Raphael Stevens

Many on Wall Street see potential strikes by the UAW against the Detroit automakers as largely manageable, even investment opportunities.
Some believe potential strikes are already factored into the stocks, while others estimate the Detroit automakers can handle such work stoppages and expected labor cost increases.
The Detroit automakers and UAW have until 11:59 p.m. ET Thursday to separately negotiate new contracts for roughly 146,000 union members before potential strikes.

United Auto Workers members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant in Detroit, Sept. 25, 2019.
Michael Wayland / CNBC

DETROIT – Many on Wall Street view potential strikes by United Auto Workers against the Detroit automakers as largely manageable – even seeing investment opportunities.
Some believe potential strikes are already factored into the stocks, while others estimate General Motors, Ford Motor and Stellantis, collectively known as the Detroit automakers, or D-3, can handle such work stoppages and expected labor cost increases. The companies and the union are bargaining contracts for 146,000 union members ahead of an 11:59 p.m. ET Thursday deadline.

“Our theoretical math suggests that labor cost increases should largely be manageable for the D-3. Further, a work stoppage should keep inventories low and support prices staying elevated, which should be a near term offset for higher wages,” RBC Capital Markets analyst Tom Narayan said Thursday in an investor note.
Using Ford, which has the most UAW employees at 57,000, as an example, RBC estimated margin impacts for 10% and 20% raises for union workers would be 0.39% and 0.79%, respectively. That doesn’t factor in potential bonuses and other possible changes such as cost-of-living-adjustments, which the union has made a priority.

What “matters most” is the duration of a potential strike, Jefferies analyst Philippe Houchois said. In an investor note Monday, he estimates each week of a strike could account for 4% to 5% of adjusted earnings at Ford; 3% to 4% at GM; and 1.5% to 2% at Stellantis.
Simultaneous national strikes against the Detroit automakers, which the UAW has alluded to doing, would be unprecedented. It could have a ripple effect on the automotive supply chain, U.S. economy and domestic manufacturing. It also would likely tally into billions in losses for the companies in production, sales and other earnings.
A strike against GM in 2019 during the last round of contract negotiations lasted 40 days and cost the automaker $3.6 billion in earnings that year, the company reported at the time.

Morgan Stanley analyst Adam Jonas has continued to say the firm is largely a buyer “across much of our sector leading up to and during contract negotiations.” He estimates labor costs only account for around 4% of the global revenues for the Detroit automakers.
“Bottom line, we’d be a buyer of both F and GM right now and during the negotiations as we believe even a ‘difficult’ outcome can catalyze far bigger changes to strategy and capital discipline that will eventually yield significant and longer lasting benefits to shareholders that will exceed today’s labor headlines,” Jonas said in an Aug. 28 note.

Jonas also said Monday that a strike may be positive for used car prices and relatively good for dealers and rental car companies such as Avis Budget Group and Hertz.
A UAW strike could “drive some headline-related downwards movement to the stocks, but the stocks largely reflect the risks of a material strike,” BofA Securities analyst John Murphy said Friday.
The union’s demands also could be costly if tentative deals are reached. Key demands have included a 40% hourly pay increase, a reduced 32-hour work week, a shift back to traditional pensions, elimination of compensation tiers and restoration of cost-of-living adjustments, among other items on the table.
– CNBC’s Michael Bloom contributed to this report. More

A Lazard investment banker sounded the alarm about the dominance of Elon Musk’s SpaceX in the rocket launch market.
“Having such a dominant launch provider is probably not healthy just in general for the commercial prospects of the industry. No one wants a monopoly choking out one point of the value chain,” Vikram Nidamaluri, a managing director at Lazard, said at the World Satellite Business Week conference on Monday.
Several other U.S. companies are working to launch competitors to SpaceX’s workhorse Falcon rockets, but delays mean American rivals are struggling to field next-generation operational rockets.

Vikram Nidamaluri, Managing Director of Telecom, Media, and Entertainment at Lazard, speaks during a panel at the World Satellite Business Week conference on Sept. 11, 2023.
Michael Sheetz | CNBC

PARIS – A Lazard investment banker sounded the alarm about the dominance of Elon Musk’s SpaceX in the rocket launch market, as the industry waits for U.S. competitors to begin flying new vehicles.
“I think it’s a huge concern,” Vikram Nidamaluri, managing director of telecom, media, and entertainment at Lazard, said during a panel at the World Satellite Business Week conference on Monday.

“Having such a dominant launch provider is probably not healthy just in general for the commercial prospects of the industry,” Nidamaluri added. “No one wants a monopoly choking out one point of the value chain. There are obviously other players that are ramping up capacity but I think the timeline hasn’t moved forward rapidly enough.”
Nidamaluri echoed concerns about a rocket launch monopoly raised by others in the space industry this year. Rocket launches are a potential bottleneck in the process of flying valuable satellites, spacecraft, and astronauts in orbit. Several other U.S. companies are working to launch competitors to SpaceX’s workhorse Falcon rockets, but delays mean American rivals are struggling to field next-generation operational rockets.

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A few days ago, SpaceX launched its 63rd mission of 2023 – and the company has already topped last year’s record of 61 missions while flying at a blistering average of a launch every four days. Beyond the U.S. rocket market, SpaceX leads the world in both launches and spacecraft mass delivered to orbit each quarter. The company alone keeps the U.S. ahead of China, the next closest geopolitical competitor, in satellite and astronaut launches.

A Falcon 9 rocket launches a Starlink mission on January 31, 2023 from Vandenberg Space Force Base in California.

SpaceX Vice President Tom Ochinero, during a separate panel at World Satellite Business Week on Monday, responded to Nidamaluri’s concern by framing it around whether the rocket-builder would fly satellites of competitors to its Starlink satellite internet service.
“We’ve proven that, yeah, we will,” Ochinero said. “We’re a launch company first, we’re here to provide launches.”

While Starlink is clearly SpaceX’s “big internal customer,” Ochinero noted that the company has moved launches for its own satellites “out of the way as needed sometimes to provide launches for competitors and customers” alike. SpaceX recently signed a deal to launch 14 missions for Canadian operator Telesat to deliver its Lightspeed internet satellites to orbit, and has previously launched satellites for other Starlink communications competitors such as OneWeb, Viasat, and EchoStar.
“I’m not super worried about this – we’re here to launch,” Ochinero said
Tory Bruno, CEO of United Launch Alliance, during the same panel pushed back on the idea that SpaceX has full control of the launch market. ULA, historically the next largest U.S. rocket competitor, has completed only two launches so far in 2023, and is working toward the inaugural launch of its next-generation Vulcan rocket in the coming months.
“I appreciate the sentiment that [SpaceX] will be a benevolent monopoly, I don’t think you’re a monopoly and I don’t think it’s our plan for you to become one,” Bruno said. More

Macy’s has tapped Olivier Bron, a French national and international retail executive, as its next CEO.
With the move, the legacy retailer is adding an outside perspective and a dash of global flair to its upscale department store.
Bron is succeeding Tony Spring, who is becoming the CEO of parent company Macy’s.

Shoppers walk past a Bloomingdale’s store in the SoHo neighborhood of New York, US, on Wednesday, Dec. 28, 2022.
Victor J. Blue | Bloomberg | Getty Images

Macy’s said Tuesday that it has tapped international retail executive Olivier Bron as the next CEO of its upscale department store, Bloomingdale’s.
Bron will succeed Tony Spring. A 36-year veteran of Bloomingdale’s, Spring became CEO-elect of the parent company Macy’s in March. He will succeed longtime leader Jeff Gennette, who is retiring in February.

Bron will step into his new role in early November.
With the move, the legacy retailer is adding an outside perspective and a dash of global flair to the higher-end department store. Bron, 46, is a French national who was most recently CEO of Central and Robinson department stores in Thailand.
Prior to that, he was chief operating officer and director of strategy for Galeries Lafayette, a French retail group in Paris. He also spent more than a decade at Bain & Company as a retail consultant.

Olivier Bron
Bloomingdale’s

By tapping a retail executive who is from another company and country, Macy’s may be hinting at bigger global ambitions for Bloomingdale’s. The chain has a small international presence, with locations in Dubai and Kuwait. Yet Bloomingdale’s flagship store in midtown Manhattan signals its popularity with tourists who flock to New York City. The store’s exterior is decorated with flags from around the world.
Macy’s also has described Bloomingdale’s as “a cornerstone” of one its key strategies — growing its luxury business.

In a news release, Spring described Bron as “an authentic and charismatic leader” who understands Bloomingdale’s brand and is ready to take the company into the future.
“His extensive international retail career and deep knowledge of the luxury market will be invaluable as we pursue additional opportunities for growth,” Spring said.
Bron said in the news release that he’s long admired Bloomingdale’s brand. He said he wants to build on that with “new store formats and continued digital expansion.”
It will mark the first time since 1991 that Macy’s has hired an outside executive as Bloomingdale’s CEO. Spring, who took the helm at the chain in 2014, succeeded Michael Gould, who came from fragrance brand Giorgio Beverly Hills in 1991 after serving as its CEO.
Along with operating 34 stores across the country, Bloomingdale’s has recently experimented by opening smaller stores called Bloomie’s. It has two locations and plans to open another in Seattle, a new market for Bloomingdale’s and the backyard of rival Nordstrom.
Bloomingdale’s also has 20 outlet stores across the U.S.
For Macy’s, Bloomingdale’s has been a growth driver and steadier source of business as some of the company’s legacy department stores have shuttered or struggled. Bloomingdale’s touts designer names and pricier items and tends to draw a more affluent customer.
In the most recent quarter, however, even Bloomingdale’s sales sagged amid greater pressure on consumers’ budgets and a shift toward spending on experiences. Comparable sales declined 2.6% on an owned-plus-licensed basis as customers bought fewer handbags, men’s apparel items and dresses.
Along with its namesake stores, Macy’s includes beauty chain Bluemercury, which saw sales gains in the most recently reported quarter.
Macy’s namesake stores, however, remain the biggest part of the business. The parent company does not split out revenue by store brands, but Macy’s stores make up most of its footprint and draw most of its shoppers.
As of late July, Bloomingdale’s had 4 million active customers on a trailing 12-month basis, compared with 41.5 million active customers at Macy’s and about 736,000 at Bluemercury. More

UPS CEO Carol Tome said the new labor deal with the Teamsters will cost less than the $30 billion outlined by the union.
The company aims to sell the agreement to investors, as its stock has fallen since a tentative deal was announced.
A Teamsters strike would have been the “costliest in a century,” creating a $7 billion hit to the U.S. economy in the first 10 days, according to one report.

UPS CEO Carol Tome introduces U.S. President Donald Trump for an event at a UPS facility at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia, U.S., July 15, 2020. 
Jonathan Ernst | Reuters

UPS CEO Carol Tome said the costs incurred by the company for the new Teamsters contract are less than the “$30 billion in new money” touted by the union, as the company aims to sell investors on the agreement.
“It’s not a $30 billion deal,” Tome told CNBC’s Frank Holland in an exclusive interview on Monday. But Tome declined to reveal the internal projection as the company released its first presentation to investors outlining the labor expenses after the bell Monday.

UPS said 46% of the compensation in the deal would be in the first year. Tome called the agreement cost-effective and fair.
“It’s a barbell structure where it’s heavier in the beginning of the contract.” Tome said. “We’ll go in the middle of the contract and it steps back down. This 46% of the cost increase happens in the first year, so imagine what the last four years of the contract are!”
The increases “are really good for us and a 3.3% compounded annual growth rate,” she added. “That’s a deal we’ll take every day, but it wasn’t just about the money. We’ve got work/life balance for people, while retaining the ability to deliver on the weekend, which is really important for our customers.”

Averting a crisis

The labor contract reached in July prevented a potentially widespread and disruptive work stoppage. A Teamsters strike would have been the “costliest in a century,” creating a $7 billion hit to the U.S. economy in the first 10 days, according to a widely reported estimate from Anderson Economic Group.
It also was another milestone in a summer marked by pushes for massive new contracts — and even strikes —‎ in industries ranging from airlines and automaking to television and film. At UPS, full-time drivers will earn up to $170,000 in pay and benefits in the last year of the contract, while part-time workers will see their starting pay rise from $16.20 to $21 an hour.‏

Official negotiations between UPS and the Teamsters began in April, as union leaders urged members to mobilize and create a “show of force it needs to take on the company.” In June, Teamsters members authorized a UPS strike during the negotiations. Weeks later, both sides accused the other of walking away from the contract talks.
In late July, UPS and the Teamsters announced they had reached a tentative contract agreement. The union ratified the UPS contract on Aug. 25 with record turnout of 58% of members voting and a record 86% approving the deal.

A ‘win-win-win’

After the tentative deal for the Teamsters contract was reached, Tome called it a “win-win-win” for the union, customers and the company.
However, UPS shares have fallen more than 14% since the July 25 announcement. Tome also estimated that UPS lost more than 1 million packages per day in volume in the weeks leading up to the eventual deal.
“We can grow now that we have certainty,” Tome said. “Because we know what our labor costs are over the next five years, we can put together plans to mitigate that cost, plans to drive productivity inside of our business through automation, which, oh by the way, we retained the ability to do so.”
Tome said the win for customers, as the holiday-shipping peak approaches, is the most important part of the deal. U.S. holiday e-commerce sales are expected to increase by 1% year over year to $273 billion, according to a recent forecast from Salesforce.

UPS shifts to modernization strategy

Tome said the Teamsters negotiation was another test of her leadership, rivaling the challenge of becoming CEO of UPS in June 2020 at the height of the Covid-19 pandemic and the beginning of an unprecedented surge in e-commerce.
“We actually started thinking about this contract negotiation the day I onboarded. Where the industry was going, what we needed to survive. We started thinking about this as a strategic imperative,” Tome said.
With the Teamsters contract done, Tome said she is focused on her “Better and Bolder” strategy, the next phase of her initial “Better not Bigger” philosophy which focused on modernizing and maximizing profits at the more than 115-year-old shipping and logistics giant. The “better” part seeks higher margin volume as well as increasing worker and facility productivity, while the “bolder” initiative involves using automation, artificial intelligence and other innovation to capture more business.
“In terms of generative AI, where we can really use this technology is to improve the customer experience,” Tome said. “We have over 12,000 people in our customer care centers around the world, each of them trying to interact with a customer who may have an issue. Think about how it will be when we have a ‘bot’ involved learning from that experience and sharing that learned experience around the world. Not only will it drive productivity but it will give better customer experience.” More