Europe debt crisis hits aluminum maker Alcoa
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Europe debt crisis hits aluminum maker Alcoa
Jeremy Hobson: The quarterly season started after the market closed yesterday, as it always does, with the stock symbol AA. That stands for Alcoa, one of the world’s largest aluminum producers. The company announced its first quarterly loss since 2009 — and it says the European debt crisis is to blame.
Marketplace’s Stephen Beard joins us live now with more on this story. Hi Stephen.
Stephen Beard: Hello Jeremy.
Hobson: So what exactly is Alcoa saying?
Beard: Well, they lost almost a quarter of a billion dollars in the last quarter, they say largely — but not exclusively — due to the eurozone debt crisis. Alcoa’s customers here, the companies that use aluminum — auto makers, construction firms, companies that make packaging — they’re all clearly worried that the eurozone might slide into a recession, and they’ve cut back. That’s hit Alcoa’s bottom line.
Hobson: Alcoa is a big company that makes aluminum, that makes stuff. Are other American companies, of all kinds, likely to be affected by the euro crisis in this way?
Beard: Those companies that do a lot of business with the eurozone certainly could suffer. But not, perhaps, corporate America as a whole. U.S. exports to eurozone account for less than 2 percent of economic output.
So as Carl Weinberg, U.S. chief economist of High Frequency Economics told the BBC this morning, the eurozone debt crisis seems unlikely to sabotage the American recovery.
Carl Weinberg: If euroland goes into sharp economic downturn, exports won’t drop to zero to Europe. We’ll see a few tenths of a percent off our GDP, which will be sad to lose but won’t derail the core U.S. economy.
But if the debt crisis spirals out of control, and triggers another banking crisis, given the global nature of banking, that could certainly do a lot more damage on your side of the pond.
Hobson: Marketplace’s Stephen Beard joining us from London. Thanks Stephen.
Beard: OK Jeremy.
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