A Real Saab Story as Swedish Automaker Files for Bankruptcy-Copyright Agence France-Presse, 2011

A Real Saab Story as Swedish Automaker Files for Bankruptcy

An aging product line and a collapse in demand owing to the tightening of available credit hurt Saab's sales in recent years. The company was forced to halt production in April 2011 as suppliers stopped deliveries over mountains of unpaid bills.

By . Agence France-Presse

Saab was founded in 1937 with government assistance to make airplanes in the pre-war years -- something that later became evident in the aerodynamic, sporty shape of its first concept-car designs.

Saab AB, a separate company, continues to this day to make fighter jets, commuter planes and defense systems.

After the end of the war, Saab Automobile built its first prototype cars in 1947, with the first production version rolling off the assembly line two years later.

In 1969, Saab Automobile linked up with Swedish truckmaker Scania, becoming Saab-Scania.

Saab's glory years came in the 1980s when a weak Swedish krona helped boost sales in its export markets, the United States and Britain, where it gained a reputation for its pioneering turbocharging technology.

But by the end of the 1980s, it had encountered financial difficulties, and after three straight years of losses, General Motors bought 50% of Saab Automobile from Saab-Scania in 1990.

Ten years later, GM snapped up the remaining 50%, making it a wholly owned GM subsidiary.

GM wanted a premium marque to add to its wide range of brands, while Saab would gain better economies of scale by being part of a larger company.

But in almost two decades of GM ownership, it made a profit only one year -- in 2001, the last time it was in the black.

An aging product line and a collapse in demand owing to the tightening of available credit hurt Saab's sales in recent years.

Saab employees told AFP in 2009 that the U.S. parent company did not invest enough money in new products during its tenure as owner, and this weakened sales.

GM was hit hard by the 2008-2009 global economic crisis and needed to shore up its own badly damaged balance sheet: it sold Saab in early 2010 to Dutch niche carmaker Spyker, now called Swedish Automobile, for $400 million.

Spyker's ambitious plan for Saab aimed to turn a profit in 2012, with among the launch of a new 9-3 model, but those goals turned out to be too optimistic.

Saab initially planned to sell 50,000 cars in 2010 and 100,000 in 2011, but ended up selling a total of just 32,000.

The company, which has its main production headquarters in Trollhaettan, a town of just 55,000 inhabitants in southwest Sweden, was forced to halt production in April 2011 as suppliers stopped deliveries over mountains of unpaid bills.

Saab's 3,700 employees saw their wages delayed for five months in a row and did not receive their November paychecks, as the company was out of money.

Swedish Automobile scrambled to negotiate deals with several potential buyers to raise the cash needed to save the carmaker from bankruptcy, including talks with Chinese carmaker Youngman and car distributor Pang Da.

Those talks failed when GM blocked the necessary technology-license transfers to the Chinese firms, signaling the end for Saab.

Copyright Agence France-Presse, 2011

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Slow Recovery for Flood-hit Thai Manufacturing Plants -Copyright Agence France-Presse, 2011

Slow Recovery for Flood-hit Thai Manufacturing Plants

While many Japanese companies have said publicly they remain committed to Thailand, in private there is frustration with the government's handling of the crisis.

By . Agence France-Presse

Piles of rubbish, rusting furniture and discarded machinery litter one of Thailand's top high-tech parks, a former symbol of economic prowess laid to waste by weeks of flooding.

Many of the companies located in the country's industrial heartland say it will be several months at least before their operations return to normal. Investor confidence in the kingdom is likely to take even longer to recover.

At least one major manufacturer, Sanyo Semiconductor, is pulling the plug on its operations in hard-hit Ayutthaya province north of Bangkok altogether, while others are considering moving to safer areas.

"We've realized, obviously with hindsight, that we're in the wrong place -- we're in a flood zone," said Richard Han, chief executive of semiconductor maker Hana Microelectronics, whose plant was badly affected.

Even if large dykes were built around the industrial parks, production would have to be suspended if the area is flooded again because access to the site would become too difficult, he said.

"My customers understand that," Han added. "They are moving their business elsewhere."

Severe Blow to Global Supply Chain

The disaster caused billions of dollars of damage and dealt a severe blow to the global supply chain. There are also questions about whether insurers will continue to cover companies located in the flood-prone region.

Japanese high-tech giant Toshiba still has no idea when operations will resume at eight of its affected factories as new machines and parts are needed and electricity and telephone links have not yet been fully restored.

"We already destroyed more than 100,000 damaged goods in our warehouse," a spokeswoman said.

Clean-up Operations Continue

At the Rojana Industrial Park, the more than two-meter-deep water that overwhelmed flood defenses in October and poured into a host of factories has receded, and a clean-up operation by a small army of workers is under way.

On a recent day at Japanese auto giant Honda's plant, employees in rubber boots and face masks were hosing down floors and walls stained brown by the water, while muddy vehicles were parked outside, an AFP reporter saw.

Further down the road at a factory run by electronics maker Pioneer, several windows were shattered, while at Panasonic workers were demolishing a perimeter wall damaged by the unstoppable mass of slow-moving water.

In total seven major industrial estates in central Thailand fell victim to the kingdom's worst floods in half a century, which left hundreds dead.

While many Japanese companies -- a key pillar of the economy -- have said publicly they remain committed to Thailand, in private there is frustration with the government's handling of the crisis, particularly its confusing advice.

"I wish the government had done more," said the president of a local subsidiary of a Japanese textile producer, who had to rely on the media for information about the disaster.

His factory, located in the northern suburbs of Bangkok, close to where the government set up its emergency response center, was submerged in one and a half metres of water, despite the firm's efforts to protect it with sandbags.

"In the beginning Don Mueang was a flood relief and evacuation center so the government said it would be OK... but they completely failed," the Japanese businessman told AFP, speaking on condition of anonymity.

The factory's stock was destroyed and the machinery is now rusting and needs to be repaired or replaced. But he has no plan to abandon the kingdom.

"We will start operations again at the same place with all the employees," he said, but added, "I hope the government prevents flooding next year."

Thailand's Board of Investment is planning to invite chief executives to Bangkok next month for a forum at which it says long-term flood prevention measures will be announced.

As well as a plan to build permanent dykes around the industrial parks, one idea that has been raised as a possible long-term solution is the construction of a new waterway from the central plains to the sea.

For flood-stricken firms, action cannot come soon enough.

"All of us are very sick. We fought very hard. We're very tired ... If the government wants to do something, (they) must announce it quickly," said Yeap Swee Chuan, head of auto parts maker Aapico Hitech.

Copyright Agence France-Presse, 2011

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Truck Thief Loses License for Life - Source Trucking Info

Truck Thief Loses License for Life

TORONTO -— The man who led police on a wild truck chase in late October has been banned from driving for life. According to several media sources, Jason Meadus, 40, was driving a flatbed that had been stolen in Niagara Falls when he led cops up and down the 401 and the Queen Elizabeth Way for almost six hours. In marked similarity to the famous 1994 OJ Simpson chase, most of the chase was caught on video camera and people across the region glued to their computers in suspense and it came to an anti-climactic end near St. Catharines when the driver pulled over and gave himself up to police. Meadus originally faced nine charges but pleaded guilty to five, including failure to stop for police and dangerous operation of a motor vehicle. The tractor-trailer unit had a load of wafer board on it when it was stolen and had already been off-loaded by the time the chase started.

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BP settles with maker of failed blowout preventer - Source Denver Post

BP settles with maker of failed blowout preventer

NEW ORLEANS—Cameron International, maker of the Deepwater Horizon blowout preventer that failed to stop last year's massive oil spill in the Gulf of Mexico, has agreed to pay $250 million to BP under a legal settlement, BP said Friday.

BP said it was "in their mutual best interests, and the agreement is not an admission of liability by either party." The companies are dropping all claims against one another, they said.

The settlement comes in advance of a federal trial over the catastrophic Gulf oil spill. The non-jury trial is slated to begin in February and determine fault in the April 20, 2010, explosion and subsequent oil spill off the Louisiana coast of more than 200 million gallons of oil.

Oil and gas analysts said they saw Friday's settlement as setting the stage for more out-of-court agreements. At this point, Halliburton Corp​., which supplied the cement to seal the blown-out well, and Transocean Ltd​., the drilling company, have not settled with BP. The federal government, individual Gulf states and many other plaintiffs also have not settled.

For the companies involved, and government entities, "it's better to make peace than make war," said Fadel Gheit, managing director of Oppenheimer & Co., a Wall Street investment bank. He studies the oil and gas markets and follows BP closely.

He said he would expect all the parties—including the federal government—to seek to settle the Deepwater Horizon case before it goes to trial. He called court "the last resort."

"The strategy right now is settle, settle, settle," he said. "I would say that once the companies settle, the government will be under increasing pressure to settle."

Phil Weiss, a senior oil and gas analyst with the Argus Research Co. in New York, agreed and said he expected more settlement announcements. "I think it's in the interest of all these parties to settle."

For now, the settlement with Cameron does not end the legal fighting over the blowout of the Macondo well, which was owned by London-based BP and two partners, MOEX and Anadarko. BP has already settled claims with those two companies and a third company, Weatherford, the maker of a part used in the well.

"Today's settlement allows BP and Cameron to put our legal issues behind us and move forward to improve safety in the drilling industry," said Bob Dudley, BP group chief executive. "Unfortunately, other companies persist in refusing to accept responsibility for their roles in the accident and for contributing to restoration efforts," Dudley said in a swipe at Halliburton and Transocean.

The blowout preventer is the last line of defense in an oil well and is supposed to shear the well and cap it. But the device placed over the Macondo well failed to work properly and choke off the out-of-control spill. Government investigators have charged that the device had a design flaw and was not maintained properly. A bent pipe also prevented it from working, investigators found.

After the spill, the large contraption was lifted from the sea floor of the Gulf and transported to a NASA facility in New Orleans where engineers pored over it and conducted tests to determine what went wrong with it.

Probes of the Deepwater Horizon explosion by the federal government and independent scientists and engineers have found all three companies were at fault for a series of decisions and actions that led to the Macondo well blowout, the nation's largest offshore oil spill.

BP is engaged in an intense legal fight with Halliburton and Transocean. Earlier this month, BP went so far as to accuse Halliburton employees of covering up damaging evidence about a cement mixture Halliburton used in drilling the well.

BP said it would use the $250 million from Cameron to pay for the cost of cleaning up from the spill and paying individual damage claims by people, businesses and government entities hurt by the spill. BP said it has spent about $7.5 billion so far of those claims. But the British company faces billions of dollars in additional damages and fines.

Under the agreement, BP said Houston-based Cameron is no longer responsible for any additional cleanup costs related to the spill. But BP said the agreement does not cover civil, criminal and administrative fines and other penalties that might arise out of the court proceedings.

Jack Moore, chairman and CEO Cameron, said the agreement with BP "removes uncertainty facing Cameron" as litigation intensifies over the Deepwater Horizon explosion.

"This eliminates all significant exposure to historical and future claims related to this incident," Moore said.

Moore said Cameron does not expect to have to pay much for possible court fines and penalties. "We do not consider these items to represent a significant risk to Cameron," he said.

Cameron said its insurers were expected to fund at least $170 million of the $250 million payment the company agreed to make to BP.

BP and Cameron also pledged to "improve safety in the drilling industry" and do more to improve blowout preventers.

So far, BP has spent about $25 billion on the Deepwater Horizon disaster and has said it expects the final bill to be about $40 billion, Gheit said. BP has received about $5 billion from the companies it has settled with, he said.

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US stocks drop; BofA and other big banks fall hard - Source Denver Post

US stocks drop; BofA and other big banks fall hard

NEW YORK—The stock market took a late afternoon fall Monday after European Union finance ministers failed to come up with the full amount of money pledged for a bailout fund.

Banks led the way down. Morgan Stanley dropped 5.5 percent and Bank of America Corp. sank 4 percent, the biggest fall in the Dow Jones Industrial average. The worry looming over banks stocks is that if Europe's debt crisis spins out of control, European banks would fail and damage U.S. banks. Big banks in Europe and the U.S. are linked through the web of global financial markets.

"If Europe is going to be bring us down it's going to come through the financial firms," said J.J. Kinahan, chief derivatives strategist at TD Ameritrade.

The Dow lost 100.13 points, or 0.8 percent to close at 11,766.26. The average lost 55 points in the last hour of trading as reports emerged that the E.U. finance ministers couldn't drum up the full 200 billion euros ($261 billion) they planned to give to the International Monetary Fund. European leaders had pledged the money for a special IMF fund to help struggling European countries at a summit meeting less than two weeks ago.

Cautious comments from the head of the European Central Bank also helped push stocks lower. The Standard & Poor's 500 index fell 14.31 points, or 1.2 percent, to 1,205.35. The Nasdaq composite index fell 32.19 points, or 1.3 percent, to 2,523.14.

Mario Draghi, the ECB president, said Monday that the central bank was looking for ways to keep the Eurozone's bailout fund working even if credit rating agencies strip France of its AAA grade. The bailout fund depends on the top ratings of France, Germany and the countries that contribute to it. Draghi also restated his view that large-scale government bond purchases were outside the central bank's responsibility.

In the U.S., a gauge of sentiment among builders inched up to its highest level since May 2010. The National Association of Home Builders/Wells Fargo builder sentiment index added two points to 21 in December. Any reading below 50 still reflects a negative outlook.

Among companies making large moves Monday:

— Winn-Dixie soared 70 percent. The supermarket chain is being sold to Bi-Lo LLC, another supermarket operator with stores in the Southern U.S., in a deal valued at $560 million.

— Cablevision Systems Corp. rose 2 percent after an analyst from Citibank said a recent drop in the company's stock seemed "way overdone." The stock has lost 27 percent from the end of October through last Friday following the unexpected resignation of its chief operating officer.

— Bank of America ended the day at $4.99. The drop puts it at risk of further selling pressure because many mutual funds have rules against holding stocks that trade below the $5 mark.

— Commercial Metals Co. dropped 1.4 percent. The company's board rejected a $1.7 billion takeover bid from investor Carl Icahn, saying the proposed deal undervalued the company.

The three major stock market indexes lost more than 2 percent last week amid worries that some European governments would try to drop the euro. Fitch Ratings warned Friday that it may cut the credit grades for Italy, Spain and four other countries that use the currency.

With two weeks of trading left in 2011, the S&P 500 is 4.2 percent below where it started the year. The Dow has managed to gain 1.6 percent in 2011, led by McDonald's Corp. and its 26 percent gain.

Nearly four stocks fell for every one that rose on the New York Stock Exchange. Trading volume was very light at 3.6 billion.

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This Week In Petroleum - Source EIA

This Week In Petroleum

Summary Crude Oil Gasoline Distillate Propane

Scroll over labels below to see different charts. Retail Prices (Dollars per Gallon) Retail Prices Change From Last 12/12/11 Week Year Gasoline 3.286 -0.004 0.306 Diesel Fuel 3.894 -0.037 0.663 Heating Oil 3.866 -0.028 0.624 Propane 2.852 0.005 0.227 Futures Prices (Dollars per Gallon*) Futures Prices Change From Last 12/09/11 Week Year Crude Oil 99.41 -1.55 11.62 Gasoline 2.596 -0.020 0.287 Heating Oil 2.913 -0.077 0.455 *Note: Crude Oil Price in Dollars per Barrel. Stocks (Million Barrels) Stocks Change From Last 12/09/11 Week Year Crude Oil 334.2 -1.9 -11.9 Gasoline 218.8 3.8 4.0 Distillate 141.5 0.5 -19.8 Propane 59.183 -0.495 -1.983 Released: December 14, 2011 Next Release: December 21, 2011 Leasing resumes, but trends in Gulf of Mexico production hinge on the timing and productivity of current deepwater developments Today in New Orleans, the Bureau of Ocean Energy Management (BOEM) is holding Western Gulf of Mexico Lease Sale 218, the first oil and natural gas lease sale in the Gulf of Mexico since all leasing and most drilling activity was suspended in the wake of the Macondo disaster in April 2010. Lease Sale 218 follows the gradual resumption of exploration and development drilling in the deepwater U.S. Gulf of Mexico (GOM). According to BOEM estimates, the 20.6 million acres on offer in Lease Sale 218 could generate production of 222 million to 423 million barrels of oil and 1.49 trillion to 2.65 trillion cubic feet of natural gas, much of which would be from deepwater fields. It is unlikely, however, that any oil or natural gas discovery made in the deepwater portions of the acreage will be brought into production over the near term. It could take several months or even years before an operator decides whether to start drilling an exploration well on a tract acquired in Lease Sale 218. Further, as This Week In Petroleum discussed in a previous edition, the lag from discovery to first production can be years for deepwater fields, particularly if located in more remote areas relatively far from existing production and pipeline infrastructure. Central to the GOM's near-term production prospects, therefore, is a group of nearly 30 deepwater projects in various stages of development, several of which had been delayed by the drilling moratorium (Table 1). These include "stand-alone" projects targeting discoveries of several hundred million barrels and more modest-sized projects connecting comparatively small discoveries to existing host production facilities. Further production increases are expected from the re-development of mature producing deepwater fields. Oil, which sells at a significant premium relative to natural gas on an energy-equivalent basis, is generally the primary target of deepwater GOM operators due to the relatively high cost of deepwater exploration and production programs. Figure 1 shows announced and anticipated annual deepwater GOM field production starts from 1990 through 2014, as well as deepwater GOM oil and natural gas production from 1990 through 2010. The relatively high number of fields scheduled for 2011 and 2012 production start-ups reflects, in part, the backlog associated with Macondo-related development drilling delays. One major deepwater development expected onstream in 2011 (but not yet producing) is Who Dat (operated by LLOG Exploration). Several smaller projects are also slated for a late 2011 start-up, but have not yet been reported as producing. It can be expected that production starts for many of these will be pushed into 2012; one such project is the ultra-deepwater Cascade-Chinook (Petrobras), the GOM's first development using a floating production, storage, and offloading vessel (FPSO). Among other key projects scheduled for production starts between 2012 and 2014 are Galapagos (Isabela, Santa Cruz, Santiago fields; BP), Caesar-Tonga (Anadarko), Lucius (Anadarko), Tubular Bells (Hess), and Jack-St. Malo (Chevron). These larger developments generally target estimated recoverable oil reserves of at least 100 million barrels and as much as 500 million barrels or more (ultimate recoverability will depend on several factors, including reservoir performance). Further delays to some of these projects are possible, and could result for a variety of reasons, including rig availability (particularly those with ultra-deepwater capabilities), third-party pipeline completion schedules, cost increases associated with escalating demand for contractor services, and the pace of permitting by the Bureau of Safety and Environmental Enforcement (BSEE). (Note: BOEM and BSEE were officially separated from the Bureau of Ocean Energy Management, Regulation and Enforcement in October 2011. Information on the separation and the functions each performs may be found here.) It is important to note that the challenges and costs associated with deepwater developments generally, and ultra-deepwater projects in particular, make it difficult for operators to predict production start dates with precision. This holds true for more recent deepwater discoveries undergoing or awaiting comprehensive appraisal programs, such as ExxonMobil's Hadrian and Julia discoveries, Shell's Appomattox find, and BP's Tiber discovery. Many of these are high-profile discoveries for which initial estimates point to resource potential of between several hundred million and one billion barrels. Should these fields' production volumes be commensurately impressive, then they will underpin longer-term production prospects for the deepwater GOM. Table 1. Deepwater Gulf of Mexico Production Starts: 2011-2014 Field Operator Protraction Area Block Water Depth (feet) Discovery Year Production Start Year Producing Anduin West Newfield Mississippi Canyon 754 2,696 2008 2011 Appaloosa Eni Mississippi Canyon 503 2,805 2008 2011 Callisto Anadarko Mississippi Canyon 876 7,788 2001 2011 Condor Deep Gulf Green Canyon 448 3,266 2008 2011 EW998 Walter Ewing Bank 998 1,000 2009 2011 Gladden Newfield Mississippi Canyon 800 3,116 2008 2011 Tobago Shell Alaminos Canyon 859 9,627 2004 2011 Developing MC241 Walter Mississippi Canyon 241 2,427 2006 2011 Ozona Marathon Garden Banks 515 3,000 2001 2011 Pyrenees Newfield Garden Banks 293 2,100 2009 2011 South Raton Noble Mississippi Canyon 292 3,400 2008 2011 Who Dat LLOG Mississippi Canyon 503/547 3,100 2007 2011 Bushwood Apache Garden Banks 463 2,700 2009 2012 Caesar Anadarko Green Canyon 683 4,457 2006 2012 Cascade Petrobras Walker Ridge 206 8,143 2002 2012 Cheyenne East Anadarko Lloyd Ridge 400 9,187 2011 2012 Chinook Petrobras Walker Ridge 469 8,831 2003 2012 Clipper ATP Green Canyon 299 3,452 2005 2012 Goose LLOG Mississippi Canyon 751 1,624 2002 2012 Isabela BP Mississippi Canyon 562 6,535 2007 2012 Mandy LLOG Mississippi Canyon 199 2,478 2010 2012 Morgus ATP Mississippi Canyon 942 4,000 1999 2012 Santa Cruz Noble Mississippi Canyon 519 6,515 2009 2012 Santiago Noble Mississippi Canyon 519 6,500 2011 2012 West Tonga Anadarko Green Canyon 726 4,674 2007 2012 Wide Berth Apache Green Canyon 490 3,700 2009 2012 Axe Newfield Desoto Canyon 4 5,822 2010 2013 Dalmatian Murphy Desoto Canyon 48 5,876 2008 2013 Knotty Head Nexen Green Canyon 512 3,557 2005 2013 Big Foot Chevron Walker Ridge 29 5,235 2005 2014 Entrada ATP Garden Banks 782 4,531 2000 2014 Jack Chevron Walker Ridge 759 6,963 2004 2014 Lucius Anadarko Keathley Canyon 875 7,168 2009 2014 St. Malo Chevron Walker Ridge 678 7,036 2003 2014 Tubular Bells Hess Mississippi Canyon 725 4,300 2003 2014 Source: Bureau of Ocean Energy Management; industry reporting. Note: Production start dates are based on publicly available information and are subject to change; operators' confidential scheduling may differ. Diesel price falls for third consecutive week The U.S. average retail price of regular gasoline declined a fraction of a cent this week to remain at $3.29 per gallon. The average price is $0.31 per gallon higher than last year at this time. The national average gasoline price has fallen in 12 of the last 14 weeks. Regional price changes were mixed. The East Coast price increased slightly but remained at $3.30 per gallon. The Midwest sold for more than a penny higher to end at $3.23 per gallon. The Gulf Coast had a decline of less than a penny and remained the lowest-priced region in the country. The largest drop occurred in the Rocky Mountains where the price fell six cents while the West Coast remained the most expensive region at $3.55 per gallon after dropping over four cents per gallon. The national average diesel price fell for the third straight week, losing almost four cents to hit $3.89 per gallon. The diesel price is $0.66 per gallon higher than last year at this time. Diesel prices were down across all the regions. The biggest decrease occurred in the Midwest where the diesel price was almost six cents below last week's average. The Rocky Mountains and West Coast followed with average prices declining more than four cents in both regions. The Gulf Coast had a decrease of over three cents. The average diesel price on the East Coast was down about two cents on the week. U.S. residential heating oil price declines Residential heating oil prices decreased during the week ending December 12, 2011. The average residential heating oil price fell by less than $0.03 per gallon last week to reach a price of $3.87 per gallon, an increase of $0.62 per gallon from the same time last year. The wholesale heating oil price decreased by $0.10 per gallon last week to $2.98 per gallon, $0.45 per gallon more than last year at this time. The average residential propane price increased by less than 1 cent per gallon to remain at $2.85 per gallon, which is $0.23 per gallon higher than last year. Prices increased in all regions. The wholesale propane price decreased by $0.02 per gallon to $1.43 per gallon. This was an increase of $0.10 per gallon when compared with the December 13, 2010 price of $1.33 per gallon. Propane inventories fall by 0.5 million barrels Last week, total U.S. inventories of propane dropped by 0.5 million barrels to end at 59.2 million barrels in total. This stock draw was well below the typical level for this time of year, as U.S. propane stocks fell by over two million barrels, on average, during the same week over the previous five years. Midwest and Gulf Coast regional stocks each drew 0.3 million barrels of propane, and Rocky Mountain/West Coast inventories also fell slightly. The East Coast region added 0.1 million barrels of propane inventory. Propylene non-fuel use inventories represented 8.4 percent of total propane inventories.

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