EuroWire January 2017

Transatlantic cable

2 (WEF 5.72) Singapore. The island nation stays in second place for the sixth year in a row. While it aces all the other sub-indexes, if it hopes ever to be number one the WEF said it must improve its scores in business sophistication and innovation. 3 (WEF 5.70) The United States of America. A stable macroeconomic situation and a falling budget de cit keep this powerful economy near the top spot. Says the WEF: “The position of the United States is driven by innovation, business sophistication, market size, nancial market development, labour market e ciency, and higher education and training.” Tied for 4 (WEF 5.57) The Netherlands. The Dutch economy moves up in the ranking again this time after having boosted its standing through “small improvements across all three subindexes, with a solid and even performance across the pillars.” It earned scores in the top ten for infrastructure, health and primary education, higher education and training, goods market e ciency, technological readiness, business sophistication, and innovation.” Tied for 4 (WEF 5.57) Germany. The German economy drops one place in the latest rankings because, although its macroeconomic environment is generally stable, with a very low government de cit, “like the rest of the euro zone it faces near-zero in ation.” Sweden, the UK, Japan, Hong Kong and Finland account for the lower tier of the WEF’s top ten competitive economies for 2016-2017. † The list-making tendency that sprouts with the New Year turned up another interesting datum on London. As per the luxury travel magazine Condé Nast Traveler , the capital of the United Kingdom (with 19.88 million overnight visitors in 2016) was the second-most-visited city in the world for the year, after Bangkok, Thailand (with 21.47 million visitors). Paris, Dubai and New York rounded out the top ve most- visited cities.

In advance of EPA and CARB approval, it appears that VW will have to store the vehicles, possibly hundreds of thousands of them. As the buy-backs got under way it would likely have to rent storage elds and warehouses all over the USA. According to a 25 th October decision by a federal judge, ultimately VW may take any of these courses of action with the bought-back diesels: † modify and resell them as used cars, with proper disclosure to the buyer † export them for resale abroad † render them inoperable and recycle them, or salvage them for parts that may be sold in the USA or exported Mr Voelcker reported that the a ected vehicles in the initial roundup fall into three groups. The 67,000 cars in Group 1 exceed legal emission limits less than earlier diesel models, thus may be the best candidates for modi cation approval. They use a newer 2.0-litre engine and are tted with tanks for the diesel emission uid necessary for selective catalytic reduction (SCR) exhaust after-treatment to reduce pollutants. The 90,000 cars in Group 2 use an older 2.0-litre diesel engine but are equipped with the SCR system and tanks for the urea uid it requires. Most of the non-compliant diesel cars (325,000 units) are in Group 3 – those that were not tted with the SCR system but only with a Lean NOx Trap. They are by far the dirtiest, and would likely be very expensive to modify. Wrote Mr Voelcker, “To comply with emission standards they might require installation of catalytic converters, urea tanks, and many engine modi cations they were never designed to accommodate.” The cars in this category are most likely to be rendered inoperable and scrapped, probably in a process similar to the “Cash for Clunkers” programme for older vehicles conducted in the USA in 2009. A ‘Nixon-to-China’moment, extraordinarily favourable to the American steel industry, may be at hand “In other words, if Democrat Obama had succeeded it would have been socialism. If [Republican] Trump succeeds he’s Making America Great Again.” Tom Balcerek, who formerly handled North American coverage for Steel Business Brie ng , is senior editor of S&P Global Platts (also London-based). In a recent issue he considered the present prospects of the American steel industry in starkly political terms and concluded that “things are looking great.” (“US Infrastructure May Soon Have Its Nixon-To-China Triumph,” 18 th November) Mr Balcerek noted that steelmakers’ share prices surged in the immediate aftermath of Donald Trump’s election to the USA presidency, presumably on Mr Trump’s commitment to put America rst by ghting “unfair” trade deals and imports. Steel

Automotive

Hundreds of thousands of buy-back ‘dirty diesels’ present Volkswagen with a daunting storage problem in the USA

In November, Volkswagen Group of America was set to begin buying back 2.0-litre diesel VW and Audi cars sold between 2009 and 2015, the rst of close to half a million caught up in the VW diesel emissions scandal. Writing in Green Car Reports , John Voelcker, senior editor for Internet Brands Automotive Group, considered what the company might do with those vehicles once it had taken legal possession. He learned that the cars would not, as might be expected, routinely be disabled, “parted out” and recycled. Their disposition depends on the outcome of negotiations between the company and both the USA Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) over proposed modi cations to some of the cars. (“What Will VW Do with TDI Diesel Buyback Cars? It’s Not What You Think,” 3 rd November)

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January 2017