Business
Ray S. Eñano, Editor business@manilastandard.net extrastory2000@gmail.com
B4
MONDAY, MAY 1, 2017
US GDP growth softens to slowest in three years
W
ASHINGTON―Since the Federal Reserve upped its benchmark interest rates by a notch in mid-March, the skies have grown a shade darker for the world’s largest economy.
The softening outlook may have sapped some of the justification for policymakers to make the two further rate hikes expected this year. Even so, most analysts say the Fed looks poised to stick with the prevailing view of three increases in the key lending rate this year, likely in June and December. The US central bank’s monetary policy committee meets Tuesday and Wednesday, and even before the recent soft data they were not expected to move at this meeting. The Fed raised rates in March and December amid the wave of economic optimism that greeted
President Donald Trump’s rise to the White House, with Wall Street and consumer sentiment smashing records and while inflation ticked higher amid accelerating job gains. But since the last meeting, weak consumer spending, with back-to-back drops in retail sales, saw quarterly growth sink to its lowest level in three years. Gross domestic product increased 0.7 percent in the first three months of the year as consumer spending and government expenditures tumbled to their lowest levels in years, the Commerce Department reported Friday, presenting preliminary data.
Though only slightly below the 0.8 percent increase in the same quarter of last year, the result was down sharply from the 2.1 percent expansion seen in the fourth quarter of 2016. It was well below analysts’ expectations of 1.1 percent GDP growth. The last time first quarter expansion was more disappointing was a 1.2 percent drop in 2014. Job growth fell by more than half in March, and the pace of new home construction slowed. So did durable goods orders, with orders of for big-ticket items excluding the transportation turning negative for the first time in six months. Consumer confidence also began to dwindle in April after record highs. Meanwhile, inflation, which the Fed is mandated to control, retreated after steady gains since the summer. The “core”
Consumer Price Index, which excludes volatile food and fuel prices, actually contracted for the first time in seven years. The core Personal Consumption Expenditures price index, the Fed’s preferred inflation indicator, held steady at an annual rate of 1.8 percent, below the Fed’s two percent target. Earlier this month, the Fed’s influential vice chair, Stanley Fischer, said he still expects the central bank to raise rates a total of three times this year. But he sounded a note of caution. “We are dependent on what happens in the economy,” he said. “We’re not tied to three.” Steven Ricchiuto, chief US economist at Mizuho Securities USA, told AFP there was scant justification for the rate hike in March and he does not think the Fed will raise more than twice this year. AFP
AUTO RECOVERY. A model poses with a Honda car on display at the Indonesia International Motor Show in Jakarta on April 29, 2017. Indonesia has forecasted vehicle sales in 2017 to reach 1.1 million units, growing at a rate of five percent, as Indonesia’s economy is expected to recover from a prolonged market slump plaguing the market in the last few years. AFP
Cuban sugar to recapture sweet smell of success By Hector Velasco PEDRO BETANCOURT, Cuba―A sweet smell of treacle used to fill the air in the village of Pedro Betancourt―but like the workers from the derelict Cuba Libre sugar refinery, it has dispersed. It was the smell of success against the odds for Cuba, reviled by the United States and its allies in the Cold War but still a world champion sugar producer―until the Soviet Union fell and stopped buying it from Fidel Castro’s communist regime. Now a demolition crane is attacking what is left of the Cuba Libre refinery’s rusty steel skeleton. Fidel is dead, the Cold War is over― and Cuba wants its sugar industry back. “The refinery was the life of the people who lived here,” says Arnaldo Herrera, 86. He lost his job at the plant when it closed in 2004. “When that changes, life changes.” Cane on the risin’ Britain and other colonial powers grew fat on Cuban sugarcane―harvested by black slaves― from the 18th century until independence at the turn of the 20th. The island then sold a lot of sugar to the United States until Washington imposed a trade embargo after communist revolutionary Castro took over in 1959. Castro later announced a “revolutionary offensive” to relaunch the industry. The Soviet Union bought the sugar at preferential prices. For 1970 Castro famously set a production target of a “great harvest” of 10 million tons. (He fell short by 1.5 million.) But after the Soviet bloc collapsed in 1989, with the US embargo still in place and prices falling, the island could no longer compete. Two-thirds of its refineries―about 100 plants―have shut down since 2002. From eight million tons a year in the 1990s, production plunged to just over one million in 2010. “That was when we touched bottom,” says Rafael Suarez, head of international relations for the state sugar monopoly Azcuba. “Since then an effort has been made. The refineries have been improved and a lot of emphasis has been put on recovering sugarcane production.”
View of the Gregorio Arlee Manalich sugar mill, which is in the process of being demolished in Melena del Sur, Mayabeque province, Cuba on February 20, 2017. The mill was one of the 100 sugar mills (64 percent of the total) that were forced to close down due to a shortage of sugar cane, as part of a broad structural reform of Cuba’s sugar industry that got underway in 2002. AFP
Suarez says Azcuba is also looking to expand production of sugar derivatives: rum, cattle feed and renewable fuel. Human cost Some 100,000 Cubans used to work in refineries like the one in Pedro Betancourt in the east. The refineries used to pay well, for Cuba―at least double the $28 average monthly salary. Julio Dominguez, 84, worked in Cuba Libre until it shut. “This town has been stripped bare. Tobacco production is all it has left,” he says. The refinery stopped milling in 2004 and demolition began in 2007. Like everything in Cuba, it takes time. Some still weep when they pass the site, says the head of the demolition, Eliecer Rodriguez. “I am knocking it down, but that was someone else’s decision,” he says. Workers were kept on their salaries for some
time after the closure. Some have since moved on to work as tobacco producers, taxi drivers or handymen. Others have emigrated to the United States. “Closing a sugar refinery is always traumatic in human and social terms,” Suarez says. “What the revolution did was take a lot of care to see that no one was abandoned.” Sweet smell Soon only the concrete smokestacks of Cuba Libre will still stand among the green fields of sugarcane. But 70 kilometers (some 40 miles) away, a chimney is still smoking. The air smells of caramel. It is business as usual at the Jesus Rabi refinery. The plant’s boiler operator Juan Hernandez, 63, was made redundant from two sugar plants that shut down before he landed here. AFP
From left are: Philex Mining Corp. HR Group Manager Jocelyn S. Sinajon; Philex Mining Corp. President and CEO Eulalio B. Austin Jr.; Philex Mining Corp. Chairman Manuel V. Pangilinan; TUCP partylist representative Cong. Raymund Democrito Mendoza; PPMMEU President Davis Macaraeg
IN HONOR OF THE FILIPINO WORKER THIS is the day that we pause from the daily grind to honor those who, well, do the daily grind – our labor force – and to take note of where they are situated and what is needed to, at the very least, address their concerns regarding work and industry. According to the most-recent quarterly survey of our labor force by the Philippine Statistics Authority (PSA), conducted this January 2017, unemployed workers number 2.76 million which is 6.6 % of the total labor force. This is a slight increase from the same month last year. Around 63% of employed workers are salary employees or wage earners. Less than 50% of them are laborers or unskilled workers. Underemployment is also said to be at a higher-thanusual level. The bottom line, thus, for this government, and every government before it, was to create jobs and more jobs. For this, businesses and industries must be allowed to flourish, else, where to source these jobs in the first place. In the recent ASEAN Prosperity for All Summit 2017, the consensus was that for there to be prosperity for all there must be wealth that should be generated, and that for this to happen business and industry, as well as investments, must be stable and growing. More on the ASEAN Summit in my next column. I trust that the current administration under President Rodrigo Roa Duterte and the Department of Labor and Employment under a most competent Secretary, Silvestre “Bebot” Bello III, are doing all that it can to address this challenge, in line with the thrust to alleviate poverty and spur economic growth for the nation. Build business and industry, not shut them down. The mining industry is one such industry that must be allowed to prosper, if only for the potentials, investments, and eventually jobs that it will bring. Mining employs thousands upon thousands, not to mention the income brought to families and downstream industries. MSMEs also benefit largely from the industry, especially in those areas where mining operates. Imagine the number of jobs lost and the income lost if mines were to be closed, or if mining investments were to be spurned. Recently, Philex Mining Corporation entered into a Collective Bargaining Agreement with the Philex Pasig Metro
Manila Employees Union (PPMMEU) after just a few months of negotiation and deliberation. There has been a healthy relationship between the Philex management led by President and CEO Eulalio B. Austin Jr. and the corporate office union led by its President Davis Macaraeg, thus no hitches when it came to discussions over the negotiation table. Credit for this also goes to the mentoring and supervision of, as well as coordination with, the Associated Labor Unions – Trade Union Congress of the Philippines (ALU-TUCP) federation to which the PPMMEU and the Philex Padcal unions belong to, under the sound leadership of my fellow Bisaya Congressman Raymund Democrito Mendoza of the TUCP Partylist and ALU-TUCP National President Michael Mendoza, as well as of ALU-TUCP Executive Vice-President Gerard Seno, and ALU-TUCP Luzon Regional Operations Officer Sofriano “Ka Undo” Mataro. Aside from President Euls Austin, the Philex management panel was composed of Manuel V. Pangilinan as Chairman with the following members: VP and General Counsel Joan A. De Venecia, HR Group Manager Jocelyn S. Sinajon, Corporate Finance Division Manager Paraluman M. Navarro, and HR Services Supervisor Emila Lourdes D. Veloso. They were ably assisted by Engineering Group Manager Engr. Vengel A. Romero and In-House Counsel Atty. Joyce Sapla. Aside from Union President Dave Macaraeg, the following are the other union officers: Eddie Gonzales, Vice President; Chimes Placido, Secretary; Jonna Catanyag, Treasurer; Weng Bautista, Auditor; Robert Andrada, PRO; with Mel Bernardo, Princess Abalajon, Vlenda Ocon, Mel Balidoy and Dick Canievel as Directors. Indeed, a stable workforce boosted by business and industry, coupled with industrial peace, make for progress and development for our country. My sincerest greetings to all Filipino workers here and abroad on this Labor Day! Mabuhay ang Manggagawang Pilipino!
Manuel V. Pangilinan, Philex Mining Corp. chairman and Cong. Raymund Democrito Mendoza, TUCP partylist representative
Cong. Raymund Democrito Mendoza, TUCP partylist PPMMEU President Davis Macaraeg
Philex Mining Corp. chairman Manuel V. Pangilinan (seated –third from left), Philex Mining Corp. president and CEO Eulalio Austin, Jr. (seated, 2nd from left) lead other company officials in the signing of collective bargaining agreement with the Philex Pasig Metro Manila Employees Union (PPMMEU). Also pictured are Cong. Raymund Democrito Mendoza of the TUCP Partylist; PPMMEU President Davis Macaraeg and other union officers and union members