State unemployment claim systems overwhelmed

ALBANY, N.Y. – Electronic unemployment filing systems have crashed in at least three states in recent days amid an unprecedented crush of thousands of newly jobless Americans seeking benefits, and other states were adjusting their systems to avoid being next.

About 4.5 million Americans are collecting jobless benefits, a 26-year high, so the Web sites and phone systems now commonly used to file for benefits are being tested like never before.

Even those that are holding up under the strain are in many cases leaving filers on the line for hours, or kissing them off with an "all circuits are busy" message. Agencies have been scrambling to hire hundreds more workers to handle the calls.

Systems in New York, North Carolina and Ohio were shut down completely by technical glitches and heavy volume, and labor officials in several other states are reporting higher-than-normal use.

"Regardless of when you call, be prepared to wait and just hang on. Try not to get frustrated," said Howard Cosgrove, a spokesman for the Wisconsin Department of Workforce Development, which boosted its staff of telephone operators by 25 percent last month to cope with a phone system that has been overloaded for weeks. "We sympathize, we're on their side, we're doing our best to help them out."

The nation's unemployment rate in November zoomed to 6.7 percent, a 15-year high. Economists predict it will rise to 7 percent in December, with another 500,000 jobs probably cut last month. The government releases its monthly employment report on Friday.

Some states attribute the increase in call volume in part to an extension of federal emergency unemployment compensation from 13 weeks to 20 weeks in late November. More than 54,000 Pennsylvanians had exhausted their federal benefits after 13 weeks by the time that occurred, said David Smith, a spokesman for the Pennsylvania Department of Labor and Industry.

"It really was a perfect storm," he said.

New York's phone and Internet claims system started to buckle on Monday afternoon and was out of service completely for the first half of Tuesday while as many as 10,000 people per hour tried to get in, said Leo Rosales, a state Labor Department spokesman.

Although that was an unusually high number of calls, Rosales said it was a software glitch in an authentication system used to verify filers' identities that caused the system to crash

"It's designed to handle this volume of calls, but the authentication process didn't work as it should have," he said. Rosales said the glitch that caused the shutdown has been fixed, and the agency doesn't expect any more problems.

About 256,000 people are collecting unemployment in New York, up from about 184,000 at this time last year.

North Carolina's Web site crashed twice this week under a rush of claims as that state set one-day records for both the amount of benefits paid and the number of transactions.

On Sunday and Monday, the number of North Carolinians trying to sign up online for new or continuing benefits was about triple what it was before the economic slowdown started, according to the state Employment Security Commission. That volume, together with a phone line problem, overwhelmed the agency's computers and prevented some people from filing claims.

The system was working again by Monday afternoon after the agency added another server and demand decreased, officials said.

"Right now, everything is back to normal," agency spokesman Larry Parker said.

Ohio's unemployment hot line also is being crushed by callers, leaving thousands unable to get through Tuesday and no alternative because the Web site for filing claims also is down, according to Brian Harter, a spokesman for the state Department of Job and Family Services. Harter said the hot line generally receives about 7,500 calls a day, but has been getting about 80,000 a day this week.

Callers to Michigan's main phone line handling applications for jobless benefits got an "all circuits are busy now" message Tuesday afternoon. Officials in Michigan, which had the nation's highest jobless rate at 9.6 percent in November, recently began urging applicants to seek benefits through a state Internet site instead. Michigan counted about 473,000 people as unemployed in November, up from about 370,000 a year ago.

Unemployment agencies from Kentucky to Alaska also are reporting long hold times for callers and slowdowns for those filing online because of higher volume.

Several states have added staff to their call centers to handle the surge, including Oklahoma and Washington.

Pennsylvania has hired temporary workers and expanded the hours of its unemployment benefits hot line to accommodate a surge in the number of calls, going from 600 employees to more than 800. Officials hope to eventually have 1,100 workers answering calls.

New Mexico has extended call-center hours, upgraded the phone system and added 15 workers. Even so, "We still are receiving reports of people's inability to get through," said Carrie Moritomo, a spokeswoman for the state Department of Workforce Solutions.

Massachusetts officials say they have avoided any technical glitches — but they're straining their system. Right now there are about 200,000 people collecting checks from week to week, up from 107,000 during the same period last year.

"We have reached capacity in our system but we have not crashed," said Michael Taylor, director of workforce development.

In Kentucky, where claims rose to 40,400 in November from 23,400 a year earlier, a flood of new filers overwhelmed the state's unemployment Web site and phone lines on Monday, when more than 8,000 people filed initial claims, said Kim Brannock, a spokeswoman for the Kentucky Education Cabinet, which oversees the state unemployment office.

Kentucky's unemployment systems weren't designed to handle that kind of volume. Technicians worked through the night to add capacity to the Web site and are still trying to increase its phone capacity beyond the current 400 lines, Brannock said.

"People seem to feel like they have to file first thing Monday morning," she said. "They don't have to, but they feel that way. It's just overwhelming to the system."

Associated Press Writers Martha Waggoner in Raleigh, N.C., Tim Martin in Lansing, Mich., Brett Barrouquere in Louisville, Ky., Glen Johnson in Boston, Dinesh Ramde in Milwaukee, Martha Raffaele in Harrisburg, Pa., and Sue Major Holmes in Albuquerque, N.M., contributed to this report.

Fed Expects Weak Economy, Fears 'Prolonged Retraction'

By Neil Irwin

Washington Post Staff Writer
Wednesday, January 7, 2009; Page D03

The economy is set to remain weak well into this year, and could even be at risk of entering a "prolonged contraction," leaders of the Federal Reserve concluded last month, as they agreed to take aggressive new steps to contain the recession.

This Story

• U.S. Service Sector, Factory Orders Decline
• Fed Expects Weak Economy, Fears 'Prolonged Retraction'
• Unemployment In D.C. Region Highest Since '03
• Alcoa to Slash 15,200 Jobs, Output

The central bank's policymaking committee was grappling at its Dec. 16 meeting with an abrupt deterioration of the economy, and even the risk of a dangerous cycle of falling prices, according to minutes released yesterday. Those minutes shed light on the committee's decision to take unprecedented steps, including cutting the interest rate the Fed controls effectively to zero; technically, the committee set a target range for the federal funds rate between zero and 0.25 percent.

According to the minutes, the officials expect that the sharp contraction in the U.S. economy in the fourth quarter will be followed by continued contraction in the first half of 2009, after which a slow recovery would begin. Some also believe that the severe financial crisis, the drop in Americans' wealth, and the global nature of the slowdown create the "distinct possibility" of ongoing economic difficulties.

Officials saw a significant risk of inflation declining and persisting at "uncomfortably low levels" -- meaning levels that risk a deflationary spiral in which prices drop and people curtail spending all the more.

For those reasons, the Fed said it was inclined to keep rates "exceptionally low" for some time and said it may expand special lending programs designed to lower the rates that Americans pay for various loans.

Members of the policymaking panel, the Federal Open Market Committee, agreed that the statement announcing its decision "should indicate that all available tools would be employed to promote the resumption of sustainable economic growth and to preserve price stability."

Specifically, the Fed leaders indicated they may expand a $600 billion program to try to push down mortgage rates. Purchases of mortgage-related securities under that program began this week. They also said they could try to push down other long-term rates by buying long-term Treasury securities.

Brian Bethune, chief U.S. economist at IHS Global Insight, highlighted the scope of the Fed's steps. "Monetary conditions are close to the point of near maximum stimulus," he said in a report. "Now it is a matter of lighting the right sparks to get the economy moving again."

Disagreements during the meeting appeared to be unrelated to the overall strategy the Fed will undertake, but how to carry it out. For example, according to the minutes, some of the policymakers preferred to continue setting an explicit numerical target for the federal funds rate, a bank lending rate. They feared that simply setting a range would signal that the Fed had lost control over that rate.

The majority of the committee, on the other hand, felt that setting a range would actually help give banks flexibility.

Even as they agreed that they are likely to hold interest rates low for some time and maintain novel programs to stimulate lending, Fed officials "recognized that, as economic activity recovered and financial conditions normalized, the use of certain policy tools would need to be scaled back, the size of the balance sheet and level of excess reserves would need to be reduced, and the committee's policy framework would return to focus on the level of the federal funds rate." In other words, the unconventional policy tools could last only as long as the economic and financial crises do.

Stock Losses Leave Pensions Underfunded by $400 Billion

By David S. Hilzenrath

Washington Post Staff Writer
Wednesday, January 7, 2009; 10:30 AM

The collapse of the stock market last year left corporate pension plans at the largest companies underfunded by $409 billion, reversing a $60 billion pension surplus at the end of 2007, according to a study released today.

Shoring up the plans could cause further pain for workers, businesses and the struggling economy at a time when they can least afford it, pension specialists said.

"The chaos that has been observed in the world's financial markets over the last 12 months has had a major adverse impact on pension plan funding and will negatively impact corporate earnings," the Mercer consulting firm reported today. "Moreover, the trend in recent months has been one of alarming deterioration," Mercer said.

As Mercer and other pension specialists described it, the pension problem illustrates how the recession and the meltdown in the financial markets can become self-reinforcing.

Ballooning pension deficits will leave some companies with diminished profits, weaker credit ratings and higher borrowing costs, which can translate into lower stock prices, Mercer principal Adrian Hartshorn said. The need to cover pension shortfalls could prompt businesses to reduce spending on items as varied as equipment that boosts productivity and dividends that deliver income for shareholders.

Though shoring up pension funds is supposed to increase employees' financial security, it could involve such tradeoffs as reductions in wages, benefits and jobs, said Mark J. Warshawsky, director of retirement research at Watson Wyatt Worldwide, another consulting firm.

In a further irony, it could also prompt companies to freeze the amount of pension benefits employees can accrue, Warshawsky said.

But the overall economic effects may be more complicated, pension specialists said. Funding shortfalls will force companies to boost their pension investments, contributing to demand for stocks and bonds.

Mercer's monthly snapshot of corporate pension plans focuses on those offered by employers in the Standard and Poor's index of 1,500 big corporations. As of Dec. 31, 2008, 772 of those companies offered traditional pensions. Using the accounting methods companies must follow when they prepare their financial statements, Mercer estimated that the S&P 1,500 pension plans held enough assets overall to cover only 75 percent of their obligations, down from 104 percent at the end of 2007. Precise figures won't be available until companies issue their annual reports for 2008 in the coming months.

Pension deficits are far from unprecedented. As recently as March 2003, the funding level for plans in Mercer's study was 73.2 percent.

When pension plans are underfunded, companies are required to plow enough additional money into the funds each year to correct the imbalance over several years. This year, Mercer estimates that the companies in its study will end up reporting about $70 billion of pension expenses, up from about $10 billion in 2008. That would equate to an 8 percent reduction in annual profits compared to 2007, the most recent year for which companies have reported full annual results, Mercer said.

Watson Wyatt looked at the issue from a different angle but found a similar trend. It tried to assess in aggregate the condition of all pension plans sponsored by individual corporations in the United States, and it used a different set of measures -- the rules that govern the actual amount of cash companies must plow into their pension funds.

Watson Wyatt estimates that corporate pension plans began 2009 with $1.63 trillion in assets and $2.12 trillion in liabilities, Warshawsky said. The firm estimates that companies will have to more than double their contributions to pension plans this year, to $111.2 billion from $50.5 billion in 2008, he said.

Both Mercer and Watson Wyatt advise companies on employee benefits.

Some business groups have been calling for relief from the federal law that would force them to boost pension fund contributions in the short run, and the government has already eased some requirements. Relaxing the requirements could entail a different compromise -- the health of the pension plans.

Even before the current recession, traditional pension plans that promise fixed retirement benefits were an endangered species for workers in the private sector. They have largely been supplanted by 401(k) plans, which offer no guaranteed payouts.

Like pension funds, Americans' 401(k) accounts have generally plummeted over the past year, and some companies have added to the strain by cutting matching contributions.

Whether the responsibility rests with corporate pension fund managers or individual employees managing their own accounts, the nation's ability to convert relatively low savings rates into comfortable retirements depends on investments not merely outstripping inflation but delivering strong and stable returns over the long run. That proposition has been sorely tested of late.

Keith Ambachtsheer, an advisor to pension funds, says the nation may be in store for "a radical rethinking of how we deliver pensions to private-sector workers."

Increasingly, the burden may fall to taxpayers, as it has with other aspects of the nation's financial trouble, said Kent Smetters, an associate professor at the University of Pennsylvania's Wharton School.

When companies go bankrupt and are unable to shoulder their pension obligations, the federally chartered Pension Benefit Guaranty Corporation steps in and covers the shortfall, subject to legal limits that would leave many higher paid workers with smaller pensions than they had been promised.

The PBGC is funded through insurance premiums paid by employer-sponsored pension funds, but Smetters predicted that the PBGC eventually will need a federal bailout.

As of Sept. 30, when its last fiscal year ended, the PBGC reported a deficit of $11.15 billion.

European gas supplies disrupted

Ukraine has denied taking any of the gas meant for Europe for its own use

Several European countries say their supplies of Russian gas have been cut or sharply reduced amid an energy price dispute between Moscow and Ukraine.

Serbia, which has had its supply completely cut, said it was a "critical" situation.

Countries as far west as Italy and Austria say they have received only 10% of their expected supply.

Amid cold weather across the continent, the European Commission said the supply cut was "completely unacceptable".

The EU depends on Russia for about a quarter of its total gas supplies, some 80% of which is pumped through Ukraine.

Ukraine's main energy company, Naftogaz, says talks with Russian counterpart Gazprom aimed at resolving the crisis are due to resume in Moscow on Thursday.

Naftogaz chairman Oleh Dubyna made the announcement, but it has not yet been confirmed by Gazprom.

Russia stopped supplying gas to Ukraine on New Year's Day in a row about unpaid bills. The row comes amid a cold snap across Europe likely to push up demand for gas.

EU GAS IMPORTS FROM RUSSIA 100% dependent on Russia: Latvia, Slovakia, Finland, Estonia More than 80% dependent: Bulgaria, Lithuania, Czech Republic More than 60% dependent: Greece, Austria, Hungary Source: European Council on Foreign Relations, 2006 figures Pressure rising as gas supplies fall Europe's need for Russian gas Bulgaria revisits nuclear power

Gazprom accuses Ukraine of an "unprecedented" shutdown of transit pipelines. It says only 40m cubic metres of gas is getting through to Europe, instead of 225m cu m.

Serbia's Srbijagas, which imports 92% of its natural gas from Russia, said it had about 10 days' of gas left, Reuters reported.

Slovakia says it will declare a state of emergency over the drop in gas supplies, though it aims to prevent the shortage hurting key public services and ordinary consumers.

The Austrian energy company OMV said it would now have to tap into its gas reserves after its supply fell to 10% of the expected level.

Bulgaria, almost wholly dependent on Russian gas via Ukraine, says it has sufficient supplies for just a few days. It says no more gas is flowing through a pipeline that also supplies Turkey, Macedonia and Greece.

Bulgarian President Georgi Purvanov said the situation was grounds for restarting a nuclear reactor, shut as part of Bulgaria's accession to the EU in 2007.

Gazprom decided to cut exports through Ukrainian pipelines by a fifth in a row over unpaid bills.

Wide impact

Early on Tuesday, Ukraine's Naftogaz said Russia had cut gas transit supplies by more than two-thirds and listed nine countries, including Germany, Poland, and Hungary which would receive reduced supplies as a result.

Gazprom's Alexander Medvedev said gas flow through Ukraine was a fraction of its usual level

"Naftogaz of Ukraine considers that in such a case if European users receive less volumes of natural gas, all claims of the noted countries must be directed to Gazprom," said a statement on the company's website.

Russian gas supplies to Turkey via Ukraine have been completely cut, the Turkish government said.

The Turkish government announced it was increasing the flow through an alternative pipeline, under the Black Sea, to compensate.

Turkey gets about 65% of its gas from Russia and about one-third of its daily supply has now been cut, the BBC's Sarah Rainsford reports. But the government says it has sufficient gas stocks to avoid immediate economic hardship.

Czech supplies also fell significantly overnight, and Croatia, which imports 40% of its gas, said supply of Russian gas via Ukraine had completely halted.

EU deplores quarrel

In a statement on Tuesday, a European Commission spokesman said that "without prior warning and in clear contradiction with the reassurances given by the highest Russian and Ukrainian authorities to the European Union, gas supplies to some EU member states have been substantially cut - this situation is completely unacceptable".

Europe's gas pipeline network Enlarge Map

"The Czech EU presidency and the European Commission demand that gas supplies be restored immediately to the EU and that the two parties resume negotiations at once with a view to a definitive settlement of their bilateral commercial dispute."

The new EU member states in Central and Eastern Europe are heavily - and in some cases entirely - dependent on Russian gas imports. Yet Germany and Italy together account for nearly half of the Russian gas consumed in the EU.

German Economy Minister Michael Glos called on Russia and Ukraine to resume talks, and is due to hold talks with senior Gazprom officials later on Tuesday.

But he said Germany could cope with any shortages. "Gas storage sites are full. And Germany gets its gas from different sources, for example from Norway or the Netherlands. Supplies from there could be increased," he said.

Many other countries are now tapping strategic reserves, built up to cope with just such a development, says the BBC's Europe correspondent Nick Thorpe.

Gazprom has promised to pump extra supplies through other pipelines - the Yamal from Arctic Russia through Belarus to Germany, and the Blue Stream to Turkey under the Black Sea.

'Gas stolen'

The move to reduce supplies going through the Ukraine by a fifth came after Russian Prime Minister Vladimir Putin held talks with Gazprom CEO Alexei Miller.

Mr Miller recommended that deliveries via Ukraine should be reduced "by the amount stolen by Ukraine, that is 65.3 million cubic metres of gas".

Ukraine has denied stealing gas, saying technical problems are disrupting the onward flow of gas to Europe.

The row between Russia and Ukraine has been simmering for weeks. Gazprom says Ukraine owes it more than $600m (£413m); Ukraine says it has paid its debt. The two sides have also failed to agree on the price Ukraine should pay for gas in 2009.

A similar row between Gazprom and Ukraine at the beginning of 2006 led to gas shortages in several EU countries.

EU officials have been meeting in Brussels to discuss the dispute and a delegation has also been sent for talks with both Ukrainian and Gazprom officials.

Gazprom wants Ukraine to pay $450 per 1,000 cu m of gas - more than double what Kiev says it is willing to pay, yet still less than what most EU states pay.

German billionaire kills himself

Mr Merckle had lost heavily on Volkswagen shares in 2008

German billionaire Adolf Merckle has committed suicide after his business empire ran into trouble in the global economic slowdown.

In a statement his family said he had been "broken" by the financial crisis, and had taken his own life.

Mr Merckle ran up losses of about 400m euros (£363m;$535m) last year due to wrong-way bets on Volkswagen shares.

He was ranked as the world's 94th richest person in 2008, and his family controls a number of German companies.

The 74-year-old's body was found on Monday near railway tracks in southern Germany. Officials said there was no evidence that anyone else was to blame.

Volkswagen losses

His family, which had reported him missing after he failed to return home, said in a statement: "Adolf Merckle lived and worked for his family and his firms."

"The distress to his firms caused by the financial crisis and the related uncertainties of recent weeks, along with the helplessness of no longer being able to act, broke the passionate family businessman, and he ended his life."

MERCKLE BUSINESS INTERESTS Phoenix Pharmahandel, drugs wholesaler with annual sales of 21bn euros Heidelberg Cement, cement firm with annual sales of 11bn euros Ratiopharm, generic drugs firm with annual sales of 1.8bn euros Kaessbohrer ski slope equipment firm with annual sales of 183m euros VEM, bought in 1997, includes three engine makers with annual sales of 280m euros

Mr Merckle's business interests included the generic drugs maker Ratiopharm and the cement maker Heidelberg Cement.

In all, his business conglomerate has about 100,000 employees and in 2008 reported 30bn euros in annual sales.

His holding company had recently been in talks with banks to secure credit after it ran up high levels of debt amid the global financial crisis.

The holding company said it had suffered heavy losses on investments in shares of the carmaker Volkswagen, which fluctuated wildly in value late last year as rival car company Porsche moved to increase its stake in VW.

Mr Merckle had helped turn his grandfather's chemical wholesale company into one of Germany's biggest pharmaceutical wholesalers, Phoenix Pharmahandel, in which he held a 57% stake.

He used his wealth, estimated by Forbes magazine last year to be $9.2bn, to take stakes in Heidelberg Cement and Ratiopharm.

Mr Merckle also owned stakes in companies that made a wide array of goods including all-terrain vehicles, software and textiles.

He is survived by his four children.

The End of the Financial World as We Know It

By MICHAEL LEWIS and DAVID EINHORN

Published: January 3, 2009

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street.

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Op-Ed Contributors: How to Repair a Broken Financial World (January 4, 2009)

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?

Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness. We have at least a brief chance to cure ourselves. But first we need to ask: of what?

To that end consider the strange story of Harry Markopolos. Mr. Markopolos is the former investment officer with Rampart Investment Management in Boston who, for nine years, tried to explain to the Securities and Exchange Commission that Bernard L. Madoff couldn’t be anything other than a fraud. Mr. Madoff’s investment performance, given his stated strategy, was not merely improbable but mathematically impossible. And so, Mr. Markopolos reasoned, Bernard Madoff must be doing something other than what he said he was doing.

In his devastatingly persuasive 17-page letter to the S.E.C., Mr. Markopolos saw two possible scenarios. In the “Unlikely” scenario: Mr. Madoff, who acted as a broker as well as an investor, was “front-running” his brokerage customers. A customer might submit an order to Madoff Securities to buy shares in I.B.M. at a certain price, for example, and Madoff Securities instantly would buy I.B.M. shares for its own portfolio ahead of the customer order. If I.B.M.’s shares rose, Mr. Madoff kept them; if they fell he fobbed them off onto the poor customer.

In the “Highly Likely” scenario, wrote Mr. Markopolos, “Madoff Securities is the world’s largest Ponzi Scheme.” Which, as we now know, it was.

Harry Markopolos sent his report to the S.E.C. on Nov. 7, 2005 — more than three years before Mr. Madoff was finally exposed — but he had been trying to explain the fraud to them since 1999. He had no direct financial interest in exposing Mr. Madoff — he wasn’t an unhappy investor or a disgruntled employee. There was no way to short shares in Madoff Securities, and so Mr. Markopolos could not have made money directly from Mr. Madoff’s failure. To judge from his letter, Harry Markopolos anticipated mainly downsides for himself: he declined to put his name on it for fear of what might happen to him and his family if anyone found out he had written it. And yet the S.E.C.’s cursory investigation of Mr. Madoff pronounced him free of fraud.

What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff; many others doubted Mr. Madoff’s profits or assumed he was front-running his customers and steered clear of him. Between the lines, Mr. Markopolos hinted that even some of Mr. Madoff’s investors may have suspected that they were the beneficiaries of a scam. After all, it wasn’t all that hard to see that the profits were too good to be true. Some of Mr. Madoff’s investors may have reasoned that the worst that could happen to them, if the authorities put a stop to the front-running, was that a good thing would come to an end.

The Madoff scandal echoes a deeper absence inside our financial system, which has been undermined not merely by bad behavior but by the lack of checks and balances to discourage it. “Greed” doesn’t cut it as a satisfying explanation for the current financial crisis. Greed was necessary but insufficient; in any case, we are as likely to eliminate greed from our national character as we are lust and envy. The fixable problem isn’t the greed of the few but the misaligned interests of the many.

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MSNBC - Toyota to suspend car production in Japan

11-day stoppage called as automaker grapples with low demand

Toyota employees work the assembly line at the Japanese automaker’s factory in Kitakyushu city, Fukuoka province, Japan. Facing sharply reduced production amid faltering U.S. sales, Toyota is suspending production at all 12 of its Japan plants for 11 days over February and March.

TOKYO - Toyota is suspending production at all 12 of its Japan plants for 11 days over February and March, a stoppage of unprecedented scale for the nation’s top automaker as it grapples with shrinking global demand.

The last time Toyota Motor Corp. halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day, according to the company.

A global economic downturn has hammered the auto industry in Japan and elsewhere, forcing carmakers to cut staff, lower production and delay new models. Major automakers in the U.S. had teetered on the brink of collapse until securing a multibillion dollar government lifeline.

“We are coping with a slump in global sales,” Toyota spokesman Hideaki Homma said Tuesday. “Demand in the world auto market is so depressed that every model is falling sharply in sales.”

Toyota said last year that it was stopping production at its 12 domestic plants for three days in January. But it decided on additional closures because of the global downturn. Toyota will stop output for six days in February and five days in March, it said.

Of Toyota’s domestic factories, four produce vehicles while the rest make engines and auto parts.
Overnight, Toyota reported that its U.S. sales in December were down 37 percent on year, a worse drop than Ford Motor Co.’s 32 percent drop and General Motor’s 31 percent slide.

Toyota last year suspended production at its auto plants in Alabama, Indiana and Texas for three months, and shut down output for two days in December at all its North American vehicle factories including five in the United States, one in Canada and another in Mexico.

Chrysler LLC also shut down its plants for a month in December, longer than the usual two-week break, while GM has said it would shut down a plant in Thailand for up to two months.

Toyota is also struggling in its home market, which has been stagnant for years. The sales drop has worsened amid a global recession.

Sales of new vehicles in Japan fell to 3.2 million vehicles last year, the lowest in 34 years, the Japan Automobile Dealers Association said Monday.

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Major automakers report U.S. sales plunge

Last month, Toyota said it was slipping into its first operating loss in 70 years, expecting 150 billion yen ($1.66 billion ) of operating losses for the fiscal year ending March 2009.

Toyota, which makes the Prius gas-electric hybrid and Camry sedan, expects 50 billion yen ($555 million) in net profit, down from 1.7 trillion yen earned the previous year.