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U.S. Claims China Guilty of Dumping
BEIJING (AP) – China criticized Washington for imposing anti-dumping duties on Chinese-made steel pipes and launched a probe Friday of imported U.S. autos, adding to trade tensions two weeks before President Barack Obama visits Beijing.
The latest moves ratchet up disputes over market access for goods from poultry and tires to Hollywood movies. But Beijing and Washington are confining the conflicts to diplomatic channels, apparently hoping to avert a trade war that could damage wide-ranging cooperation on issues such as the global economic crisis, North Korea and climate change.
The Commerce Ministry criticized the U.S. decision Thursday to raise tariffs on Chinese pipes as protectionist. It said the move violated World Trade Organization principles and commitments by Washington and other Group of 20 major economies to avoid protectionism amid the global economic crisis.
“China resolutely opposes use of such protectionist practices, and will take measures to protect the interests of domestic industry,” ministry spokesman Yao Jian said in a statement on the ministry’s Web site.
The U.S. Commerce Department said it concluded Chinese producers were dumping pipes used by the oil and gas industry and would impose duties of up to 99 percent.
Yi Xiaozhun, a deputy commerce minister, said the case was the biggest anti-dumping action yet against China by market value and affected exports worth $3.2 billion a year.
Also Friday, Beijing announced it was launching an anti-dumping investigation of imported U.S. autos. It said it was acting on a complaint by Chinese automakers but gave no details of the alleged American misconduct. The case could result in higher tariffs on U.S. autos if Chinese investigators conclude American automakers received improper subsidies or sold below fair-market price.
Beijing warned Washington at trade talks last month of the impending probe, a possible diplomatic gesture to reduce the political impact of Friday’s announcement.
Meanwhile, the Chinese steel industry group said Friday major steel mills have asked the Commerce Ministry to launch an anti-dumping investigation of U.S.- and European-made hot rolled and stainless steel. It said the steel was being sold at improperly low prices and “caused injury to the Chinese market.”
The U.S. Embassy in Beijing had no immediate comment about China’s actions Friday.
The disputes come as Obama is due to arrive Nov. 15 on his first president visit to Beijing. Both governments have repeatedly stressed the importance of stable relations and senior leaders have avoided public comments about the trade disputes.
Beijing and Washington are especially eager to avoid irritants that might derail relations as they work together with other major governments to try to pull the global economy out of its worst downturn since the 1930s.
Both governments have stuck to the dispute-resolution process laid out in WTO agreements.
In August, Beijing backed down in a dispute over auto parts and altered its import tariffs after it lost an appeal of a WTO case brought by the United States, Europe and Canada that said it treated foreign suppliers unfairly.
On Wednesday, the United States joined Europe and Mexico in asking the WTO to investigate Chinese curbs on exports of bauxite and other industrial raw materials. Beijing says it must rein in mining to protect the environment, but Washington and others say the curbs improperly give Chinese companies favorable access to some materials.
Yi, the commerce minister, repeated Chinese complaints that Washington treats China as a non-market economy. He called that status a Cold War relic and said Beijing hopes it is soon repealed.
“The ‘market economy status’ is the core of this case. An important reason why the U.S. verdict is so unfavorable to us is that it used double standards rather than the WTO standard that commonly applied by other countries,” Yi said. “That’s why our companies are treated unfairly and unequally. China is very dissatisfied.”
Source: AP Business Writer, Joe McDonald. November 2009, Manufacturing.net
Posted in Business
Tagged American Business, auto parts, automotive, Business, Manufacturing
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GM Automotive Reneges Opel Automotive Deal
Thursday, November 5, 2009
By Joe Brown
Without full details or even a reasonable explanation from General Motors Automotive, many people are scratching their heads as to why the all-but-signed deal to sell their subsidiary, Opel to parts-maker Magna, fell through.
Was it driven by the report that came out today stating October was the carmaker’s best year over year in a long time? I hope not. Regardless of the dynamics of the decision, I think this will go down as a key lesson in future business textbooks and case studies about the dangers of mixing Wall Street with Capitol Hill.
At this moment, our friends in Germany fall somewhere between annoyed and completely miffed. The thought–at least according to German workers–is that GM will likely make more cuts than Opel would have. Further, officials orchestrated a “bridge loan” to ensure Opel’s solvency while a buyer was found which they thought was finalized when Magna’s aspirations to become an even bigger player than it already was.
My concern lies with the solid relationship America had fostered with Germany may be strained slightly. The U.S. government is now the majority owner of GM (although they immediately issued a statement attempting to wash their hands of having any input in the decision) and their close ally is Germany’s Chancellor, Angela Merkel.
The Chancellor and her cabinet had strongly supported and worked feverishly on doing whatever it took to make this deal happen. Now, her office felt completely blindsided by this and I bet only stronger and more critical comments will be out from them in the coming days. One official from Merkel’s office stated that she is considering a call to President Obama to voice her displeasure.
“After many promises and months of negotiations, GM has left workers out in the cold. This attitude from General Motors shows the ugly face of turbo capitalism. It is completely unacceptable,” according to the Chancellor’s deputy leader, Juergen Ruettgers.
True to the old adage, you can’t please them all; the US finds itself smack in the middle of a situation they probably didn’t realize before becoming a majority shareholder of a giant company. Even Russia–strong supporters of the Opel-Magna deal–released a statement from Prime Minister Vladimir Putin’s office calling the decision, “absolutely astonishing.”
I worry that it may be difficult for our government to save face despite the best public relations money can buy stating they had no influence on this decision (which I do believe) yet they are technically the majority owner of the company. When’s the last time you heard of a group with a controlling interest (51 %+) in an organization not have any influence on a decision of this magnitude? It just doesn’t happen and is quite the conundrum.
Now, GM execs are scrambling to update a new restructuring plan for Opel and Vauxhall.
World Auto Parts Suppliers look to USA
Global auto suppliers are still looking to the United States for growth, despite the North American industry’s recent struggles.
Mexico City’s Grupo Bocar is building a third injection-molding plant for its Plastic Tec group. Grupo Bocar was promoting its capabilities at the Management Briefing Seminars.
Italian auto suppliers, meanwhile, are touting their knowledge of Fiat S.p.A. Fiat took charge of Chrysler Group in June.
Fiat and Chrysler “are in an early limbo stage now, but there are opportunities. It is going to happen,” said Luigi Giachino, business development manager for Mecaprom Technologies Corp., of Bergamo, Italy, during an interview at the forum yesterday.
Mecaprom has opened its first suburban Detroit office. It is looking for a partner in the region. It wants to combine its knowledge of small engine development with Fiat with an established North American supplier.
The company is part of an outreach program through the Italian American Alliance for Business and Technology. The alliance centers around suppliers in Turin, Fiat’s home, and wants to make connections with Chrysler Group and its supply base.
Many of the alliance companies have had business in North America but expect to build on that now that Fiat will be working with Chrysler Group on future small vehicles, said alliance President Massimo Denipoti.
Grupo Bocar already is a direct supplier to U.S., European and Japanese carmakers with business units producing aluminum die cast parts, machined parts and plastics.
Plastic Tec made the first in-mold application of a textile skin for an auto interior part in North America for the Volkswagen Jetta. Jaime Puente, office manager at the supplier, said it also makes air vents for BMW’s plant in Spartanburg, S.C., replacing auto parts previously made in Europe.
Drove a Ford Pinto in and a Mercedes Benz out
Before I started Kinetic Die Casting Company, in the early 80’s, “John” visited me at a different die casting company. He drove into my parking lot in a green Ford Pinto, about 10 years old. John was an interesting man, a magician who frequented magic clubs and visited Las Vegas on occasion. The most remarkable thing I remember about John other than his red hair was the gold nugget ring he wore.
John’s visit was regarding a new auto parts product idea. He told me that there was only one type of “Auto License Plate Frame” available. It was a flat plastic frame, in black or white typically, that was occasionally painted or had a sticker with the name of automobile dealerships (If you can remember, in the early 1980’s, he was right)
John had an idea for a new product. A license Plate Frame that was made of “metal” that look like gold and needed to look like gold nuggets “just like his gold nugget ring”. John pointed at the ring on his finger as he told me what he wanted. Seemed like a good idea to me so we proceeded to make the tooling for his “Gold Nugget License Plate Frame”. John sold several thousands of these frames and came to me with another idea.
John wanted a License Frame that looked like a “Silver or Gold Chain”. Within a year, John had other ideas for frames that I had made for him.
About a year and a half to two years after meeting John the first time, he drove his new Mercedez Benz to my office with the buyer of his license frame business. The buyer was a larger auto parts manufacturer. John made a lot of money on his ideas. His investment of a few thousand dollars for die casting tooling was well spent.
John, if you see this, please visit me and show me a few more card tricks.
Kinetic Die Casting manufactures products like heatsink die casting, aluminum housings, and lighting fixtures. If you would like more information, please visit our website:Kinetic Die Casting Company
New Supplier Cerion Buys Bankrupt Metal Auto Parts Makers
DETROIT — Rising from the ashes of three bankrupt auto parts manufacturers in the stamped- and cast-metal component sector is Cerion LLC, a new manufacturer coming to life through acquisitions that could be capable of generating nearly $1 billion in revenue.
Suburban Detroit-based Cerion and parent company Revstone Industries LLC of Paris, Ky., have since December acquired the die-cast metal component business of Contech LLC, almost all the assets and operations of fine blanking and metal stamping firm Precision Parts International Inc. and, on July 14, the assets of castings producer Intermet Corp.
Revstone is headed by George Hofmeister, a Kentucky industrialist with a track record of executing automotive deals in Detroit and the Midwest.
Contech’s castings business generated revenue of $156.7 million in 2008. PPI posted revenue of $141 million from January to October last year, and Intermet posted revenue of about $310 million in the 12 months ending July 31, 2008, according to records from the companies’ bankruptcy cases.
Each of the metal stampings and castings suppliers filed for Chapter 11 bankruptcy between August 2008 and January 2009 and failed to reorganize and emerge intact.
For about $43 million, Revstone and Cerion were able to pick up at least 20 manufacturing operations throughout the U.S. and Mexico and assume supply contracts with General Motors, Ford Motor Co., Chrysler Group LLC, Toyota, Honda and BMW.
The companies also landed work with large tier-one suppliers such as American Axle & Manufacturing Holdings Inc., Delphi Corp., Continental Automotive Systems Inc., Dana Corp., TRW Automotive Holdings Inc., BorgWarner Inc. and many others, according to bankruptcy court documents.
Cerion also gained four plants in Michigan and one in Mexico when it acquired Hillsdale Automotive from EaglePicher Corp. in December, renaming the company Metavation. Hillsdale posted revenue of about $100 million in 2007, according to a press release about the deal.
According to a June press release announcing Cerion’s selection of P2R Associates as the company’s public relations firm, Cerion was officially formed following the Hillsdale acquisition.
In the release, Cerion was described as a “privately held American manufacturing company focused on acquiring and operating small and medium-sized precision component manufacturing operations to serve automotive and other manufacturing industries in the U.S.”
Cerion CEO Dave Doster declined to comment for this story through spokesman Gordon Cole, president of P2R Associates.
While details about the company are sketchy, one thing is clear: the market the company is entering is rough-and-tumble.
“The casting sector has experienced a large number of failures over the last five years,” said Craig Fitzgerald, a partner and automotive supplier consultant at Plante & Moran PLLC in suburban Detroit. “That’s been the rule, rather than the exception.”
High, often volatile prices for raw materials such as steel, excess capacity, low volumes, price pressures and sourcing from low-cost countries such as India and China have squeezed the sector for much of the decade, Fitzgerald said.
Buying the firms out of bankruptcy may give the new owners an edge their predecessors lacked.
“They’re bargains, and that means continuity of the operations. There will be some consolidation, and certainly these guys can afford to close operations and consolidate and keep the good parts running and run them at a higher efficiency,” said Neil De Koker, president of the Original Equipment Suppliers Association.
Cerion and Revstone were able to acquire the desirable assets of Contech, Intermet and PPI without the burden of excessive liabilities and debts. The acquisitions also were a fraction of the likely cost a few years ago.
For instance, Contech was sold by its former parent SPX Corp. in 2007 to Marathon Automotive Group LLC for $147 million. Cerion picked up Contech’s castings division, roughly half the business, for $13.5 million.
The potential fate of a company growing rapidly through acquisition can be seen with such companies as Noble International Ltd. and Lear Corp.
Both used acquisitions to vault themselves up in the auto supplier hierarchies but took on significant debt in the process. When revenue plummeted along with car and truck production volumes, the companies could not service their debt, went into default and eventually filed for bankruptcy.
Source: Crain’s Detroit Business
http://www.mema.org/publications/articledetail.php?articleId=17795
Kinetic Die Casting manufactures die cast parts for their customers. If you would like to know more about what is die casting or if you would like a quote, please visit our website:Kinetic Die Casting Company
