Ford Motor Co.’s new CEO plans to cut $14 billion in costs, drop some car models and focus the company’s resources on trucks, SUVs and electric vehicles as part of a renewed effort to win over skeptical investors.

Jim Hackett, who became Ford’s CEO in May, met with around 100 investors Tuesday in New York to lay out his plans for the future. He said getting the company lean and flexible will help it handle the changes the auto industry is facing, from car-sharing to self-driving vehicles, to the shift to electric cars.

“I feel a real sense of urgency for what we’re doing here,” Hackett said.

Hackett and his executive team spent the summer reevaluating Ford’s operations after former CEO Mark Fields was ousted in May. Hackett traveled to Russia and Turkey and visited North American plants and Ford’s Silicon Valley research center as part of his review.

He said he was impressed by the talent at Ford, but wants to update factories and speed product development and decision-making. One of his first moves was to pare down the number of people reporting to him. Hackett has eight direct reports, compared to 18 for Fields.

Ford told investors it expects to reduce material costs by $10 billion by 2022 through new deals with suppliers and simpler designs. The company plans to share more parts between vehicles and reduce the options available for configuring a car. For example, customers can now order a Ford Fusion sedan in 35,000 possible combinations. Ford is reducing that to 96.

Ford also says it will cut $4 billion in engineering costs through 2022 by making fewer prototypes and reducing product-development time.

It plans to cut one-third of its engine development costs and redeploy them to electric and hybrid vehicles. Ford plans to introduce 13 new electrics and hybrids over the next five years, including a small electric SUV coming in 2020.

The company plans to reallocate $7 billion from cars to SUVs and trucks. Global demand for those vehicles is rising, and they are critical to Ford’s bottom line. Jim Farley, head of Ford’s global markets, said Ford plans more off-road SUVs like the upcoming Bronco for North America and more low-end small SUVs and seven-passenger SUVs for China.

The automaker plans to cut some cars from its lineup, but didn’t name them Tuesday. Farley said Ford will still offer small cars, like the Focus, but will stick to more expensive — and more profitable — versions.

Smarter vehicles

Ford emphasized that it’s open to new partnerships, such as its recent agreement with Indian automaker Mahindra Group to cooperate on mobility, electric cars and other projects. It is also working with ride-hailing company Lyft on self-driving technology and with China’s Zotye Automobile Co. about an electric car partnership.

The company says its vehicles will get smarter, with 90 percent of its global vehicles getting modem connectivity by 2020. That will allow things like software updates or apps that help drivers find parking. Ford can differentiate itself by offering, say, connected commercial vans that help small businesses keep track of their deliveries.

Marcy Klevorn, Ford’s head of mobility, said Ford launched a medical van service eight weeks ago that can pick up wheelchair-bound patients and take them to the doctor. The service uses Ford-developed software for scheduling appointments, and it will help the company figure out ways that consumers will eventually use self-driving vehicles.

“We have created a box of assets that we can pull out and use for various things,” Klevorn said.

Share price

Ford stuck to its previous guidance for 2017 on Tuesday. The company expects adjusted earnings of $1.65 to $1.85 for the full year. Ford earned $1.76 per share 2016.

Hackett, the former CEO of office furniture company Steelcase Inc., joined Ford’s board in 2013. He briefly led Ford’s mobility unit before being tapped as CEO.

Ford hired Hackett, in part, to turn around its share price, which has languished for the last two years even as rival General Motors Co. saw its shares rise to their highest level in seven years. Ford sunk below Tesla Inc. in market value earlier this year, even though it earned $4.6 billion in 2016 and Tesla has never made a full-year profit.

Ford’s shares rose 2 percent to close at $12.34 Tuesday before Hackett’s presentation. It’s not yet clear if his pitch will improve investors’ confidence.

“Straddling the now and the future will be tricky, especially in terms of profitability,” said Michelle Krebs, an executive analyst for the car-buying site Autotrader.com.

Investors have been critical of Ford for waiting too long to bring a long-range electric vehicle to market, as GM did with the Chevrolet Bolt. They also struggled to understand Ford’s plans to compete on autonomous cars.

“In the past few years, Ford simply hasn’t had a compelling narrative that investors could latch onto,” Barclay’s analyst Brian Johnson wrote in a recent note to investors.
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North Korea’s U.N. ambassador accused the United States on Tuesday of imposing “an economic blockade” on his country and deploying nuclear assets on the Korean Peninsula aimed at toppling leader Kim Jong Un.

Ja Song Nam said the U.S. push for countries to implement what he called “illegal and unjustifiable” U.N. sanctions on North Korea is part of America’s “frantic attempt to completely block our peaceful economy for people’s everyday lives and humanitarian cooperation.”

“The U.S. is clinging to unprecedented nuclear threats and blackmail, economic sanctions and blockade to deny our rights to existence and development, but they only result in our sharper vigilance and greater courage,” he told the General Assembly committee that deals with economic and financial issues.

The U.N. Security Council has imposed its toughest sanctions ever on North Korea in response to its continuing nuclear weapons and ballistic missile tests, with the aim of pressuring Kim’s government into returning to negotiations on denuclearizing the Korean Peninsula.

The measures include a ban on countries importing North Korean coal, iron ore and textiles and new limits on its crucial oil and petroleum product imports. But the economic pressure has had no visible impact on Kim’s government, which appears to be accelerating toward what it says is its goal: putting the entire United States within range of its nuclear weapons.

A week ago, North Korean Foreign Minister Ri Yong Ho told reporters that U.S. President Donald Trump had “declared the war on our country” by tweeting that North Korea’s leadership “won’t be around much longer.” Hours later, the White House pushed back, saying: “We have not declared war on North Korea.”

No regime change

The Trump administration, referring to the tweet, stressed that the U.S. was not seeking to overthrow North Korea’s government. U.S. Cabinet officials, particularly Secretary of State Rex Tillerson, have insisted that the U.S.-led campaign of diplomatic and economic pressure on North Korea is focused on eliminating its nuclear weapons program, not its totalitarian government.

North Korea’s ambassador told the assembly committee that “our people will continue to uphold the line of simultaneous development of the state nuclear force and the economy.”

Ja said the country is committed to implementing U.N. goals to end poverty and preserve the environment by 2030 and said Trump’s announced intention to withdraw the U.S. from the 2015 Paris climate change agreement “illustrates the negative stand of the U.S. towards the sustainable development goals.”

To achieve these goals, Ja said, “we should immediately obliterate the high-handed measures of the U.S., including the sanctions imposed on the developing countries.”

And clearly aiming at the United States and other economic powers, he said the “monopolistic position” of countries that control the monetary and trade system should be destroyed at the same time.
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The recovery of eastern Caribbean islands hardest hit by recent hurricanes, including Dominica, Barbuda, Turks and Caicos, the British Virgin Islands and Anguilla, could cost up to $1 billion, a senior U.N. official said Tuesday.

“It’s going to be a large-scale rebuilding effort that will take time,” said Stephen O’Malley, the U.N. resident coordinator for Barbados and the Organization of Eastern Caribbean States, “and it will be important to do that right.”

He told U.N. correspondents in a phone briefing from Dominica that “we don’t have exact figures yet,” but for the worst-affected islands the recovery bill will be “half a billion to a billion dollars.”

O’Malley said the United Nations, World Bank and Antigua government have conducted a post-disaster needs assessment for Barbuda, whose 1,800 residents were evacuated to Antigua before Hurricane Irma damaged 95 percent of its structures on Sept. 14. And he said a similar assessment will be done in Dominca, which was ravaged on Sept. 18 by Hurricane Maria, a Category 5 storm, probably in about three weeks.

“They want to build back better and they take that very, very seriously — to make sure that that can be done,” O’Malley said.

Making plans for future

Dominica’s Prime Minister Roosevelt Skerrit said he wants to have the world’s first “climate-resilient nation.”

He made an impassioned case for the world to do more to help vulnerable countries cope with the effects of global warming and urged the U.N. General Assembly 10 days ago to “let these extraordinary events elicit extraordinary efforts to rebuild nations sustainably.”

O’Malley said the effects of climate change are evident in the Caribbean, where the sea is heating up.

“The fact that the Caribbean Sea heats up, it intensifies the strengths of hurricanes; it doesn’t necessarily make them more frequent but it intensifies” the storm, he said.

O’Malley said the challenge for the islands in rebuilding is: “How do you protect yourself against that? How do you ensure that you have a resilient state and a resilient economy if you know that the risk factors are going to be elevating in this next period of time?”

Immediate disaster relief critical

As for immediate disaster relief following Hurricanes Irma and Maria, he said, regional efforts and military assistance from outside the region have been critical.

He singled out the Caribbean Disaster and Emergency Management Agency which sent a ship from Barbados to Dominica with initial aid workers the day after Hurricane Maria devastated the island.

When he landed at the airport in Dominica on Tuesday, he said there were policemen from St. Kitts, soldiers from Jamaica and Trinidad and Tobago securing the airport and other sites.

“That has helped the government set itself back up — that regional solidarity,” O’Malley said.

Some ‘green’ returning to Dominica

He said Dominica has also benefited from timely military support, especially helicopters and water desalination plants on naval vessels that produced water that could be taken inland and distributed.

He singled out military help to Dominica from Venezuela, United States, United Kingdom, Canada, France and the Netherlands.

Compared with the situation a week ago, O’Malley said he could already see some green returning to the almost totally brown island, streets were clear, roads were opening up, power and water supplies were being restored and the port was open. Now, he said, power and water need to be restored to everyone on Dominica and the economy needs to start operating quickly.

 
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House Republicans and Democrats on Tuesday grilled Equifax’s former chief executive over the massive data hack of the personal information of 145 million Americans, calling the company’s response inadequate as consumers struggle to deal with the breach. 

Former Equifax CEO Richard Smith apologized for the compromise of such information as names, addresses, birth dates and Social Security numbers. Smith was the lone witness at the first of several Capitol Hill hearings this week. No current Equifax official testified.

“The criminal hack happened on my watch, and as CEO, I am ultimately responsible, and I take full responsibility,” Smith said. “I am here today to say to each and every person affected by this breach, I am truly and deeply sorry for what happened.”

Democrats favor legislation that they say would establish strong data security standards and prompt notification and relief for consumers when their information is hacked. But Republicans tamped down expectations for any congressional action as this year the GOP-led Congress has rolled back several Obama-era rules affecting businesses and the financial sector.

“Equifax deserves to be shamed in this hearing, but we should also ask what Congress has done, or failed to do, to stop data breaches from occurring,” said Rep. Jan Schakowsky, D-Ill.

Rep. Bob Latta, R-Ohio, the chairman of the subcommittee examining the breach, said there are already laws on the books that require companies to secure sensitive consumer data. He said that hearings before four House and Senate panels this week should run their course before lawmakers make a decision about what to do next.

“The big thing we heard today is it was a very human error on their part,” Latta said.

Timeline of breach

Smith offered a timeline of what went wrong, saying the Department of Homeland Security warned the company on March 8 about the need to patch a particular vulnerability in software used by Equifax and other businesses. The company disseminated that warning by email the next day and requested that applicable personnel install the upgrade. The company’s policy requires the upgrade to occur within 48 hours, but that did not occur. The company’s information security department also ran scans on March 15 that did not pick up the vulnerability.

In late July, data security officials noticed suspicious activity on a website, which Smith said “happens routinely around our business.” He said an internal investigation ensued and he was alerted the next day, but he had no knowledge at that time that consumers’ personal information had been accessed.

Lawmakers pressed Smith about company executives selling stock in the company after the suspicious activity had been detected. On August 1 and 2, Equifax Chief Financial Officer John Gamble and two other executives, Rodolfo Ploder and Joseph Loughran, sold a combined $1.8 million in stock.

Smith described the executives as “honorable men, men of integrity.” He said at that point in time the company was unaware that consumer data had been accessed.

Schakowsky said “for a lot of Americans, that just doesn’t pass the smell test.”

Smith said the full extent of what occurred emerged during a meeting he had with cybersecurity experts and outside counsel on August 17. The board was alerted the following week and the public on September 7, after the company had made plans for how it would try to help consumers respond.

‘Damage control’

The timeline laid out by Smith didn’t satisfy many lawmakers, who accused the company of being too slow.

“I worry that your job today is about damage control. You put a happy face on your firm’s disgraceful actions, and then depart with a golden parachute,” said Ben Ray Lujan, D-N.M. “Unfortunately, if fraudsters destroy my constituent’s savings and financial futures, there’s no golden parachute awaiting them.”

Lawmakers said that at one point Equifax tweeted the wrong link for consumers to check to learn if they were part of the breach.

“Talk about ham-handed responses, this is simply unacceptable,” said Rep. Greg Walden, R-Ore.

Smith said he was disappointed in the rollout of call centers and a website designed to help the people affected by the breach. He said the company has increased its number of customer service representatives and the website has been improved. He said more than 400 million consumers contacted the company in the weeks following the announcement of the breach. He said the company wasn’t prepared for that kind of volume.

Lawmakers said they’re getting scores of calls from constituents concerned that their information was stolen and the potential ramifications in the years ahead. Rep. Ryan Costello, R-Pa., said hundreds of constituents have contacted his office about the company’s response.

“The slow rollout and how poorly it was done. To me, it was just inexcusable,” Costello said.
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Indigenous people under threat from companies seeking to develop their land for agriculture, mining and energy projects will be supported with money and practical help through a major global partnership backed by philanthropic and government funding.

The International Land and Forest Tenure Facility is the first initiative to provide grants to advance the rights of indigenous people to help them protect their forest land and resources.

“Creating mechanisms that allow indigenous peoples and local communities to gain tenure over their land or forests is a key way to tackle climate change and inequality,” said Darren Walker, president of the Ford Foundation, a major backer.

Norway pledges $20 million

The facility won a $20 million pledge from Norway on Tuesday when it was launched at a land rights conference in Stockholm.

Indigenous people and rural communities have customary claims to two thirds of the world’s land but are legally recognized as holding only 10 percent, according to the Rights and Resources Initiative (RRI), a global network.

This has contributed to an increase in conflicts over land in countries rich in tropical forests and natural resources as agribusinesses, mining and energy companies lay claim to indigenous land and forests.

Forests help slow global warming

Forests absorb planet-warming carbon dioxide and when they are degraded or destroyed, the carbon stored in the trees is released into the atmosphere. Deforestation accounts for 10 to 15 percent of carbon emissions worldwide.

If the facility invests at least $10 million a year for its first 10 years, experts project an increase in titled, protected and well-managed community and indigenous tropical forests of more than 40 million hectares (100,000 acres), an area roughly the size of Sweden.

Such efforts would also prevent deforestation of one million hectares and the release of 500 million tons of carbon dioxide and help reduce poverty among indigenous people, the RRI said.

“The Tenure Facility provides a powerful solution to save the world’s forests from the ground up,” said Carin Jämtin, director general of the Swedish International Development Cooperation Agency, another key funder.

Pilot projects

The facility has already provided grants and guidance for pilot projects in Indonesia, Mali, Peru, Cameroon, Liberia and Panama.

A 2015 peace accord that ended Mali’s civil war failed to address land-based conflicts that contributed to the war, said Boubacar Diarra, the project’s coordinator in the West African country.

The facility helped to set up 17 local land commissions to sort through conflicting claims to determine who owns the land, he said.

“These commissions have reduced conflicts by up to a third by working with local villagers and tribal leaders,” Diarra told the Thomson Reuters Foundation.
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The European Union insisted Tuesday that Brexit negotiations with Britain will not move on to the question of future relations until enough progress has been made on divorce issues, such as how much the country’s exit bill should be.

Britain desperately wants talks to move on to future trade and security arrangements but EU Commission President Jean-Claude Juncker said that more needs to be done on the withdrawal issues first.

Juncker told the European Parliament that “we have not made the sufficient progress needed” and the legislators backed him, approving a resolution underscoring the same point with a vote of 557 to 92 with 29 abstentions. It further underscored the unity of the 27 EU nations as they face off with Britain in the talks.

The EU wants London to commit to guaranteeing the rights of EU citizens already in Britain, making sure border posts do not reappear between the U.K.’s Northern Ireland and Ireland itself and pay up for everything it had agreed to while it was a member.

Juncker said “the taxpayers in the EU 27 should not pay for the British decision” to leave, while the bloc’s chief negotiator, Michel Barnier, said “serious differences remain” on how many bills the U.K. still has to settle. Estimates vary widely from 20 billion euros ($27 billion) to over three times that amount.

“Serious rifts remain, especially on the financial settlement,” Barnier said. “We will not pay at 27 what has been decided at 28, it is simple as that.”

The parliamentary resolution called for postponing any move to widen the talks with Britain unless “a major breakthrough” takes place during the fifth round of negotiations in Brussels next week.

Observers said decisive progress was highly unlikely. Tuesday’s moves further dampened hopes that the EU leaders might give the green light to an expansion in the talks at a summit on Oct 19-20.

Many lawmakers were also dismissive of Britain’s Conservative government, which is widely seen as insecure and bumbling.

The head of the biggest party group in the European Parliament called for the sacking of British Foreign Secretary Boris Johnson for stoking confusion over the Brexit talks.

The European People’s Party chairman, Manfred Weber, appealed to Prime Minister Theresa May: “Please sack Johnson, because we need a clear answer who is responsible for the British position.”

Weber turned Henry Kissinger’s famous observation about the many leaders in the EU onto Britain: “Who shall I call in London? Who speaks for the government? Theresa May, Boris Johnson, or even (Brexit negotiator) David Davis?”

Others are speculating that Britain might actually be stalling to make sure that the member states that trade heavily with the U.K. would buckle and concede at the last moment, sowing discord among the 27.

EPP member Tom Vandenkendelaere said the strong backing of the resolution proved differently. “If the Brits they can play their old divide-and-rule game, they’d better think again,” he said.
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After several years of struggling to make a living doing odd jobs in and around his village, 26-year-old Pushkar Singh came to New Delhi from the northern Uttarakhand state three months ago to hunt for a job.

The high school dropout is willing to do anything — cook, work as a security guard, a peon in an office. But not only has he failed to secure a job, he has not even got an interview so far.

“It’s a huge worry, not having work,” said a despondent Singh as he wondered how long he can continue staying with his relatives.

The hopes of young people like Singh had been fueled by Prime Minister Narendra Modi’s promise of creating millions of jobs for the country’s huge young population when he took power in 2014. Optimism rose after India won the tag of the world’s fastest growing economy. 

But the Indian economy has hit a sharp slowdown, leaving tens of thousands of people struggling to find work in mega cities like New Delhi, which are magnets for migrant labor.

The economy clocked a growth rate of 5.7 percent in the April to June quarter, its most sluggish pace in three years.

The bleak number has set alarm bells ringing and raised fears that India could struggle to return to a high growth path.

“It is a cause for concern, the economy has slowed down much more than most had expected,” said D.K. Joshi, Chief Economist at rating agency Crisil in Mumbai.

Reasons for the slowdown

The slowdown has prompted critics to accuse Modi’s government of economic mismanagement.

Most attention has turned to two major measures that have disrupted the economy in the last year. Critics have slammed the government for imposing a currency change last November to flush out illegal cash, saying it slowed down businesses amid massive currency shortages and gave an unnecessary shock to a cash dependent economy.

In July, India implemented a long overdue and widely welcomed tax reform — a goods and services tax (GST) meant to clean up a complex tax regime and make it easier to do business.

But many worry that faulty implementation and multiple tax rates have created confusion for businesses struggling with the new system.

Economists point out that the currency change and GST, coming within months of each other, have made the slowdown sharper and deeper for virtually all sectors of the economy, which had already started losing pace last year.

The impact is evident in the markets of the Indian capital, which are usually the most crowded at this time of the year. It is India’s main festive season, when consumer spending hits a high. But shop owners are disappointed because customers are not opening their wallets easily.

A usually buzzing upmarket area in New Delhi wears a deserted look. Manu Talwar, the owner of a shop selling high-end mobile phones, has been struggling to make a sale in a country counted as the world’s fastest growing smart phone market, where a new device is coveted by an aspirational generation. 

“You can see the market, it does not look like Diwali, the market is so down. Mobiles, accessories, people were crazy about it. As of now, iPhone 8 has launched, but there is no market,” said Talwar.

The government says it is looking for ways to rev up the economy — according to reports, it is considering spending billions of dollars to give investment a push.

Prime Minister Modi, seen as a business-friendly, reformist leader, recently announced the formation of a five-member panel to advise him on economic issues.

At the heart of the challenge is the need for jobs in a country where about 10 million enter the workforce every year. Modi had hoped to give manufacturing a push to create jobs for low-skill labor, but a flagship “Make in India’ program he launched to woo foreign investors has yet to show significant results. And a slowing economy means that jobs are even being lost in several sectors.

“To think of an overall manufacturing push of the kind China gave, or many East Asian economies that we observed in those economies, that does not seem to be a reality in India. There is a lot of ground to cover to reach that level,” said economist Joshi.

Officials are striking an optimistic note, calling the slowdown transitory, but economists warn recovery will be gradual.

That means Pushkar Singh’s hunt for a job and shop owner Manu Talwar’s hopes of the market picking up may not happen anytime soon.
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