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US Durable Goods and Core Capital Orders Rise

US Durable Goods and Core Capital Orders Rise

Orders for durable goods in the United States went up 2.2 percent in February after a steep drop in January, the Associated Press reports. Heavy demand for machinery, computers, automobiles, and aircraft fueled much of the increase. Durable goods are those expected to last at least three years, and orders can fluctuate sharply from month to month__however, durable goods orders have been rising steadily for the past three years.

Orders for core capital goods, a measure of business investment, increased 1.2 percent but are still below December’s total. According to Paul Ashworth, an economist at Capital Economics, business investment in equipment and software isn’t much higher than at the end of 2011. Economists see this as another indicator that economic growth will slow to about 2 percent, down from 3 percent in the final three months of last year.

While some economists are disappointed that the commercial aircraft gain was smaller than expected, most anticipate overall business investment to stay strong this year. Survey data indicate overall business spending should increase in the second quarter, Ashworth says. Many companies delayed upgrading their facilities during the recession, but they now are catching up.


GM May Shut Down Facilities, Move Production to Low-Cost Countries

An internal strategy document reveals General Motors plans to increase its production capacity in low-cost countries while it closes two facilities in Europe, Der Spiegel reports. The factories that make GM’s Opel brand in Bochum, Germany, and sister brand Vauxhall in Ellesmere Port, England, are expected to cease operations.

The manufacturer faces a shrinking car market in Europe. Opel and Vauxhall sold 20 percent fewer cars in January and February, and a Rüsselsheim, Germany, facility already has implemented a four-day work week for certain periods. Rival automakers Fiat, Peugeot, and Renault also are dependent on the European market and are also expected to close factories.

The GM internal strategy paper is called “Global Assembly Footprint.” It reveals that the company plans to produce 80 percent of additional vehicles if sales increase in “low-cost” countries such as Poland, Russia, China, India, Mexico, and Brazil. Currently, about half of GM’s automobiles are produced in high-cost countries in North America and Europe.

The document also states that GM plans to consolidate its range of global models, cutting in half the number of vehicle platforms by 2018. Very few models targeted specifically at Europe would remain under this plan.


Japan: Cooperation and Dialogue on Rare Earths Needed

Leaders in Japan, the world’s biggest importer of rare earths, stress the need for international cooperation for alternatives, conservation, diversification, and recycling of the critical materials, Bloomberg Businessweek reports. Continuing dialogue with China to stabilize global supply also is urged.

“The supply chain of rare earth-related products is connected globally,” says Keiro Kitagami, vice minister at the Japanese Ministry of Economy, Trade, and Industry. “Problems with rare earths are a common global challenge.”

Rare earths are the chemically similar metallic elements used in the construction of products ranging from wind turbines to guided missiles and hybrid car batteries. China accounts for at least 90 percent of the global supply of rare earths, and has reduced output of the materials since 2009.

Kitagami says broad international cooperation among consumer entities including the European Union, the United States, and Japan, and resource countries such as Canada and Australia is critical. “It is also important for all of us to continue dialogue with China,” Kitagami adds.

According to a spokesperson for China’s Ministry of Commerce, the country’s export controls on rare earths are intended to protect its resources and the environment.

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