Wednesday, March 31, 2004
Study Says Outsourcing Created U.S. Jobs
INDUSTRYWEEK: LEADERSHIP IN MANUFACTURING -- DAILY PAGE
A study released March 30 contradicts the prevailing theory that outsourcing has cost U.S. jobs. It indicates that 90,000 jobs were created in the United States as a consequence of moving high-tech work offshore.
A study released March 30 contradicts the prevailing theory that outsourcing has cost U.S. jobs. It indicates that 90,000 jobs were created in the United States as a consequence of moving high-tech work offshore.
Tuesday, March 30, 2004
OECD Wants To Speed Up Steel Subsidies Deal
LEADERSHIP IN MANUFACTURING
The Organization for Economic Co-operation and Development (OECD) said March 29 it wants to speed up talks aimed at reaching a global agreement to cut subsidies to the steel industry and will abandon the discussions if progress is too slow.
The Organization for Economic Co-operation and Development (OECD) said March 29 it wants to speed up talks aimed at reaching a global agreement to cut subsidies to the steel industry and will abandon the discussions if progress is too slow.
Thursday, March 25, 2004
Mass Layoffs Decline In Manufacturing
Tuesday, March 23, 2004
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Durable Orders In The Spotlight
Of the seven major economic reports due out this week -- including the Commerce Department's final figure for fourth-quarter 2003 GDP -- durable goods orders are likely to attract the most attention. Commerce is slated to release its data for February at 8:30 a.m. on March 24, and Merrill Lynch & Co. is looking for a 1.5% rise in the key indicator.
Orders for durable goods, which include airplanes, appliances and other products designed to last for three years or more, fell 2.3% in January.
"A good part of the decline in orders during January was in the transportation sector, which we anticipate will bounce back in February. Aircraft orders alone, which nose-dived 30% in January, should make up for lost ground in February," Merrill believes. - John S. McClenahen
Orders for durable goods, which include airplanes, appliances and other products designed to last for three years or more, fell 2.3% in January.
"A good part of the decline in orders during January was in the transportation sector, which we anticipate will bounce back in February. Aircraft orders alone, which nose-dived 30% in January, should make up for lost ground in February," Merrill believes. - John S. McClenahen
UBS Investor Optimism Index Declines
Like several other recent measures of economic confidence, the UBS Index of Investor Optimism has fallen significantly since January. The index, compiled by UBS Investment Research, New York, slid to a five-month low of 85 this month, compared with 97 in February and 108 in January.
Investor issues influencing its fall: accounting practices, the federal budget deficit, outsourcing and higher energy prices, says UBS.
"However, these concerns did not reduce the median expected 12-month investment returns, which remained at 8%," UBS notes. And the March index remained close to its 89 average for the final three months of 2003, says UBS. "The message, thus, appears to be more that confidence is consolidating than it is collapsing." - John S. McClenahen
Investor issues influencing its fall: accounting practices, the federal budget deficit, outsourcing and higher energy prices, says UBS.
"However, these concerns did not reduce the median expected 12-month investment returns, which remained at 8%," UBS notes. And the March index remained close to its 89 average for the final three months of 2003, says UBS. "The message, thus, appears to be more that confidence is consolidating than it is collapsing." - John S. McClenahen
Monday, March 22, 2004
Puzzled China Working To Resolve First-Ever WTO Trade Spat With U.S.
China said March 19 it was "extremely puzzled" by Washington's complaint to the World Trade Organization (WTO) over its tax system for domestic chip makers but said it is willing to work with the United States to resolve the dispute. The Ministry of Commerce has yet to receive any official documentation but said it was in touch with its U.S. trade counterparts in hopes of finding a solution.
"China has had several rounds of negotiations with the U.S. on this issue and we have already made progress," commerce ministry spokesman Chong Quan said in a statement. He added, however, that China had been taken aback when the U.S. "suddenly raised demands for discussions under the WTO mechanism for conflict resolution."
The U.S. challenge lodged March 18 is the first WTO complaint filed against China by any member of the global trade body since Beijing joined the organization in December 2001.
"China is discriminating against key U.S. technology products; it's wrong and it's time to pursue a remedy through the WTO," U.S. Trade Representative Robert Zoellick said.
Japan weighed in by saying it could seek to join the dispute between the United States and China with similar action on behalf of its own chip industry as an interested third-party, which is allowed under WTO rules.
International chip makers such Intel and Micron Technologies complain that Chinese government tax rebates of up to 14% for its fast growing $19-billion semiconductor industry give domestic companies an unfair advantage over imports.
China has flouted WTO rules by providing preferential tax treatment for chips produced in China, thereby disadvantaging U.S. and other imports, Zoellick said.
"U.S. manufacturers of semiconductors and other products have a right to compete on a level playing field with Chinese firms," he said. - Agence France-Presse
"China has had several rounds of negotiations with the U.S. on this issue and we have already made progress," commerce ministry spokesman Chong Quan said in a statement. He added, however, that China had been taken aback when the U.S. "suddenly raised demands for discussions under the WTO mechanism for conflict resolution."
The U.S. challenge lodged March 18 is the first WTO complaint filed against China by any member of the global trade body since Beijing joined the organization in December 2001.
"China is discriminating against key U.S. technology products; it's wrong and it's time to pursue a remedy through the WTO," U.S. Trade Representative Robert Zoellick said.
Japan weighed in by saying it could seek to join the dispute between the United States and China with similar action on behalf of its own chip industry as an interested third-party, which is allowed under WTO rules.
International chip makers such Intel and Micron Technologies complain that Chinese government tax rebates of up to 14% for its fast growing $19-billion semiconductor industry give domestic companies an unfair advantage over imports.
China has flouted WTO rules by providing preferential tax treatment for chips produced in China, thereby disadvantaging U.S. and other imports, Zoellick said.
"U.S. manufacturers of semiconductors and other products have a right to compete on a level playing field with Chinese firms," he said. - Agence France-Presse
Friday, March 19, 2004
U.S. Launches First WTO Complaint Against China
The United States launched the first World Trade Organization complaint against China, attacking tax breaks for the integrated circuit industry, officials said March 18. "U.S. manufacturers of semiconductors and other products have a right to compete on a level playing field with Chinese firms," said U.S. Trade Representative Robert Zoellick.
China flouted WTO rules by providing preferential tax treatment to integrated circuits produced in China, disadvantaging U.S. and other imports, he said. "As a WTO member, China must live up to its WTO obligations; it cannot impose measures that discriminate against U.S. products."
By filing the WTO case, the United States triggered a 60-day consultation period. If those talks fail, Washington can ask for a WTO panel to consider whether China is breaking the rules. "We have been pressing these and other concerns with the Chinese. These discussions will continue because we prefer compliance rather than litigation," Zoellick said in a statement. "However, the bottom line is that China is discriminating against key U.S. technology products: It's wrong, and it's time to pursue a remedy through the WTO."
It was the first complaint filed with the Geneva-based WTO against China by any of the 146 members since Beijing joined the organization in December 2001.
The United States said it exported $2.02 billion of integrated circuits to China in 2003. But Washington said the U.S. exports were subject to a 17% value-added tax costing approximately $344 million while China allowed domestic producers to obtain a substantial VAT refund. As a result of the refund policy, the effective VAT rate on domestic products could be as low as 3%, the United States said. China also allows for a partial refund of VAT paid on integrated circuits designed in China but manufactured abroad, it said.
"We believe that this policy is also inconsistent with China's international trade obligations," the U.S. Trade Representative's office said. - Agence France-Presse
China flouted WTO rules by providing preferential tax treatment to integrated circuits produced in China, disadvantaging U.S. and other imports, he said. "As a WTO member, China must live up to its WTO obligations; it cannot impose measures that discriminate against U.S. products."
By filing the WTO case, the United States triggered a 60-day consultation period. If those talks fail, Washington can ask for a WTO panel to consider whether China is breaking the rules. "We have been pressing these and other concerns with the Chinese. These discussions will continue because we prefer compliance rather than litigation," Zoellick said in a statement. "However, the bottom line is that China is discriminating against key U.S. technology products: It's wrong, and it's time to pursue a remedy through the WTO."
It was the first complaint filed with the Geneva-based WTO against China by any of the 146 members since Beijing joined the organization in December 2001.
The United States said it exported $2.02 billion of integrated circuits to China in 2003. But Washington said the U.S. exports were subject to a 17% value-added tax costing approximately $344 million while China allowed domestic producers to obtain a substantial VAT refund. As a result of the refund policy, the effective VAT rate on domestic products could be as low as 3%, the United States said. China also allows for a partial refund of VAT paid on integrated circuits designed in China but manufactured abroad, it said.
"We believe that this policy is also inconsistent with China's international trade obligations," the U.S. Trade Representative's office said. - Agence France-Presse
Thursday, March 18, 2004
U.S. Consumer Prices Tame In February
American consumer price inflation appeared tame in February, data showed March 17, safeguarding key interest rates at a 1958 low, at least for now. Analysts detected emerging price pressures, however, throwing doubt on how long Federal Reserve Chairman Alan Greenspan and his colleagues can put off a rise in rates.
Consumer prices rose a seasonally adjusted 0.3% in February, slowing from a 0.5% increase in January, the U.S. Bureau of Labor Statistics said. Over the year, prices were up 1.7%.
Energy costs, jacked up by the crude oil market, fueled much of the increase. Core consumer prices -- excluding volatile food and energy items -- rose by a more modest 0.2%. Over the year, core prices were up 1.2%.
"Inflation is indeed reasonably low, but it also seems there are some pressures beginning to build," said Naroff Economic Advisors President Joel Naroff. More and more components of the consumer price index were showing gains, he said.
"It may be early in the process, but it is beginning," Naroff said. "What the Fed does about building inflationary pressures if there are no job gains will be fascinating."
A breakdown of the February consumer price data showed:
Energy prices climbed 1.7% in February, after soaring 4.7% in January, with gasoline prices surging 2.5% and natural gas rising 2.2%.
Food prices rose 0.2% after being flat in January as high vegetable prices outweighed a 1.6% slump in beef and veal prices.
Prices for core consumer commodities, stripping out energy and food, rose 0.2%, the first increase in 18 months.
"The change in the CPI over the past couple of months -- and make no mistake, it is a big change -- is that goods prices have suddenly begun to rise," said High Frequency Economics chief U.S. economist Ian Shepherdson. "If this continues, then even modest gains in payrolls will force the Fed to tighten well before the end of the year." - Agence France-Presse
Consumer prices rose a seasonally adjusted 0.3% in February, slowing from a 0.5% increase in January, the U.S. Bureau of Labor Statistics said. Over the year, prices were up 1.7%.
Energy costs, jacked up by the crude oil market, fueled much of the increase. Core consumer prices -- excluding volatile food and energy items -- rose by a more modest 0.2%. Over the year, core prices were up 1.2%.
"Inflation is indeed reasonably low, but it also seems there are some pressures beginning to build," said Naroff Economic Advisors President Joel Naroff. More and more components of the consumer price index were showing gains, he said.
"It may be early in the process, but it is beginning," Naroff said. "What the Fed does about building inflationary pressures if there are no job gains will be fascinating."
A breakdown of the February consumer price data showed:
Energy prices climbed 1.7% in February, after soaring 4.7% in January, with gasoline prices surging 2.5% and natural gas rising 2.2%.
Food prices rose 0.2% after being flat in January as high vegetable prices outweighed a 1.6% slump in beef and veal prices.
Prices for core consumer commodities, stripping out energy and food, rose 0.2%, the first increase in 18 months.
"The change in the CPI over the past couple of months -- and make no mistake, it is a big change -- is that goods prices have suddenly begun to rise," said High Frequency Economics chief U.S. economist Ian Shepherdson. "If this continues, then even modest gains in payrolls will force the Fed to tighten well before the end of the year." - Agence France-Presse
Wednesday, March 17, 2004
FOMC Notes Lack Of Job Growth And Leaves Funds Rate Unchanged
In a departure from their January pronouncement, Chairman Alan Greenspan and the other 11 voting members of the Federal Open Market Committee (FOMC) on March 16 publicly indicated the U.S. so far has been in a nearly jobless recovery from the 2001 recession. "Although job losses have slowed, new hiring has lagged," they observed in a statement released after Tuesday's meeting in Washington, D.C.
"The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation," the FOMC said. "With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation." Accordingly, it left the target for the influential federal funds rate, the interest rate banks charge each other for overnight loans, at 1%, a 40-year low. - John S. McClenahen
"The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation," the FOMC said. "With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation." Accordingly, it left the target for the influential federal funds rate, the interest rate banks charge each other for overnight loans, at 1%, a 40-year low. - John S. McClenahen
Tuesday, March 16, 2004
U.S., Dominican Republic Strike Free-Trade Agreement
The United States struck a free-trade agreement with the Dominican Republic but kept interim protections against sugar, dairy and meat imports, the government said March 15.
"The United States and the Dominican Republic today concluded a free-trade agreement that further advances trade liberalization and expands economic opportunities for America's farmers, ranchers and exporters," said Agriculture Secretary Ann Veneman.
Exported U.S. agricultural products to the Dominican Republic range from feed grains to rice, beef, pork, poultry, horticultural products and processed consumer-ready products. But Veneman said U.S. farmers would be shielded from key imports from the Dominican Republic. Main farm exports from the Dominican Republic are sugar, coffee, and tobacco.
"We want to assure our producers that the agreement provides measures designed to effectively address import concerns for products such as sugar, dairy and meat during the transition period," Veneman said. "Depending on the products, these could include tariff-rate quotas, long-term tariff phase-outs, nonlinear tariff reductions or an import safeguard mechanism."
Three weeks ago the United States signed a free-trade agreement with Australia. The pact has come under heavy fire in Australia because it, also, excludes sugar, largely maintains U.S. protection on dairy and beef produce and gives U.S. pharmaceutical firms the right to appeal measures designed to keep the cost of medicines down.
The latest deal, reached after a week of negotiations, brings the Dominican Republic into the recently concluded Central American Free Trade Agreement (CAFTA). It expands CAFTA to the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
"The Dominican Republic is a large regional market, with strong ties to the U.S., and this agreement opens many opportunities for American exporters, farmers, workers, consumers and businesses, and it will promote economic growth, opportunity and prosperity in the Dominican Republic and the region," U.S. Trade Representative Robert Zoellick said.
Combined total goods trade between the United States and the original five Central American CAFTA countries was $23.2 billion, according to U.S. figures. With an extra $8.7 billion in U.S.-Dominican Republic trade, the new CAFTA total is approximately $32 billion. U.S. farm exports alone to the 9 million consumers in the Dominican Republic were worth nearly $450 million last year, the United States said. - Agence France-Presse
"The United States and the Dominican Republic today concluded a free-trade agreement that further advances trade liberalization and expands economic opportunities for America's farmers, ranchers and exporters," said Agriculture Secretary Ann Veneman.
Exported U.S. agricultural products to the Dominican Republic range from feed grains to rice, beef, pork, poultry, horticultural products and processed consumer-ready products. But Veneman said U.S. farmers would be shielded from key imports from the Dominican Republic. Main farm exports from the Dominican Republic are sugar, coffee, and tobacco.
"We want to assure our producers that the agreement provides measures designed to effectively address import concerns for products such as sugar, dairy and meat during the transition period," Veneman said. "Depending on the products, these could include tariff-rate quotas, long-term tariff phase-outs, nonlinear tariff reductions or an import safeguard mechanism."
Three weeks ago the United States signed a free-trade agreement with Australia. The pact has come under heavy fire in Australia because it, also, excludes sugar, largely maintains U.S. protection on dairy and beef produce and gives U.S. pharmaceutical firms the right to appeal measures designed to keep the cost of medicines down.
The latest deal, reached after a week of negotiations, brings the Dominican Republic into the recently concluded Central American Free Trade Agreement (CAFTA). It expands CAFTA to the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
"The Dominican Republic is a large regional market, with strong ties to the U.S., and this agreement opens many opportunities for American exporters, farmers, workers, consumers and businesses, and it will promote economic growth, opportunity and prosperity in the Dominican Republic and the region," U.S. Trade Representative Robert Zoellick said.
Combined total goods trade between the United States and the original five Central American CAFTA countries was $23.2 billion, according to U.S. figures. With an extra $8.7 billion in U.S.-Dominican Republic trade, the new CAFTA total is approximately $32 billion. U.S. farm exports alone to the 9 million consumers in the Dominican Republic were worth nearly $450 million last year, the United States said. - Agence France-Presse
Monday, March 15, 2004
U.S. Current Account Deficit Is Record
Contrary to what economists generally expected, the deficit in the U.S. current account, the broadest measure of America's international economic position, shrank in the final quarter of last year. The deficit for the year, nevertheless, was a record.
The current account deficit decreased to $127.5 billion in the fourth quarter of 2003, nearly $8 billion smaller than the revised third-quarter deficit of $135.3 billion, the U.S. Commerce Department reported on March 12.
"The current account deficit narrowed despite a wider trade gap as investment flows improved," explains UBS Investment Research, New York. "Very likely, the [U.S.] dollar's sharp decline in [2003's fourth quarter] increased the value of profits returned to the U.S. [And] stronger growth abroad also likely boosted profits returned to the U.S."
For full-year 2003, the current account deficit was $541.8 billion, a record and nearly $61 billion more than the $480.9 billion deficit in 2002.
The Commerce Department also reported on March 12 that at the end of January 2004 business inventories in the U.S. totaled $1.194 trillion, up 0.1% from December 2003's month-end figure. The January increase was less than the 0.3% rise economists generally expected. "The slow pace of inventory building is a negative for [2004 first-quarter] GDP growth but could give latitude for stronger growth later this year," says UBS. - John S. McClenahen
The current account deficit decreased to $127.5 billion in the fourth quarter of 2003, nearly $8 billion smaller than the revised third-quarter deficit of $135.3 billion, the U.S. Commerce Department reported on March 12.
"The current account deficit narrowed despite a wider trade gap as investment flows improved," explains UBS Investment Research, New York. "Very likely, the [U.S.] dollar's sharp decline in [2003's fourth quarter] increased the value of profits returned to the U.S. [And] stronger growth abroad also likely boosted profits returned to the U.S."
For full-year 2003, the current account deficit was $541.8 billion, a record and nearly $61 billion more than the $480.9 billion deficit in 2002.
The Commerce Department also reported on March 12 that at the end of January 2004 business inventories in the U.S. totaled $1.194 trillion, up 0.1% from December 2003's month-end figure. The January increase was less than the 0.3% rise economists generally expected. "The slow pace of inventory building is a negative for [2004 first-quarter] GDP growth but could give latitude for stronger growth later this year," says UBS. - John S. McClenahen
Friday, March 12, 2004
Forecast: Goods Exports To Post Double-Digit Growth
With a record monthly deficit reported for January, U.S. international trade figures released by the Commerce Department this week suggest America could benefit from double-digit growth in exports. And that's what the Manufacturers Alliance/MAPI is forecasting.
Exports of capital goods (not including autos), vehicles and parts, and consumer goods (again, not including autos) generally are expected to grow at double-digit annual rates for most of this year and next, says the Arlington, Va.-based business research and public policy group.
Capital goods exports are expected to display the greatest strength, with as much as a 20% annual rate of growth during the next several calendar quarters. Vehicle export growth is expected to be at a 14% to 22% rate through the first six months of 2005, before tapering off to single digits in the second half of next year. Consumer goods exports are expected to post rates between 8% and 11% in 2004 and 2005.
Manufacturers Alliance is projecting a further decline of between 8% and 10% in the value of the U.S. dollar against the currencies of other major industrial economies during the first three quarters of this year followed by a 3% decline in the final quarter of the year. In 2005, the alliance forecasts a 1% rise in the value of the dollar during the first six months and a 2% appreciation in the second half. - John S. McClenahen
Exports of capital goods (not including autos), vehicles and parts, and consumer goods (again, not including autos) generally are expected to grow at double-digit annual rates for most of this year and next, says the Arlington, Va.-based business research and public policy group.
Capital goods exports are expected to display the greatest strength, with as much as a 20% annual rate of growth during the next several calendar quarters. Vehicle export growth is expected to be at a 14% to 22% rate through the first six months of 2005, before tapering off to single digits in the second half of next year. Consumer goods exports are expected to post rates between 8% and 11% in 2004 and 2005.
Manufacturers Alliance is projecting a further decline of between 8% and 10% in the value of the U.S. dollar against the currencies of other major industrial economies during the first three quarters of this year followed by a 3% decline in the final quarter of the year. In 2005, the alliance forecasts a 1% rise in the value of the dollar during the first six months and a 2% appreciation in the second half. - John S. McClenahen
Thursday, March 11, 2004
Wind Power Leaps Forward In 2003
Power capacity generated by the wind surged by more than a quarter last year, according to industry figures released March 10.
Wind generators installed around the world by the end of 2003 had the capacity to produce 39,294 megawatts, an increase of 8,133 MW, or 26%, over 2002, according to the American Wind Energy Association (AWEA) and European Wind Energy Association (EWEA). Germany installed 2,645 MW, bringing its total to 14,609 MW, or 40% of the global total. Second was the United States, which added 1,687 MW, for a total of 6,374 MW, followed by Spain, up 1,377 MW to 6,202 MW, and Denmark, whose increase of 1,377 MW brought its wind-generated tally to 3,110 MW.
"A number of countries, including the Netherlands, Italy, Japan and the UK, now have several hundred megawatts installed and are nearing the 1,000-MW mark," a news release by the American Wind Energy Association (AWEA) and European Wind Energy Association (EWEA) said.
Almost all of the installed capacity is in Europe and the United States, which together account for 88% of the worldwide total. The only other significant player is India, which accounts for 5% of the total.
The total global generating capacity of more than 39,000 megawatts is enough to power 9 million average American homes or 19 million average European households, or 47 million people, according to the associations. - Agence France-Presse
Wind generators installed around the world by the end of 2003 had the capacity to produce 39,294 megawatts, an increase of 8,133 MW, or 26%, over 2002, according to the American Wind Energy Association (AWEA) and European Wind Energy Association (EWEA). Germany installed 2,645 MW, bringing its total to 14,609 MW, or 40% of the global total. Second was the United States, which added 1,687 MW, for a total of 6,374 MW, followed by Spain, up 1,377 MW to 6,202 MW, and Denmark, whose increase of 1,377 MW brought its wind-generated tally to 3,110 MW.
"A number of countries, including the Netherlands, Italy, Japan and the UK, now have several hundred megawatts installed and are nearing the 1,000-MW mark," a news release by the American Wind Energy Association (AWEA) and European Wind Energy Association (EWEA) said.
Almost all of the installed capacity is in Europe and the United States, which together account for 88% of the worldwide total. The only other significant player is India, which accounts for 5% of the total.
The total global generating capacity of more than 39,000 megawatts is enough to power 9 million average American homes or 19 million average European households, or 47 million people, according to the associations. - Agence France-Presse
Wednesday, March 10, 2004
Boeing Probe Finds Ethics Scandal An Isolated Incident
The ethics scandal that cost the Boeing Co. two top executives was an isolated incident, according to review of the company's dealings with former government employees released March 9.
Lawyers commissioned by the Chicago-based aerospace firm to investigate its track record with regard to government hires said they found no evidence of any other wrongdoing similar to a case involving a top Air Force procurement official that rocked the company last year. The official, Darleen Druyun, allegedly discussed a job at Boeing while she was still at the Air Force in a position to influence a controversial $18 billion tanker deal with the defense giant.
Boeing fired both Druyun and then-Boeing CFO Mike Sears, who recruited her, in November when the improper contacts were discovered. The Pentagon suspended the deal the following month, and launched an internal investigation of the affair. Boeing's chief executive officer Phil Condit resigned the same month.
The company's board, fighting to restore its tarnished image amid talk of "sweetheart deals" and "incestuous," relationships between Pentagon officials and defense contractors executives, commissioned a Washington law firm to review its policies and procedures relating to government hires.
The lawyers reviewed the personnel files of senior executives recruited from government posts in the past five years and found no other examples of non-compliance with the company's own ethics rules. But they did suggest that Boeing tighten up its procedures and make sure they were followed more consistently.
Prior to the Druyun incident, the report said, "Our sense is that Boeing's hiring of government and former government officials was not perceived within the company as a high-risk area. "As a consequence, although the company had written policies and procedures addressing both disqualification and post-employment restrictions, those policies and procedures were often not followed in practice." - Agence France-Presse
Lawyers commissioned by the Chicago-based aerospace firm to investigate its track record with regard to government hires said they found no evidence of any other wrongdoing similar to a case involving a top Air Force procurement official that rocked the company last year. The official, Darleen Druyun, allegedly discussed a job at Boeing while she was still at the Air Force in a position to influence a controversial $18 billion tanker deal with the defense giant.
Boeing fired both Druyun and then-Boeing CFO Mike Sears, who recruited her, in November when the improper contacts were discovered. The Pentagon suspended the deal the following month, and launched an internal investigation of the affair. Boeing's chief executive officer Phil Condit resigned the same month.
The company's board, fighting to restore its tarnished image amid talk of "sweetheart deals" and "incestuous," relationships between Pentagon officials and defense contractors executives, commissioned a Washington law firm to review its policies and procedures relating to government hires.
The lawyers reviewed the personnel files of senior executives recruited from government posts in the past five years and found no other examples of non-compliance with the company's own ethics rules. But they did suggest that Boeing tighten up its procedures and make sure they were followed more consistently.
Prior to the Druyun incident, the report said, "Our sense is that Boeing's hiring of government and former government officials was not perceived within the company as a high-risk area. "As a consequence, although the company had written policies and procedures addressing both disqualification and post-employment restrictions, those policies and procedures were often not followed in practice." - Agence France-Presse
Tuesday, March 09, 2004
Bush Or Kerry: Would It Make Any Economic Difference?
Neither Republicans nor Democrats have yet formally nominated their presidential candidates, but for all intents and purposes the race between President George W. Bush and Sen. John F. Kerry, D-Mass., is under way.
Bush's re-election on Nov. 2 would benefit energy companies and financial asset managers, believes Kathleen Bostjancic, a senior economist at Merrill Lynch & Co., New York. A Kerry win would be a negative for drug companies and a plus for small businesses, she says. For multinational manufacturing companies and technology firms, a Kerry win would be a mixed bag, she states. The negatives: trade protection and strict environmental and labor standards. The positives: manufacturing tax break and a call to apply technological innovations to the war on terrorism.
Also worth noting: The next president gets to select a successor to Federal Reserve Chairman Alan Greenspan, who, Bostjancic points out, cannot serve beyond 2006. - John S. McClenahen
Bush's re-election on Nov. 2 would benefit energy companies and financial asset managers, believes Kathleen Bostjancic, a senior economist at Merrill Lynch & Co., New York. A Kerry win would be a negative for drug companies and a plus for small businesses, she says. For multinational manufacturing companies and technology firms, a Kerry win would be a mixed bag, she states. The negatives: trade protection and strict environmental and labor standards. The positives: manufacturing tax break and a call to apply technological innovations to the war on terrorism.
Also worth noting: The next president gets to select a successor to Federal Reserve Chairman Alan Greenspan, who, Bostjancic points out, cannot serve beyond 2006. - John S. McClenahen
Monday, March 08, 2004
Caterpillar Remanufacturing Services Available To Others
Caterpillar Inc. is extending the reach of its services businesses by making its remanufacturing services available to other companies in industries it does not already serve. The industries include defense, automotive and industrial products.
"Caterpillar Remanufacturing Services will make Caterpillar's global remanufacturing capability available to OEMs in other industries, including defense," says Bill Springer, vice president of Caterpillar's Product Support Division. It also "builds on our very successful 'services business model,' which included Caterpillar Logistics Services and Caterpillar Financial Services."
Based in Peoria, Ill., Caterpillar manufactures construction and mining equipment. Its current remanufacturing program processes more than 2 million units annually and recycles over 100 million pounds of used products each year.
"Caterpillar Remanufacturing Services will make Caterpillar's global remanufacturing capability available to OEMs in other industries, including defense," says Bill Springer, vice president of Caterpillar's Product Support Division. It also "builds on our very successful 'services business model,' which included Caterpillar Logistics Services and Caterpillar Financial Services."
Based in Peoria, Ill., Caterpillar manufactures construction and mining equipment. Its current remanufacturing program processes more than 2 million units annually and recycles over 100 million pounds of used products each year.
Yuan Revaluation Would Have 'Not Much' U.S. Impact
David A. Rosenberg has done what he calls a "preliminary back-of-the-envelope" assessment of a 10% revaluation of the Chinese currency, the yuan, on the U.S. economy. "Not much" impact is his conclusion.
"Within a year, we estimate that a 10% revaluation against the dollar would lift U.S. import prices by 0.5%, core PPI [Producer Price Index] by 0.1% and would have no impact at all on core CPI [Consumer Price Index], GDP or the current account [the broadest measure of the U.S. international economic position]."
A 10% revaluation in the yuan is less than many critics of the Chinese currency have been advocating, however. They estimate the yuan is 20% to 40% overvalued relative to the U.S. dollar. - John S. McClenahen
"Within a year, we estimate that a 10% revaluation against the dollar would lift U.S. import prices by 0.5%, core PPI [Producer Price Index] by 0.1% and would have no impact at all on core CPI [Consumer Price Index], GDP or the current account [the broadest measure of the U.S. international economic position]."
A 10% revaluation in the yuan is less than many critics of the Chinese currency have been advocating, however. They estimate the yuan is 20% to 40% overvalued relative to the U.S. dollar. - John S. McClenahen
Dell To Relinquish CEO Role In July, Remain Chairman
Dell Inc. founder Michael Dell in July will step away from his role as CEO of the computer company he started 20 years ago but remain "deeply involved in the company's day-to-day business as chairman of the board," according to a company statement issued March 4. The move is effective as of Round Rock, Texas-based Dell's July 16 annual meeting.
Kevin Rollins, Dell's president and COO, will become president and CEO, and will be nominated for election to the Dell board at the company's annual meeting.
According to the computer maker, the pending title changes are consistent with the primary roles of Dell's top executives: "Mr. Dell emphasizing trends in technology and customer preference, including research and development; Mr. Rollins leading the company strategy and operations."
Kevin Rollins, Dell's president and COO, will become president and CEO, and will be nominated for election to the Dell board at the company's annual meeting.
According to the computer maker, the pending title changes are consistent with the primary roles of Dell's top executives: "Mr. Dell emphasizing trends in technology and customer preference, including research and development; Mr. Rollins leading the company strategy and operations."
Thursday, March 04, 2004
U.S. And Morocco Reach Free Trade Agreement
Although implementation of the pact is subject to Congressional approval, the U.S. on Mar. 2 concluded a free-trade agreement (FTA) with Morocco, another step toward creation of a Middle East Free Trade Area by 2013. The U.S. already has FTAs with Israel and Jordan and negotiations for a pact with Bahrain are underway.
Under terms of the pending agreement, more than 95% of trade between the U.S. and Morocco in consumer and industrial products would become tariff-free immediately upon implementation, says the Office of the U.S. Trade Representative, Robert B. Zoellick. All remaining tariffs on such manufactured goods would be eliminated within nine years. U.S. makers of information technology products, construction equipment, machinery and chemicals are among those who would benefit most from the agreement, says Zoellick's office.
The U.S. exports about $475 million worth of products a year to Morocco. - John S. McClenahen
Under terms of the pending agreement, more than 95% of trade between the U.S. and Morocco in consumer and industrial products would become tariff-free immediately upon implementation, says the Office of the U.S. Trade Representative, Robert B. Zoellick. All remaining tariffs on such manufactured goods would be eliminated within nine years. U.S. makers of information technology products, construction equipment, machinery and chemicals are among those who would benefit most from the agreement, says Zoellick's office.
The U.S. exports about $475 million worth of products a year to Morocco. - John S. McClenahen
Wednesday, March 03, 2004
Greenspan: Beijing Dollar-Buying May Overheat Chinese Economy
U.S. Federal Reserve Chairman Alan Greenspan warned March 2 that Beijing's massive buying of dollars threatened to overheat the Chinese economy. China had accumulated $420 billion in foreign-exchange reserves by November of last year as it snapped up U.S. government bonds to keep the yuan-dollar rate steady, Greenspan told the Economic Club of New York.
"Chinese central bank purchases of dollars, unless offset, threaten an excess of so-called high-powered money expansion and a consequent overheating of the Chinese economy," he said.
Beijing had mopped up some of the excess liquidity created by its purchases by cutting loans to commercial banks, selling bonds and requiring banks to keep higher reserves. But a broad measure of Chinese money supply -- M2 -- had grown 20% in 2003 and a little less so far this year.
"Should this pattern continue, the central bank will be confronted with the choice of curtailing its purchases of dollar assets or facing an overheated economy with the associated economic instabilities," Greenspan warned. "Lesser dollar purchases presumably would allow the renminbi [yuan], at least temporarily, to appreciate against the dollar." - Agence France-Presse
"Chinese central bank purchases of dollars, unless offset, threaten an excess of so-called high-powered money expansion and a consequent overheating of the Chinese economy," he said.
Beijing had mopped up some of the excess liquidity created by its purchases by cutting loans to commercial banks, selling bonds and requiring banks to keep higher reserves. But a broad measure of Chinese money supply -- M2 -- had grown 20% in 2003 and a little less so far this year.
"Should this pattern continue, the central bank will be confronted with the choice of curtailing its purchases of dollar assets or facing an overheated economy with the associated economic instabilities," Greenspan warned. "Lesser dollar purchases presumably would allow the renminbi [yuan], at least temporarily, to appreciate against the dollar." - Agence France-Presse
Tuesday, March 02, 2004
U.S. Construction Rate Slips A Bit
In January of this year, U.S. construction spending fell off its torrid pace of the second half of 2003.
The U.S. Commerce Department estimates spending at an annual rate of $931.2 billion in January, three-tenths of a percentage point less than its revised figure of $934.4 billion for December. An increase in the pace of highway and other kinds of public construction was more than offset by a decrease in residential and other private construction.
Spending on private construction was at an annual rate of $715.8 billion in January, 0.5% below the December's $719.3 billion rate. Public construction in January was at an annual rate of $215.4 billion, 0.2% higher than December's $215.1 billion rate. - John S. McClenahen
The U.S. Commerce Department estimates spending at an annual rate of $931.2 billion in January, three-tenths of a percentage point less than its revised figure of $934.4 billion for December. An increase in the pace of highway and other kinds of public construction was more than offset by a decrease in residential and other private construction.
Spending on private construction was at an annual rate of $715.8 billion in January, 0.5% below the December's $719.3 billion rate. Public construction in January was at an annual rate of $215.4 billion, 0.2% higher than December's $215.1 billion rate. - John S. McClenahen
Personal Income And Outlays Rise
Both personal income and spending in the U.S. rose in January, although income rose at only about half the expected rate.
Personal income increased two-tenths of a percentage point -- $18.4 billion -- between December 2003 and January 2004, the U.S. Commerce Department reported on March 1. Economists generally had been looking for a 0.4% increase. Personal consumption expenditures increased 0.4% ($32.1 billion), a tenth of a percentage point better than expected. "We expect some improvement [in consumption] over the balance of the [first] quarter as auto sales rebound and after-tax income benefits from big personal tax rebates," says UBS Investment Research, New York. - John S. McClenahen
Personal income increased two-tenths of a percentage point -- $18.4 billion -- between December 2003 and January 2004, the U.S. Commerce Department reported on March 1. Economists generally had been looking for a 0.4% increase. Personal consumption expenditures increased 0.4% ($32.1 billion), a tenth of a percentage point better than expected. "We expect some improvement [in consumption] over the balance of the [first] quarter as auto sales rebound and after-tax income benefits from big personal tax rebates," says UBS Investment Research, New York. - John S. McClenahen
Monday, March 01, 2004
EU Slaps Multi-Million Dollar Trade Sanctions On U.S.
The European Union slapped multi-million dollar trade sanctions on the United States on Mar. 1 over illegal tax breaks given to U.S. exporters, urging U.S. lawmakers rapidly to repeal the measures. Backed by a World Trade Organization ruling, the European Commission announced duties on a wide range of U.S. goods entering Europe until the U.S. Congress annuls the tax breaks under the Foreign Sales Corporation (FSC) law.
"Despite waiting for more than two years, the U.S. has not brought its legislation in line with WTO rules. We are therefore left with no choice but to impose countermeasures," said EU trade commissioner Pascal Lamy. "The name of the game is not retaliation but compliance: countermeasures will be lifted the day the FSC is repealed," he added.
The commission underlined that the level of sanctions is substantially less than the $4 billion allowed by the WTO. The sanctions take the form of import duties starting at 5%, rising by one percentage point per month, on goods ranging from American meat to nuclear reactor parts. This year they would amount to some $300 million if continued until December, said Lamy's spokeswoman Arancha Gonzalez, but added that Brussels hopes the U.S. measures will be repealed before then.
The WTO has ruled that the FSC law flouts global trade rules by allowing thousands of U.S. firms, operating through subsidiaries in offshore tax havens, to benefit from reduced export taxes. WTO arbitrators agreed with the EU that just over $4 billion (3.4 billion euros) would constitute "appropriate countermeasures" based on the trade impact of the U.S. policy.
The U.S. administration says the EU decision is regrettable -- and insists it is pushing Congress hard to push through legislation to end the tax breaks "as quickly as possible," according to a U.S. spokesman.
"We've urged the European Commission to refrain from imposing retaliatory tariffs, given the complexity of the legislation and we regret that they are moving forward," said a spokesman for the U.S. mission to the EU last week.
The House of Representative and Senate are drawing up rival proposals for legislation, which would need to be hammered out in a compromise text before signature by President George W. Bush. Two of the main proposals contain a three-year transition period to phase out the tax break, however. - Agence France-Presse
"Despite waiting for more than two years, the U.S. has not brought its legislation in line with WTO rules. We are therefore left with no choice but to impose countermeasures," said EU trade commissioner Pascal Lamy. "The name of the game is not retaliation but compliance: countermeasures will be lifted the day the FSC is repealed," he added.
The commission underlined that the level of sanctions is substantially less than the $4 billion allowed by the WTO. The sanctions take the form of import duties starting at 5%, rising by one percentage point per month, on goods ranging from American meat to nuclear reactor parts. This year they would amount to some $300 million if continued until December, said Lamy's spokeswoman Arancha Gonzalez, but added that Brussels hopes the U.S. measures will be repealed before then.
The WTO has ruled that the FSC law flouts global trade rules by allowing thousands of U.S. firms, operating through subsidiaries in offshore tax havens, to benefit from reduced export taxes. WTO arbitrators agreed with the EU that just over $4 billion (3.4 billion euros) would constitute "appropriate countermeasures" based on the trade impact of the U.S. policy.
The U.S. administration says the EU decision is regrettable -- and insists it is pushing Congress hard to push through legislation to end the tax breaks "as quickly as possible," according to a U.S. spokesman.
"We've urged the European Commission to refrain from imposing retaliatory tariffs, given the complexity of the legislation and we regret that they are moving forward," said a spokesman for the U.S. mission to the EU last week.
The House of Representative and Senate are drawing up rival proposals for legislation, which would need to be hammered out in a compromise text before signature by President George W. Bush. Two of the main proposals contain a three-year transition period to phase out the tax break, however. - Agence France-Presse
