Section 2: Economic events

View the most recent version.

Canada

GM sent notice to 296 dealers (42% of the total in Canada) that they will not renew sales and service agreements after they expire in October 2010. GM will create an independent health-care trust by January 2010 that will cover almost 9,000 current autoworkers and 27,000 retirees, funded with a combination of cash and loan payments by GM Canada that will be repaid over the next few years. A new 3-year collective agreement was ratified with the Canadian Auto Workers union. Under the deal, workers agreed to a freeze in wages and cost-of-living allowances until 2012, eliminating perks such as a week of bonus holidays, a Christmas bonus, a special vacation bonus, tuition refunds and semi-private hospital coverage, and will now have to pay into health care plans. Retirees’ pensions and benefits will be frozen until 2015 and face limits on coverage in long-term care facilities. New workers will have to pay into the company’s pension. The German government will provide GM’s main European operations open with interim loans of $2.3 billion (US).

Alcoa reached an agreement with 3,800 unionized employees at its Bécancour smelter in Quebec to reduce hours worked in exchange for keeping all production lines running. ArcelorMittal will halt iron ore mining and refining operations in northern Quebec for a month this summer to reduce inventories, affecting 2,200 workers. Flint Energy Services cut 1,100 workers in Alberta. Bell Helicopter Textron Canada announced a further 400 job cuts in addition to 500 eliminated in February.

Teck Cominco issued $4.3 billion in long-term bonds, to help finance last year’s takeover of Fording Coal.

World

Chrysler announced the closure of 789 dealerships as part of its bankruptcy restructuring. GM notified 1,100 dealerships that it will terminate their contracts in October 2010. Ford announced it will sell 300 million common shares (almost $2 billion US) in a public offering to help meet funding requirements for retirees’ health benefits.

Ten large American banks required to raise $75 billion (US) in capital by the US Treasury exceeded $60 billion by month end. The Bank of America, ordered to raise the most ($33.9 billion), converted $5.9 billion of some preferred stock of non-government owners to common shares, issued $13.5 billion in new equity and acquired $4.5 billion after tax in a sale of a stake in China Construction Bank, pushing its total at month end to $26 billion.

Microsoft issued $3.75 billion (US) in bonds, its first ever bond issue.

The European Central Bank cut its benchmark rate by a quarter point to 1% and announced it would purchase 60 billion euros in covered bonds.

Next | Previous