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European Business News (EBN), 96-12-09

European Business News (EBN) Directory - Previous Article - Next Article

From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated December 9 1750 CET


CONTENTS

  • [01] U.S. seeks an end to duties on information technology products
  • [02] UK factory prices grow at slowest rate in 30 years
  • [03] Monsanto to form two public companies
  • [04] Volkswagen's Piech to apologize to GM
  • [05] German employers concede defeat over sick-pay
  • [06] Swiss Re to buy Italy's Uniorias for $380 million
  • [07] British Aerospace in talks with Boeing on new fighter deal
  • [08] Eurotunnel traffic rises in November; car-carrying service to resume tomorrow
  • [09] Bass's planned acquisition of Carlsberg-Tetley is referred to monopolies regulator
  • [10] Greek farmers step up action as strike spreads to Crete
  • [11] France's Chirac and Germany's Kohl urge E.U. reforms

  • [01] U.S. seeks an end to duties on information technology products

    Global trade is expanding more slowly than expected this year as a sharp fall in imports to North America and western Europe has matched a steep decline in exports from Asia, the World Trade Organization says in its 1996 annual report.

    'While the information available at the time of writing is incomplete, it points to a stronger slowdown in world merchandise trade growth than was foreseen at the beginning of the year,' the WTO said.

    The more bearish outlook for world trade growth comes as the WTO holds its inaugural ministerial conference in Singapore from Dec. 9 through Dec. 13.

    The WTO said the estimated value of world merchandise trade rose less than 5% in the first half of 1996 from a year earlier, compared with a 19% increase in 1995.

    Earlier this year the global trade body forecast growth of 7% for 1996.

    Also in Singapore a U.S. initiated meeting on liberalizing basic global telecommunications made some progress, with several countries indicating they will improve the offers they have made, acting U.S. Trade Representative Charlene Barshefsky said.

    'The greatest significance in terms of the negotiations is that three or four countries indicated that they would shortly improve their offers' although they did not provide any details, Barshefsky said in a briefing after the meeting on the World Trade Organization's (WTO) Group on Basic Telecommunications (GBT).

    [02] UK factory prices grow at slowest rate in 30 years

    The prices that British manufacturers charge for their goods rose at their slowest rate in nearly 30 years in November as sterling's recent rise led to a sharp drop in commodity prices.

    Economists said the figures make it unlikely that Chancellor of the Exchequer Kenneth Clarke will raise base lending rates at Wednesday's monthly monetary-policy meeting with Bank of England Governor Eddie George. The Office for National Statistics said producer output prices were unchanged in November from October on an unadjusted basis.

    Core output prices, which exclude volatile food, drink, tobacco and petroleum prices, rose a seasonally adjusted 0.1% on the month. That took the year-on-year rate of increase to 0.8% in November, its slowest pace since September 1967 and down from 1% in October.

    A substantial drop in the costs of fuel and raw materials, helped to keep a lid on output prices as the sharp rise in sterling during the month made most imported commodities cheaper.

    Producer input prices fell a seasonally adjusted 3.2% in November from October, the largest monthly fall since April 1985. This left input prices down 5.5% year-on-year, the largest annual fall since December 1986.

    Deutsche Morgan Grenfell economist Ciaran Barr said `We may even get further weakness in input prices in the next month or two, which should feed through to output and retail prices in the next few months. 'There's every chance that inflation will fall to 2.5% in coming months, and if not then, certainly in the latter half of next year.'

    Market expectations of a pre-Christmas rate rise were dampened last week after George said that he saw no urgent need for a dramatic step on interest rates.

    Economists have virtually ruled out a rate increase Wednesday, unless there is an unexpected pick-up in retail-price data. Clarke and George will examine the retail price figures before their meeting.

    Underlying inflation, which excludes mortgage-interest payments, is expected to remain unchanged at 3.3% in November. The government's target is 2.5%.

    Most economists expect Clarke to come under strong Bank of England pressure to raise interest rates long before the next election, due by May at the latest, to stop strong growth in consumer spending from pushing inflation higher in two years' time.

    [03] Monsanto to form two public companies

    Monsanto confirmed it plans to spin off its chemical businesses to shareholders in a tax-free transaction, retaining its agricultural biotechnology, pharmaceutical and food-ingredients businesses.

    In a press release, Monsanto said the break-up into two publicly traded companies is intended to ''unlock significant value in both.'' Monsanto said after the spin off, Robert Potter will be chairman and chief executive of the new chemical company. Potter is currently executive vice president in charge of Monsanto's chemical group, which had 1995 sales of $2.7 billion.

    In addition to approving the spin-off, Monsanto's board also approved an after-tax reserve of $400 million to $600 million for costs associated with forming the two new companies.

    The reserve includes severance packages for job reductions of about 1,500 to 2,500 positions, or about 5% to 9% of the company's world-wide work force.

    Monsanto said current employees not assigned to one of the two companies by the end of the 1997 first quarter will receive severance packages comprising financial assistance, extended benefits and health insurance, career counseling and training opportunities.

    Monsanto's stock closed Friday at $41.125 on the New York Stock Exchange.

    [04] Volkswagen's Piech to apologize to GM

    A newspaper reported today that Volkswagen chief executive Ferdinand Peich will publicly apologize to General Motors, meeting another of the American automaker's conditions to settle an industrial espionage lawsuit.

    Volkswagen spokesman Klaus Koks was quoted by Die Welt as saying that Peich will express his 'deepest regrets' to GM on Thursday. Koks was away from the office and not available for confirmation.

    General Motors and its German subsidiary, Adam Opel, are suing VW executives in the United States alleging that Jose Ignacio Lopez took confidential files with him when he defected to VW in 1993.

    A recent court ruling that GM could use racketeering laws, which would automatically triple damages, has put more pressure on VW to seek a settlement. Estimates that put possible damages into the billions of dollars have plunged VW stock.

    GM has refused to deal until three conditions are met. The first, Lopez's ouster, was fulfilled in the strictest sense with Lopez's resignation 10 days ago, although GM officials expressed displeasure at VW executives' comments that they would continue to work with Lopez as a consultant.

    In addition to a public apology, GM also is demanding payment of unspecified damages.

    Prosecutors in Darmstadt are also expected to file charges against VW executives before Christmas.

    [05] German employers concede defeat over sick-pay

    German employers conceded defeat on plans to cut expenses as a second regional bargaining round reportedly resulted in agreement to pay full benefits to sick employees.

    Werner Stumpfe, president of the Gesamtmetall metalworking-industry employers' association, said late Sunday that a pilot pay agreement for the state of Lower Saxony would now set the tone for nation-wide collective- bargaining rounds although it runs counter to the association's cost- cutting hopes.

    Emerging from a long meeting of Gesamtmetall's regional representatives, a frustrated Mr. Stumpfe said he saw 'no chance for other regions to distance themselves significantly from this agreement.'

    German bank employers also said they will postpone cutting sick payments until a wider wage agreement had been reached for the more than 450,000 workers in the sector.

    Representatives of banking employers stressed that they, however, had not yet given up on making the cuts. 'Today we have decided not to make a decision,' Horst Mueller of the German Private Bank Employers Federation told a news briefing held jointly with banking unions.

    Union officials, however, declared the decision an 'intermediate success'.

    'In our view it is a success because banking employees from today will get their 100% sick pay back,' Klaus Carlin of the HBV banking trade union said.

    Carlin said protests in the sector would as a result be temporarily suspended.

    The announcements come after an agreement last week in Lower Saxony that guaranteed workers full pay on sick days despite a controversial new German law that allows employers to pay 20% less. The law had been portrayed as a way to help companies fight the chronic absenteeism that contributes to making German companies' labour bills among the world's highest.

    Gesamtmetall had rejected the Lower Saxony settlement as a pilot for nation- wide talks, and German news media reported that Mr. Stumpfe called Sunday's meeting to bolster support for an alternative pay package.

    But IG Metall, the powerful German metalworkers union, had threatened nation-wide strikes if employers tried to press ahead with sick-pay reductions.

    At a time when companies are trying to cut payroll costs, Gesamtmetall said the wage agreement will raise labour costs by 1.5% in April and another 2.5% one year later.

    [06] Swiss Re to buy Italy's Uniorias for $380 million

    Swiss Reinsurance said it will acquire Unione Italiana di Riassicurazione from Italy's Instituto Nazionale delle Assicurazioni. The purchase price, Swiss Re said in a statement, is expected to amount to around 500 million Swiss francs ($380 million).

    The price will be based on Uniorias' adjusted net asset value as of Dec. 31, and on goodwill of around 170 million Swiss francs, mostly for the value of its life insurance business.

    Swiss Re announced a month ago that it was negotiating with INA over a possible acquisition of Uniorias.

    Uniorias, Swiss Re said, is the leading reinsurer in the Italian market, and has total gross premiums of around 1.3 billion Swiss francs in 1995. Uniorias, with 22% of its business in life reinsurance and 78% in non-life reinsurance, took in about 70% of that amount in Italy.

    Swiss Re recalled that the prospectus on the privatisation of INA in 1994 mentioned the anticipated disposal of Uniorias.

    Swiss Re's acquisition of Uniorias will come in two stages. First, Swiss Re will acquire 49% in early 1997. Then, the business will be restructured to separate the reinsurance sector from the unnecessary real estate and securities units. This will allow it to cede certain existing business portfolios held by Uniorias to Assitalia, another insurance unit of INA. At the end of next year, Swiss Re will acquire the remaining 51% of Uniorias.

    [07] British Aerospace in talks with Boeing on new fighter deal

    U.K. British Aerospace has entered negotiations with U.S. aircraft maker Boeing in an attempt to grab part of the 100 million pound contract to build the next series of U.K. and U.S. jet fighter planes, reports London's Evening Standard newspaper.

    The Evening Standard reports that BAe is in talks with Boeing president Phil Condit to see if it can link-up with the U.S. company's consortium.

    The rival bidders in the race to win the lucrative Joint Strike Fighter contract are led by U.S. company Lockheed Martin. The news of BAe's move to enter the race comes shortly after the elimination of the company's original consortium which had been led by McDonnell Douglas.

    The Evening Standard quoted Condit as saying: 'We are looking at potential teaming arrangements' and that he said BAe are a 'potential partner.'

    Under the Joint Strike contract, BAe's vertical take-off plane, the Harrier will be replaced. It is currently used by the Royal Navy, who will require 60 new planes.

    Meanwhile the U.S.'s Pentagon is expected to be looking for more than 2,000 new planes.

    [08] Eurotunnel traffic rises in November; car-carrying service to resume tomorrow

    said tourist traffic on its Le Shuttle service in November rose more than 9%, despite being affected by the temporary suspension of services following a fire in the Channel Tunnel Nov. 18.

    The number of cars on Le Shuttle rose 9.8% to 142,047, while the number of coaches fell 7.7% to 4,722. Overall, passenger traffic rose 9.2% to 146,769 vehicles.

    However the impact was felt more on Le Shuttle freight services, where traffic fell 31% to 33,182 trucks from 48,263 trucks a year earlier.

    Separately, Eurotunnel confirmed that its Le Shuttle car-carrying service will resume service tomorrow. Until Dec. 29, there will be three departures every two hours, and from Dec. 30 two departures and hour, although frequency will be lower at night. The coach service is expected to resume Jan. 6.

    Traffic on the Eurostar train service, which isn't owned by Eurotunnel but also operates through the tunnel, rose 4.2% to 295,161 passengers from 283, 180 passengers a year earlier.

    Eurostar services resumed Dec. 4.

    Eurotunnel is introducing a reservation system to minimise waiting time for passengers. Le Shuttle's managing director Bill Dix said there's already been a high level of inquiries, and the shuttles are heavily booked several weeks ahead.

    [09] Bass's planned acquisition of Carlsberg-Tetley is referred to monopolies regulator

    The U.K. Department of Trade and Industry announced it has referred Bass PLC's proposed acquisition of Carlsberg-Tetley to the Monopolies and Mergers Commission for investigation.

    Bass has already acquired a 50% interest in Carlsberg-Tetley from Allied Domecq and proposes to acquire the remaining shares from Carlsberg in exchange for a 20% stake in the merged company.

    In a news release, the DTI said the merger gives rise to competition concerns in relation to the significant increase in concentration and production in the U.K. brewing industry.

    The MMC is required to make its report by March 24, 1997. If approved, the merger would create Britain's largest brewer by far, with at least 35 percent of the market. Bass now has a 23 percent market share.

    [10] Greek farmers step up action as strike spreads to Crete

    Thousands of striking farmers fortified more than 100 roadblocks across Greece as a 12-day stand-off for higher subsidies and cheap fuel prices spread to Crete.

    Farmers stepped up their action after National Economy Minister Yannos Papandoniou rejected their demands and snubbed requests for a face-to-face meeting.

    Meanwhile government officials conceded that the uprising has now cost the cash-strapped state more than 26 billion drachmas ($108 million). Transport companies, foreign and domestic, are also said to be losing more than one billion drachmas a day ($4.1 million).

    Cretan farmers drove scores of tractors and trailers onto a main motorway linking Hraklion and Chania, the island's two main ports.

    Papandoniou said: “The government cannot and will not bow down to blackmail.”

    His statement came amid media reports that Premier Costas Simitis was prepared to risk the survival of his three-month old government rather than accept the farmers' demands. He too, has refused to meet with protest organisers.

    But opposition leaders have joined in calling on Simitis to meet with the farmers.

    [11] France's Chirac and Germany's Kohl urge E.U. reforms

    French President Jacques Chirac and German Chancellor Helmut Kohl, in a joint letter crafted Monday, called for a 'major strengthening' of the European Union's role in domestic and foreign policies.

    The two leaders, who met Monday in Nuremberg, Germany, also called for E.U. institutional reforms that include decreasing the number of E.U. commission members and increasing the power of the president as well as simplifying the structure of the parliament.

    Neither European economic and monetary union nor the so-called stability pact were mentioned in the letter.


    From the European Business News (EBN) Server at http://www.ebn.co.uk/


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