business news in context, analysis with attitude

Published on: April 11, 2022

On Friday night, when I wanted to watch Max Scherzer's debut with the New York Mets, I found that there was no local feed.  Instead, I had to watch it on Apple TV+.  The good news is that I'm a subscriber … but I must admit that I found some elements of the production to be off-putting.  It may not matter, though, since the likes of Apple and Amazon are actively engaged in bidding for live sports rights … in part because original sports programming draws eyeballs, and in part because these folks would like to sell you something else (in Apple's case, an iPhone, in Netflix's case, a subscription).

Published on: April 11, 2022

Politico came out this weekend with the results of an extensive investigation into the US Food and Drug Administration (FDA), concluding that "the food side of FDA has been so ignored and grown so dysfunctional" that the agency often is ineffectual, inefficient, and inadequate to the task at hand.

A selection of excerpts:

•  "It’s been more than 11 years since Congress passed a sweeping food safety law designed to prevent this type of health risk. In that time, FDA has failed to put in place safety standards for the water used to grow fresh produce, as mandated by that law, despite knowing that water is one of the main ways fresh fruits and vegetables become contaminated with deadly pathogens. Congress has ramped up FDA funding over the past decade, but deadly outbreaks keep happening and it often takes the agency too long to respond.

"Many consumers would be surprised to learn this anemic, slow response is typical for an agency that oversees nearly 80 percent of the American food supply, but slow is what insiders in Washington have come to expect from FDA, regardless of administration. A monthslong POLITICO investigation found that regulating food is simply not a high priority at the agency, where drugs and other medical products dominate, both in budget and bandwidth – a dynamic that’s only been exacerbated during the pandemic."

•  "Indeed, Politico's investigation found that the Center for Food Safety and Applied Nutrition, the little-known food arm of FDA, has repeatedly failed to take timely action on a wide range of safety and health issues the agency has been aware of for several years, including dangerous pathogens found in water used to grow produce and heavy metal contamination in baby foods. The agency has been slow to acknowledge numerous other chemicals of concern, including PFAS, so-called forever chemicals, which can be found in the food supply and are used in food packaging. FDA has dragged its feet on major nutrition issues, even as diet-related disease rates in the U.S. have continued to worsen."

•  "Aside from the lack of attention to food at the top, there are also unique problems within CFSAN, the branch that handles food issues. The division – which is dwarfed by the medical products side of the agency – suffers from a deep-seated culture of avoiding hard decisions and a near-paralyzing fear of picking serious fights with the food industry. A Trump-era change in leadership structure set up a power struggle between the two top officials, further strengthening the status quo of inaction, which often benefits industry. The agency is adrift, without leadership, and currently plagued by turf battles.

"The result is that the agency fails to come anywhere close to meeting most American consumers’ basic expectations of government oversight on food safety and nutrition, even as Congress has directed more resources to tackle food safety problems."

Politico argues that there are four essential takeaways from its investigation:  "The food division has structural and leadership problems … Congress asked FDA to regulate water to keep deadly pathogens out of produce. 11 years later, it still hasn’t … FDA made little progress on keeping toxic elements out of baby foods … (and) FDA has not taken timely action to help cut sodium consumption."

Politico also makes the point that "this  is not your run-of-the-mill slow-churning Washington bureaucracy. FDA’s food division is so slow, it’s practically in its own league. For this story, Politico spoke with more than 50 people, including current and former FDA officials, consumer advocates and industry leaders. Some were granted anonymity to speak candidly. There is a remarkable level of consensus that the agency is simply not working. Current and former officials and industry professionals used terms like 'ridiculous,' 'impossible,' 'broken,' 'byzantine' and 'a joke' to describe the state of food regulation at FDA … This government dysfunction has a real impact on people's lives. The CDC estimates that more than 128,000 people are hospitalized and 3,000 people die from foodborne illnesses each year – a toll that has not lessened after a sweeping update to food safety a decade ago."

You can read the entire story here.

Published on: April 11, 2022

The Associated Press reports that Amazon has filed a legal objection to the union victory ay one of its New York City warehouses, on Staten Island, saying that "union organizers and the National Labor Relations Board acted in a way that tainted the results. It now wants to redo the election.

"The e-commerce giant listed 25 objections … accusing organizers with the nascent Amazon Labor Union of intimidating workers to vote for the union, a claim an attorney representing the group has called 'patently absurd'."

The New York Times adds that "the result of another Amazon election, at a warehouse in Alabama, is also being challenged by both the company and a union seeking to represent workers there, according to filings submitted late Thursday. That union argued that the problems “both separately and cumulatively constitute grounds to set the election aside,” but Amazon stopped short of calling for the result to be tossed. The union trails in the initial tally."

In one objection to the Staten Island vote, the AP writes, "Amazon said organizers 'intentionally created hostile confrontations in front of eligible voters,' by interrupting the mandatory meetings it held to persuade its employees to reject the union drive. In a filing released last week, the company disclosed it spent about $4.2 million last year on labor consultants.

"In another objection, Amazon targeted organizers’ distribution of cannabis to workers, saying the labor board 'cannot condone such a practice as a legitimate method of obtaining support for a labor organization.'  New York legalized the recreational use of marijuana last year for those over 21."

The NLRB has consistently denied any improper behavior, saying that it simply is enforcing the National Labor Relations Act.

Published on: April 11, 2022

The Washington Post reports that "employees at six more Starbucks coffee shops in Upstate New York voted to unionize Thursday and Friday, delivering a string of wins for the nascent organization effort at one of America’s most ubiquitous coffee retailers.

"Workers United, a labor union affiliated with the Service Employees International Union, announced Thursday afternoon that two stores in Rochester and another in Buffalo had voted in its favor. Then on Friday afternoon the National Labor Relations Board confirmed that workers at three more coffee shops, in Ithaca, N.Y., voted overwhelmingly to form a union, bringing the number of unionized company-owned stores to 16 out of almost 9,000.

"In a separate vote in Overland Park, Kan., the union had six votes yes and one vote no, but there were seven challenged ballots, enough to potentially affect the outcome. The official result will be determined at a separate hearing."

Some context from the Post:

"Labor unions are hoping to capture the moment to expand their reach after decades of retrenchment. They have been pressing hard on contract negotiations, winning back long-lost benefits for their members amid a rash of strikes. And they are moving aggressively to organize nonunion shops. There have been 641 petitions filed with the National Labor Relations Board in 2022 as of Friday, the fastest pace of new petitions since 2008, according an analysis of NLRB data."

And, the New York Times writes:

"The union has accused Starbucks of seeking to cut back hours nationally as a way to encourage longtime employees to leave the company and replace them with workers who are more skeptical about unionizing. And the union argues that Starbucks has retaliated against workers for supporting the union by disciplining or firing them. Last month, the labor board issued a formal complaint against Starbucks for retaliating against two Arizona employees, a step it takes after finding merit in accusations against employers or unions.

"The company has denied that it has cut hours to prompt employees to leave, saying it schedules workers in response to customer demand, and it has rejected accusations of anti-union activity."

Meanwhile, Bloomberg reports that "in his first week back on the (CEO) job at Starbucks Corp., Howard Schultz made a flurry of moves that hint at big changes in store layouts, employee relations and marketing - and indicate profit margins will be under pressure.

"The man credited with inventing Starbucks’s culture as a 'third place' for people to spend time beyond their homes and workplaces isn’t taking his new role as interim chief executive officer lightly. He’s already frozen stock repurchases that were part of a $20 billion package, saying the money would be better spent on employees and cafe improvements."

However, Bloomberg writes, "Shareholders greeted Schultz’s plans by selling off the stock, which dropped every day this week for an 11% skid."

"'He’s coming back and he’s making bold moves,' says Ivan Feinseth, an analyst at Tigress Financial Partners who has a buy rating on the stock. Feinseth thinks investing in the long term is the right idea even if there’s some short-term pain. 

'It’s going to pressure margin, absolutely, but I don’t think it’s a factor. He knows that.'

"Feinseth said Schultz’s changes may include expanding into selling food and wine into the evening hours - a move the company has experimented with in the past.  'They’re still going to try to address things that will drive traffic at night,' the analyst said. 'He wants to further the premium experience'."

The Wall Street Journal reports, by the way, that Starbucks "said it is bringing aboard a new senior executive specialized in worker relations as more baristas at the coffee chain’s cafes this week voted to unionize … Starbucks is bringing aboard Frank Britt as chief strategy officer. Mr. Britt, most recently CEO of the Boston-based Penn Foster workforce development organization, will report to Mr. Schultz."

"Mr. Britt has dedicated his career to 'empowering frontline employees to unlock their full potential in work and life,” Mr. Schultz wrote in a memo to employees. “This role is an investment in Starbucks long-term evolution.”

Published on: April 11, 2022

The Los Angeles Times reports that "the owner of Westfield malls, familiar to passersby for decades for their bright-red logo signs, plans to sell all its properties in the U.S. as pandemic fears have sped changes to how people shop … All 24 U.S. malls are to be sold by 2023, Chief Executive Jean-Marie Tritant told investors last week. The company will become a 'focused, European pure-play,' he said."

The Times notes that "Unibail-Rodamco bought Westfield Corp. for nearly $16 billion four years ago. Unibail-Rodamco-Westfield, as the Paris company is now known, intends to bet its future on Europe, where it is the largest owner of shopping centers … Tritant didn’t elaborate on whether the Westfield malls might be sold together or individually, and company representatives declined to comment further on the planned property divestment."

Published on: April 11, 2022

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 a total of 82,062,989 total cases of the Covid-19 coronavirus, resulting in 1,012,151 deaths and 79,908,520 reported recoveries.

Globally, there have been 499,132,532 total cases, with 6,203,322 resultant fatalities and 448,453,331 reported recoveries.  (Source.)

•  The Centers for Disease Control and Prevention (CDC) says that 77.2 percent of the total US population has received at least one dose of vaccine … 65.8 percent is fully vaccinated … and 45.2 percent of the fully vaccinated population has received their first vaccine booster dose.

Published on: April 11, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From CNBC:

"Amazon is handling a rapidly growing number of returns that are causing a massive problem for the e-commerce giant and the planet.

"A National Retail Federation survey found a record $761 billion of merchandise was returned to retailers in 2021. That amount surpasses what the U.S. spent on national defense in 2021, which was $741 billion. 

"Amazon wouldn’t share its overall returns numbers, but in 2021, the National Retail Federation estimates 16.6% of all merchandise sold during the holiday season was returned, up more than 56% from the year before. For online purchases, the average rate of return was even higher, at nearly 21%, up from 18% in 2020. With $469 billion of net sales revenue last year, Amazon’s returns numbers are likely staggering."

“We encourage a second life on all of the products that we receive back,” Cherris Armour, Amazon’s head of North American returns, tells CNBC.  “And that comes in the form of selling the majority of the items that we do receive. They are resold as new and used, or they go back to the seller or supplier, or we donate them."

Products that cannot be recovered or recycled are slated for what is euphemistically referred to as "energy recovery" - which means "you burn something to produce heat, to produce energy. And you rationalize the disposal of goods as a conversion from one form of matter to another."

"Rationalize" sounds like exactly the right word.  

Published on: April 11, 2022

•. Business Insider reports that "the FTC is suing Walmart over accusations it has falsely marketed some of its products.  The Commission filed the suit in the District of Columbia Friday …  the FTC alleged that Walmart's marketing and sales of its textile fiber products, including towels, bedding, and bras deceptively described their material as 'bamboo,' when in fact they were made of rayon. "

•  The New York Post over the weekend announced that Walmart heir Rob Walton, who is worth an estimated $70 billion, is expected to become the prohibitive favorite to acquire the Denver Broncos.  The price is expected to be about $4 billion, the highest price ever paid for a professional sports franchise.

The Post writes that Walton is "the favorite to buy the team despite the NFL’s efforts to court Robert F. Smith, the nation’s richest African-American … Smith has been courted aggressively by the NFL to buy the Denver Broncos as the league faces criticism over race relations."

Published on: April 11, 2022

With brief, occasional, italicized and sometimes gratuitous commentary…

•  USA Today reports that "less than two months after a baby formula recall, retailers are reporting shortages with some stores rationing sales.

"Nearly 30% of popular baby formula brands may be sold out at retailers across the U.S., according to an analysis by Datasembly, which assessed supplies at more than 11,000 stores. 

"That's a higher level than other products, said Ben Reich, CEO of the Tysons, Virginia-based research firm. "

•  Bloomberg reports that "highly pathogenic avian influenza has been found in a non-commercial backyard poultry flock in Colorado, the USDA confirmed in a statement on Saturday, amid the worst U.S. outbreak of the virus in seven years. 

"State officials quarantined the premises in Pitkin County, and birds from the flock will be 'depopulated to prevent the spread of the disease.'

According to the story, "The deadly virus has been hitting poultry operations along the East Coast and Midwest, including top producer Iowa, where a farm was recently forced to cull nearly a million birds. More than 2 million turkeys have been lost so far in the U.S. since the outbreak began in mid-January, according to Steiner Consulting Group, or about half what is typically slaughtered in a week."

The outbreak is said to be the worst since 2015, has "affected over 24 million wild, commercial and backyard birds nationwide," and is resulting in additional inflationary pressures on the economy.

Which is leaving a fowl taste in the mouths of economists.

Published on: April 11, 2022

Got the following email from MNB reader Bob Thomas:

There was a comment made last week by an MNB reader:  

“Large unions tend to have a history of corruption and graft and leadership’s objectives are often driven by differing needs than the union membership."

Union corruption does not even come close to matching corporate graft and corruption.  Enron for one example of ripping off its own shareholders.  Citibank for laundering $100 million for the brother of the Mexican President.  And who can forget Bernie Madoff?  Insider trading, friendly boards of directors and outright corporate corruption keep the US Treasury in pocket change from corporations that do not admit guilt but pay the fine.

As much as people talk about Jimmie Hoffa they should be looking at union leaders like William Winpisinger or George Kourpas.

On the subject of Starbucks employees' discontent, one MNB reader wrote:

I have a great college-age highly skilled granddaughter in the Columbus, Ohio, area who has in the past few years worked at Texas Roadhouse, then Bob Evans, and then at Starbucks. Of those three, Starbucks has been without a doubt the most employee-centric employer of all.  She cannot understand why anyone would need a union.  Starbucks has been extremely flexible in her schedule to accommodate her academic needs, and when they curtailed operations due to Covid she was paid even for not working. 

Maybe it is the attitude and work ethnic of this lady that Starbucks has treated her so well.  But I think it is largely attributable to the way Starbucks generally treats its employees. 

I personally am not a fan of expensive Starbucks coffee.  I still prefer  my Maxwell House to her gifts of bags of Starbucks coffees. 

Both my son and nephew have worked for Starbucks over the years, and they've had good experiences.  But … I think it is important to remember that not everybody has had the same experiences. Starbucks has been known as a progressive employer, but it remains possible that the company has lost its way.

Last week we took note of a CNBC story reporting that Walmart "is raising pay for long-haul truck drivers and launching a new program to train the next generation, as it seeks the staffing it relies on to replenish store shelves and warehouses across the country.

"The retailer said truck drivers will now make between $95,000 and $110,000 in their first year with Walmart. The company did not provide the current salary range for a new truck driver at Walmart, but said they have made an average of $87,500 in their first year.

""Walmart has also started a 12-week program in Sanger, Texas, and in Dover, Delaware, where people can earn a commercial driver’s license and join Walmart’s fleet. It will cover the cost of earning a license, which can run between $4,000 and $5,000."

MNB Ryan Mullen wrote:

I don't know Walmart's trucking policies off hand, but most companies place the cost of maintenance on the driver with a horrible "lease to own" contact. Not to mention what gas costs. John Oliver's latest show went into this extensively, showing the plight of a family who pulled in $150k... Then had to pay $100k for gas. After truck maintenance they grossed less than $25k. Might want to keep your day gig.

And, from another MNB reader:

Warehouse to driver training programs has been in place for decades in grocery distribution operations and they are generally very popular.  The Walmart difference is that it is focusing on long-haul operations verses short run (daily, established routes).

And, we also pointed out another CNBC story saying that "Walgreens Boots Alliance said Wednesday that it will expand the number of stores in the San Francisco and Los Angeles areas with so-called Health Corners, which offers medical care in association with health insurer Blue Shield of California. It has opened 12 Health Corner locations in California and plans to open eight more by mid-year."

One MNB reader responded:

I wonder if they will offer free lung cancer screenings to their customers that they have sold cigarettes to?

Walgreens has said it "considering" whether to stop selling tobacco products.  To me, this is a no-brainer.  If you want to be seen as part of the healthcare continuum, you can't be selling poison designed to addict and kill people.

Published on: April 11, 2022

•  CBS Sports reports:

The No. 1 golfer in the world has won the No. 1 major in the sport. Scottie Scheffler dominated the final three rounds of the 2022 Masters en route to a green jacket, record $2.7 million payout and further enshrinement as the hottest golfer on the planet, carding a 10-under 278 to win his first career major on Sunday.

"Scheffler became the fifth golfer to enter Augusta National ranked No. 1 in the world and go on to win the Masters, joining Ian Woosnam (1991), Fred Couples (1992), Tiger Woods (2001-02) and Dustin Johnson (2020).

"The victory was his fourth on the PGA Tour this season, making him the first golfer since Arnold Palmer in 1960 -- and only the second ever -- to win as many events including the Masters in that span of time to begin a season, according to Justin Ray.

"Scheffler is on such a heater that he actually won all four of those PGA Tour events in just a 57-day span, marking the shortest stretch from a first to fourth victory in PGA Tour history. This after failing to claim a victory in his first 70 events on the PGA Tour."