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Auto worker strike explained: the pay gap, the talks and what Biden is doing

Source image: https://www.theguardian.com/us-news/2023/sep/13/uaw-strike-explainer-ford-stellantis-gm

Industrial action billed as “the biggest auto strike in generations” got under way late on Thursday night for 150,000 US autoworkers, with employees at Ford, Stellantis and General Motors walking off the job at 11.59pm after contract negotiations failed to reach a deal.

It’s the latest in a series of strikes called or threatened by workers in industries including shipping and logistics, TV and movie production and hotel and leisure. Given its scale, the strike could deal a significant blow to the US economy as well as the auto industry.

Why is it happening?

The United Auto Workers (UAW) union says workers have never been fully compensated for the sacrifices they made after the 2008-09 financial crisis, when they agreed to a raft of cuts to save the industry. The carmakers received huge bailouts and soon returned to record profits.

Workers are pushing for at least a 40% wage increase over four years in a new contract; an end to two-tier wage systems in which new hires are paid significantly less for doing the same work; an increase to benefits for retirees and return of a defined pension instead of a 401k; reinstatement of cost-of-living adjustment raises; a 32-hour working week; job security protections; and protections for workers affected by plant closures.

‘This is history’: car workers walk out in biggest auto strike in generations – video report

How big is the pay gap?

The vast disparity in pay between workers and their bosses is one of the UAW’s biggest bones of contention.

  • General Motors CEO Mary Barra made $29m in 2022 – 362 times the median wage of $80,034 at the company.

  • Ford CEO Jim Farley made $21m in 2022 – 281 times the median worker of $74,691.

  • Stellantis CEO Carlos Tavares made $24.8m in 2022 – 365 times the average worker’s $67,789 wage.

CEO pay at the big three companies jumped by 40% between 2013 and 2022. Meanwhile, auto manufacturing workers have seen their average real hourly earnings fall 19.3% since 2008, according to the Economics Policy Institute.

Starting wages at GM’s Ultium Cells battery plant in Lordstown, Ohio, are just $16.50, according to the UAW. Meaning it would take 16 years for a full-time worker to earn what Barra earns in a week.

Who’s leading the charge?

The UAW president, Shawn Fain, was elected to head the union as part of a reform campaign within its ranks, aimed at taking a more aggressive approach towards bargaining after workers had accepted concessions amid bankruptcies during the 2008 economic recession. Workers have yet to regain those concessions, or a share in the $250bn profits the big three automakers have raked in over the past decade.

How did the strike begin?

In late August, the UAW announced members voted about 97% in favor of the strike authorization. The union has never gone on strike at the big three automakers simultaneously.

A minute before midnight on Thursday, after their contracts expired, UAW members walked out at three assembly plants in Michigan, Missouri and Ohio. The union said that about 13,000 workers were affected.

The Detroit Free Press reported that the Stellantis complex in Toledo, Ohio, erupted in cheering and honking of horns as the strike began.

When did the UAW last strike?

Workers at General Motors last went on strike in 2019. It lasted 40 days and cost the carmaker $3.6bn. In 2019, contracts were reached with Fiat-Chrysler, now Stellantis, and Ford without a strike occurring.

What happened to talks?

Talks are going on, “in good faith”, General Motors chief executive Mary Barra said on Friday morning. But management and workers failed to reach an agreement by the midnight deadline when current contracts expired and so the strike began. Fain has previously posted video updates on negotiations in which he has thrown copies of proposals from the automakers in the bin, criticizing the companies’ offers.

In the UAW’s most recent negotiation update, Fain criticized the counteroffers from Ford, Stellantis and GM, saying they keep in place two-tiered wages for workers; rejected their retirement and pension proposals; called wage proposals from Ford and GM “shameful and insulting”; and characterized Stellantis’s offer as “deeply inadequate”. The union has called for significant wage increases that reflect the salary increases of the companies’ CEOs.

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“It doesn’t make up for inflation, it doesn’t make up for decades of falling wages and it doesn’t reflect the massive profits we generated for this company,” said Fain.

The automakers have criticized the union’s proposals and claimed they are not “feasible”.

How serious could it get?

In the first instance, the UAW planned “standup” strikes aimed at individual auto plants, with members from three plants walking out overnight after talks failed.

Under this strategy, a strike flares without warning at targeted, individual plants. Then additional locations follow – ramping up the pressure on the companies. UAW says as time goes on, more locals may be called on to join the strike.

“This gives us maximum leverage and maximum flexibility in our fight to win a fair contract at each of the big three automakers.” The option to strike across all facilities is “still on the table”.

What are the costs?

The automotive industry contributes about 3-3.5% of the US gross domestic product (GDP), the broadest measure of the economy.

Vehicle supply – just recovering from pandemic shortages – would be hit hard. A month-long strike at the three automakers could cut output by as many as 500,000 vehicles, according to Sam Fiorani, vice-president of global vehicle forecasting for AutoForecast Solutions.

Ten-day strikes at all three automakers could cost manufacturers, workers, suppliers and dealers more than $5bn, according to economic consulting firm Anderson Economic Group.

Is the White House getting involved?

Biden appeared to support the strikers when he spoke at a press briefing hours after the strike began on Friday. The president said in his White House address: “Record corporate profits … should be shared by record contracts for the UAW.”

He also expressed regret that the strike had not been averted but urged both parties to return to the negotiating table. “No one wants a strike but I respect workers’ rights to use their options under the collective bargaining system and understand their frustrations,” Biden said.

“I do appreciate that the parties have been working around the clock. It is my hope that the parties can return to the negotiating table to forge a win-win agreement.”

UAW strike: Joe Biden calls for resolution but understands workers’ frustrations – video

His comments came after business groups had been pushing the White House to intervene to avert a strike. Hours after the strike began, the president also reportedly said he would send aides to Detroit to mediate.

Source: https://www.theguardian.com/us-news/2023/sep/13/uaw-strike-explainer-ford-stellantis-gm

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Adidas chief exec: Kanye West ‘didn’t mean what he said’ with antisemitic comments

Bjørn Gulden, chief executive of Adidas, has lamented the end of the company’s lucrative partnership with Kanye West, saying, “I don’t think he meant what he said,” regarding the rapper’s antisemitic comments in October 2022.

West, who has changed his name to Ye, wrote on X (formerly Twitter) that he was “going death con 3 On JEWISH PEOPLE … You guys have toyed with me and tried to black ball anyone whoever opposes your agenda”. On Instagram, he posted a screenshot of a conversation with Diddy, where he wrote: “Ima use you as an example to show the Jewish people that told you to call me that no one can threaten or influence me.” Ye had caused further anger earlier that month by including T-shirts with the slogan White Lives Matter in a Yeezy fashion show in Paris.

Later in October, Adidas ended a creative partnership with Ye that had begun in 2015, saying his comments were “unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness”.

In December, Ye caused further outrage after posting an image of a swastika blended with the Star of David to X and praising Adolf Hitler and Nazis in an interview with Infowars host Alex Jones. “I see good things about Hitler,” said Ye. “Every human being has something of value that they brought to the table, especially Hitler … [Nazis] did good things too.” He added: “There’s a lot of things that I love about Hitler.”

Now, speaking on the Norwegian podcast In Good Company, Gulden elaborated on the rapper’s departure, prior to Gulden’s tenure which began in January after he left Puma.

“I think Kanye West is one of the most creative people in the world,” he said. “Both in music and what I call street culture. So he’s extremely creative and has together with Adi created a Yeezy line that was very successful. And then, as creative people, he did some statements, which wasn’t that good. And that caused Adi to break the contract and withdraw the product. Very unfortunate, because I don’t think he meant what he said and I don’t think he’s a bad person – it just came across that way.

“That meant we lost that business. One of the most successful collabs in history – very sad. But again, when you work with third parties, that could happen. It’s part of the game. That can happen with an athlete, it can happen with an entertainer. It’s part of the business.”

With its futurist silhouettes and pop-cultural heft, Yeezy became a successful brand for Adidas, generating £1.3bn in 2021, 7% of Adidas’s overall annual revenue. It was a major source of income for Ye, who took a reported 11% royalty cut.

After cutting ties with Ye, Adidas was lumbered with more than £1bn of unsold Yeezy stock. In May, Gulden announced plans for the stock, saying it would be sold but with a “significant amount” of proceeds handed to groups which combat hate speech, including the Anti-Defamation League, the Philonise & Keeta Floyd Institute for Social Change (run by the family of George Floyd) and the Foundation to Combat Antisemitism. At the time, Gulden said: “There is no place in sport or society for hate of any kind and we remain committed to fighting against it.”

Jonathan Greenblatt, chief executive of the Anti-Defamation League who had condemned Ye as a “vicious antisemite” who “put Jews in danger”, welcomed the move as “a thoughtful and caring resolution”.

But the musician will still earn his share of profits, which has caused some consternation. Josef Schuster, president of the Central Council of Jews in Germany, said Adidas’s donations were “highly commendable … [but] the fact that Kanye West would profit financially from the sale is highly problematic”.

The end of the Yeezy product line contributed to a £350m drop in sales for Adidas in the first quarter of 2023, in a year-on-year comparison with 2022. Announcing those results in May, Gulden said: “2023 will be a bumpy year with disappointing numbers … the loss of Yeezy [is] of course hurting us.”

Ye, who has hinted at a 2024 presidential run to follow his 2020 campaign, has kept a relatively low profile since his antisemitic comments, though has remained a tabloid fixation for his relationship with girlfriend and co-worker Bianca Censori. The couple were pictured together at London fashion week last week.

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FTX sues Sam Bankman-Fried’s parents, claiming they received millions in gifts

FTX is suing the parents of Sam Bankman-Fried, two longtime Stanford Law School professors, alleging that the couple inappropriately used company funds to enrich themselves through gifts and donations.

The cryptocurrency company, now operating under CEO John Jay Ray III, an expert in helping companies recover after bankruptcy, claims Joseph Bankman and Barbara Fried received funds from their son’s company in the form of gifts and donations to specific causes.

The lawsuit is the company’s first legal pursuit against Bankman-Fried’s parents for their role in the company.

“As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars,” the lawsuit said. “Despite presenting itself to investors and the public as a sophisticated group of cryptocurrency exchanges and businesses, the FTX Group was a self-described ‘family business’.”

The lawsuit said Bankman and Fried received a $10m gift and a $16.4m luxury home in the Bahamas, where FTX was based, “despite knowing or blatantly ignoring that the FTX Group was insolvent or on the brink of insolvency”. The couple also advocated for “tens of millions of dollars” of company funds to be used for political and charitable contributions, including to Stanford and to Mind the Gap, a leftwing super political action committee (Pac) co-founded by Fried.

The couple “either knew – or ignored bright red flags revealing – that their son, Bankman-Fried, and other FTX Insiders were orchestrating a vast fraudulent scheme to profit and promote their personal and charitable agendas at [the company’s] expense”.

The company is also accusing Bankman of trying to help cover up FTX mismanagement and fraud, saying that he “portrayed himself as the proverbial adult in the room – and was uniquely positioned to fulfill that role – as he worked alongside inexperienced fellow executive officers, directors and and managers responsible for safeguarding billions of dollars.”

The couple has not publicly commented on the lawsuit, though a spokesperson last year told the New York Times that Bankman had worked for FTX for 11 months and said “most of his time was spent identifying worthy health-related charities”.

Bankman-Fried faces seven counts of federal charges, including charges of fraud and money laundering. After spending months under house arrest in his parents’ home in Palo Alto, Bankman-Fried was sent to a Brooklyn jail in August after a judge ruled he had tampered with witnesses. The former FTX CEO had leaked to the New York Times personal writings of Caroline Ellison, Bankman-Fried former romantic partner and former chief executive of Alameda Research, the hedge fund that was connected to FTX.

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Bankman-Fried’s lawyers have been fighting for his release from prison ahead of his 3 October trial start date.

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Instacart shares jump 43% in grocery delivery business’s Nasdaq debut

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Shares in online grocery delivery business Instacart jumped 43% in its Nasdaq trading debut on Tuesday.

While shares dropped back in later trading, ending the day up just over 12%, the price pop was the second successful initial public offering (IPO) in a week following the sale of British microchip designer Arm.

Instacart’s shares started trading at $30 and closed at $34.23, valuing the company at about $11bn. That’s about half the valuation it received from investors last March.

Instacart’s core business is to send couriers to grocery stores to pick out orders and deliver them to homes, but in recent years it has expanded into advertising and technology services, including artificial intelligence operations.

Instacart executives pitched the offering as an opportunity to get in on a revolution in the grocery business that, they said, had notably lagged in developing technologies to meet shifting consumer habits.

US consumers are ordering more groceries online than they did before the pandemic, when demand for home delivery soared, but they are doing so less often. Instacart has only recently started making profits after years of losses and faces strong competition from Uber and DoorDash.

Instacart’s share offering was backed by big investors, including PepsiCo, Norway’s Norges Bank and Sequoia Capital.

Among the winners from the IPO is Apoorva Mehta, 37, who co-founded the company in 2012 and stepped down as CEO in 2021. Mehta’s 10% stake in the firm is now valued at $1.3bn.

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Instacart currently has more than 3,000 employees and about 600,000 “shoppers” – independent contractors who pick up orders. The company has said it will pay bonuses to shoppers who have delivered at least 5,000 orders and a $20,000 bonus to those who have delivered at least 15,000 orders.

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