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GM Drops US Mine Deal, Goes Foreign

From an unfazed Associated Press:

GM gets OK to terminate its deal with Stillwater

A federal bankruptcy judge granted General Motors Co. permission Wednesday to cut ties with the Stillwater Mining Co. so it can instead use cheaper foreign suppliers.

The cancellation of the Stillwater contract was approved by U.S. Bankruptcy Judge Robert Gerber in New York following a hearing. No appeal is planned, said Stillwater spokesman John Beaudry. He said the only recourse could be through the Obama administration’s auto task force, which so far has not responded to calls for pressure on GM’s management.

Meanwhile, Montana’s U.S. senators called the move "appalling" for a taxpayer-subsidized company and asked GM to reconsider.

GM backed out of its arrangement with Stillwater and canceled dozens of other contracts to slim down expenses and emerge from federal bankruptcy protection.

It will keep using precious-metals suppliers based in Russia and South Africa – drawing criticism that the government bailout of the automaker is in effect subsidizing overseas mining jobs.

Stillwater itself is majority owned by one of GM’s remaining suppliers, Norilsk Nickel of Russia. Stillwater’s Montana executives said they’ll lose up to $10 million annually without GM – a figure that they warned could turn into hundreds of jobs lost if metals prices drop.

"GM was left with no other decision," said GM spokesman Dan Flores. "Our biggest focus is to repay our federal loan as quickly as we can."

Montana’s elected officials piled on.

"I can remember when GM wanted everyone to buy American. Perhaps it and its new owners in Washington should take their own advice," said the state’s sole House member, Republican Rep. Denny Rehberg.

Gov. Brian Schweitzer said he had parked his Chevrolet pickup in protest until the matter is resolved.

The state’s Democratic U.S. senators, Max Baucus and Jon Tester, asked GM CEO Fritz Henderson to restore the contract, but unlike Rehberg and Schweitzer steered clear of criticism of the Obama administration.

Executives for Stillwater – which dominates the economies of two Montana counties – say their operations are largely independent of Norilsk.

For the last decade, the company’s two mines have supplied GM and other automakers with platinum and palladium used to make catalytic converters that filter pollutants from vehicle exhaust.

Stillwater argued in court that GM had to honor its sole domestic contract for those metals as the recipient of up to $50 billion in government loans.

The contract included a floor price requiring GM to often pay above market prices for Stillwater’s metals. GM also had to buy certain volumes every year.

In exchange, the automaker was guaranteed a steady supply of materials and a discount if metals prices were high. But with fewer cars being made and cheaper metals available elsewhere, GM said the agreement no longer made sense.

Court fillings by Stillwater say the negotiations resulted in two amendments to the contract, last December and again in March. Stillwater Vice President John Stark said those were more favorable to GM and that a third amendment was nearing completion when the talks broke off abruptly and GM dropped the contract.

It’s uncertain how the cancellation will play out for miners.

Columbus-based Stillwater employs more than 1,300 people and runs the only platinum and palladium mines in the United States, about 90 miles southwest of Billings in the Beartooth Mountains.

The GM contract accounted for about 12 percent of Stillwater’s 2008 revenues. Stillwater has a contract roughly three times that size with Ford Motor Co., set to expire at the end of 2010.

The company already went through a round of layoffs, cutting about 300 workers after platinum and palladium prices plummeted.

Stillwater shares fell Wednesday by 19 cents, or 3 percent, to $6.16.

In May, it reported a first-quarter loss of $11.6 million on revenue of $85.8 million. That’s down from a 2008 first-quarter profit of $2.8 million on revenue of $186.4 million.

This is a story from the Associated Press, but it appears to have only been picked up by the local Billings (MT) Gazette.

Never mind that it is yet another example of how Obama/General Motors is moving jobs overseas.

And, worse yet, since Stillwater supplies “palladium and rhodium for use in catalytic converters that filter pollution from vehicle exhaust” – aren’t these the highly desirable ‘green jobs’ that Mr. Obama says he wants to expand?

Still, maybe Obama/GM’s production of Cadillac cologne for men will hire enough US workers to take up the slack.

(Thanks to Rusty Shackleford for the heads up.)

This article was posted by Steve on Wednesday, July 22nd, 2009. Comments are currently closed.

8 Responses to “GM Drops US Mine Deal, Goes Foreign”

  1. Rusty Shackleford says:

    Meanwhile, GM dumps a precious metal mine in Montana.

    General Motors drops Montana mine in favor of foreign suppliers for precious metals

    BILLINGS, Mont. — A federal bankruptcy judge has granted General Motors’ request to drop its precious metals contract with a Montana mining company so it can use foreign suppliers instead.

    Rest of story: http://blog.taragana.com/n/general-motors-drops-montana-mine-in-favor-of-foreign-suppliers-for-precious-metals-117478/

  2. beautyofreason says:

    I still remember when John Kerry’s presidential run included a promise to “stop jobs from going overseas” and to punish companies that outsourced. Yet there is not a single whimper from them now.

    • Liberals Demise says:

      I remember when they said that we were turning into a service nation.
      Right now I’d settle for that!

      Barry has divided this Nation by wide margins. What took a generation to put together will probably take two to put back into place. (how sad)

    • beautyofreason says:

      So true. :)

  3. MinnesotaRush says:

    “A federal bankruptcy judge granted General Motors Co. permission Wednesday to cut ties with the Stillwater Mining Co. so it can instead use cheaper foreign suppliers.” .. but potentially costs hundreds of American jobs.

    These federal folks got just ALL the answers, don’t they(?).

    “He said the only recourse could be through the Obama administration’s auto task force, which so far has not responded to calls for pressure on GM’s management.”

    So maybe thru the CarCzar? Isn’t most of GM’s management folks that o-blah-blah’s administration put in place?

    Surely the boy king will be able to resolve this minor glitch. After all, the players in the matter are just likely behaving “stupidly” (like the cops at Gate’s house).

  4. pdsand says:

    Of course Stillwater’s prices are higher than its foreign competitors. It’s unionized.

  5. canary says:

    Is the Navy going to haul the precious metals, cause that will cost a fortune.
    And precious metals sounds like it might be Russia’s melted stockpile of no telling what fumes might be created. And Russia will continue to sell the bad stuff to our enemies. Oh. GM strings are work with our military. :)

    oh, and what about Obama’s campaign promise that his staff had developed –
    amending the tax code to eliminate tax breaks for companies who shifted operations offshore.

  6. Confucius says:

    Still, maybe Obama/GM’s production of Cadillac cologne for men will hire enough US workers to take up the slack.

    I couldn’t find any information as to where the cologne will be manufactured. However, I did the find the following:

    –The fragrance was created by Constance Georges-Picot who trained in France.
    –The packaging was created by Pierre Eisenecker who is based in France.
    –Beauty Contact, Inc. holds the license to design, develop, produce and market the fragrance. Beauty Contact is based in Dubai and was created in 2002 by it’s CEO (and sole director) Alwyn Stephen.
    –Alwyn Stephen is mid-Eastern and says he is a fan of: (1) Mohammed bin Rashid Al Maktoum who is the Ruler of Dubai and Prime Minister of UAE, (2) Shaya Shamsadeh who is an Iranian who calls himself an “entrepreneur and advocate,” and (3) Oprah Winfrey.

    So, if this cologne is going to be manufactured in America, it’s still not very American.


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