Toronto, Ontario — August 28, 2018 — In this week’s Tuesday Ticker: Trump’s NAFTA news strengthens the TSX, Axalta’s ex linked to Specialty Chemicals after breakup with Akzo Nobel, and much, much more!
Auto Optimism
Auto parts manufacturers listed on the TSX saw their stocks jump by more than 6 percent this afternoon following Donald Trump announcing that the U.S. and Mexico were close to a deal on NAFTA.
Today, the U.S. president’s announced that his NAFTA renegotiation team had reached an understanding of the terms of a potential deal with their Mexican counterparts. While details are scarce, it is believed that one of the terms is a requirement that a higher proportion of auto workers earn wages of $16 U.S. or more. Such a provision could benefit both the U.S. and Canada as it would raise labour costs in Mexico.
In spite of the looming threat of tariffs on on Canadian-manufactured vehicles and parts, investors seem to believe that a U.S.-Mexico will be swiftly followed by an agreement between the U.S. and Canada.
While good for Canadian auto parts manufacturers, repairers may feel squeezed by the deal. With manufacturing costs up, replacement parts are likely to rise in price.
Specialty Chemical’s Outside Hire
Former Axalta CEO Charles W. Shaver will head up a new business, Specialty Chemicals, when it gains its independence from Akzo-Nobel around the end of the year.
In March, AkzoNobel announced it would be severing its connection to a subsidiary, Specialty Chemicals, to The Carlyle Group, from its Paints and Coatings business, AkzoNobel (Amsterdam, the Netherlands; www.akzonobel.com) announced in March 2018 that it had agreed to sell 100% of its Specialty Chemicals business to Washington D.C.-based Carlyle Group.
The current CEO, Werhner Fuhrmann, will re-enter his retirement, having been drawn back into the role last August in order to help manage the transition outside of Akzo-Nobel.
Currently the board chairman of Axalta, Shaver will step down from the leadership position with Axalta at the begining of September, and leave the board entirely by the time he takes up his new position. A seasoned chemical industry executive, Shaver has also been in charge General Chemical and Arch Chemicals, and in other executive positions at the Dow Chemical Company.
Fiat Chrysler Exec Sentenced for Bribery
As part of an ongoing probe into the misuse of company funds Fiat Chrysler’s training facilities, the former head of labour relations, Alphons Iacobelli, has been sentenced to five-and-a-half years in jail for bribery. He will also have to pay his employer more than $800,000 in restitution.
Iacobelli had pleaded guilty to a number of crimes, including the issuing of bribes in the form of money and gifts to senior officials from the United Auto Workers, paying for them out of money set aside for the management of Fiat’s training facilities.
While Iacobelli has taken full responsibility for the scheme, it is unclear whether other Fiat Chrysler employees will be targetted by the probe.
