BMW among the ‘bad’ foreign companies driving U.S. manufacturing jobs revival

SPARTANBURG, S.C. — Years before Donald Trump began promising to bring back good manufacturing jobs by getting tough with U.S. trade partners, such jobs have already been on the rise, largely thanks to foreign companies now cast as villains in Trump’s narrative.

Reuters analysis of federal jobs data shows that out of 656,000 new manufacturing jobs created between 2010 and 2014, two thirds can be attributed to foreign direct investment.

More recent jobs numbers are not yet available, but over $700 billion in foreign capital has poured in over the last two years bringing total foreign investment to $3.7 trillion at the end of 2016, a world record.

Now foreign companies that have spent billions of dollars on U.S. factories and local leaders who host them worry that global supply networks that back those investments will fray if Trump makes good on his pledge to roll back trade liberalization.

The U.S. president has threatened to tear up the North American Free Trade Agreement with Canada and Mexico and slap higher tariffs on nations that run trade surpluses with the United States, such as Germany or China. The administration is also discussing tighter immigration rules and more security screening of investment.

The tough message helped sway swing northeastern and Midwestern states Trump’s way in the 2016 election, but puts him at odds with companies and local leaders in the south, which has driven the recent growth in manufacturing jobs.

The southern states have voted for Trump, but have also spent decades wooing foreign companies with flexible labor laws, financial incentives and investment in ports, roads and other infrastructure.

Poster child, whipping boy

The courtship has spawned new auto plants from Kentucky to Georgia, and a new Airbus plant in Mobile, Ala.

Few places highlight the gap between Trump’s rhetoric and local aspirations better than Spartanburg in South Carolina.

German carmaker BMW has invested here $8 billion in a 1.2 million-square-foot assembly plant, which has become the largest single exporter of cars by value from the United States.

South Carolina Gov. Henry McMaster, a Republican and Trump supporter, credits the German automaker for putting his state on the global investment map.

“The presence of this company changed everything in the trajectory of our state,” McMaster said on Monday at an event unveiling BMW’s newest X3 SUV.

BMW CEO Harald Krueger said the carmaker would invest additional $600 million in Spartanburg over the next four years, adding 1,000 jobs to the 9,000-strong workforce, and spend further $200 million on employee training and education.

But the poster child of South Carolina’s success also doubles as a whipping boy. In January, BMW’s plans to build a plant in Mexico drew Trump’s ire and last month the U.S. president was quoted as saying Germany was “very bad” on trade and selling too many cars in the U.S.

And even as the company highlights its contribution to the U.S. economy and the benefits of free trade, it is hedging its bets by preparing for a possible protectionist backlash.

Outside of the spotlight, BMW is retooling factories in South Africa and China to build volume models like the X3 SUV, reducing its dependence on Spartanburg.

“We have a big footprint here, and we are flexible enough,” Oliver Zipse, BMW’s board member responsible for manufacturing, told Reuters. “We will build the X3 not only in Spartanburg, we will split it into South Africa and then to China, so we will have some flexibility to produce cars somewhere else,” he said. “If something happens at the political level — which we don’t know yet — we are able to have a flexible response.”

The Trump administration has said it welcomes foreign investment and Secretary of Commerce Wilbur Ross, who spoke at an opening of a new Samsung Electronics plant in South Carolina, said such projects showed that “America is becoming an even stronger destination for global businesses looking to grow.”

The southern U.S. states owe much of their success to coastal port authorities and cities that have invested heavily to make their channels and docks fit for shipments to and from China and Mexico. U.S. Sen. Lindsey Graham, R-S.C., who has often clashed with Trump, said protectionism would undermine those accomplishments and hurt American workers.

Doomsday scenario

“Negotiate a trade agreement with Europe, modernize NAFTA, don’t tear it up,” Graham told Reuters at the BMW factory. “We’re going in the wrong direction. We need more trade agreements, not less.”

Graham noted how low-cost competition from China and Mexico destroyed South Carolina’s once thriving textile industry and how the state reinvented itself as a manufacturing hub, bringing the likes of BMW or French tire maker Michelin.

The now humming port city of Charleston has a similar story to tell. When a major navy base shut down in the 1990s wiping out 20,000 jobs, local officials worked to bring foreign manufacturers, which now employ around 10,000 in the three counties around the city and more is set to come.

Mercedes-Benz, part of Daimler AG, is adding 1,300 jobs so it can make its Sprinter van here rather than merely assemble it with imported parts, which also means more business for local suppliers.

Up the road, Volvo Car Group, part of Chinese conglomerate Geely, is due to open its first North American plant next year with a target workforce of 2,000.

Local development officials expect more jobs and investment to come, but worry that some steps discussed by the Trump administration could have a chilling effect.

Claire Gibbons, director of global marketing at the Charleston Regional Development Alliance, said the proposed new tariffs, tougher immigration rules and stricter reviews of foreign investment projects would amount to a “doomsday scenario” for the region.

“This is an education opportunity for us all, for the people making the decisions that don’t understand the ramifications.”

Savings ratio at record low as disposable income drops, says ONS

Money changing hands

The proportion of UK residents’ disposable income that goes into savings has fallen to a record low.

The savings ratio – which measures the outgoings and incomings that affect households – has been falling sharply for more than a year.

The Office for National Statistics (ONS) said the ratio stood at 1.7% from January to March, down from 3.3% in the previous quarter.

The UK economy grew by 0.2% in the first quarter of 2017, .

This was unchanged from an earlier estimate but confirmed the slowdown from the 0.7% rate seen in the final quarter of last year.

Growth in the business services and finance sectors helped to offset slower consumer spending, the ONS said.

Consumer spending and saving were hit by another fall in disposable income.

For the first time since the 1970s, disposable income has fallen for three quarters in a row.

Concerns about the level of consumer borrowing on loans, credit cards, overdrafts and car finance.

But the ONS also said that the timing of tax payments was a major factor in the cut in savings levels since September last year. Gross saving of £5.6bn in the first quarter of the year was a sharp drop from £11bn the previous quarter, and £17.7bn in the three months before that.

Darren Morgan, head of GDP at the ONS, said: “The saving ratio has fallen again this quarter to a new record low, partly as a result of higher tax payments reducing disposable income.

“Some of the fall could be as a result of the timing of those payments, but the underlying trend is for a continued fall in the saving ratio.”

Frances O’Grady, general secretary of the TUC, said: “These figures make for grim reading. People raiding their piggy banks is bad news for working people and the economy.

“But with wages falling as living costs rise, many families are having to run down their savings or rely on credit cards and loans to get through the month. With household debt now at crisis levels, we urgently need to create better paid jobs.”

Labour’s shadow chancellor John McDonnell said: “This suggests that the crisis in earnings not keeping up with prices means that many working households are struggling to make ends meet.”

Vince Cable, from the Liberal Democrats, said: “Rising prices and falling wages since the Brexit vote mean families are increasingly unable to live within their means or save for the future.

“Our economy’s reliance on consumer spending, propped up by debt, is not sustainable and combined with an extreme Brexit the consequences could be severe.”

Earlier this week, financial information service that savers have faced a “never-ending battle” to get a decent return on their cash over the past few years.

Nine out of 10 easy access savings accounts pay interest of less than 1%, and a third of such accounts failed to even pay a rate matching the current base rate of 0.25%.

Savings rates are failing to keep pace with the rising cost of living, with inflation at a rate of 2.9%.

Lloyds misses own compensation deadline

Lloyds bank headquarters

Victims of a one billion pound fraud have criticised Lloyds Banking Group for failing to meet its own deadline for paying compensation.

In the wake of guilty verdicts in a fraud trial that ended in February, Lloyds said it would offer compensation to the victims by the end of June.

However, now the deadline has arrived, only a small fraction of the £100m it set aside has so far been paid out.

Lloyds, which bought HBOS in 2009, has yet to comment.

In the HBOS fraud, two corrupt HBOS bankers pressured small business customers into hiring a firm of so-called turnaround consultants called Quayside Corporate Services, led by David Mills.

Mills and his accomplices bribed the bank managers with cash, gifts and prostitutes, then used their relationship with the bank to bully the business owners into handing over exorbitant fees and, eventually, control of their companies. Many business owners were not only ruined but lost their marriages and their health.

Mills and the others, including former HBOS banker Lynden Scourfield, were convicted in January of various charges of fraud, corruption and money laundering between 2003 and 2007.

After years of denying any knowledge of criminality, Lloyds Banking Group came under pressure to take responsibility for crimes committed by its own staff. On 27 April the bank said it would offer victims compensation by the end of June.

However, the victims say the bank’s compensation scheme isn’t impartial. Of the 64 who’ve joined it, it’s understood that fewer than 10 have received offers and only one settlement has been reached. Lloyds has yet to comment.

Dozens more victims have declined to join the scheme amid concern that the bank is seeking to dictate terms, imposing its own compensation scheme rather than consulting them.

The bank is expected to provide an update on its treatment of the victims of the crime later today.

Nigel Morgan, whose family lost millions and was driven into bankruptcy following the fraud, says the bank refused to help him with a modest sum to prepare a compensation claim. He says the bank has made no effort to try to reverse the bankruptcy and the trustee in bankruptcy now wants to control the claim for compensation.

“It’s been 12 years since we were ruined by this and a very tough 12 years. I thought the bank would be decent enough to admit when it was wrong – but the way they’re behaving to the victims is disgusting. The first thing they should have done is to send someone round and apologise unreservedly.

“We’re constantly living on the edge, worried we won’t keep what we have left; I’m having panic attacks every day. It’s just an awful situation.”

Trinity Mirror sets aside another £7.5m for hacking scandal

Newspaper print line

Trinity Mirror has set aside an extra £7.5m to settle phone-hacking allegations, and announced it has signed a five-year contract to print the Guardian.

The owner of the Daily Mirror has now earmarked £60m in total to cover costs related to the phone-hacking scandal.

Trinity Mirror also said like-for-like group revenues were set to fall 9% in the 26 weeks to 2 July.

Falls in circulation and advertising have forced it to cut costs.

Revenues from print advertising fell by 21% over the period, while circulation revenues dropped 6%.

Chief executive Simon Fox said: “The trading environment for print in the first half remained volatile but we remain on course to meet our expectations for the year.

“I anticipate that the second half will show improving revenue momentum as we benefit from initiatives implemented during the first half of the year.”

Trinity said it had settled over 80% of the phone-hacking claims made against it, but more funds were needed because of “the lengthy process of settling claims and the structure and quantum of legal fees for the claimants”.

The group also revealed it had signed a five-year print and distribution deal for the Guardian and Observer newspapers from early 2018.

Earlier this month, Guardian Media Group said the Guardian and the Observer would switch to a tabloid format in early 2018.

Germany votes for 50m euro social media fines

Facebook logo

Social media companies in Germany face fines of up to 50m euros ($57.1; £43.9m) if they fail to remove “obviously illegal” content in time.

From October, Facebook, YouTube, and other sites with more that two million users in Germany must take down posts containing hate speech or other criminal material within 24 hours.

Content that is not obviously unlawful must be assessed within seven days.

The new law is one of the toughest of its kind in the world.

Failure to comply will result in a 5m euro penalty, which could rise to 50m euros depending on the severity of the offence.

In a statement, Facebook said it shared the goal of the German government to fight hate speech.

It added: “We believe the best solutions will be found when government, civil society and industry work together and that this law as it stands now will not improve efforts to tackle this important societal problem.”

German MPs voted in favour of the Netzwerkdurchsetzungsgesetz (NetzDG) law after months of deliberation, on the last legislative day before the Bundestag’s summer break.

But it has already been condemned by human rights groups and industry representatives.

They claim the tight time limits are unrealistic, and will lead to accidental censorship as technology companies err on the side of caution and delete ambiguous posts to avoid paying penalties.

The law will not come into force until after the German federal elections, which will be held in September.


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Human rights groups are concerned by Germany’s plan to fine social media companies

Justice Minister Heiko Maas singled out Facebook, which has some 30 million users in Germany, saying experience had shown that without political pressure, “the large platform operators would not fulfil their obligations” to take down illegal content.

He added that while the law “does not solve all problems”, it tackles the issue of hate crimes on social media, which are “increasingly a problem in many countries”.

Mr Maas, who oversaw the legislation, told the German parliament that online hate crimes had increased by almost 300% in the past few years, adding that “no one should be above the law”.

The bill was drafted after several high-profile incidents of fake news and criminal hate speech being spread on social media sites in Germany.

One case involved the targeting of prominent Green MP Renate Kunast, with a post that falsely suggested she was sympathetic to a refugee who had murdered a German student in the southern city of Freiburg.

For its part, Facebook said it had already made “substantial progress” in removing illegal content, and called into question the efficacy of the law.

The company recently announced it had hired an extra 3,000 staff (on top of the 4,500 it already has) to help monitor “the millions of reports” that come through every week.

Social media companies also point to a recent report by the European Commission, which showed that some 80% of all reported illegal content is already removed in Germany.

In addition to social media sites themselves, three voluntary, independent bodies currently monitor the German internet.

The BBC was given access to one of them, run by Eco, the German Association of the Internet Industry, in Cologne.

In a small, heavily secured office, three legal experts sifted through thousands of complaints from members of the public.


One example shown to the BBC was of a YouTube video titled “Sieg Heil”, a phrase that can be illegal in Germany.

The video was reported to the local police in North-Rhine Westphalia, and followed up with the social network itself after a few days.

But the organisers of the facility, which has been in existence for 15 years, are also concerned about NetzDG, which they say has been “rushed through” for political expediency.

“It takes time to define if a complaint’s content is really illegal or not,” said Alexander Rabe, a member of the Eco board, which was consulted by the government on the draft law.

Mr Rabe also pointed out that much of what many might deem to be “fake news” or hate speech on their social media feeds was not in fact illegal content under current German law.

The bill has also faced criticism from human right’s campaigners.

“Many of the violations covered by the bill are highly dependent on context, context which platforms are in no position to assess,” wrote the UN Special Rapporteur to the High Commissioner for Human Rights, David Kaye.

He added that “the obligations placed upon private companies to regulate and take down content raises concern with respect to freedom of expression”.

The law could still be stopped in Brussels, where campaigners have claimed it breaches EU laws.

FTSE 100 falls but pound holds above $1.30

Market trader (file picture)

The pound held above the $1.30 mark after comments from senior Bank of England officials suggested interest rate rises could be back on the agenda.

On Wednesday, Bank governor Mark Carney suggested that rates could rise if business investment grows.

The Bank’s chief economist, Andy Haldane, then said on Thursday that the Bank needed to “look seriously” at a possible rate rise.

The pound stood at $1.3010, and rose 0.2% against the euro at 1.1392 euros.

On the stock market, the was down 26.32 points at 7,324.00, with oil companies weighing on the index.

Shares in BP were down 1.6% while Royal Dutch Shell fell 1.4%.

Outside the FTSE 100, shares in Game Digital dived 30% after the video games retailer issued a profit warning.

The company said trading had been affected by lower than expected supplies of the Nintendo Switch console.

Game Digital warns on profit on low Switch supplies

Nintendo Swtich

Shares in Game Digital plunged by 30% after it issued a profit warning following low supplies of the new Nintendo Switch into the UK.

The video games retailer said that although demand was strong for the console, stock availability was lower than expected.

Game Digital also said demand for the Xbox and PlayStation consoles was softer than forecast.

The company now expects to miss annual targets for sales growth and income.

In early trade, its share price fell by 10p to 23p.

Game Digital, which operates in Britain and Spain, had said in March that while it expected “the challenging environment” in the UK to continue into the second half of its financial year, it had hoped sales of the Nintendo Switch would lift revenue.

As a result of slower supplies of the Switch and less demand for other consoles, sales will now grow below forecasts at 5-6%, Game said.

Game Digital was more upbeat about next year when it said it expected to benefit from better supplies of the Nintendo Switch “as well as the strong interest that is building for Microsoft’s new Xbox One X console”.

It also anticipates a “stronger” line-up of new video games releases.

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Game Digital

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  • -27.27%
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June U.S. sales data will be late

All automakers will now release June U.S. sales figures on Monday, July 3, prompting Automotive News to adjust plans for preliminary and final online sales reports and newsletters for June.

Four brands — Kia, Bentley, Jaguar and Land Rover — initially planned to release June sales results on Wednesday, July 5.

Automotive News will now publish its final monthly U.S. Sales Reportnewsletter (autonews.com/emailsignup) for June on Monday July 3, and scrap plans for a preliminary report on Monday and another, final report on July 5.

We’ll have our usual full print coverage of June’s U.S. sales results in the July 10 issue.

VW to expand Calif. EV charging stations in poorer areas

SAN FRANCISCO — Volkswagen AG on Thursday told California it was expanding efforts to build electric car infrastructure in poorer communities, responding to regulators who described “shortcomings” in VW’s plan.

The California Air Resources Board in May said that VW’s Electrify America unit needed to spell out how it would spend 35 percent of funds in lower-income areas.

The German automaker has agreed to spend $800 million in California and a total of $2 billion nationwide on clean car infrastructure to atone for diesel emissions cheating.

Critics, including rival charging station maker ChargePoint Inc. and some automakers, said VW’s plans could give it a competitive advantage and ignore poorer communities where the state wants to promote clean cars.

Electric car maker Tesla Inc. and some other charging station makers supported VW.

In a supplemental plan released on Thursday, the VW unit said it aimed to spend 35 percent of investment funds in such areas during the first $200 million, 30-month tranche.

Electrify America CEO Mark McNabb said by phone that the company had decided to build community charging stations, such as home and work chargers, in six disadvantaged communities, rather than five, although it did not raise the amount of money to be spent on community charging from a previous draft.

It committed to spend $2 million to $3 million on education with groups that had access to disadvantaged communities and was working on ways to open the network to owners of used electric cars.

It also said that more than half of the funds for stations near highways would be spent in less affluent areas.

Air Resources Board member Dean Florez, an environmental justice advocate who had pressed VW to add funds for disadvantaged groups, called the revised plan a “marked improvement.” He said he wanted more details and would press for reallocation of some public awareness funds to support the expansion of community charging to six areas.

McNabb said his company is considering four different charging station companies and hoped regulators would consider the revised plan over the summer. An Air Resources Board spokesman said no date for a vote had been set.

VW tells California plans for electric car charging in poorer areas

SAN FRANCISCO — Volkswagen AG on Thursday told California it was expanding efforts to build electric car infrastructure in poorer communities, responding to regulators who described “shortcomings” in VW’s plan.

The California Air Resources Board in May said that VW’s Electrify America unit needed to spell out how it would spend 35 percent of funds in lower-income areas.

The German automaker has agreed to spend $800 million in California and a total of $2 billion nationwide on clean car infrastructure to atone for diesel emissions cheating.

Critics, including rival charging station maker ChargePoint Inc. and some automakers, said VW’s plans could give it a competitive advantage and ignore poorer communities where the state wants to promote clean cars.

Electric car maker Tesla Inc. and some other charging station makers supported VW.

In a supplemental plan released on Thursday, the VW unit said it aimed to spend 35 percent of investment funds in such areas during the first $200 million, 30-month tranche.

Electrify America CEO Mark McNabb said by phone that the company had decided to build community charging stations, such as home and work chargers, in six disadvantaged communities, rather than five, although it did not raise the amount of money to be spent on community charging from a previous draft.

It committed to spend $2 million to $3 million on education with groups that had access to disadvantaged communities and was working on ways to open the network to owners of used electric cars.

It also said that more than half of the funds for stations near highways would be spent in less affluent areas.

Air Resources Board member Dean Florez, an environmental justice advocate who had pressed VW to add funds for disadvantaged groups, called the revised plan a “marked improvement.” He said he wanted more details and would press for reallocation of some public awareness funds to support the expansion of community charging to six areas.

McNabb said his company is considering four different charging station companies and hoped regulators would consider the revised plan over the summer. An Air Resources Board spokesman said no date for a vote had been set.