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Weekly Industry Crib Sheet: The Widening U.S. Trade Gap

Plus: Toyota’s Recall Woes, Mixed Employment Signs and Robot Orders in 2009.



Toyota Faces Mounting Problems
Following a series of large-scale recalls that took nearly 9 million cars off the road due to three separate defects, Toyota Motor Co., the world’s largest automaker, is now facing numerous complaints, several lawsuits and considering scaling back on production levels.

Officials at the National Highway Traffic Safety Administration (NHTSA) received complaints alleging 21 deaths due to acceleration problems in Toyota vehicles between 2000 and 2009, but since late-January, new complaints have linked an additional 13 deaths to the same issue in Toyota cars between 2005 and 2010, bringing the total number of alleged fatalities resulting from faulty accelerators in the U.S. to 34, according to the Washington Post.

“Complaints about auto safety issues typically rise sharply after a recall gains widespread attention, as NHTSA typically gets only 10 percent of the complaints generated by any given problem,” Detroit Free Press reports.

Since the latest round of recalls, litigation has mounted against the Japanese auto giant. According to the Los Angeles Times, lawsuits have been filed in federal court in at least 30 states, with potential damages projected at several billion dollars. Legal expenses would add to the $2 billion Toyota estimates the recalls will already cost in terms of repairs and lost sales.

Toyota says it is working hard to correct these problems, having already repaired 500,000 of the 2.3 million vehicles recalled for “sticky gas pedals,” and making efforts to reassure both customers and car dealers, the Wall Street Journal notes.

According to Agence France-Presse, Toyota may temporarily suspend production at two facilities in the U.S. in March and April. The company has also halted production on the Sai and the Lexus HS250h in Japan until it can work out a fix for the models’ faulty breaking systems.

Toyota is expected to cut its global production forecast for 2010 by approximately 100,000 vehicles, dropping the total from 7.5 million to 7.4 million, though the output forecast may be further cut depending on the resolution of the quality issues, MarketWatch reports.

Trade Deficit Widens in December
The U.S. trade deficit widened by 10.4 percent in December, climbing to $40.2 billion from $36.4 billion in November, according to the U.S. Department of Commerce on Wednesday.

The December goods deficit grew to $51.8 billion, a $3.4 billion increase from the prior month, while the services surplus fell to $11.7 billion, a $0.4 billion decrease from November. Total monthly export value rose to $142.7 billion, up $4.6 billion from the previous month, while import value climbed to $182.9 billion, an increase of $8.4 billion from November.

According to the Commerce Department, the month-to-month growth in export goods was largely due to capital goods ($1.8 billion); industrial supplies and materials ($1.6 billion); and automotive vehicles, parts and engines ($0.9 billion). Monthly import gains reflected increases in industrial supplies and materials ($4.4 billion); automotive vehicles, parts, and engines ($1.6 billion); and capital goods ($1.6 billion).

The growing trade gap suggests that the economy did not grow as strongly as predicted in late 2009, but it also indicates that global trade levels are picking up as the economic recovery gains strength. According to the Wall Street Journal, the December gains in imports and exports are a sign of “economic vitality,” while the deficit is growing “simply because the U.S. is importing more goods to feed domestic growth — in part to rebuild inventories depleted during the recession — than it is selling abroad.”

“The deficit is expected to keep rising in 2010 even though U.S. manufacturers will be benefiting from stronger overseas sales as the global economy rebounds and a weaker dollar makes their products from competitive in foreign markets,” the Associated Press explains. “The export gains are expected to be outpaced by an even larger rebound in imports.”

Tepid Job Growth Projected
Despite blips of good news in the job market lately, a gloomy employment outlook persists.

First-time jobless claims fell in the latest week reported, according to the U.S. Department of Labor. The seasonally adjusted initial claims in the week ended February 6 were 440,000, a drop of 43,000 from the previous week’s revised figure of 483,000, and the four-week moving average for initial claims decreased by 1,000 to 468,500.

“The latest claims reading was much better than the forecast of most economists of around 465,000, as the world’s largest economy emerges from its worst recession in decades with unemployment posing a key challenge,” Agence France-Presse reports.

At a briefing accompanying the government report, “a Labor Department official said that the drop in claims this week means that the backlog had now been completely ‘washed out’ and claims were resuming normal levels,” MarketWatch says.

And last month the unemployment rate fell to 9.7 percent.

In a report released on Thursday, the White House Council of Economic Advisers projected U.S. employers will add an average of 95,000 jobs a month this year, 190,000 a month in 2011 and 251,000 a month in 2012, assuming a jobs package of around $100 billion.

Even then, the unemployment rate is expected to remain at 10 percent in 2010, slowly falling to 8.2 percent in 2012, according to the annual Economic Report of the President.

North American Robot Orders Dropped in 2009
Orders for new robotics systems in North America fell 25 percent in 2009, though the rate of decline slowed in the fourth quarter of the year, according to new data from the Robotic Industries Association (RIA).

The total number of robots delivered by North American suppliers in 2009 was 9,451, representing a value of more than $569 million, the trade group reports in its latest annual findings. Compared to the full-year 2008 results, unit figures last year were down 25 percent, while the dollar value declined 36 percent.

In the fourth quarter, the decline nearly came to a stop: the number of units delivered was largely unchanged from the final quarter in 2008 and revenues were down only 5 percent from Q4 2008.

The number of robot units for robotics equipment in the life sciences/pharmaceutical/biomedical sector rose 43 percent, while orders for new robot units from the food and consumer goods sectors rose 7 percent in 2009, according to the RIA. Orders placed by automotive OEMs increased 5 percent, though orders from suppliers to the automotive industry fell 49 percent.

The RIA estimates that more than 1 million industrial robots are used worldwide today.

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