JEFFERSON CITY
Negotiations between General Motors Co., Chrysler Group LLC and the United Auto Workers union were expected to continue Thursday after bargainers failed to reach new deals before a Wednesday night deadline.
The union, which represents 111,000 workers at GM, Chrysler and Ford, agreed to extend the old contract and keep working, and there were signs that a GM deal was getting close.
“We are hopeful that an agreement can be reached soon,” UAW leaders said in a statement posted early Thursday on the Internet for GM workers nationwide. “While we have made significant progress, we have not been able to secure a new agreement that we would recommend for ratification.”
Chrysler, however, may be another story. Just before Wednesday’s 11:59 p.m. deadline for the contracts to end, CEO Sergio Marchionne fired off an angry letter to the UAW president saying that he failed to show up to finalize a deal.
The UAW talks will determine wages and benefits for workers at the car companies, and they also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturers, which employ hundreds of thousands more workers. The talks are the first since GM and Chrysler needed government aid to make it through bankruptcy protection in 2009.
GM negotiators stopped talking after midnight and said they would resume at 10 a.m. EDT Thursday. Chrysler and the union also talked until after midnight, but the company would not say if they stopped or when they would restart.
In the past, workers might have gone on strike if the UAW hadn’t extended their contracts. But as part of their 2009 government bailouts, GM and Chrysler workers had to agree not to strike over wages.
The UAW extended its contract with Ford Motor Co. last week, as talks have progressed more slowly with that automaker.
Up until the deadline, the negotiations that began over the summer appeared to be proceeding without the acrimony that plagued them in the past. But then Marchionne sent the letter to UAW President Bob King.
“I know we are the smallest of the three automakers here in Detroit, but that does not make us less relevant,” Marchionne said in the letter, which was obtained by The Associated Press.
Marchionne said only a few mainly economic issues separate the two sides, and he told King in the letter that he would travel out of the country for business and will return next week. He said he would agree to a weeklong extension of Chrysler workers’ current contract. The UAW didn’t set a new deadline to reach agreements.
King would not comment on the letter when reached by telephone early Thursday.
Marchionne said he and King met a week ago and agreed to finish work on the new contract before the deadline. He said not meeting the deadline hurts Chrysler’s workers.
“You and I failed them today,” he wrote. “We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done.”
King spent much of the day Thursday negotiating with GM, but it was unclear why he didn’t appear at Chrysler’s Auburn Hills, Mich., headquarters.
It’s likely that any setback is temporary, though. The union has an interest in reaching a deal that’s acceptable to both sides. A union-run trust that pays retiree health care bills owns more than 40 percent of Chrysler.
GM has taken the lead on the negotiations and its agreement may be used to set the pattern for the other two companies.
GM nearly ran out of cash and needed $49.5 billion from the government to survive, but it’s been making billions in the last two years because its debt and costs were lowered in bankruptcy and its new products have been selling well. Chrysler has turned a small profit in the first half of the year.
Under terms of both companies’ government bailouts, unresolved issues can be taken to binding arbitration, and the union’s new contracts must keep the companies’ labor costs competitive with Asian automakers such as Toyota Motor Corp. and Honda Motor Co.
The union has been seeking bigger profit-sharing checks instead of pay raises, higher pay for entry level workers who make $14 to $16 per hour, signing bonuses and guarantees of new jobs as auto sales recover. Ford and GM want to cut their labor costs to get them closer to Honda and Toyota, while Chrysler wants to hold its costs steady. Health care costs are also an issue.
Once the contract agreements are reached, workers will vote on them.
Royal Dutch Shell struggled to contain the worst North Sea oil spill in a decade as well as damage to its credibility Tuesday as a second leak was found in an oil line the company had said was “under control.”
Although the amount of oil involved in the Shell spill off the coast of Scotland is an order of magnitude smaller than BP’s 2010 Gulf of Mexico disaster _ around 1,300 barrels so far compared to an estimated 4.9 million in the Gulf _ the spill undercuts Shell’s earlier suggestions that it was a safer company than BP.
The Gannet Alpha oil rig, 112 miles (180 kilometers) east of the Scottish city of Aberdeen, is operated by Shell and co-owned by Shell and Esso, a subsidiary of the U.S. oil firm Exxon Mobil.
Shell shut down the main leak in a flow line at the rig by closing the well and isolating the reservoir, said Glen Cayley, technical director of Shell’s European exploration and production activities. However, he acknowledged a second, smaller leak has proved more elusive to control.
“The residual small leak is in an awkward position to get to,” he said. “This is complex sub-sea infrastructure, and really getting into it amongst quite dense marine growth is proving a challenge.”
“It’s taken our diving crews some time to establish exactly and precisely where that leak is coming from,”
The secondary spill is pumping about two barrels _ or 84 gallons _ into the cold water each day.
Saket Vemprala, an oil and gas analyst for Business Monitor International, said while any spill is problematic, the North Sea spill is much smaller than the Deepwater Horizon spill.
“The numbers are simply not comparable,” he said.
While the BP leak was from the well’s head, the Shell leak is from a flow line, so the company knows what to expect, he said. “There is a finite amount of oil in the flow,” Vemprala said.
Still, the shallow-water disaster is an embarrassment for Shell as the company seeks its first license for exploratory drilling off the coast of Alaska. Shell CEO Peter Voser has previously said the BP blowout could never have happened to Shell, due to Shell’s different well design.
“The risk management practices of some companies in the Gulf of Mexico do lag behind the standards set by other companies,” Voser told analysts on a conference call in February. “We at Shell have been applying the best of the North Sea standards to our worldwide operations for many years.”
Kenneth E. Arnold, a member of the U.S. National Academy of Engineering who served as an adviser to the U.S. Department of Interior during its probes into the Deepwater Horizon explosion, said the suggestion that any company is not vulnerable to a catastrophe is dubious.
“What we can measure are things that happen frequently enough that there is a trendline,” he said, citing injuries, time lost to accidents, minor spills and incidents where a company failed to comply with government rules. “Predicting major disasters _ that’s something we struggle with.”
On the eve of the Gulf disaster, BP had been tipped by some industry insiders as a potential winner of a safety award for its Gulf operations.
Arnold said he would classify a 1,300-barrel spill as “significant” but not catastrophic.
At its largest, the North Sea oil spill sheen covered an area 19 miles wide by 2.7 miles long (31 kilometers by 4.3 kilometers). Both Shell and the British government predict the oil will disperse naturally and not reach shore.
Cayley, in a statement, said the company “deeply regrets” the spill. He said the first leak was stopped Thursday but now “the oil found a second pathway to the sea.”
Shell said it believes the oil is now leaking from a relief valve close to the original leak, and once it is certain of the source, it will stop the spill.
The British government agrees that the leak is small compared with the BP disaster but says it is still substantial for the U.K.’s continental shelf. It has promised to investigate the spill, which is four times the amount leaked by all British rigs into the North Sea in 2009.
Vicky Wyatt of Greenpeace criticized Shell for not releasing information about the spill as quickly as it should have.
“The news that there’s now a second leak from the Shell platform will only heighten concerns over how this episode is being handled,” she said. “While oil has been flowing, timely information has not.”
Shell informed U.K. government agencies of the spill on Wednesday, but did not make the news public until Friday. On Saturday it declared that the leak had been contained.
Britain has already beefed up its inspections of the 24 drilling rigs and 280 oil and gas installations in its part of the North Sea in the wake of the 2010 Gulf spill.
The last major spill in the North Sea was in 1993, when oil tanker MV Braer ran aground in the Shetland Islands, spilling around 620,000 barrels of crude into the sea.
____
Sterling reported from Amsterdam. Danica Kirka also contributed to this story from London.
Asian stocks opened higher Friday after promising U.S. jobs data helped propel Wall Street up.
Japan’s benchmark Nikkei 225 stock average was narrowly up at 8,985.22 in early trading. Hong Kong’s Hang Seng index rose 1.3 percent to 19,854.14 and South Korea’s benchmark Kospi index was 0.9 percent higher at 1,833.44.
Australia’s S&P/ASX200 index gained 1.5 percent to 4,204, while benchmarks in New Zealand, the Philippines and mainland China also rose.
On Thursday, the Dow Jones industrial average shot 423 points higher following news that the U.S. job market had gotten a little better.
The Labor Department reported that the number of people applying for unemployment benefits fell below 400,000 last week for the first time in since April, a positive sign for the job market.
The brighter outlook was enough to catapult stocks. The Dow finished at 11,143.31, up 423.37 points, or about 4 percent. The S&P 500 finished up 4.6 percent and the Nasdaq composite index 4.7 percent.
World markets fluctuated wildly this week as signs the U.S. might be headed toward recession rattled investors already unnerved by Europe’s worsening debt crisis.
The leaders of Germany and France, the biggest economies of the nations that use the euro currency, announced they will meet Tuesday to discuss the financial crisis on the continent.
The stocks of French banks have been hammered because of concerns they will be hit with massive losses from European sovereign debt they hold. One European nation after another has struggled with debt, with Spain and Italy the latest.
France is trying to assure financial markets that it will not be downgraded from AAA. Standard & Poor’s rating agency stripped the United States of its top-flight AAA credit rating last Friday.
A citizens’ group is enforcing a six-hour general strike in Bangladesh’s capital, partially disrupting businesses and transportation, to demand that the government cancel a gas exploration deal with U.S. energy giant ConocoPhillips.
Schools are also closed during Sunday’s strike in Dhaka.
Last month, the government signed a production-sharing contract with ConocoPhillips to explore for gas in deep waters of the Bay of Bengal business cards.
But the National Committee on Protection of Oil, Gas and Mineral Resources, Power and Ports says the agreement is compromising Bangladesh’s interests.
The country is facing up to 250 million cubic feet in gas shortages each day.
ST. LOUIS - The Missouri Court of Appeals has ruled in favor of allowing Francine Katz, a former high-ranking executive of Anheuser-Busch, to proceed with a gender-discrimination lawsuit in St. Louis Circuit Court.
Katz spent more than 20 years working for the company and sued in 2009 after resigning as the vice president of communications and consumer affairs.
She claimed she was given a smaller salary and bonuses than male executives, and that the company excluded women from informal social networks one hour payday loan.
Anheuser-Busch claimed the case should be heard by an arbitrator, but the trial court ruled that such an arbitration agreement was not binding after In-Bev acquired the company in 2008.
American employers in April added more jobs than forecast and the labor market in the prior two months was stronger than initially estimated, indicating the world’s largest economy is weathering the impact of higher fuel prices.
Payrolls expanded by 244,000 last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said today in Washington. The jobless rate climbed to 9 percent, the first increase since November, a separate survey of households showed. Employment was forecast to grow by 185,000 last month, according to the median estimate of economists surveyed by Bloomberg News.
Stocks jumped after four days of losses and the dollar rallied as the report eased concern that the economic recovery is cooling. The figures bolster Federal Reserve Chairman Ben S. Bernanke’s forecast for a labor market that is “improving gradually.”
“This is good news, and it’s getting better,” James Glassman, senior economist at JPMorgan Chase & Co. in New York, said in a radio interview on “Bloomberg Surveillance” with Tom Keene. “People increasingly are becoming more confident that we are on a recovery track.”
March payrolls were revised up from a previously reported gain of 216,000, and February employment increased 235,000 after a prior estimate of 194,000. April payroll projections in the Bloomberg survey of 86 economists ranged from gains of 118,000 to 325,000, while the jobless rate was projected to hold at 8.8 percent.
Shares Rally
The Standard & Poor’s 500 Index advanced 0.4 percent to 1,340.2 at the 4 p.m. close in New York. IntercontinentalExchange Inc.’s Dollar Index, used to track the greenback against the currencies of trading partners including the euro and yen, rose 0.8 percent to 74.785.
The economy has generated 760,000 private jobs in the past three months, the report showed. Overall, companies added 2.1 million jobs since last February, after the loss of 8.8 million as a result of the 18-month recession that ended in June 2009.
“So much for the headwinds of higher gasoline prices the economy is facing,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.
Private hiring, which excludes government agencies, rose by 268,000 in April, more than the 200,000 median forecast in the Bloomberg survey and the most since February 2006, after a 231,000 increase in March.
Railroad Hiring
Among companies adding workers is Norfolk Southern Corp. (NSC) The fourth-biggest U.S. railroad is expanding payrolls as it benefits from higher shipping volumes. First-quarter profit excluding some items was $1 a share, topping the 90-cent average estimate from 27 analysts surveyed by Bloomberg.
“We still have a need for additional employees for the business that we’ve got out there,” Mark Manion, chief operating officer of Norfolk Southern, said in an April 27 teleconference. “There is a need to hire for our current business as well as hiring for the growth that’s anticipated in the first — this year and on into 2012.”
The separate survey of households showed the size of the labor force was little changed in April and employment shrank by 190,000. That pushed the share of the population in the labor force down to 58.4 percent from 58.5 percent a month earlier.
“The labor market has shown further improvement,” William C. Dudley, president of the Federal Reserve Bank of New York, said in a speech after today’s report. “Yet the recovery remains moderate and we still have a considerable way to go to meet the Fed’s dual mandate of full employment and price stability.”
Obama Ratings
The report is a boost for President Barack Obama, whose administration is locked in negotiations with Republican leaders in Congress to reduce record budget deficits guaranteed payday loans. The president’s approval ratings got a lift in public opinion polls after the killing of al-Qaeda leader Osama bin Laden.
Americans remained concerned about the economy, which is likely to be the top issue in the 2012 presidential election. In a New York Times/CBS poll conducted May 2-3, 57 percent of those surveyed said they approved of the job Obama is doing, up from 46 percent who approved last month. Thirty-four percent approved of how Obama is handling the economy and 55 percent disapproved.
The jobs report “is obviously good news,” White House press secretary Jay Carney said aboard Air Force One as Obama traveled to an event in Indianapolis, adding, “We obviously have a lot more work to do.”
Government payrolls decreased by 24,000 in April, the sixth straight decline. Local-government employment dropped by 14,000.
Manufacturing Jobs
Factory payrolls increased by 29,000 last month, exceeding the survey forecast of a 20,000 gain, after a 22,000 rise in March.
“We are going to be hiring and growing employment in Puget Sound and in South Carolina over the foreseeable future,” Jim McNerney, chief executive officer of Chicago-based plane maker Boeing Co., said on an April 27 teleconference. “Production rates are fueling really an unprecedented growth for commercial airplanes.”
Employment at service-providers rose 200,000 in April after a 184,000 gain the prior month. The health care industry added 37,300 workers in April. Construction payrolls increased on a pickup in heavy and civil engineering employment.
Retail trade employment increased by 57,100 last month, which may have reflected the effects of an Easter holiday that occurred later this year than last, making seasonal adjustment difficult for the Labor Department.
Jobs Recovery ‘Slow’
While payrolls have grown each month since October, Bernanke said on April 27 that central bankers would like to see more strength in the U.S. job market, noting that a recovery has been “quite slow.”
“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable.”
Fed policy makers last week decided to complete their program to buy $600 billion in Treasuries through June to boost the economy. At the same time, Bernanke said the Fed would maintain record monetary stimulus and keep its balance sheet steady by reinvesting proceeds of maturing securities.
Economic growth slowed to a 1.8 percent annual rate in the first quarter after expanding at a 3.1 percent pace in the last three months of 2010, according to Commerce Department figures.
Food, Fuel
Rising fuel and grocery bills are squeezing the budgets of households whose spending makes up 70 percent of the economy and damping consumer confidence. The Bloomberg Consumer Comfort Index decreased to minus 46.2 in the week ended May 1, the lowest level since the end of March, from minus 45.1 the prior period.
Regular gasoline was $3.99 a gallon on May 4, the highest since July 2008, according to AAA, the nation’s biggest motoring organization. Food costs rose 0.8 percent in March, also the most since July 2008, consumer-price index data from the Labor Department showed last month.
Higher incomes are helping make up for the price increases. Average hourly earnings climbed by 3 cents to $22.95 in April, today’s report showed, while the average work week for all employees held at 34.3 hours.
The data also showed a decrease in long-term unemployed Americans. The number of people unemployed for 27 weeks or more fell to 43.4 percent of all job-seekers from 45.5 percent a month earlier.
JEFFERSON CITY
Toyota Canada will start sending notices soon to owners of about 25,000 sport utility vehicles to fix malfunctioning airbags.
The automaker said Thursday it will conduct a voluntary safety campaign next month to replace airbag sensor assemblies in about 19,000 RAV4 and 6,000 Highlander vehicles from the 2007 and 2008 model years. It will also include some Highlander hybrids.
A company statement said two sensors in the curtain shield airbag system in those models can detect vehicle roll angles. But if one sensor malfunctions, the airbag warning light will illuminate, which will suspend the roll detection system.
At the same time, the company noted the airbag will remain effective if there is a side collision.
Credit Suisse Group AG is at odds with Goldman Sachs Group Inc. on the outlook for interest rates in China as analysts differ on the threat from inflation and the government’s likely mix of policy tools.
Increases may be “close to an end” after a quarter-point boost to key benchmarks this week, according to Goldman, the fifth-biggest U.S. bank by assets. In contrast, Swiss lender Credit Suisse estimates the deposit rate will rise by another 1.5 percentage points by year-end, eclipsing the 1 percentage point gain since the global financial crisis.
Credit Suisse sees “limited” room for increases in bank reserve requirements as elevated inflation adds pressure for the central bank to keep boosting rates after four increases since mid-October. Forecasters lack clues to policy makers’ intentions because unlike nations from the U.S. to South Korea, China issues no minutes of monetary policy meetings and the cabinet, not the central bank, has the final say on rate decisions.
“China isn’t a country that solely focuses on interest rates as a policy tool, it also uses quantitative tools, and that makes it harder to predict rates,” said Helen Qiao, a Hong Kong-based economist for Goldman. “The PBOC isn’t independent, it can’t always raise interest rates as it wishes.”
HSBC Holdings Plc is among banks that disagree with the Credit Suisse assessment.
Reserve requirements will continue to climb as so-called quantitative tools are “dominant” in tightening and rate increases play a secondary and “moderate” role, Qu Hongbin, Hong Kong-based chief China economist for HSBC, said by e-mail.
Faster Inflation
China’s statistics bureau may report on April 15 that the annual rate of inflation quickened to 5.2 percent in March, the fastest pace since July 2008 and more than the government’s full-year target of 4 percent.
The Shanghai Composite Index has climbed 7 percent this year as investors and analysts predict the government can sustain growth while taming prices. Credit Suisse, HSBC, Macquarie Group Ltd. and Citigroup Inc. advocate China stocks.
Credit Suisse describes its forecasts for rates as “the highest on the street” and Hong Kong-based economist Tao Dong said in a note this week that the central’s bank’s latest move is “one step closer towards our direction.”
Tao sees the one-year lending rate climbing 1.35 percentage points to 7.66 percent by year-end, a level higher than when Chinese officials were trying in 2007 and 2008 to cool an overheating economy before the financial crisis struck. The central bank has already boosted reserve requirements for banks by 4.5 percentage points since the start of last year and Tao sees “only limited further upside.”
Goldman says officials may increase rates once more in the first half, increase reserve requirements as “a regular tool,” allow more currency gains and maintain controls on bank lending and the property sector. Tightening measures have reduced inflation pressures and officials may be able to loosen policies in the second half, economists Qiao and Yu Song said in a note.
The reserve ratio for the nation’s biggest banks stands at 20 percent, excluding any extra requirements for individual lenders not publicly announced.
–Chinmei Sung. Editors: Paul Panckhurst, Nerys Avery.
To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at +86-10-6649-7560 or lzheng32@bloomberg.net Chinmei Sung in Taipei at +886-2-7719-1543 or csung4@bloomberg.net
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