Business and Finance

MONTREAL–Fiat SpA chief executive Sergio Marchionne says the Italian automaker fully intends to use Chrysler’s Canadian plants in southern Ontario after the Italian company buys a stake in the ailing U.S. car manufacturer.

Marchionne says there’s a collective view that Chrysler’s assembly lines in Canada are efficient and churn out quality products.

Fiat is on the verge of taking control of a 20 per cent share in Chrysler, pending the completion of bankruptcy court procedures in New York.

The Italian carmaker has been plotting a return to North America, where it last sold cars two decades ago.

It would gain access to Chrysler’s dealer network, while the U.S. company would expand into Fiat’s international markets.

Marchionne says he hopes Fiat can work with Canadian auto workers, a relationship that he acknowledges got off to a bumpy start no fax payday loans. The CAW, however, managed a cost-cutting deal that helps save Chrysler Canada on labour costs at its plants.

The Windsor.-based automaker, with more than 9,000 employees, operates vehicle assembly plants in the southwestern Ontario border city of Windsor as well as Brampton, just northwest of Toronto, and a parts plant in Toronto.

Marchionne, a dual Canadian-Italian citizen, says that while Fiat cannot substitute Chrysler’s judgment on the North American market, it can offer technical expertise on how to produce smaller, more efficient cars.

The company has been developing a new fuel-efficient, cleaner-burning engine it hopes to put into its new vehicles.

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UPDATED 12:15 P.M. with Wentzville voting results

General Motor Corp.’s Wentzville workers approved revisions to the United Auto Workers labor contract, a union representative said today.

The changes passed with a 59 percent approval rate, said Tom Brune, the sourcing representative for UAW Local 2250, which represents more than 1,700 hourly workers at the full-size van plant. The Wentzville results were not available Thursday night.

The revised agreement was approved nationally, with 74 percent voting in favor, the UAW said in a press conference.

TOKYO–More than 100 Japanese companies face possible bad debts if General Motors Corp. files for bankruptcy, a private credit research agency said yesterday.

GM has close business ties with 102 Japanese companies, Teikoku Databank Ltd. said. They include auto-parts makers and suppliers such as Aisin Seiki Co. Ltd., Bridgestone Corp. and Mitsubishi Electric Corp.

GM said not enough of its bondholders agreed to swap their debt for company stock, meaning that the money-losing auto giant is likely to be headed for bankruptcy protection.

GM has until Monday to finish restructuring or file for bankruptcy.

Amid worries over GM’s possible bankruptcy, the U.S. Treasury has launched a $5 billion (U.S.) support program to provide government guarantees for financing auto parts.

Aisin Seiki said it had applied for the U.S. government’s auto-parts support program. It said it had around 1.7 billion yen ($19 million Canadian) in bad debt from GM at the end of April.

Teikoku Databank did not specify the number of Japanese companies applying for the U cheap car insurance.S. auto-parts assistance program. But it warned that not every applicant would be able to get federal assistance.

"There is a potential risk that GM’s bankruptcy could trigger bad debt" among the 102 Japanese companies, the research agency said. GM, which has received $19.4 billion (U.S.) in federal loans, faces a list of restructuring tasks to complete before the Monday deadline.

It must get new cost-cutting agreements with unions, close factories, cut jobs, and complete the debt-for-stock swap with 90 per cent of its bondholders to prove to the government it can repay loans.

GM lost $6 billion in the first quarter as car buyers worldwide steered clear of showrooms, partly out of fear that GM may go bankrupt and stop honouring its warranties.

Associated Press

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BERLIN–Germany pressed for an independent future for General Motors Corp.’s Europe-based Opel unit yesterday, with the country’s foreign minister saying "the lights must not go out" as its American parent headed for a likely bankruptcy filing.

Chancellor Angela Merkel and several ministers gathered for talks at Merkel’s Berlin office with representatives of GM, the U.S. government and Opel’s suitors, as well as governors of German states that have Opel plants, with the aim of putting Opel on the road to safety.

Hours earlier, Opel’s supervisory board approved a plan to package GM assets for a new investor by pooling GM’s European plants, sales operations, patents and other assets – excluding Sweden’s Saab unit – debt-free under the German-based Adam Opel GmbH subsidiary, said Karin Kirchner, a spokeswoman for GM Europe.

"This way it can join a partnership with a potential investor," Kirchner said. "You have one company that would be invested in or would sell a stake."

GM could choose any new investor, but Germany would decide on whether a new owner would get further government assistance and, if so, what kind.

Some 25,000 people work for Opel in Germany, nearly half of GM Europe’s total workforce, and fall elections are putting pressure on politicians to find a solution that minimizes layoffs.

Italy’s Fiat SpA; a consortium of Canadian auto-parts maker Magna International Inc. and Russia’s Sberbank; and U.S. investment firm Ripplewood Holdings LLC have all filed bids for Opel.

Kirchner said the consolidation would help keep Opel’s assets separate from a bankruptcy filing by GM, which seemed inevitable yesterday as bondholders balked at its plan to swap bond debt for company stock payday loans for bad credit.

"If General Motors were to go bankrupt in the coming days, the lights must not go out at Opel because of that," Frank-Walter Steinmeier, the foreign minister and vice chancellor, told reporters before the meeting.

The German government has proposed putting Opel under a trustee to allow time for talks to continue with investors. Kirchner said Germany and GM would have equal rights to Opel under that plan.

"The pooling of assets is the first step. Then you can expect that a substantial part of these assets will go into a trustee structure."

Steinmeier said he was confident that government bridge financing would be nailed down. Economy minister Karl-Theodor zu Guttenberg said Germany needed to reach an agreement with U.S. officials and GM about how Opel might be transferred to a new owner or investor. "We absolutely need this agreement with the U.S. side,” Guttenberg said, adding that a bankruptcy filing for Opel was still possible if all other options failed.

It was unclear whether yesterday’s meeting would bring clarity on what, if any, suitor will secure Opel.

"It is rather unlikely that the result of tonight will be that future negotiations will be conducted with one investor alone," government spokesman Thomas Steg told reporters. He added that it was unclear whether a "ranking" of suitors would emerge.

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More than 600 local Chrysler pickup plant workers have accepted voluntary severance and retirement offers, a union official said Tuesday evening.

Tuesday was the final day for Chrysler’s U.S. hourly workers — including those from the Fenton pickup plant and the idled minivan plant — to accept the current round of voluntary severance and retirement incentives. The packages take effect today.

Nearly 640 pickup plant workers have already left or will leave today under the offers, said Don Ackermann, vice president of United Auto Workers Local 136, which represents hourly workers at the Dodge Ram facility. About 1,250 workers as of March were eligible for the offers, he said.

"I was expecting a fairly high turnout, but I wasn’t expecting … this kind of number," he said.
Ackermann said he’ll have to talk with the plant manager and human resources director about the plant’s work force needs.

Chrysler has said it will close the pickup plant by Sept. 30, but it’s unclear how much time or labor it will need to finish Dodge Ram production.

Joe Shields, president of UAW Local 110, did not have a final tally of his members Tuesday evening. Local 110 represents about 300 hourly workers who had worked at the idled minivan plant.

Nearly a month ago, UAW members approved labor and health care concessions. Chrysler filed for bankruptcy the next day and said it would permanently close the Fenton minivan and pickup plants, along with six other facilities.

A hearing to approve the sale of Chrysler’s remaining assets, to a group led by Italian automaker Fiat SpA, is set for today.

Donald Goforth, laid off from the pickup plant since September, had more questions than answers about what option he should take.

The 14-year Chrysler worker could stay with the bankrupt automaker and hope to get transferred elsewhere. But Chrysler has been mum on transfer opportunities — on which workers would qualify and on when those transfers would happen emergency cash loans.

So although he worried about how quickly he could find a new job, Goforth said Tuesday afternoon that he planned to take a buyout offer.

Goforth, 41, of Cahokia, qualifies for a buyout of $25,000 toward a new vehicle and a $115,000 taxable, lump-sum payment.

He wanted to know if he had enough years of service to transfer to another plant. No one could tell him that information, he said.

"It’s still too early to determine what’s going to happen" with transfer opportunities, Chrysler spokeswoman Dianna Gutierrez said.

She also declined to say Tuesday how many workers so far had signed up for the packages nationwide.

The offers are:

— A $50,000 payment and a $25,000 new-vehicle voucher if a worker qualifies for retirement.

— Full retirement benefits under a special early retirement for workers ages 50 to 62 with at least 10 years of service.

— Preretirement leave for those who are eligible for retirement within 24 months of their plant’s closure.

— A buyout of $75,000 and a $25,000 vehicle voucher for workers with one to 10 years of service. Those with more than 10 years will get $115,000 and a $25,000 vehicle voucher.

Laid-off workers who do not accept an incentive offer could wait to be transferred. But just how long they’ll have to wait for an offer — and where they’ll be asked to move — is uncertain.

Under the revised UAW contract approved April 29, a laid-off worker could receive one chance to transfer. If he or she rejects that offer, the worker will be dropped from the payroll and only have the right to be recalled if the local plant reopens.

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Boeing Co. leaders say that the U.S. military’s airlift needs are growing and that a Pentagon proposal to halt future orders for the C-17 Globemaster III cargo plane is premature.

Boeing, whose defense unit is headquartered in St. Louis, is trying to rally support for the C-17 on multiple fronts — arguing that ceasing production would erode the U.S. industrial base, costing thousands of jobs at Boeing plants and those of its main suppliers. But Boeing officials also emphasize the plane’s strategic value.

"Right now, since 9/11, the airplane has been flying at about a 15 percent higher rate than was anticipated," said Donald A. Anderson, Boeing’s C-17 program manager in St. Louis. "In addition, they’re talking about rebasing troops in the United States. They’re talking about an increase in the size of the Marines Corps and the Army.

"So it seems like the airlift requirements are growing. And you need airlifters to meet those needs."

Starting with Secretary of Defense Robert Gates’ announcement in early April and continuing through last week, the Pentagon has said it can get by with the 205 C-17s that are either in service or on order. The Air Force also uses the Lockheed Martin C-5 Galaxy to transport weapon systems, cargo and personnel to overseas locations.

Republican Sen. Christopher "Kit" Bond and Democratic Sen. Claire McCaskill, both of Missouri, have written letters supporting more orders of the C-17, and Machinists Union officials have traveled to Washington to show their support for a program that supports 900 jobs in St. Louis.

"This is high political theater," said analyst Richard Aboulafia of The Teal Group in Fairfax, Va. "The bottom line is I don’t think the line is threatened. But it is up to everybody from Department of Defense to Congress to Boeing to the unions to make it look as though it were."

The Defense Department has not sought funding for the C-17 in the last three years. But Congress has stepped in to add funding for more of the $202 million planes through supplemental defense appropriations bills.

Bond and Boeing officials have asked why Gates would halt C-17 orders while there is a study under way into the military’s future air-mobility needs. The results are expected this fall.

"But yet we’re making that decision now to stop the airplane," Anderson said. "So it seems somewhat premature saving account payday loan."

Bond said shutting down production of the C-17 is a "dangerous gamble" and warned that the U.S. can’t afford to "lose the capability to transport safely our troops and equipment to anywhere in the world."

In a letter to President Barack Obama, McCaskill said the U.S. is "literally flying the wings off these planes," and added "this is not the time to end its production, especially in light of projected global mission sets for the U.S. military."

Both legislators also have gone to bat for Boeing’s St. Louis-built F/A-18 Super Hornet, whose future was placed in limbo under the latest Pentagon spending plan.

The C-17 is assembled at a plant in Long Beach, Calif. But the cargo door, cargo ramp, landing-gear pods, nose and engine pylons are built in St. Louis.

A November 2008 report by the Government Accountability Office recommended "careful planning to avoid shutting down the C-17 line prematurely." Both Boeing and the Air Force believe shutting down and restarting production "would not be feasible or cost effective," the report found.

The GAO cited the high costs of hiring and training a new work force, reinstalling equipment to proper working condition and re-establishing a supplier base.

Boeing has delivered the C-17 to other countries, including Australia, Canada and the United Kingdom. The United Arab Emirates has announced its intent to buy four of the planes, and Qatar has ordered two and exercised an option on two additional C-17s.

But Anderson said international sales alone are not enough to sustain the C-17 line. Boeing officials say maintaining C-17 sales to the U.S. Air Force is necessary to keep the price of the planes competitive in the international market.

Defense analyst Loren Thompson of the Lexington Institute in Arlington, Va., said the C-17 is the best strategic airlifter ever built and "a very cogent case" can be made that terminating production at 205 planes would be too early. At the moment, he said, its future will be dictated by Congress.

"Here’s the bottom line to C-17," Thompson said. "If Congress doesn’t add money, there won’t be any more."

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Ukraine’s economy probably shrank as much as 23 percent in the first quarter of the year as the global financial crisis took its toll on the eastern European nation, President Viktor Yushchenko said.

“The economic contraction is expected between 20 percent to 23 percent in the first three months of the year,” said Yushchenko today, according to a statement posted on his Web site. “The pace of the decline is one of the fastest in Europe.”

Yushchenko urged the government to review the state budget for this year, which still assumes the economy will expand 0.4 percent, according to the statement.

A global recession is compounding problems in eastern European economies, which are being battered by a lack of credit, weakening currencies and plunging demand for their products instant credit report. Ukraine was forced to turn to the International Monetary Fund with other emerging-market countries, including Hungary and Latvia, to boost its financial system in November.

Ukraine’s economy shrank 8 percent in the fourth quarter, the first contraction since 1999. The state statistics committee is expected to release gross domestic product figures for the first quarter in late June.

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Decades of ballet have taken their toll on Chan Hon Goh’s feet.

It was a slew of stress fractures early in her career that led the National Ballet of Canada’s principal dancer – now on the cusp of retirement – to launch her own shoe company, Principal by Chan Hon Goh Inc., in 1996.

"I was really trying to find better shoes for myself," she says, referring to pointe shoes, commonly called toe shoes, in ballet.

The shoes allow ballerinas to balance on their toes, making them appear weightless. The design has evolved little since the first pointe shoes appeared in the 1800s, partly because of ballet’s love of tradition.

Even the best-made shoes fade fast. Goh goes through two pairs of pointe shoes in a single performance of Giselle, she says, sometimes three pairs in longer ballets such as Swan Lake.

Thus, finding the perfect pair of shoes – the kind that make standing en pointe feel easy – is bittersweet. "You can’t put them away and use them another time."

HERE’S WHAT’S INVOLVED:

• Pointe shoes are almost entirely made by hand, a time-consuming process low rates payday advance. Just sewing on the ribbons can take more than 1  1/2 hours, Goh says.
• The hard box in the toe of the shoe is called the block; it helps the dancer balance on her toes. "People ask if it’s aluminum or steel," Goh laughs. Rather, it’s a mix of burlap and glue, sometimes even paper. "We really are dancing on our toes."
• The shank, a piece of stiff material that reinforces the thin leather sole, helps support the arch of the foot en pointe. It is usually made of leather or layers of burlap glued together. The upper is traditionally pink satin.
• The patterned linings – from ladybugs to hearts and daisies – were added to Principal shoes about three years ago, Goh says. The embellishment adds a playful touch to the shoes without flouting ballet’s traditions, she says. Once assembled, the shoes must be aged – "like wine" – so the glue dries without any bumps in the material, which "would be really noticed when you jump, land or turn." Aging time depends on the manufacturer, but hovers around 10 days.

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Indigo Books & Music Inc. has declared its first dividend, as revenues increased four per cent in the fourth quarter, but profit weakened.

The company said Friday that it would initiate a cash dividend of 10 cents per share on its common shares, payable to shareholders of record as of June 15.

The decision came as the company posted $1.9 million in profit for the period ended March 28, a slide from $3.1 million in the same period a year earlier.

Revenues rose to $214.5 million from $206.2 million.

Pre-tax earnings for the quarter were $2.3 million, an increase of 21.6 per cent, or $400,000, from the same quarter last year.

Indigo said the current quarter's results include tax expenses of $400,000, while last year's numbers included a $1 individual health insurance.2 million tax recovery.

"We are very satisfied with both our top line growth and operating profits, especially in this challenging economic climate," said chief executive Heather Reisman in a release.

"We are also proud that our strong balance sheet has allowed us to initiate a quarterly dividend while continuing to invest in our future growth."

For the year, profit tumbled to $30.7 million from $52.8 million. Revenues increased to $940.4 million from $922.9 million.

Indigo shares increased five per cent, or 59 cents, to $12.60 on the Toronto Stock Exchange.

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NEW YORK – Gap Inc. reported that its first-quarter profit fell almost 14 per cent as the clothing chain faced sluggish consumer demand during the recession, but the results narrowly beat Wall Street estimates.

The San Francisco-based chain, which operates Banana Republic and Old Navy stores as well as the Gap, said Thursday that it earned US$215 million, or 31 cents per share, for the three months that ended May 2. In the same period a year earlier, it earned $249 million, or 34 cents per share.

Revenue dropped eight per cent to $3.13 billion, from $3.38 billion.

Sales at stores open at least a year, or same-store sales, fell eight per cent. Same-store sales are considered a key indicator of a retailer's health.

Analysts had forecast profit of 30 cents per share on revenues of $3.14 billion.

Many clothing retailers are struggling with weak sales. To drive customer traffic, Gap is testing new store models for all three of its chains.

In particular, the company hopes its low-price Old Navy chain, which has been retooled to cater in part to frugal moms, will be a vehicle for growth. The company launched an ad campaign for Old Navy in February and is overhauling its fashions.

"We remain focused on increasing traffic and gaining back market share across all our brands by offering customers the right products and shopping experience," said Glenn Murphy, chairman and chief executive in a statement. He added that he is "particularly encouraged" by Old Navy's performance 24 hour payday advances.

Gap's North American division suffered a 12 per cent same-store sales decline, while same-store sales at Banana Republic's North American division dropped 13 per cent. Old Navy posted just a three per cent decline.

Gap has been in a better position than some of its rivals because it started slimming its inventory before the recession as part of its turnaround effort, which has otherwise stalled because of the sudden retreat of consumers. Still, the company has pressed for more cuts.

In March, Gap announced that Murphy volunteered for a 15 per cent salary cut this year. It also reduced its board from 13 to 10 seats and cut both members' annual cash payment and their stock compensation by 15 per cent. It also has eliminated merit-based salary increases for most employees at its headquarters.

Gap also has also paring its inventory and said Thursday that its inventory per square foot was down 12 per cent at the end of the first quarter from a year earlier. The company expects inventory per square foot at the end of the current quarter to be lower than last year at the same time by a percentage in the low double digits.

During the first quarter, the company opened 11 stores and closed 11, compared with 33 openings and 23 closings a year earlier. Gap continues to expect to open about 50 stores and close about 100 in fiscal 2009. And it still anticipates net square footage will decrease about two per cent this year over 2008.

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