Global News: More Drop-outs From Shanghai Show; Canada Backs GM, Chrysler Warranties; SsangYong Slashes Jobs; and Supplier Schaeffler Struggles With Debt
By Michelle Krebs April 9, 2009In Global News, China's upcoming auto show in Shanghai has more no-shows as a result of the ailing global economy, Canada's government is backing General Motors and Chrysler warranties as the U.S. is, and South Korea's troubled SsangYong axed more than a third of its workforce.
In China, automakers and suppliers continue to pull out of the Shanghai auto show scheduled for later this month. Fiat, Renault and Daihatsu have cancelled their attendance. So too have suppliers Michelin, Magna International, Delphi, ArvinMeritor and Johnson Controls. The Chinese arms of Ford, General Motors, Chrysler, Mercedes-Benz, BMW and Volkswagen are confirmed to exhibit.
In Canada, the government, taking its cue from the U.S. government, announced it, too, will back the warranties on General Motors and Chrysler vehicles. The Canadian government said it will spend up to $150 million to back the warranties in order to prevent a collapse of the automakers' sales as they restructure.
In addition, the Canadian government has allocated another $567 million, on top of the previous $445 million, to guarantee the accounts receivables of Canadian suppliers. The insurance helps suppliers obtain credit and continue operations.
In South Korea, troubled automaker SsangYong axed 2,467 of its workers -- or 36 percent of its workforce -- in a desperate attempt to survive. The company filed for bankruptcy earlier this year and is trying to cut costs and raise capital by selling property, including a parts center. Chinese automaker SAIC retains its 52 percent stake in Ssangyong but has lost management control of South Korea's smallest automaker. Meantime, Ssagnyong has sued SAIC saying it took intellectual property to China and has not lived up to its financial obligations.
In Germany, the never-ending saga of the supplier Schaeffler Group, which gulped the bigger supplier Continental AG, took yet another turn as Schaeffler won time and a loan of 1 billion Euro.
The Schaeffler Group, the world's second-largest ball bearings maker, acquired Continental, Europe's second largest auto parts supplier, in a hostile takeover last year. The guppy-swallowing-the-whale takeover, not surprisingly, has left Schaeffler cash strapped and laden with 11 billion Euro in debt as it made its takeover attempt as the global auto market turned downward. The merger could take months or years to complete as Schaeffler reorganizes and secures its hoped-for 5 billion Euro to 6 billion Euro in aid from banks the European government.
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