On Monday the company resumed production of spare parts to serve its overseas operations. In Europe, the company said that the extended halt in production could delay imports of some of its models, including the Prius hybrid model, RAV4 small sport utility vehicle, Land Cruiser four-by-four, iQ city car and Lexus luxury vehicles. “The longer the stop, the likelier it will be that we have some delays in deliveries”, a spokesman said.

Honda, which had announced a shutdown of its plants until at least March 21, said on Tuesday that they would remain closed until March 27. Seeking to regroup after the earthquake, Japan’s carmakers have faced the unenviable choice of either staying closed or resuming production, but risking they will run out of components. The disaster decimated the country’s automotive supply base and power supply.

Nissan on Monday resumed limited operations at five of its Japanese six plants. The carmaker’s Oppama, Tochigi, Kyushu, Yokohama and Nissan Shatai plants resumed producing parts for overseas manufacturing and repair parts. Its engine plant in Iwaki, inside the disaster zone, remains closed.

Nissan said it would resume vehicle production from March 24 “while inventory of supply lasts”. The car industry has been one of the industries hardest hit by the disaster. Overseas carmakers including General Motors, its European Opel division, and Renault’s South Korean Renault Samsung Motors unit, have had to halt some production because of a lack of parts – mostly electronic components from Japan.

Frost & Sullivan, the consultancy, wrote on Tuesday that the halt in production would lead to lost revenues, and that carmakers would be unable to make up for the shortfall within the current fiscal year, which ends on March 31. “A rising Yen, which has appreciated by 3.75 per cent during the last ten days already, might hurt the profitability of Japanese companies”, Vivek Vaidya wrote. “On the other hand, the reconstruction of the country could provide an impetus to the Japanese economy, by creating an economic activity and a demand for the replacement of cars”.

Source: http://www.ft.com/cms/s/0/4c14cb10-546f-11e0-979a-00144feab49a.html#axzz1HKvNrDBm

“We cannot leave this alone and we must take care of it as quickly as possible,” Hidehiko Nishiyama, deputy director of Japan’s Nuclear and Industrial Safety Agency, told reporters. Cooling systems at all of the plant’s six reactors were knocked out by the March 11 earthquake and tsunami, and power has since been restored to two reactors, units 5 and 6. Workers continued efforts Tuesday on a power line to service the other four reactors though some of the machinery, including the water pumps that cool the reactors, might be damaged, officials said. That could mean more repair work before the four reactors can be connected to a power supply.

Another major effort was underway to restore full power and resume operations at the plant’s central command center, which will make it easier for workers to monitor heat and water levels at the reactors. Recovery efforts have been hindered by difficulties in gauging readings of crucial data, forcing officials to work off aerial photos and speculation. Workers continued pumping water into three reactors using fire hoses to keep them from overheating, while firefighters aimed streams of water at their spent fuel pools through gaps in the buildings housing the reactors, blown out in a series of explosions that rocked the site last week.

The crisis at the plant has raised fears about the spread of contamination of the environment and local food supply. The government has announced that traces of radioactive elements have been found in vegetables and raw milk from farms around the plant, prompting a government ban on shipments from those areas. Elevated levels of radioactive iodine and cesium have also been detected in the seawater near Fukushima, and the government is testing seafood as a precaution, Yukio Edano, the chief cabinet secretary, said Tuesday. Government officials and health experts stress, however, that the doses are low and do not pose an immediate threat to human health.

Also on Tuesday the public broadcaster NHK, citing the government’s Science Ministry, reported that radiation levels surpassing 400 times the normal level had been detected in soil about 25 miles from the Fukushima plant. In the NHK report, a Gunma University professor said that radiation released by iodine-131 had been found to be 430 times the level normally detected in soil in Japan and that released by cesium-137 was 47 times the normal levels. The professor, Keigo Endo, said that there was no immediate health risk but that the radiation levels would require monitoring.

The nuclear crisis has also overshadowed the monumental task in Japan of providing aid to hundreds of thousands of people displaced from the quake and tsunami. More than 237,000 people remain living in temporary shelters, NHK reported. The Japanese Red Cross has from 300 to 350 people assigned to medical teams working in the disaster zone, said a spokesman, Francis Markus. The organization is still scaling up its relief operations but planning is already under way to help with recovery and reconstruction efforts, Mr. Markus said.

“Right now, people need hot showers daily, they need better sanitation systems,” he said. Medical teams are treating large numbers of cases of hypothermia and pneumonia, Mr. Markus said, as well as illness from swallowing polluted water. Doctors also are treating conditions tied to Japan’s comparatively older population, like diabetes and high blood pressure. The need for medicine is constant, Mr. Markus said. “One doctor in the field described the situation of receiving more medicine as pouring water in the desert,” he said.

Unseasonably cold weather has added to the daily struggle for refugees and relief workers. Local forecasters are predicting overnight temperatures this week to hover around freezing in the prefectures hardest hit by the tsunami, in the northeast, as a cold front moves into the region. On Tuesday, the government raised the official death toll upward to 9,079, and said more than 12,600 were missing, although officials cautioned there could be overlap between the figures. The final death toll is likely to reach 18,000, the government has said.

The economy has also taken a battering. Honda and Toyota both said they would suspend domestic auto production until at least this weekend because of the difficulty of procuring parts. Cosmo Oil said Monday that it had finally extinguished the dramatic fires at its Chiba refinery, north of Tokyo, that raged after the quake. But the 220,000- barrel-a-day facility, one of the country’s biggest, will be out of commission for some time.

Source: http://www.nytimes.com/2011/03/23/world/asia/23japan.html

Singapore Airlines Ltd. will suspend one of its two daily services to Haneda from March 27, and Jetstar, the budget unit of Qantas Airways Ltd. will redirect half of its 14 weekly Tokyo-bound flights to Osaka, the carriers said. Cathay Pacific Airways Ltd., Korean Air Lines Co. and Singapore Air have ended temporary Tokyo capacity boosts as demand cools. Carriers added seats out of the Japanese capital last week as overseas governments advised residents to avoid the city after the earthquake and an accident at the Fukushima Dai-Ichi nuclear power plant.

About $2 billion of Delta’s total revenue, or 8 percent, “touches Tokyo” and there has been “some drop-off in bookings,” President Ed Bastian said in a presentation during a transportation conference in New York hosted by JP Morgan Chase & Co. The decline in travel demand to Japan is “somewhere between a 6- and 9-month one-time event” and will probably rebound when the government puts more money into the economy for rebuilding efforts, he said.

Delta, the world’s second-largest carrier, said it would reduce overall seating capacity by 4 percentage points in the second half of the year, especially in markets where “revenue has not kept pace with fuel” such as the trans-Atlantic. The Atlanta-based airline is cutting departures at its Memphis hub by 25 percent. The company is retiring 120 of its least-efficient planes over the next 18 months, including DC9-50s and Saab turbo-props and 60 of its 50-seat regional jets, according to the filing.

Source: http://www.bloomberg.com/news/2011-03-22/delta-air-lines-slashes-japan-capacity-as-much-as-20-after-quake-tsunami.html

Toyota said it was adding about 1.4 million vehicles to its November 2009 recall for pedal entrapment in floormats. All told, Toyota has now recalled nearly 7 million vehicles in the United States over the issue. NHTSA Administrator David Strickland said after a government review of more than 400,000 pages of Toyota documents, it was concluding its final investigation into the automaker “to determine whether the scope of its recalls for pedal entrapment was sufficient.”

“As a result of the agency’s review, NHTSA asked Toyota to recall these additional vehicles, and now that the company has done so, our investigation is closed,” Strickland said. Toyota spokesman John Hanson said “this latest round” of recalls hopefully puts an end to its accelerator pedal recalls. The recalls are the latest blow to the company that has now recalled 14.2 million vehicles in the United States since January 2009, according to a Detroit News analysis. The company has recalled millions more vehicles worldwide.

Toyota — which got good news last week when two government studies found no evidence that electronics were to blame for sudden acceleration — has been struggling to put its recall problems behind it. The company said there were no accidents or injuries linked to the new vehicles recalled today. Rebecca Lindland, an automotive analyst at IHS Global, said Toyota’s long-term growth prospects were still at risk. She noted that some consumers – long-time Toyota buyers or people who were adamantly opposed to buying a Toyota – aren’t going to change their minds because of the new recall.

“But Toyota is vulnerable with first-time Toyota or Lexus owners. This is not the experience that they expected,” Lindland said. Owners of other brands may also be harder to convert to Toyota. But the company is rightly focused on its reputation – and recalling vehicles – even with little evidence, Lindland said. “They can’t wait for something to happen. They have to be proactive,” she said. “That’s a consequence of what happened over the last year.”

Toyota said today it is also recalling 761,000 2006-10 RAV4; 603,000 2003-09 4Runner models and 17,000 2008-11 Lexus LX 570 models to avoid drivers getting pedals trapped in carpet – but the remedy is different than the November 2009 recall. Toyota also said it will recall Toyota will recall 372,000 2006-07 RX 330, RX 350 and RX 400h vehicles, and 397,000 2004-06 Highlander and Highlander hybrid vehicles to replace the driver’s side floor carpet cover and its two retention clips. The new recalls also cover about 20,000 2006 and early 2007 Lexus GS 300 and GS 350 all-wheel-drive vehicles “to modify the shape of the plastic pad embedded in the driver’s side floor carpet.”

The massive recalls end the National Highway Traffic Safety Administration’s investigation into whether the Japanese automaker recalled enough vehicles, which was opened in early 2010. The government already has imposed fines of nearly $49 million on Toyota for failing to conduct three separate recall campaigns in a timely manner. NHTSA doesn’t plan to impose any more fines in the wake of these recalls. Despite a half-dozen NHTSA investigations into sudden acceleration claims in Toyota vehicles since 2000, the automaker did little until the high-profile deaths of four motorists — including an off-duty California Highway Patrol officer behind the wheel — near San Diego in August 2009. They were killed when the vehicle sped out of control. Investigators said the cause was a trapped floormat in a loaner Lexus from a dealer.

Over a 10-year period, NHTSA received nearly 3,100 complaints, alleging at least 93 deaths from Toyota sudden acceleration incidents, but has confirmed a link in just five deaths. In that same period, the rest of the industry accounted for about 6,400 complaints combined. In January 2010, Toyota was forced to temporarily stop selling more than 60 percent of vehicles in the United States, as it searched for a fix for its sticky pedal problem. Its top executive, Akio Toyoda, was called to testify before Congress, and the issue got worldwide attention.

Source: www.detnews.com

Rates had been marching steadily upwards this year on expectations of continued economic growth and fears that government borrowing will fuel inflation. Rates on 30-year fixed-rate mortgages averaged 4.95 percent with an average 0.6 point for the week ending Feb. 24, Freddie Mac said, down from 5 percent last week and 5.05 percent a year ago. The 30-year fixed-rate mortgage hit a low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11.

For 15-year fixed-rate mortgages, rates averaged 4.22 percent with an average 0.7 point, down from 4.27 percent last week and 4.4 percent a year ago. The 15-year fixed-rate loan hit a low in records dating back to 1991 of 3.57 percent in November. Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.8 percent with an average 0.6 point, down from 3.87 percent last week and 4.16 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.

For 1-year Treasury-indexed ARMs, rates averaged 3.4 percent with an average 0.6 point, up from 3.39 percent last week but down from 4.15 percent a year ago. The MBA said applications for purchase loans were up 5.1 percent last week compared to the week before, and that requests for refinancing surged 17.8 percent. Demand for purchase loans was still down 6.9 percent from the same period a year ago.

In a Feb. 18 forecast, MBA economists said they expect rates on 30-year fixed-rate loans to average 5.2 percent during the first three months of this year, rising to an average of 5.5 percent in the second quarter, 5.6 percent in the third quarter, and 5.8 percent in the final three months of the year. The MBA projects a more gradual rise in during 2012, with rates on 30-year fixed-rate loans climbing to an average 6.3 percent in the final three months of the year.

Source: www.inman.com

It’s inarguable that Jobs doesn’t look healthy, which hardly is surprising. After all, he took the indefinite medical leave for a reason. So why is it out of line to develop a plan to replace him that includes reporting to shareholders? Corporations constantly defend their actions by invoking their “responsibility to shareholders.” Wouldn’t letting them know you have an actual CEO succession plan in place be a responsible thing to do? The arguments I’ve read against the succession-plan proposal range from the specious (it will tip off competitors which Apple executives are worth stealing) to the stupid (the proposal was presented by a union, so therefore it must be a bad idea).

Mainly, though, this appears to be a case of emotion clouding judgment. Here’s a quote from the Wall Street Journal that I think says a lot: “I thought it was inappropriate and jumping the gun,” said Marjorie Banko, an 81-year-old long-time Apple shareholder, who attended the meeting with her husband from Santa Clara, Calif. She said she trusted the board to make the right decisions when it was necessary.

I’m glad Marjorie is so confident in Apple’s board, but placing blind trust in the directors to “make the right decision” doesn’t always work out so well. HP shareholders could tell her a little bit about that. A spokeswoman for the Laborers’ International Union, which represented the pension fund pushing the succession plan, said the proposal would be resubmitted for next year’s shareholders meeting. I hope it is. And I hope Steve Jobs — who turns 56 today — is there to urge shareholders to approve a succession plan. Because it makes sense and it’s the responsible thing to do.

Source: www.itworld.com

“Over the past few weeks we had a domino effect, and the concern is that anything can happen,” said Justin Urquhart Stewart, a founder of Seven Investment Management in London. “At the moment the ripple is very small, but it has the potential to turn into something bigger quickly.” Much of the uncertainty is being stoked by fears over oil supplies. Analysts have been keeping an eye on Libya, which has the largest oil reserves in Africa, and on Bahrain, which is next to Saudi Arabia.

“Geopolitical ripples in the Middle East are the basis for today’s decline,” said Lawrence R. Creatura, a portfolio manager at Federated Investors. “Higher energy prices act like a tax on consumers, reducing the amount of discretionary purchasing power that they have,” Mr. Creatura said. “It represents an additional, potential headwind for retailers.” Treasury prices rose and stocks declined in the United States, where the main Wall Street stock indexes have risen steadily in recent months to levels not seen since the financial crisis started.

In the final minutes of trading, the Dow Jones industrial average was down 204.43 points, or 1.64 percent. The broader Standard & Poor’s 500-stock index declined 30.09, or 2.24 percent, while the technology heavy Nasdaq lost 81.16 points, or 2.86 percent. Markets in Europe and Asia were also lower. In Europe, the FTSE-100 in London lost 0.3 percent while the CAC-40 in Paris declined by 1.1 percent. In Asia, the Nikkei 225 closed 1.8 percent lower on Tuesday, and the Hang Seng in Hong Kong sank 2.1 percent.

Financials, industrials and materials shares shed more than 2 percent in the broader market in New York trading. In addition to the turmoil in the Middle East, investors took in some discouraging developments in the United States economy. Shares of Wal-Mart, the world’s largest retailer, dropped 4 percent after the company said sales at stores open at least a year in the United States fell 1.8 percent in the fourth quarter. Real estate prices slid again in December, pushing a leading price index, the Standard & Poor’s/Case-Shiller Home Price Index of 20 large metropolitan areas, down 1 percent in December on an unadjusted basis.

Amid the uncertainty, bond prices rose. The yield on 10-year Treasury notes was 3.48 percent down from 3.58 percent late Friday. “You are getting a flight to quality bid,” said Laura LaRosa, the director of fixed income at Glenmede. “The equity market is feeling jittery with what is going on in the Middle East.” “The more volatile, the more I would think people would flock to Treasuries right now,” she said. “I would imagine if there is continued volatility you will continue to see that on a daily basis.” In Libya, Col. Muammar el-Qaddafi vowed on state television on Tuesday “to fight to the last drop of blood.” Human Rights Watch said it had confirmed at least 62 deaths in the violence in Tripoli so far, and more than 200 people killed in clashes elsewhere, mostly in the eastern city of Benghazi, where the uprising began last week. Opposition groups estimated that at least 500 people had been killed.

In an effort to calm turbulent oil markets, Saudi Arabia’s oil minister, Ali al-Naimi, said that the Organization of the Petroleum Exporting Countries was ready to meet any shortage in supply by the unrest. Light, sweet crude oil for April delivery surged in New York, rising $5.71, or 6.4 percent, to settle at $95.42 The April contract for Brent crude, a global benchmark for oil that trades in London, was up 1 percent at $106.72 a barrel, after hitting $108.57 earlier in the session. In addition, the Paris-based International Energy Agency tried to reassure the market that it “stands ready, as always, to make oil available to the market in the event of a major supply disruption if alternative supplies cannot readily be made available via normal market mechanisms.”

For the moment, it added in a statement, “we are not in a situation where that is necessary.” But some noted that it is the prospect, rather than the reality, of dislocations in supply that was currently spooking the markets. “Obviously as this situation in the Middle East continues to unravel it is about fear,” said Thomas Bentz, an energy analyst with BNP Paribas. “It is worry that we will continue to see this unrest spreading across other major oil producers. Prices react to the potential loss of supply; it doesn’t necessarily have to be that there is an actual loss of supply.”

Source: www.nytimes.com

In the land of L’Etoile du Nord, two food companies are doing well. Hormel (Spam!) reported earnings this morning that easily topped analysts’ estimates and its stock is up more than 2%. And General Mills, which reaffirmed its 2011 outlook earlier today and had a nice Daytona 500, is also up about 2%. Other food stocks gaining include Kraft Foods, one of three of the DJIA 30 components in the green — the other two are big oil stocks ExxonMobil and Chevron.

Also on the up: Kellogg, Heinz, Tyson Foods, Kroger and Hershey. Of course, once the flurry in MENA simmers down, investors might start to focus on another food reality: input prices (grain, corn, etc.) are rising and pass-through on prices remains a challenge. Food may look good today, but may find things tougher tomorrow. Then again, food commodity prices, while high, are down across the board today.

Source: http://blogs.wsj.com

For a start, there are no fancy cross-shareholdings; BP is simply buying a 30% stake in 23 oil and gas blocks off the east coast of India. Unlike the Arctic expedition, which could take a decade to produce any hydrocarbons, one of Reliance’s fields already accounts for 40% of India’s gas production. And the politics also appear simpler: the deal requires the approval of the Indian government but at least there should be no distracting sideshows in the form of court battles with aggrieved oligarchs.

After the disaster with the Macondo well in the Gulf of Mexico, it sounds bizarre to hear BP hailed without qualification by a partner as “one of the finest deep-water exploration companies in the world”. But, if one can ignore Macondo (as Reliance’s billionaire backer Mukesh Ambani seems to be doing), the deal almost has a traditional feel: asset-rich but inexperienced national operator seeks helping hand from international oil major with greater technical capabilities.

A return to traditional ways may turn out to be seen as a great advance for Bob Dudley’s attempts to reinvent BP. After all, the new chief executive is taking a leaf out of BG Group’s much-praised book by going where demand for energy can be virtually guaranteed to rise. India, say the forecasters, will have the greatest rise of any country in demand for gas over the next two decades.

But these are early days for the Indian offshore gas industry and BP’s returns on the $20bn investment are tricky to estimate. Worries will remain that Dudley is overpaying for growth and diversification. Besides, BP’s suspension of drilling in Libya is a reminder that a step forward in India could soon be followed by two steps backwards in north Africa and the Middle East.

Source: www.guardian.co.uk

US oil contracts jumped $6 a barrel on Monday to over $95, chasing Brent crude, which traded as high as $108, as the global oil system is drawn into the vortex. While Egypt is a minor oil player, Libya’s Sirte Basin holds Africa’s largest reserves and supplies 1.4m bpd in exports, mostly to Italy, Germany and Spain. BP, Statoil, Total and ENI have begun evacuating families and non-essential staff from Libya. BP chief Bob Dudley told Sky News that the company has only limited exploration in Libya but “remains committed to doing business” there.

Germans oil explorer Wintershall said it was winding down its Libyan operations, but Italy’s ENI has most to lose from its pipeline to Libya. ENI’s stock tumbled 5pc in Milan, leading a 3.6pc fall in the MIB index. Global oil inventories are higher than before the 2008 price spike, and OPEC can raise output if needed. It has refused to act so far despite pleas from the International Energy Agency (IEA) that the supply picture is already “alarming”.

A Saudi official said global oil ministers meeting tomorrow in Riyadh will examine market “volatility”, but dashed hopes of OPEC action, saying world markets are “sufficiently supplied”. Though Libya’s oil fields are big enough to influence global supply, producing 2.3pc of world output, investors have broader concerns. The lighting speed of events in a country that was stable just days ago has caused markets to doubt assurances about Saudi Arabia and the Gulf states. The Gulf region ships a third of global oil output.

Credit default swaps on Saudi Arabia’s debt jumped to 140 basis points on Monday, while Bahrain rose to 305 despite an olive branch from the Sunni royal family to Shi’ite protestors. The island’s Grand Prix in March has been cancelled. Fitch Ratings downgraded Libya on Monday on political risk although the 6m-strong country has foreign assets of $139bn (£85.7bn) or 190pc of GDP, no foreign debt, and a better balance sheet than Saudi Arabia.

Michael Lewis, commodities chief at Deutsche Bank, said oil markets are bracing for trouble. December “call options” with a strike price of $120 on US crude have doubled suddenly, indicating fears of a nasty escalation. “Libya raises the stakes,” he said. Mr Lewis said oil prices tend to cause economic damage at a $95 to $100 for US crude. As a rule of thumb, a sustained $10 rise in price lops 0.5pc off US growth over two years, and worse if it reaches a self-feeding tipping point. “It’s like a $50bn tax,” he said.

Mr Horsnell said the global energy crunch is haunting us again after a brief respite during the financial crisis. “In just two years, the world has grown so fast as to consume additional volume equal to the output of Iraq and Kuwait combined,” he said. While oil is likely to keep flowing from Mid-East states whatever the political colour of the regimes, it is less clear that global oil companies will continue to explore or invest in regions where nobody knows the rules of the game. “It matters a lot what the investment climate is for long-term fixed capital projects,” he said.

The IEA has called for $30 trillion of investment in energy projects over the next 20 years to keep global growth on track and meet explosive demand from China. The task may soon be harder.

Source: www.telegraph.co.uk