EoW May 2009

Transat lant ic Cable

Telecommunications is another area important to Mr Obama, whose stimulus sets aside $7.2 billion for upgrading broadband networks in the United States. Alcatel-Lucent, of France, with its New Jersey-based research arm Bell Labs, would appear to be a prime contender for some work under the plan. The president’s stimulus package is very new; so, too, is the race for preferment that it has set off. But already one thing is clear. According to federal statistics cited by the Post , foreign-owned firms employ 5.3 million workers in the US, spend $336 billion on US payrolls, and account for 20% of US exports. This constitutes a significant presence on the American scene. Firms so situated are not disposed to wait for trifling eligibility questions to be settled before moving to tap into stimulus-related business. Sanyo North America, an arm of the Japanese technology giant, provides a case in point. Officials of the company, which broke ground recently on a solar-panel plant in Oregon, told Mr Eggen that they are readying their strategies. Senate records show that the firm recently registered as a lobbying organisation in Washington for the first time since 2001. Aaron S Fowles, of Sanyo’s San Diego unit, said, “With the new stimulus package that the federal government has announced, it is starting to appear that the US market will be a prime location to focus much more effort on our environmental and energy-related technology and products.” Canadian and American auto workers show a new willingness to accept sacrifices to help save their industry The Canadian Auto Workers union on 8 th March said that it had reached a tentative agreement with General Motors Corp on a freeze of wages and pensions until September 2012, together with other concessions required to qualify the company for Canadian government aid. GM’s Canadian unit is based in Oshawa, Ontario, east of Toronto. The Conservative government of Canada had made it a condition of providing financial aid to GM and Chrysler Canada that the union agree to bring labour costs into line with costs at Canadian plants operated by Toyota and Honda. As in the United States, the differential in labour costs between Japanese-owned auto companies and others is a contentious subject in Canada. In 2008, after 77 consecutive years as global leader in auto sales, GM conceded first place to Toyota. While currency fluctuation was not explicit in the agreement announced in early March, the recent decline in value of the Canadian dollar probably allowed the union to avoid wage cuts. The Canadian dollar had fallen, over a year, from about parity to a roughly 25% discount to the United States dollar. At a news conference in Ottawa to announce the agreement, Jim Stanford, chief economist for the union, acknowledged that, if the Canadian currency were to return to par, labour costs at Canadian plants would exceed those in the United States. Automotive

Business

Overseas firms seeking opportunities under the US stimulus act proceed confidently but carefully

American firms are not the only ones vying for contracts under the $787 billion economic stimulus programme announced by US President Barack Obama. Hundreds of foreign-owned companies, believing that they offer more expertise than US companies in the same industry, are intensifying their lobbying efforts. Many are already active in the US and know their way around state capitals as well as Washington, DC. Their initiative has boosters in high places, among them Spain’s Prince Felipe who, with his wife Princess Letizia, visited the US this spring to scout business opportunities for Spanish companies in the stimulus package. In remarks at a business luncheon in New York, the prince set his purpose in a global context: “Only by working together with US businesses and government, as well as coordinating our needs and priorities, can we get our countries, and world, back on track.” While zeal in the pursuit of commercial advantage is acceptable – even commendable – staff writer Dan Eggen of the Washington Post pointed out that foreign companies, trade ministries, and business groups are at some pains not to arouse nationalistic sentiment in US lawmakers and their constituents. He said the firms are being advised by consultants to stress that any contracts they land would lead to jobs in the US rather than overseas. (“Foreign Firms Eye Stimulus Dollars,” 23 rd March) Mr Eggen noted that the overseas-based companies are not alone in going gingerly. President Obama wants the US to focus on alternative energy, rapid transit, and other technologies pioneered in Europe and Asia. But “Buy American” provisions in the stimulus legislation and elsewhere in US law require that most materials and work originate in the United States. According to Mr Eggen, such statutes are “effectively silent” on where the parent firm must be based. Will strict interpretation of the law seriously thwart the president’s aims? Jayson Myers, the chief executive of Canadian Manufacturers & Exporters, an Ottawa-based industry group, stated the problem: “Once you get into some of these specialized technologies, only one or a few companies worldwide can provide it. If you want to advance the innovation priorities of the Obama administration, it becomes very difficult without involving foreign companies.” The stakes for the US president can be seen in a chief ❈ ❈ element of his stimulus programme. Mr Eggen of the Post observed that most firms specialising in the transit and high-speed rail projects dear to Mr Obama’s heart are based overseas. Bombardier, of Canada, and Alstom, of France, provide two examples. Transurban Group, of Australia, is a world leader in the development of toll roads. It happens to be already at work on high-speed toll lanes along the Capital Beltway, in Washington.

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EuroWire – May 2009