Business

Starbucks, Kraft Heinz and Mondelez are among the companies focusing on premium products during the cost-of-living crisis.
By “beefing up their premium proposition” as well as value products, companies can capture and retain trade-down audiences, says Paul Martin, KPMG’s head of retail.

“As we create more premium beverages, it becomes more difficult for customers to replicate it at home and we think that helps with the concept of trade down,” Starbucks CFO Rachel Ruggeri told CNBC’s “Squawk Box” on Aug. 3.
Gary Hershorn / Contributor / Getty Images

Personalized coffees, “prestige” skincare and “elevated” sauces and spreads are just some examples of how companies like Starbucks, Unilever and Kraft Heinz are tilting their focus toward premium products — and consumers appear to be loving it.
But why are companies zooming in on their pricier offerings when consumers are feeling the effects of the biggest inflation shock in decades?

“Customer insight is key for consumer businesses as the cost of living squeeze tightens,” Paul Martin, KPMG’s U.K. Head of Retail, told CNBC.
“Whilst it’s true that some consumers are having to increasingly turn to value products and watch every penny, it is also the case that other consumers are nervous about the economic outlook but still have money to spend and are in essence trading down to premium products,” Martin said.
“For example, swapping meals out for premium meals in. Whilst this group will also look to save money via the value essentials, they won’t be filling the basket solely with them,” he said.
‘An offering that’s worth paying for’
Starbucks reported record customer counts and sales in the last quarter, beating Wall Street expectations. The results appear to reaffirm the view that some customers aren’t trading down or reducing their spending despite the increasing cost of living.
Designing bespoke products is key to upping customer engagement even when money is tight, Starbucks CFO Rachel Ruggeri told CNBC’s “Squawk Box” on Aug. 3.

“As we create more premium beverages, that’s more difficult for customers to replicate at home and we think that helps with the concept of trade down,” Ruggeri said. “It may mean that maybe a customer doesn’t come as frequently, but we want to ensure that we have reasons for the customers to come into the stores and interact with us.”
Giving customers more flexibility also helped to sell more expensive products and pass on higher costs, Ruggeri said. 
“We’ve been able to do that through our personalization, which is a choice, and what we’ve seen so far is our demand is strong. And that tells us that we have an offering that’s worth paying for,” she said.
The focus on premium products isn’t unique to the largest coffee chain in the U.S.
Kraft Heinz is getting in on the luxury market with the launch of its HEINZ 57 Collection in July. The “chef-inspired” condiments are “designed to add magic to the culinary experience,” according to the company.
This came as the company lifted prices by more than 12% in response to higher transportation, labor and ingredients costs amid rising inflation.

The introduction of more premium products is in addition to redesigns of classic products, according to the company’s U.S. president Carlos Abrams-Rivera.
“One focus is how do we optimize formulas to bring in ingredients that are cheaper,” Abrams-Rivera told CNBC’s “Squawk Box” on July 28. “And how do we customize our products to the different consumers so they can access different products at different price points.”
Treading a similar path is Mondelez. The company announced in June a deal to acquire organic-focused Clif Bar & Company, while all the company’s 2021 acquisitions — Hu Master Holdings, Lion/Gemstone Topco and Gourmet Food Holdings — were described as “premium” in its second-quarter earnings report.
‘Value faces a boom and so does premium’
Unsurprisingly, consumers are also reliant on cheaper products, which companies are also sensitive to.
McDonald’s, for example, attributed some of its growth in the U.S. to its value products in its Q2 2022 earnings report.
Other companies are looking to attract both ends of the market by focusing on higher and lower-priced products.
Nestle CEO Mark Schneider told investors in the company’s half-year results earnings call that the approach has been used before.
“What we’re seeing with the current situation is similar to what happened in previous economic slowdowns and downturns,” Schneider said. “We pay attention to premium products but we also pay attention to affordable products. By covering both ends of this spectrum we’re doing well and we’re serving those needs.”
Appealing to the widest possible customer base is key to maintaining and growing profits in the current economic climate, according to KPMG’s Martin.
“In this landscape, value faces a boom and so does premium. Supermarkets recognize it, including the discounters, who are expanding their core value ranges, but also beefing up their premium proposition. Their aim is to capture and retain all of the trade-down audiences,” Martin said.
Driving desirability and sales
Unilever CEO Alan Jope told CNBC’s “Squawk Box” that the company was seeing a mixture of customers trading up and trading down.
“The premium ranges in our portfolio are actually doing very well … We are seeing some downtrading – that’s on pack size, where people are moving to more affordable formats,” he said on July 26.
In 2014, Unilever launched Prestige, a luxury arm of the conglomerate that now includes Dermalogica, Tatcha and Paula’s Choice.
Described as “a string of pearls” by Executive VP and Group CEO Vasiliki Petrou in December, the model relies on “a certain level of scarcity” to drive desirability and sales.
So far, it appears to have worked. Beauty & Personal Care grew 7.5% in the last quarter, driven by “strong growth” in Prestige Beauty and Health & Wellbeing, according to the company’s Q2 2022 results announcement.
A focus on premium products can also be a more palatable means of tackling inflation costs compared to reducing items or packaging sizes, according to EY global consumer leader Kristina Rogers.
“There is a limit to these actions and considering that input costs continue to rise, companies are looking at how to expand the value of their products,” Rogers told CNBC.
“The only way to grow is therefore to go the premium and added value route. Companies need to demonstrate the added value of their brands and give consumers a good reason to buy higher-priced products,” Rogers said.
“Companies are focusing on increasing the features of their product to extend consumers’ willingness to pay. These features include brand building, higher quality products, sustainability, or health features, to help validate a higher premium to be charged,” she added.

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China’s domestic tourism — a key indicator of retail spending — is on track to make a comeback after dipping to an all-time low during the nation’s worst lockdowns, according to official data and analysts. 
But since the mainland’s biggest lockdown in Shanghai ended in late May, the increase in holiday bookings has indicated that tourism spending would be recovering in the second half of the year, Fitch Ratings said. 
Signs of recovery have appeared across Chinese retail spending which rose 2.7% year-on-year in July following an unexpected 3.1% rise in June although July’s number missed expectations.

China’s domestic tourism — a key indicator of retail spending — is on track to make a comeback after dipping to an all-time low during the nation’s worst lockdowns, according to official data and analysts. 
Since the mainland’s biggest lockdown in Shanghai ended in late May, the increase in holiday bookings has indicated that tourism spending would be recovering in the second half of the year, Fitch Ratings said. 

This buoyancy comes after tourism revenue and numbers in China hit a trough in the first half of 2022 and fell by nearly half compared to the same period in 2019 before the pandemic struck, Fitch added.
“China’s relaxed Covid-19 pandemic-related travel restrictions and more targeted pandemic control measures have fueled a rise in tourism demand, despite ongoing scattered outbreaks,” China-based Fitch Ratings analysts Flora Zhu and Jenny Huang said in a note late last week.
“A slow recovery in the tourism sector has put a drag on the economy given its large contribution, accounting for around 11% of GDP and 10% of national employment in 2019.”

Tourists walk under the full bloomed cherry blossom trees at Jimingsi Road on March 22, 2016 in Nanjing, Jiangsu Province of China.

After a series of relaxations by Beijing — including the easing of inter-provincial group travel bans and the curb of excessive local government mobility controls in June — traveler numbers leapt by over 62% month-on-month in July, Fitch Ratings said, citing official Chinese data. 
Data from online travel agencies such as Tuniu Corporation showed bookings surging 112% over July, Fitch said. 

The daily average tourists at Xinjiang’s top-rated, or “5A-level,” tourist attractions skyrocketed to 110,000 in July compared with 19,000 in May, the Fitch analysts said. Yunnan’s Dali city, a famous tourist spot, attracted 6.9 million tourists — a 46% jump from pre-pandemic levels in 2019, they said.

The recent outbreaks in Hainan, Xinjiang and Tibet are unlikely to pull back the recovery in tourism as there are fewer travelers in these regions compared to the rest of the nation, the Fitch report said.
But recovery, while robust, remains patchy across regions, in particular, short haul travel operators will do better than national scenic spot tourist companies which target national visitors, it added.
Chinese consumers will continue to favor local and shorter trips amid the pandemic, the report said.
The pandemic has also altered domestic Chinese tourism, business consultancy China Briefing said in a note last week.
Group-travel destinations have lost some of their popularity as  Chinese travelers steer toward family vacations, health-care tours and research trips, it said.
CTrip, China’s leading online travel agent, said in its summer tourism report last month that “parent-child” or family travel, as opposed to traditional Chinese big bus tours, has increased.
Signs of recovery have appeared across Chinese retail spending including tourism.
New data on Monday shows July’s retail spending increased 2.7% year-on-year following an unexpected 3.1% rise in June, although the latest result for July fell short of analysts’ expectations of a rise of between 4% and 5%.
These were the first increases in retail spending since February, as consumption picked up after Covid-19 infections and restrictions eased. 
In May, as Shanghai battled its worst lockdown, retail sales were down 6.7% year-on-year.

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Electric vehicles (evs) seem unstoppable. Carmakers are outpledging themselves in terms of production goals. Industry analysts are struggling to keep up. Battery-powered cars could zoom from 8% of global vehicle sales in 2021 to 40% by 2030, according to Bloombergnef. Depending on whom you ask, that could translate to anywhere between 25m and 40m evs. They, and the tens of millions manufactured between now and then, will need plenty of batteries. Bernstein reckons that demand from evs will grow nine-fold by 2030 (see chart 1), to 3,200 gigawatt-hours (gwh). Rystad puts it at 4,000gwh. Such projections explain the frenzied activity up and down the battery value chain. The ferment stretches from the salt flats of Chile’s Atacama desert, where lithium is mined, to the plains of Hungary, where on August 12th catl of China, the world’s biggest battery-maker, announced a €7.3bn ($7.5bn) investment to build its second European “gigafactory”. It is, though, looking increasingly as though the activity is not quite frenzied enough, especially for the Western car companies that are desperate to reduce their dependence on China’s world-leading battery industry amid geopolitical tensions. Prices of battery metals have spiked (see chart 2) and are expected to push battery costs up in 2022 for the first time in more than a decade. In June Bloombergnef cast doubt on its earlier prediction that the cost of buying and running an ev would become as cheap as a fossil-fuelled car by 2024. Even more distant targets, such as the eu’s coming ban on new sales of carbon-burning cars by 2035, may not be met. Could the ev boom run out of juice before it gets started? Giga-ntic promisesOn paper, there ought to be plenty of batteries to go around. Benchmark Minerals, a consultancy, has analysed manufacturers’ declared plans and found that, if they materialise, 282 new gigafactories should come online worldwide by 2031. That would take total global capacity to 5,800gwh. It is also a big “if”. Bernstein calculates that current and promised future supply from the six established battery-makers—byd and catl of China; lg, Samsung and sk Innovation of South Korea; and Panasonic of Japan—adds up to 1,360gwh by the end of the decade The balance would have to come from newcomers—and being a newcomer in a capital-intensive industry is never easy. The optimistic overall capacity projections conceal other problems. Matteo Fini of s&p Global Mobility, a consultancy, notes that gigafactories take three years to build but require longer—possibly a few extra years—to manufacture at full capacity. As such, actual output by 2030 may fall short. Moreover, manufacturers’ unique technologies and specifications mean that cells from one factory are usually not interchangeable with those from another, which could create further bottlenecks.Most troubling for Western carmakers is China’s dominance of battery-making. The country houses close to 80% of the world’s current cell-manufacturing capacity. Benchmark Minerals forecasts that China’s share will decline in the next decade or so, but only a bit—to just under 70%. By then America would be home to just 12% of global capacity, with Europe accounting for most of the rest. Americans’ slower uptake of evs may ease the crunch for carmakers there. Deloitte, a consultancy, expects America to account for just under 5m vehicles of the 31m evs sold in 2030, compared with 15m in China and 8m in Europe. Big American carmakers already have joint ventures with the big South Korean battery producers to build domestic gigafactories. In July Ford and sk Innovation finalised a deal to build one in Tennessee and two in Kentucky, with the carmaker chipping in $6.6bn and the South Korean firm $5.5bn. The same month the Detroit giant struck a deal to import catl batteries. General Motors and lg Energy are together putting over $7bn towards three battery factories in Michigan, Ohio and Tennessee.It is Europe’s carmakers that seem most exposed. Volkswagen, a German giant, plans to construct six gigafactories of its own by 2030. Some, such as bmw, are teaming up with the South Korean firms. Others, including Mercedes-Benz, are investing in European battery-making through a joint-venture called acc. A number of European startups, such as Northvolt of Sweden, which is backed by Volkswagen and Volvo, are also busily building capacity. Yet the continent’s car industry looks likely to remain quite reliant on Chinese manufacturers. Some of those batteries will be manufactured locally: catl’s first investment in Europe, a battery factory in Germany, is set to begin operations at the end of the year. Some packs or their components may, however, still need to be imported from China. That is not a comfortable position to be in for European carmakers. It may become even less so if the eu introduces levies based on total lifecycle carbon emissions from vehicles, including electric ones. Northvolt’s chief executive, Peter Carlsson, reckons that proposed eu tariffs on carbon-intensive imports could add 5-8% to the cost of a Chinese battery made using dirty coal power. That could be roughly equivalent to an extra $500, give or take, per pack. Such rules would boost his firm’s prospects, since it runs on clean Nordic hydroelectricity. It would also severely limit European carmakers’ ability to source batteries from abroad.What’s mined isn’t yoursThese manufacturing bottlenecks, serious though they are, look more manageable than those at the mining end of the battery value chain. Take nickel. Thanks to a big production increase in Indonesia, which accounts for 37% of global output of the metal, the market seems well supplied. However, Indonesian nickel is not the high-grade sort usable in batteries. It can be made into battery-compatible stuff, but that means smelting them twice, which emits three times more carbon than does refining higher-grade ores from places like Canada, New Caledonia or Russia. Those additional emissions defeat the purpose of making evs, notes Socrates Economou of Trafigura, a commodities trader. Carmakers, particularly European ones, may shun the stuff. Cobalt has become less of a pinch point. A price spike in 2018 prompted battery-makers to develop battery chemistries that use much less of it. Planned mine expansions in the Democratic Republic of Congo (drc), home to the world’s richest cobalt deposits, and Indonesia should also tide battery-makers over until 2027. After that things get trickier. Getting more of the stuff may require manufacturers to embrace the drc’s artisanal mining, the formalisation of which has yet to bear fruit. Until it does, many Western carmakers say they would not touch the sector, where adults and many children toil in harsh conditions, with a barge pole.Most uncertainty concerns lithium. A shortage is forcing manufacturers unable to get their hands on enough of the metal to cut production. For now consumer-electronics firms are bearing the brunt. But the smaller batteries in electronic gadgets only represent a fraction of demand. ev-makers, whose battery packs use a lot more, could be next. By 2026 the lithium market is projected to tip back into surplus, thanks to planned new projects. However, most of these are in China and rely on lower-grade deposits which are much costlier to process than those of Australia’s hard-rock mines or Latin America’s brine ponds. Mr Economou estimates that a price of $35,000 per tonne of the battery-usable form of lithium carbonate is required to make such projects worthwhile—lower than today’s lofty levels, but three times those a year ago. The high-grade stuff due to come from elsewhere should not be taken for granted, either. Chile’s new draft constitution, which will be put to referendum in September, proposes nationalising all natural resources. Changes to the tax regime in Australia, which already has some of the highest mining levies in the world, could deter fresh investments in “green”-metal production. In late July the boss of Albemarle, the largest publicly traded lithium producer, warned that, despite efforts to unlock more supply, carmarkers faced a fierce battle for the metal until 2030. Because building mines takes anywhere from five to 25 years, there is little time left to get new ones up and running this decade. Big mining firms are reluctant to get into the business. Markets for green metals remain too small for mining “majors” to be worth the hassle, says the development boss at one such firm. Despite their reputation for doing business in shady places, most lack the stomach to take a gamble on countries as tricky as the drc, where it is hard to enforce contracts. Smaller miners that usually get risky projects off the ground cannot raise capital on listed markets, where investors are queasy about the mining industry, which is considered risky and, ironically, environmentally unfriendly. The resulting dearth of capital is attracting private-equity firms—often founded by former mining executives—and manufacturers with a newfound taste for vertical integration. lg and catl are among the battery producers which have backed mining projects. Since the start of 2021 carmakers have made around 20 investments in battery-grade nickel, and five others in lithium and cobalt. Most of these projects involved Western firms. In March, for example, Volkswagen announced a joint venture with two Chinese miners to secure nickel and cobalt for its ev factories in China. Last month General Motors said it would pay Livent, a lithium producer, $200m upfront to secure lumps of the white metal. The American ev champion, Tesla, is signing deals left and right.Mick Davis, a coal-mining veteran now at Vision Blue Resources, an investment firm that invests in minor miners, doubts that all this dealmaking will be enough to plug the funding gap. Recycling, which usually makes up a quarter of supply in mature metals markets, is not expected to help much before 2030. Tweaks to battery designs may moderate demand for the scarcest metals somewhat, but at the risk of lower battery performance. Lithium in particular will remain hard to substitute. Technologies that do away with it entirely, such as sodium-based cathodes, are a long way off. Helter-smelterEven if the West’s ev industry somehow managed to secure enough metals and battery-making capacity, it would still face a giant problem in the middle of the supply chain, refining, where China enjoys near-monopolies (see chart 3). Chinese companies refine nearly 70% of the world’s lithium, 84% of its nickel and 85% of its cobalt. Trafigura forecasts that the shares for the last two of these will remain above 80% for at least the next five years. And as with battery manufacturers, Chinese refiners gobble up dirty coal-generated electricity. On top of that, according to Trafigura, both European and North American firms are also expected to rely on foreign suppliers, often Chinese ones, for at least half the capacity to convert refined ores into the materials that go into batteries.Western governments say they understand the urgent need to diversify their suppliers. Last year Joe Biden, America’s president, unveiled a blueprint to create a domestic supply chain for batteries. His mammoth infrastructure law, passed in 2021, set aside $3bn for making batteries in America. The Inflation Reduction Act, which Congress passed on August 12th, also includes sweeteners for the battery industry, contingent in part on mining, refining and manufacturing components at home or in allied countries. The eu, which created a bloc-wide battery alliance in 2017 to co-ordinate public and private efforts, says €127bn was invested last year across the supply chain, with an additional €382bn expected by 2030. Most of this is likely to land downstream, helping Europe and America to become self-sufficient in the production of finished cells by 2027. That is something. And it remains possible that enough discoveries of new deposits, more efficient mining technology, improved battery chemistry and sacrifices on performance all combine to bring the market into balance. More likely, as Jean-François Lambert, a commodities consultant, puts it, the ev industry is “going to be living a big lie for quite some time”. ■ More

Electric vehicles (evs) seem unstoppable. Carmakers are outpledging themselves in terms of production goals. Industry analysts are struggling to keep up. Battery-powered cars could zoom from less than 10% of global vehicle sales in 2021 to 40% by 2030, according to Bloombergnef. Depending on whom you ask, that could translate to anywhere between 25m and 40m evs. They, and the tens of millions manufactured between now and then, will need plenty of batteries. Bernstein reckons that demand from evs will grow nine-fold by 2030 (see chart 1), to 3,200 gigawatt-hours (gwh). Rystad puts it at 4,000gwh. Such projections explain the frenzied activity up and down the battery value chain. The ferment stretches from the salt flats of Chile’s Atacama desert, where lithium is mined, to the plains of Hungary, where on August 12th catl of China, the world’s biggest battery-maker, announced a €7.3bn ($7.5bn) investment to build its second European “gigafactory”. It is, though, looking increasingly as though the activity is not quite frenzied enough, especially for the Western car companies that are desperate to reduce their dependence on China’s world-leading battery industry amid geopolitical tensions. Prices of battery metals have spiked (see chart 2) and are expected to push battery costs up in 2022 for the first time in more than a decade. In June Bloombergnef cast doubt on its earlier prediction that the cost of buying and running an ev would become as cheap as a fossil-fuelled car by 2024. Even more distant targets, such as the eu’s coming ban on new sales of carbon-burning cars by 2035, may not be met. Could the ev boom run out of juice before it gets started? Giga-ntic promisesOn paper, there ought to be plenty of batteries to go around. Benchmark Minerals, a consultancy, has analysed manufacturers’ declared plans and found that, if they materialise, 282 new gigafactories should come online worldwide by 2031. That would take total global capacity to 5,800gwh. It is also a big “if”. Bernstein calculates that current and promised future supply from the six established battery-makers—byd and catl of China; lg, Samsung and sk Innovation of South Korea; and Panasonic of Japan—adds up to 1,360gwh by the end of the decade The balance would have to come from newcomers—and being a newcomer in a capital-intensive industry is never easy. The optimistic overall capacity projections conceal other problems. Matteo Fini of s&p Global Mobility, a consultancy, notes that gigafactories take three years to build but require longer—possibly a few extra years—to manufacture at full capacity. As such, actual output by 2030 may fall short. Moreover, manufacturers’ unique technologies and specifications mean that cells from one factory are usually not interchangeable with those from another, which could create further bottlenecks.Most troubling for Western carmakers is China’s dominance of battery-making. The country houses close to 80% of the world’s current cell-manufacturing capacity. Benchmark Minerals forecasts that China’s share will decline in the next decade or so, but only a bit—to just under 70%. By then America would be home to just 12% of global capacity, with Europe accounting for most of the rest. Americans’ slower uptake of evs may ease the crunch for carmakers there. Deloitte, a consultancy, expects America to account for just under 5m vehicles of the 31m evs sold in 2030, compared with 15m in China and 8m in Europe. Big American carmakers already have joint ventures with the big South Korean battery producers to build domestic gigafactories. In July Ford and sk Innovation finalised a deal to build one in Tennessee and two in Kentucky, with the carmaker chipping in $6.6bn and the South Korean firm $5.5bn. The same month the Detroit giant struck a deal to import catl batteries. General Motors and lg Energy are together putting over $7bn towards three battery factories in Michigan, Ohio and Tennessee.It is Europe’s carmakers that seem most exposed. Volkswagen, a German giant, plans to construct six gigafactories of its own by 2030. Some, such as bmw, are teaming up with the South Korean firms. Others, including Mercedes-Benz, are investing in European battery-making through a joint-venture called acc. A number of European startups, such as Northvolt of Sweden, which is backed by Volkswagen and Volvo, are also busily building capacity. Yet the continent’s car industry looks likely to remain quite reliant on Chinese manufacturers. Some of those batteries will be manufactured locally: catl’s first investment in Europe, a battery factory in Germany, is set to begin operations at the end of the year. Some packs or their components may, however, still need to be imported from China. That is not a comfortable position to be in for European carmakers. It may become even less so if the eu introduces levies based on total lifecycle carbon emissions from vehicles, including electric ones. Northvolt’s chief executive, Peter Carlsson, reckons that proposed eu tariffs on carbon-intensive imports could add 5-8% to the cost of a Chinese battery made using dirty coal power. That could be roughly equivalent to an extra $500, give or take, per pack. Such rules would boost his firm’s prospects, since it runs on clean Nordic hydroelectricity. It would also severely limit European carmakers’ ability to source batteries from abroad.What’s mined isn’t yoursThese manufacturing bottlenecks, serious though they are, look more manageable than those at the mining end of the battery value chain. Take nickel. Thanks to a big production increase in Indonesia, which accounts for 37% of global output of the metal, the market seems well supplied. However, Indonesian nickel is not the high-grade sort usable in batteries. It can be made into battery-compatible stuff, but that means smelting them twice, which emits three times more carbon than does refining higher-grade ores from places like Canada, New Caledonia or Russia. Those additional emissions defeat the purpose of making evs, notes Socrates Economou of Trafigura, a commodities trader. Carmakers, particularly European ones, may shun the stuff. Cobalt has become less of a pinch point. A price spike in 2018 prompted battery-makers to develop battery chemistries that use much less of it. Planned mine expansions in the Democratic Republic of Congo (drc), home to the world’s richest cobalt deposits, and Indonesia should also tide battery-makers over until 2027. After that things get trickier. Getting more of the stuff may require manufacturers to embrace the drc’s artisanal mining, the formalisation of which has yet to bear fruit. Until it does, many Western carmakers say they would not touch the sector, where adults and many children toil in harsh conditions, with a barge pole.Most uncertainty concerns lithium. A shortage is forcing manufacturers unable to get their hands on enough of the metal to cut production. For now consumer-electronics firms are bearing the brunt. But the smaller batteries in electronic gadgets only represent a fraction of demand. ev-makers, whose battery packs use a lot more, could be next. By 2026 the lithium market is projected to tip back into surplus, thanks to planned new projects. However, most of these are in China and rely on lower-grade deposits which are much costlier to process than those of Australia’s hard-rock mines or Latin America’s brine ponds. Mr Economou estimates that a price of $35,000 per tonne of the battery-usable form of lithium carbonate is required to make such projects worthwhile—lower than today’s lofty levels, but three times those a year ago. The high-grade stuff due to come from elsewhere should not be taken for granted, either. Chile’s new draft constitution, which will be put to referendum in September, proposes nationalising all natural resources. Changes to the tax regime in Australia, which already has some of the highest mining levies in the world, could deter fresh investments in “green”-metal production. In late July the boss of Albemarle, the largest publicly traded lithium producer, warned that, despite efforts to unlock more supply, carmarkers faced a fierce battle for the metal until 2030. Because building mines takes anywhere from five to 25 years, there is little time left to get new ones up and running this decade. Big mining firms are reluctant to get into the business. Markets for green metals remain too small for mining “majors” to be worth the hassle, says the development boss at one such firm. Despite their reputation for doing business in shady places, most lack the stomach to take a gamble on countries as tricky as the drc, where it is hard to enforce contracts. Smaller miners that usually get risky projects off the ground cannot raise capital on listed markets, where investors are queasy about the mining industry, which is considered risky and, ironically, environmentally unfriendly. The resulting dearth of capital is attracting private-equity firms—often founded by former mining executives—and manufacturers with a newfound taste for vertical integration. lg and catl are among the battery producers which have backed mining projects. Since the start of 2021 carmakers have made around 20 investments in battery-grade nickel, and five others in lithium and cobalt. Most of these projects involved Western firms. In March, for example, Volkswagen announced a joint venture with two Chinese miners to secure nickel and cobalt for its ev factories in China. Last month General Motors said it would pay Livent, a lithium producer, $200m upfront to secure lumps of the white metal. The American ev champion, Tesla, is signing deals left and right.Mick Davis, a coal-mining veteran now at Vision Blue Resources, an investment firm that invests in minor miners, doubts that all this dealmaking will be enough to plug the funding gap. Recycling, which usually makes up a quarter of supply in mature metals markets, is not expected to help much before 2030. Tweaks to battery designs may moderate demand for the scarcest metals somewhat, but at the risk of lower battery performance. Lithium in particular will remain hard to substitute. Technologies that do away with it entirely, such as sodium-based cathodes, are a long way off. Helter-smelterEven if the West’s ev industry somehow managed to secure enough metals and battery-making capacity, it would still face a giant problem in the middle of the supply chain, refining, where China enjoys near-monopolies (see chart 3). Chinese companies refine nearly 70% of the world’s lithium, 84% of its nickel and 85% of its cobalt. Trafigura forecasts that the shares for the last two of these will remain above 80% for at least the next five years. And as with battery manufacturers, Chinese refiners gobble up dirty coal-generated electricity. On top of that, according to Trafigura, both European and North American firms are also expected to rely on foreign suppliers, often Chinese ones, for at least half the capacity to convert refined ores into the materials that go into batteries.Western governments say they understand the urgent need to diversify their suppliers. Last year Joe Biden, America’s president, unveiled a blueprint to create a domestic supply chain for batteries. His mammoth infrastructure law, passed in 2021, set aside $3bn for making batteries in America. The Inflation Reduction Act, which Congress passed on August 12th, also includes sweeteners for the battery industry, contingent in part on mining, refining and manufacturing components at home or in allied countries. The eu, which created a bloc-wide battery alliance in 2017 to co-ordinate public and private efforts, says €127bn was invested last year across the supply chain, with an additional €382bn expected by 2030. Most of this is likely to land downstream, helping Europe and America to become self-sufficient in the production of finished cells by 2027. That is something. And it remains possible that enough discoveries of new deposits, more efficient mining technology, improved battery chemistry and sacrifices on performance all combine to bring the market into balance. More likely, as Jean-François Lambert, a commodities consultant, puts it, the ev industry is “going to be living a big lie for quite some time”. ■ More

Life Changes

Personal bankruptcies fell during the pandemic but as inflation rises and government aid wanes, the rate may soon start to rise again.
Bankruptcy may feel like financial rock bottom but it’s a chance to start again fresh.
It’s best to work with experts to make sure your personal bankruptcy is handled correctly and eases rather than complicates your financial life.

seksan Mongkhonkhamsao

Personal bankruptcy filings have fallen dramatically since the beginning of the coronavirus pandemic, but with interest rates rising and government relief waning, filing numbers will likely pick up through this year, say experts.
“I’ve had more calls in the last few weeks than the previous six months,” said Charles Juntikka, a New York-based lawyer who specializes in bankruptcy law.

Bankruptcy attorney David Leibowitz, head of Chicago-based Lakelaw, said his firm has “already seen filings in the Chicago area pick up by about 25% in the last two months.”
The variety of government stimulus programs, enhanced tax credits and protections against evictions and loan foreclosures put in place in the last two years have reduced the number of bankruptcy filings.

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Here’s a look at other stories offering a financial angle on important lifetime milestones.

However, community lockdowns and general Covid malaise may also be a factor, Juntikka suggests. “It’s hard for people to face the fact that they need to file,” he said. “It takes emotional energy, and they feel guilty about it.
“For every person I help, there are four or five out there who are miserable.”
Bankruptcy may feel like rock bottom for financially strapped Americans, but it is also a new start and an opportunity to get out of hole that only seems to get deeper for many.

It isn’t an easy process. A bankruptcy filing remains on your credit history for 10 years and makes getting a loan or mortgage difficult.

“If you can pay off your debts outside bankruptcy, you should,” said Leibowitz, a past chairman of the consumer bankruptcy committee of the American Bankruptcy Institute. “However, if your wages are being garnished, your car has been seized and you’re being hounded by collection agencies, bankruptcy may be imperative.”
If you’ve decided bankruptcy is your best option, your first decision is whether to hire a lawyer to help you through the process. You can file with the courts on your own, but the cost of mistakes is high.
What chapter of the code should you file under? What forms do you need to complete? What mistakes must you avoid? Bankruptcy law is complex and while you may save money filing on your own, you could lose much more on the back end.
“People don’t do their own dental work,” Juntikka said. “You need to consult a lawyer.”

What to do

The bankruptcy process involves a series of steps and procedures that have to be followed. The kind of bankruptcy filing you choose will depend on your circumstances.
Chapter 7 bankruptcy filings, which account for a significant majority of personal filings, can ultimately discharge most, though not all, personal debts. Alimony, tax debts and student loans are among the liabilities that may remain for petitioners. Most of your property is subject to seizure and sale, although there are some exemptions, such as retirement account balances.

To qualify for Chapter 7, you have to pass a means test. Essentially, your income must be less than the median income of the state where you file. Otherwise, you have to file under Chapter 13 of the code.
In that situation, some unsecured debts may be forgiven and you may be able to keep some personal property, but it basically creates a debt repayment plan, typically over a five-year period.
Here are individual steps you need to take in a bankruptcy filing:

Gather the documents you will need, including tax returns, pay stubs, bank, brokerage and retirement account statements, appraisals of real estate and other assets you own, vehicle registrations and any other documents pertaining to debts you owe or assets you own.
All bankruptcy filers have to complete a credit counselling course both before and after filing. The fee is typically less than $50 and may be waived if you’re unable to pay it.
Fill out and print the appropriate bankruptcy forms, get your filing fee ($338 for a Chapter 7 filing in federal court), file the forms in court and mail the necessary documents to your appointed bankruptcy trustee.
Attend the meeting — likely online — of your creditors with your trustee. It takes place about a month after your case is filed.

All these steps are essential, and having an attorney can help ensure you don’t make mistakes.

What not to do

The biggest mistake people make in bankruptcy filings is trying to game the system. All your assets may be seized in a bankruptcy and failing to disclose all of them can result in criminal charges
Just ask tennis player Boris Becker, currently looking at jail time in the U.K. for hiding assets. Do not transfer property to family or friends before you file. It will be clawed back.

Honest debtors get a fresh start, while dishonest ones can potentially go to jail.

David Leibowitz
head of Lakelaw

Also don’t max out your credit resources before you file. The court will not look kindly upon it. Never use funds from retirement accounts to pay off debt.
“Truth and transparency are critical to the bankruptcy process,” said Leibowitz. “Honest debtors get a fresh start, while dishonest ones can potentially go to jail.”

What to do post-bankruptcy

Declaring bankruptcy can feel like the ultimate failure, but there is life after bankruptcy. Leibowitz advises clients to take the following steps to get their lives back in order:

Establish a budget you can stick to.
Open a savings account and save a month’s worth of income to provide a financial cushion for unexpected expenses.
Get a secured credit card and use it only for expenses you can pay off at the end of the month.
Pay your rent and bills on time.
Check your credit report regularly to make sure no debts discharged in bankruptcy remain outstanding on your profile.

If you follow a disciplined plan, you can quickly improve your credit profile and even be eligible for a Federal Housing Administration mortgage in as little as three years.
“There is such a stigma associated with bankruptcy,” Leibowitz said. “But the idea of rehabilitation and forgiveness is baked into our constitution.
“Bankruptcy can give people a second chance.” More

Beauty has become a rare bright spot for the retail industry despite soaring inflation.
Experts attribute the rise of makeup sales in tough economic times to people indulging in affordable splurges.
Larissa Jensen of The NPD Group said the U.S. is seeing the return of the “lipstick index.”

Target has added new brands to its beauty department. At a growing number of stores, it also has mini Ulta Beauty shops with prestige brands.
Melissa Repko | CNBC

As prices creep up, some people have decided against getting a new outfit, delayed big purchases like TVs or cancelled Netflix accounts.
But for now, they’re still splurging on beauty.

For retailers, the beauty category has become a rare bright spot as people pull back on spending amid surging inflation. Often seen as an affordable luxury, it is the only discretionary retail category with rising unit sales in the first half of the year, according to The NPD Group, which tracks categories including clothing, tech and toys, as well as beauty products at specialty and department stores.
“You may not be able to go out to eat out as much, but you can buy yourself a lipstick,” said Olivia Tong, an analyst for Raymond James.
This spring, Target called out the strength of its beauty sales, even as it twice cut its profit outlook for the year. Walmart is also investing in the category and rolling out new beauty displays to hundreds of stores, despite its warnings that shoppers are skipping over discretionary categories like apparel.
Other factors work in the industry’s favor, too. Weddings and parties have picked up again. More people are heading back to the office, and can no longer hide behind their Zoom filters. And during the pandemic, some people got in the habit of pampering themselves at home with face masks, hair treatments and other beauty products.
Larissa Jensen, a beauty analyst for NPD, called it the return of the “lipstick index” — a term made famous by Leonard Lauder, chairman of the board of Estee Lauder, to explain climbing sales of cosmetics during the recession in the early 2000s.

As consumer sentiment has fallen, lipstick sales volume has climbed, Jensen said. That increase has carried over to other beauty products. Makeup sales, including lipstick, are up 20%, skincare is up 12%, fragrance is up 15% and hair care is up 28% for the first half of the year — and they are all growing in units, as well as dollars, she said.
Much of the beauty category’s growth is coming from households that earn over $100,000 a year, and Jensen said discounters may have a tougher time capitalizing on the trend. Still, beauty’s resilience could provide some cushion for big-box retailers in a slowdown − if they can figure out how to cash in.

Beauty at $3, $5, $9

Walmart and Target both cut their profit forecasts after having to mark down prices on apparel, home goods and other products that aren’t selling. Yet both companies are refreshing their beauty departments and adding new brands to attract customers.
A year ago, Target began opening hundreds of Ulta Beauty shops inside of its stores with brands including MAC Cosmetics and Clinique. The company plans to add more than 250 this year and eventually have the shops at 800 locations, representing about 40% of its U.S. footprint.
And after seeing fragrance become the biggest sales-driver in prestige beauty during the last holiday season, it also added popular fragrance brands to the Ulta shops, including Jimmy Choo Man, Juicy Couture and Kate Spade New York.
Since January, Target has introduced more than 40 brands to its stable of beauty products, including “clean” products that are free of certain ingredients and Black-owned and Black-founded brands.
On an earnings call in mid-May, CEO Brian Cornell said beauty saw double-digit growth in comparable sales in the fiscal first quarter versus the year-ago period. That broke from other categories, besides food and beverage and essentials, which saw a noticeable slowdown.

Walmart has added about a dozen prestige beauty brands to select stores. It struck a deal with British beauty retailer, Space NK, to add the assortment and develop a private label.
Melissa Repko | CNBC

At Walmart, new beauty displays were set up this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology and other brands typically found at specialty beauty shops or department store makeup counters.
A more affordable display called “Beauty Finds” also began rolling to nearly 1,400 stores, offering shoppers lip glosses, lotions and more for $3, $5 or $9.
Walmart has also struck exclusive deals with direct-to-consumer companies like Bubble, a skincare brand with colorful packaging and focus on Gen Z and young millennial customers. For the past few quarters, it has seen double-digit growth in its cosmetics business, said Creighton Kiper, Walmart’s vice president of merchandising for beauty.
“Beauty is this fascinating category where it’s not like food and it’s not like health and wellness, but yet the customer interacts and engages with it every day,” he said in an interview earlier this summer. “You’ve got this mental wellness component to it around confidence and feeling good about yourself.”
When budgets get tighter, Kiper said customers might also fall back on skills they gained during the pandemic — such as doing their nails or hair color at home — and go to Walmart to shop for an at-home twist on the salon.
Ashley Marie Lemons, a stay-at-home mom in suburban Atlanta, said her family is eating out less often because they’re spending more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys hot dogs instead of pricier meats, such as ribs.
But she said she still allows herself to spend about $50 a month on beauty products like eyeshadow pallets and mascaras.
“It’s an outlet for me,” she said. “Some people like art. It’s a creative way for me to express myself.”

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The United Nations’ worst-case scenario calculation is that global food prices will rise by an additional 8.5% by 2027.
More expensive fertilizers are contributed to those higher costs, with some fertilizers spiking 300% since September 2020, according to the American Farm Bureau.

“Last year [fertilizer] was around $270 per ton and now it’s over $1,400 per ton,” Meagan Kaiser, of Kaiser Family Farms and farmer-director of the United Soybean Board, told NBC’s “Nightly News with Lester Holt.”
“It’s scary. It turns my stomach a little bit to think about the amount of risk that our family farm is taking right now.”
Farmers are finding themselves forced to pass some of those costs along to customers, resulting in higher grocery prices.
Fertilizer is essential for crops. Without fertilizer, plants may not get the nourishment they need to result in the yields necessary to meet global demand.
According to the International Fertilizer Association, we would only be able to feed about half of the global population without fertilizer.

Farmers are trying to adjust to this new normal. When surveyed in spring 2022 about what they intended to plant, farmers said they were turning to more soybean, according to U.S. Department of Agriculture data, or a record 91 million acres of the legume. That may be because legumes don’t require as much fertilizer as corn to grow.
Spikes in fertilizer prices started when Russia invaded Ukraine in 2022.
“It’s amazing how dependent the world is on fertilizers from the region that we’re talking about Russia and Ukraine,” Johanna Mendelson Forman, adjunct professor at American University’s School of International Service, told CNBC.
The region is responsible for at least 28% of the world’s fertilizer exports, including nitrogen-, potassium- and phosphorus-based fertilizers, according to Morgan Stanley.
Also factoring into price spikes are rising natural gas costs.
“There’s a direct relationship with what we’re seeing in fuel prices and fertilizer prices,” Jo Handelsman, director of the Wisconsin Institute for Discovery at the University of Wisconsin-Madison, told CNBC.
That’s because fossil fuels are used in the manufacturing process of fertilizers — and is one of the reasons that they can contribute to climate change.
Plus, if farmers overuse fertilizers, the chemicals can run off into waterways, causing environmental damage, pollution and illnesses.
“I’m not saying that the fertilizer is bad … our soil naturally has nutrients,” Ronald Vargas, secretary of the Global Soil Partnership for the United Nations. “If [soil] is naturally depleted, then you need to find a way to make those nutrients available.”
Watch the video above to learn more about the world fertilizer crisis amid supply chain woes and its climate change impact, while exploring potential solutions on the horizon.

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Automakers are investing in towns across the American South.
The new plants bring tax and workforce advantages as the industry moves toward electric vehicles.
But the expansion south comes with unique challenges.

Jack Weaver, an 82-year-old retired dairy farmer whose house sits on a Civil War battlefield, lives near General Motors’ Spring Hill plant in Tennessee.
Michael Wayland / CNBC

SPRING HILL, Tenn. – Jack Weaver can point to a cannon on a Civil War battlefield from the comfort of a shaded bench in his backyard — a visible marker of his land’s rich past. As he speaks about his small town, it’s over the loud rumble of cars and trucks at the intersection in front of his farmhouse red home.
The 82-year-old retired dairy farmer has lived in Spring Hill nearly his entire life. He’s watched the once-quiet town in middle Tennessee grow into a burgeoning Nashville suburb. The evolution of Spring Hill has come in conjunction with a population boom in the state as well as the introduction of new industries — in particular, auto companies — that have poured billions of dollars in new investments into the state.

“It’s good and it’s bad,” says Weaver, who complains about cars hitting his fence and the traffic General Motors’ Spring Hill plant has brought since it opened in 1990. “I’m not against development at all. I’m not. I think a man outta do what he wants with his own land.”
Detroit is the city that “put the world on wheels,” but it’s towns like Spring Hill and others in neighboring states that are attracting the most investments from automakers in recent years, as production priorities shift to a battery-powered future with electric vehicles.
Companies more than ever want to build EVs where they sell them, because the vehicles are far heavier and more cumbersome to ship than traditional models with internal combustion engines. They also want facilities for battery production to be close by to avoid supply chain and logistics problems.
Among the first to invest in southern states was Ford Motor in the 1950s and 1960s in Kentucky, followed by foreign-based, or transplant, automakers starting with Nissan Motor, which established a plant in Smyrna, Tennessee, in 1983. Others such as General Motors, Subaru, Toyota Motor and BMW followed suit through the 1990s. More have followed since then, including recent announcements by Hyundai Motor and Rivian Automotive to build multibillion-dollar plants in Georgia.

As more companies look to the American South, the investments are changing the landscape of towns across the region and of the automotive industry’s workforce, supply chain and logistics. Companies first to set up shop in the South earn early advantages over their northern competitors, and future newcomers, according to officials.

Auto executives say they’re investing in the South for a combination of reasons: lower energy costs, available workforce and livability among them. Many southern states also come with other benefits, potentially controversial, such as all-in lower pay for workers, millions in tax breaks and a largely non-unionized workforce in many of the Republican-controlled, right-to-work states.
But the shift brings unique challenges, too. As the Motor City moves and expands south, it has to grapple with preservation of historic plantation farms, unearthing of slave burial grounds and pushback from citizens and local politicians who aren’t used to the traffic or industries.

Investments shifting

Automakers have announced $45.9 billion of investments in southern states since 2017, according to The Center for Automotive Research, a nonprofit think tank based in Ann Arbor, Michigan. That’s the first year the South outpaced the Midwest, or Great Lakes region, for announced investments since at least 2010.
Midwest states such as Michigan, Ohio and Indiana saw $39.9 billion in announced investments in that same timeframe.
Most of the money heading south – $34.2 billion, or 74% – has come in since last year from traditional automakers such as GM, Hyundai and Ford Motor as well as EV startup Rivian. Others such as Volkswagen and Nissan continue to invest and expand their operations in the South, largely for new electric vehicles.
“We are basically undergoing the single biggest industrial transformation, I would say, not to understate it, in the history of America,” Scott Keogh, CEO at Volkswagen of America, told CNBC in June at the automaker’s new battery lab in Chattanooga, Tennessee. “It’s happening right now in this area.”

Scott Keogh of Volkswagen of America at the VW plant in Chattanooga, TN, June 8, 2022.
Michael Wayland | CNBC

Keogh singled out energy capacity and costs as the top priority for the company’s investments in Tennessee, including the potential for new assembly and battery facilities that the company is “actively” scouting locations for. He and other executives have also cited incentives, tax support, labor and workforce training as other key elements.
Ford CEO Jim Farley put a similar emphasis on the cost and availability of energy in September, announcing an $11.4 billion investment in new vehicle and battery plants in Tennessee and Kentucky.
“We want to work with states who are really excited about doing that training and giving you access to that low energy cost,” Farley told the Associated Press then.
Tennessee has among the lowest electricity prices in the country, according to the most recent data from the U.S. Energy Information Administration. The state’s average industrial price of electricity per kilowatt-hour was 6.31 cents as of May. Michigan’s industrial energy cost was 8.72 cents per kilowatt-hour, and the national average was 8.35 cents.

Mississippi and South Carolina were under 7 cents, while Georgia was 9.05 cents – among the highest in area, according to the U.S. Energy Information Administration.
While those cost differences seem minimal, they add up quickly. Ford’s new battery plants will have an annual capacity for 43 megawatt-hours of production. There are 1,000 kilowatt-hours of electricity in a megawatt-hour, meaning tens of thousands of dollars in savings per year.
The expansion south is expected to continue for years to come, according to AlixPartners. The global consulting firm expects investments from automakers and suppliers in southern states such as Alabama, Georgia and Kentucky to total $58 billion for electric vehicles between 2022 and 2026. That’s nearly four times the $15 billion that’s expected in Midwest states, and $20 billion elsewhere in the country.
“It definitely will change but right now there’s a lot more interest and activity happening in the Southern states, particularly with all these automakers making investments on the EV front,” said Arun Kumar, a managing director in the automotive and industrial practice at AlixPartners.

Southern hospitality

State economic development officials from Tennessee and Georgia say their states have made the automotive industry a priority because of the supply chain jobs that typically follow. They also say electric vehicles have helped to level the playing field for new investments.
“This is almost like a seed field of opportunity, as this industry changes because we’re building the supply chain in the United States for electrification from scratch,” said Pat Wilson, commissioner of Georgia’s economic development unit. “There’s a huge amount of opportunity.”
As of July, EV-related projects contributed more than $12.6 billion in investments and more than 17,800 new jobs in Georgia since 2020, officials said.
Tennessee reports automotive companies have added more than 43,800 new jobs and invested $16.5 billion in private capital in the state since 2012, representing nearly 30% of private capital investments during that time.

Nissan’s Smyrna Vehicle Assembly Plant opened in 1983, marking Tennessee’s first major auto facility. The plant employs more than 7,000 people are produces a variety of vehicles, including the Leaf EV and Rogue crossover.
Michael Wayland / CNBC

With billions of dollars on the line and tens of thousands of new jobs, states have offered enormous incentive packages for the companies in the forms of land, tax abatements/incentives and other support such as installation of utilities and roadways.
For example, Tennessee approved an $884 million incentive package for Ford’s plans to spend $5.6 billion in the state, as well as in-kind services and a $2 million grant for training services. Ford’s investment includes a new electric truck plant and battery facility with supplier South Korea-based SK Innovation.
Bob Rolfe, who oversees The Volunteer State’s economic development, said such actions are needed to compete with others. He said to attract Ford last year the state spent years accumulating enough land for an “electric vehicle mega site” ahead of securing the automaker’s commitment.
“We tell our team every day to continue to recruit. Is enough, enough?” Lewis said ahead of a trip to Japan for automotive recruitment in June. “The more great companies that call Tennessee home, the softer the landing when we do hit the next wind shear that’s going to be developed around the next recession.”

Unique issues

But not all agree that the automotive industry should be expanding South into rural areas. Rivian has faced notable pushback since announcing plans last year to build a $5 billion plant about 45 miles east of Atlanta, Georgia.
While hailed by many politicians, including Gov. Brian Kemp, local news outlets report residents of the rural area are concerned with how it will impact their community. Others, including politicians, oppose a $1.5 billion in tax breaks and other incentives that state and local officials have offered Rivian.

Haynes Haven is a historic landmark in Spring Hill, Tennessee that has been maintained by GM since the automaker built an assembly plant near the site in the 1980s.

“[Union Army General] Sherman and his troops destroyed our community. Now this supposedly green company is coming to destroy it again,” JoEllen Artz told NBC News in May. Artz is president of the grassroots No2Rivian group, which says it has raised over $250,000 and hired Atlanta lawyers to fight the plant. “We want to keep it just like it is.”
Building massive assembly plants in traditionally rural areas can also involve a unique set of challenges.
Decades ago, when GM was building its Spring Hill plant, the company unearthed an unmarked slave graveyard. GM paid for the remains to be moved to a nearby burial site.
“When we invest in properties, we’re also investing in communities, their history and culture,” GM said in an emailed statement to CNBC. “With any building or renovation project, we expect to encounter the unexpected, and we try to work with community members to find solutions to fit the unique needs of each situation. In many cases, like in Spring Hill, the unexpected finds become intertwined in our own history, as well.”
It wasn’t the first time GM has operated around such a site. On the property of its Detroit-Hamtramck plant, there’s an active Jewish graveyard that the company agreed to build around when it built the plant in the 1980s.
And, Nissan is reported to have similarly moved a graveyard in Smyrna, Tennessee – located about 28 miles northeast of Spring Hill – when the automaker built its plant and railroads were installed there in the early 1980s. Nissan did not return request for comment.

GM maintained and updated a historic plantation in Spring Hill, Tenn. called Rippavilla as part of a deal for land to build an assembly plant in the city in the 1980s.
Michael Wayland / CNBC

Since GM’s Spring Hill Assembly plant was built, the company also has maintained two historic plantations as part of land deals struck during the construction. It still maintains one called Haynes Haven, whose historic horse stables were turned into a welcome center and used for other events. The surrounding area is currently being used for employee parking during construction of the company’s new $2.3 billion battery plant, next to the original plant.
The other site, called Rippavilla, sits across the street from the plant and was donated by the company to the city in 2016. It is now being run by a nonprofit organization, The Battle of Franklin Trust, committed to Civil War preservation and education.
“The last people that owned Rippavilla were pretty insistent that they wanted it to be a historic site. They did not want to happen to what happened to Haynes Haven, which Haven is owned by GM and able to use however they see fit,” said Eric Jacobson, CEO of the organization.
Jacobson credits GM with saving and maintaining the site in the form of $100,000 a year up until 2016, when a 10-year deal to maintain the property ended. GM said it continues to support the site.

Battling the union

While the automakers may have to navigate battlefields of the South, they don’t have to worry as much about battling unions.
The United Auto Workers has failed to successfully organize a non-Detroit automaker plant in the South, despite decades of attempts. The prominent union also now faces challenges of organizing joint venture battery plants from GM and Ford in the South.
“It’s a very critical time for the UAW,” Ray Curry, president of the union, told CNBC. “This transformation piece is about our future. It’s about 86-plus years of longstanding history.”

Ford’s more than $11.4 billion investment to build new U.S. facilities in Tennessee and Kentucky is expected to create nearly 11,000 jobs to produce electric vehicles and batteries.
Both GM and Ford officials have said the decision of whether to unionize at their U.S. battery plants, which are joint ventures, will be left to the workers.
While the labor cost gap has narrowed between the Detroit automakers and other non-unionized automotive plants, organized labor costs are higher for the companies.
At the end of a current four-year contract between the Detroit automakers and UAW in 2023, the Center for Automotive Research estimates average hourly labor costs per worker will be $71 for GM; $69 for Ford; and $66 for Stellantis, formerly Fiat Chrysler.
“There’s quite a bit of anti-union attitude that prevails in the international carmakers,” said James Rubenstein, a professor emeritus at the University of Miami Ohio, who specializes in the automotive industry. “It’s a little bit easier to do that down South, to keep the union out.”

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