growth strategy.
* Nearly half (46 percent) of companies participating in the survey derive 25 percent or more of their revenue from outside the U.S.
* Fifty two percent of respondents expect to grow non-U.S. revenue by 10 percent to 30 percent over the next three years, and 22 percent of respondents expect to grow non-U.S. revenue by more than 30 percent.
* Among respondents from large companies (revenues of more than $1 billion per year), 54 percent anticipate completing four or more acquisitions outside the U.S. over the next three years.
* A majority of respondents are looking at joint ventures with non-U.S. companies as a means of expansion—with 53 percent of companies anticipating one to three such transactions, and 16 percent of companies anticipating four or more—over the next three years.
* More than half (54 percent) of respondents indicate that “difficulty finding suitable targets” is their company’s most significant challenge in completing international acquisitions.
* Fifty nine percent of respondents plan to expand manufacturing capacity outside of the U.S. over the next three years. Reasons include facilitating sales in a key international market (56 percent), lowering the cost of production (23 percent), establishing technical expertise in the region (11 percent), or to accommodating a customer who requires local production (10 percent).
Source: www.kansascity.com
Sestak jockeys for jobs authority
MIDDLETOWN — With Keystone State payrolls smaller than they were in 1999, Pennsylvania’s candidates for U.S.
Senate worked Friday to control the debate over where the jobs went, and why they’re not coming back.
Republican Pat Toomey, echoing business leaders, has seized on Obama administration policies supported by Democrat Joe Sestak, such as the new federal health care law. Toomey says such policies are slowing the recovery; worries over the cost of new regulations and taxes have rendered companies unwilling to hire, he has said.
But Sestak, struggling to gain ground in independent polls, is targeting policies supported by Toomey that, he maintains, are friendly to multinational companies and give them incentives to move operations to foreign countries.
Toomey approves of China dumping cheap, government-subsidized goods on American consumers and supports a loophole that allows American companies to earn profits overseas without paying taxes on them at home, Sestak said.
In comparison, Sestak said he has pushed for tax breaks and guaranteed bank loans to small businesses, which do the
most hiring in the nation’s economy.
“This is the engine of our economy, this is it, small businesses. Congressman Toomey says it’s ‘an unfortunate tendency’ to buy American,” Sestak told about two dozen employees of a Harrisburg- area manufacturer of exercise and rehabilitation pools.
Sestak is a second-term U.S. House member from the Philadelphia suburbs and a former Navy admiral whose credentials during a 31-year career include commanding an aircraft battle group in support of the wars in Afghanistan and Iraq.
Toomey is a former investment banker and restaurant owner who also represented the Allentown area in Congress from 1999 to 2005. He more recently headed up the Washington, D.C.-based free-market advocacy group, Club for Growth.
Two weeks ago, the U.S. House overwhelmingly approved a measure that would allow the federal government to seek trade sanctions against China and other nations for manipulating their currency to gain trade advantages. Every U.S. House member from Pennsylvania voted for it, including Sestak.
Toomey said he would have voted against it, calling it bad economic policy.
Slapping tariffs on goods is tantamount to imposing a tax on consumers, Toomey said, even though he sees some merit to pressuring China to allow the value of its currency to rise. And he said taxing the foreign profits of American companies would simply create a stronger incentive for them to move their headquarters overseas.
“What we have to do is strengthen our own businesses in the United States so that we can compete,” Toomey said during a conference call with reporters Friday.
The recession wasn’t as severe in Pennsylvania as elsewhere in the country. However, Pennsylvanians who lost their jobs might not know it’s over. Payrolls have dropped by 230,000 jobs — or one in every 25 — since April 2008, when job loses hit the high mark of 5.8 million.
The number of unemployed people seeking first-time benefits is down substantially from the recession, but higher than normal.
More than 22,000 unemployed Pennsylvanians applied for first-time benefits during the week ending Oct. 2. That’s down from more than 30,000 a year ago. However, it remains above the September weekly average of 17,000 from 2001 to 2007, according to labor economist Mark Price, of the Harrisburg-based Keystone Research Center.
The race between Sestak and Toomey is ultra-competitive. New TV ads by the campaigns and outside groups are emerging at a rate of one per-day in October.
So far, Toomey leads in independent polls, fundraising and assistance from allies that buy TV ads, such as the U.S. Chamber of Commerce. However, Sestak entered October with a slight cash advantage over Toomey, according to information released by the campaigns Friday.
Source: http://www.centredaily.com/
October 15, 2010
The Philippines: Shell in tax probe
The Philippine unit of Royal Dutch Shell probably never expected to be called “a sacred cow” even though it is one of the country’s best-known companies. But neither did Pilipinas Shell Petroleum think that it might be accused of tax dodging or “technical” smuggling.
But that’s what’s happened. The company has become the first multinational to be hit by President Benigno Aquino III’s high-profile campaign against alleged tax-dodgers. And it may not be the last.The country’s bureau of customs announced on Thursday that its “campaign against tax dodgers shifted to a much higher gear with the filing of a 24-billion peso technical smuggling complaint against the multinational Pilipinas Shell Petroleum Corp.
Angelito Alvarez, the customs chief, said the criminal complaint against Shell “should prove to everyone that President Aquino’s campaign against smuggling, corruption and other economic crimes respect no sacred cows.”
The complaint against Shell, which runs one of two petroleum refineries in the Philippines, is part of a public assault on suspected tax evaders and smugglers launched shortly after Aquino’s inauguration on June 30. He vowed not to impose new taxes during the election campaign. Instead, he is doing all he can to curb tax evasion that swallows as much as 250bn pesos a year. The budget deficit this year is seen to grow to a record 325bn pesos.
At least once a week since July, tax and customs authorities have been filing complaints against companies and wealthy individuals suspected of failing to pay the correct taxes. Shell is the first multinational company caught in the drive that has so far targeted a wealthy pawnshop operator, a waste management company and other medium-scale businesses.
The customs bureau alleged that Pilipinas Shell evaded 2.7bn pesos in excise taxes and value added taxes by misclassifying or misdeclaring unleaded gasoline imports as tax-exempt substances to escape tax payments. It is seeking additional penalties of 21.8bn pesos.
The complaint has been submitted to the Department of Justice, which will decide whether or not to file a suit before a court after an investigation. The company’s spokesman did not reply to a request for comment. One of Shell’s external counsels downplayed the complaint, saying it was a desperate move by the customs bureau to boost collections that have been falling short of target.
The customs bureau has a separate case against Shell seeking to collect 7.3bn pesos in unpaid excise taxes on imports of petroleum products used for the production of unleaded premium gasoline. The bureau tried to seize some of Shell imports in December to enforce the collection but was blocked by an injunction from a court.
Ironically, Shell’s tax troubles partly stem from a decision to make petrol products in the country rather than import them like most others do. It brings in tax-exempt intermediate products, which authorities are keen treat as a finished product, thus, subject to tax. Of the three oil majors in the country that set up shop in the country after World War II, Shell is the only one still operating a refinery. Chevron closed its manufacturing facility in 2003 while Exxon sold its refinery in the early 1970s to Petron Corp, a Philippine state oil company that was later privatised. It runs the country’s other oil refinery.
On September 6, the Philippine energy secretary said one of the country’s two remaining petrol refineries will likely shut down because it is becoming less and less viable. No prizes for guessing which.
Source: blogs.ft.com
But that’s what’s happened. The company has become the first multinational to be hit by President Benigno Aquino III’s high-profile campaign against alleged tax-dodgers. And it may not be the last.The country’s bureau of customs announced on Thursday that its “campaign against tax dodgers shifted to a much higher gear with the filing of a 24-billion peso technical smuggling complaint against the multinational Pilipinas Shell Petroleum Corp.
Angelito Alvarez, the customs chief, said the criminal complaint against Shell “should prove to everyone that President Aquino’s campaign against smuggling, corruption and other economic crimes respect no sacred cows.”
The complaint against Shell, which runs one of two petroleum refineries in the Philippines, is part of a public assault on suspected tax evaders and smugglers launched shortly after Aquino’s inauguration on June 30. He vowed not to impose new taxes during the election campaign. Instead, he is doing all he can to curb tax evasion that swallows as much as 250bn pesos a year. The budget deficit this year is seen to grow to a record 325bn pesos.
At least once a week since July, tax and customs authorities have been filing complaints against companies and wealthy individuals suspected of failing to pay the correct taxes. Shell is the first multinational company caught in the drive that has so far targeted a wealthy pawnshop operator, a waste management company and other medium-scale businesses.
The customs bureau alleged that Pilipinas Shell evaded 2.7bn pesos in excise taxes and value added taxes by misclassifying or misdeclaring unleaded gasoline imports as tax-exempt substances to escape tax payments. It is seeking additional penalties of 21.8bn pesos.
The complaint has been submitted to the Department of Justice, which will decide whether or not to file a suit before a court after an investigation. The company’s spokesman did not reply to a request for comment. One of Shell’s external counsels downplayed the complaint, saying it was a desperate move by the customs bureau to boost collections that have been falling short of target.
The customs bureau has a separate case against Shell seeking to collect 7.3bn pesos in unpaid excise taxes on imports of petroleum products used for the production of unleaded premium gasoline. The bureau tried to seize some of Shell imports in December to enforce the collection but was blocked by an injunction from a court.
Ironically, Shell’s tax troubles partly stem from a decision to make petrol products in the country rather than import them like most others do. It brings in tax-exempt intermediate products, which authorities are keen treat as a finished product, thus, subject to tax. Of the three oil majors in the country that set up shop in the country after World War II, Shell is the only one still operating a refinery. Chevron closed its manufacturing facility in 2003 while Exxon sold its refinery in the early 1970s to Petron Corp, a Philippine state oil company that was later privatised. It runs the country’s other oil refinery.
On September 6, the Philippine energy secretary said one of the country’s two remaining petrol refineries will likely shut down because it is becoming less and less viable. No prizes for guessing which.
Source: blogs.ft.com
October 14, 2010
Offshoring No Longer Just for Big Companies
Much of the anger over offshoring is aimed at big multinational companies like IBM, which have been shifting a growing number of jobs overseas, and their clients, many of which are also large global companies. But a Contra Costa Times article spotlights an interesting trend: startups that hire contract workers in low-cost countries through online job sites like oDesk and Elance.
Article author Scott Duke Harris offers several Silicon Valley examples, including data storage service Box.net, which outsourced software development work to folks in Siberia, and RockYou, a development company that creates applications for Facebook and MySpace that supplemented its local production capabilities with Romanian and Japanese workers.
Harris notes some startups are called "micro-multinationals" due to their prowess in hiring global employees.
As I noted in a recent blog post, hiring temporary contractors like those who plug their services on oDesk and Elance is an appealing option for companies, not just startups, in a rocky economy. As I mentioned then, contractors employed through oDesk worked more than 1 million hours in August, an all-time high for the 7-year-old site. Just a year ago, workers on oDesk logged less than half of that, about 400,000 hours per month. Online hiring is up 129 percent since last year, pretty impressive considering the flat employment growth in the larger economy. The number of temporary IT jobs appears to be growing.
oDesk itself uses a global model. As Harris writes, the company was founded by partners in California and Greece. It has 38 full-time employees in California and the equivalent of 106 other full-time jobs elsewhere around the world. An example of an oDesk team: A stay-at-home mother in Tennessee manages a customer-support staff primarily based in the Philippines.
According to oDesk CEO Gary Swart, Silicon Valley companies that use oDesk can typically hire six workers overseas for the cost of a single California-based employee.
source: http://www.itbusinessedge.com/
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