October 30, 2020

Israeli Electric Car Company Files for Liquidation

JERUSALEM — The vision was ambitious. Better Place, an electric vehicle infrastructure company, unveiled plans more than five years ago to pioneer a system of quick-service battery swapping stations across Israel to enable unlimited travel. The company’s founder predicted that 100,000 electric cars would be on the roads here by 2010.

But on Sunday, Better Place announced that its venture, a flagship enterprise of Israel’s image as a start-up hub, was coming to an end.

Dan Cohen, the company’s third chief executive, said in a statement that financial difficulties had left the company no option but to file for liquidation in a district court and to request the appointment of a provisional receiver “to find the best way to minimize the damage to its employees, customers and creditors.”

The announcement followed a string of setbacks in the emerging electric car market. Fisker, a carmaker, is in financial distress; A123 Systems, a battery supplier for Fisker, and, more recently, Coda Holdings, another carmaker, filed for bankruptcy. Tesla, the prominent car manufacturer, has had success, though, repaying its government loan last week after a successful initial public offering.

Israel had been considered a perfect testing ground for Better Place’s green project, given the country’s small size and high gasoline prices. The electric car fit into Israeli dreams of reducing oil dependency; the initiative gained the support of the government and was embraced by Shimon Peres, the president of Israel. President Obama, during his March visit here, praised the Israelis’ innovative spirit, mentioning electric cars as one of several examples.

Yet the project was hobbled by problems and delays, and the company’s idea failed to gain traction, with fewer than 1,000 cars on the road in Israel today and another few hundred in Denmark. Mr. Cohen said on Sunday that the vision and the model had been right, but that the pace of market penetration had not lived up to expectations. Without a large injection of cash, he said, Better Place was unable to continue its operations.

“This is a very sad day for all of us,” Mr. Cohen added. “The company brought with it a vision that swept along many people here and around the world.”

About $850 million in private capital has been invested in the company, which has 350 employees in Israel. The largest shareholder, with about 30 percent of the stock, was the Israel Corporation, a large holding company that focuses on chemicals, energy, shipping and transportation. The corporation’s decision not to invest further in Better Place led to the motion for receivership.

The Better Place model for electric car use emerged from an effort among manufacturers and suppliers to establish a standard infrastructure in the nascent industry. Under terms that resembled a cellphone plan, subscribers to Better Place bought their cars and paid about $350 a month to lease access to the batteries, swap stations and charge points. But only one car manufacturer, the French automaker Renault, signed on to adapt its Fluence Z.E. sedan to enable battery switching, limiting the customers’ choices and the company’s potential.

The battery has a range of about 100 miles. For those traveling longer distances, Better Place set up a network of switching stations where it promised that swapping a depleted battery for a fully charged one would take about the same time as filling a car with gas, so that range would no longer be an issue.

“It’s not the future of gas stations; it’s the end of them,” the company Web site boasted.

About three dozen switching stations now dot Israel, which is about 260 miles long from north to south, but they often look deserted.

The company was founded in Palo Alto, Calif., by Shai Agassi, an Israeli entrepreneur who had previously been a top executive at SAP, the German software company. It then moved from California to Tel Aviv.

In October, Better Place announced that Mr. Agassi had been replaced as chief executive by Evan Thornley, the company’s top executive in Australia. The company said Mr. Agassi would continue as a board member and shareholder. Mr. Thornley left after only three months, over differences regarding the direction of the company, according to Globes
, the Israeli business publication. He was replaced by Mr. Cohen.

In February, Better Place announced that it was winding down its operations in North America and Australia to concentrate on its core markets in Denmark and Israel.

Mr. Cohen said on Sunday that the company would do what it could to continue to serve its customers and operate the recharging network, until the liquidator decides on a course of action.

Article source: http://www.nytimes.com/2013/05/27/business/global/israeli-electric-car-company-files-for-liquidation.html?partner=rss&emc=rss

New Jobless Claims Drop for Third Straight Week

Other data on Thursday showed that an increase in the cost of gasoline last month pushed up producer prices, but a lack of broad price pressures gives the Federal Reserve scope to maintain its easy monetary policy.

The report on jobless claims added to a range of data — in areas like retail sales, manufacturing and employment — that suggested higher taxes were having a limited impact on the economy.

“The recent labor market data signal at least steady, and potentially improving, job growth so far in 2013 despite the implementation of various forms of fiscal tightening,” said Daniel Silver, an economist at JPMorgan Chase.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 332,000 last week, the Labor Department said.

Economists polled by Reuters had expected first-time applications to rise to 350,000.

The four-week moving average for new claims, a better measure of trends in the labor market, fell to a five-year low.

While the signs of strength in the jobs market could intensify an already lively debate at the Fed on the future course of monetary policy, economists said the central bank was unlikely to scale back its monetary stimulus.

The Fed’s policy makers meet next week to assess the economy and are widely expected to keep buying $85 billion in Treasury and mortgage-backed securities a month in an effort to spur even stronger economic growth. They have said the Fed would keep buying bonds until there was a substantial improvement in the outlook for the labor market.

A second report from the Labor Department offered little reason to worry about an uptick in inflation, with wholesale food prices almost reversing January’s increase and the cost of automobiles rising only marginally.

But gasoline prices jumped 7.2 percent last month, enough to push the Producer Price Index up a relatively steep 0.7 percent after a 0.2 percent advance in January. In the 12 months through February, the index — prices received by farms, factories and refineries — rose 1.7 percent, the fastest rise since October and up from a 1.4 percent gain the prior month.

Underlying inflation pressures remained contained, however, with wholesale prices excluding volatile food and energy costs rising 0.2 percent after a similar increase in January. In the 12 months through February, this so-called core producer price index was up 1.7 percent, the smallest rise since January 2011.

Separately, the United States current account deficit narrowed in the fourth quarter, aided by an increase in services exports and more income earned abroad, the Commerce Department reported Thursday. It said the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell to $110.4 billion, from an upwardly revised $112.4 billion in the third quarter.

Economists polled by Reuters had expected the fourth-quarter current account deficit to widen to $112.8 billion from a previously reported $107.5 billion for the third quarter.

Article source: http://www.nytimes.com/2013/03/15/business/economy/jobless-claims-continue-decline.html?partner=rss&emc=rss

Robert H. Levenson, a Visionary Adman, Dies at 83

The cause was chronic obstructive pulmonary disease, said his wife, Jane Warshaw.

Mr. Levenson was associated for more than a quarter-century with the New York agency Doyle Dane Bernbach. He became the agency’s creative director in 1970 and was later a vice chairman and the chairman of its international operation.

He had joined DDB as a copywriter in 1959 and soon became known for his pithy, genially colloquial ad lines.

“He called it a ‘Gertrude Steiny’ way of writing: very crisp and to the point,” said Dominik Imseng, a Swiss copywriter and author whose 2011 book, “Think Small,” chronicles the history of that campaign, done by DDB for Volkswagen. (Mr. Levenson did not create that campaign, though he did work on a later incarnation of it.)

At DDB, Mr. Levenson collaborated with art directors including Len Sirowitz and especially Helmut Krone to produce a string of ad lines from the 1960s that have endured in the public memory.

For Volkswagen of America, Mr. Levenson created several print ads that centered on the Beetle’s diminutive size, solid craftsmanship and fuel efficiency. They include the tag lines “It makes your house look bigger” and “After we paint the car, we paint the paint.”

He also devised a New Yorker-style cartoon, produced amid rising gasoline prices, that showed a man holding the nozzle of a gas pump to his temple as if it were a gun. The caption: “Or buy a Volkswagen.”

For El Al, Mr. Levenson wrote a series of print ads that drew on the warmth of Jewish oral tradition. (The New York City schoolteacher-turned-comedian Sam Levenson was his uncle.) His tag lines for the company included “My son, the pilot“ and “We don’t take off until everything is kosher.”

For Sara Lee, he wrote the words to the durable TV jingle “Everybody doesn’t like something/ But nobody doesn’t like Sara Lee,” which accompanied shots of people enduring all manner of irritants (haircuts, traffic jams) before consoling themselves with a piece of the company’s cake.

Mr. Levenson was especially proud, his wife said, of a series of ads for Mobil, centering on highway safety and collectively titled “We Want You to Live.”

His entries in that campaign include a print ad featuring a photo of a man driving while embracing a young woman above the headline, “Till Death Us Do Part.” For a starkly effective television spot, Mr. Levenson and Mr. Sirowitz showed a car being pushed off the roof of a 10-story building.

“If you drive at 60 miles an hour and hit something, it’s exactly the same as driving off a 10-story building,” the narrator says. The voice-over continues, as the camera shows the car landing, crumpled: “And it will get you to exactly the same place … the morgue.”

Robert Harold Levenson was born in New York City on Nov. 23, 1929, and raised in the Bronx. He earned bachelor’s and master’s degrees in English from New York University and afterward worked at various jobs, including market research, before joining DDB.

He first made his mark at the agency in 1960, as the author of a house ad for DDB that appeared in Time magazine. The ad had been the winning entry in a contest, sponsored by Time, that invited various agencies to submit ads that best reflected their corporate philosophies.

Mr. Levenson’s ad was boldly headlined “Do This or Die.” In the text that followed, he wrote: “Is this ad some kind of trick? No. But it could have been.” The ad, still considered canonical, ends with a meditation on the need for truth in advertising.

Mr. Levenson was inducted into the Copywriters Hall of Fame (now the Creative Hall of Fame) in 1972. After leaving DDB in 1985, he held executive positions at Saatchi Saatchi and at Scali, McCabe, Sloves.

Mr. Levenson’s first marriage, to Elaine Berk, ended in divorce; his second wife, Kathe Tanous, died before him. Besides Ms. Warshaw, whom he married last April, he is survived by two sons from his first marriage, Keith and Seth; a stepdaughter, Katherine Warshaw-Reid; and a step-granddaughter.

In interviews over the years, Mr. Levenson elucidated his philosophy of copywriting, which was, at bottom, epistolary.

“When he was asked how he wrote the copy for all those Volkswagen ads,” Mr. Imseng recalled on Thursday, “he said: ‘I always started by writing Dear Charlie, like writing to a friend. And then I would say what I had to say, and at the end I would cross out Dear Charlie, and I was all right.’ ”

Article source: http://www.nytimes.com/2013/01/18/business/media/robert-h-levenson-a-visionary-adman-dies-at-83.html?partner=rss&emc=rss

DealBook: Exxon Mobil to Sell Its Japanese Arm for $3.9 Billion

Exxon Mobil said on Sunday that it had agreed to sell its Japanese subsidiary to TonenGeneral Sekiyu, a major refinery operator in Japan, for about $3.9 billion, as part of a revamping of the oil giant’s operations in that country.

Under the terms of the deal, Exxon will sell a 99 percent stake in the subsidiary, ExxonMobil Yugen Kaisha, to TonenGeneral. Exxon will in turn shed most of its controlling stake in TonenGeneral, keeping a 22 percent interest in the Japanese refiner.

The deal represents the latest move by Exxon and other major oil companies to shift their focus from refining operations to higher-margin businesses like exploration and development of new sources of oil and natural gas.

There is surplus refinery capacity in many parts of the world in large part because of the economic downturn, which has sliced into demand for gasoline and other petroleum products.

Meanwhile, high oil prices and relatively low gasoline prices have squeezed refinery profits. Royal Dutch Shell and BP are selling refineries in Western Europe and the United States. Several refiners have closed a handful of refineries on the East Coast in recent years, and a few are up for sale. ConocoPhillips plans to separate its refinery operations from oil and gas exploration and production.

TonenGeneral will also streamline its operations in light of what it says is declining demand for oil in Japan, which has put pressure on the company’s profit margins.

“The company will be able to more effectively execute locally driven investments and other business decisions that will help the company adapt to the challenging operating environment,” TonenGeneral said in a statement.

TonenGeneral will continue to have exclusive use of Exxon brands like Esso, Mobil and General in Japan. Exxon will also provide technology and supply services to TonenGeneral.

The Japanese refiner plans to finance the transaction with some of its 100 billion yen ($1.3 billion) in cash on hand and with bank debt. The deal is expected to close by June 1.

TonenGeneral was advised by Nomura Securities and the law firm Nishimura Asahi.

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U.S. Jobless Claims Fall Sharply

The number of people seeking unemployment benefits for the first time plummeted last week to 352,000, the fewest since April 2008, the Labor Department said Thursday. The decline added to evidence that the job market is strengthening.

Weekly applications fell by 50,000, the biggest drop in the seasonally adjusted figure in more than six years. The four-week average, which smooths out fluctuations, dropped to 379,000. That was the second-lowest such figure in more than three years.

When weekly applications fall consistently below 375,000, it usually signals that hiring is strong enough to push down the unemployment rate. A department spokesman cautioned, however, that volatility at this time of year is common.

Separately, the department said consumer prices were unchanged last month, the latest sign that inflation remains tame. Lower gasoline prices offset rising costs for food, medical care and housing.

The Consumer Price Index was flat in December for the second straight month, the government said. Excluding volatile food and energy costs, so-called core prices rose 0.1 percent.

Inflation appears to be peaking after rising steeply last year. Prices rose 3 percent in 2011, up from a 1.5 percent pace in 2010 and the most since 2007. But that was down from the 12-month increase of 3.9 percent in September.

Lower inflation gives consumers more spending power, which bolsters growth. It also gives the Federal Reserve more leeway to keep interest rates low and take other steps to strengthen the economy.

Many economists say inflation has peaked and that they expect the rate to decline this year. The prices for oil and many farm commodities, such as corn and wheat, have declined. That has brought down the price of gasoline and slowed food inflation.

The Federal Reserve projects consumer price inflation will fall from about 2.8 percent in 2011 to roughly 1.7 percent this year.

In another economic report Thursday, the Commerce Department said builders ended 2011 with a third consecutive year of dismal numbers of new homes started and the worst on record for single-family home building.

In December, builders broke ground at a seasonally adjusted annual rate of 657,000 homes, the Commerce Department said. A third consecutive monthly increase in single-family home building was offset by a drop in volatile apartment construction.

For the entire year, builders began work on 606,900 homes. That was slightly better than in the previous two years. But it was only about half the number that economists equate with healthy markets.

Construction began on 428,600 single-family homes in 2011. It was the fewest on records dating back a half-century. Single-family homes are key to a housing rebound because they account for roughly 70 percent of the market.

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Higher Prices Buoy Profits as Oil Companies Scramble for New Fields

HOUSTON — Exxon Mobil and Royal Dutch Shell reported large increases in second-quarter profits on Thursday, benefiting from oil and gasoline prices that have been propelled upward by political turbulence in the Middle East and North Africa.

It was the strongest quarter for Exxon since it set a corporate quarterly earnings record in 2008, when crude oil prices approached $150 a barrel before collapsing as the world economy slowed.

Exxon, the biggest American oil company, reported earnings of $10.7 billion for the quarter, up from $7.56 billion the year before, but a bit less than Wall Street had been expecting. Shell, the largest European oil company, posted profits of $8.7 billion, up from $4.4 billion a year ago.

The results of Exxon and Shell, as well as ConocoPhillips and BP earlier in the week, highlighted the oil majors’ dependence on high oil prices for profit growth at a time when they are straining to pick up new reserves to increase or even sustain future production.

Major oil companies are finding it difficult to acquire new reserves because countries rich in oil and gas have become increasingly grudging in their dealings with foreign companies, striking production-sharing agreements that offer them a smaller share of the profits. That is prompting oil companies to drill deeper below the ocean’s surface and explore in the Arctic for oil — expensive propositions that put pressure on profits — or drill for less profitable gas.

“We are going into a world where finding the oil and gas is going to be more complex,” Shell’s chief executive, Peter R. Voser, acknowledged as his company released its results. “It needs more money.”

Smaller oil and gas companies like EOG Resources and Cabot Oil and Gas have proved to be more nimble than the giants in recent years, moving into shale oil and gas fields in the United States and booking new reserves at a far faster rate. The major companies have tried to follow suit over the last two years, but a glut of natural gas from rising production has weakened the profitability of some fields.

Growth in oil company profits for the rest of the year is uncertain, given that oil and gas prices are strongly tied to the health of the global economy. Demand in the United States for diesel, gasoline and other petroleum products has eased in recent months after starting the year strongly, and the growth in Chinese oil demand has slowed somewhat.

“If the economy does not grow faster, earnings growth in the energy sector is obviously going to be limited,” said Fadel Gheit, a senior oil analyst at Oppenheimer Company. “You can’t grow energy demand in a flat economy.”

The Energy Department reported on Thursday that United States oil demand in May fell by nearly 2.5 percent from the same month the year before, representing a decline of 464,000 barrels a day. The department also reported that oil inventories last week were up by 2.3 million barrels from the week before, suggesting a less-than-robust summer driving season.

Oil prices have eased more than 10 percent since the spring, when crude prices peaked because of the loss of 1.3 million barrels of oil a day of production caused by the turmoil in Libya and fears that instability could spread to major producers like Saudi Arabia and Algeria. Since then, increased production in Saudi Arabia and the release of oil from strategic reserves in the United States and other industrialized countries have helped prevent shortages.

Even if oil demand and prices increase, large oil companies will strain to keep up production.

ConocoPhillips reported a 90,000-barrel-a-day decline in oil and gas production for the quarter on Wednesday, though earnings were higher anyway as a result of higher oil prices. Shell also reported a decline of 100,000 barrels of daily oil and gas production for the quarter, in part because of permitting delays in the Gulf of Mexico after the BP accident last year.

Exxon’s earnings were lower than analysts had expected despite strong revenue growth, reflecting a record $10.3 billion in capital and exploration expenditures in new oil and gas projects, up 58 percent from the second quarter of 2010.

Exxon’s purchase of XTO Energy last year to become the nation’s biggest natural gas producer has been questioned by some investors in light of low gas prices, but the acquisition helped Exxon’s oil and gas production to increase by 10 percent from a year ago.

Exxon is continuing to invest heavily in natural gas, purchasing 317,000 acres for $1.7 billion in Pennsylvania’s Marcellus shale field in June. It is also drilling deep in the Gulf of Mexico, and last month announced the discovery of a new deepwater field holding the equivalent of 700 million barrels of oil.

Edward Westlake, an analyst at Credit Suisse, said Exxon profits were hurt by the shutdown in production in several oil fields and refineries around the world for maintenance reasons. He said he was optimistic about the company’s prospects because of an increase of annual capital expenditures from $21 billion in 2007 to around $35 billion currently, along with its aggressive acquisition of oil and gas acreage.

“One day this will pay off,” Mr. Westlake added.

While Exxon has tried to buy reserves, Shell has invested heavily over the last decade in complex projects, particularly in the Persian Gulf state of Qatar. Its $20 billion Pearl project, which will produce liquid fuels out of natural gas on an enormous scale, has been going through final tests this year and should begin to produce profits in coming months.

For Shell, “earnings and cash flow should greatly improve over the next few years,” said Brian M. Youngberg, an oil analyst at Edward Jones.

Julie Werdigier contributed reporting from London.

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Consumer Sentiment Slumped in Early July

Worries about stubbornly high unemployment pushed the Thomson Reuters/University of Michigan’s index of consumer sentiment to 63.8, the lowest level since March 2009, a report showed on Friday. Economists had expected the index to rise to 72.5, from 71.5 in June.

Separate data from the Federal Reserve showed that industrial production rose a modest 0.2 percent in June after two months of slight declines. Output was held back partly by supply disruptions in the auto industry related to the March 11 earthquake in Japan.

The reports were the latest in a series, including weak retail sales and employment, to suggest that an anticipated step-up in growth in the second half of the year might not be as strong as initially thought.

“We still expect an improvement in the second half, but the question is, How much can we grow?” said Yelena Shulyatyeva, an economist at BNP Paribas in New York. “Our view is the rebound is not going to be anything like in the prior cycles because we are growing at a lower potential rate right now.”

The Federal Reserve chairman, Ben S. Bernanke, said this week that the central bank was prepared to act if growth faltered further but made it clear that the Fed was not yet at that point.

The economy was hit by a combination of high commodity prices and bad weather, causing growth to slow sharply to a 1.9 percent annual rate in the first quarter after a brisk 3.1 percent in the final three months of 2010.

Disruptions to motor vehicle production and still-high gasoline prices are expected to have held growth to a rate of 1.5 to 2 percent in the second quarter. The government will release its initial second-quarter gross domestic product estimate on July 29.

Manufacturing in the second quarter posted its weakest rise since the recession ended in mid-2009. There are indications that manufacturing maintained its weak tone as the third quarter started.

The decline in consumer sentiment, which came even as gasoline prices dropped from a peak of more than $4 a gallon in May, does not bode well for consumer spending.

The debate in Washington over raising the country’s debt ceiling is adding to economic uncertainty.

Hard-pressed consumers could get a reprieve from declining commodity prices. Labor Department data showed that the Consumer Price Index fell 0.2 percent in June as gasoline prices tumbled 6.8 percent. Despite declines in the last two months, gas prices are up 35.6 percent over the previous 12 months.

The drop in consumer prices was the first in a year. Prices increased 0.2 percent in May.

Stripping out food and energy, however, the core index rose 0.3 percent after a similar gain in May. The rise in core inflation reflected a lagged pass-through from high commodity prices, and economists saw no threat of an upward spiral in price pressures.

In the 12 months to June, core inflation rose 1.6 percent after increasing 1.5 percent in May. This narrower measure of prices was pushed up by rises in housing, new vehicles, used trucks and apparel. Apparel prices recorded their biggest jump since March 1990, while the rise in used cars and trucks was the biggest in more than one and a half years. Fed officials would like to see core inflation closer to 2 percent.

Wage growth remained benign, with average hourly earnings flat in June. In the 12 months through June, average hourly earnings rose 1.9 percent. In addition, capacity use at factories was unchanged at 76.7 percent in June, pointing to slack in the economy.

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With Sonic, G.M. Stands Automaking on Its Head

The production line has been squeezed into half the space of a traditional plant. Welding robots are concentrated in efficient clusters, instead of being spaced along the line, while many of the workers earn half the typical union wage. Even the first coat of rust-proofing has been reformulated so that it is one-hundredth as thick as — and thereby cheaper than — the coating on other cars.

One of the oldest axioms in the auto industry is that no company can build a subcompact car in the United States and make money because they are priced too low. The Ford Fiesta is built in Mexico. The Honda Fit is made in several places, including China and Brazil. But with Americans — and Detroit — rediscovering small cars because of high gasoline prices, General Motors is intent on shattering that notion with its new Chevrolet Sonic. Not only does it give G.M. a new entry in the lowest tier of the market when it goes on sale this fall, the Sonic is expected to be a breakthrough in establishing a new level of cooperation between Detroit and the United Automobile Workers.

The radically revamped factory here operates with fewer and cheaper workers, many of whom are paid $14 an hour rather than the full U.A.W. wage of $28 an hour.

The plant itself is smaller and reconfigured to save money, with company executives modeling some of the changes after G.M.’s most efficient factories in Germany and Korea. The production line’s footprint alone was reduced from 1 million square feet to 500,000 — the equivalent of losing the space of more than two Wal-Mart Super Stores. The energy bill was cut by powering some operations with methane gas from neighboring landfills.

The Sonic will be G.M.’s littlest, and most fuel-efficient, conventionally powered vehicle. It was conceived in 2008 before the federal government’s bailout of the bankrupt automaker, when negotiators from the company and the union began brainstorming about what it would take to make a profitable subcompact car in the United States rather than in low-wage countries.

“We wanted to prove we could do it,” said Diana D. Tremblay, G.M.’s head of labor relations , “and we went into it with an open mind.”

The U.A.W. tried to persuade the Ford Motor Company to build the Fiesta subcompact in the United States. But Ford chose a plant in Mexico, where the combined wages and benefits of a production worker total less than $10 an hour. By contrast, a full-wage union member in the United States costs G.M. close to $60 an hour. Even an entry-level wage employee costs about $30 an hour in wages and benefits.

While it is not the only factor in producing a profitable subcompact, lower employment costs were critical to the decision to build the Sonic in Michigan. In a groundbreaking labor agreement, the union allowed G.M. to pay 40 percent of its union workers at Orion Township an “entry-level” wage that sharply reduces overall production costs.

“The entry-level wage structure was an important enabler, because obviously the smaller the car the less the margin,” said Ms. Tremblay.

The U.A.W.’s president, Bob King, said the union considered the significance of a competitive subcompact to G.M.’s overall product lineup. The Sonic is the first subcompact that G.M. has tried to build in its home market since the Chevrolet Chevette almost 40 years ago, aside from a brief joint effort with Toyota to build Geo Prisms. The smallest car in its lineup now is the Chevrolet Aveo, a subcompact developed by G.M.’s South Korean subsidiary.

“We are committed to the success of the company,” Mr. King said recently. “We had to talk about a business model that makes sense.”

For all its promise, the Sonic still has to convince consumers that G.M. has found the right formula for an attractive and affordable subcompact. Previous efforts like the Geo Prism and the Aveo were bland and underpowered, and contributed to G.M.’s lackluster reputation in the overall car market.

“G.M. has a lot to prove with the Sonic,” said Joseph Phillippi of the research firm Auto Trends . “They have to cut costs but still put out a competitive car.”

The car itself is a mosaic of innovation to make the Sonic lighter, less costly and more fuel-efficient, including high-strength steel used in its windshield pillars and the ultra-thin film applied to prevent rust. The Sonic sedan resembles a shrunken version of the Cruze,  while the hatchback version is distinguished by its short rear overhang and upright stance.

The Sonic weighs 500 pounds less and is eight inches shorter than the next biggest car G.M. makes, and its little 1.4-.liter turbocharged engine will deliver the best gas mileage in the company’s fleet. “It will be north of 40 miles per gallon,” said Jim Federico, head of G.M.’s global small cars and electric vehicles.

Still, to get the car to meet cost-saving goals, a team of G.M. engineers and manufacturing specialists also had to adapt and reconfigure the Orion plant. It opened in 1983, and was used to build big cars like the Buick Riviera in the 1990s. It nearly closed two years ago, when three other large assembly plants were shut down to reduce capacity.

G.M. spent heavily in converting the plant, investing $545 million in new equipment and retraining workers — and it shows, from the gleaming floors to the banks of fluorescent lighting that brighten the plant and save $430,000 a year in energy costs. The plant is also the company’s greenest, producing 80 percent less solid waste and using 20 percent less water, all at a savings.

Various stages along the assembly line, like the body shop and trim area, are more compact, with teams of six workers installing parts fed to them on automated carts by independent suppliers who operate inside the plant. That reduces costly inventory and improves productivity. “Normally the suppliers would be five miles away versus 50 feet,” said John Barry, a G.M. manager.

The plant over all employs 1,800, a reduction of 25 percent. To augment the small profit earned on the Sonic, the workers will also make the larger, more upscale Buick Verano on the same line. Even the shifts have been fine-tuned to four 10-hour days rather than the usual five-day week to save wear and tear on the machinery.

Every dollar saved is essential for the Sonic to compete, auto experts said. And if the car is a winner with consumers — production begins in August — Orion Township could become a model.

“This plant has the potential to redefine American manufacturing,” said Harley Shaiken, a labor professor at the University of California, Berkeley. “A success here indicates untapped capabilities.”

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As Sales Decline, Wholesale Inventories Grow

The Commerce Department said Friday that wholesale inventories rose 1.8 percent in May, the biggest gain since October. Some of that increase reflected an unwanted buildup of goods because sales declined.

Sales at the wholesale level fell 0.2 percent, the report said. The sales drop was led by a big decline in auto sales, and the inventory buildup also reflected a large rise in auto stockpiles.

The weakness in May sales offered the latest evidence that the economy slowed in the spring as consumers struggled with soaring gas prices and high unemployment.

Manufacturing has been one of the strongest sectors of the nation’s economy since the recession ended two years ago; factory production has been supported by concerted efforts on the part of businesses to restock depleted shelves. With the May rise in inventories, stockpiles are now 18.9 percent higher than their lowest level, hit in September 2009.

Factory activity weakened this spring, in part because of temporary factors. High gasoline prices caused consumers to spend less elsewhere, which cut demand for factory goods. And the March 11 earthquake and tsunami in Japan led to supply-chain disruptions that slowed manufacturing in the United States, particularly in the auto and computer industries.

There are signs that those impediments are lifting. Gas prices have dropped considerably since peaking in early May at a national average of nearly $4 a gallon. And manufacturing activity expanded in June at a faster pace than in the previous month, according to the Institute for Supply Management. That suggests the parts shortage is beginning to abate.

The economy grew at an annual rate of 1.9 percent in the first three months of the year. Analysts are expecting similarly weak growth in the April-June quarter.

Growth is expected to pick up to a 3.2 percent rate in the final six months of the year, according to an Associated Press survey of 38 economists.

Still, growth must be stronger to significantly lower the unemployment rate. The economy would need to grow at a 5 percent pace for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year will simply keep up with population growth and hold the rate steady.

In another report, the Federal Reserve said consumers took on more debt in May and used their credit cards more for only the second time in nearly three years.

The Federal Reserve said Friday that consumer borrowing rose $5.1 billion in May, the eighth consecutive monthly increase. It followed a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans.

The overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion in May. That was just 1.7 percent higher than the nearly four-year low of $2.39 trillion hit in September.

The increase in credit card borrowing marked only the second monthly gain since August 2008. Households began borrowing less and saving more when unemployment spiked during the recession. The category is down 4.4 percent over the last year and 18.5 percent from its peak in August 2008.

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Retail Sales Rise, but Below Forecasts

Sales at discount stores increased 7.8 percent in May, the best showing by any group of retailers in terms of sales last month, according to a survey of 25 retailers released on Thursday.

But sales at stores that have been open at least a year, known as same-store sales, compiled by Thomson Reuters, rose 4.9 percent in May, slightly below the 5.4 percent that analysts had forecast. It was also below the 8.9 percent growth in April, which was one of the biggest increases in the index in the last few years.

Analysts said the May figures reflected the continued pressures on consumers from an uncertain jobs market, a depressed housing sector and the recent rise in gasoline prices.

Sherif Mityas, a partner in the retail practice at A. T. Kearney, a global management consulting firm, called the results “a bit underwhelming.”

He added: “In totality we are still seeing significant headwinds from a consumer confidence perspective,” he said. “You are seeing that show up in consumer retail sales.”

The monthly survey of same-store sales is used as a gauge for buoyancy in the retail sector and the strength of consumers. It was released a day before the Labor Department’s monthly report on the jobs market. Analysts are forecasting an unemployment rate of 8.9 percent, down from 9 percent, and the addition of 170,000 jobs in May, although other jobs data this week has raised some concerns about whether those expectations will be met.

Economists said higher food and gasoline prices, although they have been moderating recently, have taken their toll on retailers. With some people out of work and a depressed housing market, “people are feeling less confident about where their money is going,” Mr. Mityas said.

“The American consumer is still unfortunately focused on their needs when they open their wallet,” he said.

Still, the Thomson Reuters survey also suggested that while discount consumers were seeking bargains, more affluent consumers were feeling less of a pinch. Retail sales at department stores rose 3.8 percent, but that was below the 4.5 percent increase expected. Apparel for teenagers did well, climbing 4.5 percent, slightly above expectations of 4.2 percent.

Another survey, from the International Council of Shopping Centers, released on Thursday found a gain of 5.4 percent in May retail sales from May 2010.

Neither survey includes Wal-Mart.

Chris G. Christopher Jr., the senior principal economist for IHS Global Insight, said: “The fact that luxury stores are plowing ahead gives some credence to suspicions that the high-end American consumer is pulling out of the recession relatively well, while the rest are having their incomes swallowed up by higher food and gasoline prices.

“In addition, shoppers are increasingly shopping for clothing from discount stores and staying away from the more expensive apparel outlets,” he said.

The Thomson Reuters survey accounts for sales in the four weeks through May 28. It quoted some retailers as saying that unseasonably cool and wet weather in the beginning of the month hurt traffic, but as the weather turned warmer near the end of the month, business picked up.

Same-store sales at Saks jumped 20.2 percent in May. In a statement, Saks said that a four-day sales event helped push up May’s results.

Costco was also strong, with a 13 percent rise.

Macy’s reported same-store sales were up 7.4 percent. The department store chain said in a statement that it was raising its guidance to a 5 percent increase in same-store sales for the second quarter from the previous estimate of about 4 percent.

Macy’s includes online sales in its same-store sales calculations.

Mr. Mityas said Saks and Macy’s were pursuing consumers with better pricing and merchandising. “They are clearly setting the bar,” he said.

Nordstrom said sales were up 7.4 percent.

Among the companies that missed forecasts by the biggest margins were Destination Maternity, which showed same-store sales declining 8.6 percent, worse than the decline of 1 percent forecast by analysts.

Same-store sales at J. C. Penney, which had been expected to show a 3.3 percent rise, fell 1 percent.

Gap and Stage Store also fell short of forecasts.

The teenage apparel retailers Buckle and Zumiez beat expectations, with same-store sales rising 8.8 percent and 7.8 percent, respectively, in May.

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