The U.S. President Barack Obama has denied the turnaround plans tendered by General Motors (GM) and Chrysler for extra funds citing insufficiency as a reason. Instead, the government called on GM to completely redraft restructuring plans within 60 days, and forced Chrysler to merge with Italian suitor Fiat. Even if GM's chief Rich Wagoner, dubbed the U.S. auto industry's godfather, has decided to resign, President Obama harshly slammed the car industry saying that bankruptcy law would be applied once turnaround efforts are insufficient.

GM's financial structure has precipitously deteriorated evidenced by corporate deficits that have been generated for four straight years -- a $30.8 billion deficit last year alone -- and a debt excess of near $86 billion. Even amid plunged sales and accumulated deficits after the corporate credit rating degradation to the level of speculation grade, no endeavors have been made on a structural reformation with both managements and labor unions only seeking their own profits, resulting in the current condition in the end.

Considering a possible collapse of GM, boasting a 101-year history and the world's largest vehicle production volume, domestic automakers should also be fully prepared for probable worst case scenarios.

A possible liquidation of GM or Chrysler was also reflected in President Lee Myung-bak's mentioning of a necessity on 'an epoch-making improvement' during last week's government release on the auto industry support plans. Vice Minister Lim Chae-min of Knowledge Economy's belated remark, saying that ' a 70 percent vehicle tax deduction cannot be supported without the enhancement in illegal wage and salary practices? should be also implemented in substance.

[Translated by Eun-jung Kim / JYJ]

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February industrial production slightly receded and the leading composite index swung to an uptrend in 14 months.

Though it is early to bring up an economic recovery, some are voicing that the worst ever economic decline began to decelerate from its peak pace.

According to 'Industrial Activities during February 2009' disclosed by the National Statistical Office(NSO) on March 31, mining and manufacturing output fell 10.3 percent year-on-year. Taking into account operating days and Lunar New Year holiday, the figure saw a 15.5 percent year-on-year drop.

Services production each illustrated a 0.1 percent year-on-year and 1.2 percent month-on-month accretion.

Consumption goods sales contracted 6.2 percent year-on-year, but expanded 5.0 percent month-on-month. February capacity utilization in the manufacturing industry came in 66.7 percent on average, 5.3 percentage points higher against January.

In particular, the leading composite index designed to forecast the future economic situation climbed 0.5 percentage points from the figure recorded in January.

However, facility investment, a key to an economic rocovery, failed in avoiding sluggishness plunging 21.2 percent year-on-year with reduced investment in machinery including semiconductor equipment, while domestic machinery orders, a leading index of facility investment, diminished 28.8 percent year-on-year.

Meanwhile, March manufacturing business confidence was found to have considerably improved.

[Eun-jung Kim / JYJ]

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http://news.mk.co.kr/newsRead.php?year=2009&no=198390

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]