German industrial labor starts 24-hour strikes in row over pay, working hours

Members of German industrial trade union IG Metall take part in a 24-hour strike at VAC (VACUUMSCHMELZE) plant in Hanau. Around 260 companies are expected to be hit by walkouts in support of IG Metall’s demands from Wednesday to Friday. (Reuters)
Updated 31 January 2018
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German industrial labor starts 24-hour strikes in row over pay, working hours

FRANKFURT: Industrial workers in Germany held the first of a series of planned 24-hour strikes over pay and working hours on Wednesday, affecting companies including Volkswagen’s truck maker MAN and automotive supplier ZF Friedrichshafen.
Powerful German union IG Metall has called for full-day walkouts through Friday, firing a last warning shot before it ballots for extended industrial action that could be crippling to companies reliant on a well-oiled supply chain of car parts and other components.
“This has become necessary because the employers are moving sideways and have thrown into question compromises that had already been agreed,” IG Metall’s head Joerg Hofmann told daily Handelsblatt.
Across Germany, around 260 companies are expected to be hit by walkouts in support of IG Metall’s demands from Wednesday to Friday. At automotive supplier Robert Bosch in Stuttgart workers are due to go on strike later on Wednesday, to be followed by Mercedes-Benz maker Daimler and sportscar firm Porsche on Friday.
Emboldened by the fastest economic growth in six years and record low unemployment, the union is demanding an 8 percent pay rise over 27 months for 3.9 million metals and engineering workers across Europe’s largest economy.
The union has also asked for workers to be given the right to reduce their weekly hours to 28 from 35 to care for children, elderly or sick relatives, and return to full time after two years.
“I switched from full-time to part-time work because of my children and now I don’t have the opportunity to return to full-time,” Souad Benchakra, a worker at Geberit, a German maker of toilet bowls and faucets, told Reuters TV when strikes there began during the night.
This is IG Metall’s first major push for a change in hours since workers staged seven weeks of strikes in 1984 to help secure a cut of the working week to 35 hours from 40 hours.
Employers have offered a 6.8 percent wage increase but rejected the demand for shorter hours unless they can also increase workers’ hours when necessary.
Workers at printing press maker Heidelberger Druckmaschinen in Heidelberg are among those downing their tools on Wednesday, as are staff at Kion’s Still brand of forklift trucks in Hamburg and at lighting company Zumtobel in Lemgo.
Both the union and the employers have left the door open to resuming talks after the planned strikes end on Friday but each said they demanded more willingness to make concessions.
Employers in Bavaria said they had filed a legal challenge to the walkouts on Wednesday, demanding that workers return to work and the union pay damages. Other regional associations have said they will do the same.
“We still want a compromise. Causing such high damage to companies and the economy with full-day strikes is counter-productive and irresponsible,” Bertram Brossardt, head of the Bavarian employers’ group, said in a statement.
The DIW economic institute estimates that the strikes could cost the affected companies a total of €62 million a day in lost revenues, assuming that around 50,000 workers, or on average 200 per company, stop working for one day each.


Saudi Arabia seeks stable, not soaring, oil prices

Updated 22 September 2018
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Saudi Arabia seeks stable, not soaring, oil prices

  • Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday.
  • The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98

RIYADH: Oil prices rose this week on continuing market tightness. With the price rise, some Saudi-bashing has begun. Bloomberg reported that increasing prices were due to Saudi Arabia’s comfort with Brent crude above $80 per barrel. Such “analysis” is hogwash.

Due to market tightness, Brent rose to nearly $80 per barrel but deteriorated to $78.80 on Friday. WTI rose above $70 per barrel for the first time in three months and settled at $70.78 per barrel by the week closing.
The average price for Brent crude per barrel over the past five months has been between $72.11 and $76.98. As may be noted in those numbers, the Brent crude price has been resisting the psychological barrier of $80 per barrel. The fact is that, since October 2014, the Brent monthly average has never gone above $80.
The oil price outlook might be raised as a result of this upward tendency and the continuing tight oil market. For instance, with the latest numbers in hand, HSBC has revised its oil price forecast upward with Brent to average $80 per barrel in 2019 and $85 in 2020, before settling at about $75 in 2021.
Bloomberg was inaccurate about Saudi Arabia’s comfort with a Brent price above $80 per barrel. The Kingdom has never been among the bulls when it comes to oil prices. Again and again, Saudi Arabia has been a major advocate for stable oil prices, not increasing oil prices, which it views as unsustainable and damaging to the global economy. Bloomberg is also predicting that Saudi Arabia will follow its allegedly bullish nature and refrain from ramping up production to compensate for the oil lost once the US sanctions on Iran come into effect.
US Secretary of Energy Rick Perry has confirmed that Saudi Arabia, Russia and the US are well able to add enough crude oil supply into the market to compensate for Iran. Indeed, the Kingdom has begun to increase output to adjust for market needs, from 9.87 million barrels per day (bpd) in April to 10.42 million bpd in August.
The upward movement in oil prices came after strong fundamentals showed market tightness that spurred record levels of speculative traders, with nearly all betting on higher prices. The price rise also recognized that total US inventories are below the five-year average for the first time since May 2014. Oil prices have been gradually trending upward with gentle fluctuations. There have not been any steep surges or declines. There is nothing artificial about the trend. In reality, it is boringly predictable.
Last month, the International Energy Agency (IEA) reported OECD commercial crude oil inventories at 32 million barrels below the five-year average. Stocks at the end of Q2 2018 were up 6.6 million barrels versus the end of 1Q 2018, the first quarterly increase since 1Q 2017. The IEA also noted that global refinery throughputs in the second half of 2018 are expected to be 2 million barrels higher than in the first half of the year. These refined products stocks will draw down before building again in 4Q 2018.
Global crude oil inventories peaked in 2016. The OPEC+ agreement that worked for market balance was the reason for a fall in inventories. Since May 2017, global oil stocks have been on the decline and now global crude oil stocks are below the five-year average. Product stocks are also below that level, with strong demand and healthy refining margins.
Inventories have kept falling despite American producers pumping at all-time highs last month. It is only the massive flood of oil from the US which has kept crude oil prices at low levels from early 2015 to the end of 2017 — along with a resulting lack of upstream investment in the oil industry. Therefore, the IEA predicts that in 2022 spare production capacity will fall to a 14-year low.
Global oil markets are rebalancing. Oil prices started their upward momentum from the end of October 2017. They went above the psychological barrier $60 a barrel after 10 consecutive months of tireless efforts by OPEC and non-OPEC nations that started on January 2017. The market rebalancing will continue through the end of 2018, and beyond.
Such upward momentum in oil prices isn’t artificial movement because it came after many months without steep price fluctuations. In 2016, the Brent price average was $43. The 2017 Brent price average was $54, and prices just surpassed $60 in October 2017. The Brent average surpassed $70 in late March 2018 and has been hovering between $72 and $78 since. There is no evidence of a steep fluctuation or an artificial movement.
The claims of an artificial price movement have come just at the time when OPEC and the world are reaping the positive outcomes of 24 nations collaborating in output cuts that managed to successfully rebalance the oil market in a situation where global oil inventories were running at record highs. Also, these false claims came when the oil industry needs capital inflows to reactivate upstream investments for major international oil companies. Such investments are essential for the price stability that benefits oil producers and consumers globally. Low oil prices result in low investment in discovery and production of petroleum resources, which damages various industry sectors and energy needs. That leads to a vicious cycle of up-and-down price fluctuations.