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Michelin shuts Northern Ireland factory; UK export gloom deepens – as it happened

Discussion in 'Market News' started by Lily, Nov 4, 2015.

  1. Lily

    Lily Forum Member

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    All the latest economic and financial news, including a downturn at Britain’s exporters, poor US factory orders and hefty job cuts at Michelin and Standard Chartered

    5.37pm GMT

    Despite mixed economic news - including a downturn in UK exports, job cuts at Standard Chartered and Micheline - leading shares managed to end the day (mostly) in positive territory. Support came from Wall Street, where poor US factory order figures came into the “bad news is good” category, suggesting the Federal Reserve might think again about raising interest rates this year. More crucial data follows later in the week, with the non-farm payroll numbers due on Friday. Meanwhile the day’s closing scores showed:

    5.08pm GMT

    Elsewhere there has been a meeting between EU commissioner Pierre Moscovici and Greek president Alexis Tsipras, and the mood from the EU side seems positive:

    Very constructive meeting between @tsipras_eu and @pierremoscovici on #greece, growth and reforms @EU_Commission pic.twitter.com/0RlRlWRDBm

    With @tsipras_eu @atsipras: positive momentum needs to be maintained, @EU_Commission supports reform process #Greece pic.twitter.com/Hf1SDaump0

    4.45pm GMT

    Meanwhile Secretary of State for Northern Ireland Theresa Villiers said the Michelin news was “a tragic blow” for the company’s employees, writes Henry McDonald. She said:

    The announcement represents the closure of a long-standing and valued employer in Northern Ireland.

    I welcome the support being offered by the company, Invest NI and the Department of Employment and Learning to assist staff in searching for alternative employment.

    4.34pm GMT

    Our economics correspondent Phillip Inman has pointed out that Michelin, in blaming a glut of tyres from the far east, fails to mention that it has a huge plant in India, four in Thailand and two in China. The Chinese factories employ more than 6,000 workers out of Michelin’s 112,000 global workforce.

    @Michelin to close #NorthernIreland factory. Blames far east dumping, though it has 7 sites making tyres in far east https://t.co/JwSRfza75o

    @Michelin to close #NorthernIreland factory. Blames far east dumping.brings back memories of Dunlop circa 1979 https://t.co/jYcf9D2v1P

    4.13pm GMT

    Back to Ireland. South of the border, away from the doom and gloom over Northern Ireland’s shrinking manufacturing base, the emphasis today in Dublin is all on hi-tech.

    More than 30,000 tech entrepreneurs from all over the planet have descended on the city’s RDS conference centre for the annual Web Summit. But even amid all of the start ups and the hyper-optimistic tech speak there is discord from the lips of a Game of Thrones star.

    3.17pm GMT

    Earlier there was better news for the US economy, with New York business activity bouncing back in October.

    The Institute of Supply Management’s index surged from 44.5 to 65.8. This is the best performance for 12 years and follows the lowest reading in September since 2009.

    HUGE BEAT: ISM New York explodes to 65.8 from 44.5 (45.7 expected) https://t.co/avjpLWlCFX

    Did they just go to 24/7 working in NY area or what? https://t.co/ec9XWSL3ZI

    3.09pm GMT

    After disappointing UK export figures, come weaker than expected US factory orders.

    According to the Commerce Department, new orders for factory goods fell for the second month in a row in September, hit by a strong dollar and cutbacks by energy companies.

    2.45pm GMT

    Ahead of the latest US factory order figures, markets are treading cautiously, with the Dow Jones Industrial Average currently up around 10 points after an initial dip.

    The factory orders are expected to recover a little from August’s 1.7% decline, but most observers will be concentrating on Friday’s non-farm payroll numbers for further guidance as to when the Federal Reserve might raise interest rates.

    2.37pm GMT

    Northern Ireland’s First Minister Peter Robinson and Deputy First Minister Martin McGuinness said they would do everything they could for the Michelin workers, the Belfast Telegraph reports. They said:

    The Executive will make every effort to alleviate the impact of the job losses and ensure the necessary support is available to those affected directly and indirectly.

    Just over a year ago the workers of JTI Gallaher in Ballymena received similar news and so this combined with today’s announcement is a real body blow to the local economy.

    2.10pm GMT

    The Belfast Telegraph has also spoken with Ballymena factory manager John Milsted, who has worked at the factory for two years and had been a Michelin employee for the past 36 years.

    He told them.

    “The decision was not made easily, but is due to the dramatic transformation of the truck tyre market since 2007.

    “Sales have slumped and we are competing with cheap imports.”

    1.56pm GMT

    1.49pm GMT

    Davy Thompson of Unite said that in terms of per head of population the loss of 860 jobs for a country town like Ballymena would be the equivalent of the city of Belfast losing 14,000 jobs.

    Meanwhile the Michelin management are trying to soften the blow by holding out the chances of some workers relocating to other plants.

    1.48pm GMT

    We’ve got hold of the document which Michelin handed to staff in Ballymena today, explaining why the plant is to shut by 2018.

    It blames “Asian imports”, general over-capacity and high energy costs, which mean it doesn’t make financial sense to upgrade the plant:

    1.30pm GMT

    The Ballymena job losses are a particularly bitter blow, as the pneumatic tire was (re)invented in Northern Ireland by John Boyd Dunlop back in the 1880s.

    860 jobs lost as Michelin closes its tyre factory in Ballymena, Northern Ireland - the country which gave the world the pneumatic tyre

    1.25pm GMT

    Michelin is actually cutting around 1,6000 jobs across Europe.

    The French tire maker has announced it will also restructure its operations in Italy and Germany, and is taking a £280m impairment charge to cover the cost.

    As well as 860 jobs going in Ballymena, Michelin is axing around 750 posts in Italy and Germany

    1.10pm GMT

    According to workers who attended the briefing from management today some staff will be offered relocation to other Michelin factories in Britain and Europe, reports our correspondent Henry McDonald.

    1.07pm GMT

    Commercial television station UTV’s business editor, Jamie Delargy, is tweeting more details of the closure:

    Michelin factory manager John Milsted says jobs will begin to be phased out in six months time

    Michelin offering jobs to any worker willing to up sticks and take up a position at another plant.

    1.04pm GMT

    Michelin has blamed outdated machinery at the Ballymena factory for the decision to close the site by 2018.

    In a statement, it says:

    “The tyre building machines at Ballymena are not capable of making the high tech tyres of the future, and the amount of investment required to upgrade the plant is prohibitive, particularly at a time when that capacity is not required.

    “The Ballymena factory currently employs 860 people and the MTPLC is committed to supporting those employees during consultation and in the forthcoming months.

    “Michelin appreciates the impact these proposals may have on the employees and local community and commits to support every employee throughout the process.

    12.52pm GMT

    Ballymena’s local MP, Ian Paisley, says he will table an urgent question at the House of Commons tomorrow, about the Michelin factory closure.

    Ballymena MP Ian Paisley describes loss of 860 jobs at Michelin as "apocalyptic news"

    TUV leader @JimAllister statement on Michelin says it's "impossible to exaggerate the devastating blow that has fallen on North Antrim"

    12.31pm GMT

    I’m afraid we have bad news from Northern Ireland, as feared.

    Nearly nine hundred jobs are to go, after Michelin told its workforce at today’s meeting in Ballymena that it is closing the plant where it has operated since 1969.

    Michelin staff told plant will shut gradually from 2017 before closing completely in 2018. 1,000 jobs affected.

    “In addition to the 860 workers who are directly employed by Michelin on the site, there are approximately 500 contractors and many more in the economy who now face the threat of redundancy as a result of this announcement.”

    “Unite has repeatedly demanded action from Ministers in relation to the high energy costs, the protracted difficulties experienced by Michelin in obtaining a connection for a proposed combined-heat power plant and the pressing need for capital support to modernise the plant.

    Ministerial inaction has resulted in a situation where high energy costs have left the Ballymena plant having the second lowest operating efficiency and now facing closure.

    Almost 900 jobs to go with closure of Michelin plant in Ballymena. Company had previously complained of high energy costs in NI.

    12.09pm GMT

    The British Chamber of Commerce has raised the pressure on the British government to help exporters, after warning this morning that the sector is at a six-year low.

    Yes, we have to be honest with ourselves – and acknowledge that, as a country, we are not living up to the national export challenge set by the Prime Minister back in 2012.

    Will we continue, our unsustainable binge of consumer and Government spending – or will we make the tough choices and fix the fundamentals, a choice that would lead to more investment and global trade?

    11.41am GMT

    Over in Ballymena, Northern Ireland, workers at the Michelin tire plant have been told to assemble for a meeting at noon, and it could be bad news.

    We understand they will be told about plans to halt production at the site, which could lead to job losses.

    11.07am GMT

    The Standard Chartered selloff is gathering speed.

    The bank’s shares are now down 10% , as the City learns more about CEO Bill Winters’ plan for the company, funded by £3.3bn from shareholders through a cash call.

    Standard Chartered $STAN.LN down 10% after posting an unexpected loss in Q3.

    10.51am GMT

    Richard de Meo, managing director at Foenix Partners, agrees that today’s construction report suggests growth will rebound this quarter.

    He says (via Reuters):

    The construction data was a bit underwhelming, but overall we are still on track for 1% growth in the final quarter which is pretty good.

    My money would still be on the Bank of England hiking rates sometime in the first half of 2016,” said

    10.44am GMT

    Britain’s housebuilders are having a bad morning on the stock market.

    Shares in Barratt Development and Taylor Wimpey have both shed 3%, followed by Persimmon (down 2%).

    Liberum putting the knife into UK housebuilders. Downgrades Barratt, Persimmon and Taylor Wimpey to 'sell'. Flags margin pressures.

    10.12am GMT

    Today’s construction report follows an unexpectedly strong manufacturing PMI yesterday, which showed growth rebounded in October.

    This may be a sign that the economy is picking up after slowing in the last quarter, reckons Newsnight’s Duncan Weldon:

    Manufacturing & construction PMIs strong, consumer confidence high = forward looking indicators point to Q3 UK GDP as blip not slowdown.

    9.59am GMT

    Markit also disputes the official claim that the construction sector shrank in the last quarter (as the Office for National Statistics believes).

    Rather than acting as a drag on the economy, as suggested by recent GDP estimates, the sector is continuing to act as an important driving force behind the ongoing UK economic upturn.

    The UK #PMI construction series is very different from the official output series and "ne'er the twain shall meet" #ukhosuing #GBP

    9.54am GMT

    Construction firms are struggling to find enough builders to keep up with demand, says Markit’s Tim Moore:

    “Construction companies noted a rebound in new business flows during October and responded to rising workloads by taking on extra staff at the fastest rate for almost a year.

    Shortages of skilled staff persisted as a result, with the current period of falling sub-contractor availability the longest seen in over a decade.”

    9.48am GMT

    This chart shows how commercial building activity jumped last month, growing nearly as fast as housebuilding.

    Civil engineering growth slowed, though, continuing a recent trend:

    9.39am GMT

    Britain’s construction sector has posted another month of solid growth, according to data firm Markit.

    Markit’s construction PMI came in at 58.8 in October, down from 59.9 in September.

    9.29am GMT

    Central bank news. Zambia has just hiked interest rates by three whole percentage points, in an attempt to fight inflation and prop up its currency, the Kwacha.....

    Kwacha gonna do? *ZAMBIA RAISES BENCHMARK INTEREST RATE TO 15.5% FROM 12.5%

    9.27am GMT

    It’s nearly time for Markit’s monthly healthcheck of Britain’s construction sector:

    9.18am GMT

    Reuters columnist Olaf Storbeck sees more trouble ahead for Volkswagen:

    I'm a bit surprised VW shares only down 3.5 pct this morning. Investors don't seem to comprehend full dimension of additional EPA charges.

    9.18am GMT

    Volkswagen shares have taken a predictable hit from the news that the emissions cheating scam may be even bigger than thought.

    Here we go again for Volkswagen... https://t.co/a89y9KXPKP

    9.04am GMT

    The biggest takeover of a UK tech company since 2011 has been announced, with US video game maker Activision Blizzard sweeping on King Digital, the British creator of Candy Crush.

    Related: UK maker of Candy Crush bought by US's Activision Blizzard for $5.9bn

    They were only going to pay $1 billion, but then they got stuck on a couple of levels, bought some gold bars, and, well, here they are.

    8.41am GMT

    Standard Chartered’s shares have slumped to the bottom of the FTSE 100 index at the start of trading in London.

    They lost almost 6% at one stage, as investors react to the decision to issue £3.3bn of new shares to raise capital.

    Standard Chartered is asking its investors to stump up £3.3bn after reporting its first quarterly loss in at least 15 years and warning of further penalties for regulatory breaches.

    Alongside the rights issue, the emerging markets-focused bank also revealed it would need to cut 15,000 jobs as it reins in costs and pulls back from riskier operations.

    Standard Chartered seeks £3.3bn from investors https://t.co/pL8G9sPMbS

    Stanchart Q3 numbers show why it needs to raise capital: income -18%, bad debts more than double, quarterly loss. pic.twitter.com/xzY48T50iq

    8.34am GMT

    The Times is so worried about Britain’s current account deficit that it has published two different opinion pieces on it today.

    Ed Conway, Sky’s economics editor, argues on page 27 that policymakers are deliberately ignoring the alarm bells, because they’ve been ringing for so long.

    UK has biggest peacetime current account deficit since 1772. Time to panic? @thetimes col: https://t.co/LlWftow29E pic.twitter.com/IrUObYbweh

    8.08am GMT

    This export gloom is a worry, because Britain is already running a persistent trade gap with the rest of the world.

    This chart, from last month’s trade figures, shows how the UK’s surplus in services is more than wiped out by the deficit in goods traded in and out of the country:

    7.55am GMT

    Phil Couchman, CEO of parcel business DHL Express UK, says British exporters are suffering from persisting worries over the eurozone (after another summer dominated by the Greek crisis)

    “We can mostly attribute the drop in export orders and sales to uncertainty in the Eurozone, and the instability of the Chinese and wider global economy.

    Despite these factors, we must remember that UK businesses are resoundingly resilient. Whilst the overall index has fallen, over half of businesses say export orders have remained constant – and half say export sales have too.”

    7.43am GMT

    The UK manufacturing industry has suffered a painful slump in export growth and confidence as problems in the global economy hit demand.

    According to the British Chambers of Commerce this morning, exporters are at their gloomiest since the dark days of the last recession.

    While export orders have remained constant for just over half (54%) of UK businesses, and 50% report that export sales have remained the same as in the previous quarter, both have fallen to their lowest level since Q2 2009.

    “Driving export growth is key to reducing the UK’s deficit and maintaining our global competitiveness. These figures make it clear that the UK’s export drive is at risk of going into reverse gear, precisely at the time when it needs to be moving forward.

    “Many firms are currently operating at capacity and are in need of support to invest in machinery or staff. Those businesses considering taking the leap and breaking into new markets desperately need access to the growth funding and working capital to enable this transformation.

    7.25am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    We’ve also launched a GBP3.3bn Rights Issue to strengthen our balance sheet and accelerate execution of our strategic plan.

    Group CEO Bill Winters: “These actions will result in a lean, focused & well capitalised bank, poised for growth.” pic.twitter.com/XRRZGVvKLE

    Related: VW emissions scandal widens to include Porsche claims

    Bit of a lift expected for the FTSE this morning after a strong finish in the US. FTSE100 forecast to start +25 at 6387.

    Related: Reserve Bank of Australia keeps cash rate at 2% – as it happened

    Continue reading...
     

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