Eyes on Fiat Chrysler's Canadian plants as company merges with Peugeot to create $47-billion auto giant - Financial Post - Canada News Media
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Eyes on Fiat Chrysler's Canadian plants as company merges with Peugeot to create $47-billion auto giant – Financial Post

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PSA Group and Fiat Chrysler Automobiles NV will combine to create the world’s fourth-biggest carmaker, as the manufacturers prepare to shoulder the costly investments in new technologies transforming the industry such as automation and electrification.

In the biggest auto tie-up since Daimler’s ill-fated purchase of Chrysler in 1998, the French and Italo-American carmakers will each own half of the enlarged business with combined annual sales of 8.7 million vehicles.

The all-stock transaction brings together two carmaking dynasties — the billionaire Agnelli clan of Italy and the Peugeots of France — and will forge a regional powerhouse to rival Germany’s Volkswagen AG with a market value of about US$47 billion, surpassing Ford Motor Co.

Executives promised not to close any plants in the merger even though the new company aims to extract 3.7 billion euros in annual synergies related to platform and purchasing efficiencies. FCA currently operates two assembly plants in Ontario where it manufactures nearly one quarter of all vehicles made in Canada.

“In the merger there will be no affect on production in Ontario,” FCA chief executive Mike Manley said on a call with reporters Wednesday.

Earlier this year, FCA announced plans to eliminate a third shift and 1,500 jobs at its Windsor, Ont., plant where 6,000 employees build the Chrysler Pacifica, Chrysler Pacifica Hybrid, Chrysler Voyager and Dodge Grand Caravan.

It has since extended the shift until the end of the first quarter in 2020, and will continue to review the feasibility of maintaining the shift, a spokesperson said in an email. It’s too early to comment on whether that extra capacity — if it opens up — could be used to build PSA vehicles in North America, the spokesperson said.

No cuts have been proposed at FCA’s Brampton, Ont., plant where 3,400 workers build the Chrysler 300, Dodge Charger and Dodge Challenger.

While the combined company said its manufacturing footprint will remain stable for now, the executives touted the synergies from sharing technologies and platforms across brands.

The new company will be run by PSA Chief Executive Officer Carlos Tavares, with Fiat Chairman John Elkann holding the same role.

The transaction will take as long as 15 months to complete, pending approvals by shareholders of both companies and by regulators, the carmakers estimated.

Like executives across the industry, Tavares and Elkann are responding to growing pressure to pool resources for product development, manufacturing and purchasing in the face of trade wars and an expensive shift toward electric and self-driving technology.

“The challenges of our industry are really, really significant,” Tavares, 61, said on the call with reporters. “The green deal, autonomous vehicles, connectivity and all those topics need significant resources, strengths, skills and expertise.”

“The technological revolution we are embracing requires a more innovative response than anything we have done before,” Elkann, 43, said in a letter to staff.

In an era when size is becoming ever more important, the deal will turn the two mid-sized carmakers into a global heavyweight, with a stable of popular brands and annual vehicle sales surpassing General Motors Co. The combination will give Peugeot-maker PSA a long-sought presence in North America and should help Fiat gain ground in developing low-emission technology, where it’s lagged rivals.

Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, said the deal reflects where the auto industry is going and where it needs to go given how expensive it is to develop new technologies.

“That is so capital intensive and there’s only so much money to go around,” Nantais said. “They have to look for partners, they have to look for synergies in order to basically be prepared for the future.”

As for future manufacturing decisions, Nantais expects the companies to choose markets where it can produce more profitably. While Canada has a skilled labour force, infrastructure and the benefit of the new Nafta deal, it also has higher costs for inputs such as electricity, Nantais said.

“We’re still one of the highest cost jurisdictions to produce,” he said.

When it comes to where to locate production and management, Tavares indicted the company will stick to where the brands have roots and manage through regional headquarters.

“The brands carry the passion, the brands carry the history, the brands carry the emotions. This is why we considered that the brands will stay in their countries of origin,” he said. “Italian brands will stay in Italy, French brands will stay in France, American brands will stay in the U.S., and German brands will stay in Germany.”

Yet the new company will face many challenges. It will still be heavily reliant on Europe’s sluggish and saturated auto market, and poorly positioned in China, the world’s largest country for car sales.

The challenges will be manifold, from improving Fiat’s struggling European operations to meeting tough rules on emissions that kick in next year in the region as well as an unprecedented policy known as the green deal demanding an even tougher clampdown on carbon. Tavares, known as a hard-nosed cost-cutter, will also have to navigate the political crosscurrents in France, Italy and the U.S., where the automakers have deep national roots.

He has tackled tough jobs before, leading the French carmaker back from the brink after taking over in 2014, and reviving the loss-making Opel brand after acquiring it from GM two years ago.

“We believe further synergies above the modest 3.7 billion euros announced will be required to justify the combination going forward, which Tavares’ track record makes likely,” Bloomberg Intelligence analyst Michael Dean said in a note.

The deal with Fiat Chrysler marks a reversal of fortune for the 61-year-old executive, who was forced into a bystander role earlier this year when Elkann approached Renault SA, PSA’s French rival. That merger fell apart in early June after Renault’s Japanese partner, Nissan Motor Co., declined to back it.

China’s Dongfeng Motor Corp., which owns 12 per cent of PSA, will see its stake in the combined company decline to 4.5 per cent as a result of the deal and the sale of a portion of its holding to the French carmaker.

Dongfeng’s stake in PSA has attracted attention because of the possibility it could interfere with U.S. regulatory approval. U.S. economic adviser Larry Kudlow said last month the Trump administration would review the proposed merger because the deal would give the Chinese carmaker a stake in the combined company.

Tavares, on the call, said the companies don’t expect any significant issues from the antitrust regulators.

Fiat CEO Manley dismissed concerns over legal and tax issues that arose in recent weeks. GM in November accused Fiat Chrysler of bribing a union in the U.S. for more favourable terms. Manley, speaking with reporters, called the allegation meritless.

Separately, Italian tax authorities have claimed that Fiat owes the government a hefty sum after underestimating Chrysler’s value following its purchase several years ago. Manley reiterated that the case would have no material impact, and said both issues were reviewed during due diligence with PSA.

Manley, 55, who took over at Fiat last year after the sudden death of industry legend Sergio Marchionne, “will be there alongside” Tavares at the combined group, Elkann said in a letter to employees. He didn’t specify what Manley’s role would be.

Before the closing, Fiat will distribute to its shareholders a special dividend of 5.5 billion euros while PSA will distribute its 46 per cent stake in car-parts maker Faurecia SE to its own investors.

The spinoff or sale of Fiat’s robotics arm Comau slated for the benefit of the Italian company’s shareholders has been modified since October. Now, the planned separation will occur after the closing, and shareholders of the combined company will benefit.

Bloomberg.com

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Cathay Pacific Crew Demand Right To Wear Masks Amid Coronavirus Fears – Simple Flying

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Cathay Pacific cabin crew members are asking their employer for the right to wear masks in fear of contracting the new fast-spreading Coronavirus. The new virus is quickly spilling out of China, with carriers like Cathay Pacific most exposed.

Flight attendants are requesting the right to wear face masks. Photo: Cathay Pacific

What are the details?

Cathay Pacific is no stranger to viruses. The airline was right at the center of the SARS crisis many years ago and memories of quarantined infected passengers are still fresh in its collective mind. In fact, back in 2003, some 42 percent of all Cathay inbound and outbound flights had been canceled due to a drop in passenger traffic and the airline was considering grounding the entire fleet.

As such, cabin crew operating the airline know they will be on the front line when it comes to battling this new challenge and they want to be prepared.

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So far the airline has allowed its staff to wear face masks on flights operating to and from China, but now the flight attendant union is fighting to have all staff on all flights have the right to wear a mask.

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As Cathay Pacific has a large number of network throughput-passengers, it is very likely that if someone was infected with the virus they would head onwards to another destination and could infect others on a non-china flight.

Cathay Pacific
Flight attendants are the most at risk. Photo: Cathay Pacific

What is the union arguing?

“All of them are worried about the risk they are taking every time they go to work,” the union said in a statement to South China Morning Post. “It is time for the company to properly address their concerns and allow cabin crew to wear masks on all flights.”

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The union also stated that having their team members wear masks means that they will be able to protect their passengers.

“Such a measure does not only ease the anxiety of frontline employees but also sends a message to the public that Cathay Pacific is doing everything to ensure the safety of the passengers.”

The union’s statement concluded that it would be ‘too late and too painful’ to let the team members wear masks on all flights only after the first flight attendant gets infected.

Previously during a measles outbreak last year, Cathay Pacific allowed all flight crew to wear masks. So far the airline has only responded cautiously and has not elevated the new virus to the same level.

australia-first-airbus-a350-1000
The carrier has not allowed flight attendants to all wear masks yet. Photo: Cathay Pacific

“As required by the Hong Kong health authorities, we are now distributing health declaration forms and will be making face masks and antiseptic wipes available at the boarding gate to passengers traveling from Wuhan to Hong Kong,” Cathay Pacific said in a statement to SCMP.

“Our frontline staff are reminded to maintain good personal and environmental hygiene, and to remain alert and vigilant while being on the lookout for passengers presenting with infectious disease symptoms.”

How dangerous is this new virus?

So far this new virus has killed six and spread from China to Thailand, Japan, and Taiwan. There are around 300 reported cases so far, but some experts believe that China is under-reporting the number and it could easily be in the thousands within the country.

With the Lunar Holiday soon approaching, the number of Chinese passengers will dramatically increase around the world as they travel to, from and throughout China. If the new virus is going to spread, it will be spreading then and the world should be prepared.

For those reading for the first time about this virus and are worried, fear not. Most of those who get the virus will only suffer symptoms associated with the common cold, such as a runny nose, headaches, coughing, sneezing. However, there is a chance that the virus could lead to pneumonia or bronchitis. If you feel like you have flu-like symptoms and you recently traveled internationally, then go see a doctor.

Simple Flying is an aviation blog and not a professional medical service. Any medical statements we published is based on the writer’s common sense at best and is no way an official medical recommendation nor the official advice of Simple Flying. If you are feeling unwell, seek a professional

What do you think? Should the flight attendants wear a mask? Let us know in the comments.

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Lineups outside grocery stores in St. John's as state of emergency hits Day 5 – CTV News

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ST. JOHN’S, N.L. —
Emptying kitchen cupboards were restocked in St. John’s, N.L., on Tuesday, as residents lined up at grocery stores open for the first time since last week’s massive blizzard.

The lineup at one Sobey’s store stretched around the parking lot and out onto the street by the time doors opened at 10 a.m.

The city had advised people to buy enough food to last 48 hours, but some would-be shoppers still turned away upon seeing the epic queue.

Within 20 minutes, there was little room to move inside the store as people filled their carts with essential foods and household items, leaving some shelves nearly bare.

The openings at Sobey’s and other grocers occurred on the fifth day of a state of emergency in the provincial capital, as cleanup continued from a storm last Friday that brought 76 centimetres of snow to some areas.

The state of emergency was to continue Wednesday, though the city said some restrictions would be lifted.

Grocery stores and pharmacies will be allowed to open from 10 a.m. to 6 p.m. on Wednesday, as well as family doctors and specialist clinics in order to take pressure off hospital emergency rooms.

Oil companies will also be permitted to deliver home heating fuel.

Hundreds of Armed Forces personnel have been brought in to help in the effort, and more were expected to arrive on Tuesday.

Amid the slow return to everyday life, police announced one troubling development: the search for 26-year-old Joshua Wall, who went missing at the height of the blizzard, has been suspended.

RCMP spokeswoman Glenda Power said in an email that despite “exhaustive efforts” over the last four days, Wall — who was last seen leaving his home for a friend’s house at the height of the storm on Friday — has not been found.

“Bay Roberts RCMP continue to urge residents in the area to check their properties, including backyards, sheds, barns and other outbuildings, as well as vehicles, in the event Joshua sought shelter there,” Power said.

At Sobey’s on Tuesday, one St. John’s resident said she and her husband walked down early with a plan to beat the crowd, but arrived to find others had the same idea.

Doris Squires said she was looking forward to a restocked kitchen Tuesday night.

“I’m going to put on a pot of fresh meat soup, if I can get some fresh meat,” she said.

Several taxi companies offered free rides to seniors and people with disabilities who needed to pick up supplies.

Just around the corner from Sobey’s, there was a sense of relief at The Gathering Place, a service centre providing meals, warmth and other basic needs for low-income residents.

Ashley MacDonald, director of social programs, said the state of emergency has been hard on guests who rely on the centre for food and toiletries and couldn’t afford to stock up ahead of the storm.

Many were without power or any means to keep up with updates from the city, MacDonald said, noting some people approached her in the street during the last few days asking where they could find food.

“They’re in the dark about what everybody else knows,” MacDonald said.

About 70 people showed up on Monday to eat and to warm up, MacDonald said, and more than a dozen took home canned supplies for other community members who were housebound.

MacDonald said there was a sense of relief that day as people were finally fed, saw their friends’ faces and swapped stories after an isolating and precarious stretch.

She said planning ahead for warming centres and access to food should be a priority during such weather events in order to better support vulnerable members of the community.

Scott Seabrook, who lives in a bedsit nearby, was at The Gathering Place for a meal Tuesday afternoon. He said he’d been relying on the centre since moving to the city nearly a month ago for a job opportunity that fell through.

Seabrook said staff sent him home with some extra canned food Thursday night, warning they might be shutting down for a couple of days.

“I’ve been living on canned goods since then, and I shared it with some of the people in my room,” he said.

Defence Minister Harjit Sajjan said about 450 troops — including some 175 reservists — would be in Newfoundland on Tuesday to help the province dig out from the storm.

Premier Dwight Ball said Tuesday afternoon that the Armed Forces had completed more than 160 assigned tasks so far, and the call volume of requests for assistance had been “extremely high.”

The city said it would allow the St. John’s International Airport to resume flights Wednesday at 5 a.m., and taxis would have permission to resume operations at midnight.

This report by The Canadian Press was first published Jan. 21, 2020.

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The "Twin Threats" Facing Big Oil – OilPrice.com

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The “Twin Threats” Facing Big Oil | OilPrice.com

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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    The global oil and gas industry is facing the “twin threats” of the loss of profitability and the loss of social acceptability as the climate crisis continues to worsen. The industry is not adequately responding to either of those threats, according to a new report from the International Energy Agency (IEA).

    “Oil and gas companies have been proficient at delivering the fuels that form the bedrock of today’s   energy system; the question that they now face is whether they can help deliver climate solutions,” the IEA said.

    The report, whose publication was timed to coincide with the World Economic Forum in Davos, critiques the oil industry for not doing enough to plan for the transition. The IEA said that companies are spending only about 1 percent of their capex on anything outside of their core oil and gas strategy. Even the companies doing the most are only spending about 5 percent of their budgets on non-oil and gas investments.

    There are some investments here and there into solar, or electric vehicle recharging infrastructure, but by and large the oil majors are doing very little to overhaul their businesses. The top companies only spent about $2 billion on solar, wind, biofuels and carbon capture last year.

    Before even getting to the transition risk due to climate change, the oil industry was already facing questions about profitability. Over the past decade the free cash flow from operations at the five largest oil majors trailed the total sent to shareholders by about $200 billion. In other words, they cannot afford to finance their operations and also keep up obligations to shareholders. Something will have to change. Related: Libya Is Facing A New Oil War

    But, of course, as climate policy begins to tighten, oil demand growth will slow and level off. Most analysts say that it won’t require a big hit to demand in order for the financial havoc to really begin to devastate the balance sheets of the majors. Demand only needs to stop growing.

    The IEA said there are things the industry can do right now – and should have done a long time ago. Roughly 15 percent of the energy sector’s total greenhouse gas emissions comes from upstream production. “Reducing methane leaks to the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions,” the IEA said. But, the Permian is flaring more gas than ever, and methane leaks at every stage of the extraction and distribution process. Drillers have promises improvements, but the industry’s track record to date is not good.

    Meanwhile, the IEA also noted that while attention is often focused on the oil majors, national oil companies (NOCs) account for more than half of global oil production. The majors only account for about 15 percent.

    It is one thing for ExxonMobil or Chevron to face an existential crisis – which, absent an attempt to transition to a low-carbon business, they certainly do – but it’s an entirely different thing for the NOCs who will struggle to deal with the energy transition. The threat from the energy transition is not just to a specific business, but to whole governments and entire populations. “Some are high performing, but many are poorly positioned to adapt to changing global energy dynamics,” the IEA said. “None of the large NOCs have been charged by their host governments with leadership roles in renewables or other noncore areas.” Related: Has Natural Gas Hit Rock Bottom?

    Ultimately, the report from the IEA should be worrying for the industry. The agency itself has faced criticism for not being more at the forefront of calling for a clean energy transition, and its forecasts for renewables have consistently undershot actual improvements for renewable technologies. The agency also continues to call for more upstream oil and gas investment. In other words, the IEA is somewhat conservative, and has been slow to recognize major shifts in the energy sector.

    As such, the majors should probably take note when the IEA says something like “the transformation of the energy sector can happen without the oil and gas industry.” They can drag their feet, and will become increasingly ravaged by policy change and a deterioration in their core business. Or, they could proactively transform themselves, as the IEA says they should. Solutions to climate change “cannot be found within today’s oil and gas paradigm,” the agency said.

    By Nick Cunningham of Oilprice.com

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