Global Business |Update|
(A weekly update on Global Business )
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Issue 102

Global Business Update

(4th Feb.’09---10th Feb.’09)

Contents

Global Corporate

1 Nissan to cut 20,000 global jobs

2 Integreon buys bankrupt firm

3 Truckmaker Volvo cautious on 2009

4 First Pacific keen on hiking 20% stake in Philex Mining

5 Toyota triples year loss forecast

6 Satyam gets Murty as CEO and Rs 600 cr

7 Infineon reports smaller losses

8 Kingfisher cuts pilots' salaries by Rs 80,000

Global Outsourcing

9 China's vice premier stresses outsourcing industry development

10 Allstate explores outsourcing options as it plans to cut 1,000 jobs

11 China’s budding outsourcing sector to get subsidies

12 Expertus Among the Top Ten Training Outsourcing Providers

13 IBM backflips on outsourcing, offers to move workers abroad

14 Evergreen Solar mulls manufacturing outsourcing deal

15 Warner Bros to outsource jobs to India

16 ICG Commerce Announces Engagement With Whirlpool Corporation

Global Economy

17 UK retail sales 'rose in January'

18 US watchdog attacks bail-out plan

19 Sarkozy defends plans for economy

20 House prices 'up 1.9% in January'

21 Job prospects in 2009 'alarming'

22 Germany gets new economy minister

23 Local auto industry posts near-flat sales growth of 0.2% in January

24 GDP growth won’t fall below 3.7% in ’09

Global Markets

25 Asian shares dip on US consumer woes

26 Rigid pay cap could cause talent exodus

27 US auto suppliers seek rescue as crisis deepens

28 Europe shares down, led by oils; Barclays soars

29 US urges swift G7 actions to save global economy

30 UBS cuts jobs after Q4 loss, stems outflows in Jan

Global Corporate

1 Nissan to cut 20,000 global jobs
Nissan is to cut 20,000 jobs worldwide, 8.5% of its workforce, over the next year because of a sharp fall in sales. The Japanese carmaker made the announcement as it said it expected to make a loss of 265bn yen ($2.9bn; £2bn) for its current financial year. Nissan chief executive Carlos Ghosn said the the firm's worst assumptions on the state of the global economy have been met or exceeded. The global auto industry is in turmoil. Nissan is no exception.
9^th February 2009, www.bbc.co.uk
 

2 Integreon buys bankrupt firm
AN AYALA-CONTROLLED business- process outsourcing (BPO) unit gobbled up an American company that filed for bankruptcy. Arlington, Virginia-based Onsite Sourcing Inc., a provider of electronic evidence solutions for law firms and corporations, announced in a statement on Thursday that it has filed for reorganization under Chapter 11 of the bankruptcy code, and that it plans to be acquired by Integreon. Onsite Sourcing added that Integreon Managed Solutions Inc., a Los Angeles, California-based firm majority-owned by Ayala Group’s BPO arm LiveIt Solutions Inc., has completed the acquisition of Onsite Sourcing’s outstanding prebankruptcy secured debt. A search of the US Securities and Exchange Commission doesn’t reveal any data on Onsite Sourcing. The company also didn’t disclose how much it owes nor how much the Ayala Group’s unit paid for the company.
8^th February 2009, www.bbc.co.uk

3 Truckmaker Volvo cautious on 2009
The Swedish lorry maker AB Volvo has seen falling demand hit its fourth quarter earnings, and predicted a tricky year ahead in 2009. It reported an operating loss of 999m kronor ($120m; £81m) in the October to December period. We do not see a return of demand during the first half, Volvo chief executive Leif Johansson said. Volvo said demand in North America and Japan would remain weak in the first six months of the year. The global economic downturn has hit demand for heavy trucks, but analysts say Volvo remains in a relatively strong position. If you look to the tone of Leif Johansson's comments, these are less panic-stricken than in Q3, Nordea analyst Johan Trocme said. If you look to cash flow it was stronger than expected and it is obviously the case that they feel they can pay out a dividend of two crowns [kronor] per share, which is a signal that they are not on the brink of a liquidity disaster.
6^th February 2009, www.bbc.co.uk

4 First Pacific keen on hiking 20% stake in Philex Mining
THE Hong Kong-based First Pacific Company Ltd. is interested in hiking its stake in listed Philex Mining Corp., where it currently owns a 20-percent interest. Last November, First Pacific took part in Philex’s sale of 778.665 million treasury shares worth P6.16 billion. The Hong Kong firm bought 99.997 percent of the total treasury shares sold from November 5 to 19, 2008 while other registered stockholders as of October 30, 2008 bought 24,899 shares. The shares were valued P7.92 each. Proceeds from the sale will be used primarily to fund the development of Philex’s Boyongan project and the exploration of various claims and undertakings. The mining firm, on Friday, reported that it has acquired the 50-percent interest of Anglo American Exploration BV (Anglo) and Anglo American Exploration Anglo Philippines) Inc. in the Boyongan copper-gold project, which will give Philex effectively the full control over the property together with its 81 percent-owned subsidiary, Philex Gold Philippines Inc. Philex has previously announced its decision to buy out Anglo on September 25, 2008.
7^th February 2009, www.businessmirror.com

5 Toyota triples year loss forecast
The world's biggest carmaker, Toyota, has widened its predicted loss for 2008 after demand for its cars slumped. In December, Toyota predicted it would make a full year operating loss of 150bn yen ($1.65bn; £1.13bn). The Japanese car giant has now tripled that figure and expects to make a 450bn yen operating loss, the first annual loss at the firm in 70 years. Although it has not suffered as badly as its US rivals, Toyota has still been hit by falling demand in the downturn. The strengthening yen has also hit its profitability, by depreciating its overseas earnings. In expanding its loss prediction for the year, Toyota also said it made a loss of 164.7bn yen in the three months from October to December.
5^th February 2009, www.bbc.co.uk

6 Satyam gets Murty as CEO and Rs 600 cr
Satyam's government-appointed Board on Thursday named A S Murty, one of the company's own, as Chief Executive and announced tying up Rs 600 crore loans to meet working capital needs. The Board, at the end of a two-day meet, also roped in Homi Khusrokhan, a Tata group veteran, and chartered accountant Partho Datta, as special advisers to help the company in management and finance areas, respectively. Murty, who has been with Satyam for 15 years and was currently heading the company's global delivery unit, would assume charge as CEO with immediate effect. The company's former CEO Rama Raju, along with Satyam founder Ramalinga Raju, is in judicial custody pending trial in a case relating to a Rs 7,800 crore accounting fraud in the IT firm.
5th February 2009, www.financialexpress.com
 

7 Infineon reports smaller losses
German chipmaker Infineon has reported a three-month net loss, hit by falling demand in the slowdown, but it was a smaller loss than the previous year. The firm saw a net loss of 404m euros ($517m, £352.3m) in the three months to 31 December, but this was better than the 529m euro loss a year earlier. Chief executive Peter Bauer warned that market conditions would unfortunately worsen further. In response to slowing demand, the firm said it would cut costs further. The firm has been hampered by a contraction in the global car market, where demand for automobile electronic components has typically been strong. Infineon predicted that sales would fall by 10% in the current three month period from the first quarter.
7th February 2009, www.bbc.co.uk

8 Kingfisher cuts pilots' salaries by Rs 80,000
Moving quietly, private air-carrier, Kingfisher Airlines, has effected a Rs 80,000 cut in the salaries of all its pilots. Earlier, we were being paid a salary of Rs 4.30-lakh per month. Now it has been cut to Rs 3.50-lakh, all in the name of integration (with the erstwhile Deccan), a Kingfisher pilot said in Mumbai on condition of anonymity. The salary package is mainly based on the flying hours of about 70-hours, he said, adding that the whole package has been revised downwards in the name of bringing parity with the erstwhile Deccan pilots. Kingfisher's management, while slashing the salaries, has taken the defence that it was only implementing the Deccan-Kingfisher package structure in Kingfisher post-the merger,' the pilot said. The pay-cut, effective for sometime now, is understood to have given rise to resentment and heartburn in Kingfisher's pilot community.
8th February 2009, www.financialexpress.com

Global Outsourcing

9 China's vice premier stresses outsourcing industry development
China's Vice Premier Wang Qishan said on Monday that the country should take advantage of the rare opportunity to expand the outsourcing industry. The State Council has identified 20 pilot cities to take part in a program that offers perks to businesses that opt to participate in outsourcing. The program will help ensure economic growth, industry restructuring and the job promotion -- notably for the college graduates, according to Wang in an industry meeting held on Monday in the east city of Nanjing.     The government would offer more support in tax breaks, financing, and vocational training, Wang said. The Vice Premier noted it was important to nurture China's outsourcing industry, and local governments should create sound legal conditions to pave the way for the industry expansion. Twenty cities, including Beijing, Shanghai, Xi'an, Suzhou and Hangzhou, have been designated for pilot service outsourcing programs. Beginning Jan. 1, these companies are eligible for tax breaks, financial support, subsidies and intellectual property rights protection, the Ministry of Commerce (MOC) said on Monday. More multinational companies and financial institutions, hard hit by the global financial crisis outsource their business to less costly regions. This creates an opportunity for Chinese outsourcing companies, said vice minister of MOC Ma Xiuhong.
4th February 2009, www.tutorial-reports.com

10 Allstate explores outsourcing options as it plans to cut 1,000 jobs
Allstate Corp., which plans to cut 1,000 jobs in its underperforming financial arm, is in the midst of a review that might result in some of those positions being outsourced or sent offshore. In November the Northbrook-based company hired Boston Consulting Group to find ways to trim costs at its financial unit. Since 2004 Allstate has moved certain operations to foreign countries. In December, for example, the company opened a service center in Manila with 10 representatives fielding calls from financial customers. Allstate also has sourced several life and annuity processes to Allstate Northern Ireland, whose 1,500 workers provide outsourcing and other services, and to EXL, a self-described provider of offshore business outsourcing solutions.
5th February 2009, www.tutorial-reports.com

11 China’s budding outsourcing sector to get subsidies
China’s outsourcing industry is to get government tax breaks and subsidies to boost its growth as a new report shows it is struggling to reach its potential. Though China’s outsourcing and offshoring services sector has been growing rapidly, it still lags far behind India, according to a report from international consultancy McKinsey. Chinese outsourcing firms remain much smaller than India’s global companies and they are growing at only half the pace. Given China’s aspirations to become a major outsourcing destination, it is not growing fast enough compared to other parts of the world, said Alex Peng, partner at McKinsey’s Beijing office. China’s top four offshoring companies have grown by 15 to 20 per cent each year over the last five years. But India’s top four have seen growth of 30 to 40 per cent.
5th February 2009, www.tutorial-reports.com

12 Expertus Among the Top Ten Training Outsourcing Providers
Expertus a global provider of services that optimize the business impact of learning, today announced that The Black Book of Outsourcing named Expertus to the list of the Top Ten HRO organizations focused on training and learning services.
6th February 2009, www.msnbc.com
 

13 Troubleshoot Faced By IBM
After facing a nasty backlash from its employees after it announced yet another round of layoffs last week, IBM has retrenched itself and come back with a new offer. Workers previously designated for the chopping block will be granted a reprieve of sorts and offered jobs in other countries. Last week, IBM announced a new round of some 1,200 job cuts, bringing the total number of workers laid off since the company posted fourth quarter results up to 4,000. Big Blue took no small amount of criticism for its decision to reduce its workforce, particularly in New York State, where the cuts were estimated to have eliminated up to 900 positions. It was just over six months ago, on July 15, 2008, that New York State governor David Paterson announced that IBM would be the recipient of some $140 million in tax incentives. In return, the company pledged to create 1,000 additional jobs without the state and retain at least 1,400 jobs at the East Fishkill facility in Dutchess County.
8th February 2009, www.tutorial-reports.com

14 Evergreen Solar mulls manufacturing outsourcing deal
Evergreen Solar’s President and CEO Rick Feldt surprised financial analysts during its fourth quarter earnings call by highlighting that the company was in various stages of talks with prospective subcontract manufacturers, mostly based in Asia. The executive noted that subcontracting production would significantly reduce the capital requirements the company would otherwise have to find, while meeting its contracted backlog that now stands at approximately 1GW over the next five years. Indeed, the production goals that tie in with the sales targets previously projected by the company highlight the significant capital requirements of Evergreen. However, new capital would be almost impossible to obtain at rates of return that made the expansion plans viable, considering the current severe credit crunch.
6th February 2009, www.tutorial-reports.com

15 Warner Bros to outsource jobs to India
In a move that could ruffle a few feathers in the Barack Obama administration, American entertainment giant Warner Bros has said it will be outsourcing jobs to India. It is believed that about 200 positions are to be outsourced to India and Poland by Warner Bros, which will slash as many as ten per cent of its 8,000-strong workforce in the coming days. While no final decision have been made internationally, the company expects the layoffs, elimination of open positions and outsourcing to affect nearly 800 positions worldwide, or approximately ten per cent of its 8,000 employees, a Warner Bros official told PTI in an e-mailed statement. About 200 open positions and 300 outsourced jobs would be affected as part of the reduction, while another 300 employees would be laid-off, the official said, adding that jobs would be outsourced to India. While the spokesperson declined to comment on exact number of jobs being moved to India, the sources said that about 300 positions are being outsourced, out of which about 200 would go to India and Poland.
8th February 2009, www.hindu.com

16 ICG Commerce Announces Engagement With Whirlpool Corporation
ICG Commerce, a leading procurement outsourcing specialist, has signed a multi-year agreement with Whirlpool Corporation, the world's leading manufacturer of home appliances. The contract engages ICG Commerce to help drive cost reductions by aggressively attacking $1 billion of indirect expenditures across the U.S. with services that include sourcing, category management and transaction processing. Recognizing the opportunity to increase savings across indirect spend, Whirlpool engaged ICG Commerce to help drive greater efficiencies within the Marketing, IT/Telecom, MRO, and Professional Services and Travel expenditures. The partnership allows Whirlpool to accelerate savings opportunities by gaining fast access to ICG Commerce's deep category and global expertise, market intelligence and buying center infrastructure.
9th February 2009, www.tutorial-reports.com

Global Economy

17 UK retail sales 'rose in January
Sales of retail goods rose in January, the British Retail Consortium (BRC) has said, after shops cut prices to encourage consumers to keep spending. On a like-for-like basis, retail sales rose 1.1% compared with a year earlier, the biggest increase since May 2008. The strong overall performance was driven by food sales, which rose 5.1%. Sales of non-food items fell by 1.6%. However, the BRC warned that economic conditions remained weak, and January's sales rise could be just a blip. By the end of January, sales growth had weakened as clearances ended, the BRC said. Sales of clothing, footwear, homewares, and health and beauty products all fell. Overall sales, which include the impact of new stores, rose by 3.2%, with food sales up 6.8% and non-food sales rising 0.8%.
10th February 2009, www.bbc.co.uk

18 US watchdog attacks bail-out plan
The Congressional Oversight Panel says the government overpaid for distressed financial assets and shares last year. It says the US Treasury paid $78bn (£53bn) more than it should when buying stakes in banks through the $700bn Troubled Assets Relief Program (Tarp). The Treasury had paid $254bn in 2008 in return for shares in a number of troubled financial institutions. The findings may influence Congress when it considers how to spend the remaining $350bn in bail-out funds. The oversight panel was established in October 2008 to review of the state of financial markets and the regulatory system, and to measure how effectively the government bail-out programmes were working to correct the problems.
6th February 2009, www.bbc.co.uk

19 Sarkozy defends plans for economy
French President Nicolas Sarkozy has defended his plans to revive the French economy, saying state intervention with banks has so far cost people nothing. Mr Sarkozy also said there would be no bonuses for executives of failing banks that have been bailed out by the state. The government would scrap a local business tax in 2010 and was ready to consider cutting income tax, he added. He made the comments in a TV interview, a week after nationwide protests and strikes at his handling of the economy. A million workers downed tools to protest against what they said was an inadequate response to the global financial crisis, and to call on the government to do more to protect jobs and wages. On Monday, Prime Minister Francois Fillon announced a 26bn euro ($33.1bn; £23.5bn) initiative designed to revitalise the economy. The package comprises 11bn euros to help businesses improve their cashflows; 11bn euros of direct state investment; and 4bn euros of investment by state-owned firms in modernisation programmes.
8th February 2009, www.bbc.co.uk

20 House prices 'up 1.9% in January
The average price of UK homes rose by 1.9% in January from December's figure, according to the Halifax. However it warned that one month's figures did not indicate an end to the downward trend in prices, which it says have dropped 17.2% in the past year. The average house price has now reached £163,966, according to the Halifax. Last week, a survey by Nationwide suggested house prices fell by 1.3% in January, and they said job worries were putting off people buying homes. Martin Ellis, chief economist at the Halifax, said his bank's latest survey did not mean the property market had reached a turning point, after last year's dramatic slump in mortgage lending, completed sales and prices. It's far too early to make any conclusion, he said. The figures are going against the trend and our survey shows that if you compare the last three months to the previous three months then prices are still down significantly, by about 5%, he added.
5th February 2009, www.bbc.co.uk

21 Job prospects in 2009 'alarming'
UK companies are shedding jobs at an ever-growing rate, says the Chartered Institute of Personnel (CIPD). Its research suggests more than one in three UK employers are planning to cut jobs in the first three months of 2009. This is twice as many as planned to make cuts during the final three months of 2008. These latest... figures suggest that job prospects are deteriorating at an alarming rate, said CIPD's chief economist John Philpott.

A total of 36% of employers surveyed plan to cut staff in the first quarter of 2009, compared with the 27% that plan to take on additional staff. This is the first time that a higher proportion of employers plan to cut staff than hire them since the survey began in 2004.
7th February 2009, www.bbc.co.uk

22 Germany gets new economy minister
Karl-Theodor zu Guttenberg is to become Germany's new economy minister, following the surprise resignation of his predecessor Michael Glos. Mr Zu Guttenberg has been proposed by his party, the Bavarian-based Christian Social Union (CSU), and his appointment is due to be a formality. At 37-years-old, he will become the youngest ever person to fill the role. The CSU is part of the coalition government led by Angela Merkel's Christian Democrats. Mr Zu Guttenberg, already a senior member of the CSU, is considered to be one of the rising stars of German politics. He is young, very young - but that is exactly what I want in the process of renewal, said CSU leader Horst Seehofer.
7th February 2009, www.bbc.co.uk

23 Local auto industry posts near-flat sales growth of 0.2% in January
THE local auto industry continued to show resilience amid declining sales globally as it sold 8,791 units in January, just 0.2 percent down compared with  the same month in 2008. Elizabeth Lee, president of the Chamber of Automotive Manufacturers in the Philippines Inc., said the near -flat growth in January shows continued consumer confidence in the market. First-month performance is still relatively better compared with other markets, where January 2009 sales tumbled negative 37 percent year-on-year in the US, Lee said in a statement. She said Filipino buyers are now more stringent in their purchases as they take into consideration fuel efficiency, purchase price and value for money as top purchase criteria. Sales of vehicles in the passenger- car segment went up by 14.2 percent to 3,384 units, while the number of commercial vehicles (vans, pickups, AUVs, SUVs, trucks, buses) sold went down by 7.5 percent to 5,407 units. Commercial vehicles are still the preferred automotive types of Filipinos, though, with a market share of 62 percent. Toyota Motors Philippines maintained its market leadership with 3,203 units sold, about 7 percent higher than in January 2008. Its market share is now at 36.4 percent.
9th February 2009, www.businessmirror.com

24 GDP growth won’t fall below 3.7% in ’09
Despite the grim forecasts by multilateral organizations for the Philippines this year, the National Economic and Development Authority (Neda) does not see growth hitting below 3.7 percent. The Neda said government stands pat on its 3.7-percent to 4.7-percent growth forecast for 2009 saying that hitting the International Monetary Fund’s (IMF) projection of 2.25 percent and rating agency Standard and Poor’s, 2.2 percent to 2.5 percent, is not in the cards. The Neda national planner’s Dennis Arroyo said given that the economy successfully pulled off a “respectable” 4.5-percent growth in the fourth quarter of 2008, when the economy was already in crisis territory, means the country has enough steam to hit its growth targets. The crisis began in September and hit hard in October, November, December. Hence, the fourth quarter of 2008 was already in the crisis era. Yet the economy still grew 4.5 percent. We expect the growth momentum to continue at least for the first and second quarters of 2009, said Arroyo. Arroyo is confident the growth momentum will be maintained even with the expectations of more layoffs this year and what Neda sees as layoffs of about 60,000 to 200,000, with most of these workers in export-oriented industries and OFWs working in countries badly hit by the global recession.
7th February 2009, www.businessmirror.com