China finds oil in Saudi Arabia while gas prices rise (again), Ford shrinks and Iran tells us to stick it. Quite a Monday.
Ford Posts 19% Profit Rise, Unveils Restructuring Plan
January 23, 2006
Ford Motor Co., the No. 2 U.S. auto maker, said Monday that it will cut 25,000 to 30,000 jobs and idle 14 facilities by 2012 as part of a restructuring designed to reverse a $1.6 billion loss last year in its North American operations.
The cuts represent 20% to 25% of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers in the region.
The plant closings, which affect seven assembly plants, will eliminate capacity of 1.2 million vehicles. Ford currently can build 4.5 million vehicles a year in North America using 43 parts, stamping and assembly plants.
China Will Strike An Energy Deal With the Saudis
January 23, 2006
BEIJING -- China and Saudi Arabia are expected to sign a wide-ranging agreement today on energy cooperation amid Beijing's quest to secure more energy resources vital to fuel its fast-growing economy.
China, the world's second-biggest consumer of oil, has been seeking to tighten economic and political partnerships with its major oil suppliers across Central Asia, Africa and Latin America. Its quest has taken on added urgency since 2004, when the country's oil demand surged about 15%, helping underpin the biggest rise in international oil prices in a generation.
China's oil imports from Saudi Arabia have roughly doubled in recent years, from 12.5 million tons in 2002 to 22 million tons for the first 11 months of 2005.
West Talks Tough With Iran, Treads Lightly
U.S., Europe Seek a Security Council Role, But Too Much Pressure Could Backfire
January 23, 2006
WASHINGTON -- As U.S. and European officials press to have Iran brought before the United Nations Security Council, they are also promising that Tehran won't face serious punishment there -- for quite a while.
Iran has few friends left after deciding to resume efforts to enrich uranium, a process that could advance it a big step closer to being able to build a nuclear weapon. But there are reasons the move toward international penalties might not be swift. As the Organization of Petroleum Exporting Countries' second-largest producer, Iran has considerable economic leverage. It also may benefit from the "Iraq effect." There is widespread anxiety that any U.N. action -- unless carefully constrained -- could open the door for another U.S.-led war.
There's Little Margin for Error
Fuel Pressures Keep Prospects For Economic Growth in Limbo As Investors Begin to Seek Cover
January 23, 2006
Now, with oil back near $70 a barrel, Mr. Herrmann is beginning to hunker down again. So are a lot of other investors. That helps explain why the Dow Jones Industrial Average fell 213.32 points Friday for its biggest one-day percentage decline since 2003. With the current bull market now more than three years old, the question is whether the economy can improve enough to get people like Mr. Herrmann to feel good enough to start buying stocks again.
"We don't have much margin for error," Mr. Herrmann says. "We can't afford to lose two million barrels a day being exported out of Iran."
What worries him is that the problems weighing on the economy "won't go away real soon." It isn't just that expensive oil serves as a tax on consumers and businesses alike. Interest rates have been rising as well, and the two together are damping growth. "I don't think $70 oil translates into a huge economic problem," he says. "But who says it can't go to $80? Who says it can't go to $90?"
