Tuesday 31 December 2019
BUSINESS DAY
37
NATIONAL NEWS
FT
Panasonic says Tesla gigafactory plant labour shortages resolved Joint venture electric battery project in Nevada had suffered from lack of engineers KANA INAGAKI
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anasonic says it has resolved a labour shortage that has hampered production efficiency at the “gigafactory” in Nevada, its joint-venture electric battery plant with Tesla. The Japanese company made a $1.6bn investment in the $5bn plant to become the exclusive supplier of lithium-ion electric battery cells for Tesla’s Model 3 car. But the gigafactory has struggled to raise its production yields since it launched in 2017. Originally designed to be able to produce the equivalent of 54 gigawatt hours a year, it is only now finally nearing 30GWh. Panasonic said it has faced an industry-wide shortage of battery engineers after a construction boom in lithium ion battery megafactories to address the shift towards electric vehicles. “Even today, demand is far outstripping supply when it comes to chemical engineers with lithiumion experience,” said Allan Swan, the head of Panasonic’s US battery manufacturing unit based inside the gigafactory, in an interview. To build its team, Panasonic recruited chemical engineers from non-battery sectors and trained them to handle lithium-ion batteries. Now it has 3,000 people who operate the machinery and about 200 technical assistants from Japan to keep the plant running 24 hours a day, 365 days a year. “For us to move to [54GWh] should not be so hard. We now have the knowhow to do it in quite a high volume environment,” said Mr Swan. Securing engineers is a critical
step as Tesla plans to use batteries produced at the US gigafactory for its Model Y sport utility vehicle when it launches next summer, according to people with knowledge of the plan. Panasonic declined to comment on battery plans for Model Y. Tesla could not be reached for comment. The skills gap in engineers was one of many problems that led the Tesla chief executive, Elon Musk, to blame his Japanese partner for constraining Model 3 production in April. But whether the Japanese company, whose $1.6bn commitment only covers capacity to 35GWh, will make an additional investment is far from certain. In November, Kazuhiro Tsuga, its chief executive, said the company’s focus was in reaching the 35GWh target and that it had no plans to build a new battery plant for Tesla in China even despite the US company’s deepening relationship with local battery producers. Part of the frustration for Panasonic has been the mismatch between sales of Tesla electric vehicles and Mr Musk’s aggressive plans to build new plants in China and Germany, according to people close to the Japanese group. In addition to the capacity at Gigafactory 1, declining sales of Model S and Model X vehicles mean that Panasonic could also use production lines at its plant in Osaka without making investments in new factories. Mr Swan played down perceived tensions between the two companies, saying there was no barrier between the two teams working inside the gigafactory. “Our whole job is to make sure that Tesla wins,” Mr Swan said. “If Tesla wins, Panasonic wins.”
China boosts lending to small businesses despite risk Concerns grow that campaign is driving up bad loans rather than supporting economy SUN YU IN BEIJING
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government-led campaign to boost small business financing by 30 per cent has prompted Chinese banks to relax lending standards and lower interest rates even though the sector is known for high numbers of defaults on loans. The lending spree makes small companies the latest beneficiaries of Beijing’s efforts to rescue the nation’s ailing economy after GDP growth fell to a 30-year low. However, concerns are growing that a surge in lending to subprime borrowers could result in an increase in bad loans rather than a boost to the real economy. Chinese banks lent a record Rmb2tn ($286bn) to small companies with limited access to credit in the first 10 months of this year, the China Banking and Insurance Regulatory Commission announced this month. That is up from Rmb1.7tn in the whole of 2018. Average interest rates paid on small business loans fell from 7.4 per cent to 6.8 per cent over the same period. Large banks are leading the wave. The Industrial and Commercial Bank of China, the nation’s
largest lender by assets, reported a 48 per cent jump in outstanding small business loans in the first 11 months of the year, according to a press release. ICBC currently charges small companies as little as 3.9 per cent interest, compared with the benchmark lending rate of 4.35 per cent. However, by the end of May, Chinese banks were also reporting a 5.9 per cent non-performing loan ratio for small businesses, according to the People’s Bank of China, against 1.4 per cent on loans to large companies. Even if the borrowers do not default, the increase in lending to small companies is often unprofitable. Many lenders are pricing small business loans at below the 8 per cent average cost of funds for small business loans, according to Ji Shaofeng, a former official at the China Banking and Insurance Regulatory Commission. “The Chinese government is sacrificing banking profits to rescue small firms,” said Mr Ji. The ICBC Branch in Dezhou, a city in Shandong province in China’s east, provides such a large subsidy on its small business loans that it is equivalent to a cut of 60 basis points in its lending rate.
MOL chief executive Zsolt Hernádi, left, and Croatia’s former prime minister Ivo Sanader © FT Montage/Reuters/AFP
Former Croatian PM convicted of corruption in privatisation case Ivo Sanader accepted bribe in sale of state-owned energy group, court rules VALERIE HOPKINS
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ormer Croatian premier Ivo Sanader and the head of Hungarian oil group MOL have been found guilty of corruption by a Zagreb court, in a case that has lasted for nearly a decade. The case relates to the privatisation of Croatian state energy group INA in 2009. A court in Zagreb ruled on Monday that Mr Sanader was guilty of accepting a bribe of €10m from MOL chief executive Zsolt Hernádi in exchange for MOL being awarded a substantial stake in INA and more seats on its management board. MOL now owns 49 per cent of INA, while the Croatian state owns 45 per cent. Mr Sanader received a prison sentence of six years, while Mr Hernádi received two years. Neither of the men were present in court to hear the verdict, Mr Sanader due to illness and Mr Hernádi because he lives in Hungary and has fought extradition to Croatia despite Interpol — the body that facilitates international
police co-operation — issuing a warrant for his arrest. The ruling is the first step in a series of court stages and neither man will have to start serving their sentences until the appeals process has been exhausted. Both Mr Sanader and Mr Hernádi deny wrongdoing. MOL Group said in a statement that Mr Hernádi “continues to have the full support and confidence of the MOL Group boards”. A previous conviction against Mr Sanader for bribery and illegal profiteering in relation to the INA privatisation was overturned by Croatia’s constitutional court in 2015 due to procedural errors. This is the first time Mr Hernádi has been brought to trial. His lawyer Michael O’Kane called the verdict a “travesty” and said that a team of “senior independent trial monitors concluded that this case was riddled with unfairness, bias, incompetence and possibly worse”. In a statement, MOL Group noted that an investigation by the Hungarian public prosecutor in 2011 had cleared Mr Hernádi, and that a UN trade arbitration panel had decided
in favour of MOL and “explicitly concluded” that allegations of bribery were false. The question of INA’s ownership is politically sensitive in Croatia. It was one of the largest companies in the former Yugoslavia before its collapse and even after the war in the 1990s it was a big employer in the newly independent country. But since then the privatisation scandal has become an emotive issue for Croatians who are fed up with the country’s tumultuous transition to capitalism, and a cause of diplomatic tensions between Croatia and Hungary. The Hungarian government owns 25 per cent of MOL Group. Hungarian premier Viktor Orban has previously suggested that Croatia should buy back its INA shares to end the protracted cross-border row between the two EU members. Delivering the judgment on Monday, president of the Zagreb court Ivan Turudic condemned Budapest’s refusal to honour the arrest warrant for Mr Hernádi, saying: “There is an active European arrest warrant for Hernádi and Hungary should act accordingly.”
Trump’s financial records battle: what will happen in 2020? US Supreme Court decision likely to have far-reaching implications for future presidencies KADHIM SHUBBER
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he US Supreme Court will rule in 2020 on a set of historic cases involving Donald Trump that will define the presidency for decades to come and determine whether he can continue to keep his tax and financial records secret. Mr Trump is battling Democrats in Congress and a New York City prosecutor to stop them investigating his business affairs with subpoenas to his accountant and two lenders, Deutsche Bank and Capital One. Though the president has been defeated in the lower courts, in March his lawyers will try to persuade nine justices on the conservative-majority high court to endorse Mr Trump’s expansive argument that he has immunity from investigation while in office. Here’s what you need to know: What cases will the Supreme Court hear? Two involve House Democrats, who are investigating Mr Trump’s
business affairs and possible Russian influence, and the third involves the Manhattan district attorney, Cyrus Vance, who is investigating alleged hush money payments. In all three, investigators issued subpoenas for copies of Mr Trump’s financial records to various companies that have worked with the president and his businesses. The president sued the companies — accounting firm Mazars USA and banks Deutsche Bank and Capital One — to stop them from complying with the subpoenas. What is Mr Trump arguing? In the US, both parties have long argued that the president occupies a unique role in the constitutional structure. The president is the only elected official in the entire executive branch — one of three coequal branches of government — and therefore requires some protection from interference and distraction while fulfilling his or her duties. Mr Trump has advanced two separate but connected arguments that rest on this foundation: that he is
absolutely immune from any form of criminal investigation while in office, and that House Democrats do not have a valid legislative reason to look into his affairs. Rather, Mr Trump claims, the requests are just efforts to harass him. The immunity line extends a longstanding justice department policy that considers the president immune from indictment by federal prosecutors while in office. But that has never been affirmed by the courts, nor has it ever applied to investigative steps before indictment. Taken together with the president’s defiance of the impeachment inquiry, the arguments amount to a broad declaration that Mr Trump, as head of the executive branch, cannot be investigated by anyone as long as he remains in the White House. How have courts ruled so far? Most of the judges who have heard Mr Trump’s arguments have responded with scepticism, even apparent disdain at times, as they have repeatedly ruled against him at the district and appeals court level.