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[Biography of the Day] from [Britannica]

Tuesday, June 2, 2009
Johnny Weissmuller
American swimmer Johnny Weissmuller, who won five Olympic gold medals and set 67 world records and who was even more famous as a motion-picture actor, most notably in the role of Tarzan, was born in Romania this day in 1904.

[On This Day] from [Britannica]

Tuesday, June 2, 2009
1953: Elizabeth II crowned queen
On this day in 1953, 27-year-old Elizabeth II, the elder daughter of King George VI, was crowned queen of the United Kingdom at Westminster Abbey, having taken the throne upon her father's death in February 1952.

news20090602jt1

[TODAY'S TOP STORIES] from [The Japan Times]

[BUSINESS NEWS]
Tuesday, June 2, 2009

Fallout to hit Japan, parts makers acutely
GM破綻、日本の部品業界を急撃

By HIROKO NAKATA
Staff writer

General Motor Corp.'s filing for bankruptcy protection Monday will have a wide impact on Japan's economy, ranging from further reduced U.S. consumption and car sales to fallout hitting the nation's parts makers, experts said.

The largest industrial bankruptcy in U.S. history is expected to push down U.S. gross domestic product by 0.03 percentage point because it will idle around 114,000 GM assembly workers and dealership employees, putting a further damper on household spending, said Takahide Kiuchi, chief economist at Nomura Securities Co.

The weaker consumption in turn will push down Japan's GDP by about 0.02 point through a fall in sales of Japanese cars, he said.

"Also, the U.S. government's mounting deficit may lead to a lower dollar (against the yen)," he said, and this will hit Japanese carmakers' profits.

But Kiuchi said the more immediate impact will be on Japanese auto parts makers, not the overall economy or the automakers.

"Parts makers are expected to suffer most, due to possible defaults as well as reductions in their sales," said Yuji Masaki, manager of information reporting at Teikoku Databank Ltd.

The private credit research firm said last week that 102 Japanese parts suppliers and other companies face potential failure to recover accounts receivable from GM now that it has filed for Chapter 11.

Major Japanese car parts makers, including air conditioner and navigation system maker Denso Corp., suspension parts maker Yorozu Corp. and Akebono Brake Industry Co., have already applied for U.S. government guarantees on receivables under a $5 billion Treasury Department program.

But many small suppliers haven't qualified for the federal assistance because they need to be approved by GM to be deemed necessary sources for the failing U.S. giant, experts said.

"The situation is very tough for small and weak parts makers," said Yasuo Aoki, director in the international department of Japan Auto Parts Industries Association. "There are actually some Japanese makers that have not yet been told by GM to apply for the program."

Even parts makers that are expected to get the federal assistance anticipate a decline in sales.

Yorozu, which had 21 billion in group sales from GM for the business year that ended in March, now expects to see sales tumble to 8.5 billion for this business year to next March.

GM, Chrysler Corp. and Ford Motor Co. account for 19 percent of Akebono Brake's group sales, but that figure will fall to 14 percent this business year, Akebono said.

Satoko Terasawa, senior credit analyst at Mizuho Securities Co. in charge of the auto sector, said suppliers of parts for restructured automakers will see sales tumble.

"Those providing parts for Cadillac, Chevrolet and GMC will survive. But those depending on Saturn and Hummer will either see their supply cut or go with a very small amount of sales," Terasawa said.

"The natural selection of parts makers will gain speed," she said.

Major Japanese parts makers said they have been preparing for GM's bankruptcy for months, even years.

"We have made efforts to increase our (exposure to) Japanese makers for a few years, as the shares for the U.S. Big Three have been declining," said Yoshio Arai, a senior spokesman for Akebono.

To minimize the fallout of GM's bankruptcy on Japan, the government will extend emergency financial aid to small and midsize suppliers of auto and other parts to GM, according to the Ministry of Economy, Trade and Industry.

Automakers with business ties to GM will meanwhile carefully monitor its restructuring.

Toyota Motor Corp., which jointly set up with GM in 1984 the New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, Calif., plans to continue the tieup. The plant produces Toyota's Corolla and Tacoma, and GM's Pontiac Vive.

There has been speculation Toyota may also lend support to GM because the U.S. market is the top moneymaker and Toyota has been sensitive to any trade friction with the U.S. or threat to boycott Japanese cars.

Suzuki Motor Corp., which has long been an ally of GM, is also cautiously waiting.

Its tieup with GM started 28 years ago when GM bought Suzuki shares. Suzuki later bought back a 17 percent stake in 2006 and GM's remaining 3 percent in 2008. Even after the two makers capital tieup ended, they continued cooperating on technology development.

"We are calmly and cautiously watching what the U.S. government will do," Suzuki Chairman and President Osamu Suzuki said last Wednesday.


[NATIONAL NEWS]
Tuesday, June 2, 2009
Nova chief admits skimming funds
NOVA元社長、積立金の流用を自認

By ERIC JOHNSTON
Staff writer-

OSAKA — The former president of Nova Corp. admitted Monday he siphoned off employment benefit funds just before the language school giant went bankrupt in 2007 but pleaded not guilty to embezzlement, claiming he used the funds for employees.

Nozomu Sahashi, 57, who once headed one of Japan's largest and most popular English conversation school chains, is charged with funneling nearly 320 million from employment benefit funds in July 2007 by transferring the money to a bank account belonging to an affiliate, which has not been named.

"I apologize to the students and employees for all of the trouble I caused, but it was not my intention to do wrong," Sahashi told the Osaka District Court at the opening of his trial. "I don't think I can judge whether what I did constitutes embezzlement or not."

Nova's financial situation worsened considerably in February 2007, when the company was responsible for monthly salary payments of 1.1 billion to its foreign instructors and 500 million for its Japanese staff. In addition, there were monthly classroom rental fees of 1 billion.

By July 2007, Nova owed students nearly 900 million in cancellation fees, which it could not pay.

Many students had canceled their contracts out of anger over Nova's system, which they claimed made it impossible to actually take all of the lessons they paid for.

In April 2007, the Supreme Court ruled the way the company calculated its cancellation policies was illegal and ordered Nova Corp. to repay about 310,000 to a Tokyo man who received no refund when he canceled his contract.

Faced with mounting debts, Sahashi in July 2007 allegedly diverted nearly 320 million from an employment benefit fund to the affiliate's account.

The money was then supposedly used to reimburse students who had canceled their contracts. Nova officially declared bankruptcy in October 2007 and much of its operation was taken over by Nagoya-based G.Communications.

Sahashi argued he had the employees' welfare in mind when he used the funds to pay the cancellation fees.

"Use of the money is not a violation of the funds' purpose. The defendant thought it was money in an account with his name to be used for the welfare of the employees," Sahashi's lawyers said in a statement to the court. "Unless the cancellation fees were paid, the company was facing bankruptcy. Because there were no other funds, the money was used to avoid this worst possible case, and to maintain a minimal (amount) of welfare for the employees."

Sahashi faces not only a lawsuit over the diversion of the employee benefit funds but also a suit by former students seeking 16 million in damages.

An attempt by the Osaka-based General Union, which represents many ex-Nova employees, to get prosecutors to indict Sahashi for nonpayment of wages failed last year. But in March, after the union pushed the local labor bureau to get prosecutors to probe their decision, auditors for the prosecutor's office ruled the initial decision not to charge Sahashi was unjust.

The union hopes Sahashi will be tried separately for nonpayment of wages to 5,000 dismissed employees.

news20090602jt2

[TODAY'S TOP STORIES] from [The Japan Times]

[NATIONAL NEWS]
Tuesday, June 2, 2009
Aso wants 55-day legislative extension
麻生内閣、国会会期５５日延長

By MASAMI ITO
Staff writer

Prime Minister Taro Aso said Monday he wants the current Diet session, which is set to close Wednesday, extended by 55 days until the end of July to secure enough time to pass bills related to the 14 trillion extra budget for fiscal 2009.

The ruling bloc-dominated Lower House is expected to vote on the extension Tuesday in a move that will likely put off the general election until at least late August.

The Liberal Democratic Party-New Komeito bloc got the extra budget, the largest ever, through the Diet last week. But the related bills, which must clear the Diet to carry out the enormous supplementary budget, are still being deliberated in both Diet chambers.

Ruling bloc executives, including Aso and New Komeito leader Akihiro Ota, met Monday afternoon and both parties agreed the lengthy extension was necessary.

LDP Secretary General Hiroyuki Hosoda told reporters that Aso stressed the importance of passing not only the budget-related bills but also other key pending legislation, including the antipiracy bill to create a permanent law to enable the Maritime Self-Defense Force to protect ships of any nationality from pirate attacks and the controversial organ transplant law.

"Prime Minister Aso said there are many bills left that need to be firmly passed," Hosoda said. "He also said the economic measures have entered a critical phase and vowed that the government will deal with them."

The primary aim of the extension is to prepare for a situation in which the opposition camp, which controls the Upper House, puts up a fight and draws out the deliberations.

"There is no predicting what will happen with talks between the ruling and opposition parties," Hosoda said.

With the extension, it is unlikely Aso will call a general election before the end of August or early September. But New Komeito Secretary General Kazuo Kitagawa said Aso could dissolve the Lower House during the extended session, depending on the situation.

"The dissolution of the house is entirely in the hands of the prime minister," Kitagawa said. But "in a sense, if the pending bills are passed, Aso may decide to dissolve the house during the Diet session."

Kenji Yamaoka, Diet affairs chief of the Democratic Party of Japan, questioned the need for such a long extension.

"We will agree to deliberations on bills and once we have finished thoroughly deliberating them, we will vote," he said.

A 55-day extension, however, won't be long enough for the ruling bloc to definitely hold a second vote in the Lower House for the budget-related bills. The Constitution stipulates that the Lower House can pass bills with a two-thirds majority in a second vote after the Upper House either rejects the bills or does not vote on them after 60 days.

"We did not set the extension on the assumption that we would hold a two-thirds second vote," Kitagawa said. "Considering that there are budget-related bills and other important legislation still in the Lower House, we decided a certain amount of time was necessary to pass them."


[BUSINESS NEWS]
Tuesday, June 2, 2009
Gas station biofuel sales begin
ガソリンスタンド、バイオガソリン発売開始

(Kyodo News) Nippon Oil Corp. began selling biofuel Monday at 861 of its approximately 2,000 service stations in Tokyo and six other prefectures, the company said.

The price for biofuel is the same as regular gas, company officials said.

Besides Tokyo, the fuel is being sold in Tochigi, Gunma, Saitama, Kanagawa, Yamanashi and Nagano prefectures.

The government is promoting biofuel under the premise that the carbon dioxide its ingredient plants absorb from the atmosphere will offset the emissions released by cars that use it.

Japan's major oil distributors sold biofuel on a trial basis at about 100 service stations in the fiscal year that ended in March and plan to substantially increase sales this year.


[BUSINESS NEWS]
Tuesday, June 2, 2009
Domestic sales of vehicles fell 19% in May
国内車両販売５月、１９パーセント低下

(Bloomberg) Toyota Motor Corp. led a 19 percent drop in domestic vehicle sales in May as falling wages and rising unemployment kept people out of dealer showrooms.

Sales of cars, trucks and buses, excluding minicars, fell to 178,503 vehicles, the Japan Automobile Dealers Association said Monday. Toyota sold 80,503 units, excluding Lexus brand cars, down 24 percent. Honda Motor Co. posted a 4.5 percent gain and Nissan Motor Co. sold 9.1 percent fewer units.

The nation is struggling to spur consumer spending as wages fell for an 11th straight month in April and the jobless rate reached a five-year high. Still, the pace of decline in auto sales slowed last month from 32 percent in March and 29 percent in April as government tax incentives helped boost sales of Toyota Prius and Honda Insight gasoline-electric hybrid cars.

"More and more people are opting for hybrids to save money, given the current economic condition," said Ichiro Takamatsu, chief investment officer at Alphex Investments Co. in Tokyo. Rising oil prices this year will "further spur demand for cars with better fuel economy."

Toyota said May 8 it has received more than 80,000 orders for the revamped Prius. Honda's Insight has attracted 35,000 orders, the firm said May 21. Nissan said May 19 that orders for 14 fuel-efficient models, including the Cube and Tiida, rose about 30 percent in the preceding month.

The unemployment rate climbed to 5 percent in April, the government said last week, while household spending fell 1.3 percent in April.

Prime Minister Taro Aso plans to subsidize purchases of new fuel-efficient cars to spur sales as part of his 15.4 trillion economic stimulus program.

The program will be implemented after winning approval from the Diet. The government expects the subsidies to boost sales by 690,000 vehicles this fiscal year. Consumers who bought cars after April 10 when Aso announced the program are eligible.


[BUSINESS NEWS]
WTuesday, June 2, 2009
Wages decline for 11th straight month
賃金、１１か月連続下降

(Bloomberg) Wages fell for the 11th month in a row in April, extending their longest losing streak in five years and indicating households will pare spending further in the coming months.

Monthly wages, including overtime and bonuses, dropped 2.5 percent from a year earlier after declining 3.9 percent in March, the fastest pace since July 2002, the Health, Labor and Welfare Ministry said Monday.

Tighter budgets and rising unemployment indicate households will hold back an economy showing signs of emerging from recession. Daiichi Kasei Co. and Toto Ltd. are among companies slashing salaries even as exports and production begin to stabilize.

"We'll see more visible weakness in consumer spending along with a deterioration in the job market," said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. "Wages won't grow for a while."

Daiichi Kasei, a maker of synthetic leather for clothing and sports equipment, began cutting wages for executives and full-time workers in April, according to Tokyo Shoko Research Ltd.

Toto, Japan's largest maker of toilets and bathroom fixtures, said last month it will reduce executives' salaries by as much as 10 percent from June through September.

Overtime pay led the decline in wages, sliding 18.8 percent after an unprecedented 20.8 percent drop in March, according to Akira Motokawa, head of the labor ministry's statistics division.

A rebound in production helped ease a drop in overtime working hours among manufacturers for the first time in 11 months. Extra working hours fell 45.3 percent in April after an unprecedented 48.9 percent plunge in March.

OT plummets 45%

(Kyodo News) Average overtime hours per worker at manufacturers dropped 45.3 percent in April from a year earlier, falling for the 13th straight month amid continued output adjustments, the government said Monday.

Average overtime hours, a key gauge of the economic outlook, stood at 9.1 hours at manufacturers with five or more workers, following the biggest percentage fall, 48.9 percent, reported in March.

"The size of the decline became smaller in line with improvements on the manufacturing front," the Health, Labor and Welfare Ministry said in a preliminary report. Comparable data on overtime hours have been available since 1990.

news20090602lat

[Today's Newspaper] from [Los Angeles Times]

[News > World]
Seats, debris from Air France plane reportedly found

Associated Press
6:37 AM PDT, June 2, 2009

RIO DE JANEIRO -- An airplane seat, a life jacket, metallic debris and signs of fuel were found in the middle of the Atlantic Ocean today by Brazilian military pilots searching for a missing Air France airliner.

The debris was spotted from the air about 410 miles north of the Brazilian island of Fernando de Noronha, roughly along the path that the jet was taking before it disappeared with 228 people on board, said Air Force spokesman Jorge Amaral.

There were no signs of life in two sightings of separate debris areas about 35 miles apart.

"The locations where the objects were found are towards the right of the point where the last signal of the plane was emitted," Amaral said. "That suggests that it might have tried to make a turn, maybe to return to Fernando de Noronha, but that is just a hypothesis."

Amaral said authorities would not be able to confirm that the debris is from the plane until they can retrieve some of it from the ocean for identification. Brazilian military ships are not expected to arrive at the area until Wednesday.

The discovery came more than 24 hours after the jet bound from Rio de Janeiro to Paris went missing, with all feared dead.

Rescuers were still scanning a vast sweep of ocean extending from far off northeastern Brazil to waters off West Africa. The 4-year-old Airbus A330 was last heard from at 0214 GMT Monday (10:14 p.m. EDT Sunday).

Investigators on both sides of the ocean were trying to determine what brought it down. Potential causes included shifting winds and hail from towering thunderheads, lightning or a combination of other factors.

An automatic message sent from the plane just before it disappeared said that the plane was losing pressure and had experienced an electrical failure.


[News > World]

Airbus jet leaves few clues before vanishing
Pilots on Rio-to-Paris flight ran into storms but did nothing to signal distress.

By Peter Pae and Ralph Vartabedian
June 2, 2009

There was no word from the pilots, no sign that anything was wrong with Air France Flight 447 as it streaked over the dark waters of the Atlantic on its way to Paris. And then it was gone.

All it left behind were automated pings signaling that something had gone wrong. The plane had been battling through ferocious thunderstorms. But what caused one of the world's safest commercial jets, with 228 passengers and crew, to simply vanish over a vast expanse of ocean may never be known.

"It's like going into a black hole," said Robert Ditchey, a Marina del Rey aviation consultant and co-founder of America West, now part of US Airways. "The airplane is pretty much on its own. It's hours away from help."

There was no word from the pilots, no sign that anything was wrong with Air France Flight 447 as it streaked over the dark waters of the Atlantic on its way to Paris. And then it was gone.

All it left behind were automated pings signaling that something had gone wrong. The plane had been battling through ferocious thunderstorms. But what caused one of the world's safest commercial jets, with 228 passengers and crew, to simply vanish over a vast expanse of ocean may never be known.

"It's like going into a black hole," said Robert Ditchey, a Marina del Rey aviation consultant and co-founder of America West, now part of US Airways. "The airplane is pretty much on its own. It's hours away from help."

The disappearance of the Airbus A330 has fueled speculation that lightning, faulty electronics or pilot error may have brought the plane down. A navigation device used on the same type of plane recently malfunctioned on two flights, causing one to lose control.

The investigation is likely to be especially complex, made more vexing by the possible difficulties of finding wreckage that has either sunk to the bottom of the sea or dispersed over hundreds of miles of water.

The plane was probably traveling about 500 mph, and the pilots were checking in with traffic control about every half-hour, meaning the search area is likely to include hundreds of square miles of open ocean.

According to European investigators, the last voice communication from Flight 447 came when it was near Fernando de Noronha island, about 200 miles off Brazil's coast. The missing airliner was about to enter Senegal's air traffic control space when it vanished.

On Monday night, search aircraft looked for signs of the plane in the Atlantic about halfway between the Brazilian and African coasts.

Brazilian Vice President Jose Alencar said he had received information that the pilot of another airliner had seen glowing spots, possibly fire, in the sea more or less at the time the Air France plane disappeared.

Pilots flying a commercial jet from Paris to Rio de Janeiro for Brazil's largest airline, TAM, spotted what they thought was fire in the ocean along the Air France jet's route early Monday, the airline said in a statement e-mailed to the Associated Press.

Brazilian air force spokesman Col. Jorge Amaral said authorities were investigating the report, according to the Agencia Brasil official news service.

Investigators have been particularly baffled by the lack of any sign of distress or communication from the pilots before the plane vanished.

"This was so catastrophic, no signals, no nothing. Then bang, it is gone," said Robert E. Breiling, an air safety expert in Boca Raton, Fla.

Breiling said that in many catastrophic airliner disasters, events unfold too quickly for pilots to send messages. That was the case in the 1996 explosion of TWA Flight 800, he said.

Airline officials said the Air France plane transmitted numerous automated messages of system failures. Officials on Monday were unable to determine whether any of the failures caused the plane to crash.

It's not the first time that a passenger jetliner has vanished over the ocean, leaving investigators few clues. In many cases, extraordinary detective work narrows down what happened and the cases are solved. But in 1962, a Lockheed plane en route to Vietnam plunged into the Pacific Ocean with 107 people aboard. Investigators never found the plane or determined what caused the crash.

Such catastrophic events are unusual, Breiling said. According to federal data, only 6% of commercial airliner accidents occur during the cruise phase of the flight. Accidents during landing and approaches account for 65% of the crashes.

One of the most urgent tasks for Air France investigators is to find the flight data recorder and the cockpit voice recorder, known as black boxes, which could be thousands of feet below the surface of the ocean.

Those devices have sonar beacons that can operate as deep as 20,000 feet, according to manufacturers.

The region of the accident is a particularly dangerous stretch for jetliners.

news20090602nyt

[Today's Newspaper] from [The New York Times]

[Business]
Obama Is Upbeat for G.M.’s Future

By BILL VLASIC and NICK BUNKLEY
Published: June 1, 2009

President Obama marked the lowest point in General Motors’ 100-year history — its bankruptcy filing on Monday — by barely mentioning it, instead focusing his remarks on the second chance G.M. will have to become a viable company with more government aid.

“I’m confident that the steps I’m announcing today will mark the end of an old G.M., and the beginning of a new G.M.,” Mr. Obama said.

While the moment had been anticipated for weeks, the bankruptcy filing nevertheless included more crushing news to G.M.’s home state, Michigan, which is already reeling from waves of layoffs and plant closings.

Shortly after filing for Chapter 11 in Federal Bankruptcy Court in Manhattan, G.M. said it would close 14 more American factories — including seven in Michigan — and cut up to 21,000 more jobs.

“This is a ton of bricks hitting us,” said Senator Carl Levin, Democrat of Michigan. “These are real jobs, real families and real communities, with real names of real factories that are going to be closed.”

Among the Michigan plants facing shutdown are its Willow Run transmission factory in Ypsilanti, which was built in 1943 to assemble B-24 bombers during World War II.

“I was angry at first, then I cried, then I got angry again,” said Don Skidmore, the president of United Automobile Workers Local 735, which represents the plant’s 1,100 workers. “I’m hurt for the people. The looks on their faces are horrible.”

After the factory closings, which will leave 12 in Michigan, G.M. will have fewer than 40,000 workers building cars in the United States — one-tenth of a work force that in the 1970s numbered 395,000 people.

Mr. Obama acknowledged the pain associated with G.M.’s drastic downsizing, but said that he saw no option other than bankruptcy to fix the company’s bloated cost structure.

“I will not pretend that the bad times are over,” he said. “Difficult days are ahead.”

The White House and G.M. hope a speedy trip through bankruptcy, in 90 days or fewer, will limit further damage to the company, its employees, dealers and suppliers.

A quick restructuring appears possible because of new agreements with the U.A.W. and a majority of G.M.’s bondholders who agreed to swap their debt for equity in what is being referred to as the “new G.M.”

The expectations for an accelerated court process were buoyed by the quick proceedings in the Chrysler bankruptcy. Chrysler, which entered bankruptcy on April 30, could now emerge shortly as a new corporate entity owned by a U.A.W. health care trust, the Italian automaker Fiat, and the American and Canadian governments.

On Monday morning, lawyers representing a group of Indiana pension funds appealed a bankruptcy judge’s approval of Chrysler’s sale to Fiat. But the judge, Arthur J. Gonzalez, later that day entered his final approval of the sale and agreed to shorten a customary 10-day stay of such a sale to 4 days. That would allow the Chrysler deal to take effect at noon on Friday.

Fritz Henderson, who will stay on as G.M.’s chief executive at least until a new board is formed later this summer, said he was eager to exit bankruptcy.

“We’re confident we will move fast,” Mr. Henderson said at a news conference in New York. “Not with a sense of urgency, but with pure, unadulterated speed.”

The company is hoping to spread a sense of optimism. It created a new Web site, GMReinvention.com, where it posted the first ad in a new campaign.

The company filed first-day motions in court Monday to allow it to keep paying employees and suppliers while in bankruptcy. The plan from the president’s auto task force calls for G.M. to receive $30.1 billion in federal aid, in addition to the $19.4 billion it has already received. The governments of Canada and Ontario will contribute $9.5 billion more.

A reconstituted G.M. is expected to emerge from bankruptcy with its best assets, including its Chevrolet, Cadillac, Buick and GMC brands, and with 60 percent government ownership. The remaining stock will be split among a U.A.W. health care trust, bondholders and the Canadian governments.

But closed plants and discontinued brands — Saturn, Pontiac, Saab and Hummer — will be among the assets that will not remain with the company.

Mr. Henderson said the bankruptcy represented a “defining moment” for the automaker that would allow it to “permanently” unshackle itself from the cost of supporting hundreds of thousands of retirees and the $27 billion in debt held by investors.

Still, it will take more than a restructuring to stem G.M.’s decades-long slide in market share, from more than 50 percent in the 1960s to about 20 percent now.

Fixing the balance sheet is only the beginning, said Joseph Phillippi, an industry consultant. “The second half is going to be cultural,” he said. “G.M. was No. 1 for so long, and now it’s going to be another carmaker in the middle of the pack.”

Mr. Henderson promised a renewed commitment to its customers, and even offered an apology of sorts for the poor quality of past G.M. products. “The G.M. which let too many of you down is history,” he said.

The fall of G.M. was also marked by its removal from the group of 30 blue-chip companies that comprise the Dow Jones industrial average.

Mr. Obama said the government would take a hands-off approach to managing G.M., and would divest its stock in the company as soon as it could. But that is likely years away.

Meanwhile, the Ford Motor Company — the only member of Detroit’s Big Three to not require federal assistance — expressed concern that it could be hurt by the level of aid given to G.M.

“We look forward to working with the Obama administration to ensure that the government’s majority ownership of G.M. will not change the industry’s competitive dynamics and that a level playing field will be maintained,” Ford said Monday in a statement.

Once G.M. has finished cutting jobs, brands and models, it could fall behind Ford in terms of sales.

The cuts at G.M. include two assembly plants in Michigan, and two in Delaware and Tennessee. Other large plants that stamp metal parts or build engines will be shut in Indiana, Ohio, Virginia and New York.

Workers at the Willow Run plant in Michigan learned their factory was closing when they arrived at the union hall at 7:30 a.m. They were told that some production would stop immediately, and all but 300 of 1,100 workers would be laid off within months.

“It’s like being at a funeral,” said Mr. Skidmore, the plant’s union leader.

news20090602wp

[Today's Newspaper] fom [The Washington Post]

[Business Policy]
U.S. Bets Billions on GM's Resurgence
Obama Unveils Plan for Brief Bankruptcy, Nationalization

By Peter Whoriskey, Tomoeh Murakami Tse and Kendra Marr
Washington Post Staff Writers
Tuesday, June 2, 2009

President Obama laid out his case yesterday for committing billions of dollars more to the rescue of General Motors, arguing that the nationalization of the industrial giant was necessary to bolster the foundering U.S. economy.

The former corporate icon filed for bankruptcy protection in the morning, on a historic day when another major American company, Chrysler, won permission to be merged with the Italian automaker Fiat.

During the GM bankruptcy, the United States aims to raise its investment in the company to $50 billion, take a majority stake in it and name most of its directors, giving the government unprecedented control over one of the nation's largest manufacturers.

The government has needed to take ownership stakes in private enterprises during the economic crisis, Obama said yesterday, "for the simple and compelling reason that their survival and the success of our overall economy depend on it."

Nevertheless, the plan poses significant political risks for his administration. Obama is gambling billions that GM can rise again after years of decline.

The success or failure of that investment will be easily measurable based on the company's eventual share price. The United States is slated to own 60 percent of the stock.

Meanwhile, some in Congress question not only the cost of the rescue but also the principles underlying it.

"We are helping the auto industry today. Who is it tomorrow? Is it the truckers? Is it the airline industry?" asked Rep. Jeb Hensarling (R-Tex.), one of the five members of the committee overseeing the Troubled Assets Relief Program. "The government should not be in the business of picking winners and losers."

At the same time, the restructuring plan is drawing criticism from some members of Obama's own party, particularly those representing industrial swing states, as GM makes significant reductions in its vast U.S. operations.

The government aims to make the automaker lean enough to turn a profit once U.S. auto sales return to 10 million vehicles a year. The sales rate is running below that. It topped 16 million during the credit boom.

Debate over the plan rippled across the nation yesterday as communities protested proposals to close or idle 17 GM plants and warehouses. About 2,000 dealerships will be shut down, as well. U.S. employment at the company is slated to shrink by 25,000, from about 88,000 to 63,000 next year.

In a letter to GM chief executive Fritz Henderson, Rep. John D. Dingell (D-Mich.) criticized a proposal to shutter the Willow Run Transmission Plant in Ypsilanti Township, Mich. "As you well know, this plant was once known as the 'Arsenal of Democracy' for having built the famous B-24 bomber that helped the U.S. and its allies win the Second World War," Dingell wrote. "Its closure would have a catastrophic effect on the community in which it is located."

Steven Rattner, chief of the administration's autos task force, said the government played no role in choosing which plants to close and sought to quell concerns that it will make decisions better left to the company. "No plant decisions. No job decisions. No colors-of-car decisions," he said.

The administration also will dispatch eight Cabinet secretaries and other top officials to Ohio, Michigan, Indiana and Wisconsin this week to "discuss immediate ways the federal government is cutting through red tape to bring relief to auto communities and achieve long term economic revitalization," according to a White House statement.

All four states are considered presidential swing states, and the White House emissaries plan to discuss the administration's efforts to restructure the auto industry and to implement the $787 billion economic stimulus plan.

Addressing the workers directly, Obama said there would be pain ahead but added that their sacrifices will ensure the future of the manufacturing base so that "all of our children can grow up in an America that still makes things, that still builds cars, that still strives for a better future."

Despite the complaints, the administration was buoyed yesterday by the news that a federal bankruptcy court had approved plans to create a new Chrysler run by Fiat, free of much of its debt and other crippling obligations.

"Keep in mind, many experts said that a quick, surgical bankruptcy was impossible. They were wrong," Obama said yesterday.

In its new Fiat alliance, Chrysler will expand its footprint with Fiat's Latin American and European distribution networks. Its gas-guzzling product line will add Fiat's smaller, more fuel-efficient vehicles.

But the global auto industry, analysts noted, is littered with failed joint ventures and mergers -- BMW and Rover, Fiat and GM, Ford and Jaguar and Land Rover, to name a few. Closer to home, Chrysler just finished extricating itself from another ill-fated union, with Daimler.

One of the main reasons for the trouble, auto executives and analysts said, is the clash of management between distinct corporate cultures.

Gerald C. Meyers, former chief executive of American Motors Corp., said he searched for a global partner 30 years ago in much the same way Chrysler had sought out Fiat. He found a willing partner in Renault, a French automaker.

"It was supposed to be a marriage made in heaven -- that's the same term that was used to describe DaimlerChrysler," Meyers said in a recent interview. "But they had no feeling for the heredity of the Jeep. People want to buy them and go off road with them and go fish, and the French had no idea what that was about, and they didn't care."

The Obama administration has cautioned that the GM bankruptcy case will take longer than Chrysler's because it is a larger and more global company. But if the first day of court proceedings is any indication, GM's stay in U.S. Bankruptcy Court in Lower Manhattan will be a relatively short one, as well.

Judge Robert Gerber whipped through the agenda, giving approval to all 24 requests made by the automaker during a late afternoon hearing that lasted less than two hours.

Most significantly, Gerber gave GM the go-ahead to tap $15 billion of the $33 billion in financing from the U.S. and Canadian governments to finance operations while the automaker is in bankruptcy proceedings.

"We're confident, but we're not cocky," said Ron Bloom, a senior adviser to the president's autos task force, about the prospects in bankruptcy court. The revival of GM is a long-term project, the administration acknowledged.

"These are important steps on the long road to overcoming a problem that didn't happen overnight and will not be solved overnight," Obama said. "I recognize that today's news carries a particular importance because it's not just any company we're talking about. It's GM."

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[News > Environment] from [The Guardian]

[Environment > Geothermal Energy]
Eden Project reveals 'hot rocks' clean energy plan
Geothermal plant would initially power Eden Project buildings but eventually aims to supply local community and National Grid

Steven Morris
guardian.co.uk, Monday 1 June 2009 18.15 BST
Article history

Plans to build the UK's first geothermal plant that would use heat from granite outcrops beneath the Earth's surface to power a small town were unveiled today.

Initially the plant would be used to supply the Eden Project in Cornwall but could potentially feed spare carbon-neutral electricity winto the National Grid.

Eden and its commercial partner claim, EGS Energy, believe this is the first in a series of projects that could lead to Cornwall's "hot rocks" supplying up to one-tenth of the UK's electricity.

The government is watching the plans closely and Ed Miliband, the secretary of state for energy and climate change, attended the launch of the scheme in Westminster.

Matt Hastings, Eden's energy manager, said: "It's a massively exciting project - a way of making sure Eden has a source of green power but also of feeding heat and power into the local community and into the National Grid. We will only need a quarter or a fifth of the electricity that will be generated. Cornwall leads the way in wind and wave energy technology. Now we're trying to do the same in geothermal power."

For many centuries geothermal power has been used by humans but only when it bubbled or spurted naturally to the surface in the form of hot springs.

Scientists have long looked for reliable and practical ways of drilling down into hot rocks and harnessing the power of the heat that is found there naturally.

Cornwall is considered an ideal location for a "hot rocks" project because its granite outcrops are relatively close to the surface - around 4km (two and a half miles) down.

If it gets planning permission, the power plant at Eden will consist of two boreholes, both between 3km and 4km deep, built within the same disused clay quarry as the centre.

Water will be pumped into an injection hole and then allowed to percolate through the hot rocks and heat up. The water will then be pumped back out through a second hole, returning to the surface at around 150C. The heated water will be converted into electricity via a heat exchanger.

The remaining heat in the water can be used to heat local buildings, hopefully not just at Eden but in surrounding areas. Spare heat could be used by Eden for growing exotic fruit and vegetables out of season or possibly in a spa.

It is estimated that the plant, which could be ready by 2012, could generate enough electricity to supply the equivalent of almost 5,000 homes.

A spokesman said: "The energy would be 100% controllable and on an industrial scale. Above all, compared to other clean technologies, it has a small footprint above ground, and since it consists of a closed loop system its potential negative environmental impact is small."

Tim Smit, the chief executive of the Eden Project, said it was a "pioneering" scheme. He added: "Powering the Eden Project site from a renewable source of energy is clearly a priority for us."

A great deal of research on hot rocks was carried out in Cornwall in the 1970s-80s. The potential for a plant was clear but none built. A plant has been built in Germany and scientists across the world from the US to Asia and Australia are looking at ways of harnessing the huge sources of power that lie beneath the earth.

There is a geothermal plant in Southampton that supplies hot, treated water to a number of customers in the city centre but the Eden scheme is different because the heat would be converted into electricity.

Roy Baria, technical director of EGS Energy and formerly deputy project director at the Rosemanowes "Hot Rocks" project in Cornwall, said he hoped to take engineered geothermal systems from "academic exercise to commercial reality."

He added: "With the geology in the vicinity of the Eden Project being ideal for creating our power plant and its reservoir, we would not only expect to be able to supply virtually all of the Eden Project's power and heat requirements but generate surplus power that could be fed into the grid to help meet the government's CO2 reduction and renewable generation targets."


[Environment > Travel and Transport]
MPs attack shipping industry's 'irresponsible' inaction on emissions
International Maritime Organisation also criticised as 'not fit for purpose' by Commons committee

John Vidal, environment editor
guardian.co.uk, Monday 1 June 2009 16.21 BST
Article history

The international shipping industry has acted irresponsibly in failing to address rapidly growing climate change emissions and the UN body that governs it is "not fit for purpose", according to an influential group of MPs.

Showing clear impatience at continuing lack of progress in cutting emissions, the House of Commons Environmental Audit Committee said: "There can be no excuse for the lack of progress within the International Maritime Organisation since the Kyoto protocol was signed [in 2005]. That the IMO has yet to reach agreement even over the type of emissions control regime to take forward, let alone decide any details, suggests it is not fit for purpose in this vital area. None of the obstacles … [are] insurmountable. It is perfectly feasible to track the emissions of individual ships."

In addition, said the MPs, the government does not even know what Britain's share of global shipping emissions is and no one has accurately calculated the world total.

While other industries and many rich countries have been given targets and timetables to reduce emissions and are expected to trade carbon if they cannot reduce their own emissions, the shipping industry has escaped national and international legislation. According to an IMO study released in April on greenhouse gas emissions, levels are projected to double or even triple, unless measures to curb them are introduced.

"The emission of greenhouse gases from shipping is a serious problem for international climate change policy. They are growing and there is a risk of considerable delay before they are brought under control. It is no longer acceptable to argue that it is to hard to find an adequate basis for dealing with shipping emissions," said the report, which accepts an estimate that global emissions are around 3% of global CO2 emissions — more than the UK or Canada.

Launching the report, Reducing CO2 and other Emissions from Shipping, committee chairman, Tim Yeo MP, said: "We deplore the prevarication that has prevented global agreement on how to reduce emissions from international shipping. The industry accepts the seriousness of climate change but has taken little or no action to cut its own emissions in absolute terms. Meanwhile the government has failed to give this issue the attention it deserves.

"Emissions from shipping cannot be allowed to continue escalating in an uncontrolled manner. The UK needs to show more determined leadership on climate change issues within the International Maritime Organisation," he added.

The government has admitted that the current calculation of the UK's share of international shipping emissions was "an underestimate", the report from the EAC report said. "If the UK's share of these emissions lies at the upper end of the government's range of estimates then, overall, UK carbon emissions might not have gone down at all since 1990."

It also recommended that the government:

• Include shipping emissions in the EU's climate change reduction targets.

• Clarify its position on the use of emission trading for shipping.

• Accelerate research into low and zero-carbon propulsion systems.

• Consult on how to improve methods for calculating the UK's share of shipping emissions.

The IMO's April report suggested specific measures the industry could introduce to reduce emissions. These included operational measures that would increase efficiency and lead to emissions cuts of 25% to 75%. It also considered technical factors such as towing kites, speed reductions and upgrades to hulls, engines and propellers.

A Department for Transport spokesperson said: "The government is committed to reducing the impact of transport on the environment, and tackling emissions from shipping is a key part of this. We agree with the Environmental Audit Committee that the problem of carbon emissions needs to be tackled globally."

Last week, the transport secretary, Geoff Hoon, confirmed to the International Transport Forum that the government would be pressing for international shipping emissions to be included in a new climate change deal at Copenhagen in December.

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[Today's Paper] from [Slate Magazine]

GM Smiles Its Way Into Bankruptcy

By Daniel Politi
Posted Tuesday, June 2, 2009, at 6:45 AM ET

The Los Angeles Times (LAT), New York Times (NYT), Washington Post (WP), and the Wall Street Journal (WSJ) continue to lead with the nationalization of General Motors. When the automaker filed for Chapter 11 protection yesterday morning, it "became the second-largest industrial bankruptcy in history," notes the WSJ. President Obama marked the moment "by barely mentioning it," points out the NYT, instead choosing to focus on how filing for bankruptcy will give GM another shot at survival. Some Republican lawmakers were quick to criticize the Obama administration's decision to infuse more than $50 billion in taxpayer money into the automaker and called it another example of the deepening involvement of the government in the private sector. Others were skeptical that so much money was given "to a company lacking an answer to its most profound problem: how to get more car buyers to choose its cars and trucks," notes the LAT. Some members of Obama's party, particularly from industrial swing states, criticized the restructuring plan that will lead to more job losses.

USA Today (USAT) goes big with GM's bankruptcy filing but devotes its lead spot to the Air France jet carrying 228 people that vanished as it was making its way from Rio de Janeiro to Paris. Investigators began searching a vast swatch of the Atlantic Ocean for any signs of the Airbus 330-200, but there's little hope that anything will be found that could shed light on what happened to the plane as it traveled through a lighting storm off the Brazilian coast. Assuming all the people aboard were killed, it would be deadliest airline disaster since November 2001. Pilots flying another plane said they saw what looked like fire in the ocean along the route early yesterday.

In addressing GM's bankruptcy, Obama was careful to note that filing for Chapter 11 would hardly mark the end of problems for people who depend on the automaker for their livelihood. "I will not pretend that the bad times are over," he said. "Difficult days are ahead." Indeed, shortly after it entered bankruptcy, GM announced the closing of 14 more American factories and cut up to 21,000 more jobs. By 2011, GM aims to shrink its U.S. work force to 38,000, which is less than one-tenth of what the company had in 1985. GM will also shut down around 2,000 dealerships.

As expected, Obama emphasized that the government won't be involved in day-to-day decisions, and the White House made clear that it had no say on which plants to close. Steven Rattner, the head of the administration's autos task force summarized the government's limited involvement: "No plant decisions. No job decisions. No colors-of-car decisions." Still, many analysts say the government might find it impossible not to get involved in product decisions to further environmental goals, or even just give it favorable treatment when making purchasing decisions. Ford expressed concern that the amount of aid given to GM could change the playing field.

On the same day as GM filed for Chapter 11 protection, a New York bankruptcy judge approved the sale of most of Chrysler's assets to Fiat. The timing was great for the White House. "Keep in mind, many experts said that a quick, surgical bankruptcy was impossible. They were wrong," Obama said yesterday.

While the key players emphasized that this is an opportunity for GM to remake itself—"Why would a CFO be smiling when he's filing for his company to go bankrupt?" GM's Chief Financial Officer Ray Young asked—it's really "a risky play for the economy," declares USAT. The idea is that the effects of GM's bankruptcy filing will mostly be felt in the auto industry, but if things go awry, "the fallout could drag the economy into a deeper recession."

The LAT's Michael Hiltzik declares that there's only a "microscopic chance that taxpayers will turn a profit" with the investment in GM. "[I]f you were a conventional stock market maven, you would probably take one look at this deal and run like hell." Still, that doesn't mean the move is a bad idea since the government has to take into account the "incalculable economic cost" that would be involved in an overall GM collapse.

In a news analysis inside, the NYT makes clear that deciding when to sell off the government's stake in GM will be one of the toughest decisions Obama will face. As soon as the company comes out of bankruptcy proceedings many lawmakers are bound to urge the government to get out of the auto industry. But the truth is that the faster the sale, the less likely it is that the government will be able to recover the billions of dollars it has put in the company.

The government isn't alone in having to get used to playing a new role in GM. In a piece inside, the NYT takes a look at how the United Automobile Workers will have to adjust to its new role as not only a labor representative but also an owner of 17.5 percent of GM and 55 percent of Chrysler. Some analysts think this shift will improve the relations between workers and management as the union will have to focus on profitability since it will directly impact the retirees' health plan. Others are skeptical and say that it's unlikely the union will be able to look beyond its traditional role.

The Air France flight traveling to Paris made its last radio contact about three hours after it took off. A short while later, the plane entered a severe thunderstorm and sent out several automated maintenance messages to Air France headquarters signaling that several of its electrical components had failed and that it had lost cabin pressure. There were no distress calls from the pilots. What exactly happened remains a mystery that may never be solved, particularly considering that the lack of distress calls from the pilots signals that it must have been a quick succession of events. Initial theories lay out the possibility that lightning may have brought down the plane, but experts say it's highly unlikely that could have brought down a plane.

The WSJ details that the automatic alert sent out by the Air France plane "is puzzling for several reasons." Electrical failures can cause problems, but rarely do they result in disasters, mainly because modern planes are equipped with backups. The alerts also suggest there wasn't a sudden loss of electrical power, meaning the pilots could have sent out a distress signal. Experts are focusing in on an electronic system that had caused two recent harrowing incidents in the same Airbus model. As the NYT details, the systems sent two Qantas flights "into sudden dives" due to faulty information that it fed the plane's computers. One expert tells the NYT that if the Air France flight suffered the same problem, and at the same time the storm winds were pushing the plane downward, "that would be hard to recover from."

The NYT reports that Iranian officials around the world may celebrate Fourth of July among representatives of the American government. The State Department has told its consulates and embassies around the world that "they may invite representatives from the government of Iran" to their Independence Day celebrations. The paper explains that these annual parties "typically feature hot dogs, red-white-and-blue bunting and some perfunctory remarks about the founding fathers."

The WP off-leads a look at how the economy is still in the dumps. Despite the optimistic words that are being uttered by government officials, "the evidence of improvement still exists only in the form of glimmers." There's no question that the economy is stabilizing a bit, and, of course, financial markets have been rising, but even the economic indicators that purport to tell good news "come with caveats that make them less than impressive." The general view is that the economy will stop contracting in the second half of the year, but even then recovery will come slowly and unemployment will keep rising. "We're not improving yet," David Wyss, chief economist at Standard & Poor's, succinctly explained. "But we're not getting worse quite as fast."