Airbus says US factory will be world's most efficient

Airbus Group said on Sunday that its first US factory, due to formally open on Monday, will be the most efficient in the world and capable of producing up to eight jetliners a month by 2018. 

PHOTO: BLOOMBERG

SEP 14, 20157:18 AM

[Mobile, ALABAMA] Airbus Group said on Sunday that its first US factory, due to formally open on Monday, will be the most efficient in the world and capable of producing up to eight jetliners a month by 2018.

The elegant, skylit factory on 116 acres here is a potent threat to rival Boeing Co. Both companies now make 42 single-aisle planes a month and plan to ramp output up sharply in the next few years to fill back orders for new planes.

Boeing makes its competing 737 jetliner at a single factory in Renton, Washington, and plans to lift the rate to 52 a month in 2018. Airbus, with facilities in Germany, France and China, plans to lift production to 50 a month.

The new US plant will start out producing four a month, and gives Airbus the ability to go higher simply by adding additional shifts of workers, Airbus officials said on Sunday. "We can go to eight with very little adjustment," said Timo Zaremba, product quality manager for the US factory.

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The US presence also gives Airbus a strong card to play in selling to US airlines. Already Airbus' current backlog will double its US market share to 40 percent. The Mobile plant will supply North American airlines, with the first two going to JetBlue Airways Crop and American Airlines Group starting in the second quarter of 2016.

Airbus said it introduced several efficient techniques in the new factory, after taking the best ideas from its existing plants. Among them: a machine that automatically installs the 2,400 rivets used to attach wings to the fuselage. Those improvements will be copied by the earlier factories.

The Airbus factory will also be the first in the United States to be certified by the European Aviation Safety Agency, not its US counterpart, the Federal Aviation Administration.

REUTERS

    
 

Britain's left-wing unions jubilant at Corbyn victory

Trade union activists declared themselves "thrilled" with the election of veteran campaigner Jeremy Corbyn as leader of Britain's main opposition Labour Party at an annual congress of unions on Sunday. 

PHOTO: AFP

SEP 14, 20157:10 AM

[BRIGHTON] Trade union activists declared themselves "thrilled" with the election of veteran campaigner Jeremy Corbyn as leader of Britain's main opposition Labour Party at an annual congress of unions on Sunday.

The yearly meeting of the Trades Union Congress (TUC), a gathering of unions, peace movements and international solidarity groups, was held in the coastal city of Brighton one day after the anti-austerity stalwart Corbyn stunned many in his own party by sweeping to a decisive victory.

"We are thrilled with Jeremy Corbyn's victory!" said 27-year-old David Sharkey, adding that Corbyn's triumph showed unions re-emerging as a powerful force in the Labour party they founded, after being sidelined under the more centrist "New Labour" of former leader Tony Blair.

"The trade union movement has proved during this election that it's still a very strong lobby group," said Mr Sharkey, an advertising manager for socialist newspaper The Morning Star, which published its first Sunday edition in its 85-year history after Mr Corbyn won.

The election of the 66-year old, backed by Britain's two biggest unions, comes as the Conservative government of Prime Minister David Cameron prepares to introduce a bill to make it harder for trade unions to call strikes and stage pickets.

Activists, who have pledged to put up a tough fight against the proposals, welcomed Mr Corbyn as a breath of fresh air.

"Jeremy Corbyn's victory is very good news," said Andrea Butcher of socialist and trade unionist bookshop Bookmarks, as she arranged anti-austerity pamphlets and anti-capitalist essays at the Congress library.

"It will shift the debate to the left, we will talk more about refugees, renationalisation, the NHS (National Health Service)."

Mr Corbyn, a former union official who praised the groups' role in society in his leadership victory speech, is expected to receive a hero's welcome when due to address the Congress on Tuesday.

HARDEST YET TO COME

Mr Corbyn won the backing of several unions officially affiliated with the Labour party, as well as non-affiliated groups, some saying the anti-war campaigner could offer a stiffer opposition to the Cameron administration.

"We are very much welcoming of Jeremy Corbyn," said Nick McCarthy of the largely civil service-representing Public and Commercial Services Union, before leaving to welcome former Greek finance minister Yanis Varoufakis, who shares Mr Corbyn's support for economic stimulus over austerity.

"Only the most hard-bitten cynic wouldn't have been impressed by the way that this campaign seems to have taken off and particularly the way young people have been excited about getting involved in politics," said TUC leader Frances O'Grady.

Yet Mr O'Grady warned of the need for Labour to regain the trust of the electorate, after the party was defeated in the May 2015 election as it struggled to shake off an image of being less reliable on the economy than the Conservatives.

As Mr Corbyn sets his sights on leading Labour into the next election in 2020, activists indicated that the hardest battle was yet to come, not only in winning over an electorate but also those opposed to Mr Corbyn's views within his own party.

"Now there will be a difficult battle against the Blairite bureaucracy," said Socialist Party member Mark Best.

"The only way for Jeremy Corbyn to apply his agenda will be to mobilise people and to build up the movement."

AFP

    
 

Germany reinstates border controls over refugee surge

German police officers check a car from Hungary on September 13, 2015, in the southern German city of Freilassing at the border between Germany and Austria, after Berlin's shock decision to reintroduce such controls to halt a surge in refugee numbers. 

PHOTO: AFP

SEP 14, 20157:04 AM

[FREILASSING] Germany reintroduced border controls on Sunday after admitting it could no longer cope with a record influx of migrants and refugees, raising the stakes ahead of a key EU meeting on sharing the burden of the crisis across the bloc.

Within hours of Berlin's shock announcement German officers began carrying out the first passport checks near the border with Austria, an AFP journalist saw.

As night fell, police in fluorescent vests stopped all cars and pedestrians at the Freilassing crossing in Bavaria, with three Syrian migrants who were on foot told to remain on the side of the road.

The extraordinary scenes came on the eve of emergency talks on the crisis in Brussels, when interior ministers are expected to lock horns over the European Commission's controversial plan to spread migrants across the bloc.

Despite an outpouring of public sympathy for the plight of the refugees, many of whom are from Syria, several eastern European countries have already warned they will oppose any binding quotas on absorbing asylum seekers.

As the continent scrambles to respond to the biggest movement of people since World War II, Germany's dramatic reintroduction of border checks signalled a U-turn on Chancellor Angela Merkel's earlier decision to throw open the country's doors to Syrian refugees.

The renewed border checks effectively suspend Germany's participation in the bloc's borderless Schengen system, one of the cornerstones of the European integration project since it was created in the 1990s.

"The aim of this measure is to stop the current influx to Germany and to return to an orderly process," Interior Minister Thomas de Maiziere said, as the city of Munich recorded an influx of 63,000 asylum seekers in two weeks.

Asylum seekers must understand "they cannot choose the states where they are seeking protection," he told reporters.

The German move was welcomed by Hungary's hardline Prime Minister Viktor Orban, whose own country is building a fence along its border with Serbia to keep migrants out.

"We understand that this decision was necessary in order to defend Germany's and Europe's values," he told Bild newspaper.

The Czech Republic said it would also boost security on the border with Austria.

The sudden developments came as tragedy struck again off the coast of Greece, with 34 more migrants - including four babies and 11 children - drowning when their overcrowded wooden boat capsized in high winds.

'IT WON'T WORK'

The image of hundreds of German police mobilising at the border piles on the pressure ahead of Monday's meeting of the bloc's interior and justice ministers on the EU plan to introduce compulsory quotas for refugees.

"The German decision of today underlines the urgency to agree on the measures proposed by the European Commission in order to manage the refugee crisis," the EU said.

While Germany and France back proposals to help "frontline" states Italy, Greece and Hungary, European Commission plans for sharing 160,000 new arrivals in a quota scheme are facing resistance from member states Hungary, the Czech Republic, Slovakia and Romania.

Czech Prime Minister Bohuslav Sobotka insisted his country would never accept compulsory quotas, saying the system "won't work", while Slovakia said it would try to block any such binding measures.

Hungary, which reported a record 4,330 newcomers on Saturday alone, was working around the clock to finish a controversial anti-migrant fence on its frontier with Serbia by Tuesday, when tough new laws will take effect that mean anyone crossing illegally can be deported or even jailed.

Many migrants are now rushing to get to Hungary before the fence is completed. Those who miss the Tuesday deadline potentially face a mammoth detour around Hungary to Croatia or Romania.

For those already in Hungary, confusion reigned late Sunday over whether they would be able to get into Germany.

"I do not want to stay in Hungary," Yusuf, a Syrian in his twenties, told AFP at a refugee transit camp in the border town of Roszke.

"If they take fingerprints, will they make us come back here?" he asked.

END OF SCHENGEN?

Under EU rules, the first country of entry is required to deal with an asylum seeker's request for protection, but Germany had waived the rule for Syrian refugees.

While earning praise for its welcoming stance, German regional authorities have buckled under the sudden surge of migrants.

In Munich, overwhelmed local officials said they were stretched to capacity, with more than 13,000 migrants arriving in the city on Saturday alone.

"It is very clear that we have reached the upper limit of our capacity," said a Munich police spokesman.

Dr Merkel, whose country is taking in the lion's share of new arrivals, bluntly warned last month that the passport-free Schengen zone of 26 countries was under threat.

"If we don't arrive at a fair distribution then the issue of Schengen will arise - we don't want that," she said.

Dr Merkel and her French counterpart Francois Hollande discussed the latest developments by phone on Sunday evening. The two leaders "share the same evaluation of the current situation of the refugees", a spokesman for the German government said.

The 57-member Organisation of Islamic Cooperation meanwhile, in an emergency meeting on Sunday, urged the United Nations to consider a peacekeeping force for Syria to help stem the flow of people trying to reach Europe.

The International Organisation for Migration said Friday that more than 430,000 people have crossed the Mediterranean to Europe this year, with 2,748 dying en route or going missing.

AFP

    
 

BOJ to stand pat even as goals depart from reality: source

SEP 13, 20151:33 PM

[TOKYO] Bank of Japan policymakers are in no mood to expand monetary stimulus this week, sources familiar with their thinking say, even as poor data challenges their presumption that economic recovery will boost inflation to its 2 percent target next year.

When BOJ Governor Haruhiko Kuroda last opened the monetary taps, in October, he was backed by a razor-thin majority on the bank's board, and although subsequent changes have moved the board closer to his policy stance, a repeat looks even less likely now, the sources said.

With inflation and growth still in the doldrums despite the bank's 80 trillion yen (US$665 billion) per year asset buying measures, they said the board had grown increasingly concerned about their diminishing policy options and the downsides of the stimulus, such as draining liquidity from the government bond market.

Investors mostly expect the BOJ to stand pat at least until Oct 30, when it updates its long-term economic and growth forecasts, so a surprise move might have an outsized impact on markets.

But that looks like one of the very few incentives for it to act now, with risks to the bank's policy targets - such as weak global demand and China's slowdown - mostly beyond its control, said the sources. "There's not much the BOJ can do to respond to overseas headwinds," said one source. "What's important is that domestic demand remains firm." The government also does not welcome additional monetary steps that might weaken the yen further and boost import costs.

Easing now would run counter to the government's policy priorities, government officials say.

With an upper house election looming next year, Prime Minister Shinzo Abe's administration has shifted its focus to helping low-income households and pensioners hit by the rising cost of living from a weak yen. "A lot of people are getting suspicious on what benefits there are to additional monetary easing," said Takeshi Minami, chief economist at Norinchukin Research Institute. "Politicians don't want the yen to weaken too much."

Those betting on a surprise cite similarities to last October, when Kuroda expanded stimulus without prior warning to prevent slumping oil costs and weak consumption from hurting inflation expectations.

Mr Kuroda's decision caught even some of the nine board members off guard, angering four of them enough to vote against him.

With one of the dissenters having retired and been replaced by a former auto executive more supportive of Kuroda's views, the governor would in theory have less trouble getting his way if he sees the need to ease, the sources said.

But many on the board hope they won't face that decision, relying on companies to use their record profits more on wages and investment.

Like last October, renewed falls in oil costs are weighing on inflation. But household income is rising and underpinning consumption, which is firmer than last October when households were feeling the direct hit from a tax hike, BOJ officials say.

Business sentiment and capital expenditure have held up even as markets have been lashed by fears of a hard landing for China, they argue, based on internal hearings they conduct on firms across Japan.

Mr Kuroda told parliament on Thursday that while the recovery appeared "patchy", conditions were falling in place for inflation to hit 2 percent as more firms raise prices.

He also signalled that any delay in hitting that target wouldn't trigger policy action if it was due mostly to oil price falls.

It has now become a near certainty that the BOJ will cut its economic and price forecasts for this fiscal year at the Oct 30 review. But with few tools left to deploy, the BOJ will cling to its goals for as long as possible, even if they appear increasingly out of touch with reality, some analysts say. "If you don't have many policy tools left, you don't want to use it now," said Mari Iwashita, chief market economist at SMBC Friend Securities. "You want to save it for later, given worse things could easily happen to Japan's economy."

REUTERS

China grapples with risk of economic hard landing

SEP 13, 20151:45 PM

[SHANGHAI] When Chinese Premier Li Keqiang sought to reassure business leaders that the world's second-largest economy can stave off a hard landing, he acknowledged mounting fears of exactly that, and analysts say the adjustment to slower growth will be painful.

Just six months ago, Mr Li set a 2015 economic growth target of "around seven per cent", confidently telling lawmakers that the economy was adjusting to a "new normal".

But he scrambled to reassure a World Economic Forum meeting on Thursday that China was not heading for a disorderly slump which would shake the global economy.

"If there are signs the economy is sliding out of the proper range we have adequate capability to deal with the situation," he said. "The Chinese economy will not head for a hard landing." Still, gloomy perceptions of China are growing and the signs are troubling: a surprise currency devaluation, persistently weak manufacturing, and rising debt defaults, with a share price collapse to boot.

Government meddling in the stock and currency markets, including police investigations, as well as falling back on pump-priming to support the flagging economy, have raised questions over the leadership's management and commitment to reforms, analysts say.

China on Monday revised downward its 2014 economic growth figure to 7.3 per cent, the weakest in 24 years. In both the first and second quarter this year, growth remained stuck at 7.0 per cent, slower than last year.

"Nothing is working for Chinese leaders these days. They can slow the rate of descent, but they can't change the downward direction of their economy," Gordon Chang, an author and independent commentator on China, told AFP.

"At this moment, China's technocrats look incompetent, clueless, and oblivious." The authorities' next steps will be crucial, analysts say.

"The risk for a hard landing has always been there. Whether or not China will avoid it will depend on the policy reserves the government uses," Zhang Jun, an economics professor at Shanghai's Fudan University, told AFP, citing reducing local government and corporate debt as examples.

"There's still space for the government to turn the situation around," he said.

Recent economic figures for August were a mixed bag, though showed glimmers of hope.

Exports performed better than expected, but imports plunged nearly 14 per cent year-on-year.

Consumer price inflation ticked up to a manageable 2.0 per cent, but the producer price index - a measure of costs for goods at the factory gate - fell 5.9 per cent, the worst since September 2009.

The country's biggest banks, including industry giant the Industrial and Commercial Bank of China, have reported rises in bad loans for the first half as companies struggle.

"Banks may become more cautious in lending to the real economy," ANZ Banking Group economist Liu Ligang said in a research note on Thursday.

"This could turn into a vicious cycle of slower growth and deflation," he warned. "Proactive policies are required to head off such a risk." China has already cut interest rates five times since November and the government this week offered some details of a more aggressive fiscal policy, including accelerating major construction projects.

China could deploy fiscal stimulus of at least 1.2 trillion yuan (US$188 billion) over the next three years, according to an estimate by state-owned investment bank China International Capital Corp.

That would be far less than the 4.0 trillion yuan stimulus package China rolled out to stave off the effects of the 2008 global financial crisis.

But that sort of pump-priming was not without its costs - China is still paying the price from the crippling debt and asset bubbles that resulted.

So perhaps, say some commentators, what is most needed is for the government to step back and not try too hard.

The very act of intervention itself goes against the principle of reform and the greater role the Communist Party has promised for market forces in the economy.

Authorities have spent an estimated US$234 billion on buying shares to try to support prices after a nearly 40 percent collapse in the stock market since mid-June.

"The government's efforts to prop up the (domestic) A-share market were clumsy, misguided and unnecessary. Hopefully, China's leaders understand that now, and won't repeat that mistake in the future," Andy Rothman, investment strategist at Matthews Asia, said in a research report.

Despite the widespread global fears over the state of affairs in China, some of it is overdone, say analysts.

The chance of a hard landing is small, Citic Bank International's chief economist Liao Qun told AFP, "even though China's economy hasn't fully stabilised and the picture is still uncertain".

"The biggest risk for China now is its policy missteps, especially foreign exchange rate policy," said Lu Zhengwei, chief economist at China's Industrial Bank.

Authorities "should push through exchange rate reform and just allow the yuan to depreciate more", he told AFP. "Government intervention should respect the logic of the market rather than work against it."

AFP

      

Malaysia's Prime Minister to announce economic measures on Monday

Malaysian Prime Minister Najib Razak is expected to announce measures to strengthen the economy on Monday as falling commodity prices weigh on growth and the ringgit currency plumbs near 18-year lows. 

PHOTO: EPA

SEP 12, 201511:24 AM

[KUALA LUMPUR] Malaysian Prime Minister Najib Razak is expected to announce measures to strengthen the economy on Monday as falling commodity prices weigh on growth and the ringgit currency plumbs near 18-year lows.

Slowing demand from China and a political crisis swirling around Mr Najib have also shaken investors in Southeast Asia's third-largest economy in recent months, pushing the ringgit down nearly 19 per cent against the US dollar so far this year.

Najib is expected to announce the new measures at around 11:30 pm (0330 GMT) after a weekly meeting of the economic council on Monday, officials at the Prime Minister's office said on Saturday, without giving details.

Last month, he set up a special economic committee to propose immediate and medium-term measures to strengthen the economy and to restore investor confidence.

Malaysia has been gripped by political tensions which escalated in early July after a report that investigators looking into debt-laden state investment fund 1MDB had found that close to US$700 million had been deposited in an account held by Prime Minister Najib Razak.

Mr Najib, who also chairs 1MDB, has denied any wrongdoing, but the scandal has not died and has weighed on the economy.

Both Mr Najib and Malaysia's central bank governor have pledged not to impose capital controls.

Mr Najib has maintained that Malaysia's current economic situation was stronger than during the 1997-98 Asian financial crisis.

Massive outflows of capital during that crisis forced Malaysia to peg the ringgit at 3.8 to the dollar, which was retained that 2005.

Fitch Ratings said last week that Malaysia's deteriorating currency position - reflected in the ringgit's sharp depreciation, falling foreign exchange reserves and shrinking current account surplus - could force it restore a negative outlook on the country's credit rating.

REUTERS