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U.S. importers turn to prayer and the President ahead of West Coast port labor talks

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© Reuters. FILE PHOTO: Crude tankers are shown at the port of Long Beach, California, U.S., March 8, 2022. REUTERS/Mike Blake

By Lisa Baertlein

LOS ANGELES (Reuters) – For more than two years, Isaac Larian has used every available tool to overcome global supply-chain bottlenecks and keep retailers stocked with enough Bratz and LOL Surprise! dolls to meet pandemic demand. Asked how he’s preparing for this summer’s West Coast port labor talks, the chief executive of Los Angeles-based MGA Entertainment deadpanned, “I’m praying two times a day.” Larian and a half-dozen suppliers for major retailers like Walmart (NYSE:WMT), Amazon.com (NASDAQ:AMZN) and Target (NYSE:TGT) told Reuters that COVID-related ocean shipping snafus have exhausted the workarounds they’d use in the event that talks between 22,000 workers and employers at 29 West Coast ports hit an impasse after their contract expires on July 1.

The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) employer group will meet for the first time on Tuesday.

Any deadlock could delay or halt shipments at the No. 1 U.S. seaport in Los Angeles/Long Beach and other Pacific coast gateways that handle 58.1% of goods from the Far East. That would “hurt the already fragile U.S. economy even more,” said Larian, who is among the importers calling on the White House to intercede – as it has in the past.

The talks come at a critical time for suppliers and retailers because seasonal Christmas merchandise will start hitting U.S. ports in June.

“Chaos is the new normal,” said Jay Foreman, CEO of Tonka Truck and My Little Pony seller Basic Fun!

Efforts to sidestep shipping snarls only added to delays, costs and headaches, he said.

When the pandemic-fueled surge in cargo overwhelmed the Los Angeles/Long Beach ports, importers rerouted goods – spreading backups other U.S. ocean cargo gateways like Houston, Charleston and New York. That shift contributed to a year-over-year West Coast market share loss of 4.6% to ports on the Eastern Seaboard and Gulf Coast in January and February, according to data from Xeneta and Container Trades Statistics. Importers said distance as well as border and infrastructure hurdles knock ports in Canada and Mexico out of contention for many shippers. Pricey air transport is an option for some shippers, but airport cargo facilities jam up when demand spikes.

So, suppliers like Mattel (NASDAQ:MAT), MGA and Basic Fun! are racing in goods as fast as they can. Barbie and Hot Wheels maker Mattel’s inventory jumped 55% year-on-year to $969 million for the quarter ended March 31. Larian, MGA’s CEO, plans to import about 40% of this year’s remaining 4,700 40-foot containers two to three months earlier than usual. But new COVID lockdowns in China are throwing a wrench in those plans, slowing the movement goods at major Chinese ports and miring hundreds of MGA containers in the mess.

Parties on both sides of the contract negotiations say they are invested in keeping West Coast ports open and thriving – though they differ on key issues.

The PMA represents employers like Mediterranean Shipping Co (MSC) and Maersk, which have been booking historic profits and are keen to use automation to speed up cargo processing. Dockworkers represented by ILWU – one of the nation’s most powerful – kept ports running even as some workers lost their lives to COVID. They want to protect jobs.

While there hasn’t been an ILWU strike during coast-wide talks since 1971, talks are always contentious. There have been labor slowdowns or shutdowns during every negotiation going back to the 1990s, said Peter Tirschwell, a vice president at S&P Global (NYSE:SPGI) Market Intelligence. President Barack Obama dispatched his labor secretary to help hammer out a deal in 2015, when the previous talks broke down and dockworkers stopped work for 8 days – sapping an estimated $8 billion from the Southern California economy and clogging U.S. transportation lanes.

The ports have been on President Joe Biden’s radar for months as shipping delays stoke inflation that is fueling voter discontent ahead of the mid-term elections in November. Biden formed a supply chain task force and has been sending his labor secretary to port meetings up and down the West Coast.

“I stand ready to help facilitate productive conversations that result in the best outcome for workers and our economy,” U.S. Labor Secretary Marty Walsh said in a statement.

Stock Markets

Hyundai Motor Group to invest more than $10 billion in U.S. up to 2025

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3/3

© Reuters. Hyundai Motor Group Chairman Euisun Chung delivers remarks along with U.S. President Joe Biden on the automaker’s decision to build a new electric vehicle and battery manufacturing facility in Savannah, Georgia, as Biden ends his visit to Seoul, South K

2/3

By Heekyong Yang

SEOUL (Reuters) -Hyundai Motor Group said on Sunday it would invest an additional $5 billion in the United States by 2025 to strengthen collaboration with U.S. firms in advanced technology.

The investments, announced during a visit to Seoul by President Joe Biden, are for robotics, urban air mobility, autonomous driving and artificial intelligence, the group said.

Hyundai Motor Group, which houses Hyundai Motor Co and Kia Corp, on Friday announced plans to invest $5.5 billion in Georgia to build electric vehicle (EV) and battery facilities.

The new investment brings its planned U.S. total through 2025 to about $10 billion, above the $7.4 billion it announced last year.

The world’s third-biggest automaker by vehicles sales did not say where in the United States the additional $5 billion would be invested.

“Thanks to Hyundai, we are being part of this transformative automobile sector and accelerating us on a road where we’re going to be handing to United States of all electric future,” Biden told a news conference.

Standing next to him after a meeting, Hyundai Motor Group executive chair Euisun Chung said, “I am confident that this new plant in Georgia will help us become a leader in the America automobile industry with regards to building high quality electric vehicles for our U.S. customers.”

Hyundai’s new EV and battery manufacturing facilities will be based in the southern “right to work” state, where labour unions are less prevalent and cannot require workers to join.

Biden, a Democrat, has described himself as the most pro-union president in history. But the deal, announced by Georgia’s Republican governor, showed the compromises the president may have to make as he woos investment overseas.

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Analysis-Tesla brand threatened by Musk harassment claim, criticism of Democrats

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3/3

© Reuters. FILE PHOTO: Tesla CEO Elon Musk speaks about new Autopilot features during a Tesla event in Palo Alto, California October 14, 2015. REUTERS/Beck Diefenbach

2/3

By Hyunjoo Jin and Paul Lienert

(Reuters) – Elon Musk has made a name for himself and Tesla (NASDAQ:TSLA) by breaking the rules, but the billionaire’s latest comments on politics and a claim of sexual harassment against him that he said is untrue may hurt the brand in the eyes of some car owners and employees.

Musk on Thursday denied a report by Business Insider that he sexually harassed a flight attendant on a private jet in 2016, calling the person who made the claim a liar.

The previous day, the Tesla chief executive, in the midst of a contentious effort to buy Twitter Inc (NYSE:TWTR), said he would now vote Republican instead of Democrat and called the Democrats a “party of division and hate.”

Tesla also was cut this week from the widely followed S&P 500 ESG Index, which an index executive said was due to issues including claims of racial discrimination within the company and crashes linked to its vehicles.

Musk responded by calling such ratings around environmental, social and governance (ESG) issues a “scam,” and questioned how the index could drop an electric car firm while adding oil and gas producers.

Tesla could not immediately be reached to comment.

While Musk has made attention-grabbing headlines before – once calling one critic a “pedo guy” on Twitter – the latest controversies again raise the question whether his outspokenness will tarnish his likeability. And – since Musk is so closely tied to Tesla – whether that will that hurt the carmaker’s sales, especially in California.

The left-leaning state is Tesla’s largest market, accounting for nearly 40% of the company’s U.S. retail registrations last year, according to Experian (OTC:EXPGF) data. Tesla sales in California were up almost 70% in the year and it had a 6.5% share of all vehicles in the state, according to the California New Car Dealers Association.

#BoycottTesla was trending on Twitter on Friday and several people claimed they were canceling their car orders.

“In the past, I admired him for working to build a green business that’s transformational in energy use. But he is sadly becoming divisive as an attention seeking troll and I no longer trust that he is dedicated to the quality of his products. I will cancel my Tesla order,” said J Yeh, a Twitter user who describes herself as a lawyer who has lived in several cities including Los Angeles.

“You lost a potential customer,” a Twitter user named Ute Bauer from Germany said, adding in German: “To anyone reading this, cancel your orders.”

Reuters was unable to confirm if any Tesla orders had been canceled.

Many institutional investors may stand by Musk no matter what given the company’s strong performance, but that doesn’t mean some aren’t frustrated.

“They’re doing a lot of good things,” said Taylor Ogan, CEO of Snow Bull Capital, which owns Tesla shares. “It’s just disappointing when that is tainted by Elon Musk’s antics. Elon Musk is the best thing for Tesla and the worst thing for Tesla.”

One Tesla employee, who asked not to be identified, voiced frustration that Musk’s efforts outside Tesla appeared to be hurting the carmaker’s stock. “The company needs to do something to address the issue,” he said.

On Friday, Tesla shares dropped almost 9%, knocking about $66 billion off of Tesla’s stock market value and putting the stock at its lowest level since last August, with analysts citing “distraction risks” from the Twitter deal. Musk assured people on Thursday Tesla was constantly on his mind.

If discussion around water coolers at work focused on the sexual harassment claim against Musk rather than Tesla products, the end result could be “corrosive” for the Tesla brand, said John Smith, a former group vice president at GM who ran global product planning.

Tesla and SpaceX employees also could become “a little bit rattled and angry” because of Musk’s anti-Democratic party comments as technology company staff in California tend to be more liberal, said Jason Stomel, founder of tech talent agency Cadre.

Bill Nelson, administrator of NASA, which relies on Musk’s SpaceX to fly its astronauts to space, told Reuters on Thursday that Musk has a strong team of executives at the spacecraft maker and the agency’s partnership with the company was “going without a hitch.”

And Musk still has plenty of fans online. Twitter user @JVega103 said he was a Republican who owned a Tesla and just signed up for Tesla solar panels. “Thanks for everything you do,” the user tweeted.

That left some industry observers wondering whether Musk and Tesla would simply shake off these latest controversies, as they have in the past.

“Is Elon Musk now crazy, or crazy like a fox? He has earned the benefit of the doubt as he is often playing chess when the rest of us are playing checkers,” Northwestern (NASDAQ:NWE) University professor Erik Qualman said. “As Musk himself on ‘Saturday Night Live’ famously stated, ‘What, did you think I would be normal?'”

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Stock Markets

Hyundai Motor Group to invest $5 billion in U.S. up to 2025

Published

on

3/3

© Reuters. Hyundai Motor Group Chairman Euisun Chung delivers remarks along with U.S. President Joe Biden on the automaker’s decision to build a new electric vehicle and battery manufacturing facility in Savannah, Georgia, as Biden ends his visit to Seoul, South K

2/3

By Heekyong Yang

SEOUL (Reuters) -Hyundai Motor Group said on Sunday it would invest an additional $5 billion in the United States by 2025 to strengthen collaboration with U.S. firms in advanced technology.

The investments, announced during a visit to Seoul by President Joe Biden, are for robotics, urban air mobility, autonomous driving and artificial intelligence, the group said.

Hyundai Motor Group, which houses Hyundai Motor Co and Kia Corp, on Friday announced plans to invest $5.5 billion in Georgia to build electric vehicle (EV) and battery facilities.

The new investment brings its planned U.S. total through 2025 to about $10 billion, above the $7.4 billion it announced last year.

The world’s third-biggest automaker by vehicles sales did not say where in the United States the additional $5 billion would be invested.

“Thanks to Hyundai, we are being part of this transformative automobile sector and accelerating us on a road where we’re going to be handing to United States of all electric future,” Biden told a news conference.

Standing next to him after a meeting, Hyundai Motor Group executive chair Euisun Chung said, “I am confident that this new plant in Georgia will help us become a leader in the America automobile industry with regards to building high quality electric vehicles for our U.S. customers.”

Hyundai’s new EV and battery manufacturing facilities will be based in the southern “right to work” state, where labour unions are less prevalent and cannot require workers to join.

Biden, a Democrat, has described himself as the most pro-union president in history. But the deal, announced by Georgia’s Republican governor, showed the compromises the president may have to make as he woos investment overseas.

Continue Reading

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