Ford Motor Co said on Thursday it will increase production over the rest of the year after a surge in sales triggered by the U.S. government’s “Cash for Clunkers” sales incentive program.
Ford has emerged as one of the clear winners from the $3 billion sales program, which offers rebates of up to $4,500 for consumers who trade in older and less fuel-efficient vehicles.
But like other automakers, Ford was caught off guard by the incentive-fueled jump in sales that began in late July and raised the prospect that the battered industry had hit bottom.
In response, Ford said on Thursday it will build another 6,000 Focus sedans in the current quarter by adding overtime and a Saturday shift at an assembly plant in Wayne, Michigan.
And a second plant in Kansas City, Missouri, will drop plans to shut down for two days later this month and increase output of the Escape small SUV by another 3,500 vehicles.
The moves take Ford’s third-quarter output in North America to 495,000 vehicles, up 18 percent over a year earlier.
The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles. That would represent a 33 percent annual gain.
“I think we were surprised by the speed and the urgency with which consumers went to dealers,” said Ford sales analyst George Pipas quick cash.
The output gains will translate into higher revenue for Ford, the only U.S. automaker to have avoided bankruptcy. Shares were up 2.2 percent to $7.87 in afternoon trading.
Ford posted a sales increase for July, its first since late 2007, and the automaker has been gaining U.S. market share.
In a sign of its momentum, Ford has also taken 16 percent of the deals made under the Cash for Clunkers program, compared with a retail market share of 13 percent this year to date.
“Ford and some Asian brands have been the biggest beneficiaries of the vehicle trade-in program,” Standard & Poor’s equity analyst Efraim Levy said in a note for clients.
FORCED TO MOVE EARLY
Ford had previously planned to detail production plans in early September but said it had been forced to act earlier because sales remained strong in early August.
Other major automakers have also raised production. General Motors Co GM.UL said it will spell out stepped-up production plans for the rest of 2009 by the end of August.
Anglo-Australian miner Rio Tinto said on Tuesday it had yet to be presented with any evidence to support the detention of four of its China-based staff on suspicions of stealing state secrets.
The mining giant said it had also not been informed of any charges against its detained staff, which include Rio Tinto’s top iron-ore salesman in China, Australian Stern Hu.
Hu and three Chinese colleagues were detained a month ago on suspicion of spying on Chinese steel mills. Rio, the world’s second-largest iron ore producer, and Anglo-Australian firm BHP Billiton,, the third-largest producer, are currently locked in iron ore price negotiations with China.
“We are still not aware of any evidence that would support their detention,” said Rio’s iron ore division chief Sam Walsh.
“We continue to be concerned for the health and welfare of our three other employees detained at the same time as Stern Hu,” Walsh said in a statement, noting that the Australian government had informed the company that Hu was well.
The Rio detentions have cast a shadow over Australia-China trade, worth $53 billion in two-way terms in 2008.
In a growing war of words between Australia and China, Smith delivered a veiled warning on Tuesday for Beijing to rein in its diplomats after its embassy tried to block a speech in Canberra by an exiled leader of China’s Uighur Muslim minority.
An online article published in a magazine run by China’s state secrets agency at the weekend said Rio spied on Chinese mills for six years, resulting in the mills overpaying $102 billion for iron ore, Rio Tinto’s biggest earner payday loans.
The Australian government on Tuesday brushed off the Chinese report accusing Rio of overcharging and spying on Chinese steel mills, saying it had not been officially sanctioned.
“It is now quite clear, given that the article has been taken off the website, that it was essentially the opinion of the individual writer, and not if you like officially sanctioned,” Australian Foreign Minister Stephen Smith said.
Rio Tinto’s shares were some 2.2 percent lower at A$57.22 at midday on Tuesday, continuing a 3 percent slide the previous day amid investors nerves over the miner’s relations with China.
AUSTRALIA-CHINA TIES
Australian diplomats had made a fresh appeal for China to grant legal representation to China-born Hu after they were allowed only their second visit to his Shanghai detention center late last week, Smith said.
“We were very pleased to see that his health and welfare continues to be in good order,” Smith told state radio.
Jiang Ruqin, the author of the article that laid out the allegations, said the claim of losses came from Chinese media reports, including his statement that indications that Rio had been spying for six years came from seized computers.
But he’s made mistakes in handling his own money and still lives in his mother’s basement.
He hopes to be out by his 30th birthday next month.
"My dad is a successful accountant and my mother has been in finance for as long as I can remember," he says. "My parents just never taught me about the subject of money, nor did I think to ask."
He spent frivolously, having owned six cars by the time he got his first university degree.
Then, he borrowed $60,000 to pay for his MBA studies and moved to China for two years. He found a job there, but racked up another $10,000 in consumer debt.
Goodman likes the idea of teaching young people about personal finances in school – as long as they learn why they need to care about their money.
"Sometime in your life, something will change. And if you’re not prepared for the unexpected, you can get into trouble," he tells me.
"I never learned why it was important to save money until it was too late. I could have paid my debts faster and not had to move back home."
He tries to help others avoid the same plight in his book, Following the Goods: Financial Management for the Young and Ambitious, which he published himself and sells at his website, www.followingthegoods.com.
What if schools started teaching money skills to all students? What would be on the curriculum?
Compound interest is a good place to start, says high school teacher Mike Gentile, who has taught Grade 12 economics.
"Most students are completely shocked to understand how debt functions," he says. "The greatest consternation stems from the basic concept of amortization, where the lender is paid the bulk of the interest costs up front low rate payday loans."
He shows students how they can pay up to twice the original amount borrowed if they spread the interest over many years.
The shorter the better when it comes to loan repayments: That one lesson can help them save thousands of dollars once they start buying cars and homes.
Gary Rabbior, president of the Canadian Foundation for Economic Education, has three simple concepts he’d teach youngsters:
Students can go through school without ever being taught how to make decisions, he says.
They need a rational, step-by-step model to guide their future decisions on working, spending, borrowing, saving and investing.
They also need to consider the impact their decisions have on other people.
Rabbior thinks there’s too much focus on preparing budgets in money management courses.
"Almost no one works with a budget. Out of 100 people, maybe three will do it," he says.
"We’re pushing people into the details of something they’re likely never to use."
It’s better to focus on the big picture, he says. Are you saving enough to pay for what you want? Are you taking on more debt than you can handle?
(You can find a free 125-page book, Money and Youth, and help for parents and teachers at www.moneyandyouth.cfee.org.)
eroseman@thestar.com
Bob Wamhoff tries to be accessible to his clients. He’s a financial adviser; one of the few places he asks not to be interrupted is on the golf course. But he broke that rule last fall when he got a call from a panicked client, just as the stock market began its sharp descent.
The psychologist’s role Wamhoff plays has been especially important in these rough economic times. The hardest part of his job, he said, has been helping investors remember that the cyclical nature of the stock market indicates that even this downturn will pass. That need to provide a feeling of security is part of why he talks so frequently with clients.
The only other time Wamhoff is unreachable is when he’s working with schools he helped to build in Honduras. Shortly after his wife visited with a church group in 2003, the couple began supporting a small village by helping provide proper nutrition and building schools and homes. Wamhoff visits about six times annually to do philanthropy that he said is more of a privilege for him.
What were your first years in business like?
Business is rough. When I went into business for myself, I sold my home. Took the equity out of my home and moved into an apartment. I borrowed $5,000 from my mother. I was 26. I started the business in 1975.
The initial years were interesting. What happens when you’re starting out in business is you make a deposit, you make a withdrawal. I used to keep the check registers to show I put $150 in and took $100 out to survive. So the first few years are tough. You’re young, and back then I looked young so it was very difficult for people to take me seriously. With my own father it took a couple of years before he (asked) me to do his taxes, and he had the utmost confidence in me.
What’s your most difficult job as a financial adviser?
My most difficult job, when the stock market is going down, is holding their hands and telling them its going to be OK. That’s the toughest part because you’re dealing with emotions. And you also have to deal with your own emotions. If you go back to October 2008, the stock market is crashing, I’m losing money for my clients. The clients are calling; they’re concerned. And even somebody like me starts to doubt — do I believe what these people are saying on TV? That’s the difficult part totally free credit score.
But we hold their hands and tell them its going to be OK. And 98 percent of our clients held in and this year we’re up 15 percent through (late July). The people who got out in October don’t have that 15 percent and they’ll never get it.
Is there a difference in your strategy with the swing from the hot stock market of a few years ago to today’s stock market?
I tend to be contrary. I still diversify and do the proper things. … But when the market is hot, I’ll underweight the stock market, because I feel that what goes up will go down. So from 2003 through 2007, the market was up and I was saying to my clients, "Take some money off the table. Let’s put some money into real estate and … other investments." Now, what I have been saying since November 2008 is, "The market is way too low. Get your money in now."
Does that mean your business tends to do better in poor markets?
No, 2009 is going to be a worse year (for my business) because I can say (buy) all day long, but clients sometimes won’t respond because they’re scared. They’ll hear me and they’ll stay the course. But will they put new money in? Most of them will not. They’ll put it in when everything goes up.
You invest quite a bit in your volunteer work in Honduras. What do you feel you get out of it?
Everybody says you’re the greatest person in the world for doing this. I say I’m the luckiest person in the world to have this.
I can raise money … but then I can see the end result. I can see these kids smiling. I can see their grades up. I can see the children (who get scholarships) have a chance (for further education). Nobody gets to do that, so I’m the luckiest guy in the world.
I have to give the credit to my wife. Would I have stood up and said I’ll do that? I don’t know if I would have had the courage.
The U.S. Securities and Exchange Commission wants former Kmart Chief Executive Charles Conaway to pay $22.6 million, alleging he mislead investors before the company filed for bankruptcy in 2002, court documents showed.
In a filing with the U.S. District Court for the Eastern District of Michigan on July 30, the SEC said Conaway “should be penalized for intentionally lying, and causing others to lie, about Kmart’s financial condition.”
The agency asked the court to ask Conaway to return $13.7 million in what it described as “ill-gotten gains” and impose an $8.9 million civil penalty on him.
The SEC had accused Conaway of making omissions and misrepresentations about Kmart’s financial condition in its 10-Q regulatory filing in October 2001.
“Prepared in accordance with Conaway’s directive to suppress any disclosure of the crisis, however, the Form 10-Q misled the investing public into believing that all was well with the company’s cash flow,” the SEC said in the filing business cards.
“The document included no disclosure of the liquidity crisis or the fact that Kmart had delayed over $1 billion in vendor payments in an effort to survive it.”
A Michigan Federal jury, in June, upheld the civil charges against Conaway, according to the SEC.
Conaway’s attorney Scott Lassar could not be immediately reached for comment by Reuters outside regular office hours.
Kmart is now a part of Sears Holdings Corp.
Lassar was quoted in the Wall Street Journal on Monday saying his client never profited from the situation.
“He didn’t make any money from his actions,” the paper quoted Lassar as saying.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Dhara Ranasinghe)
Switzerland’s UBS will not have to pay a fine as part of the settlement of a tax evasion dispute with the United States, two Swiss newspapers reported on Sunday.
The NZZ am Sonntag and SonntagsZeitung both also reported that data of some 5,000 UBS clients would be released to the U.S. authorities. The two papers cited unnamed sources familiar with the case.
Spokesmen for the Swiss justice and the foreign ministry declined to comment on the reports. UBS was not immediately available.
The U.S. government and UBS struck a deal to settle a dispute over tax evasion and Switzerland’s bank secrecy on Friday, heading off a showdown that had threatened to sour relations between the U.S. and Switzerland.
The main sticking point was that U.S. authorities wanted UBS to disclose the names of 52,000 wealthy American clients suspected of using the bank to evade taxes — a demand that tested Switzerland’s vaunted tradition of bank secrecy.
The parties still have to work out details, which are expected by Friday, when a new pretrial status conference is scheduled. The court trial against UBS has been reset for Aug 10, but would be called off if a final deal is signed.
Switzerland’s top-diplomat Michael Ambuehl told the NZZ am Sonntag, the deal would not violate Swiss law.
“The Swiss legal system is maintained, because the U.S. have promised to act on the basis of the current agreements and to ask for legal assistance again,” said Ambuehl, who is state secretary in the foreign ministry cash advance lenders.
Swiss justice minister Eveline Widmer-Schlumpf, whose ministry is in charge of the negotiations together with the foreign ministry, said in a newspaper interview the parties had still to agree on important details.
“I am optimistic, that an agreement can be reached,” she told Swiss paper Sonntag.
But she warned that worries of a failure were not unfounded.
“There are still details to be cleared, which are of importance to us,” she said. “Should we not reach an agreement, which is in line with our Swiss laws, a deal would be put into question.”
IN PRINCIPLE
Under the settlement, described as an “agreement in principle” expected to be finalized by next Friday, UBS is likely to reveal far fewer than 52,000 client names, but would include the biggest accounts, a U.S. government source had told Reuters.
UBS Chairman Kaspar Villiger said earlier this month the tax talks were focusing on client names rather than on a potential payment by UBS.
A U.S. government source who has followed the case closely had downplayed talk of a financial penalty.
The rally in some vital basic resources has endured into the second half of this year, but red flags are being raised too as hopes for global growth in 2010 risk being engulfed by commodity-induced inflation.
Oil and industrial metal copper, needed to fuel growth and therefore recovery, have made gains this year of 50 and 85 percent respectively.
“If, at this point, a rise in commodity prices were to drive input costs higher…this would derail any economic recovery,” said Philippe Bonnefoy, founder of Swiss-based investment adviser Cedar Partners.
Investors in those markets have fed on a tide of risk-seeking investments in global equity markets, as funds re-allocated money after the global financial meltdown, and on China’s restocking process.
Moving into the third quarter, China’s restocking is said to have faded, leading some analysts to conclude that green shoots had been priced in by now.
But while prices saw some sharp losses earlier this week, copper is still up some 14 percent so far this quarter, while oil is holding around $67 a barrel — keeping faith with share prices — and gold has kept a $900 an ounce handle even as flows into exchange traded products waned.
Crude oil and gold watchers say those markets were already pricing in potential inflation — a dangerous scenario for central banks looking to keep policy loose and credit cheap cashadvance.
“If rising commodity prices cause inflation (or raise inflationary expectations), they could force the U.S. Federal Reserve to raise rates too early,” said Adam Robinson, director of commodities at U.S. fund Armored Wolf.
“Tightening monetary policy before the economy is ready for it could stop economic growth in its tracks.”
GROWTH?
JP Morgan said in its quarterly note that strength in commodity markets in the first half of 2009 appeared to have pre-empted the global economic recovery.
“However, much of the strength has been due to the speed at which the supply side has adjusted to lower demand conditions,” the bank added.
Data from leading world economies suggests the global downturn is bottoming. But for a sustainable recovery, growth is key — and that is in short supply.
A Reuters survey this month of 50 economists worldwide showed global gross domestic product (GDP) contracting by 1.5 percent this year. Economists polled saw a surge from Asia as the driver to bring back global growth in 2010.
Figures due on Friday were expected to show the U.S. economy contracted for a fourth consecutive quarter, the first time that has happened in records dating to 1947.
Powered by WordPress -- XHTML 1.0