Enron Mentions - 04/06/2001 ,
 Brazil Scrambles for More Energy
The New York Times, 04/06/2001
World Watch 
The Wall Street Journal, 04/06/2001

Dabhol notice: Govt has till Monday to respond
Business Standard, 04/06/2001
Houston-Based Energy Company's Broadband Division Pares 250 from Work Force
KRTBN Knight-Ridder Tribune, 04/06/2001
Chelmsford, Mass., Telecom Network Company Cuts Staff, Earnings Forecast
KRTBN Knight-Ridder Tribune, 04/06/2001
UK: Auto-sector unlikely to boost 2001 metal demand.
Reuters English News Service, 04/06/2001

Business/Financial Desk; Section W
Brazil Scrambles for More Energy
By JENNIFER L. RICH

04/06/2001
The New York Times 
Page 1, Column 3
c. 2001 New York Times Company 

SAO PAULO, Brazil, April 5 -- Though nightly newscasts show cars floating 
down flood-prone streets here, residents are hoping for more rain -- at least 
20 percent more than normal for this time of year, to be precise. 
That is how much the operators of Brazil's electricity grid say needs to fall 
to ensure that hydroelectric plants will continue to run at full capacity, 
averting the need for energy rationing, like the recent rolling blackouts in 
California, in at least part of Brazil later in the year.
Here, as elsewhere across the globe, the struggle to deregulate has been 
coupled with soaring demand for power. As the Brazilian government seeks 
other energy sources, formulates a rationing plan and encourages consumers to 
voluntarily cut back energy use, companies --especially those in power-hungry 
industries -- are scrambling for ways to make sure their electricity needs 
will be met. And independent local and foreign power developers, like 
EnergyWorks, based in Landover, Md., are hoping to be of service, offering to 
construct minipower plants on the companies' premises. 
''A lot of companies have been calling us in the last two weeks to see if it 
is possible to invest in this type of project,'' said Nelson Cardoso de 
Oliveira, business development manager for EnergyWorks, a unit of the 
electric utility Iberdrola S.A. of Spain. 
For the last few years, experts have warned of an impending energy crisis in 
Brazil, as increasing industrialization has caused the demand for energy to 
outpace supply by about 20 percent. The government's three-year-old effort to 
attract more investors through the privatization of most of the country's 
power grid has had a slow start. Local companies have been hindered by a lack 
of financing. And uncertainties in the newly deregulated power market over 
such things as the pricing of electricity have stymied grid-expansion plans 
by the private enterprises, including Enron, that bought up the former 
state-owned companies. 
Even the completion last year of a natural gas pipeline from Bolivia has been 
slow to stimulate investments in thermoelectric power, a move that was meant 
to reduce the country's near-total dependence on hydroelectric power. Only 15 
of the 49 thermoelectric plants that the government focused on almost two 
years ago in its emergency power plan seem close to coming on line, in the 
next year or so. 
With rainfall missing major reservoirs and a shortage of transmission lines 
preventing excess power that does exist from moving among regions, the 
government says that the power situation in Brazil will be touch-and-go at 
least until 2003. 
So some of the country's biggest power-intensive companies are taking matters 
into their own hands, hoping to ensure a constant power supply with their own 
natural-gas-fired generators. Among those that have recently done so are Cia. 
Siderurgica Nacional, a steel maker, and Globo Comunicacoes e Participacoes, 
parent of the Rio de Janeiro daily newspaper O Globo. So have two rival 
breweries: Cia. Cervejarias Kaiser, owned by the Coca-Cola Company, its 
Brazilian bottlers and Heineken; and the maker of Brahma beer, Cia. de 
Bebidas das Americas, known as AmBev. Plants are planned for the Brazilian 
units of the American-based multinationals Corn Products International and 
International Paper. 
Rudi Anvari, director of Engineering and Technology at Corn Products Brazil, 
said the company's decision was based on the ''need to count on a reliable 
and flexible source of energy.'' 
In a study of power use in the state of Sao Paulo, the state's secretary of 
energy found that companies produced 14 percent of the energy they consumed 
in 2000, up from 5 percent in 1994. 
In some cases, the excess power from these company plants can be sold to the 
national grid. Jayme de Hollanda, general director of the National Institute 
for Energy Efficiency, a nonprofit advocacy group, said that this so-called 
cogenerated power should account for about 15 percent of the country's 
electricity supply by 2010. 
''The volumes that we are dealing with don't provide a complete solution for 
the country, but they can certainly resolve localized problems,'' said Ivan 
Marimon, the sales manager at Guascor do Brasil, a joint venture controlled 
by Grupo Guascor of Spain, which builds small-scale power plants for 
hospitals. 
Companies said that part of the appeal of small power projects was that they 
required less time to build than a public power project -- sometimes as 
little as six months. And the cost, at about $6 million for a small 
5-megawatt plant, could be just as cost effective for some companies as 
buying electricity from the national grid, especially since electricity 
prices were expected to increase significantly in the next several years. 
Some private power concerns, including EnergyWorks, even finance the projects 
outright. But for a project to be viable for financiers and builders, 
companies need to agree to buy the electricity for 15 to 20 years. That is a 
daunting proposition for Brazilians, who have been made shy of long-term 
commitments by years of economic turmoil. Part of the doubt has been caused 
by exchange rate worries. Unlike natural gas prices, which are charged in 
dollars, electricity prices are fixed by the government in local currency. 
Indeed, private power plants are clearly not for everyone. 
''For most companies,'' said Pio Gavazzi, director of infrastructure at the 
Federation of Industries of the State of Sao Paulo, a trade group, a solution 
''could just be a matter of renegotiating existing electricity contracts or 
installing more energy efficient parts in the factory.''


Photo: Brazilian companies and some overseas concerns are searching for more 
energy sources to make sure their electricity needs will be met. This 
EnergyWorks power plant was built for the Kaiser brewery in Pacatuba. 
(EnergyWorks do Brazil Ltd.) 
copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 
International
World Watch
Compiled by David I. Oyama

04/06/2001
The Wall Street Journal
A11
(Copyright (c) 2001, Dow Jones & Company, Inc.)

ASIA/PACIFIC 
China Cracks Down
On Foreign Investors 
In Cable Networks 
China's telecommunications regulator threatened to seize assets in a move to 
reinforce a ban on foreign investment in domestic telecommunications 
networks. The move, announced on the Ministry of Information Industry's Web 
site, follows widespread links between local cable-television operators and 
companies seeking to use those networks to offer lucrative services such as 
high-speed Internet access. A crackdown on the practice could threaten the 
business operations of some Hong Kong-listed companies that have invested in 
China's cable networks, usually with the tacit approval of local governments. 
The ministry's notice said foreign companies, including Hong Kong and Macau 
concerns, can't invest in telecom networks before China's expected entry into 
the World Trade Organization. The notice requires foreign investors in 
telecom networks to report to the ministry and "voluntarily rectify" the 
investments. Local governments and companies that own fiber-optic networks 
are also required to report their holdings within 30 days. 
The notice exempts companies with a basic license for telecommunications 
services, including state-controlled China Telecommunications, China Mobile 
Communications and China Unicom. 
UPS to Open Asian Hub in Philippines 
United Parcel Service said it plans to open a hub in the Philippines to 
handle deliveries within Asia. The Atlanta-based company said it hasn't 
decided how large the facility will be, but "some limited operations" are 
expected to begin by year's end. The hub is likely to be located at Clark 
International Airport, a former U.S. Air Force base. UPS said the facility 
should improve delivery times in the region because jet freighters from there 
can reach all major Asian cities in fewer than four hours. It plans to keep 
its existing cargo hub at Taipei's airport in Taiwan for trans-Pacific 
operations. UPS, which began direct flights between the U.S. and China on 
Sunday, can't fly between Taiwan and China because of the political stalemate 
between Beijing and Taipei. 
Indonesian Sports-Shoe Exports Decline 
Indonesia's sports-shoe exports to the U.S. have fallen by 10% since December 
because of the U.S. economic slowdown, putting thousands of people out of 
work as companies such as Nike, Reebok and Adidas cut production orders, a 
local industry-group official said. More than 300,000 Indonesians are 
employed in sports-shoe factories, and exports last year totaled $2 billion. 
Companies have also cut orders because of fears that Indonesia's political 
instability could disrupt output, he said. 
BRIEFLY: 
-- Honda Motor plans to begin producing motorcycles in Asia outside Japan 
within two years for sale in Japan, its president said. He said lower labor 
costs would allow Honda to aim at reducing domestic prices of its 
50-cc-engine bike to less than 100,000 yen ($800), from 140,000-150,000 yen 
now. 
-- Dabhol Power, an Indian unit of U.S. power company Enron, issued a notice 
of arbitration to India's government to try to recover, at the Court of 
Arbitration in London, 1.02 billion rupees ($21.9 million) it says it is owed 
for supplying power to the Maharashtra State Electricity Board. 
-- Indian investigators have concluded that the crash of a jet operated by 
Alliance Air, a unit of state-run Indian Airlines, that killed 61 people last 
July was the fault of the pilots of the Boeing 737-200 aircraft in making 
their approach to Patna airport. 
Taiwan's president, Chen Shui-bian, and the Dalai Lama, the exiled Tibetan 
spiritual leader, met in Taipei, in a session that marked their common 
interests and mutual differences with China's government. 
--- 
EUROPE 
France Telecom's Access Offer Rejected 
France's telecommunications regulator said it again rejected France Telecom's 
offer for the unbundling of the country's so-called local loop, and has 
ordered the company to submit a new proposal by Thursday. Implementation of 
the local-loop unbundling, which came into force Jan. 1, has been delayed 
because of high prices set by France Telecom for access to local exchanges by 
rival telecommunications operators. The regulator said some of the fees 
announced by France Telecom remain too high and need to be reduced further. 
Rival operators have complained repeatedly that the former French telephone 
monopoly is erecting barriers that prevent them from access to the local 
loop. 
EU Vote Backs Livestock Vaccinations 
The European Parliament voted overwhelmingly to ask European Union countries 
to consider introducing wider vaccination programs to stem the spread of 
foot-and-mouth disease. Although not binding, the vote will add to pressure 
on EU members that have resisted calls for all but very limited immunization 
programs against the virus, which sickens cloven-hoof animals. Opposition to 
vaccinations has centered on potential trade losses. EU countries, notably 
Britain, where more than 1,000 farms have been infected in six weeks, have 
largely stuck to a policy of restricting livestock movements and killing 
animals at risk of spreading the virus. 
RWE Drops Bid for Spain's Cantabrico 
German utility conglomerate RWE pulled out of the bidding for Spain's 
Hidroelectrica del Cantabrico, paving the way for a negotiated end to the 
yearlong takeover battle for the smallest of Spain's four power companies. A 
joint bid of 27.30 euros ($24.61) a share from Ferroatlantica, a unit of 
Spain's Villar Mir group, and German utility Energie Baden-Wuerttemberg had 
trumped RWE's bid of 26 euros a share. RWE withdrew from the bidding war 
after Cantabrico's board yesterday approved the Ferroatlantica offer. That 
leaves just Electricidade de Portugal, the 30% state-controlled utility, in 
the running for Cantabrico. EdP holds 35% of Cantabrico, which will force 
Ferroatlantica to negotiate for control. 
BRIEFLY: 
-- L'Oreal's chairman said he is confident the French cosmetics maker can 
maintain sales growth this year, after the company reported first-quarter 
sales rose 12.7% from a year earlier to 3.4 billion euros ($3.07 billion). 
"My confidence goes beyond the current year," he told analysts. 
-- Swiss-Swedish engineering and technology company ABB plans to list its 
American depositary shares on the New York Stock Exchange today, despite the 
volatile market and a sharp decline in its stock price earlier this week in 
Swiss trading. 
-- Kenya's respected central-bank governor, Micah Cheserem, was abruptly 
dismissed this week by President Daniel arap Moi, in a move that could 
cripple the country's ailing economic-reform program. He was replaced by 
Nahashon Ngigi Nyagah. 
--- 
THE AMERICAS 
Some Canadian Cigarette Taxes Raised 
Canada's federal government said it is immediately raising the taxes on 
cigarettes by four Canadian dollars (US$2.54) a carton in the provinces of 
New Brunswick, Nova Scotia, Prince Edward Island, Quebec and Ontario, where 
cigarette taxes were lowered a few years ago. The government is also 
increasing the federal excise tax on each carton of cigarettes across Canada 
by C$1, and will allocate an additional C$480 million over five years to its 
antismoking campaign. Canada lowered cigarette taxes across eastern Canada 
sharply a few years ago after widespread smuggling from the U.S., where 
cigarettes were much cheaper. The initiatives are aimed at discouraging 
smoking among youths, government officials said. 
Brazil Posts Unexpected Rise in Output 
Brazil's industrial production in February rose by a surprising 1.5% from a 
year earlier, even though the month had three fewer working days than in 2000 
because the nationwide Carnival festivities fell in February this year 
instead of March. Output also rose 0.8% from January, boosted in part by an 
8.7% rise in production of capital goods, the government said. 
Canada Propane Merger to Be Reviewed 
Canada's Federal Court of Appeal ordered the country's Competition Tribunal 
to reconsider the proposed merger of propane distributors Superior Propane 
and ICG Propane, Superior said. The tribunal ruled last August that the 
merger could proceed, but Canada's Competition Bureau appealed the decision. 
Court Rules Chavez Term Extends to 2007 
Venezuela's Supreme Court ruled that President Hugo Chavez should stay in 
power until January 2007, a decision that effectively allows Mr. Chavez to 
extend what began as a five-year term to eight years, local media reported. 
The court ruled that under a new constitution, "a transition period" and 
fresh elections last July, which Mr. Chavez won handily, he didn't officially 
begin his current term until January 2001. Supreme Court officials weren't 
available to comment. Mr. Chavez could conceivably remain in power until 2013 
because the new constitution allows for re-election to a new term. The ruling 
is likely to spur Mr. Chavez's critics, who say he is trying to impose 
authoritarian rule. 
BRIEFLY: 
-- Ecuador's government asked the International Monetary Fund to extend the 
expiration of its $304 million standby-credit agreement to June 30 from April 
18. 
-- Free-market reform has brought prosperity to Brazil but hasn't narrowed 
the gap between rich and poor. According to a report by Brazil's national 
statistics institute, average per-capita income rose 30% between 1992 and 
1999 to 525 reals ($245) a month. But the average income of the richest 10% 
of all Brazilians remained 19 times greater than that of the poorest 40%.

Dabhol notice: Govt has till Monday to respond
Santosh Tiwary NEW DELHI

04/06/2001
Business Standard 
2
Copyright (c) Business Standard 

With little time left to respond to the arbitration notice served on it by 
the Dabhol Power Company, the Union finance ministry has asked the law 
ministry and the Maharashtra government to advise the Centre on the 
counter-moves to be made. 
The Enron-promoted company had issued a notice of conciliation and 
arbitration for the non-payment of the December bill of MSEB of Rs 102 crore, 
which had the state government as well as the Centre's counter-guarantee.
DPC has informed the Centre that it has to respond by 3.00 pm on Monday. 
Maharashtra government sources said, "Thursday and Friday are holidays on 
account of Moharrum and Mahavir Jayanti respectively. We will be able to work 
on the notice only on Saturday. The Centre too will be able to take action 
only on Monday as Saturday and Sunday are holidays." 
Finance ministry sources said that the law ministry had earlier informed the 
government that there was a case for Maharashtra seeking adjustment of 
"availability penalty" from DPC against the outstanding bills and the Centre 
was expected to fight it out in the international court of arbitration. They 
further said that the Centre will respond to the notice well in time. 
Sources also said that the Centre was contemplating the options through which 
a long-term solution to the payment wrangle could be achieved. 
The finance ministry was also firming up on its suggestion of the 
possibilities of a re-negotiation of the counter-guarantee for a discussion 
in the Cabinet, they pointed out. The Centre had made it clear earlier that 
it was interested in finding a long-term solution to the problem by not 
paying the December bill for which the GoI counter-guarantee was invoked by 
the DPC, till the penalty issue taken up by the MSEB was settled.

Houston-Based Energy Company's Broadband Division Pares 250 from Work Force
Tom Fowler

04/06/2001
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas 
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM) 

Enron Broadband Services has eliminated up to 250 positions in recent weeks, 
a reflection of changes in the high-tech market and a consolidation of 
operations in the company. 
Many of the employees have found work elsewhere with parent company Enron 
Corp., said Chief Executive Officer Ken Rice, but the move brings the number 
of Enron Broadband employees from as many as 1,200 in recent months to about 
900.
Many of the job cuts came when Enron Broadband, a division of energy giant 
Enron Corp., finished building out the 18,000-mile fiber optic network that 
it uses to buy and sell Internet bandwidth, Rice said. 
"We had a number of people working on that, but now that it's in place we 
needed to redeploy them elsewhere," Rice said. 
Consolidating operations from outlying Enron Broadband offices, such as 
Portland, Ore., to Houston, also accounts for some of the lost positions, as 
well as slowing demand for a PC-based streaming media product the company 
developed, Rice said. 
It's not unusual for Enron to move several hundred employees to different 
locations and divisions around the country every year to account for changes 
in the market, Rice said. The company employs about 15,000 people. 
"It's just a part of the way we do business," he said. 
Enron Broadband is still growing and has posted more than a dozen new 
broadband-related jobs on its Web site since March 20. 
Enron officials have shied away from calling the eliminated jobs "layoffs." 
When word of the job cuts first surfaced at the end of March, a company 
spokesman used the term "redeployed" to describe the action. 
Many employees were offered the opportunity to find other jobs in Enron, but 
those who did not find new jobs or accept other positions in the company had 
few other options than leaving. That saved the company from actually firing 
workers, which could have required it to report the actions to the Texas 
Workforce Commission. 
Enron Broadband Services has attracted a lot of attention in the past year 
for pioneering a previously unheard of notion -- treating access to the 
biggest Internet data lines as a fluid commodity that could be bought and 
sold. 
The group was created following Enron's 1997 acquisition of Portland General 
Electric, a small Oregon utility company that was also in the process of 
building its own fiber optic network. Enron used that as a starting point to 
build its network, which now has access to dozens of other global networks. 
The company buys time and access to those networks and sells it to end-users 
who want to send large amounts of data over the Internet for things such as 
broadcasts of concerts and meetings or more mundane tasks like exchanging 
business data between two different offices of a company. 
The company uses "pooling points," about 25 data switching hubs it owns 
around the world, to open and close connections with other networks around 
the world to effect those trades. 
The company is also building a platform to deliver broadband content to homes 
and businesses, such as movies and games. 
The cornerstone of that content was originally a 20-year contract with 
Blockbuster Video that would have combined that company's movie industry 
clout with Enron's technology to bring video-on-demand to homes. Enron 
canceled that deal in March, however, when Blockbuster couldn't deliver the 
quantity or quality of movies Enron wanted, Rice said. 
"We're working directly with the studios, broadcasters and other producers to 
get content for that ourselves," Rice said. 
The company announced a deal with a gaming firm to let customers order and 
play a variety of video games through the Web shortly after the Blockbuster 
deal fell through, but Wall Street quickly punished Enron's stock for the 
news. 
Combined with word of the job shuffling on March 21, the company's stock 
dropped more than 8 percent in a single day and has continued to sag. 
Since early March the stock lost more than 31 percent of its value, going 
from about $74 to as low as $51, but closed up $1.98 on Thursday at $55.70. 
Carol Coale, a senior analyst with Prudential Securities, said the market 
already made adjustments for the reshuffling of jobs at EBS and reacted to 
the dropping price of bandwidth. 
"The balance of the drop has been in reaction to the premium multiple they 
were getting for their technology in general," Coale said. "What would make 
the stock go back up is if technology as a whole goes back up."

Chelmsford, Mass., Telecom Network Company Cuts Staff, Earnings Forecast
Peter J. Howe

04/06/2001
KRTBN Knight-Ridder Tribune Business News: The Boston Globe - Massachusetts 
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM) 

Sycamore Networks, the Chelmsford optical networking company that once 
dreamed of rivaling Lucent Technologies and Nortel Networks, yesterday said 
it will lay off 140 workers. It also slashed its earnings forecasts. 
Facing the same imploding market for telecommunications gear that has 
battered Lucent, Nortel, and companies across the telecom industry, Sycamore 
said its revenue for the quarter ending April 28 is likely to come in at a 
stunning $100 million below analyst forecasts, or $50 million to $60 million. 
That is only one-third of the last quarter's sales.
Instead of earning 5 cents a share as it did last quarter, Sycamore forecast 
a loss of 16 to 19 cents per share, heavily driven by up to $150 million in 
one-time charges for firing workers, writing off inventory, and other 
expenses. 
"This [13 percent] reduction in staff is a difficult step to take, but we 
believe it is a necessary one," Sycamore president Daniel E. Smith said in an 
analysts' conference call last evening. Sycamore said the layoffs will occur 
over the next three weeks and would not comment on severance packages. 
Sycamore cited the same set of factors that have led Wall Street to punish 
telecom stocks it adored just a year ago: Carriers are abruptly slowing down 
or abandoning spending on network upgrades as they struggle to make profits 
on their huge investments so far and try to determine how bad and how long 
the U.S. economic slowdown will be. Sycamore also said it has faced problems 
from an unnamed supplier in getting enough components to ship expected 
volumes of its high-end SN 16000 optical switching device this quarter, but 
hopes to have it worked out by May or June. 
Sycamore chief financial officer Frances M. Jewels said the company will not 
generate net cash from operations "for the next several quarters," but is in 
a fair position to ride out the slowdown. 
Sycamore last month reported just under $975 million in cash and short-term 
securities, plus another $400 million in long-term liquid assets. That should 
be ample to cover its typical payroll, research, and operating expenses of 
about $20 million a month. 
Jewels and Smith said that despite the collapse in revenue, the company does 
not want to cut back so deeply on research and sales that it will hurt its 
chances of resuming sales growth. "The question is when, not if, service 
providers will return to investing in their infrastructure," Smith said. 
Sycamore recently bought a roughly 100-acre parcel of land in Tyngsborough 
where it plans to build a new campus consolidating its far-flung Chelmsford 
offices. "Those plans are still proceeding, albeit at a much more modest 
pace," Sycamore spokesman Richard Williams said last night. 
Sycamore would not say which customers have cut back or dropped spending 
plans, but noted that it is well known Williams Communications accounts for 
more than half of its revenue and that Williams has said it will slow down 
capital expenditures. 
Sycamore said it recently turned down a sale to a customer who was demanding 
"vendor financing," or buying gear on credit. It said two customers with 
which it had made such deals had drawn down only $50 million of $200 million 
in authorized credit. 
Many analysts have said Sycamore sorely needs to branch out from its customer 
base of about a dozen emerging carriers like Williams, 360 Networks, and 
Enron Broadband to land a marquee name like AT&T, SBC, or Verizon. 
Smith said Sycamore is getting "positive feedback" from trials at big-name 
U.S. and foreign carriers of that ilk, but gave no indication any sales deals 
are imminent. 
Sycamore shares, which have collapsed from highs of more than $190 last year, 
had risen $1.41 to $9.06 in Nasdaq Stock Market action before trading was 
stopped before the news announcement.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


UK: Auto-sector unlikely to boost 2001 metal demand.

04/06/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

LONDON, April 6 (Reuters) - Transport sector end-use is unlikely to provide a 
substantial boost to base metal demand in the coming year, UBS Warburg/Enron 
Metals said in their LME weekly metal report on Friday. 
Depending on the metal, end-use by the transport sector makes up a large 
proportion of overall demand for most of the base metals complex. Only in tin 
does it appear to be less than ten percent of total demand, it said.
"The bulk of the transport demand is from the motor vehicles industry," UBS 
Warburg economist, Warren Oliver said in the report. 
Aluminium is also used in the aerospace sector while nickel is utilised in a 
wide range of transport applications, the report added. 
North America, Japan and Western Europe account for around 70 percent of 
world auto production, although developing economies are begining to play an 
important role. 
USB Warburg auto equity research team estimates show despite five percent 
increases in global auto production for 1999 and 2000, reaching 57.29 million 
units last year, production is likely to stagnate or even decrease in 2001. 
"UBS Warburg forecasts 2001 global production of 57.06 million units, a 
decline of 0.4 percent from 2000." 
Wide variations in regional production for 2001 are expected, the report 
said. 
"Of the large OECD producers, the U.S. is likely to show a substantial 
decline, Japan a small decline and Western Europe a small increase," it said. 
U.S. production, which was above the long term trend, is expected to fall 
backwards, because of production cut backs by the 'Big Three' carmakers. 
"While other producers in North America are increasing production, seemingly 
confident in winning market share, this is swamped by cutbacks by GM , Ford , 
and Chrysler DE)," the report said. 
Elsewhere, Japanese output has been decreasing during the 1990s. Annual 
average output will show little change in 2001 and stay close to the trend 
line over the past two decades. 
In western Europe, production levels are above trend estimates and USB 
Warburg predicts production in this area is likely to grow enough to remain 
so. 
U.S CAR SALES HOLDING UP, GERMANY FALLING 
Car sales in the U.S have been strong so far this year despite overall 
weakness of the American economy, the report said. 
Preliminary estimates show March sales of just over 17 million units, above 
the typical range of Wall Street estimates of 16.3-16.9 million. 
"Indeed, in each of the three months of the first quarter, U.S sales have 
surpassed consensus estimates." 
"While we expect a deterioration of sales performance in coming months. it is 
true that car sales have held up better than expected." 
But car sales for the first two months of the year in Germany, which accounts 
for around a quarter of the European market, are down five percent 
year-on-year. 
The rebound in German unemployment is one sign that consumer spending could 
disappoint in coming months and autos could be particularly at risk. 
Declining demand from the auto sector poses a clear risk, it added. 
So although car sales have been better than expected in such markets as the 
U.S, there is still concern the transport sector may not substantially boost 
base metal demand over the coming year.
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
sharonda.stephens@enron.com