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International Marketplace

Volvo and Saab-Scania Call Off the Merger

Sweden’s two automakers, Volvo and Saab-Scania, last week called off the merger they had been slowly-and painfully-working toward since last spring. Volvo, the larger of the two, said in a statement that while it had been eager to go ahead with the deal, Saab’s reluctance had finally convinced the Volvo board that "conditions to combine do not exist." In fact, quarreling about the merits of the mergeramong executives and union leaders within Saab-Scania had broken out almost from the moment senior executives announced the first agreement in May (INTERNATIONAL MARKETPLACE, May 23). The Saab unions first complained that such a joint venture would ultimately lead to layoffs at Saab and its subcontractors. Then the unions at Saab’s profitable truck and bus divisions accused management of not consulting them-an oversight that would be contrary to Sweden’s law of co-determination between labor and management. On top of this, Volvo’s earnings for the first half of 1977 plummeted 41 per cent-compared with Saab’s 6 per cent drop. Had the merger gone ahead, Volvo-Saab-Scania would have been the biggest industrial concern in Sweden and one of Europe’s largest car manufacturers. Now both companies are looking else-where for future business partners : Saab is already talking to Italy’s Lancia and Volvo is putting out feelers to automakers in France.

Solar Energy in Mali

The largest solar-power plant ever attempled, with nearly an acre of solar collectors, will be completed sometime next year in the desert-bound African country of Mali. The $1 million project will eventually produce 80 kilowatts of power a day, providing electricity and drinking water to a nearby hotel and agricultural cooperative and power to pump irrigation water from the Niger River for a 370,000-acre area. The plant is being built by Sofretes, a French family firm that has expanded recently with the backing of Renault, the French Atomic Energy Commission and the Compagnie Française des Pétroles. According to Sofretes, the plant is the first solar-energy complex to service an entire region. The largest plant now in operation, also built by Sofretes, produces only 25 kilowatts of power daily.

Nigeria Fights Fuel Shortage

Though Nigeria has plenty of oil in the ground and pouring out of its wells, the country has had a chronic fuel shortage because it lacked the refinery and distribution capacity to process oil for its own economy. Now, Nigeria has decided to divert some of its petrodollars into a $2.5 billion development program. New pipelines, two more refineries and twenty oil-storage depots will be built. With $7.5 million already spent on trucks to transport the oil from the country’s existing refinery, the Nigerian Govemment hopes that the fuel shortage will begin to ease by the end of next year.

Fishing Limits in the South Pacific

Japanese and Russian fishermen, still sorting out the effects of recent agreements worked out by their governments after long disputes over fishing rights in northem Pacific waters, now face a new set of restructions in the south. Australia, New Zealand and ten independent island nations last week established limits at 200 miles from their shores. Because the countries are spread across the South Pacific, their action affects 6 million square miles of the Indian and Pacific oceans. The Japanese feel particulary threatened since they alone have been harvesting 300,000 metric tons of tuna a year from the South Pacific. Australia, however, is sympathetic to the Japanese fisherman-especially since Japan is Australia’s No. I trading partner-and hopes that some agreement can be reached to allow the Japanese to continue fishing in the south Seas.

Tanzania-Zambia Railway Backed Up

The 1,160-mile Tanzania-Zambia railway, built by the Chinese and opened with much fanfare only last year, has been so swamped with business that 75,000 tons of freight destined for Zambia has backed up in the Tanzanian capital and port city of Dar es Salaam, most of it still aboard ships waiting to be unloaded. Meanwhile, 900 railroad cars are reported to be standing idle in Zambia, also waiting for their cargoes to be unloaded.

Ford Gets Go Sign in Egypt

The $130 million joint venture that Ford Motor Co. agreed to last spring with Egypt’s El-Nasr Motor Co. to produce trucks and diesel engines has now received official approval from the country’s Supreme Council for Investments, even though Ford is still on the Arab boycott list. In endorsing the deal, Egypt demonstrated its own flexible approach to the boycott system. Egypt is willing to exempt a company from the list if it makes an investment equal to what it might have in Israel or, as in this case, forms a joint company with a local partner. Canada’s Massey-Ferguson will also be a partner in the new venture.

RITA PALMER with bureau reports

Newsweek, September 12, 1977

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