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German tool industry foresees 25,000 job cuts

Last Updated on Tuesday, 30 November 1999 05:00 Written by Administrator Wednesday, 11 February 2009 18:37
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FRANKFURT: Demand for machine tools, a key component of the German powerhouse economy, collapsed in December, threatening the jobs of 25,000 workers this year, an industry body said on Tuesday.

The fourth quarter was the worst quarter since 1958, Manfred Wittenstein, president of the German Engineering Federation, or VDMA, was quoted by a statement as saying. That year however marked the start of a significant five-year growth phase for the German machinery sector which ended in 1962.

The German economy is the biggest in Europe and the machine tool industry plays a big part in its strength and export prowess.

In December, orders for machine tools, used to produce other tools, parts and consumer products, plunged by 40 per cent from the equivalent figure in 2007. VDMA said it expected output to shrink 7.0 per cent this year as the global economic downturn curbed both domestic and foreign orders.

Strong variations were expected between different branches in the sector however. Orders fell by 29 per cent in the last quarter of 2008 compared with the figure for the same period a year earlier, VDMA said.

For the year as a whole, the sector resisted weaker global economic activity reasonably well, with an increase of 5.4 per cent in the value of its products sold to 194 billion euros ($250 billion), strong exports to developing countries and the creation of 40,000 new jobs, VDMA said.

Major markets for German production were Brazil, China, India and Russia, the so-called BRIC countries. The value of exports even reached a new record last year, gaining 8.0 per cent over the level in 2007. Along with automobiles, machine tools are a key export for Germany, which remained last year the world biggest exporter in US dollar terms of manufactured goods.

China will likely take over the crown this year, however, as firms there have suffered somewhat less from the global downturn.

Although Germany has fewer global conglomerates than other leading economic powers, it is home to a host of family-owned small and medium-sized enterprises known as Mittelstand that have become world leaders in niche product areas.

Courtesy: The News


Subhiksha shops, warehouses looted

Last Updated on Tuesday, 30 November 1999 05:00 Written by Administrator Wednesday, 11 February 2009 18:34
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MUMBAI: At least 600 stores and warehouses of an Indian retail chain struggling to pay wages were ransacked over the past week, an official said on Monday, as a slowing economy and rising unemployment strain the country.

Subhiksha Trading Services, which operates about 1,600 discount stores across the country, ran out of cash last October, and has been struggling to pay wages, rentals and its suppliers, its founder R Subramanian told Reuters.

The properties have become vulnerable targets, he said. We are taking all steps to protect our assets. It is really sad that we have been unable to prevent this so far.

Over the last few days, Subhiksha stores in several parts of the country have been damaged and warehouses looted because the company has been unable to pay its employees and the security agency that provides protection, he said.

The perpetrators could be disgruntled vendors, employees or anti-social elements taking advantage of the situation, he said, adding in some cases even owners of the real estate the company uses have broken locks and taken away assets.

Chennai-based Subhiksha, which launched its first discount grocery store in 1997, was considered a pioneer in India highly fragmented retail industry which is estimated at more than $350 billion worth of annual sales and forecast to nearly double by 2015.

Rapid economic growth and rising middle-class incomes had encouraged a boom in the industry, with large conglomerates including Reliance Industries, the Tata Group and Bharti Enterprises setting up shop and hiring tens of thousands.

The industry has also drawn global heavyweights including Wal-Mart Stores Inc, Tesco Marks & Spencer and Metro AG in the cash-and-carry segment.

Subhiksha, which had more than 15,000 employees, expanded quickly on borrowed cash, with its plans to raise money from the stock market last year shelved by a volatile market. As the credit crunch bit, banks also became wary of lending.

Operations are at near standstill. We are working with the financial stakeholders, lenders and investors, to inject liquidity and get the company back on track, Subramanian said. The company has an immediate need for about 3 billion rupees ($61 million), he said.

Courtesy: The News


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