Thu, Jan 01, 2009 - Page 12 News List

Evergreen chairman predicts worse economy ahead

PESSIMISTIC Chang Yung-fa’s remarks echoed those of Hon Hai chairman Terry Gou, who said the downturn was worse than predicted and that the worst was yet to come


Evergreen Group (長榮集團) chairman Chang Yung-fa (張榮發) said on Tuesday that the nation’s economic outlook could worsen in the second half of this year and that the global economy wouldn’t improve until 2012, local media reported yesterday.

Evergreen Group is a Taiwanese conglomerate that consists of Evergreen Marine Corp (長榮海運), Asia’s largest container shipping company, and EVA Airways Corp (長榮航空), the nation’s second-largest airline.

Chang told a media briefing that the shipping industry was the most effective indicator of the economic climate, because only when the economy is in good condition does a shipping company ship more goods.

“Evergreen Marine will not be able to generate as much revenue this year as in 2008, but will still be profitable,” Chang said, adding that the company had shelved plans to order new ships before 2012, while the operations of EVA Airways would remain at current levels.

Chang’s remarks echoed those made by Hon Hai Group (鴻海集團) chairman Terry Gou (郭台銘) two weeks ago, when he said that the economic downturn was three times worse than observers had predicted and that the worst was yet to come.

The company trimmed 10 percent to 15 percent of its local workforce in order to reduce costs.

When asked about comments made by central bank Governor Perng Fai-nan (彭淮南) on Monday that the government’s stimulus package could help reverse the economy in the second half of this year, Chang said “the government would have to work very hard to achieve this end,” the Chinese-language Economic Daily News reported yesterday.

On the “big three links” — referring to direct transport and communication links between Taiwan and China — Chang said it would not help the economy much, as it came too late.

“Countries around the world have been cutting their orders from China amid the deteriorating economic conditions and the shipping volume across the Taiwan Strait has decreased tremendously as a result,” Chang said.

In the past, a terminal’s throughput could reach 1,000 twenty-foot equivalent units (TEUs), but has now decreased by around 30 percent to between 600 and 700 TEUs, he said.

But Chang said the nation’s economy would suffer even more without China’s help.

Chang also said the Japanese real estate industry could see a drop in sales this year. Taiwan is not immune from the fallout of the financial crisis in other countries, he said, adding that more local banks could get into difficulties this year and next year.

Although many local companies have implemented unpaid leave and cut year-end bonuses to offset the effects of the downturn, Chang said employees at Evergreen Marine and EVA Airways would receive year-end bonuses equivalent to two months and one month of their salaries respectively.

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