Resources For Our Future

AIAK's Chairman & CEO In The News
20 July 2003 - P.Y. Chin


New Straits Times

IN the mid-1970s, a Press conference was held in Kuala Lumpur to launch
what was then known as, and still is but in a different form, the Arab-
Malaysian Development Bank.


In walked a good looking, tall, well tanned and well-dressed gentleman.

As he walked into the room on the eighth floor of Bangunan Dato Zainal, next to Bank Bumiputra in Jalan Ampang, Kuala Lumpur, reporters wondered what this Middle-Eastern gentleman, with the look of a British banker, was doing at a Press conference to launch a Malaysian bank.

That was the first time Malaysians ever saw in person Hussain Najadi, an Arab from Bahrain, who over the next few years was to play a crucial and significant role in creating Malaysia's banking history. In the years to come, he would leave behind a mark that till today is being remembered and respected by most senior and experienced bankers in Malaysia and the Asian region.

Two weeks ago, this writer met up with Najadi again since that long chat in the late 1970s. Najadi looks different now, more mellowed, more mature, more softspoken, but still as fit and active as ever before; and, yes, less flamboyant.

Born in Bahrain, Najadi was educated in the West, mainly in West Germany and Switzerland, learning about the global oil business and industrial financing in Western Europe and the US.

"My banking businesses started from my education in the 1960s. In the beginning I was just managing funds." A local business magazine described him as the "first indigenous investment banker of the Arab Gulf region". In 1962, he was appointed a financial adviser to the Kuwaiti Minister of Finance and Oil. Soon his reputation spread throughout the Arab Gulf region, and many other Gulf states such as Saudi Arabia, Bahrain and United Arab Emirates sought his advice.

Then came the 1973-74 oil crisis, which saw crude oil price in the Middle East shooting through the roof, from single digit to double digits, and in the words of Najadi, "created a near financial panic in the world". The crisis changed his perception of the Arab Gulf region. In those days, Arab petro-dollars were pouring in by the billions into Western Europe and the US financial markets.

Following the oil crisis, he began urging Arab Gulf states to look to developing Asia for investments and trade. In a series of speeches and writing extensively in Arab publications, he called upon the Arab Gulf states to "open your eyes to the East".

Najadi said his "look East" vision for the Arab Gulf states was a "matter of survival" then. "All this while, the Arabs were looking to the West until they were forced, especially after Sept 11, to look elsewhere." Najadi recalled that soon after Opec (Organisation of Petroleum Exporting Countries) increased the price of oil, "I was asked by the Finance and Oil Minister of Kuwait (now the Ruler of Kuwait) to lead a Government-cum-private mission to Asian countries, including Malaysia.

"That was what brought me to Malaysia. I had the opportunity to meet up with such Malaysian leaders as the late Tun Abdul Razak, the late Tun Hussein Onn, and even the late Tengku Abdul Rahman, who was then chairman of Perkim.

"After some extensive discussions, we signed a joint venture agreement to set up a bank in Malaysia to handle mainly merchant banking and trade financing activities. In the first quarter of 1975, Arab-Malaysian Development Bank (AMDB) commenced operations from a very modest half-a-floor in the old Bangunan Hong Leong Finance in Jalan Pasar, Kuala Lumpur.

"But soon after we moved to the eighth floor of Bangunan Dato Zainal, next to Bank Bumiputra in Jalan Ampang." AMDB was Najadi's first venture in Malaysia, which he said was like, "putting the money where your mouth is". Indeed, the venture was a culmination of his years of persuading Arabs to invest in Asia.

AMDB, which today is known as AmBank, has since those days grown from strength to strength, making it today one of the top five financial and banking groups in the country.

The bank then grew by leaps and bounds for more than 20 years under the leadership of Tan Sri Azman Hashim, a banker who made it on his own. When Azman bought AMDB, he was then with Malayan Banking.

But even in the early years of the bank, Najadi was already making waves in the local banking industry when he turned the bank into the top merchant banking group in Malaysia with group assets hitting RM1 billion in 1979 — only after four years in operation.

His track record in building AMDB into what it was in those days still stays unbeatable till today.

He had the backing of a solid financial core team of smart managers, many of whom are today well-known in their own little way in the corporate and banking circles.

He introduced numerous corporate financial services into AMDB, the most significant of which was bankers' acceptances, which was the first for Malaysia.

Banking will always be Najadi's forte. He said this when asked whether he would return to banking and corporate finance work if given a second chance: "Once you are a banker and banking is in your blood, like any other profession, you cannot get it out of the system. It is merchant banking and corporate finance work related to Malaysia and the Asian region that I know best." Despite the merchant banking industry today being far more competitive and with far fewer opportunities now than before, Najadi is still not deterred, as, in his words, "every cycle of history brings its crises and also its opportunities. Man is enriched by going through crises".

"Malaysia, Asean and China are dynamic growth areas today. There is still room for developing financial bridges with the Middle East to tap the surplus capital of the Arab Gulf region and the West, which have not yet been exploited to the fullest. For example, regional merchant banking could move into conventional Islamic financial products to spearhead its expansion of financial services in the new growth areas." Najadi had some time to catch up with the Asian economic and banking situation. For eight years of his life, he was banned from leaving his home country, Bahrain, following a loan deal that went sour.

"My earlier banking career brought me back to Bahrain where I founded and became the executive chairman of a major Arab merchant banking group." Following the deal that went sour, he lost control of the bank and had to leave. After eight years he was allowed to leave the country.

"I went back to Switzerland and rebuilt my family-owned company, AIAK (Arab Investments for Asia (Kuwait), under the umbrella of AIAK Finance AG in Zug, Switzerland." Incidentally, AIAK was the main founder of AMDB, holding up to 33 per cent of AMDB's paid-up capital, until the complete stake was sold to Azman.

Today, Najadi still manages his AIAK company, which since January this year has set up its main office in Malaysia. The company is involved mainly in corporate finance work, cross-border mergers and acquisitions, financial products and services, and bringing Arab and West European investments to Asia, including Malaysia and China.

"I am happy with what I am doing now. Everything that I do, I must combine my happiness with the product of my intellectual power. Otherwise, I will call it a day and go fishing." Why fishing? "It is the best of my hobbies, which include boating, sailing and water and snow skiing. My favourite places for fishing are Pangkor, Langkawi and Batu Ferringhi in Penang; going out to sea in a simple fishing boat." "I have been fishing since the 1960s, catching mainly trout. Now and then I go for some deep-sea fishing. "The biggest fish that I caught was a marlin, about 3.5 metres long, offshore Mexico. It took me four hours to reel it in. It was an experience, especially when you take it as a challenge.

Why the interest in the sea? "The sea is a source of relaxation and meditation." Since returning to Malaysia for more than a year now, Najadi has come to like Malaysia so much that he has decided to make this country his home. He still travels a lot to the Middle East and Western Europe, but mainly to bring investors from those regions to Asia, including Malaysia.

Despite his age — he is in his early 60s — it will be a long time before Najadi retires from active work.

As he said: "Retirement means ‘vegetating' for an active mind. A true entrepreneur cannot retire."

THE EMERGING PATTERN OF THE ARAB FINANCIAL INVOLVEMENT IN ASIA *
Managing Director,Arab Malaysian Development Bank HUSSAIN NAJADI
--------------------------------------------------------------------------------

Never had so few, lost so much, so stupidly and so
fast

So states one of the statesmen of our time, Dean
Acheson from his book Present at the Creations The
Far Eastern Economic Review in its April 6 1979
issue. It concludes that "the Arabs are borrowing
again-believe it or not ....".

Both statements reflect the present day dilemma of
the Arab-OPEC countries. As the oil revenues begin
to peter out, a number of the Arab-oil producing
countries will find themselves not?ot better off
than before. In Iran, an inundated flow of
petro-wealth with its attendant mis-management and
an appalling rate of corruption put an end to 2,500
years of monarchy; and delivered a hard blow to the
U.S.'s vital interest in this strategic area of the
world - thanks of course, to this very slippery
black commodity called oil.

We both the Arabs and the Iranians-awoke from our
long sleep and preoccupation with trafficking in
poppies, pearls and perfumes, in the service of the
Goddesses of our beauties and the dead of the
ancient world, all via the silvery route of the
Orient suddenly to face the enormous dilemma on the
one hand of embracing this rush of wealth and trying
to cope with this problematic, very flirtatious
greasy black-liquid and on the other to learn how to
prevent it slipping away from our shaky hands and
fingers. Personally, I view this as an instrument of
instant economic revolution, in the shortest span of
time, of our recent history, though I would much
prefer becoming rich as a consequence of continuous
,human creation, endeavour and the sweat of learning
on the part of our people. The creation of wealth
and its management are part of a process which we
had never experienced, as the oil wealth came out of
the earth at such a velocity, only to meet the ever
thirsty demand of the consumer societies of the
industrial world and to fuel their locomotives of
growth. The jackpot, if you could call it that,
brought with it as well, an indefusable time bomb
now being quietly transplanted in the sands of
Arabia, which, when it explodes, will undoubtedly
shake the entire present economic order right
through to its very foundations and well beyond the
boundaries of our nations.

Admitting the present madness of accumulation of
easy wealth by many of our responsible leaders and
influential citizens, the destiny of our nation will
surely be similar to that of the late 16th century
Spain with her abundant supply of Latin American
gold and silver, filling the swallowing treasury of
that empire. Until today, Spain has not recovered
from its past insanity and no wonder that it is
still regarded as one of the least developed
countries of the continent of Europe. There is
indisputable evidence now that we too shall face the
same fate-if not worse than that of Spain-in a not
too distant future. Why and how?

From 1974 to 1978, in a span of just five years,
US$550 billion was earned by OPEC governments in
foreign exchange receipts. An approximate US$400
billion was spent hurriedly on military hardware,
goods, services and the like. This, according to a
renowned American oil consultant, Walter J. Levy,
writing in the recent issues of Foreign Affairs, was
only equal to US$200 to 300 billion in value
received on an OECD basis. Thus, a net front-end
waste of US$100 to 200 billion was "brilliantly"
achieved, not to mention how the balance was
"managed". Mind you, this historical waste was so
perfectly attained and well under the kind and
expert orchestration of the most lucratively paid
advisors from the most advanced countries.
Naturally, this shopping rush has served indeed well
the economies of the OECD, but I assure you that it
will not last in the next round. The wind of change
blowing over and around Arabia is already forcing
upon us a cold re-assessment of the past gigantic
political and economic blunders. Soon we will
establish national priorities in regard to the
petro-wealth of tomorrow, further away from the
interests of America or Europe, or Japan and closer
to God and the nation.

When the day dawns that we have to consider
faithfully the true interest of our own people in
gearing the rate of oil-flow to the speed and the
propensity of our own consumptive and development
capacities, then it is a matter of course, that we
have to lower the present rate of production which
could mean higher market prices and a slow or a
sluggish rate of growth in most of the OECD
countries. If an OECD country opts for a higher rate
of economic growth in order to pull itself out of
recessionary trend, it may face an expensive energy
bill at the risk of deterioration of its balance of
payment accounts and increasing borrowings from
abroad. Should, however, the same country opt for
the opposite direction, i.e. a drastic cut in energy
consumption, it will face the dilemma of a recession
at home followed by an alarming rate of unemployment
perhaps leading to political instability, strikes
and civil disorders of grave consequence.

At this stage of our political maturity, it is
inconceivable for any intelligent mind to draw up a
workable formula which could serve the interest of
oil producing countries in tandem with the
legitimate interest of the western nations. This is
an understatement: more so because the western
countries have never stopped to think of us as
anything like equal partners, in determining or
pursuing the political and socio-economic
aspirations of the developing OPEC countries. Their
attitude is c]early evidenced by their inexhaustible
capacity to manipulate our political scene in the
obsessive pursuit of economic domination and
continued supremacy. The only avenue open to us
besides violent political eruptions, is a forced
energy programme of oil production and purposeful
economic planning, exclusively designed to meet our
genuine demand for goods and services.

Prerequisite to this mature and independent economic
sailing is the re-arrangement of our national
priorities, in the service of our country and to
free ourselves from the grip of the so called
advisors and managers who are nothing but disguised
present-day white-collar paratroopers of their
colonial ancestors.

The foregoing analysis and forecast should not be
branded with the suggestion that I am advocating a
narrow, insular or dogmatic approach to our economic
development and its intercourse with the economies
of the OECD countries- not at all. We, the products
of Western education, know-how and experience, are
neither extremists of any sort nor insular men
unaware of the advantages of peaceful,
interdependent economies beneficial to the
universality of mankind.

It is true that we repudiate chauvinism as much as
we reject alien dominance. This repudiation arises
not only from our recognition of the realities of
our time and space but from the very spirit and the
temper of our culture and tradition. In the west,
there is an arrogance of power, so also let there be
in Arabia an arrogance of belief and conviction.

Having said that, allow me promptly to venture into
the difficult area of forecasting the future role of
the Arabs in the global economic theatre at large,
and in the Asian arena in particular. It can be
summarized as follows:

(i) The political scene in search of a just and an
independent Palestinian state will continue to
dominate the political horizons in the Middle East.
On this issue, the United States will totally back
Israel and her blind ambitions in the area, even at
the further risk of alienating itself from the
majority of the Arab world, including its close
allies, such as Jordan, Saudi Arabia, Kuwait and the
other Arab Gulf countries. The Camp David Peace
Accord is a prelude to such growing political
conflict and turmoil leading to a collision course
with the western countries.

(ii) Independently of the said political development
is the realization by all of us that the demand for
oil will far exceed the supply and its resultant
shortage of fuel coupled with higher prices, yet to
come. This supply/demand ratio is further worsened
by the serious doubt now prevailing over the atomic
energy plan of the industrial countries.

(iii) A definite end of the era of cheap energy to
fuel a continuous economic expansion of the rich
countries as well as a serious re-evaluation if not
a readjustment of their financial and economic
structures.

(iv) A marked improvement in OPEC current account
balances, of both low absorbers, such as Kuwait,
Saudi Arabia, Qatar, United Arab Emirates, Libya, as
well as those of OPEC high absorbers such as
Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq,
Nigeria and Venezuela. The former category of Arab
OPEC countries will boost their petro-dollar
surpluses into 100 billion US$ by 1981.

(v) In the next round, the aforesaid surpluses will
not disappear as fast as they did in the past,
neither in terms of wasteful military hardware nor
exorbitantly priced plants, goods and services nor
slavishly stuck in the U.S. treasury bills and bank
deposits.

(vi) A true diversification of supply of labour and
materials to Arab OPEC countries will directly
benefit the growing economies of the ASEAN
countries, Taiwan, South Korea, Hongkong and even
China with the consequence of intensification of
trade, tourism, in the easterly direction, followed
by increasing financial dealings in deposits with
banks and purchase of bonds are fixed assets.

The trend of Arab economies is moving slowly yet
somewhat hesitantly towards East Asia and ASEAN. It
is demonstrated by the fact that in 1978 alone more
than 5.5 billion U.S. dollars were transmitted to
their homelands by the 3 million Asian workers; the
lion's share of which was received by South Korea,
Taiwan and recently the Philippines. Now, we also
witness a marked increase of approximately 300% per
annum for the year 1978 in terms of tourist trade
originating from Middle East countries to the Far
Eastern ASEAN destinations.

By 1980-81, the flow of tourism from the Middle East
region to Asia will further increase to the level
reached in Europe in the mid and late 70's with more
dollars spent per tourist head than any other
visiting person. Destinations such as Singapore,
Manila, Hongkong and Bangkok will be the first
beneficiaries of the coming tourist trade booms
followed by other points in the South East Asia
region.

In the investment and financial arena the financial
performance and the unprecedented success of the
early Arab joint financial institutions such as my
own bank -Arab-Malaysian Development Bank in Kuala
Lumpur, Arab Japanese Finance Group (UBAN), in
Hongkong and Kuwait Pacific Finance will lead to
more Arab financial and investment joint
undertakings paving the way for increased Arab
investments in Asia in general and in the ASEAN
countries in particular.

As we do not possess any technological know-how, nor
are we desirous of seeking a secured supply of raw
materials for our industries, our investments can
only be directed prudently towards financial
undertakings in the Asian markets and through
purchase of bonds, stocks and real estate, besides
the banking industry.

We are definitely impressed by the potentialities of
economic growth in the ASEAN region and the
usefulness of such financial centres as Singapore,
serving the Middle East as the regional base for
financial engagements of the Arab surplus funds.

The east has shown its usefulness in our search for
diversification of manpower, goods and services. The
west has also demonstrated its unreliability in
times of crises, its appetite to over-kill in its
commercial transactions and its wilful desire to
dominate rather than to deal with us as a
fair-business-partner worthy of trust. The bulk of
our business will still be conducted with the
powerful industrial nations but an increasing
proportion of total trade and investments will be
generated in Asia's favour as we get closer to
1980's.

It is my fascination and admiration for your people,
your culture, heritage and aspirations that will
continue to direct my human energy and resources,
for instance, towards a credible, meaningful and
humane Arab presence in this part of the world.
Arab-Malaysian, no matter how modestly one mentions
it, is only a single test of our financial
capabilities and performance conceived and promoted
by forward-looking and receptive Ma]aysian
authorities and the Arab investors from Bahrain,
Kuwait and Saudi Arabia. We are now more certain,
confident, and are poised to embark on a broader
ASEAN financial involvement with the co-operation
and the goodwill of your authorities and financial
institutions.

Teen's Rampage Leaves 10 Dead in Minn.
Heavily Armed Teen Kills Grandparents, Seven Others at High School on Minnesota Indian Reservation
By JOSHUA FREED
The Associated Press
Mar. 22, 2005 - The suspect in the worst U.S. school shooting since Columbine smiled and waved as he gunned down five students, a teacher and a guard, asking one of his victims whether he believed in God, witnesses said. The teen's grandfather and his grandfather's wife also were found dead, and the boy killed himself.
Some of the victims were shot at close range, medical officials said.
Reggie Graves, a student at Red Lake High School, said he was watching a movie about Shakespeare in class Monday when he heard the gunman blast his way past the metal detector at the school's entrance, where an unarmed guard was killed.
Then, in a nearby classroom, he heard the gunman say something to his friend Ryan. "He asked Ryan if he believed in God," Graves said. "And then he shot him."
The death toll at the Red Lake Indian Reservation in far northern Minnesota made it the nation's worst school shooting since the rampage at Columbine High School in Littleton, Colo., in April 1999 that ended with the deaths of 12 students, a teacher and the two teen gunmen.
The victims included the gunman's grandfather; the grandfather's wife; a school security guard; a teacher; and five other students. At least 14 others were wounded, and two of them remained in critical condition Tuesday at MeritCare in Fargo, N.D., officials said.
At least three of the victims were shot in the head at close range, said officials at North Country Regional Hospital in nearby Bemidji. One of those victims died and the other two were transferred to the Fargo hospital. Three victims remained at North Country Regional in noncritical condition.
"I think there was an intent to kill," Tim Hall, the hospital's emergency nursing director, said at a morning news conference.
"There's not a soul that will go untouched by the tragic loss that we've experienced here," Floyd Jourdain Jr., chairman of the Red Lake Chippewa Tribe, told WCCO-TV of Minneapolis on Tuesday.
Police said the gunman killed himself after exchanging fire with officers. Red Lake Fire Director Roman Stately said the gunman had two handguns and a shotgun.
"We ask Minnesotans to help comfort the families and friends of the victims who are suffering unimaginable pain by extending prayers and expressions of support," Gov. Tim Pawlenty said.
The shooter was Jeff Weise, a 17-year-old student who had been placed in the school's Homebound program for some violation of policy, said school board member Kathryn Beaulieu. Students in that program stay at home and are tutored by a traveling teacher. Beaulieu said she didn't know what Weise's violation was, and wouldn't be allowed to reveal it if she did.
There was no immediate indication of Weise's motive. But several students said he held anti-social beliefs, and he may have posted messages on a neo-Nazi Web site expressing admiration for Adolf Hitler.
A writer who identified himself as Jeff Weise of the Red Lake Reservation posted the messages under the nickname "Todesengel" German for "angel of death." An April 2004 posting by him referred to being accused of "a threat on the school I attend," though the writer later said he was cleared.
Relatives told the St. Paul Pioneer Press that Weise was a loner who usually wore black and was teased by other kids. Relatives told the newspaper his father committed suicide four years ago, and that his mother was living in a Minneapolis nursing home because she suffered brain injuries in a car accident.
The governor said it appeared the school had "very rigorous security."
"It looks like you had a very disturbed individual who was able to overcome a lot of precautions to do a lot of damage," Pawlenty said.
Beaulieu said school was canceled Tuesday, but plans hadn't been made for the rest of the week.
During the rampage, teachers herded students from one room to another, trying to move away from the sound of the shooting, said Graves, 14. He said some students crouched under desks.
Some pleaded with the gunman to stop. "You could hear a girl saying, 'No, Jeff, quit, quit. Leave me alone. What are you doing?'" Sondra Hegstrom told The Pioneer of Bemidji.
Student Ashley Morrison said she heard shots, then saw the gunman's face peering though a door window of a classroom where she was hiding with several other students. After banging at the door, the shooter walked away and she heard more shots, she said.
"I can't even count how many gunshots you heard, there was over 20. ... There were people screaming, and they made us get behind the desk," she said.
FBI spokesman Paul McCabe said the gunman exchanged gunfire with Red Lake police in a hallway, then retreated to a classroom, where he was believed to have shot himself.
The reservation, about 240 miles north of the Twin Cities, is home to the Red Lake Chippewa Tribe, one of the poorest in the state. According to the 2000 census, 5,162 people lived on the reservation, and all but 91 were Indians.
It was the second fatal school shooting in Minnesota in 18 months. Two students were killed at Rocori High School in Cold Spring in September 2003. Student John Jason McLaughlin, who was 15 at the time, awaits trial in the case.
Red Lake High School has about 300 students, according to its Web site.

Cesar Mogollon, second left, found the cold painful on arrival from Venezuela, until he and his family discovered the joys of snow tubing.
FORT MCMURRAY JOURNAL

Looking for Recruits for the Frozen North? Try the Tropics
By CLIFFORD KRAUSS


FORT McMURRAY, Alberta, March 13 - Forty below zero isn't so bad once you get used to it. At least that was the message of a seminar at Keyano College called "We Love the Winters Here," attended by 30 new immigrants from warm-blooded places like Venezuela and Nigeria, drawn here by the promise of hefty salaries in an oil boomtown.

Of course, the lecturers noted, there are some important things to remember about living in this sub-Arctic town where winters last eight long, blustery months.

For one thing, children must be taught that it is dangerous to stick their tongues on freezing metal poles. There are risks to warming up a car inside the garage, and there are ways to drive out of a skid on an icy road.

It is all part of life in what was once a God-forsaken cowboy outpost until several multinational oil companies ratcheted up their oil sands operations here in recent years. In two decades, the population has nearly doubled, to 60,000 from 35,000. There is a lot of money to be made here, especially with oil prices over $50 a barrel, plenty of high-paying jobs and a real estate boom, which have all helped make just about everyone, blue-collar workers included, feel prosperous.

But few Canadians from relatively balmy places like Vancouver and Toronto have the gumption to live in these frigid climes, so oil company recruiters are looking far and wide. Amazingly, they are finding plenty of hearty, well-trained and highly motivated people from places where 70 degrees Fahrenheit is considered chilly.

"What do you prefer," asked Ligda Massicotte, 38, a lawyer who left the chaos of her native Venezuela four years ago. "A country where there is kidnapping, crime, revolution, political uncertainty or a country that is cold where you have to put a hat on?"

Nevertheless, Ms. Massicotte and her fellow English-language students at Keyano say the constant need to shovel snow and the short, dark days take some getting used to.

"When we first got here, my husband would say 'Let's go out,' " she recalled, "and I'd say, 'Oh honey, we have to dress the kids, two socks on each, then the long underwear, then the long-sleeve shirts, then the snow suit, then the mittens, then the hats, then the scarves.' Then as soon as you're ready one of the kids would pooh, and you'd have to start all over again. We'd always be an hour late."

Venezuela, where President Hugo Chávez fired more than 5,000 employees at the state oil company after a failed general strike, has been particularly fertile recruiting ground for energy companies.

"When you are in Venezuela and you read the word 'cold,' you don't really know what that word means," said Cesar Mogollon, an electrical engineer with Suncor Energy who arrived from Venezuela in November.

"The first time I went out at minus 40 during a safety tour around the plant in early December, I was dying," he said. "I felt pain in my nose and ears that went inside. I looked around at my colleagues and asked myself, 'Do they have different blood than me?' "

But Mr. Mogollon said that once he found that local supermarkets carried the white maize flour dough used to make arepas and empanadas, "I was O.K." He and his wife have adjusted, he said, and his 9-year-old daughter and 13-year-old son are snow tubing and skiing with gusto.

At least 4,000 foreign-born immigrants now live in Fort McMurray, and the number is growing fast. Local supermarkets carry halvah from Saudi Arabia, mango nectar from Egypt, jarred yellow cherries from Guatemala, rice sticks from the Philippines and marinating sauces from South Africa. There are cultural organizations for Latinos, Hindus, Filipinos and Chinese. The first Islamic school opened last year.

Mushtaque Ahmed, a 54-year-old engineer at Syncrude Canada, who was born in Bangladesh, has worked previously in Iraq and Saudi Arabia. He says that 10 families from Bangladesh arrived here in the last three years, and that they now get together to celebrate Bangladeshi holidays with potluck dinners that mix their native cooking with Canadian fare: typically roast turkey and assorted biryanis.

There has already been one marriage in the community, he said, and he is trying to persuade his brother-in-law to come here to open a Bangladeshi restaurant.

"I like the friendliness of the people here," Mr. Ahmed said, although he admitted to one misgiving that has nothing to do with the weather: "I can get uncomfortable with what's on television. There's a lot of tolerance to things I am not accustomed to."

Immigrants here, like immigrants everywhere, get homesick and cling to their native cultures.

Oswald Francis, a 52-year-old Jamaican-born bus driver, still wears a Jamaican flag on a bracelet and on a pin on his lapel. He came here for a three-week holiday in 1977 to visit friends, and never left, in large part because his wife thought this could be a good place to raise their two daughters.

"Canada is the best place in the world to live right now, and Fort McMurray is the best place in Canada to live because of the opportunities, the jobs, the money," he said while shopping for a long-distance calling card in a multicultural supermarket. "As for the cold, I wouldn't call it an adjustment. You never get used to it."

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'Hogzilla' or Hogwash?
After a Georgia man announced that he had killed a 1,000-pound wild hog last summer, the story spread far and wide. Now his tale is being put to a scientific test
Tall Tales and the Unlarded Truth About Hogzilla
By SHAILA DEWAN



LAPAHA, Ga., March 17 - Few episodes in this modern age have drawn the Southern talent for tall tales like the legend of Hogzilla, the alleged 12-foot, 1,000-pound wild hog shot and killed on a South Georgia farm last June.
Documented by only a single photograph before the carcass was buried, Hogzilla drew television crews from as far away as Japan and appeared on the cover of Weekly World News. The pig became the theme of the town's annual festival. People from California and New Jersey called to order hog T-shirts.
So tall did the tale become that in November, a team of scientists exhumed Hogzilla and went at him with calipers and DNA tests. Now all of Berrien County awaits their findings, which are to be broadcast on the National Geographic Channel on Sunday night.
Some people say the hog had to have been raised in a pen to get that big. Others think there was no hog at all. No one figured the argument would ever be resolved. And, anyway, that was not the point. Asked if she believed Hogzilla was real, Beverly Moore, a retired bookkeeper eating lunch at Flander's Cafe in Alapaha, raised her eyebrows and said, "It's a real story."
Few hunting yarns could stand up to a posse of Ph.D.'s in yellow hazard suits. In fact, new technology has generally made it easier - not harder - to practice the art of embellishment, said Wiley Prewitt, a collector of hunting and fishing lore in Kilmichael, Miss. There is a cottage industry in making realistic sets of antlers out of resin to mount as trophies, he said, and photographs no longer back up a story.
"Some guy kills a deer and takes a picture of it," Mr. Prewitt said. "He'll take it to his buddy who's got all the computer software and they'll turn it into a world record."
But two people were eager for the credibility they hoped a scientific investigation would bring: Ken Holyoak, who owns Ken's Hatchery and Fish Farms, and Chris Griffin, his former employee, who said he killed Hogzilla with a single shot last June. The men had a falling out over who deserved proceeds from the sale of the Hogzilla photograph, and Mr. Griffin now fixes flats at the Wal-Mart in nearby Fitzgerald.
Mr. Holyoak has a knack for publicity, and has a wall of articles about his efforts to raise bullfrogs in captivity and his record-breaking fish breeds, like one he calls the Georgia Giant Hybrid Bream. He has theorized that Hogzilla grew so big by feasting on the special fish food used on the farm.
Mr. Holyoak, who also operates hog hunts on his land, allowed National Geographic to dig up Hogzilla because, he said, he wanted the free advertising, and he thought the hog might be a world record.
A thousand pounds is not extraordinary for a pen-raised hog. But a feral pig or a true wild boar -characterized by tusks, black hair and long legs - would top out closer to 500 pounds, and a typical one of each weighs in at about 150 pounds. Interbreeding with farm animals is, of course, a possibility.
Mr. Griffin says he is tired of doubters. "They're going to eat a whole lot of humble pie come Sunday evening," he said. "I'm going to be giggling and laughing."
Drinking a mixture of Fanta Cherry and Pibb Extreme on his lunch break, Mr. Griffin, 32, told the story he has told a thousand times: He was picking up after hunters when he saw the hog. He grabbed a rifle from his truck and fired. "I shot him, and he turned around and walked off, and I thought, how'd I miss something that big?" Mr. Griffin said. He said he followed the hog into the swamps, where it collapsed and died. Mr. Griffin said he managed to drag it out with a backhoe.
Mr. Holyoak said he measured Hogzilla "with a ruler" and drove the hog in his flatbed truck to a peanut scale. The meat was too gamey to eat, he said, and the pig was too expensive to stuff, so he told Mr. Griffin to bury it.
But before they laid Hogzilla to rest, Mr. Holyoak shot a picture of the pig trussed up by the hind legs, dangling from the backhoe. Later, he had six people sign affidavits saying they had seen the 1,000-pound wild hog (each signer circled "alive" or "dead").
In Alapaha, several townspeople said it did not matter if Hogzilla turned out to be a hoax. "The Legend of Hogzilla" had proved more popular, they said, than previous parade themes like "Saluting Our Firemen" and "Good Old Days on the Farm."
Hogzilla is not the first Alapaha legend, and he probably will not be the last. In the 1970's, the town had a peg-legged bigfoot that left mysterious tracks at night. He has been in the parade too.
"First there was the bigfoot, then there was the hog," said a man at City Hall who refused to give his name and said he was sick to death of hearing about Hogzilla. "And you heard a big old snake crawled across Highway 82 the other day."
Renee Copeland, the city clerk, looked up in surprise at this bit of news. Then she asked, "How big was it?"
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# posted by Michael P. Whelan : 12:55 PM  0 comments

Friday, March 18, 2005
Pvt. Michael Zollo, right, is one of the relatively few members of the 69th Infantry not currently in Iraq. Green Camouflage and Purple Hearts By ALAN FEUER

t was a strange St. Patrick's Day for the soldiers of the Fighting 69th. They usually fill a city block when they muster outside for the parade. This year, they filled a fraction of a block. They usually take up several dozen pews at St. Patrick's Cathedral for the cardinal's Mass. This year, they took up maybe 10. They usually finish the parade by riding back to their armory with their M-16's on a private subway, for a regimental cocktail. This year, the train and guns were there, but instead of drinking whiskey and Champagne, some of them drove to an Air Force base in New Jersey to retrieve the body of a comrade killed in Iraq. "It's adds to the - what would you call it? - the surrealness of the day," Lt. John Salazar, a company commander, said. "Picking up a body on St. Patrick's Day." He shook his head. The 69th Infantry - one of the oldest units in the New York National Guard - was created in 1851 and, according to legend, has missed only two St. Patrick's Day parades in its history. For 150 years - more than half the parade's 244-year stretch - its troops have marched up Fifth Avenue on March 17. And in most years, the private subway train has been there to take them back. This year, however, was the first since World War II in which the unit has marched with soldiers in the field. Nearly 800 of its roughly 900 soldiers are serving in Iraq. A plaque in the lobby of their armory, on Lexington Avenue and 26th Street, commemorates the dead. Civil War: 388 World War I: 900 World War II: 472 Iraq: 16 Capt. Martin Ortiz thought about those 16 as he marched. Their names were in his head - a macabre poem, of sorts: Baptiste. Reardon. Engeldrum. Urbina. Fisher. Irizarry. Babin. Bergeron. Comeaux. Fassbender. Frickey. Murphy. VonRonn. Kamolvathin. Obaji. Ali. "Each one of those guys is a name," he said, having just returned from a tour in Iraq. "But each name's got a story." The 69th was founded as "the Irish Brigade," but it is not wholly Irish anymore. You can still find Flynns and Kanes and O'Malleys, but more and more the dog tags read Rivera, Santiago or Singh. The day started early, at 5 a.m. The men mustered at the armory. It was dark outside. A pair of bootblacks shined their boots. Upstairs, the officers drank a toast of Jameson's. "Gentlemen, our job today is to make sure the tradition goes forward," said Capt. Raphael Santiago, the commander. "A toast to our fallen soldiers." "Carry on!" came the answer. "May they rest in peace." Then they fell in, stepped out in formation and made a left at 26th Street. All the way up Madison Avenue, they called out military cadence. "Here we go again Same old stuff again Marching down the avenue Five more hours and we'll be through." Or a little rougher: "Yellow bird with a yellow bill Sitting on my window sill Lured him in with a piece of bread Then I smashed his little head." A pause at 51st Street, behind St. Patrick's, waiting for the Mass to begin. The talk, however, was less about parade routes or grand marshals and more about Ramadi and roadside bombs. One private told another about a home video made in Iraq that shows a Humvee practically blowing up. "It's supposed to be a fun day, but when you lose guys, it's mixed," said Sgt. William Gerke, who fought in Vietnam. "We still got a wake tonight, you know?" Cardinal Edward Egan directed his sermon at the men. He called them "wonderful, gallant, courageous defenders of this nation." He said they were "young Americans who heard a call." After Mass, they marched to 39th Street to pick up M-16's and bayonets. Except for the police horses and the sanitation men with brooms and shovels, the 69th was in the lead. The parade began and the firefighters of Ladder Company 45 applauded them. A police inspector, carrying a bullhorn, applauded them. Two drunk guys in "I'm With Stupid" T-shirts applauded them, too. People shout, "We love you!" and "Thank you!" and "God bless the U.S.A.!" From the windows of the Pierre Hotel, a chef in whites and a toque flashes them a quick thumbs up. The parade was done at 86th Street, and the soldiers walked in a narrow column, two by two, down the crowded street, their rifles slung across their backs. People stood aside and stared. Then clapped. Then they headed down into the subway, waiting for the No. 6 train. It is a strange sight - loaded rifles in the station. At least they had removed their bayonets. The dispatcher had summoned a train, but several shuddered by before they boarded. Finally, their ride arrived: a private subway train with the Irish and American flags. "This is the one perk of the day," said Cadet Adorian Lazar. "The 69th train." Back downtown, the detail fell in once again on 28th Street. They were marching toward the armory to celebrate with speeches and a drink. Capt. Keith Jensen was not joining them, though. Specialist Azhar Ali died two weeks ago outside of Baghdad. Captain Jensen had the job of picking up his body. Copyright 2005 The New York Times Company | Home | Privacy Policy | Search | Corrections | RSS | Help | Back to Top

 

# posted by Michael P. Whelan : 1:59 PM  0 comments

DRIVING
Putting a Car of the Future Back on the Road
By STEVEN KURUTZ



N the dim half-light of a Long Island garage, a handful of DeLoreans stand in darkened corners or suspended on hydraulic lifts, their trademark gull-wing doors ajar, their stainless-steel silver shells still ultramodern more than two decades after the DeLorean Motor Company went bust. Visible through a dusty window in the parking lot outside, perhaps 20 more DeLoreans, lined up and identical, sit waiting, like some surreal automotive dream.
This is P. J. Grady's, a modest gray automotive garage tucked behind a used-car lot in West Sayville, N.Y. As the sign on its roof - DeLorean Motor Cars - indicates, the shop specializes in the repair and restoration of DeLoreans, the famous and doomed early-1980's sports car created by John Z. DeLorean and featured in the "Back to the Future" movies.
It is estimated that around 9,200 DeLoreans were built in the car's three years of production, 1981 through 1983, and that about 7,000 are left. Of those, a good number have passed through the hands of Rob Grady, P. J. Grady's tall, thin, intensely focused owner, who has spent the past 20 years as one of the foremost of the world's few DeLorean experts. DeLorean owners from Maine to Florida send him their cars, and in a small garage that was once part of his family's General Motors dealership, Mr. Grady fixes engines, locates obscure parts, fabricates what he can't find and restores long-neglected DeLoreans so they can turn heads once more.
For many years, P. J. Grady's was about as profitable as an Edsel dealership, but that has changed. The teenagers who saw "Back to the Future" 20 years ago and were fascinated by the film's time-traveling DeLorean are now grown and seeking out the low-sweeping coupe. At the same time, the car is approaching its 25th birthday, a benchmark in the collector market. Where once values hovered around $17,000, a restored DeLorean now runs close to $30,000.
"In the last five or six years the values have gone way up," said James Espey, vice president of the DeLorean Motor Company in Houston, which bought the rights to the DeLorean brand and sells restored models. "The car is coming into its own."
It was long believed that DeLorean parts could not be found, so many cars were garaged, but Mr. Espey's firm bought the entire DMC parts inventory - everything from body panels to nuts, bolts and washers. Mr. Espey estimates that the company has enough gull-wing doors to last 120 years at the current rate of use, and enough interior carpet to cover a football field twice over. This month, the company opened a second branch near Tampa, Fla. And two shops near Los Angeles, DeLorean Motor Center and DeLorean One, serve the West Coast as P. J. Grady's serves the East.
Of the handful of DeLorean specialists, P. J. Grady's is the oldest, going back to 1979, when Mr. Grady became one of the original DeLorean dealers. For the sum of $25,000 he received the right to sell the line's one and only model, the DMC-12, and a poster of the car autographed by Mr. DeLorean, which still decorates his office, where Mr. Grady was joined on a recent afternoon by his wife, Debby, who handles the phone, and a DeLorean enthusiast named Mike Deluca.
Like many dealers, Mr. Grady signed up based on the reputation of Mr. DeLorean, who had been an engineering and marketing star at G.M. - in the early 1960's he created the Pontiac GTO, which many consider the first muscle car - and left at the height of his career to challenge the Big Three automakers. But from the start, his company was besieged with problems, starting with too little money to work with and the fact that the car, priced at $25,000, made its debut in 1981 in one of the worst economies in recent memory. "The cars were never hot sellers," Mr. Grady said.
Topping it off was Mr. DeLorean's very public arrest in 1982 for conspiracy to distribute cocaine, still a sore spot with DeLorean enthusiasts. (Mr. DeLorean was eventually acquitted; the prevailing sentiment among owners is that he was framed.) When the company filed for bankruptcy protection that year, Mr. Grady continued to honor his customers' service warranties. Over time, he found himself doing more and more repair work on DeLoreans, until that was all he did.
Not surprisingly, he has developed an affection for the car, though it is a cool, dispassionate one, tempered by years of daily involvement. "It's a good car," he said simply.
Mr. Deluca, hovering nearby, said: "Rob is being modest. He's completely dedicated. I was driving by once and it was Easter Sunday. It was freezing. Rob was out in the parking lot testing temperature sensors."
IN a far corner of the garage, the P. J. Grady's mechanic, Pat Tomasetti, stood in blue coveralls beneath a DeLorean on a hydraulic lift, draining oil and listening to NPR. Mr. Tomasetti has been repairing and restoring DeLoreans at P. J. Grady's for 13 years and is accustomed to overenthusiastic fans of the car. He laughed as he recalled the time a Japanese man showed up with his family, saying he had flown to America to visit Disney World and P. J. Grady's.
The DeLorean Mr. Tomasetti was working on had come in from Pennsylvania and was set to have its front fender replaced, among other repairs. Another DeLorean, its door crunched like a soda can, was in need of extensive body work. Outside, dozens more waited, a daunting workload for two men.
"I'd like another mechanic, but it's hard keeping them," Mr. Grady said. "Most guys don't like doing restoration work. It's dirty, and there's also the repetition."
People who spend time around garages tend to acquire a detailed know-how of car design and mechanics, but DeLorean experts take specialization to a refined level. Because of its unpainted stainless-steel body, the DMC-12 was available in only one color, silver. Its interior was black leather or gray leather, nothing else, and the car changed little over its brief production run.
So while the Corvette aficionado has a half-century of paint schemes, body types and fancy options to ponder, the DeLorean lover must be content with trivial changes - the radio antenna on the '81 models is in the windshield, for example, while on the '82 it is on the left rear quarter.
Pointing to a model whose license plate read BK2DFUTR, Mr. Grady proceeded to make the indistinguishable cars distinguishable. "We just got this one out of mothballs," he said. "It sat for four years. The owner decided to sell it. It only has 11,000 miles."
He continued: "That one over there was in a wreck. Needs a new door." Then he walked over to a car covered in a soft blanket of dust. The passenger window was stuck halfway down, and the seat was given over to orphaned parts. Mr. Grady's pupils widened, as if he were laying eyes on a DeLorean for the very first time. "This is the 530," he said reverently. "It's a Legend prototype, Twin Turbo. They only made three of these."
The 530 is going to be restored as his own DeLorean, Mr. Grady said, just as soon as he finds the time. "Sometimes you get a little burned out," he mused, reflecting on the vagaries of being a DeLorean expert. "Then something rejuvenates you."
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# posted by Michael P. Whelan : 12:59 PM  0 comments

Un-Volunteering: Troops Improvise to Find Way Out By MONICA DAVEY

he night before his Army unit was to meet to fly to Iraq, Pvt. Brandon Hughey, 19, simply left. He drove all night from Texas to Indiana, and on from there, with help from a Vietnam veteran he had met on the Internet, to disappear in Canada. In Georgia, Sgt. Kevin Benderman, 40, whose family ties to military service stretch back to the American Revolution, filed for conscientious-objector status and learned that he will face a court-martial in May for failing to report to his unit when it left for a second stint in Iraq. One by one, a trickle of soldiers and marines - some just back from duty in Iraq, others facing a trip there soon - are seeking ways out. Soldiers, their advocates and lawyers who specialize in military law say they have watched a few service members try ever more unlikely and desperate routes: taking drugs in the hope that they will be kept home after positive urine tests, for example; or seeking psychological or medical reasons to be declared nondeployable, including last-minute pregnancies. Specialist Marquise J. Roberts is accused of asking a relative in Philadelphia to shoot him in the leg so he would not have to return to war. A bullet to the leg, Specialist Roberts, of Hinesville, Ga., told the police, seemed his best chance. "I was scared," he said, according to a police report on the December shooting. "I didn't want to go back to Iraq and leave my family. I felt that my chain of command didn't care about the safety of the troops. I just know that I wasn't going to make it back." Department of Defense officials say they have seen no increase in those counted as deserters since the war in Iraq began. Since October 2002, about 6,000 soldiers have abandoned their posts for at least 30 days and been counted as deserters. (A soldier who eventually returns to his unit is still counted as a deserter for the year.) The Marine Corps, which takes a snapshot of how many marines are missing at a given point in time, reported about 1,300 deserters in December, some of whom disappeared last year and others years earlier. The figures, Pentagon officials said, suggest that the deserter ranks have actually shrunk since the years just before Sept. 11, 2001. Of course, many things have changed since then, including the seriousness of deserting during a time of war. Many of the tactics also defy simple categories like official desertion. "There are a lot of people, many more than normal, who are trying to get out now," said Sgt. First Class Tom Ogden, just before he left for a second trip to Iraq with his Army aviation unit from Fort Carson, Colo. He said he had seen fellow soldiers in recent months who seemed intent on failing drug tests because they believed they would be held back if only their tests "came back hot," while others claimed bad backs and necks, with the same hope. "I'll tell you what," Sergeant Ogden said, "they're coming up with what they consider some creative ways to do it now." In the fall of 2003, Staff Sgt. Camilo Mejia of Miami, in the Florida National Guard, was among the first to announce he was refusing to return to Iraq and filing for conscientious-objector status. A year ago, Pfc. Jeremy Hinzman, a South Dakotan, vanished from his post only to reappear in Canada, his family in tow. Word of such cases spread among soldiers. Some reacted with disgust, accusing their colleagues of cowardice: how could they let down other soldiers in a time of war, when, unlike the draftees of the Vietnam War, they had all volunteered? Others, though, say the cases made them think more about their ambivalence. "What I've seen is that soldiers are more afraid to make a stand for themselves than they are to go into combat," said Sergeant Mejia, who was released in February after nearly nine months of confinement at Fort Sill, Okla., for desertion. "Until I took a stand, I was really going against my own conscience. I was so afraid to be called a coward." In the months since his case, more organized efforts have arisen. A group of former soldiers who succeeded in achieving conscientious-objector status has created a Web site, www.peace-out.com , showing people how to apply. The site reported 3,000 hits the first day. In Canada, residents banded together to help American soldiers who arrive there, supplying money, food and rooms. Michelle Robidoux, a leader of the War Resisters Support Campaign, said members were lobbying Canadian officials to grant the soldiers refugee status. These soldiers come from all different towns, all over the country, but their reasons for wanting out echo one another. Some described grisly scenes from their first deployments to Iraq. One soldier said he saw a wounded, weeping Iraqi child whom no one would help; another said he watched as another soldier set fire to wild dogs just to pass time. Others said they had simply realized that they did not believe in war, or at least not in this war. "It wasn't what I thought it would be," Private Hughey said. He said he enlisted at 17 from his home in San Angelo, Tex., because a recruiter promised that the military would buy him the education his father could not afford. He said he had tried to push aside little doubts he had, even back in basic training, but realized as his unit prepared to leave Fort Hood, Tex., for Iraq last March that he could not go. "There are people who would want to hang me for this," he said in a telephone interview from Toronto. "The thing is, yes, I did sign up for this. And, when I did, I had this vision that I'd be a good guy and defend my country. But killing people for something I don't believe in just to fulfill a contract just didn't seem right to me either." At a base in Germany, Specialist Blake Lemoine, 23, who served in Iraq last year, sent his chain of command a letter this year, announcing all the reasons he should be allowed to quit: the Army conflicts with his religious beliefs and rituals; he and his wife are not monogamous, counter to military policy; he is bisexual. In February, Army officials brought court-martial charges, accusing him of refusing to perform his assigned duties. Army officials have said the number of people searching for escape routes is relatively small and no different from that of the past. "There will always be some people who do this sort of thing, but I haven't seen any evidence at all of a trend," said Lt. Col. Bryan Hilferty, an Army spokesman. "There are more people that we hear about volunteering to be deployed, who want to go and serve. Remember, these are all volunteers." Although available Pentagon records date back only a few years, they show a rise in applications for conscientious-objector status. In 2002, 31 soldiers and marines applied, compared with 92 in 2003. As of November, the latest month for which records were available, 75 soldiers and marines had applied in 2004. Of the 75 applications, 34 were approved, 41 turned down. That path, though, can be slow and complex. Military rules require that a service member show that he has developed a true moral, ethical or religious opposition to all war. Sergeant Benderman applied in December, days before his unit shipped to Iraq without him. His conscientious-objector application is being processed, but so far, one military official has recommended against its approval, he said. He faces a general court-martial on charges of desertion and missing his unit's deployment. He could face penalties as severe as seven years in confinement, forfeiture of all pay, reduction in rank and a dishonorable discharge. "Everybody wants to put you in a little box, wants you to have some grand epiphany and bolts in the sky when it comes to this," Sergeant Benderman said recently. "But it's not that way. Here's what happened: I spent six months over there, and I came back and thought about it. What I know is that it's inhumane. It's turning 18-year-old men and women into soulless people." Among some desperate soldiers, the process of applying for conscientious objector may seem as remote a possibility as leaving for Canada. In his interview with the police, Specialist Roberts said that his wife, worried about his imminent return to Iraq, had suggested a shooting: "She said, 'Why don't you do what everyone else is doing?' She meant for me to try to find some way out of it." A hearing is scheduled for next week. The rest of his unit, meanwhile, is in Iraq. Copyright 2005 The New York Times Company | Home | Privacy Policy | Search | Corrections | RSS | Help | Back to Top

 

# posted by Michael P. Whelan : 12:02 PM  0 comments

92 Cutlass Supreme
G.M. Sees a Loss Near $1 Billion; Stock Falls 14%
By DANNY HAKIM



DETROIT, March 16 - General Motors' stock fell to its lowest level in more than a decade Wednesday after the company said it expected to post a loss of nearly $1 billion for the last six months. The news set off G.M.'s largest single-day share loss since the market collapse of 1987 and further darkened Wall Street assessments of the company, the world's largest automaker.
The losses reflected an increasingly harsh reality: that General Motors, which three years ago was thought to be the healthiest of the Big Three automakers in Detroit, is now considered the weakest, primarily because it is not selling enough cars at home. The losses also raised questions about the strategy of the company's chairman and chief executive, Rick Wagoner.
On the New York Stock Exchange Wednesday, G.M. fell $4.71, or 14 percent, to $29.01, on volume of more than 59 million shares. It was the Big Board's most active stock, and its closing price was the lowest since November 1994.
General Motors' unsettling news led to a broad sell-off of shares in companies whose fortunes decline in a weaker economic climate. G.M. alone accounted for about 35 points of the 112.03-point decline in the Dow Jones industrial average.
Numerous problems are weighing on G.M. in the United States, its crucial home market, where brands like Pontiac, Buick and Saturn are household names yet are sorely lacking in appeal, according to J. D. Power & Associates, the quality and customer satisfaction analyst.
A wave of new models has not helped stem the company's plummeting sales, even though G.M. spends more than any other automaker on rebates and low-rate financing deals. That has led G.M. to scale back its production in North America in the first half of the year by 300,000 cars, or about 10 percent.
Increasing health care costs are also a heavy burden for the company, which is America's largest private health care provider; G.M. covers 1.1 million Americans, or nearly 0.4 percent of the entire population. Rising interest rates and weakening credit ratings are expected to cool its lending business, the General Motors Acceptance Corporation , which is its main profit center. And foreign competitors, like Toyota and Nissan , are far more profitable.
Mr. Wagoner, who has been chief for five years, did not outline significant changes to his strategy on Wednesday and insisted in a conference call with analysts and reporters that he still had the confidence of the company's directors.
"The board is fully informed on all our strategies, and on that basis supportive," he said.
And John M. Devine, G.M.'s chief financial officer, declared in an interview, "The board - and I've observed it pretty clearly - it's got full confidence in Rick and the team."
Company directors have not returned calls for comment in recent weeks about G.M.'s challenges.
In both stock and bond markets, the reaction to Wednesday's news was swift and unforgiving. Merrill Lynch lowered its recommendation on G.M. shares to sell. Fitch, one of the three leading debt-rating agencies, downgraded G.M.'s debt to its lowest investment grade and put the company on a negative outlook for potential downgrading to junk bond status.
Standard & Poor's, which already had G.M. debt at its lowest investment rating, changed its outlook to negative. The third major debt-rating company, Moody's Investors Service, put G.M. on review, which means that the bonds could be knocked down to Moody's lowest investment grade as soon as several weeks from now.
Thus, one of corporate America's largest debt issuers could soon be selling junk bonds. That would not only drive up G.M.'s borrowing costs, but would also rattle the bond markets more broadly.
"The bad news of this morning certainly outstripped our downside expectation," a Standard & Poor's credit analyst, Scott Sprinzen, said, adding that G.M.'s hold on an investment-grade rating was "tenuous."
"The concern for us is not just this year," he said, "but what that says longer term about how G.M. is going to fare."
G.M. has 7,600 dealers around the country and operations in 32 states, including plants that employ tens of thousands of workers. It is a top 10 employer in Michigan and Ohio and feeds a wide web of suppliers throughout the Midwest, from its large former parts subsidiary, Delphi , itself one of the nation's largest corporations, to a variety of small businesses.
The company said on Wednesday that it expected an operating loss of $1.50 a share in the first quarter of 2005, or about $850 million, compared with its earlier projections that it would at least break even. For the year, G.M. cut its earnings forecast to a range of $1 to $2 a share, down from $4 to 5 a share.
Some analysts say that G.M. will be hard pressed to turn a profit this year. "We don't see anything on the horizon to enable them to make money this year," said Sean Egan, a credit analyst at the independent ratings firm Egan-Jones, who has been among the most pessimistic about G.M.'s prospects.
Ronald Tadross, an analyst at Bank of America , said that despite the company's heavy spending on purchase incentives, "we continue to believe G.M.'s products are overpriced" because resale values of cars are falling.
The automaker's largest American rival, the Ford Motor Company , reiterated its projections for operating earnings in the first quarter Wednesday, though it said it expected its full-year earnings to come in at the low end of its previously stated range of $1.75 to $1.95 a share. Still, that gave some confidence to analysts.
"We believe that the problems at G.M. are really G.M.-specific," said John Casesa, an analyst at Merrill Lynch, "and while declining market share is affecting Ford, too, the company has a stronger portfolio of products." Mr. Casesa maintained a neutral rating on Ford shares.
The prevailing view of analysts about G.M. has been that the company is not close to having to file for bankruptcy protection because at least by the end of last year, it had $23 billion in cash in its automotive operations against roughly $30 billion in debt that does not come due for years. But the company said that cash flow from its operations this year would shrivel to a deficit of $2 billion from the positive $2 billion that had been projected.
Mr. Egan sees the risk of bankruptcy as more immediate than some others do. "The real question is, What's going to turn this around?" he said. "They have relatively few levers to pull."
G.M. also restated its fourth-quarter earnings to reflect a recent agreement to pay Fiat $2 billion to extract itself from an industrial alliance. As part of the alliance, struck in 2000, Fiat was granted the right to sell its auto business to G.M. at any time over roughly five years. Several analysts have criticized that deal as a gift to Fiat that put G.M. at risk of having to absorb Fiat's badly struggling auto business.
G.M.'s own European operations have lost money for five consecutive years. Mr. Wagoner had said that the company would make money on the Fiat deal because of parts-sharing agreements.
For the fourth quarter of last year, G.M. said it would take an $886 million charge, which turns a relatively slim profit of $1.11 a share into a loss of 17 cents a share. That is equivalent to about $96 million of the nearly $1 billion loss projected Wednesday.
Mr. Wagoner said the company would largely stick to its previously outlined strategies - consolidating its global operations into one engineering and manufacturing organization, and continuing an effort to invigorate its car and truck lineup.
"North America is our 800-pound gorilla and today's announcement really shows how important it is that we get this business right," he said, adding that products remain "the first and most important element of this strategy to get North America on track."
He and other G.M. executives are convinced that the company's fortunes will substantially improve when a new wave of its most important vehicles - medium and large-size sport utility vehicles and large pickup trucks - arrive in 2006 and 2007. But demand for larger S.U.V.'s has been weakening, and analysts are concerned that if gasoline prices remain high, new versions of G.M. mainstays like the Chevrolet Suburban and the Cadillac Escalade will not be the profit sources they have been in the past.
"The real part of the earnings problem," Mr. Sprinzen of Standard & Poor's said, "is what is going on in S.U.V.'s, particularly mid- and large-size S.U.V.'s"
Chris Ceraso, an analyst at Credit Suisse, asked Mr. Wagoner and Mr. Devine on a conference call what steps the company was considering to reckon with the fact that its share of the United States market had dropped to 25 percent in February from close to 33 percent a decade ago.
"What are the thoughts, longer term, about shrinking the business to get more in line with where the market share is?" he asked.
Mr. Devine, the chief financial officer, replied, "Getting the share back up is our top priority."
"Obviously," he added, "the losses we're looking at in North America right now provide clearly some additional incentive to move faster here."
Jeremy W. Peters, in Detroit, and
Jonathan Fuerbringer, in New York, contributed reportingfor this article.
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# posted by Michael P. Whelan : 11:34 AM  0 comments