Summit Notebook

Exclusive outtakes from industry leaders

Audio – Looking ahead with Ford

Ford Motor Co Chief Executive Alan Mulally found himself in a rather strange situation this week.

mulally1.jpgIt’s hard to imagine that during the week with our annual Reuters Autos Summit, there could have been a spate of bad news from another sector of the economy where one might say, “Well, maybe things aren’t that bad for the automakers”.

And yet, here we are. There were likely some long odds out there that the U.S. financials sector would look worse than the auto companies — which have struggled mightily in the past year.

Not that it’s all goodness and light in Detroit. Sales for the major auto companies have fallen to recession levels and there were several guests on Monday who went so far as to ask whether the “Big Three” would be able to keep the “Three” part of their name for the next year.

Russia’s helping hand for Fannie, Freddie

The head of Russia’s oil pipeline monopoly Transneft, which carries over 10 percent of the world’s oil supply to market, takes a charitable view of Russia’s oil output growth. At a time when oil prices are on the slide, and the OPEC group of oil producing nations is cutting production, he thinks energy-rich Russia must keep pumping more to help the world’s less fortunate consuming nations and their economies.

“What about our beloved Fannie Mae and Freddie Mac? We can’t do it (let production stagnate). We have to support them,” he joked.

Kremlin adviser sees end to graft

dvork.jpgThe Kremlin has been promising for years to root out corruption from Russia’s bureaucracy. President Dmitry Medvedev has vowed to redouble these efforts. In June, the newly elected president’s administration presented him with new anti-corruption legislation and a plan to clean up the judiciary.  

Medvedev’s top economic adviser, Arkady Dvorkovich, speaking at the Reuters Russian Investment Summit, bristled at a reporter’s suggestion that the anti-corruption campaign might start in the top echelon of politics:

AUDIO – Power industry can’t keep up with the Joneses

slobodin3.JPGMikhail Slobodin’s Integrated Energy Systems, Russia’s largest private electricity investor, works in a tough industry: Prices for gas are rising, prices for coal are rising more. Russia’s growing economy needs power, and IES has heavy obligations to build new stations at a time when construction costs are soaring and credit is tight. Government price regulation leaves little room for profit.

 And compared to the power industry with its tight finances, the IES chief executive said, his plant personnel can’t help but find the rich neighbours offer more appealing employment.

AUDIO – Vimpelcom: At home in Vietnam

izosimov.jpgAs Russia’s acquisitive corporations have consolidated their positions at home, their ambitions have spread to other fast growing, often risky and untried emerging markets. First they hit the countries of the former Soviet Union, which many Russian businessmen still view as their backyard,  and more recently, have expanded in other emerging markets in Asia and Africa. Particularly hospitable have been the old Cold War allies of the Soviet Union, as Russian mobile phone operator Vimpelcom found when it made its first step in Asia by entering a joint venture in Vietnam.

“It was the real red carpet treatment,” Vimpelcom chief executive Alexander Izosimov said.  

Buy a farm in Russia, get more than you pay for

soldatov.jpgThe chief executive of Russian agribusiness company Razgulay, Alexander Soldatov, set out to buy up old collective farms, and ended up with a milk business. The cows just came with the land, he said. 

 Razgulay is investing to expand its land bank, betting that Russia’s arable land will be parcelled out to private owners by the end of 2009. Sometimes, he said, he is able to buy virgin meadow. When he buys a collective farm, it comes with Soviet-era trappings, including an obligatory herd of cows and a command-economy version of a business plan approved by the regional government. The milkmaids — who in contemporary Russia are effectively shareholders in the collective farm — usually come too.

AUDIO: Capital flight to cure what ails

pankin1.jpgSoaring oil prices have helped make Russia rich, but the flood of petrodollars means Russians face double digit price inflation. Dmitry Pankin, Russia’s deputy finance minister, sees a trade off in a recent market selloff: Russian companies might have trouble raising capital, but billions of dollars in capital outflows may be just the thing to help cool inflation. 

AUDIO – Fannie, Freddie favour Russia

Russia’s Finance Ministry and central bank have been put on the defensive for investing the national reserves in U.S. mortgage agency debt. Deputy Finance Minister Dmitry Pankin tells the Reuters Russia Investment Summit that Fannie Mae and Freddie Mac were propping up Russia’s finances, not the other way around.

No gain without pain for European paper makers

The current slew of bad news was necessary to get European forestry companies to act, the head of the world’s top paper and board maker Stora Enso said on Wedstora_ceo_web.JPGnesday.

For years the European paper industry has suffered from overcapacity, which has kept a lid on prices, while increasing costs of wood and energy have eaten into already low margins.

Audio – The waiting is the hardest part

holliday1.jpgFor Marc Holliday, chief executive of SL Green Realty Group and Gramercy Capital Corp, the Tom Petty lyrics ring especially true.

Holliday, speaking at the Reuters Global Real Estate Summit, said on Tuesday that his company is waiting with bated breath to hear about which company has won the award to expand the gaming options at New York City’s borough of Queens-located Aqueduct Race Track.