Archive for May, 2011

GM to add 2,500 jobs at Detroit-area factory

Wednesday, May 25th, 2011 | Finance News

DETROIT – General Motors Co. will add 2,500 jobs at a Detroit-area factory, investing $69 million so the plant can make two new Chevrolet sedans.

The factory, which straddles the border between Detroit and the small enclave of Hamtramck, now makes the Chevrolet Volt and its European counterpart, the Opel Ampera. GM announced on Wednesday that it will upgrade the plant so that it can run around the clock making the new Malibu midsize car and a revamped Impala, a large sedan.

About 1,200 of the jobs will be new hires, since GM still has to recall about 1,300 laid-off workers in the U.S. But in Michigan, which has one of the highest unemployment rates in the nation, the jobs are big news.

The company gave no time frame for hiring new people or recalling laid-off workers. It said new hires at the plant will get around $14 per hour, about half the pay rate of veteran United Auto Workers union members.

The jobs are part of a larger GM expansion to create or keep about 4,000 jobs by investing $2 billion in 17 factories in the U.S. GM has already announced more jobs at plants in Bowling Green, Ky.; Toledo, Ohio; and Flint and Bay City, Mich.

"Filling this plant with new work is very satisfying because GM is dedicated to helping rebuild this city," Mark Reuss, the company's North American president, said in a statement.

GM said last week it would shut the Detroit-Hamtramck plant for four weeks starting in June, reconfiguring it to boost Volt and Ampera production from 16,000 cars per year to 60,000 next year to meet strong demand. It will also allow GM to add equipment to build the 2013 Malibu at the plant starting next year. The car also will be built in Kansas City, Kansas.

In addition, GM said it will build a long-overdue new version of the Impala at the factory. GM released few details about the car, which is expected to go into production for the 2013 model year. The current version is far noisier and lacks technology and handling offered by competitors such as the Ford Taurus. Now built in Oshawa, Ontario, it's the ninth generation of the Impala and went on sale starting in the 2006 model year. Spokesman Chris Lee would not say if the Oshawa plant would also build the new Impala.

GM sold about 70,000 Impalas through April, an increase of nearly 30 percent over the first four months of last year. Last year many of the cars went to large fleet buyers such as rental car companies.

Reuss told reporters Wednesday that the new version would be front-wheel-drive like the current car.

GM will stop producing two other big cars at the factory, the Cadillac DTS and Buick Lucerne, later this year.

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Greek PM insists govt will see through reforms

Wednesday, May 25th, 2011 | Finance News

ATHENS, Greece – Greece's prime minister insisted Wednesday his government would see through new austerity measures and called again for a cross-party agreement on the reforms, which he has so far failed to secure despite European Union pressure.

George Papandreou renewed his commitment to reforms as international debt inspectors returned to Athens to continue a crucial review of Greece's progress in meeting the terms of its euro110 billion ($155 billion) bailout package from other European Union countries and the International Monetary Fund.

They will determine whether the country receives the next euro12 billion installment of rescue loans in June — and could indicate whether Greece will need extra help beyond the current rescue loans, such as a second bailout.

"We have achieved very difficult targets in a critical time, and this is what we must continue. We are entering a new phase of the program with determination," Papandreou told reporters after briefing the country's president, Karolos Papoulias, on the latest developments.

"As I have stressed before, always the aim for me in these crucial times is for national cohesion," he said. "And I am totally open, as I have stressed to the political leaders, to every new idea, proposal that is realistic, effective."

He insisted, both in his talks with Papoulias and in the comments he made afterwards, that he was determined to keep Greece in the eurozone.

He did not answer a question on whether he was considering holding a referendum on the austerity measures — as press reports have indicated. Government spokesman Giorgos Petalotis, asked about the same issue later in the day, said there was "no particular thought" at the moment of doing so.

Many both within Greece and in the rest of Europe fear that even with the current bailout, the country will not be able to pull itself out of the crisis. Some argue that with a debt of over euro342 billion last year, along with a budget deficit of 10.5 percent of gross domestic product, Greece will eventually have to restructure its debt — pay creditors later or less than the full amount owed.

But the European Central Bank has been adamant this should not be considered an option.

"To think that there is an easy way out, in that a country's debts are largely or fully relieved, is an illusion," the ECB's chief economist, Juergen Stark, said in Berlin. "The necessary structural adjustments must be made."

Stark pointed to the dire effects restructuring would have on Greek banks' capital and to a likely need for subsequent recapitalization — which "would not be very cheap."

"We should think one connection further when we use this miracle word debt relief, or debt restructuring — be it soft or hard," he told a conference organized by a group linked to German Chancellor Angela Merkel's party.

In Athens, Papandreou met with political party leaders Tuesday, seeking support for a midterm package of measures which will run to 2015 — two years beyond his government's mandate. But he failed to win consensus.

The new plan includes more than euro6 billion worth of measures for this year, including tax increases and an immediate start to previously announced privatizations. It aims to narrow the country's budget deficit from 10.5 percent of gross domestic product last year to 7.5 percent by the end of 2011.

Top EU officials have argued that Greece, which is struggling to meet the terms of the bailout extended last year and could need more help, needs opposition parties to back the debt-cutting plans to ensure they can be implemented smoothly.

But Antonis Samaras, the head of the main opposition conservative party, said that while he agreed with several elements, including the privatizations, the overall direction of the plan, and the hike in taxes in particular, was wrong.

"To this demonstrably mistaken recipe, I will not agree," said Samaras, whose party officials were to meet later Wednesday with debt inspectors.

Unions have already begun protests over the privatizations, with employees of Hellenic Postbank, one of the enterprises up for privatization, occupying the company headquarters in central Athens. Employees at the gambling monopoly OPAP held a 24-hour strike against plans to sell the state's stake in the company.

A communist party-backed union has called for a demonstration on Saturday, while a rallies were being planned in Athens and the country's second largest city of Thessaloniki Wednesday night following a call through a social networking site for "outraged citizens" to demonstrate.

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Derek Gatopoulos in Athens and Geir Moulson in Berlin contributed.

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Geithner: Lagarde and Carstens "credible" for IMF

Wednesday, May 25th, 2011 | Finance News

WASHINGTON (Reuters) – Treasury Secretary Timothy Geithner on Wednesday said France's Christine Lagarde and Mexico's Agustin Carstens are both "credible" candidates to lead the International Monetary Fund, but he wants the candidate who can earn the broadest support.

"They're very talented people. Christine Lagarde is an exceptionally capable person, an excellent mix of financial, economic knowledge, talent, and the kind of political skills you need," he said at a breakfast sponsored by Politico. "Agustin has that as well. We want to see a process where we look to the candidate who can command the broadest support."

Geithner said the United States will eventually weigh into the decision, but said he believes it is important that the IMF run a "contestable" selection process based on merit and the talents of candidates.

Both Carstens, Mexico's central bank governor and former finance minister, and Lagarde, France's economy minister, have put their names up for consideration to replace Dominique Strauss-Kahn, who resigned as IMF chief last week after he was arrested on charges of attempting to rape a maid in a New York hotel. Many have seen Lagarde as the front runner.

Carstens is the first candidate for IMF managing director from an emerging market. The IMF has been run by a European since it was created after World War Two.

Geithner said the United States was working with emerging economies and Europe to make sure the fund's structure "reflects the balance of power in the world today."

"Two very credible people now said they'd like to run the institution and there may be others that join them," Geithner said. "But I think you can look at this now and be much more confident that you're going to have an open process where people are going to look at the candidate, not just at the most experience and technical capacity, but who can command the most, the broadest base of support."

Geithner said Strauss-Kahn has not contacted him since his arrest and resignation. The U.S. Treasury boss declined comment when asked if the IMF had an atmosphere where women felt preyed upon by male colleagues when he worked at the Fund from 2001-03, adding that female IMF employees would be better positioned to answer such a question.

DEBT FALL-BACK PLAN?

At the same event, Geithner refused to admit that the administration was working on a contingency plan to stave off a default if Congress failed to give the U.S. government room to borrow, but vowed that the United States would meet its obligations.

"Our plan is for Congress to pass the debt limit," Geithner said. "Our fall-back plan is for Congress to pass the debt limit and our fall-back plan to the fall-back plan is for Congress to pass the debt limit," he said.

The United States has already reached its $14.294 trillion borrowing cap and Congress has until about early August to increase the level before the country becomes unable to pay all its bills.

Geithner said "The United States will never default on its obligations. This country will never put itself in a position where people believe we are not going to pay our bills," he said.

(Reporting by David Lawder, Rachelle Younglai and Lisa Lambert, Editing by Chizu Nomiyama)

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