ECONOMIC GLOOM SHRINKS HONDA’S MANUFACTURING OUTPUT

Honda Motors has announced today (21.11.08), that it plans to close down its car production operations in Swindon, UK for two months next year, thus halting production and affecting 6,000 of its factory workers.

It also planes to scale back US operations. This news comes fresh in the midst of the current economic downturn where Honda seeks to gradually restructure in order to strategically reposition itself responsively to be able to adapt to the current hard times shocking the industry. Falling worldwide demand has crippled the exportation of Japanese cars, especially to the United States which is Japan’s number one Japanese car importer.

The story is very much the same in different places in and around Europe and the rest of the world. In Sweden for example, Volvo has laid off 5,000 workers and cut production, German automaker BMW has sliced production by over 20,000 vehicles in its German plants; French Renault is laying off 6,000 staff while PSA Peugeot Citroën is decreasing production at three of its plants.

The motor industry globally faces extreme financial difficulties bearing in mind the high price of crude oil coupled with the lack of consumer disposable spending. Almost all major automakers have already announced their current struggle. Consumer price confidence in general and within the auto trade has dramatically tumbled due to fears of financial uncertainty and the fact that financial lenders are tightening the noose on borrowing.

Consumers are also more sensitive in these times and feel that spending their income on the absolute necessities is the only essential matter right now and for a time to come. Creating jobs and implementing a coordinated set of fiscal policies or a stimulus package to decrease taxes, in order to spur on spending again, would be welcomed.

Daimler has to stop production due to finacial crisis .

Daimler Chrysler , Second largest car producer in the world will stop its production due to financial crisis. The German automaker will stop its production from 11 th of dec til beginning of January due to weak financial conditions.

Mercedes reported that they issued a profit warning on full years earning after posting a profit of 275 million dollars in the third quarter, reversing net loss of 1.9 billion dollars last year in the same quarter.

As well the German car producer based in Stuttgart, Germany reported that its revenue declined by 7 % to 30.5 billion in the quarter on declining sales in north America, compared to revenue of 32 billion dollars posted in the same period a year ago.

It is enormous how the financial crisis will effect others industries . This example shows that Mercedes has to stop its production for one months because there is no more demand for such a exclusive car. Its very difficult to invest in a new car in this kind of stressful financial period. Mercedes had to get rid of 10 000 part time workers in order to stay stabile.

This example shows that not only banks suffer from this, as well as any other company in any other industry company.

ROLLS ROYCE REDUCES JOBS AMID AVIATION INDUSTRY TURNDOWN

In addition to the big 2,300 job reduction this year, aircraft engine maker Rolls Royce has recently revealed that it will be cutting more jobs through the remainder of 2008 and up to 2,000 jobs throughout 2009 in the wake of the current economic slowdown.

As the crisis in the global economy deepens, worldwide travel is on a downward spiral and the aviation industry faces a steep upward slope to climb; airplane sales are on the decrease and hence Rolls Royce’s orders from Boeing and Airbus, in turn, are on a steady decline.

This job cut plan, however, will help to reduce costs for Rolls Royce and trim production output in order to manage and manoeuvre through these difficult times, as well as remain competitive and maintain innovation. The idea is to save cash in 2009 due to uncertainties. Cash flow always allows for flexibility and in these times, flexibility can be a luxury.

Rolls Royce is not alone and it seems evident that all industries are and will be affected by the present world financial crisis. British giant Aerospace (BAE) Systems is facing the same issues as Rolls Royce is up against as well. The root of the problem just may be a ‘greedy’ Anglo-Saxon model.

It is purely down to Keynesian demand side economics now. But history states that recession has to come and go and that it has a purpose, and that is to readjust inflation and interest rates in order for growth to kick off again. I predict that Rolls Royce’s engines will, once again, fly the friendly skies in style!

Hypo Real had to be rescued by other banks

Germany’s financial sector was in big crisis on Monday after Hyper Real Estate one of its biggest lenders, had to be rescued by other banks and the government to solve a €50bn liquidity crisis.
Shares in HRE dropped more than 70 per cent and other banking stocks went down after the intervention, the most serious sign of strain in Germany’s financial sector since the collapse of Lehman Brothers aggravated the global credit crisis this month.

The Hypo Real Estate Holding AG (is a holding company based in Munich, Germany which comprises a number of real estate financing banks. The company's activities span three sectors of the real estate market: commercial property, infrastructure and public finance, and capital markets and asset management.

HRE, one of Europe’s biggest commercial property and public sector lenders, was handed a €35bn liquidity lifeline by other German private sector banks, the Bundesbank and the European Central Bank. The lender is also selling €15bn of assets to cover its liquidity shortfall.
The urgent bail-out was agreed in the early hours of yesterday with Mr Steinbrück and Angela Merkel, German chancellor, in telephone contact with bankers and officials meeting in Frankfurt.

Related video :

http://video.aol.com/video-detail/hypos-deal-to-avoid-finance-squeeze/964169166

American Internatioal Group has to repay emergency aid

AIG, the stricken US insurer, is considering selling more than 15 businesses, including its aircraft leasing unit, a stake in a large US reinsurer and billions of dollars in properties in an effort to repay a $85bn government loan and secure its future as an independent company.

The board of AIG, which was de facto nationalised this month when the US administration stepped in with an emergency loan, was meeting in New York on Sunday night to discuss a radical plan for asset disposals. People close to the situation said AIG , led by its new chief executive Edward Liddy, wanted crucial businesses such as its international life insurance unit and its US pension businesses to be at the core of the “new AIG”. But apart from those, AIG was prepared to consider selling most other operations.

AIG and its advisers, led by Blackstone and JPMorgan, are believed to have drawn up a list of about 15-20 large businesses that could be sold. AIG has to move fast because it has short window to repay the emergency governemt aid .

The governemtn extended the loan , gives itright to buy a majority stake in the company , after AIG collapsed under the weight of billions of dollars in credit related losses .

Lehman brothers is probably the largest bank failure in the U.S. history. A german bank calles KfW did one of their worste deals ever in their history and ceo’s of the bank get punished fot that mistake .

After the transfer margin of the state bank KfW, two executives mangers had to leave their job . The Board of Directors of KfW decided the immediate termination of the boards Detlef Leinberger and Peter Fleischer.
This news got published by the Finance ministers Peer Steinbrueck (SPD) and German Economics Minister Michael Glos (CSU). Apparently it was the fault of the two boards that they borrowed 350 million Euros to Lehman brothers before they got bankrupt.

KfW decided to do a deal with the U.S. investment bank Lehman Brothers to set up a business of 350 million euros, although the institute was already insolvent.
Fleischer and Leinberger got immediately removed from their offices. The existing service contracts would be terminated.

There are certain mistakes that just can't be allowed to happen at a bank. Transferring 350 million to Lehman Brothers an institution that had already shown itself to be a candidate for bankruptcy the night before is one of those mistakes. The state owned lending bank KfW will now have to provide a detailed account of how it could have made such a misstep. What's more important, though, is that it needs to take a really close look at its in house risk management department and make the changes needed to make sure something like this can never happen again. KfW has undergone immense growth over the past few years.

It has grown more entwined in the capital market and thereby diversified its own refinancing. But now is the time for Germany's ninth-largest bank (in total assets) to ask itself whether the growth of its internal structures has kept sufficient pace with the bank's other growth and whether it still has all of its other functions under complete control