Member Briefing November 25, 2023
UAW strikes GM SUV Plant, Company Strike Has Cost $800M, Withdraws Guidance
United Auto Workers President Shawn Fain ordered a walkout at the GM's Arlington, Texas, factory, which builds highly profitable Cadillac Escalade, Chevrolet Suburban and other large SUVs. The move came less than four hours after GM posted better-than-expected third quarter results. General Motors said the cost of the ongoing UAW strike is $800 million so far and increasing by $200 million for every week it continues.
During a call with analysts, Chief Executive Mary Barra called GM's offer a record contract that would allow GM's U.S. factory workers to earn up to $84,000 a year, and also compel the company to look for further cost savings. "We will not agree to a contract that isn’t responsible to our employees and our shareholders," she said. The automaker on Tuesday also withdrew its 2023 financial guidance and its electric vehicle production targets through mid-2024 as it reported that third-quarter net income declined 7.3 percent to $3.1 billion. GM said adjusted earnings before interest and taxes fell 17 percent in the third quarter to $3.6 billion, including a $200 million reduction attributed to the strike that began Sept. 15.
War in Israel Headlines
- Israel and Hamas: The Latest News – Guardian
- Gaza Authorities Say 700 Palestinians Killed in Overnight Strikes as Israel Intensifies Bombing Campaign - Reuters
- ‘Been Through Hell’: Israeli Hostage Speaks At Press Conference After Being Released By Hamas - Forbes
- How Humanitarian Aid is Being Distributed in Gaza – Marketplace
- IDF Believes it’s Ready for Gaza Ground Offensive — and that it Should Start Soon – Times of Israel
- Marine Corps 3-Star General Advising Israeli Military on Gaza Ground Operation - Axios
- Israel Calls on UN Chief to Resign After Saying Hamas Attack “Did Not Happen in a Vacuum” - The Hill
- EU Fails to Agree on Call for ‘Humanitarian Pause’ to Allow Aid Into Gaza – Politico
- France's Macron Proposes That Anti-Islamic State Coalition Fights Hamas – Reuters
- Macron: We Stand 'Shoulder to Shoulder' With Israel in Hamas War – Politico
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Avdiivka Civilians Cling on Amid Russian Assault - BBC
- Ukraine’s Leader Says Russian Naval Assets Are no Longer Safe in the Black Sea Near Crimea - AP
- Ukraine's Race to Build its Own Arms Industry - FT
- Inside the Commando Raids Unnerving Russia in Crimea - NYT
- Ukraine's EU Membership Bid to be Assessed in Report Due on Nov. 8 - Reuters
- Ukraine Says Israel-Hamas War Shows West Must Ramp up Arms Production – Politico
- Why Kyiv's Dnipro East Bank Gain Could be Significant - BBC
- Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Pentagon’s First Industrial Base Strategy Meant to ‘Catalyze Generational Change’
The Defense Department’s first ever national defense industrial strategy, slated for release in December, will create a roadmap for the department on how it plans to prioritize and modernize its industrial base as it learns from Russia’s invasion of Ukraine, an official said this week. The strategy — the first of its kind for DoD — was directed by the secretary of defense and deputy secretary of defense earlier this year to create a roadmap for how the department will modernize its industrial base, she added. The strategy is “meant to catalyze a generational change” that will guide DoD’s policies, programs and investments in the industrial base for the next three years.
There are four key areas the strategy focuses on: having resilient supply chains, workforce readiness, flexible acquisitions and a focus on economic deterrence and economic security. “While these four priorities are designed as a department-wide industrial strategy for how the DoD will build a modern industrial ecosystem, of course, the department cannot do this alone,” Laura Taylor-Kale, assistant secretary of defense for industrial base policy said. “We are engaged with others to share our aim of a future with a robust modernized industrial base. This includes and very much, I believe, both traditional and more innovative or non-traditional suppliers.”
Sienna Poll: Biden, Hochul Approval Falls, But New York State is Still ‘True Blue’
President Biden has a 45-52% favorability rating, down from 50-45% in September, and a 46-51% job approval rating, slightly down from 47-48% last month. For 2024, Democrats say they want a different presidential nominee than Biden, 52-41%; in September, they wanted Biden as their nominee, 54-40%. Hochul has a 40-44% favorability rating, down a little from 40-41% in September. Her job approval rating stands at 45-45%, down from 48-41% last month. “Is New York still ‘true blue?’ 49% of voters are enrolled as Democrats and only 23% as Republicans.
By a 49-37% margin, voters say they would vote for a Democrat, rather than a Republican, for their representative in Congress. Similarly, voters say they want Democrats to control the House after the 2024 election, 51-37%. On the wars in Israel and Ukraine “Democrats support more aid for Ukraine two-to-one, as do a plurality of independents, but a majority of Republicans oppose it,” Siena College pollster Steven Greenberg said. “Aid to Israel, however, is supported by 52% of independents, 57% of Democrats and 61% of Republicans. Jewish voters support aid to Ukraine 71-19% and aid to Israel 81-8%.
Read more at Sienna College Research Institute
COVID Update - Respiratory Virus Season Threatens to be a Challenge Again
Forecasts from the US Centers for Disease Control and Prevention suggest that this respiratory disease season will be similar to last year — which saw hospitals more full than at any other point in the pandemic — and worse than pre-pandemic years once again. At the peak of the respiratory virus season, there could be between 15 and 25 new weekly hospitalizations for every 100,000 people in the US, according to the analysis.
For now, respiratory virus levels are relatively low in the US overall. In the first half of October, combined hospitalization rates for Covid-19, flu and RSV were less than half of what they were at the same time last year, CDC data shows. Covid-19 hospitalizations have been ticking down for about a month. There were about 16,000 new admissions in the second week of October, which will likely hold relatively steady over the next several weeks, CDC ensemble forecasts suggest. The CDC also considers flu activity to be low currently, but some regions have seen slight increases.
NYS COVID Update
The Governor updated COVID data for the week ending September 29th.
Deaths:
- Weekly: 124
- Total Reported to CDC: 80,693
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,291
- Average Daily Patients in ICU Statewide: No Data
7 Day Average Cases per 100K population
- 8.2 positive cases per 100,00 population, Statewide
- 9.6 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
‘Throw a Tent Over That Circus’ - Republicans Nominate Mike Johnson for Speaker After Spurning Emmer
Republicans chose Rep. Mike Johnson as their latest nominee for House speaker late Tuesday, hours after an earlier pick, Rep. Tom Emmer, abruptly withdrew in the face of opposition from Donald Trump and hardline GOP lawmakers. Johnson of Louisiana, a lower-ranked member of the House GOP leadership team, becomes the fourth Republican nominee after Emmer and the others fell short in what has become an almost absurd cycle of political infighting since Kevin McCarthy’s ouster as GOP factions jockey for power.
After he withdrew Tuesday afternoon, Emmer briskly left the building where he had been meeting privately with Republicans. He said later at the Capitol that Trump’s opposition did not affect his decision to bow out. A lawyer specializing in constitutional issues, Johnson had rallied Republicans around Trump’s legal effort to overturn the 2020 election results. In the end, Johnson won 128 votes on the evening ballot, more than any other candidate. He becomes the fourth GOP choice to try to reach 217 votes in the Full House. A vote there is expected today.
UAW Strike Pinches Automakers and Suppliers, but FOR Now Spares Consumer
Six weeks into United Auto Workers’ strike, the impacts of the work stoppages are rippling through the car business, causing pain for the automakers themselves, as well as parts makers and factory workers. One corner of the industry that has been largely spared: dealerships and consumers, due in part to an inventory buildup of both cars and parts before the strikes. there are now more than 40,000 UAW members on strike at Stellantis, General Motors and Ford Motor at seven assembly plants and dozens of parts-distribution centers in the U.S... In all, roughly 6,600 workers at GM, Ford and Stellantis have been temporarily laid off as a result of the strike.
In the supply base, thousands of other workers have been idled at parts makers because of the strike. About 40% of suppliers responding to a trade-group survey said they had laid off some employees since the start of the walkouts, according to MEMA, an industry group representing parts makers. That figure is expected to jump by the end of October. The shock to the supply chain could intensify as the strike drags on, causing lasting damage to financially fragile parts makers.
China, US Seeking to Set Stage for Xi-Biden Summit as Economic Working Group Holds First Meeting
A “productive and substantive” first round of new economic negotiations between Beijing and Washington could set the stage for President Xi Jinping’s potential visit to the United States next month, analysts said, as the world’s two largest economies seek to iron out a series of issues. Chaired by financial officials at the deputy ministerial level, the first Economic Working Group meeting on Tuesday had “in-depth, candid and constructive communication”, a statement from China’s Ministry of Finance said.
The virtual meeting covered domestic and global macroeconomic situations, bilateral economic relations and cooperation in responding to global challenges, it said. Despite an intensified tech rivalry – including an export ban on China-specific Nvidia and Intel graphic processing units last week that has the potential to undercut Beijing’s artificial intelligence drive - economic tensions between China and the US are showing signs of easing with increasing high-level contact.
Read more at South China Morning Post
Jamie Dimon Criticizes Central Banks for Getting Forecasts Wrong
JPMorgan Chase CEO Jamie Dimon lit into central banks Tuesday, saying they were “100 percent dead wrong” about where the economy was heading over the last year and a half and urging “humility about financial forecasting.” Speaking at a financial forum in Saudi Arabia, Dimon was widely critical of U.S. economic policies and cautioned against the hubris of the financial sector. Dimon on Tuesday questioned the power of the Federal Reserve and of monetary policy to direct the economy.
“I don’t think it makes a piece of difference whether rates go up 25 basis points or more — zero, none, nada,” he said. Pandemic stimulus programs and large structural changes — effected by three major pieces of legislation passed during the first half of the Biden administration — in the U.S. economy have likely been working in the opposite direction to the Fed’s program of quantitative tightening.
CHIPS Update Session: Export Restrictions and High-Skilled Immigration Talk Dominate
It’s been more than a year since Congress passed the CHIPS and Science Act, which set aside nearly $53 billion in subsidies in a bid to restore America as a global leader in chip manufacturing and research. As the Commerce Department works to get that money out the door — and as Congress tries to pass more bills bolstering the domestic chip sector — POLITICO’s CHIPS Update examined how Washington delivering on its promises.
The Commerce Department is expected to spend the first tranche of $39 billion in chip manufacturing subsidies by the end of the year — and some of the biggest companies are lining up for a share. Chip executives have warned, however, that cutting off their access to Chinese chip revenue will require them to slow down or even pare back their plans to build new fabs and foundries in the United States. Leaders across the chip industry say Washington’s efforts to reinvigorate high-tech manufacturing won’t work without skilled workers at new abs and foundries. The need is especially acute for employees with advanced STEM degrees, who are often non-citizens and are unable to work in the U.S. without reforms to the immigration system.
Buffalo, Rochester, Syracuse win Federal Tech Hub Designation
Buffalo, Rochester and Syracuse together as a region have won a federal tech hub designation, according to U.S. Sen. Chuck Schumer's office. The designation is part of the CHIPS & Science Act, which recognizes the role of semiconductor technology in national security. It focuses on domestic chip production and supply chain security in an effort to reduce reliance on foreign manufacturers. Of the 31 designees, five to 10 will be chosen in early spring as the top applicants that will receive roughly $75 million apiece to start with the potential for much more down the road. Schumer said his office is helping the regions put together the next bid which focuses more specifically on how they plan to use the money.
Schumer said the corridor's access to a well-trained and affordable workforce, affordable resources, shovel-ready sites as well as past disinvestment made it among the top applications. Central New York became a crucial part of the bid last year, when Micron Technologies announced it planned to invest $100 billion over the next two decades to build an enormous factory there which it says will eventually create 50,000 jobs.
Canada's St. Lawrence Seaway Workers to Go on Strike, Unifor Union Says
Workers at St. Lawrence Seaway Management Corp have decided to go on strike on Sunday after failing to reach an agreement on wages, the Canadian labor union Unifor said. Unifor, which represents 361 workers at the government-established company, said no agreement had been reached with management after a late Saturday deadline passed. The strike would affect the St. Lawrence Seaway, which connects the Great Lakes and the St. Lawrence river, disrupting cargo movement towards Canadian provinces.
An orderly shutdown of the system took place during a 72-hour notice period allowing for vessels to safely clear the Seaway system, and the corporation remains in regular contact with the marine industry, St. Lawrence Seaway Management said in an emailed response to Reuters on Sunday. "There are no vessels waiting to exit the system, but there are over 100 vessels outside the system, which are impacted by the situation," the statement added.
Rivian Says Construction on 1st Phase of Georgia Factory Will Proceed in 2024
Rivian Automotive will move ahead with construction on a factory in Georgia early next year, the company confirmed last week. The California-based electric truck company made the announcement as it opens a retail location in an intown Atlanta development, the eighth in a network of what the company calls “spaces” that it’s rolling out in select locations nationwide. The company plans additional locations in Colorado, Texas and California in coming months.
Rivian currently produces its R1T pickup truck and R1S SUV at a factory in Normal, Illinois. The vehicles currently cost more than $70,000 apiece. It plans a $5 billion manufacturing complex for a site east of Atlanta, where it’s supposed to produce R2 vehicles with lower price tags aimed at a mass market. The company is supposed to eventually hire 7,500 employees at the site near Social Circle. The first phase of Rivian’s factory is supposed to make 200,000 vehicles a year, starting production in 2024, with a second phase capable of making another 200,000 a year being complete by 2030. The design of the R2 will be unveiled next year, Rivian officials said Thursday.
Earnings Update
Alphabet ew Jersey (4.4%).
Microsoft
3M - 3M Co. reported adjusted profit that was well above expectations and raised its full-year outlook. The maker of Scotch tape, Post-it Notes, Command strips and N95 face masks said the net loss for the quarter was $2.08 billion, or $3.74 a share, after net income of $3.86 billion, or $6.77 a share, in the same period a year ago. The results included a $4.2 billion charge from the settlement of Combat Arms earplugs litigation. Excluding nonrecurring items, adjusted earnings per share rose to $2.68 from $2.60 and beat the FactSet consensus of $2.34. Sales grew 3.6% to $8.31 billion, above the FactSet consensus of $7.99 billion. - Read more at MarketWatch
Global Fossil Fuel Demand Will Peak By 2030 Amid ‘Unstoppable’ Shift To Green Energy, IEA Says
Global demand for fossil fuels will peak this decade if governments around the world stick to current policies, the IEA said in its annual World Energy Outlook report for the first time. Going by current policies, global oil use is expected to peak at around 102 million barrels a day towards the end of the decade, the IEA predicts, falling slightly to 97 million barrels a day by 2050 as the shift to electric vehicles offsets increased oil use in other sectors like aviation. Renewable energy sources like solar, hydro and wind power will also account for nearly half of the world’s energy supply by 2030, the IEA forecast, up from around 30% today.
In its report, the IEA acknowledged fossil fuels will continue to play an important role in global energy supplies and said “continued investment in fossil fuels is essential” in all of the scenarios it considered, even its most ambitious. This is to both meet the increases in demand expected through the end of the decade and to “avoid a precipitous decline in supply that would far outstrip even the rapid declines in demand seen” in its most ambitious scenarios, the IEA said.
EEOC Unveils Strategic Plan
A newly re-energized Equal Employment Opportunity Commission (EEOC) is stepping up its efforts to make sure employers adhere to federal laws that aim to prevent discrimination based on race, ethnicity, religion, gender, age and disability. Details of what it intends to do were outlined in the commission’s five-year Strategic Enforcement Plan (SEP). Proposed publicly last January, it was released in final form on Sept. 21. Given the Biden administration’s ongoing emphasis on aggressively addressing issues involving both what it sees to be systemic and individual instances of discrimination, employers should continue to keep an eye out for recent and future developments involving issues that could embroil them in enforcement actions that can be as serious as it is unexpected.
The SEP identifies six subject matter priorities, and employers can expect the EEOC to conduct a more aggressive enforcement agenda with respect to each of them, the attorneys stress. They are: Eliminating barriers in recruitment and hiring, Protecting vulnerable workers from underserved communities, Addressing selected emerging and development issues, Advancing equal pay for all workers, Preserving access to the legal system, Preventing and remedying systemic harassment.