Day: April 12, 2017

Russia is struggling to source gas turbines for two new power plants it is building in Crimea, Russian Energy Ministry Alexander Novak said Wednesday.

European Union sanctions bar European individuals and companies from providing energy technology to Crimea, which Russia annexed from Ukraine in 2014. The Black Sea peninsula has suffered electricity shortages since then.

Three sources told Reuters last year that turbines for the Crimean plants would be made by Siemens Gas Turbine Technologies LLC, a joint venture in which Siemens has a 65 percent share.

The German company categorically denied it intended to send turbines to Crimea.

The joint venture’s factory is the only one in Russia capable of making turbines which will be compatible with the Crimean power plants.

“Work is continuing despite problems related to the delivery of equipment from a Western company. We are working on buying other equipment,” Novak told the upper house of Russia’s parliament on Wednesday. He did not name the Western company.

Novak later told reporters Russia was considering various options, including sourcing equipment from other countries, using Russian machinery, or using foreign equipment on Russian territory that was imported before sanctions were introduced.

The two new power plants were due to be commissioned at the end of 2017, but Novak said last month their launch had been delayed by a few months.
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The election of Donald Trump as U.S. president last year raised the specter of economic recession in Mexico, sent the country’s peso into a tailspin, and threatened local industry such as car making.

But four months on, Mexican automobile output is accelerating fast, unemployment is at a nine-year low, and the peso has been one of the world’s best-performing currencies in 2017.

Since diplomatic ties reached a nadir in January with the cancellation of Mexican President Enrique Pena Nieto’s planned meeting with Trump, business confidence has slowly returned.

Fears that Trump could tear up the NAFTA trade treaty have subsided, and so far the hit to foreign investment has been slight, said Gilberto Fimbres, head of Mexican employers’ federation Coparmex in the northern border city of Tijuana.

“The storm of the great talker, the big negotiator, descended on us,” he said. “Then it turns out that all these great things, the great threat, weren’t so great in the end.”

Instead, Mexican auto production leapt 36 percent in March, capping the strongest start to any year since 2011. The same month, growth in new manufacturing orders was the highest in six months, the Markit Purchasing Managers’ Index showed.

As a result, areas most exposed to the threat of a trade war are now looking ahead with cautious optimism.

Baja California, a major draw for manufacturers supplying the U.S. market, expects to book $2.7 billion in foreign direct investment (FDI) this year, up from about $2.5 billion in 2016, said Carlo Bonfante, the border state’s economy minister.

Companies investing in the state this year include China’s Kunshan Eson Precision Engineering, Korea-based electronic components maker INZI DISPLAY, and U.S. drinks company Constellation Brands although its plans are facing opposition from local farmers worried about water supply.

In Guanajuato state in central Mexico, a car making hub, the industry is likely to create some 20,000 new jobs this year, an increase of about 10 percent from 2016, said Alfredo Arzola, director of the local automotive cluster.

Arzola declined to give specific examples, saying that “absolutely all” the auto sector companies in Guanajuato, which include General Motors, Honda and Volkswagen, were adding jobs.

Broader surveys present a similar picture.

A poll of 868 foreign and domestic executives by consultancy KPMG showed 58 percent planned to expand operations in Mexico in the next three years, up three percentage points from a year earlier. Though published in March, the survey was conducted November-December at the height of uncertainty over Trump.

Maurizio Rosa, chief executive of Codan Rubber Mexico, a maker of hoses for the automotive industry, said his worries about Trump began to fade when U.S. clients persuaded him that Mexico was indispensable to their business.

“If you take away the low-cost parts the U.S. buys from Mexico, it’s going to be very difficult for them,” said Rosa, who expects Codan’s sales to rise around 30 percent this year.

Rosa declined to name his clients, but said they included parts suppliers to global automakers including Nissan, Fiat Chrysler and Ford.

Risks to economic growth still loom, including government spending cuts, rising interest rates, low oil production, and lingering fears over Trump’s plan to renegotiate the North American Free Trade Agreement (NAFTA) between Mexico, the United States and Canada.

Trump’s threats to slap import tariffs on Mexican-made cars in the weeks after his victory pummeled the peso. However, the currency’s slump helped spur a revival in exports and tourism.

Concern about NAFTA still clouds investment, and on March 31 the government cut its 2017 growth forecast by 0.7 points to around 1.8 percent.

Still, private sector economists who cut growth forecasts last year on fears Trump could choke the economy are starting to revise up estimates, citing stronger data and a softer tone from U.S. officials over trade in recent weeks.

Much depends on consumer sentiment, which hit a record low when Trump took office in January, the same month the government ushered in an inflation-boosting gasoline price hike.

But the more conciliatory U.S. tone, a drop in unemployment to its lowest rate since December 2007, and the peso’s appreciation over the past 2 1/2 months have helped confidence rebound.

 
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The sculptor of Wall Street’s “Charging Bull” says New York City is violating his legal rights by forcing his bronze beast to face off against the “Fearless Girl.”

Artist Arturo Di Modica said Wednesday that the new neighboring statue changes his bull into something negative.

He says the bull’s message is supposed to be “freedom in the world, peace, strength, power and love.”

His lawyers say “Fearless Girl” exploits the bull for commercial purposes. They want it moved and are hoping for an amicable solution.

Artist Kristen Visbal’s statue of a girl with her hands on her hips was placed on the traffic island on March 7.

Mayor Bill de Blasio says men who don’t like women taking up space “are exactly why we need ‘Fearless Girl.'”

 
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United Airlines Chief Executive Officer Oscar Munoz took to the airwaves Wednesday in an attempt to quell the outrage over Sunday’s forced removal of a passenger, vowing that kind of incident “will never happen again.”

Facing mounting pressure, Munoz was much more contrite in an interview with ABC News, apologizing profusely to Dr. David Dao and promising that security officers will no longer be used to remove passengers. “We can’t do that,” he said.

The tone of Munoz’s remarks contrasted sharply with some of his previous statements, which many critics viewed as perfunctory, even calling Dao “belligerent and disruptive.”

The statements further fueled the controversy, which began when Dao was videotaped being dragged from an overbooked United Airlines flight Sunday at Chicago O’Hare International Airport.

Dao was one of four passengers bumped from the flight to accommodate four airline employees after the airline failed to get passengers to voluntarily take a later flight.

Dao repeatedly refused to leave his seat, prompting Chicago aviation security officers to pull him from it and drag him down the aisle on his back and off the plane. Fellow passengers recorded the incident on their cellphones and video of the incident quickly went viral.

Dao was hospitalized Tuesday in Chicago for injuries he sustained while being removed, according to Thomas Demetrio, a Chicago personal injury lawyer Dao has retained.

The backlash from the incident spread worldwide, with calls for a boycott of the airline and Munoz’s resignation. As of Wednesday morning, an online petition demanding he step down had more than 40,000 signatures.

Reaction to the incident was particularly intense among Asian-Americans and in Vietnam. The website of the medical board in the southern state of Kentucky, where Dao is licensed to practice medicine, shows he graduated in 1974 from the University of Medicine of Ho Chi Minh City in Vietnam.

Reports that he was convicted in 2004 of felony charges related to his medical practice were generally dismissed in Vietnam as a likely smear campaign.

“Dr. Dao didn’t do anything wrong on that flight and that’s the main thing,” Clarence Dung Taylor wrote on Facebook, the most popular social media platform in Vietnam.

After surrendering his medical license and a five-year probationary period, the state licensing board allowed him to practice medicine again in 2015.

The security officer who dragged Dao from the plane remains on leave “pending a thorough review of the situation,” the Chicago Department of Aviation said.

The U.S. Department of Transportation is investigating the incident, and several legislators have called for new rules to curb the airline industry’s practice of overbooking flights.

United’s share price, meanwhile, has rebounded. It opened at $71.65 Wednesday in New York after plunging to an intra-day low of $68.36 the previous day.
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President Donald Trump told a group of chief executives Tuesday that his administration was revamping the Wall Street reform law known as Dodd-Frank and might eliminate the rules and replace them with “something else.”

At the beginning of his administration, Trump ordered reviews of the major banking rules that were put in place after the 2008 financial crisis, and last week he said officials were planning a “major haircut” for them.

“For the bankers in the room, they’ll be very happy because we’re really doing a major streamlining and, perhaps, elimination, and replacing it with something else,” Trump said Tuesday.

“That will be the minimum. But we’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many,” he said.

The many provisions of the Dodd-Frank measure were aimed at decreasing risks in the U.S. financial system. The White House is not unilaterally able to upend Dodd-Frank’s rules, almost all of which are implemented by independent regulatory agencies like the Securities and Exchange Commission and the Federal Reserve.

A sweeping change to the law would require congressional action, though in some cases regulators may also have wiggle room to make changes through a formal rule-making process.

Report on regulations

In February, Trump issued an executive order requiring Treasury Secretary Steve Mnuchin to consult with U.S. regulators and submit a report outlining a proposal for possible regulatory and legislative changes that will help fuel economic growth and promote American business interests.

That report, due to be released in June, will most likely serve as a blueprint for possible changes down the road. However, congressional action on a Wall Street bill is not expected in the near term, as Congress focuses primarily on health care and tax reform.

Participants in the Tuesday meeting included Rich Lesser, chief executive of Boston Consulting Group; Doug McMillon, chief executive of Wal-Mart Stores; Indra Nooyi, chief executive of PepsiCo; Jim McNerney, former chief executive of Boeing; Ginni Rometty, chief executive of IBM; and Jack Welch, former chairman of General Electric.

The business leaders are part of Trump’s “Strategy and Policy Forum” that last met with him in February.

Trump also reiterated his criticism of the North American Free Trade Agreement between the United States, Canada and Mexico.

“NAFTA is a disaster. It’s been a disaster from the day it was devised. And we’re going to have some very pleasant surprises for you on NAFTA, that I can tell you,” he said.
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United Airlines saw its stock price decline by 4 percent or more after a viral video showing a passenger being dragged off a flight and injured sparked outrage in the U.S. and several nations. One airline analyst says he has never seen such a “parade of incompetence.”
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