business news in context, analysis with attitude

Published on: December 8, 2016

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

I'm Kevin Coupe and this is FaceTime with the Content Guy.

"There’s a special providence in the fall of a sparrow. If it be now, ’tis not to come. If it be not to come, it will be now. If it be not now, yet it will come—the readiness is all." - "Hamlet," Act 5, Scene 2

As much as this is going to annoy some MNB readers, I am going to come back to politics. But not for the sake of politics. In fact, I think there is a very good business reason to do so ...

Let's move past the whole Breitbart vs. Kellogg's debate. I think we've spent plenty of time on that ... not necessarily enough, but plenty. I'm happy to say that the vast majority of emails I've gotten on this story, and my support of the Kellogg's decision to pull its ads from the controversial alt-right Breitbart site, have agreed with my position and Kellogg's. There have been a few that have not, with some folks apparently feeling that Kellogg's is part of a left wing cabal by US corporations to drive the country inexorably toward liberalism and progressivism. I'm not sure if I find this more amusing or absurd, but we can talk about that another time.

And I certainly don't want to get drawn into the debate as to whether our democracy is on the path to being a kakistocracy. Some will say yes, some will say no. Some will say that such a debate paints the situation with way too broad a brush. I say that it is not a debate for here and now.

Today, I'd like to draw your attention to something else. A few somethings else, in fact ... because I've been doing this a long time, and I think there's a trend.

I'm talking about what happened recently at a Michaels arts and craft store in Chicago, when a woman started berating African Americans on the staff - and even other customers who used their smartphones to record the temper tantrum - for what she called discrimination against her because she was white. It apparently started with the availability of a reusable bag, but it quickly went out of control as she started shouting about having voted for Trump, that this was really why she was being discriminated against, and that, by the way, Trump won.

At a Miami Starbucks, a man who felt the wait for his latte was taking too long blamed it on anti-white discrimination by the baristas ... and once again, on the fact that he voted for Trump.

And then there was the guy who starting yelling at passengers on a Delta flight, apparently emboldened by the fact that his presidential candidate - Trump - won. "Donald Trump is your president, every goddamn one of you," he said. "If you don't like it, too bad." (The bad news is he wasn't kicked off the flight. The good news is that he's been banned by Delta for life.)

Now, to be fair, these are isolated incidents. Except that at a certain point, they're not. They keep happening.

I wrote earlier this week that it seems like more and more stories on MNB seem like they have to be placed in a political context ... not because I'm necessarily taking sides - and I certainly won't take the same side every time - but because at this particular moment, nerves are exposed, emotions are raw, and we're seeing the collision of a lot of attitudes and opinions. Sometimes, it can be a violent collision.

That's what happened in Washington, DC, last weekend when a North Carolina man went into a pizza parlor called Comet Ping Pong and fired a weapon - all because, he said, he was self-investigating a report on the internet that Hillary Clinton and her campaign chairman, John Podesta, were running a child sex ring out of Comet's basement. That report, of course, was just one of fake news stories that flooded the internet during the election, inflaming a lot of people and no doubt swaying people's votes on both sides of the aisle. Let's be clear - this report was a load of crap, and the people who originated it, and then spread it via Twitter or Facebook or other social media venues are reprehensible. In this case, it could've cost somebody their life.

(This is not some marginal DC neighborhood by the way ... not that it matters. Comet is a popular place in DC. It is across the street from a respected bookstore called Politics & Prose. And it is an area where Michael Sansolo finds himself on a regular basis.)

But here's the business reason for talking about such things. The employee who is the next person to be berated may work for you. The employee who has to deal with disruptive customers may work for you. The business that gets targeted in the next flurry of fake news stories may be yours.

It doesn't matter if the person causing the disturbance or dragging you into an unwanted circumstance is disturbed or unhinged. If it happens - or when it happens - it'll be not just on the regular news in your community. It'll be online and all over social media. There may well be video on YouTube. And you will be front and center in what is turning into a political and cultural morass. (It is too fetid to call it a debate.)

Simple question.

Are you ready?

Are you preparing your people, the ones who are the front lines, to deal with such people and situations? Are you developing an infrastructure within your organizations to respond when things go bad? Are you ready to move quickly and assuredly?

I may be wrong, but I don't things are going to get better or calmer anytime soon. I think the battle between people who think they are being disenfranchised from the American dream and those who feel that they have been disenfranchised by the American dream and that this is their time to get it back, is just beginning. There may be more heat than light, but the potential is for everybody to get burned.

Are you ready?

You better be. Because readiness is all.

That's what is on my mind this morning. As always, I want to hear what is on your mind.

Published on: December 8, 2016

by Kevin Coupe

The Washington Post this morning reports that a new report from the National Center for Health Statistics says that "for the first time in more than two decades, life expectancy for Americans declined last year."

According to the story, "Rising fatalities from heart disease and stroke, diabetes, drug overdoses, accidents and other conditions caused the lower life expectancy ... In all, death rates rose for eight of the top 10 leading causes of death."

The Post goes on: "Overall, life expectancy fell by one-tenth of a year, from 78.9 in 2014 to 78.8 in 2015, according to the latest data. The last time U.S. life expectancy at birth declined was in 1993, when it dropped from 75.6 to 75.4, according to World Bank data.

"The overall death rate rose 1.2 percent in 2015, its first uptick since 1999. More than 2.7 million people died, about 45 percent of them from heart disease or cancer ... The report’s lone bright spot was a drop in the death rate from cancer, probably because fewer people are smoking, the disease is being detected earlier and new treatments have been developed recently, experts said.

"The largest rate jump for any cause of death was for Alzheimer’s disease, which went from 25.4 to 29.4 deaths per 100,000 people. But several experts attributed that to greater reporting of the disease as a cause of death, not by any huge growth in the number of people who died."

And: "Death rates rose for white men, white women and black men. They stayed essentially even for black women and Hispanic men and women."

Wow. Talk about an Eye-Opener.

The decline in life expectancy in the US - which is contrary, I think, to the trends taking place in much of the industrialized world - also is said to be related to what are called "diseases of despair," such as overdoses and suicide that are a result of depression and addiction.

This all comes at a time when one would think that the public consciousness about things like diet and exercise would seem to be higher than ever before. And it also comes at a time when backsliding in terms of public health almost certainly is having an impact on things like healthcare spending, as well as entitlement programs such as Medicare. (Though I suppose if people stop living as long, it could relieve some of the pressure on Social Security. I'm pretty sure that the decline won't have any appreciable impact on Social Security spending, though...and I'm very sure that this would not be something to celebrate.)

In short, it ain't good.

Published on: December 8, 2016

The Seattle Times reports that the United Food and Commercial Workers (UFCW) has blasted Amazon for its announcement of a new store, Amazon Go, that will operate without checkout lines and, by extension, without checkout personnel.

"“Amazon believes that America’s hardworking men and women are irrelevant to customers — they couldn’t be more wrong,” Marc Perrone, president of the UFCW international, said in a prepared statement, adding, "Amazon is masking its blind greed as progress ... This is not about improving customer experience: it’s about destroying good jobs, with no regard to the families and communities impacted. This is not the America that hardworking families want and deserve.”

The Times notes that futuristic technology "comes with a dose of angst for big parts of the workforce," and writes that "Amazon Go is bound to trouble those who fear the displacement of millions of relatively low-skilled jobs in an economy where automation has already taken a toll on manufacturing employment. Cashiers are the second-largest occupation in America, to the tune of 3.5 million jobs, according to the Bureau of Labor Statistics."

However, the Times also reports that Amazon "has argued that it’s creating plenty of opportunities for independent authors, merchants and startups that rely on its platforms. The company says that about half the items sold on its site are shipped by third-party sellers, many of which have lots of revenue and generate jobs."

Published on: December 8, 2016

Bloomberg reports that Ahold Delhaize said yesterday that it plans to buy back $1.1 billion worth of stock and "will plow money into online expansion as its cash reserves swell following the merger of the Dutch and Belgian retailers."

According to the story, Ahold Delhaize "aims to double online sales by 2020," from the $2.5 billion (US) that it expects to do globally online this year.

Bloomberg writes that "the supermarket operator’s profits have been dented by food deflation in the U.S., yet that headwind should diminish in the second half of 2017 as prices of milk, eggs and meat recover, CEO Dick Boer said on a call with reporters. Any inflation spurred by President-elect Donald Trump’s infrastructure spending plans could also benefit the retail industry, he said, adding it’s too early to give any specific forecast."

In other company news, Ahold USA said yesterday that it has "received a score of 95 on the Corporate Equality Index (CEI), a national benchmarking survey and report on corporate policies and practices related to lesbian, gay, bisexual, and transgender (LGBT) workplace equality, administered by the Human Rights Campaign Foundation."

The company said that the score "reflects a commitment to LGBT workplace equality, with respect to tangible policies, benefits, and practices. As part of the company’s commitment to being a better place to work, Ahold USA and its retail divisions, Stop & Shop New England, Stop & Shop New York Metro, Giant Landover, Giant Carlisle and online grocer Peapod, have an equal employment opportunity policy which includes sexual orientation and gender identity and expression for all operations and equivalent benefits for different-sex spouses and same-sex partners or spouses."

Published on: December 8, 2016

The Los Angeles Times reports that Pebble Technology Corp., which pioneered the design and manufacture of smartwatches more than four years ago and used the then-new concept of crowdfunding to build its first watches, is shutting down.

Pebble is selling its software and intellectual property to Fitbit. Terms of the deal were not disclosed.

"For many in the technology industry," the Times writes, "Pebble’s sale and shutdown seemed inevitable after heavyweight firms such as Apple Inc. and Alphabet Inc.’s Google threw their hats into the smartwatch ring.
Despite offering the first smartwatch that enabled users to receive phone notifications and send and receive text messages from their wrist ... Pebble was dealt a blow when Google released Android Wear in 2014 and Apple launched the Apple Watch last year."

White Pebble's management did not go into details about why the company had become untenable, the Times writes that "analysts say the acquisition of Pebble’s software and engineers will bolster Fitbit’s own efforts to compete in the wearables market. Smartwatches like the Apple Watch, which now double as fitness trackers, have also eaten into Fitbit’s market share. The fitness tracker company’s growth has hit a wall in recent months, with lagging sales and expansion difficulties."

Published on: December 8, 2016

CNBC reports this morning that Starbucks plans to open 12,000 new stores over the next five years, with half of them in the US and China, which would bring it to a total of 37,000 stores globally.

The company also said that it is possible that China eventually could be a bigger market for the company than the US, and outgoing CEO Howard Schultz reiterated a point he has made before: ""These are the early days of the growth and development of the company. If Starbucks was a 20-chapter book, I still think we're in chapter 4 or 5."

The comments came at an investors conference, where executives "highlighted how the company is focusing on both its flagship Starbucks stores and the higher-end Reserve Roastery and Tasting Room outlets for future growth. The company also has targeted the Reserve Roastery stores, which will sell premium coffee at around $10 a cup, to represent about one-fifth of total outlets by 2021.

"Also, Starbucks plans to open new stand-alone outlets under Princi, a high-end Italian bakery the company invested in over the summer. The bakery will serve pizza and have locations in major markets such as New York, Seattle and Chicago by 2018. Moreover, Princi food is expected to be offered at all of the company's new Roastery locations."

Published on: December 8, 2016

• Wal-Mart de Mexico said yesterday that it plans to invest $1.3 billion over the next three years in its operations there, with a focus on expansion - of stores and distribution centers - and logistics. The company has said that its goal is to double sales from 2014 to 2014; in 2015, its sales were $28 billion.

In making the announcement, Wal-Mart de Mexico said that the investment would not result in any jobs being moved from the US to Mexico.

Published on: December 8, 2016

• Sandwich chain Jimmy John's has agreed to pay a $100,000 fine to settle an Illinois case in which the Illinois Attorney General went after the company for an overly restrictive non-compete clause that forced sandwich makers and drivers to agree not to work for two years for any competing sandwich shop located within a few miles of a Jimmy John's.

According to the story, "The settlement requires the company to pay $100,000 to the state’s attorney’s office to create education and outreach programs to promote best practices by employers, prosecutors said. It also requires Jimmy John’s to notify all current and former employees and franchisees in Illinois of the change. The company must remove all non-competes from new employee manuals, and use non-competes only in a way that complies with Illinois law."

Published on: December 8, 2016

• Advertising Age reports that Pinterest has hired Brian Monahan, formerly Walmart.com head of marketing, to be its new head of vertical strategy, "responsible for developing and managing marketing programs to increase awareness, enhance adoption and drive revenue for Pinterest in verticals like CPG, retail, entertainment, auto, tech, telco, financial services, travel and quick-serve restaurants."

Published on: December 8, 2016

A comment about the new Amazon Go store from an MNB reader:

Once again “The evil Amazon” has revealed their true colors as the biggest job killer in America. Thank goodness for companies like Albertson’s, Big Y, etc. who apparently still value people and human interaction.

Unfortunately, while Jeff Bezos and his $1.68 million dollars in salary and BILLIONS in stock holdings continue to get richer, his intent to wipe-out millions of working class jobs is both alarming and disgusting!

Your suggestion to embrace the technology is shortsighted and should be stopped. Unfortunately, the “I’m too busy” joke of a generation doesn’t have the smarts of foresight to understand what the loss of working class jobs will do to America.

I am certainly no fan of Donald Trump, but would support a heavy tax on Amazon as the greatest job killer in America…For all you “Amazon genius” people I would ask you look beyond the 5 minutes you save by having to actually talk to people (I know how important you are...or not) and think beyond yourself (if that’s possible) and what the loss of jobs would do to the economy and America.

I just think you are wrong, especially when you refer to the "I’m too busy' joke of a generation." That level of condescension strikes me as misguided, to say the least.

And I certainly don't understand exactly what you mean when you write that "your suggestion to embrace the technology is shortsighted and should be stopped." Is it the embrace of my technology that should be stopped? Or my even suggesting it?

Another MNB reader had a different problem:

Fantastic idea.  Now, how am I going to come up with the money to sticker our product with expensive little stickers.  I’m sure Amazon won’t want to do this for free when I’m already being charged for EVERYTHING else real or imagined.  Once Amazon gets this working (and the rest of the world follows suit) we better find a way to make this part of the labeling process because this is a cost saving super-measure for retailers.

By the way, I really like the scan and go at Sam’s Club (no more waiting in long lines!) and my question is why hasn’t Costco thought of this?  Guys, come on!  But if the Amazon Go idea was instituted at these two retailers it would be a game changer.

On the same subject, but taking a different perspective, was MNB reader Bob McGehee:

When was the last time a) somebody (your teenage kids don’t count) pumped your gas, b) you went inside a bank to get cash, c) you saw a kid deliver a newspaper (oops, maybe a little too soon) or even sent a fax?  All things change.  If you think your business is immune, think again.

And MNB reader Joe Axford chimed in:

People fear what they don't understand, KC.



Yesterday, MNB took note of a Washington Post story suggesting that if President-elect Donald Trump is successful in cracking down on illegal immigration, it could result in deportations that could have "a particularly dramatic impact on agriculture."

Here's how the Post framed the story:

"Americans could see the cost of some fruits and vegetables soar. Undocumented workers account for 67 percent of people harvesting fruit, according to the Agriculture Department. They make up 61 percent of all employees on vegetable farms, and as many as half of all workers picking crops.

"Agricultural economists across the political spectrum say that there’s no way that workforce could be raptured up without reverberations throughout the food system — think farm bankruptcies, labor shortages and an eventual contraction of the broader economy. And even if you’re far from the agriculture industry, you could see $4 milk, low-quality oranges, and extortionately priced raspberries.

"The logic behind these dire predictions is pretty straightforward. If Trump were to begin deporting farmworkers or requiring that farms verify their work status, farmers would have three ways to fill in the labor gaps. They could hire legally authorized workers, who are vastly more expensive; switch away from crops that require human laborers to harvest them; or cut production, allowing fields to fallow and fruit to go unharvested."

Got a lot of email about this.

One MNB reader wrote:

The increase in food prices would be more than offset with the cost of welfare, food stamps, subsidized health care, and crowded public schools.

From another MNB reader:

I can't wait to see the discussion about this article.  So prices will be higher if people are paid a higher wage to pick produce, but increasing minimum wage does not effect prices?  IMHO, the right thing to do is to eliminate illegal workers from the process and pay a wage that is fair for the difficult work. If the market drives the process, then American workers will be incentivized to do the work for the pay and the prices of the product will adjust accordingly. We really can't have it both ways, right?  As you said, this won't do anything to make the US food industry great again, but neither does an artificial minimum wage.

MNB reader Gary Loehr wrote:

So where are all the supporters of a “living wage” when it comes to these workers?  Where is the public outrage? You know these workers are exploited.  No benefits, low wages, no breaks, no overtime and no disability coverage if they get hurt.  Why is Walmart evil when they pay the legal minimum wage, but farmers can employ undocumented workers and it’s okay.  Part of the reason is that most Americans won’t work under those conditions, so we are willing to look the other way.  Yes, the Waltons make more money than the average farmer, but I think there is a double standard here that isn’t right.  As Americans, we have a choice, pay a living wage and pay more for our goods and services or acknowledge that some jobs don’t need to pay a living wage and keep prices down.  Either way , it should apply to all workers in all industries.

MNB reader Mark Delaney wrote:

I was one of the ones that took you to task for embedding too much politics in MNB and we can agree to disagree on that but in this case I think you might have provided some broader context. Perhaps the headline is potentially higher prices but I would suggest some perspective.

Regardless of who is in the top office there is overwhelming sentiment for reining in illegal immigration. Most of our parents and nearly all of our grandparents immigrated "by the rules" and it's hard to understand why anyone bothers to do it legally anymore - though thankfully many do. You talk about costs - how about the cost to countless school districts that are forced to educate children of those undocumented - many districts' tax increases are a direct result of this hidden "cost". Talk about "cost" to someone involved in an auto accident with an undocumented worker - it's tough to put a price tag on that. Talk about hotels on eastern Long Island and throughout the country that are occupied completely by undocumented workers - paid for via our local and State taxes. Talk about the cost to college students who try to get into many colleges only to see that programs designed to allow undocumented children to attend our colleges are potentially taking seats that could have gone to children of those that played by the rules.

I don't know if the right people occupy any of our offices right now but if you're going to have a conversation about financial impacts to consumers let's have the complete conversation - $4 milk is a very small piece of the puzzle...

From another reader:

I think Trump will develop a worker program for agriculture workers to legally work in the US. The uncontrolled entry into the country contributes to the drug trade, crime, the birther issue, healthcare cost, human trafficking, etc. We as a country need to have secured borders. We should know who is coming in our country and the reason they want to come here and when they should leave. Maybe what needs to happen is the people who claim they cannot find work that receive assistance for too long need to fill these agricultural jobs. The sad thing is people come to the US to work seeking the American Dream. Then there are those Americans who think they are entitled and don’t work. Thing of it is they probably receive more assistances than agricultural workers earn. Maybe an exchange program needs to be developed.

MNB reader John Kopecky wrote:

If these percentages are correct, and most of them are increasingly hard to believe, the US has a much more serious problem with undocumented aliens than previously reported.  These circumstances should have never been allowed to occur and something needs to be done.  Everyone will adapt to the situation as we have for decades when something like this happens.  Personally, I think this article is deliberately written, as are many in the press, to intimidate the public into believing the problem is much more serious than it actually is.

I will specifically disagree with your last point - I've had a number of industry folks, none of them members of the media nor raving liberals - make similar points to me about the potential impact of Trump immigration policies.

On a broader level, I'm really getting tired of people on either side of the political aisle criticizing the media for bias on pretty much any story that the people happen to disagree with. Does the media make mistakes? Sure. get things wrong? Yup. Does bias sometimes creep in? Absolutely.

But the vast majority of reporters and writers that I know and read and watch and listen to are serious about their jobs, do their absolute best to get it right, work hard not to do biased journalism, and are, to my mind, American heroes. (Clinton supporters think the press was too hard on her. Trump supporters think the press was unfair to him. My experience as a daily newspaper reporter was that if I got criticized by both sides, it meant I was doing something right.)

I know that the press is suffering from appalling approval ratings these days. But I don't feel that way. I'm glad that I subscribe to one print newspaper, and more than a dozen online news sources.

I firmly believe that the responsibility of the press, in the words of Peter Finley Dunne, is to comfort the afflicted and afflict the comfortable. It is a sacred mission to do things like report stories that bring down presidents (Richard Nixon) and cause cardinals (Bernard Francis Law) to go into exile when their misdeeds are exposed. And I wish that some of the people who express outrage about the behavior of the legitimate press would show a little bit more outrage about the fake news stories that deliberately pollute social media. Which is sort of where I started MNB this morning...