business news in context, analysis with attitude

Published on: April 1, 2021

APRIL 1, 2021 - New reporting from the Suez Canal indicates that previous stories about why the skyscraper-sized container ship Ever Given blocked the canal were inaccurate - the ship did not run aground because of high winds that forced it off course.

Authorities who boarded the ship - which was going from the Yantian district of China to  Rotterdam in the Netherlands - to inspect its cargo found that it in fact was loaded down  with thousands of grey Amazon Prime delivery vans that the company planned to scatter across the EU in an effort to dominate the continent's delivery infrastructure.  There also were several containers loaded with delivery drones.

Each van, inspectors said, was laden with China-made electronics - including Alexa-based systems - that would be placed in Amazon distribution centers before being priced so low that it would be irresponsible not to buy them.

The combined weight of the vans, drones and products was so heavy that the ship could not help but run aground, experts said.

One Amazon logistics employee, who asked not to be identified because he was afraid of being transferred to the Amazon warehouse on Diego Garcia, said, 'If you think the traffic jam in the Suez Canal was bad, wait until these vans hit the roads and highways of Europe.  And there are so many drones that they're gonna blot out the sun.  It's gonna be awesome.

Each of the vans also contained a portable urinal - with built-in automatic disposal system - designed to allow drivers not to have to stop to use the bathroom while on their routes.

The Amazon logistics expert, however, defended these systems.  "People have it all wrong," he said.  "They think we're putting those in so the drivers can avoid rest stops, but what people don't understand is that each one is equipped with equipment that allows us to instantly test the urine of every driver, making sure that they are not under the influence of alcohol or non-performance enhancing drugs."

Published on: April 1, 2021

Spring has arrived.  The air is warming, the flowers are beginning to bloom, and people are getting vaccinated at an unprecedented rate.  Enjoy the moment, KC says ... and then start thinking beyond the transitional year that 2021 is going to be, focusing on the transcendent year that 2022 has to be. 

Published on: April 1, 2021

Kroger held a virtual investor conference yesterday, saying that it believes it will double its online sales to more than $20 billion by the end of 2023 … that it will have 11 of its planned 20 Ocado-powered robotic fulfillment centers open by the end of next year … plans to increase its average associate wage to $16/hour by the end of the year … and expects to deliver total shareholder return of between eight and 11 percent per year.

The doubling of online sales by the end of 2023 comes after a year in which it already doubled its e-grocery business to more than $10 billion as the pandemic drove consumers online. Kroger said it also doubled the number of digital households within its network during the past year.

Kroger says that over the past year it "invested more than $2.5 billion to safeguard and reward our associates, including nearly $1 billion to secure pensions for more than 30,000 associates. This was in addition to the $800 million incremental investment in associate wages and training over the last three years – which have raised our average wage to more than $15.50/hour. This year, we plan to invest an additional $350 million more that we expect will increase our average associate wage to $16/hour by the end of the year. "

CNBC writes that "Kroger CEO Rodney McMullen said the company will attract customers with fresh foods, grow its ads business to drive an alternate stream of revenue and fulfill online grocery orders more efficiently with the help of large, automated hubs operated with United Kingdom-based logistics technology company Ocado … McMullen said the company anticipates e-commerce, cooking at home and prepared meals to go will continue to propel sales beyond the pandemic."

CNBC also writes that "along with digital investments, Kroger’s Chief Information Officer Yael Cosset said the grocer will attract customers by doubling down on popular items and services. For example, he said it will expand its assortment of adult beverages and restaurant-style prepared meals. It will grow Home Chef, the meal kit company it acquired in 2018.

"Company leaders pointed to Kroger’s media and ads business, Kroger Precision Marketing, as a way to offset the cost of online grocery orders, too."

And, CNBC writes, "Kroger said it is experimenting with new ways to offer customers quick, restaurant-quality meals from ghost kitchens or convenient, preassembled dinner kits. Those investments in prepared food could help the grocer’s business — particularly as Americans grow tired of cooking or return to busier lives and fuller calendars after getting vaccinated for Covid-19."

Published on: April 1, 2021

The Produce Marketing Association (PMA) and the United Fresh Produce Association yesterday announced their plans to merge and "create a new global trade association combining their resources and expertise to enhance member services, increase advocacy before government and the public, help members grow their businesses, and drive consumption of fresh produce and demand for floral products as a vital cornerstone of public health."

The agreement is that PMA and United Fresh will operate as independent entities through the end of this year, and then launch the new, combined organization on January 1, 2022.  Cathy Burns, PMA's CEO, and Tom Stenzel, United Fresh's CEO, will then serve as co-CEOs through 2022, with Burns becoming sole CEO in January 2023.

This is not the first time that the two organizations have announced the intention to merge.  In 2012, after discussions about a potential merger, they called it off, saying that they were "unable to agree on an acceptable joint association model that would meet both member and industry needs."  There also were reports that one of the stumbling blocks was an inability to figure out who the new CEO of a combined entity would be.

“Through my 28 years of service to our industry, I have long recognized the potential synergies of our groups building something powerful together,” Stenzel said in a prepared statement. “It is gratifying to me several years before my retirement to find a strong and committed partner in Cathy who also believes in this shared vision. I’m looking forward to launching this new organization together, setting the stage to enhance member value while driving greater produce consumption in the years ahead.”

“By joining forces, we will continue to support our members with the services, insights, and connections they seek to grow their businesses while ensuring our role and voice as an industry has an even greater impact,” Burns said. “Tom has been a great partner, and I truly appreciate his deep history, knowledge, and care for our industry. We, along with our talented teams, look forward to leveraging our strengths to serve our diverse and complex supply chain. I am so proud and honored to serve the produce and floral community at such a pivotal time in our history.”

The agreement between the two organizations focuses on a number of strategic commitments, including:  "To serve all sectors of the global fresh produce and floral supply chains, growing our global membership and participation … to government advocacy and leadership to build and maintain a positive business climate in the United States and the North American market so critical to our members’ success … to global engagement with international bodies and allied organizations to promote free and fair trade, international harmonization of standards, and worldwide growth in consumption …  to providing expertise and business solutions in food safety, new technology, supply chain management, sustainability, leadership and talent development, business operations, marketing and more … to bringing all sectors of our diverse supply chain together to better understand our interconnections and support efficiency and profitability throughout the chain … to enhance business-to-business sales and marketing connections across the produce and floral supply chains … (and) "to demand creation to inspire consumers to embrace produce and floral products as essential parts of their lives, while increasing profitable sales of members’ products."

Published on: April 1, 2021

FMI-The Food Industry Association yesterday released a new report saying that "the food retail industry invested $24 billion in response to the dramatic changes in Americans’ shopping and food consumption habits amid the pandemic."

The investment, the study says, included "significant safety, workforce and technology investments that have enabled food retailers to safely keep their stores operating, thereby serving communities during the public health crisis."

Specifically, FMI said, "These investments include:  

•  Increases in payroll and incentive pay: $12 billion.

•  Increases in benefits: $5 billion.

•  Non-monetary benefits and vaccine incentives: $1 billion.

•  Personal Protective Equipment (PPE) and other safety expenses: $1 billion.

•  Cleaning and sanitation supplies, labor, and other related expenses: $3 billion.

•  Technology and online delivery expenses: $1.5 billion.

The study says that "according to the data, food retailers spent more than $1 billion on PPE and other safety expenses, such as store signage, COVID-19 tests, and thermometers, and an additional $2 billion on increased cleaning and sanitation hires or use of external partners for this purpose, and more than $400 million on cleaning and sanitization products."

Published on: April 1, 2021

The Chicago Tribune reports that Cleveland Avenue, a venture capital firm launched by Don Thompson, the former McDonald's CEO, has put $15 million behind Dom's Market and Kitchen, a new food hall format that is the brainchild of Bob Mariano, the former Dominick's and Roundy's CEO who launched the Mariano's chain before selling it to Kroger.

The first Dom's is expected to open in late spring, on N. Halsted Street, about a mile south of Wrigley Field.

Eater Chicago has described Dom's as a much-anticipated opening of a format that will combine elements of a restaurant with a gourmet grocery store, featuring "food hall-style counters serving up breakfast, lunch, and dinner from all over the world."

Also involved in the business - which now has raised more than $25 million - are Jay Owen, a grandson of Dominick’s founder Dominick DiMatteo, and Don Fitzgerald, former senior executive with Dominick’s, Roundy’s and Mariano’s.

Published on: April 1, 2021

The Seattle Times this morning reports that Amazon has announced to employees that it anticipates an autumn return to "an office-centric culture as our baseline."  An office-centric model, the company said, "enables us to invent, collaborate, and learn together most effectively."

The internal memo is clear evidence that Amazon does not plan to embrace a hybrid workplace model.

The Times writes that "it had seemed unlikely Amazon would allow employees to stay away from the office permanently. Amazon continued to expand its office footprint during the pandemic, and executives preach a culture of in-person collaboration within 'two-pizza teams' — groups small enough to be fed with two pizzas."

Published on: April 1, 2021

Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

•  In the United States, there now have been 31,166,344 total cases of the Covid-19 coronavirus, resulting in 565,256 deaths and 23,673,462 reported recoveries.

Globally, there have been 129,594,382 coronavirus cases, with 2,830,627 resultant fatalities, and 104,500,042 reported recoveries. (Source.)

•  The Washington Post reports that "coronavirus deaths in the United States last year fueled a rise in the nation’s mortality rate for the first time since 2017, the Centers for Disease Control and Prevention said in a report this week.

"In 2020, more than 3.3 million people died in the United States, the CDC said, in what was the nation’s highest annual death toll in its history.

"The agency analyzed death certificate data from last year and found that covid-19 was the underlying or contributing cause of more than 377,000 U.S. fatalities — making it the third-leading cause of death in the United States after heart disease and cancer."

•  From Axios:

"America is on the verge of a fourth wave of the pandemic.

"It should be far less deadly than the previous three. But this persistent failure to contain the virus will only make it harder to put COVID-19 behind us … Roughly 63,000 Americans per day were diagnosed with COVID over the past week. That's a 17% increase from the week before, and echoes the rising caseloads of the second wave last summer.

"Average daily caseloads increased over the past week in 25 states. The biggest spikes were in Michigan and New York.

"Even as vaccinations climb, new cases declined in only five states, mainly in the Southeast."

•  The Wall Street Journal reports that "newly reported Covid-19 cases in the U.S. rose, as did deaths … The U.S. reported more than 66,000 new cases for Wednesday, according to data compiled by Johns Hopkins University and published early Thursday morning Eastern time. That was up from 61,240 a day earlier but down from 86,950 a week earlier.

"While dramatically lower than the highs of around 300,000 reached in early January, daily cases are trending higher … Deaths were also up, and appear to be entering an upward trend, with the seven-day average exceeding the 14-day average for two straight days through Tuesday, according to the Journal’s analysis of Johns Hopkins data."

•  The Journal also reports:

"Many states are broadly expanding Covid-19 vaccine eligibility this week, unleashing more demand in a time of still-tight supplies by targeting the shots at millions more people.

"Several states, including Texas, Ohio, Louisiana and Indiana, have set eligibility requirements to ages 16 years and up this week, joining states such as Arizona and Georgia that made the move recently. New York made people 30 years and older eligible starting Tuesday. Connecticut is shifting to 16 and up on Thursday.

"In some places that have expanded eligibility, demand is still outpacing vaccine supply. It varies from state to state and even within states, but some people are reporting having a hard time getting an appointment.

"States are banking on a growing number of vaccine doses to meet the need. President Biden has set a goal of 200 million shots by April 30."

•  The Washington Post reports that "at least 97.6 million people have received one or both doses of the vaccine in the U.S.  This includes more than 51.3 million people who have been fully vaccinated … 195.6 million doses have been distributed."

•  The New York Times reports that "Workers at a Baltimore plant manufacturing two coronavirus vaccines accidentally conflated the vaccines’ ingredients several weeks ago, ruining about 15 million doses of Johnson & Johnson’s vaccine and forcing regulators to delay authorization of the plant’s production lines … The mistake is a major embarrassment for Johnson & Johnson, whose one-dose vaccine has been credited with speeding up the national immunization program.

"It does not affect Johnson & Johnson doses that are currently being delivered and used nationwide. All those doses were produced in the Netherlands, where operations have been fully approved by federal regulators.

"But all further shipments of the Johnson & Johnson vaccine — projected to total tens of millions of doses in the next month — were supposed to come from the massive Baltimore plant.

"Those shipments are now in question while the quality control issues are sorted out, according to people familiar with the matter."

•  The Wall Street Journal reports that "the Miami Heat is about to become the first sports franchise to attempt a groundbreaking play: requiring some fans to show proof of vaccination in order to get into games.

"It’s a decidedly low-tech operation, relying on paper cards distributed to the vaccinated by the Centers for Disease Control and Prevention. It will also, quite possibly, never be widely adopted.

"Around 450 Heat fans who flash CDC cards on Thursday showing they are fully vaccinated will be able to enter through a separate gate to gain access to two special 'vaccinated sections' in AmericanAirlines Arena. They will still be required to mask, but can sit closer together than the other 3,500 fans there - and know that they’re only around other vaccinated people.

"The team says it’s a chance to test something that patrons want, expand attendance capacity, and boost the benefits of vaccination."

Published on: April 1, 2021

•  USA Today reports on how the closed Macy's store in downtown Burlington, Vermont, has been converted into a high school.

According to the story, "The Downtown Burlington High School opened March 4, about six months after school administrators closed the existing school, just under 2 miles away, because toxic industrial chemicals known as PCBs were found in the building and soil during renovations. That left students stuck at home learning remotely for much of the school year during the coronavirus pandemic.

"As school officials looked for space where students could attend school in-person, they eventually eyed the empty department store, which closed in 2018. They talked with architects and learned it was a possibility, said Superintendent Tom Flanagan … The building underwent a $3.5 million retrofit supported by the state that added partial walls for classrooms while keeping some Macy’s remnants, like the sparkly white tile floors, bright red carpeting, and Calvin Klein and Michael Kors signs and a large-scale Levi’s jeans photo on a classroom wall. The library is housed in the former Macy’s china department, with books displayed on under-lit shelves, while the gym is in a former store's warehouse and is still unfinished."

•  CNBC reports that "Starbucks said Wednesday it has resolved allegations from the Equal Employment Opportunity Commission about alleged racial bias in its employee promotions, based on data from 2007 through 2011.

"In a letter to employees, CEO Kevin Johnson said that Starbucks does not know what prompted the EEOC allegations and that the company’s analysis of its own data did not show systemic discrimination in store-level promotions.

"'The agreement is not only the right thing for partners, it has also led us to focus more resources on structural changes necessary to support partners’ career progressions and ensure that every partner has the opportunity to learn about promotion opportunities,' Johnson wrote."

•  Axios reports that New York State has now formally legalized recreational marijuana for all adults over age 21.

The story notes that "New York is the 15th state to legalize recreational marijuana and is expected to quickly become one of the largest markets for legal cannabis in the country.

The marijuana industry in New York is expected to generate $350 million in tax revenue annually and potentially create 30,000 to 60,000 jobs … The measure will also expunge records for thousands of people with past marijuana-related convictions. People of color represented 94% of marijuana arrests in New York City in 2020.

"About 46% of revenue from pot sales will be steered toward Latino and Black communities."

Published on: April 1, 2021

…will return next week.

Published on: April 1, 2021

Today is Major League Baseball's Opening Day.  Fans will be in the stands (albeit, in almost all cases, at reduced capacity).   It is a day of renewal.

As always, in the words of the great Robert B. Parker, it "is the most important thing that doesn't matter."

And, as always, it is time for this storied movie clip:

Published on: April 1, 2021

Today, in another one of my ongoing series of author interviews, I speak with Richard Lui, who is just out with a lovely new book, "Enough About Me: The Unexpected Power of Selflessness."

Lui, an NBC/MSNBC anchor and correspondent, has crafted a thoughtful book that examines the role that selflessness can and does play in modern society, using his own experience as a caregiver for his aging father, who has been stricken with Alzheimer's disease, as the narrative spine from which to do a deep dive that is in part spiritual, in part philosophical, and deeply personal.

it is, he suggests, the antithesis of a self-help book, and it strikes me as a rebuke to the rebuke to those who put their own needs first.

In addition, our conversation focuses on the role of selflessness in business leadership.  I found this to be both interesting and relevant, since at many companies, leaders and success are judged on the maximize-profits-and-minimize-expenses scale … selfless leadership requires maximizing people, which doesn't always fit on that scale.

I hope you enjoy my conversation with Richard Lui:

Richard Lui's "Enough About Me: The Unexpected Power of Selflessness," is available on Amazon, from the iconic independent bookstore Powell's, and at your local bookseller.

Published on: April 1, 2021

Tomorrow is Good Friday, and MNB will be taking the day off.  As always, the archives are open … and we'll be back on Monday.

In the meantime, have a good weekend … Stay safe.  Be healthy.

Sláinte!