Business

Mortgage rates soared to the highest level since November 2000, crushing affordability for potential homebuyers.
The average rate on the popular 30-year fixed mortgage hit 7.48%, according to Mortgage News Daily.
The average on the 30-year fixed last year at this time was around 5.5%.

A For Sale sign displayed in front of a home on February 22, 2023 in Miami, Florida. 
Joe Raedle | Getty Images

Mortgage rates jumped Monday, following a rise in bond yields driven by investors’ concerns that high interest rates and inflation will linger longer than expected.
The average rate on the popular 30-year fixed mortgage hit 7.48%, the highest level since November 2000, according to Mortgage News Daily. It has risen 29 basis points in just the past week.

“Investors just aren’t seeing the kind of deterioration in economic data that they expected,” said Matthew Graham, chief operating officer of Mortgage News Daily.
He noted that the Federal Reserve wants to see the same deterioration before considering a policy shift, and that shift would likely favor short-term rates first.
“The net effect is that longer-term rates like 10-year Treasury yields and mortgages are bearing the brunt of the market’s negative rate sentiment. This won’t change until the data forces the Fed to start talking about the first rate cut.”
Higher rates are hitting potential homebuyers hard, adding insult to the injury of Covid pandemic-inflated home prices. Rates set more than a dozen record lows in 2020, setting off a homebuying spree that caused prices to rise over 40% from the start of the pandemic to the summer of 2022. Prices pulled back slightly at the end of last year but are now increasing again due to still-strong demand and very lean supply.
Higher mortgage rates exacerbate the supply situation. Current homeowners are reluctant to list their homes for sale because the vast majority of them have rates around or below 3%. To move to another home would mean more than doubling that rate. It has created what is now being called “golden handcuffs” among potential sellers.

For a buyer today, the difference in affordability from just a year ago is dramatic. The average on the 30-year fixed last year at this time was around 5.5%. For someone buying a $400,000 home, with 20% down on a 30-year fixed loan, the monthly payment today, with principal and interest, is roughly $420 more than it would have been a year ago.
More borrowers are now opting for adjustable-rate loans, which offer lower interest rates for shorter fixed terms. The average rate on a 5-year ARM last week was 6.2%, according to the Mortgage Bankers Association. The ARM share of applications rose to 7%. In 2020, when the 30-year fixed was setting multiple record lows, that share was less than 2%.
The nation’s homebuilders have been trying to offset higher mortgage rates by either buying down those rates for short or long terms, or by lowering home prices. They had slowed those incentives earlier this year, as demand surged and rates fell back, but they recently ramped them up again.
Homebuilder sentiment in August, however, dropped sharply, with builders citing higher interest rates as the main reason. More

The Pentagon’s Space Development Agency on Monday awarded $1.5 billion in contracts to Lockheed Martin and Northrop Grumman for prototype communications satellites.
The 72 satellites will be for a Beta variant in part of SDA’s growing constellation, a network the U.S. military is building to provide encrypted communications through a fleet of hundreds of satellites.
Lockheed’s contract is worth $816 million, and Northrop’s is worth $733 million.

An artist illustration shows the functions of the Space Development Agency’s satellite constellation.
Space Development Agency

The Pentagon’s Space Development Agency on Monday awarded $1.5 billion in contracts to Lockheed Martin and Northrop Grumman for prototype communications satellites.
SDA said the 72 satellites will be for the Beta variant of its Tranche 2 Transport Layer constellation, a network the U.S. military is building to provide encrypted communications through a fleet of hundreds of satellites, which it calls the Proliferated Warfighter Space Architecture.

Lockheed and Northrop will each build 36 of the prototype satellites, scheduled to begin launching by September 2026. Lockheed’s contract is worth $816 million, and Northrop’s is worth $733 million. An SDA spokesperson told CNBC that the agency received six proposals for the contract.

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The Pentagon is increasingly ambitious in space, seeing a need to keep up with China’s growing capabilities in a domain that has widespread ramifications for national security efforts back on Earth. The Space Force has especially seen its budget grow, with $30 billion requested for fiscal 2024. Much of that funding goes to both defense contractors and space companies providing products and services to the military.
The first satellites of SDA’s system launched in April. Those Tranche 0 satellites were the first effort to demonstrate the feasibility of SDA’s network.
In addition to communications, the SDA network aims to provide the U.S. military with features such as missile warning and tracking capabilities. SDA’s network falls under the Space Force’s contribution to the Department of Defense’s Joint All-Domain Command and Control, a project to create a unified network across its military branches.
SDA has previously awarded contracts to build and operate satellites in its fleet to York Space, SpaceX, Lockheed Martin, Northrop Grumman and L3Harris. More

Attend any business conference or open any management book and an encounter with some variation of the same message is almost guaranteed: the pace of change in business is accelerating, and no one is safe from disruption. Recent breakthroughs in artificial intelligence (ai) have left many corporate Goliaths nervously anticipating David’s sling, fearing that they might meet the same fate as firms such as Kodak and Blockbuster, two giants that were felled by the digital revolution.“The Innovator’s Dilemma”, a seminal book written in 1997 by Clayton Christensen, a management guru, observed that incumbents hesitate to pursue radical innovations that would make their products or services cheaper or more convenient, for fear of denting the profitability of their existing businesses. In the midst of technological upheaval, that creates an opening for upstarts unencumbered by such considerations. Yet the reality is that America Inc has experienced surprisingly little competitive disruption during the age of the internet. Incumbents appear to have become more secure, not less. And there is good reason to believe they will remain atop their perches. Consider the Fortune 500, America’s largest companies by revenue, ranging from Walmart to Wells Fargo. Accounting for roughly a fifth of employment, half of sales and two-thirds of profits, they form the backbone of corporate America. The Economist has examined the age of each firm, taking into account the mergers and spin-offs that paint an artificially youthful picture of the group.We found that only 52 of the 500 were born after 1990, our yardstick for the internet era. That includes Alphabet, Amazon and Meta, but misses Apple and Microsoft, middle-aged tech titans. Merely seven of the 500 were created after Apple unveiled the first iPhone in 2007, while 280 predate America’s entry into the second world war (see chart 1). In fact, the rate at which new corporate behemoths arise has been slowing. In 1990 just 66 firms in the Fortune 500 were 30 years old or younger and since then the average age has crept up from 75 to 90.One explanation is that the digital revolution has not been all that revolutionary in some parts of the economy, notes Julian Birkinshaw of the London Business School. Communications, entertainment and shopping have been turned on their heads. But extracting oil from the ground or sending electricity down wires look mostly the same. High-profile flops like WeWork, a much-hyped office-sharing firm now at risk of collapse, and Katerra, a failed one-time unicorn that tried to redefine the construction business by using prefabricated building components and fewer middlemen, have discouraged others from trying to disrupt their respective industries.Another reason is that inertia has slowed the pace of competitive upheaval in many industries, buying time for incumbents to adapt to digital technologies. Although 65% of Americans now bank online, nearly all the banks they use are ancient—the average age of those in the Fortune 500, including JPMorgan Chase and Bank of America, is 138. Fewer than 10% of Americans switched banks last year, according to Kearney, a consultancy. That stickiness has made it difficult for would-be disrupters to build scale before incumbents imitate their innovations. A labyrinthine regulatory system that favours big institutions with well-staffed compliance departments also contributes. The insurance industry, also dominated by geriatric giants like aig and MetLife, is much the same.The pattern is not unique to financial services. Walmart, America’s mightiest retailer, almost missed the rise of e-commerce. David Glass, its chief executive in the 1990s, predicted that online sales would never exceed those of its single largest retail warehouse, according to a recently published book, “Winner Sells All”, by Jason Del Rey, a journalist. Nonetheless, Walmart’s financial heft and enormous customer base gave it the chance to change course later. Only Amazon now sells more online in America. The recent growth of electric vehicles from Ford and General Motors, America’s two largest carmakers, offers another example. Their bulky balance-sheets have allowed them to pour vast amounts of money into reinventing their businesses at a time when raising capital is becoming more difficult for newcomers.A third explanation for the endurance of America’s incumbents is that their scale creates a momentum of its own around innovation. Joseph Schumpeter, the economist who coined the phrase “creative destruction”, first argued that economic progress was propelled mostly by new entrants, noting in “The Theory of Economic Development”, a book published in 1911, that “in general it is not the owner of stage-coaches who builds railways”. By the time Schumpeter published “Capitalism, Socialism and Democracy”, his magnum opus of 1942, he had changed his mind. It was, in fact, large firms—monopolies, even—that drove innovation, thanks to their ability to splash cash on research and development (r&d) and quickly monetise breakthroughs through existing customers and operations, spurred on by an ever-present fear of being toppled.America’s tech titans offer the quintessential illustration. Alphabet, Amazon, Apple, Meta and Microsoft invested a combined $200bn in r&d last year, equivalent to 80% of their combined profits and 30% of all r&d spending by listed American firms. Less obvious examples abound, too. John Deere, America’s largest agricultural-equipment business, founded in 1837, leads the way on recent innovations like driverless tractors and clever sprayers that use machine learning to spot and target weeds. Its ambition is to make farming fully autonomous by 2030, says Deanna Kovar, an executive at the firm. It has been snatching laid-off techies from Silicon Valley and now employs more software engineers than mechanical ones.Incumbents and newcomers also often play complementary roles in innovation. William Baumol, an economist, wrote in 2002 of a “David-Goliath symbiosis” in which radical breakthroughs are generated by independent innovators and then enhanced by established firms. A paper in 2020 by Annette Becker of the Technical University of Munich and co-authors split the r&d spending of a sample of firms into its two components—the more exploratory “research” and the more commercially-oriented “development”—and found that the relative weight of research declined with firm size. Likewise, a 2018 paper by Ufuk Akcigit of the University of Chicago and William Kerr of Harvard Business School found that the patents generated by large firms were less radical and more focused on incremental improvements to existing products and processes.That division of labour may help explain why many startups are bought by established firms. John Deere’s acquisition in 2017 of Blue River, a startup, gave it the technology behind its clever weed sprayer, which it was then able to sell through its vast network of distributors. Over the past decade 74% of venture-capital “exits” in America were via such acquisitions, according to PitchBook, a data provider (see chart 2). That is up from next to none in the 1980s, leading to warnings of a plague of “killer acquisitions”, with big firms eating their potential future rivals. Such nefarious cases do occur, but are rare. A study in 2021 by Colleen Cunningham, then at the London Business School, and co-authors found that 5-7% of acquisitions by pharmaceutical companies, which rely heavily on startups to top up drug pipelines, looked suspect. Most of the time, folding into an established giant is simply the most efficient way for an innovative new firm to bring its breakthroughs to the world.A final explanation for the lack of competitive disruption in corporate America relates to demographics. “Young firms are generally built by young people”, notes John Van Reenen of the London School of Economics. Between 1980 and 2020 the share of the American population aged between 20 and 35 fell from 26% to 20%. The rate of new business formation fell from 12% to 8% over the same period (see chart 3). In a 2019 study comparing variations in population growth and new business formation across states in America, Fatih Karahan of the Federal Reserve Bank of New York and co-authors concluded that falling population growth accounted for 60% of the decline in the business entry rate over the past four decades. Application rates to start new businesses in America surged in late 2020 after plummeting in the early months of the covid-19 pandemic, and have since remained well above pre-pandemic levels. That entrepreneurial burst has largely focused on hospitality and retailing, which were hammered by the pandemic, and over time may peak, especially as household savings, puffed up by the pandemic, dwindle. Optimists will hope that the recent flurry of investment in ai startups can sustain the momentum. Even if it does, the corporate giants of the past may well remain on top. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 
But analysts note that those blockbuster treatments are minimally profitable – and may even come with margin headwinds for some retailers.
That’s because GLP-1s like Novo Nordisk’s Wegovy and Ozempic are branded drugs with low gross margins.

A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 
George Frey | Reuters

Drugmakers aren’t the only ones feeling the impact of the weight loss industry gold rush. 
Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 

But analysts note that those blockbuster treatments are minimally profitable for retail pharmacies – and may even come with margin headwinds.
“More recently, you’re starting to hear retailers talk about these drugs. But I wouldn’t say they’re necessarily beneficiaries of the increased popularity,” Arun Sundaram, an analyst at CFRA Research, told CNBC. “They’re really not making much of a profit on the drugs. So it’s really just a traffic driver and not really a profit pool for retailers.” 
Buzzy drugs like Novo Nordisk’s obesity injection Wegovy and diabetes treatment Ozempic have skyrocketed in popularity over the last year, with high-profile names like billionaire tech mogul Elon Musk among recent users.
Those treatments are known as GLP-1s, a class of drugs that mimic a hormone produced in the gut to suppress a person’s appetite. 
Other drugmakers, such as Eli Lilly and Pfizer, are developing their own GLP-1s in a bid to capitalize on a weight loss drug market that some analysts project could be worth $200 billion by 2030. An estimated 40% of U.S. adults are obese, making successful treatments a massive opportunity for drugmakers. 

But the boom in demand for GLP-1s is also being felt in other parts of the drug supply chain, including the pharmacies that dispense the prescription drugs to patients. 

Are weight loss drugs profitable? 

On an earnings call Thursday, Walmart CEO Doug McMillon said the company expects weight loss drugs to help drive sales for the rest of the year: “We still expect food, consumables, and health and wellness, primarily due to the popularity of some GLP-1 drugs, to grow as a percent total in the back half.” 
In June, likewise, Rite Aid CFO Matthew Schroeder said a jump in pharmacy revenue and the company’s decision to hike its full-year revenue guidance was “due to the increase in sales volume in Ozempic and other high-dollar GLP-1s.” Schroeder was referring to the hefty price tags of GLP-1s, which range from around $900 to $1,300 in the U.S. 
He said those drugs have high sales amounts per prescription, but emphasized that the increased volume of GLP-1s has a “minimal impact” on Rite Aid’s gross profit. 
Kroger CEO Rodney McMullen similarly said during an earnings call in June that GLP-1 drug “sales dollars are a lot bigger than the margin dollars.” 
“We would expect the GLP-1 type drugs to continue but remember, the impact on profitability is pretty narrow,” he said.
That’s because GLP-1s like Wegovy and Ozempic are branded drugs with “very, very low gross margins,” according to CFRA Research’s Sundaram. 
He said retail pharmacies generate high sales for each GLP-1 prescription they dispense but rake in low profits, which is having a slight negative impact on the overall gross margins of retailers like Walmart and Kroger. 
UBS analyst Michael Lasser similarly highlighted in a recent note that gross margins for Walmart’s U.S. business “would have looked even better had it not been for the contribution of the GLP-1 drugs since these carry very low profit rates.”

A selection of injector pens for the Saxenda weight loss drug are shown in this photo illustration in Chicago, Illinois, U.S., March 31, 2023. 
Jim Vondruska | Reuters

Gross margins for branded medications are 3.5% on average for pharmacies, according to a 2017 study from USC’s Schaeffer Center for Health Policy and Economics. That suggests it may take years before a branded drug significantly contributes to a pharmacy’s bottom line.
In contrast, gross margins for generic drugs – the cheaper equivalents of branded medications – are 42.7% on average for pharmacies. 
There are several reasons for the lower margins of branded drugs. For one, branded drugs don’t directly compete with other medications because they have patent protections. That gives drug manufacturers more power when they negotiate drug discounts with wholesalers, which purchase medications and distribute them to pharmacies. 
As a result, there is “little room for wholesalers and pharmacies to capture large margins due to their relative lack of negotiating power,” according to the Association for Accessible Medicines, a trade association representing the manufacturers and distributors of generic prescription drugs. 

What other impacts do retailers face?

But there are also other impacts of GLP-1s to consider beyond a retailer’s pharmacy business.
For companies like Walmart and Kroger, GLP-1 drugs may be indirectly impacting other business categories in a positive way.
That makes some analysts less worried about margin headwinds in pharmacy: “The gross margin headwind is less of a risk overall for Walmart because any footstep in the door often ends up with multiple items in a basket,” KeyBanc analyst Bradley Thomas told CNBC. 
“Walmart is generally not a quick store that you just pop in on the way home,” he said. “They’re going to make multiple purchases, and I think we’re seeing a lot of discretionary categories actually see a lift from some of this incremental traffic they’ve been getting lately.” 
Thomas added that GLP-1 drugs only fall under one part of Walmart’s business: “If you’re listing off the most important things that are driving Walmart’s strong sales performance right now, it’s probably not making the top 10,” he said. 
It’s a slightly different situation for Rite-Aid and similar companies like CVS Health and Walgreens.
Those companies have retail pharmacies but also other business segments that are directly affected in different ways by the boom in GLP-1 drugs.
For example, CVS also operates a health insurer and pharmacy benefit manager, or PBM, which maintains formularies and negotiates drug discounts with manufacturers on behalf of insurers and large employers.
The increased demand for GLP-1 drugs is likely more of a headwind for health insurers since they have to cover the costly drugs for beneficiaries, but CVS says “the risk is manageable” in that business division.
Meanwhile, PBMs may benefit more from the increase in GLP-1 use since they negotiate significant discounts on drugs and drive competition between manufacturers – but they often don’t pass along all of the savings to insurers.
“Each of the businesses kind of has GLP-1 in them and they are impacting them in a variety of different ways,” CVS CEO Karen Lynch said during an earnings call last month.
Correction: The Association for Accessible Medicines is a trade association representing the manufacturers and distributors of generic prescription drugs. An earlier version misstated its name. More

Redwire is putting a biotech technology testbed on Sierra Space’s first mission with its inflatable space habitat.
“We go to space not just for science and discovery, but to improve life on Earth,” Mike Gold, Redwire’s chief growth officer, told CNBC.
Biological and pharmaceutical research and production is seen as a key customer market for microgravity platforms in space.

An ADSEP with blue PIL-BOXs, hardware which will be delivered to Sierra Space for the LIFE habitat pathfinder mission.

Space infrastructure company Redwire is putting a biotech technology test bed on Sierra Space’s first mission with its inflatable space habitat, establishing a new partnership between the two companies to make drugs in orbit.
“It’s an incredible moment for Redwire, an incredible moment for Sierra,” Mike Gold, Redwire’s chief growth officer, told CNBC. “We go to space not just for science and discovery, but to improve life on Earth.”

“I can’t tell you how long I’ve been waiting to say those words. This is the first step in an amazing journey to come,” he added.
Biological and pharmaceutical research and production is seen as a key customer market for microgravity platforms in space. Redwire is not alone in targeting that market, with startups like Varda and Space Forge also working on such test beds.
The idea is to manufacture drugs in space, leveraging the environment to create unique materials, that would be returned for use on Earth.
“Many drugs are based on crystals. In space you can create perfect, or at least different versions of, crystals that can then be leveraged to create new versions of drugs with greater efficacy with the ability to last longer,” Gold said.

An ADSEP facility, primarily supporting regenerative medicine research associated with Redwire’s Bio Fabrication Facility (BFF).

Redwire will include its ADvanced Space Experiment Processors (ADSEP), which process what it calls PIL-BOXs (Pharmaceutical In-space Laboratory – Bio-crystal Optimization Xperiment), when Sierra flies its LIFE (Large Integrated Flexible Environment) habitat on a demonstration mission, expected in 2026.

Redwire currently has an ADSEP on the International Space Station, which was installed in January, and expects to fly three PIL-BOXs on the upcoming SpaceX CRS-28 cargo mission. It’s previously partnered with Eli Lilly to conduct testing with PIL-BOXs, which were developed through a partnership with NASA.

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“The ADSEP is like the Nintendo, and the PIL-BOX is the cartridge you put in it,” Gold said.
The pathfinder mission of a LIFE module will represent the first time it flies in space. Sierra has made steady progress in testing subscale LIFE models, including a test last week at NASA’s Marshall center in Huntsville, Alabama.

An artist’s rendering of a commercial space station in orbit.
Sierra Space

Both Sierra and Redwire are among the five companies developing the Orbital Reef space station, one of several private habitats aiming to be successors to the ISS when it’s expected to be retired at the end of this decade. Orbital Reef is envisioned as a “business park” in space, hosting astronauts for research as well as tourists for exotic excursions.
Gold said this pathfinder LIFE flight will help demonstrate the business case for the larger future station. He also noted that the strategic partnership between the companies includes a road map on revenue and intellectual property sharing that “will become more explicit as we actually go into operations.” More

Space company Axiom raised $350 million in a round that was led by Saudi-owned Aljazira Capital and Korean healthcare investment firm Boryung.
The Houston-based company currently flies private and government astronauts on missions to the International Space Station via launches with SpaceX.
It’s developing technologies including a commercial space station and a lunar spacesuit and has over $2 billion in customer contracts to date.

Chief Engineer Jim Stein wears the new spacesuit during the Axiom Space Artemis III Lunar Spacesuit event at Space Center Houston in Houston, Texas, on March 15, 2023. – “Since a spacesuit worn on the Moon must be white to reflect heat and protect astronauts from extreme high temperatures, a cover layer is currently being used for display purposes only to conceal the suits proprietary design, ” Axion said in a press release.
Mark Felix | Afp | Getty Images

Space company Axiom raised $350 million in a round that was led by Saudi-owned Aljazira Capital and Korean healthcare investment firm Boryung, the company announced on Monday.
Houston-based Axiom trains and flies both private and government astronauts on missions to the International Space Station via launches with SpaceX. It’s developing human spaceflight technologies including a commercial space station and a lunar spacesuit.

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The company said the investment will further its development efforts. It has over $2 billion in customer contracts to date, Axiom said Monday. Its flown two crews to the ISS, including the recently completed Ax-2 mission, and is working to launch its first space station module by 2026.
In a statement, Aljazira Capital CEO and managing director Naif Almesned said backing Axiom is “in line with the Saudi Vision 2030’s transformative approach.” More

Automaker Stellantis has threatened to move production of the current Ram 1500 pickup truck from a factory in suburban Detroit to Mexico, a union leader said Sunday.
Such a move would likely receive some political pushback. It also would potentially impact the union’s membership, as EVs require fewer people to produce them.
UAW President Shawn Fain said he believes relocating the truck production would “be a huge mistake on the part of Stellantis to try it.”

UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC

WARREN, Mich. – Automaker Stellantis has threatened to move production of the current Ram 1500 pickup truck from a factory in suburban Detroit to Mexico, a union leader said Sunday.
United Auto Workers Vice President Rich Boyer, who heads the union’s Stellantis unit, said the automaker has discussed the move during ongoing contract negotiations that are occurring simultaneously but separately between the UAW and General Motors, Stellantis and Ford Motor.

Boyer said the company’s plans would include producing a new all-electric Ram pickup truck at the Sterling Heights Assembly Plant, which currently produces most of the Ram light-duty pickups.
Such a move would likely receive some political pushback. It also would potentially impact the union’s membership, as EVs require fewer workers to produce them. There’s also no guarantee that an all-electric pickup would be as successful as the current internal combustion engine (ICE) model, meaning less job security for members.
Boyer, speaking to hundreds of union members during a “Sunday Solidarity” rally, didn’t hold back his displeasure about the potential plans, calling out Stellantis CEO Carlos Tavares for not caring about U.S. auto workers.
“He don’t give a s*** about the American auto worker,” Boyer said wearing a red UAW shirt with “UNITED WE STAND DIVIDED WE FALL.” “They have said they want to take the Ram 1500 ICE and send it to Mexico.”

Workers build 2019 Ram pickup trucks on ‘Vertical Adjusting Carriers’ at the Fiat Chrysler Automobiles (FCA) Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.
Rebecca Cook | Reuters

Stellantis, which already produces some Ram pickups in Mexico, did not confirm nor deny the potential move, saying in a statement: “Product allocation for our U.S. plants will depend on the outcome of these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.

“As these decisions are fluid and part of the discussions at the bargaining table, we will not comment further.”
UAW President Shawn Fain said he believes relocating the truck production would “be a huge mistake on the part of Stellantis to try it.”
“Those are our jobs and that’s our vehicle. We expect to keep that work,” he said.
Speaking with CNBC after the event, UAW’s Boyer described the ongoing negotiations with Stellantis as “slow and confrontational.”
Fain, who began leading the union earlier this year and has taken a more confrontational tone with the negotiations, said he would like to reach tentative agreements with the companies in the coming weeks ahead of the deals expiring at 11:59 p.m. ET, Sept. 14.

UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.
Michael Wayland / CNBC

“When Labor Day hits, we better have agreements. If we don’t, there’s going to be problems,” Fain said, declining to predict the likelihood of a strike against one or all three of the automakers. “We’re not married to anything right now.”
Fain earlier this month publicly threw a recent proposal from Stellantis into a trash bin during a Facebook Live event with members.
Contract talks between the union and automakers usually begin in earnest in July ahead of mid-September expirations of the previous four-year agreements. Typically, one of the three automakers is the lead, or target, company that the union selects to negotiate with first and the others extend their deadlines. However, Fain has said this year may be different. More

Aldi announced this week it plans to acquire Winn-Dixie and Harveys Supermarket.
With the deal, the German retailer would take over operations of about 400 stores in Florida, Alabama, Georgia, Louisiana and Mississippi.
Even before the deal, the deep discounter had aggressive expansion plans.

Getty Images

No-frills discounter Aldi is the latest grocer to shake up the industry with big moves.
The German retailer announced this week that it plans to acquire about 400 Winn-Dixie and Harveys Supermarket locations across the Southern U.S. As part of the deal, it would take over operations of the stores, which are in Florida, Alabama, Georgia, Louisiana and Mississippi, and put at least some of them under the Aldi name.

The deal is expected to close in the first half of next year.
Aldi is already expanding aggressively across the country. It has more than 2,300 stores across 38 states. Separate from the acquisition, it is on track to open 120 new stores by year-end.
The proposed deal comes as Kroger’s $24.6 billion acquisition of Albertsons is pending. Companies including Amazon and Target are also trying to snap up more grocery market share as inflation-weary consumers continue to buy food and essentials but become more frugal when it comes to other merchandise like clothing and electronics.
Like Trader Joe’s and fellow Germany-based rival Lidl, Aldi relies heavily on its own brands. About 90% of products it carries are Aldi’s private label, which allows it greater scale and lower costs in areas like marketing and the supply chain. Aldi also gets creative to keep costs low, including by reducing the size of a pasta sauce lid and other packaging and using electronic shelf labels that save on labor and materials.
As inflation cools, that could present a new challenge for Aldi — if shoppers revert to old habits like shopping at neighborhood grocery stores that may have higher prices, or opt for a favorite name-brand cereal or more variety. It’s also had to race to keep up with competitors’ online options, prompting Aldi to expand curbside pickup to more stores.

The privately held retailer did not share financial details of the acquisition. But the deal has big implications for publicly traded competitors including Walmart and Kroger, as well as regional grocers.
CNBC spoke to Jason Hart, the CEO of Aldi U.S., about why the company is doing the deal and how it sees Aldi fitting into a fast-changing grocery landscape. His comments were edited for brevity and clarity.
Why was Aldi interested in acquiring Winn-Dixie and Harveys Supermarket? Why acquire rather than build your own hundreds of stores in similar locations?
This acquisition provides us speed to market with quality retail locations, great people and a solid core business in a region of the country, the Southeast, where we’ve already had and experienced significant growth and success, but we also see much more opportunity and there’s much more consumer demand to meet.
Doing this [expanding] on our own organically, that has been our plan, and that has been our trajectory over a number of years, and in the Southeast as well. …. This acquisition really gives us the opportunity to accelerate all of those plans.

Jason Hart, Aldi U.S. CEO
ALDI Creative Quarter Studio/ Katrina Wittkamp

What should shoppers expect to see at those stores on the other side of the acquisition?
We’re currently evaluating which locations we’ll convert to the Aldi format to better support the communities that we’ve now got the opportunity to serve more closely. We’re going to convert a significant amount to the Aldi format after the transaction is closed and over the course of several years.
For those stores we do not convert, our intention is that a meaningful amount of those will continue to operate as Winn-Dixie and [Harveys] Supermarket stores.
In stores that you choose not to convert with the acquisition, will people start to see some of those Aldi products on Winn-Dixie shelves?
We can certainly see and imagine some future synergies and learnings from each other, whether that’s consumer insights, product ideas, merchandising ideas, but at this point, we just don’t have any definitive plans to announce.
What do you think your stores offer that other players like Walmart, Kroger and even Dollar General don’t?
We carry a limited number of SKUs [stock keeping units, the term used to describe each type of product carried by a retailer] first and foremost — a couple of thousand SKUs in our stores versus our competition that may have many times that — that drives higher volume per SKU, driving scale that provides efficiency both in our business and for our suppliers.
The dozens of brands and sizes and small variants of the same product — the result of that [in rival stores] is tens of thousands of products that isn’t necessarily the result of customer demand. It’s more so the brand’s demand for shelf space within those stores. And the result actually can frustrate customers by overcomplicating the shopping experience. At Aldi, we simplify that shopping experience for the customer, offering great quality and great prices.
Why do you think we’re seeing so many big moves in the grocery industry right now?
The way that consumers are shopping is changing quite dramatically. And also the drive to value. And obviously, there are alternative retail formats that are growing quicker than the traditional formats. We’re very proud to be one of those alternative formats that’s really disrupting the industry.
Consumers seem to be willing to try other ways to fill their grocery list, whether that’s through e-commerce, whether that’s through trying out discounters like Aldi, [and] trying out different products like private label.
When consumers are seeing these changes, and seeing other retailers and other products meet their needs, they change their shopping habits.
What are the trends with online and in-store sales now as the pandemic is more in the rearview mirror?
We’re now seeing equal growth in both our bricks-and-mortar sales and in our e-commerce sales. I would anticipate if I was to look at the crystal ball of the future, it’s going to go back to e-commerce growing slightly more than what bricks and mortar is both in the market and for Aldi. More