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Empty shipyard and suicides as ‘Hyundai Town’ grapples with grim future

SOUTH KOREA: When Lee Dong-hee came to Ulsan to work for Hyundai Heavy Industries five years ago, shipyards in the city known as Hyundai Town operated day and night and workers could make triple South Korea’s annual average salary.

But the 52-year-old was laid off in January, joining some 27,000 workers and subcontractors who lost their jobs at Hyundai Heavy between 2015 and 2017 as ship orders plunged.

To support their family, Lee’s wife took a minimum wage job at a Hyundai Motor supplier. His 20-year-old daughter, who entered a Hyundai Heavy-affiliated university hoping to land a job in Ulsan, is now looking for work elsewhere.

The Lee family’s fortunes mirror the decline of Ulsan, which is now reeling from Chinese competition, rising labor costs and its over-reliance on Hyundai – one of the giants, family-run conglomerates or chaebol that dominate South Korea.

Generations of Hyundai workers like Lee powered South Korea’s transformation from the ashes of the 1950-53 Korean War to an industrial and manufacturing powerhouse, making the southeastern port of Ulsan the country’s richest city by 2007.

But some experts say the chaebols have now become complacent and risk-averse, failing to keep pace with their overseas competitors.

South Korea’s focus on exports has also made Asia’s fourth-largest economy vulnerable to growing protectionism by major trade partners and other external shocks.

“Hyundai was everything to me. I feel hopeless,” Lee said at his apartment, a high-rise complex popular with Hyundai Motor workers 10 km (6 miles) from the automaker’s factory.

With young people fleeing in search of jobs, Ulsan is now the fastest-aging city in the country, according to Statistics Korea. The city’s population of 1.1 million has more than quadrupled since 1970 but fell for the first time in 2016 even as the population grew in the rest of the country.

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South Korea to ban about 20,000 BMW vehicles after engine fires

 South Korea’s transport ministry said on Tuesday it would ban some 20,000 BMW vehicles from the streets amid mounting public fears about engine fires.

The driving ban comes after 27 engines went up in flames between January and July, which prompted BMW’s Korea unit to apologize for last week and a recall of 106,000 diesel vehicles including the 520d from Aug. 20.

Amid public concerns over safety, the government order will affect about 20,000 BMW cars that are part of the recall but yet to receive safety checks, according to the transport ministry.

“I am asking owners of the BMW cars subject to the recall to actively cooperate to prevent bigger accidents, despite your inconvenience,” Transport Minister Kim Hyun-mee told a press conference.

Those who own the affected vehicles, however, can drive for safety checks, the ministry said, adding that the ban is intended for quick safety checks rather than punitive action against the owners.

Officials at the German automaker identified the root cause as defects in the exhaust gas recirculation system, while the South Korean government is conducting a separate probe into the case and planning to take legal action if necessary.

The order would be effective as soon as owners of the affected cars receive a mail notice, as early as Aug. 15, the transport minister said.

BMW, which trails only Mercedes in imported car sales in South Korea, saw sales more than double to 59,624 vehicles last year, from five years ago.

South Korea is a relatively small market, ranking eleventh in global auto sales, but is a major market for lucrative, premium vehicles and is currently dominated by Hyundai Motor and Kia Motors.

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Saudi cuts oil output as OPEC points to 2019 surplus

LONDON: OPEC on Monday forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production.

In a monthly report, the Organization of the Petroleum Exporting Countries said the world will need 32.05 million barrels per day (bpd) of crude from its 15 members in 2019, down 130,000 bpd from last month’s forecast.

The drop in demand for OPEC crude means there will be less strain on other producers in making up for supply losses in Venezuela and Libya, and potentially in Iran as renewed U.S. sanctions kick in.

Crude LCOc1 edged lower after the OPEC report was released, trading below $73 a barrel. Prices have slipped since topping $80 this year for the first time since 2014 on expectations of more supply after OPEC agreed to relax a supply-cutting deal and economic worries.

OPEC in the report said concern about global trade tensions had weighed on crude prices in July, although it expected support for the market from refined products.

“Healthy global economic developments and increased industrial activity should support the demand for distillate fuels in the coming months, leading to a further drawdown in diesel inventories,” it said.

OPEC and a group of non-OPEC countries agreed on June 22-23 to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction by Venezuela and others pushed adherence above 160 percent.

In the report, OPEC said its oil output in July rose to 32.32 million bpd. Although higher than the 2019 demand forecast, this is up a mere 41,000 bpd from June as the Saudi cut offset increases elsewhere.

In June, Saudi Arabia had pumped more as it heeded calls from the United States and other consumers to make up for shortfalls elsewhere and cool prices, and sources had said July output would be even higher.

But the kingdom said last month it did not want an oversupplied market and it would not try to push oil into the market beyond customers’ needs.

DEMAND SLOWING

Rapid oil demand that helped OPEC balance the market is expected to moderate next year. OPEC expects world oil demand to grow by 1.43 million bpd, 20,000 bpd less than forecast last month, and a slowdown from 1.64 million bpd in 2018.

In July, Saudi Arabia told OPEC it cut production by 200,000 bpd to 10.288 million bpd. Figures OPEC collects from secondary sources published in the report also showed a Saudi cut, which offset increases in other nations such as Kuwait and Nigeria.

This means compliance with the original supply-cutting deal has slipped to 126 percent, according to a Reuters calculation, meaning members are still cutting more than promised. The original figure for June was 130 percent.

OPEC’s July output is 270,000 bpd more than OPEC expects the demand for its oil to average next year, suggesting a small surplus in the market should OPEC keep pumping the same amount and other things remain equal.

And the higher prices that have followed the OPEC-led deal have prompted growth in rival supply and a surge of U.S. shale. OPEC expects non-OPEC supply to expand by 2.13 million bpd next year, 30,000 bpd more than forecast last month.

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Trump backs boycott of Harley Davidson in steel tariff dispute

WASHINGTON: President Donald Trump backed boycotting American motorcycle manufacturer Harley Davidson Inc on Sunday, the latest salvo in a dispute between the company and Trump over tariffs on steel.

The Wisconsin-based motorcycle manufacturer announced a plan earlier this year to move production of motorcycles for the European Union from the United States to its overseas facilities to avoid the tariffs imposed by the trading bloc in retaliation for Trump’s duties on steel and aluminum imports.

In response, Trump has criticized Harley Davidson, calling for higher, targeted taxes and threatening to lure foreign producers to the United States to increase competition.

“Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! The U.S. will soon have a level playing field, or better,” Trump said in a Twitter post.

Harley Davidson has repeatedly declined to comment on Trump’s remarks over the course of the dispute. The company could not be immediately reached for comment on Sunday.

Harley has forecast that the EU tariffs would cost the company about $30 million to $45 million for the remainder of 2018 and $90 million to $100 million on a full-year basis.

Trump met Saturday with a group of bikers who support him, posing for pictures with about 180 bikers at his golf resort in Bedminster, New Jersey, where he is on vacation.

Motorcycle companies based outside the United States include Japan’s Honda Motor Co Ltd and Yamaha Corp, Europe’s BMW  and Ducati as well as India’s Hero MotoCorp Ltd, Bajaj Auto Ltd, among others.

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