Saturday, February 21, 2009
Saab aims to survive without GM
Carmaker Saab, which is owned by General Motors, has had its application to enter a reorganisation process approved by a Swedish court.
An administrator has been appointed to handle the process. Saab is seeking to create a fully independent business.
GM has said that it wants to sell Saab. There had been concerns about the loss-making carmaker after the Swedish government rejected GM's call for aid.
GM took a 50% stake in Saab in 1989 and gained full ownership ten years later.
Any restructuring would need the approval of Saab's creditors, who meet on 6 April.
Expressions of interest
"Today is the beginning of a new chapter in Saab's history," said Jan Ake Jonsson, Saab's managing director.
He also said that several companies had expressed interest in Saab, though he declined to name any.
"Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab," he said.
He also revealed that creating a separate unit of Saab and German carmaker Opel, also owned by GM, had not been discussed.
Separately, the German government said that it had not received an official application for a state guarantee from carmaker Opel.
The government was waiting for a plan from Opel on its future before making any decisions, a government spokesman said.
Government aid
Despite turning down GM's request for support, a senior Swedish government official has said the government has not ruled out providing loan guarantees to Saab following its restructuring.
"It is not the case that we have closed the door to that. That will depend on what the plans look like," Joran Hagglund, state secretary at the Swedish Industry Ministry, told the Reuters news agency.
Sweden said last year that it would provide up to 25bn Swedish crowns in aid to its auto industry to help it through the economic crisis.
Mr Jonsson said Saab expected to be given access to the state funds.
Saab said in a statement that the reorganisation was "the best way to create a truly independent entity that is ready for investment".
In a restructuring plan submitted to the US Treasury this week, GM had said it planned to make Saab an independent business by the start of 2010.
Loss-making
Sales at Saab in 2008 were down 25% on the previous year.
Saab's managing director said this is the beginning of a new chapter
The Swedish carmaker has not made a profit since 2001. In 2007 it made an operating loss of 2.19bn Swedish crowns ($248m; £175m), according to regulatory filings.
It estimates its losses in 2008 at around 3bn Swedish crowns and expects a similar loss this year, filings also revealed.
Stephen Pope, chief global strategist at Cantor Fitzgerald, believes GM "oversaw the destruction of the Swedish car company's soul".
"Just look at the current '93' [model] as an example," he said. "The '93' is just a Saab body skin placed on top of the Vectra from Opel/Vauxhall."
Protection from creditors
The reorganisation process is the Swedish equivalent of going into Chapter 11 bankruptcy protection in the US, providing protection from creditors.
Saab has plans to launch three new models over the next year and a half.
"Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM," Mr Jonsson said.
Saab said funding for the restructured company would need to be secured during the three-month reorganisation process and would be sought from both public and private sources.
During that period, the company is not allowed to pay off any debts accumulated before the reorganisation was declared.
Supplier concerns
Saab employs about 4,100 people in Sweden. Thousands more work for suppliers to the company.
Responding to concerns from Saab's supplier base, GM Europe said it would establish "a viable mechanism for the timely payment of suppliers' claims towards Saab".
GM added that it hoped the gesture would encourage suppliers to support Saab's efforts to reorganise into an independent business.
An administrator has been appointed to handle the process. Saab is seeking to create a fully independent business.
GM has said that it wants to sell Saab. There had been concerns about the loss-making carmaker after the Swedish government rejected GM's call for aid.
GM took a 50% stake in Saab in 1989 and gained full ownership ten years later.
Any restructuring would need the approval of Saab's creditors, who meet on 6 April.
Expressions of interest
"Today is the beginning of a new chapter in Saab's history," said Jan Ake Jonsson, Saab's managing director.
He also said that several companies had expressed interest in Saab, though he declined to name any.
"Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab," he said.
He also revealed that creating a separate unit of Saab and German carmaker Opel, also owned by GM, had not been discussed.
Separately, the German government said that it had not received an official application for a state guarantee from carmaker Opel.
The government was waiting for a plan from Opel on its future before making any decisions, a government spokesman said.
Government aid
Despite turning down GM's request for support, a senior Swedish government official has said the government has not ruled out providing loan guarantees to Saab following its restructuring.
"It is not the case that we have closed the door to that. That will depend on what the plans look like," Joran Hagglund, state secretary at the Swedish Industry Ministry, told the Reuters news agency.
Sweden said last year that it would provide up to 25bn Swedish crowns in aid to its auto industry to help it through the economic crisis.
Mr Jonsson said Saab expected to be given access to the state funds.
Saab said in a statement that the reorganisation was "the best way to create a truly independent entity that is ready for investment".
In a restructuring plan submitted to the US Treasury this week, GM had said it planned to make Saab an independent business by the start of 2010.
Loss-making
Sales at Saab in 2008 were down 25% on the previous year.
Saab's managing director said this is the beginning of a new chapter
The Swedish carmaker has not made a profit since 2001. In 2007 it made an operating loss of 2.19bn Swedish crowns ($248m; £175m), according to regulatory filings.
It estimates its losses in 2008 at around 3bn Swedish crowns and expects a similar loss this year, filings also revealed.
Stephen Pope, chief global strategist at Cantor Fitzgerald, believes GM "oversaw the destruction of the Swedish car company's soul".
"Just look at the current '93' [model] as an example," he said. "The '93' is just a Saab body skin placed on top of the Vectra from Opel/Vauxhall."
Protection from creditors
The reorganisation process is the Swedish equivalent of going into Chapter 11 bankruptcy protection in the US, providing protection from creditors.
Saab has plans to launch three new models over the next year and a half.
"Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM," Mr Jonsson said.
Saab said funding for the restructured company would need to be secured during the three-month reorganisation process and would be sought from both public and private sources.
During that period, the company is not allowed to pay off any debts accumulated before the reorganisation was declared.
Supplier concerns
Saab employs about 4,100 people in Sweden. Thousands more work for suppliers to the company.
Responding to concerns from Saab's supplier base, GM Europe said it would establish "a viable mechanism for the timely payment of suppliers' claims towards Saab".
GM added that it hoped the gesture would encourage suppliers to support Saab's efforts to reorganise into an independent business.
Friday, February 20, 2009
Obama’s Economic Stimulus Plan Mapped Out
Want to know where all that 900 million/billion/however-many dollars is going? Here’s the low down on President Obama’s aggressive plan.
Thursday, February 19, 2009
Shipping rates hit zero as trade sinks
Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.
By Ambrose Evans-Pritchard, International Business Editor
"They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmitigated disaster."
Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost.
Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader.
The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets.
Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant.
Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.
He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost.
Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader.
The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets.
Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant.
Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.
He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
The power of color in direct marketing
Color is one of the most powerful elements of design for direct mail, ads, and other marketing materials.
Why? Because color is a form of nonverbal communication. Research has shown that color increases brand identity, assists in memory, increases a reader’s participation in ads, and improves readership, learning, and comprehension.
This is a complicated subject and is worthy of a dozen posts, but I’d like to cover just three important points about why color choice is so important.
Color carries meaning through association.
This meaning can be divided into two parts: natural associations and psychological or cultural associations.
By “natural association” I mean that colors bring to mind certain ideas that everyone understands. For example, green is associated with nature because that’s the primary color of plants everywhere in the world. Blue is associated with the sky. Yellow is associated with the sun. These associations are simple and universal.
Psychological or cultural associations are more tricky. In the U.S., orange is associated with Halloween because pumpkins are a big part of that holiday. But since many other cultures don’t celebrate this particular holiday, that association doesn’t exist. Likewise, while black is associated with death in the West, white is often the death color in other cultures.
There is a “vocabulary of color.”
Colors are not as clear cut as words, but there is a loose meaning for most colors. What follows is a quick definition of some common colors for those who live in a Western culture.
Black can signify death or evil, but it is also a power color and can be sophisticated.
White is the color of purity, but can also imply coldness or sterility. Like black, white can be a classy color.
Red suggests excitement and strong emotions. It’s a color easily recognized by the eye, so it’s good for getting attention.
Blue is the most popular color, especially among men. It’s calm, soothing, and businesslike.
Green is the nature color, providing a feeling of tranquility and calm. It can also signify wealth and stability. Today, it is associated with recycling and environmentalism.
Yellow is warm and cheerful. It’s the most attention-getting color, but can be fatiguing for the eye. Black type on a yellow background provides maximum contrast for short, high-impact messages.
Purple signifies wealth and royalty. It also carries an exotic feeling. However purple can be a weak color for design.
Brown is the color of nature, with a feeling of strength and warmth. It can be both down-to-earth or sophisticated. It can also be boring or even evoke a 70’s feel.
Orange is the combination of red and yellow, so it’s energetic, warm, and enthusiastic. It is often used to draw attention.
Pink is typically associated with romance and love. It’s a calming color for most people. Just as blue is the “male” color. Pink tends to be the “female” color.
Practical considerations should guide color choice.
Color associations and vocabulary are something you should know. But when it comes to designing marketing items, don’t get carried away. Copy is more important than color, and the whole point of design is to make sure people READ the copy.
So keep a few things in mind:
Black type on white paper is both practical and legible.
Your cost savings from printing in two colors can sometimes outweigh any benefits from printing in many colors.
Colors are seldom psychologically additive. That’s a fancy way of saying that you can’t reap the symbolism of multiple colors by throwing them all on a page. Too many colors will be distracting and make your layout look unprofessional and “cheap.” Keep it simple.
When in doubt, use blue. It’s a favorite color and it’s easy to use in design. It’s legible for headlines, produces good-looking tints, and lets you highlight key points in the copy while not drawing much attention to the design itself.
Some colors are hard to work with, such as orange, brown, and pink. They often don’t print the way you want them and tints can be tricky.
Orange is a great color to grab attention. It goes in and out of popularity, but in general it’s underused. So it lets you stand out more easily.
Red is a power color for headlines, subheads, phone numbers, and other hot spots. Red and black can create a high-impact, reader-friendly layout. Just make sure you use a red that looks red and not pink or purple.
The best use for color? Photos and illustrations. Graphics like these can give a layout plenty of “pop” and let you keep the text simple and readable.
There you have it. That’s my quick reveiw of key points for using color in direct marketing. This barely scratches the surface, but there should be plenty here to give you some ideas for improving your marketing materials.
Why? Because color is a form of nonverbal communication. Research has shown that color increases brand identity, assists in memory, increases a reader’s participation in ads, and improves readership, learning, and comprehension.
This is a complicated subject and is worthy of a dozen posts, but I’d like to cover just three important points about why color choice is so important.
Color carries meaning through association.
This meaning can be divided into two parts: natural associations and psychological or cultural associations.
By “natural association” I mean that colors bring to mind certain ideas that everyone understands. For example, green is associated with nature because that’s the primary color of plants everywhere in the world. Blue is associated with the sky. Yellow is associated with the sun. These associations are simple and universal.
Psychological or cultural associations are more tricky. In the U.S., orange is associated with Halloween because pumpkins are a big part of that holiday. But since many other cultures don’t celebrate this particular holiday, that association doesn’t exist. Likewise, while black is associated with death in the West, white is often the death color in other cultures.
There is a “vocabulary of color.”
Colors are not as clear cut as words, but there is a loose meaning for most colors. What follows is a quick definition of some common colors for those who live in a Western culture.
Black can signify death or evil, but it is also a power color and can be sophisticated.
White is the color of purity, but can also imply coldness or sterility. Like black, white can be a classy color.
Red suggests excitement and strong emotions. It’s a color easily recognized by the eye, so it’s good for getting attention.
Blue is the most popular color, especially among men. It’s calm, soothing, and businesslike.
Green is the nature color, providing a feeling of tranquility and calm. It can also signify wealth and stability. Today, it is associated with recycling and environmentalism.
Yellow is warm and cheerful. It’s the most attention-getting color, but can be fatiguing for the eye. Black type on a yellow background provides maximum contrast for short, high-impact messages.
Purple signifies wealth and royalty. It also carries an exotic feeling. However purple can be a weak color for design.
Brown is the color of nature, with a feeling of strength and warmth. It can be both down-to-earth or sophisticated. It can also be boring or even evoke a 70’s feel.
Orange is the combination of red and yellow, so it’s energetic, warm, and enthusiastic. It is often used to draw attention.
Pink is typically associated with romance and love. It’s a calming color for most people. Just as blue is the “male” color. Pink tends to be the “female” color.
Practical considerations should guide color choice.
Color associations and vocabulary are something you should know. But when it comes to designing marketing items, don’t get carried away. Copy is more important than color, and the whole point of design is to make sure people READ the copy.
So keep a few things in mind:
Black type on white paper is both practical and legible.
Your cost savings from printing in two colors can sometimes outweigh any benefits from printing in many colors.
Colors are seldom psychologically additive. That’s a fancy way of saying that you can’t reap the symbolism of multiple colors by throwing them all on a page. Too many colors will be distracting and make your layout look unprofessional and “cheap.” Keep it simple.
When in doubt, use blue. It’s a favorite color and it’s easy to use in design. It’s legible for headlines, produces good-looking tints, and lets you highlight key points in the copy while not drawing much attention to the design itself.
Some colors are hard to work with, such as orange, brown, and pink. They often don’t print the way you want them and tints can be tricky.
Orange is a great color to grab attention. It goes in and out of popularity, but in general it’s underused. So it lets you stand out more easily.
Red is a power color for headlines, subheads, phone numbers, and other hot spots. Red and black can create a high-impact, reader-friendly layout. Just make sure you use a red that looks red and not pink or purple.
The best use for color? Photos and illustrations. Graphics like these can give a layout plenty of “pop” and let you keep the text simple and readable.
There you have it. That’s my quick reveiw of key points for using color in direct marketing. This barely scratches the surface, but there should be plenty here to give you some ideas for improving your marketing materials.
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