Airbus poised to invest $600 million in new U.S. plant

Reuters – 9 hrs ago

ATLANTA (Reuters) - European planemaker Airbus is poised to invest $600 million in a new U.S. production facility in Mobile, Alabama, for its A320 passenger jet that is expected to produce four planes a month by 2017, according to two people familiar with the company's plans.

U.S. rival Boeing Co on Friday argued that a U.S.-based plant would not dilute Washington's case against European aircraft loans that the World Trade Organization has found illegal. The same body has also faulted some U.S. aid to Boeing.
Airbus, owned by Europe's EADS and Boeing, the world's dominant jetmakers, are involved in the largest-ever dispute at the WTO over mutual accusations of billions of dollars of illegal aircraft subsidies.
"While it is interesting once again to see Airbus promising to move jobs from Europe to the United States, no matter how many are created, the numbers pale in comparison to the thousands of US jobs destroyed by illegal subsidies, which Airbus and its European government underwriters have failed to remove to the satisfaction of the U.S. government and in direct contravention of international trade law," Boeing spokesman Charlie Miller said in an emailed statement.
Airbus had initially offered to assemble some commercial freighters in Mobile to sweeten a bid for a bitterly fought $35 billion refueling tanker contest it lost to Boeing last year.
The latest plan calls for a $600 million Alabama assembly plant dedicated to the A320 passenger jet that would start producing four aircraft a month in 2017, according to two people familiar with the matter who were not authorized to speak publicly.
One local official said the plant would create a significant number of direct jobs, and could attract many smaller companies needed to provide components for the new passenger planes, to the region.
It would be the second plant outside Europe for Airbus's most popular jet. The EADS unit produces 37 planes a month between France and Germany and 3 a month in China. By the end of this year, it plans to reach 38 in Europe and 4 in China.
EADS also builds helicopters in Columbus, Mississippi.
EADS Chief Executive Tom Enders said on Thursday no final decision had been taken and called recent reports "speculation."
Sources have not ruled out an announcement as early as Monday ahead of the July 9-15 Farnborough Airshow in the UK, but there are signs some hurdles remain before a deal can be finalized.
"There are plenty of conditions that would need to be met for such a concept to be implemented. This just isn't the case right now," a source familiar with the matter said.
(Reporting by Karen Jacobs in Atlanta, additional reporting by Tim Hepher and Elena Berton in Paris and Andrea Shalal-Esa in Washington; Editing by Christian Plumb)

A combination of several factors, including a declining dollar and the Federal Reserve’s announcement that it would keep interest rates at virtually zero until late 2014, helped to send gold and silver prices soaring to multi-week highs. Analysts expect the upward trend to continue as paper currencies founder and gloomy news continues to dominate the economic headlines.

The spot price for gold was around $1,725 by 2 p.m. Eastern time after jumping more than $60 since the day before, up almost 30 percent from a year ago and more than 7.5 percent over the last 30 days. It smashed through $1,700 on Wednesday for the first in six weeks.
"At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar," Commerzbank analyst Daniel Briesemann told Reuters.
Analysts said the single most important factor behind gold’s strong rally was the Federal Reserve. On Wednesday, the privately owned central bank promised to keep short-term interest rates at rock bottom until late 2014, extending the date from its previous pledge to keep rates down until mid-2013.
Also bullish for gold — and bearish for the U.S. dollar, of course — was Fed boss Ben “helicopter” Bernanke’s veiled threat to unleash more so-called “Quantitative Easing,” known in simpler terms as creating new “money” out of thin air and pumping it into the economy by purchasing bonds. The dollar immediately took a hit against other major currencies.
"The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don't get improvement in the pace of recovery and a normalization of inflation," Bernanke said during a quarterly news conference after the Fed’s report was released. Analysts and central bank critics, already concerned about massive monetary “easing” in recent years, lambasted the idea that more money would solve the economic problems plaguing America.
“If the Federal Reserve thought the economy was improving, it wouldn’t need this artificial prop to keep sustaining it,” said Euro Pacific Capital head Peter Schiff, noting that wild money printing was helping to drive the nation and its economy off a cliff. “The President and the Federal Reserve are now conspiring to create a much bigger crisis.”
The Fed claimed it would be targeting a 2-percent rate of annual inflation for 2012. However, few analysts take the government’s “Consumer Price Index” (CPI) measure of inflation seriously — especially as Core CPI, one of the most frequently cited figures, omits price increases in key sectors like food and energy.
According to Schiff, the government’s claim based on CPI that inflation for 2011 was 3 percent is completely bogus. It was actually much higher, he said, noting that officials were using phony measures like the CPI to mask the true rate of inflation. And it is likely to be even higher in 2012 before eventually morphing into a full-blown currency and debt crisis in the coming years.
“The reason they have to keep [interest rates] so low is to artificially support a phony economy,” Schiff explained. “This economy is a disaster waiting to happen — the only thing standing between us and economic Armageddon is zero-percent interest rates.”
But it can’t go on forever, and the longer rates are kept so low, the worse the looming crisis will be. For now, Schiff, whose business trades gold and silver, said investors should protect their assets by purchasing precious metals “before the price goes any higher.”
An analysis by Bloomberg published on Wednesday showed that gold — which has increased every year for more than a decade — provided the best return on investment over the last five years when adjusted for volatility. And heavy-hitting financial firms cited in the report including Goldman Sachs and Morgan Stanley are forecasting that gold prices will keep rising to around $2,000 in 2012 or 2013.
“People are still very under-invested in gold, and so there is a huge scope of that increasing,” explained UniCredit analyst Jochen Hitzfeld, the most accurate precious-metals forecaster tracked by Bloomberg over the past two years. Other experts noted that gold is widely and accurately perceived as a safe-haven in times of economic turmoil.
While gold prices have been extraordinarily volatile — spot prices hit $1,923 in September before crashing to $1,523 by the end of 2011 — the longer-term rally has so far been relatively consistent over the past decade. Just 10 years ago, gold was worth less than $300 per ounce.
Silver, which has also seen drastic price fluctuations, was less than $5 per ounce 10 years ago. In 2011, it surged to an all-time high of around $50 before dropping back down to about $33.35 today. The U.S. dollar, meanwhile, has not been doing so well — even when measured against other depreciating paper currencies.
Even billionaire investor George Soros, whose well-publicized sale of some 99 percent of his gold holdings during the first quarter of 2011 spooked precious-metals investors, has jumped back into the market. According to Securities and Exchange Commission (SEC) filings cited by Bloomberg, the hedge-fund manager had increased his stake in SPDR Gold Trust, an exchange-traded fund tracking gold prices, to almost 50,000 shares as of September 30.
Central banks around the world were also buying up multi-ton quantities of gold bullion, according to data cited in news reports. And the trend shows no signs of slowing down.
In other bullish news for the precious metal, unconfirmed reports indicate India has started purchasing oil from Iran using gold rather than U.S. dollars. China could follow, too, according to news reports.
"It shows the exodus from the dollar is gaining speed," noted precious-metals and currency trader Simit Patel on the investment analysis site Seeking Alpha. "With the major economies of the world facing $7.6 trillion in bond payments due this year, I think the tipping point for a shift out of dollars and into a new monetary system backed by gold is not as far off as it may seem."
With the steep drop in prices during the last few months of 2011, some analysts and traders were reluctant to get back in the precious-metals market before the appearance of a solid bottom had solidified. But the big banks and respected analysts are forecasting that as long as the fundamentals — out-of-control money printing, sovereign-debt crises, wild government spending, and more — remain the same, gold and silver prices could see massive gains in 2012.

Reports of gold

Saturday, June 30, 2012