The American public has gotten past its animosity toward General Motors for taking a government bailout in 2009, the company’s top executive said Thursday.
Chairman and CEO Dan Akerson said a poll taken last summer for GM by Washington public opinion firm Peter Hart Research Associates shows that more than 70 percent of Americans have a positive opinion of the company. When the same poll was taken in July of 2009, more than 70 percent had a negative opinion, Akerson said.
“I think America loves a competitor. I think General Motors, Chevrolet in particular, is part of Americana,” Akerson said during an appearance at the Detroit Economic Club.
In 2009, GM, saddled with high debt and expensive labor costs, needed $49.5 billion in government loans to survive a trip through bankruptcy court.
The U.S. government got a stake in the restructured company, part of which was sold in an initial public stock offering about one year ago on Nov. 18, 2010. The government’s remaining 500 million shares would have to sell for around $53 per share for the U.S. to break even. Such a sale probably won’t come anytime soon. GM shares are trading around one-third less than the $33 IPO price.
The summer before the IPO, then-GM Chairman and CEO Ed Whitacre said government ownership was hurting the company’s sales. Whitacre said GM didn’t want to be known as “Government Motors.”
But Akerson said on Thursday that the new GM is now making money and has passed that stage.
“I do think that we’ve kind of gotten over that,” he said.
GM made a net profit of just over $7.1 billion in the first nine months of the year.
Akerson said the government doesn’t get involved in running GM. But he’s concerned about government pay limits for companies that took bailout money. GM, he said, won’t be able to give bonuses to its 25 highest-paid executives _ even though it could make $8 billion or $9 billion this year.
“We’ve got some very, very good people that could do well at other companies who are doing this one for the home team,” he said.
Akerson pinned the drop in GM’s stock price on the broader economy, not automaker’s performance. Shares of General Motors Co. were down 96 cents, or 4.2 percent, to $21.69 in afternoon trading Thursday. They’re down about 41 percent for the year, slightly worse than the 40 percent drop in shares of Ford Motor Co.
Akerson also said GM will take actions to right its money-losing European operations. He referred to French competitor Peugeot Citroen SA’s plan cut 6,000 jobs because of flat demand in Europe, although he stopped short of saying there would be plant closures or layoffs at GM.
He said the government debt crisis in Europe could have a larger impact on the U.S. than the 2008 financial meltdown and recession, because Europe is “a hugely and important cultural and economic center of gravity for the world.”
Last week GM said its third-quarter net income fell 15 percent from a year earlier to $1.7 billion, partly because of a pretax loss of $292 million in Europe. The loss forced GM to back off an earlier forecast of breaking even in Europe this year.
“Clearly you can’t have a unit as important as Opel is to General Motors chronically unprofitable,” he said. “It’s not sustainable and it’s not good for the company.”
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Shares in Spain’s Repsol energy company are soaring after the company announced it has made a major new shale oil find in Argentina that boosts by a third its total amount of recoverable oil.
Repsol YPF SA’s shares were up 5.4 percent in midday trading Tuesday in Madrid.
The company said the discovery includes 927 million barrels of recoverable resources, 741 million of which is oil.
Argentine President Cristina Fernandez in May announced a huge shale oil deposit in Neuquen province, but less than 10 percent of it had been explored at the time.
Repsol owns the rights to 12,000 square kilometers (4,633 sq. miles) of the 30,000 square kilometer (11,583 sq. mile) basin. Like other oil companies, it has only recently begun to search them.
Thailand’s prime minister says she hopes the process of draining floodwater through Bangkok can be sped up now that peak high tides have passed.
Prime Minister Yingluck Shinawatra said Monday that “if there is no more additional water, the current runoff might not cause heavy flooding in Bangkok.” She said there was still a massive amount of water that needs to pass through the capital’s drainage network as it makes its way down from flooded provinces in the north quick cash.
Record high tides pushing up the Chao Phraya River from the Gulf of Thailand have made draining the water from Thailand’s worst flooding in a half-century more difficult. That has put extreme pressure on Bangkok’s flood defenses, though they have largely held and most of the city remains dry.
With financial help from St. Clair County, a Michigan company will build a perishable-goods warehouse at MidAmerica St. Louis Airport in Mascoutah. The facility will handle fresh fruit and vegetables bound for international markets.
The deal announced Thursday includes $2.15 million from the county in upfront money and for refrigeration equipment for the warehouse, which will cost up to $5.7 million.
North Bay Produce Inc. of Traverse City, Mich., will build the 36,448-square-foot warehouse, which will be completed by the middle of next year, officials said.
In exchange for the county’s help, the airport will own the warehouse after 15 years, officials said.
North Bay specializes in year-round production and marketing of fresh fruit and vegetables for customers in North America, Latin America and Europe Business Card Holders. County officials said the warehouse will help North Bay open a shipping route to Asia.
“A large portion of the product they will handle at Mid-America flies, and we look forward to hosting their worldwide air activity,” said County Board Chairman Mark Kern. “This is the anchor tenant for our international trade route linking Latin America with Asia.”
North Bay’s president, Mark Girardin, said the company searched for three years to find a distribution center in the Midwest.
The refrigeration equipment the county is contributing to the project came from a MidAmerica warehouse the Boeing Co. began using last year for assembly operations.
As Europe’s leaders struggle toward a solution to its debt crisis, hopes are growing that cash-rich China will take a major role in a rescue _ expectations that are likely to be dashed.
On Friday, the chief executive of Europe’s bailout fund visits Beijing to talk to potential investors. Beijing has expressed sympathy for the 27-nation European Union, its biggest trading partner, but has yet to commit any cash.
Joining in a bailout could help Beijing in its campaign to join the top ranks of governments that manage the global economy _ a leadership role that many around the world have been urging China to take.
So far, Beijing has promised to help only by continuing business as usual, trading with Europe and stockpiling some of China’s multibillion-dollar trade surpluses in the safest European government bonds.
“For China, this could be a very big break in its efforts to take the seat at the head of the table in the international monetary hierarchy,” said Carl Weinberg of High Frequency Economics in a report.
Still, getting directly involved would put Chinese leaders in a position that is fraught with political risk _ spending public funds to bail out European countries that despite their debt crisis are still far richer than China per person.
Managers of China’s sovereign wealth fund, a potential investor, have tried to maintain an image as careful financial guardians after they faced criticism when early investments abroad failed to perform well.
During a visit to Paris this month, the Chinese fund’s chairman said Europeans should “respect yourself” and stop “expecting charity from China.”
European leaders are looking for investors outside the 17 nations that use the euro common currency, including sovereign wealth funds, for a fund to backstop the main bailout fund, the European Financial Stability Facility.
That is part of a complex plan under development to have the EFSF act as an insurer for bonds issued by weaker governments such as Italy and Spain, making them more attractive to investors.
The head of the EFSF, Klaus Regling, is due to explain the insurance scheme during his visit Friday to Beijing.
On Thursday, French President Nicolas Sarkozy was set to telephone his Chinese counterpart, Hu Jintao.
Even if China contributes, Beijing needs to limit its risk, said Huang Wei, an economist at the Chinese Academy of Social Sciences, a government think tank. She said that could mean the best Europe could hope for is a Chinese purchase of bonds guaranteed by the region’s stronger governments.
“I don’t think the Chinese government will invest directly in sovereign debt, such as Greek debt, because that’s very dangerous,” she said.
Still, China’s robust economy and $3.2 trillion in foreign reserves have fueled hopes in weaker economies that Beijing might emerge as a last-minute alternative to European aid and austerity measures that have fueled protests guaranteed online personal loans.
“You will hear some less-serious people in Ireland or Greece say, We don’t need you Europeans with your conditions because the Chinese will bail us out,” said Katinka Barysch, an analyst at the Centre for European Reform, a think tank in London.
But the vast scale of Europe’s needs _ as much as 1 to 2 trillion euros for the bailout fund _ makes that unrealistic, Barysch said.
“This is just not something the Chinese will give them,” she said.
China’s foreign and finance ministries did not respond Thursday to questions about whether Beijing would contribute to a bailout and the status of talks with Europe.
Asked on Wednesday about a possible Chinese role in a European bailout, foreign ministry Jiang Yu expressed hope the crisis could be resolved by the EU.
“I believe the Chinese side, with an open attitude, will discuss with the European side multiple ways of cooperation,” Jiang said.
Some Europeans are looking to Chinese companies, still financially strong after the 2008 global crisis battered Western business, as potential buyers of public assets such as power companies that might be sold to raise money.
But Chinese buyers that picked up European companies and other assets earlier at fire-sale prices have run into trouble managing them. They have shifted to pricier but more reliable blue-chip acquisitions such as China National BlueStar Corp.’s purchase this year of Norway’s Elkem, a maker of silicon and carbon parts, for a hefty $2 billion.
Chinese help also might carry a political cost, which has sparked unease for some in Europe.
Last month, Wen Jiabao repeated Beijing’s longstanding appeal to Europe to grant it market economy status _ a move that would make it harder for European companies to press trade complaints against Chinese rivals _ though he refrained from linking it directly to possible Chinese help in the debt crisis.
The top EU economic official, Olli Rehn, has distanced himself from a proposal floated by Brazil for China and other developing countries to jointly contribute.
“That would however have very far-reaching political consequences,” Rehn said in an Oct. 21 interview with Handelsblatt, a German business newspaper.
“It would mean that the Chinese, the Russians and Brazilians would indirectly have a place at the table in the eurozone,” Rehn said. “Such a decision would have strategic significance that is not to be underestimated.”
When it comes to the intersection of energy and geopolitics, few know more than economist Daniel Yergin.
Yergin cofounded and now chairs the IHS Cambridge Energy Research Associates, an energy consultancy. But he’s better known for his epic tale on the history of the global oil industry, “The Prize: The Epic Quest for Oil, Money, & Power,” a No. 1 best-seller that won the Pulitzer Prize for general nonfiction in 1992 and was later made into a PBS miniseries.
Yergin spoke Friday at the St. Louis County Public Library about his latest book, “The Quest: Energy, Security and the Remaking of the Modern World”
Toronto
BlackBerry services buzzed back to life across the world Thursday, after a three-day outage that interrupted email messages and Internet services for millions of customers.
Research In Motion Ltd., the Canadian company that makes the phones, posted a statement that says services are improving.
Many BlackBerry users have been unable to send and receive emails and messages in an outage that started Monday in Europe. Web browsers haven’t been working either. On Thursday morning, BlackBerry users on Twitter and online forums were reporting that their phones were buzzing with incoming messages again.
RIM co-CEO Mike Lazaridis apologized for the outage in a video posted to the company’s site Thursday morning.
“It’s too soon to say that this issue is fully resolved,” Lazaridis said. “I’d like to give you an estimated time of full recovery around the world, but I cannot do this with certainty at this time.”
A crucial link in BlackBerry’s European network failed Monday, and a backup also failed. Although the underlying issues were quickly repaired, the system had built up a backlog of emails and messages that needed to be wound down. Meanwhile, messages destined for Europe were piling up at BlackBerry data centers in the rest of world. By Wednesday, the outage had spread to the U.S. and Canada, slowing service to a crawl there.
RIM shares were down 35 cents, or 1.5 percent, at $23.53 in premarket trading in New York. Investors have taken the outage in stride, figuring that it’s only one of many problems RIM is facing. The shares are up slightly since the outage began.
Starbucks hopes customers will be willing to pay at least $5 more when they stop in for their morning cup of Joe.
Starting Nov. 1, Starbucks will begin collecting donations of $5 or more from customers to stimulate U.S. job growth through its “Jobs for USA” program. The Seattle-based coffee chain is collaborating with the Opportunity Finance Network, a nonprofit that works with nearly 200 community development financial institutions to provide loans to small businesses and community groups. Starbucks says 100 percent of the donations will go toward loans for firms and organizations that can add jobs or stem job losses.
Starbucks, which pioneered how Americans drink coffee, declined to estimate how much money it plans to raise, but millions of people visit its nearly 7,000 company-owned U.S. stores each day. Customers who give will get a red, white and blue wristband that says “Indivisible.”
“This is about using Starbuck’s scale for good,” said Howard Schultz, Starbucks Corp.’s CEO.
The program is the latest effort by Schultz to address the nation’s economic woes. In August, he sent more than 200,000 Starbucks employees a memo urging them to do what they can to help business thrive. Then, he asked fellow CEOs to stop contributing to political campaigns until the nation’s leaders reached a long-term economic solution. After that, he hosted a national telephone forum, bought full-page ads in two major newspapers and started a website, Upwardspiral2011.org.
Schultz said he feels personal responsibility to do something to stimulate the U.S. economy. Starbucks is hiring about 200 people a day in the U.S. as part of its efforts to remodel thousands of stores and add about 200 more locations in the next year. But Schultz said he wanted to do more.
Starbucks is covering the operational costs to get loans out through the program, which will run indefinitely. Its charitable arm, The Starbucks Foundation, is giving $5 million to get the program started, with the hope that funds will be invested in communities within a month of a donation being made business card design.
Opportunity Finance Network works with 180 financial institutions _ banks, credit, unions, loan funds and venture capital funds _ that give loans in low-income communities that don’t have easy access to credit. The organization, created 27 years ago, has invested $23.2 billion and generated nearly 300,000 jobs through 2009.
Loans through the network have supported everything from charter schools to grocery stores nationwide. The organization found that, even during the recession, more than 98 percent of the money loaned out has been repaid, which is in line with traditional lenders.
Through the program, businesses will apply to financial institutions, which along with the Opportunity Finance Network will assess their potential for adding jobs. Preference will be given to applicants who can add jobs within six months. An outside organization will audit the program within a year.
“We want to match up every person who has $5 to share with every person who can’t spare $5,” said Mark Pinsky, CEO of Opportunity Finance Network.
The effort has the potential to be successful, say some experts. Community institutions succeed, they say, because they understand the needs in the areas they serve.
“I think it’s a really worthy effort,” said Mark Zandi, chief economist at Moody’s Analytics. “In theory, this is a great idea and should have impact.”
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Online: For more information, visit createjobsforusa.org or for information on Opportunity Finance Network and how to find a community development funding institution, visit opportunityfinance.net
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