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    Who’s to Blame for a Factory Shutdown: A Company, or California?

    VERNON, Calif. — Teresa Robles begins her shift around dawn most days at a pork processing plant in an industrial corridor four miles south of downtown Los Angeles. She spends eight hours on her feet cutting tripe, a repetitive motion that has given her constant joint pain, but also a $17.85-an-hour income that supports her family.So in early June, when whispers began among the 1,800 workers that the facility would soon shut down, Ms. Robles, 57, hoped they were only rumors.“But it was true,” she said somberly at the end of a recent shift, “and now each day inches a little closer to my last day.”  The 436,000-square-foot factory, with roots dating back nearly a century, is scheduled to close early next year. Its Virginia-based owner, Smithfield Foods, says it will be cheaper to supply the region from factories in the Midwest than to continue operations here.“Unfortunately, the escalating costs of doing business in California required this decision,” said Shane Smith, the chief executive of Smithfield, citing utility rates and a voter-approved law regulating how pigs can be housed.Workers and company officials see a larger economic lesson in the impending shutdown. They just differ on what it is. To Ms. Robles, it is evidence that despite years of often perilous work, “we are just disposable to them.” For the meatpacker, it is a case of politics and regulation trumping commerce.The cost of doing business in California is a longtime point of contention. It was cited last year when Tesla, the electric-vehicle maker that has been a Silicon Valley success story, announced that it was moving its headquarters to Texas. “There’s a limit to how big you can scale in the Bay Area,” said Elon Musk, Tesla’s chief executive, mentioning housing prices and long commutes.As with many economic arguments, this one can take on a partisan hue.Around the time of Tesla’s exit, a report by the conservative-leaning Hoover Institution at Stanford University found that California-based companies were leaving at an accelerating rate. In the first six months of last year, 74 headquarters relocated from California, according to the report. In 2020, the report found, 62 companies were known to have relocated.Dee Dee Myers, a senior adviser to Gov. Gavin Newsom, a Democrat, counters by pointing to California’s continued economic growth.“Every time this narrative comes up, it’s consistently disproven by the facts,” said Ms. Myers, director of the Governor’s Office of Business and Economic Development. The nation’s gross domestic product grew at an annual pace of 2 percent over a five-year period through 2021, according to Ms. Myers’s office, while California’s grew by 3.7 percent. The state is still the country’s tech capital.Still, manufacturing has declined more rapidly in California than in the nation as a whole. Since 1990, the state has lost a third of its factory jobs — it now has roughly 1.3 million, according to the Bureau of Labor Statistics — compared with a 28 percent decline nationwide.The Smithfield plant is an icon of California’s industrial heyday. In 1931, Barney and Francis Clougherty, brothers who grew up in Los Angeles and the sons of Irish immigrants, started a meatpacking business that soon settled in Vernon. Their company, later branded as Farmer John, became a household name in Southern California, recognized for producing the beloved Dodger Dog and al pastor that sizzled at backyard cookouts. During World War II, the company supplied rations to U.S. troops in the Pacific.Leo Velasquez, 62, started working at the plant in 1990. He had hoped to stay there until he was ready to retire.Mark Abramson for The New York TimesAlmost 20 years later, Les Grimes, a Hollywood set painter, was commissioned to create a mural at the plant, transforming a bland industrial structure into a pastoral landscape where young children chased cherubic-looking pigs. It became a sightseeing destination.More recently, it has also been a symbol of the state’s social and political turbulence.In explaining Smithfield’s decision to close the plant, Mr. Smith, the chief executive, and other company officials have pointed to a 2018 statewide ballot measure, Proposition 12, which requires that pork sold in the state come from breeding pigs housed in spaces that allow them to move more freely.The measure is not yet being enforced and faces a challenge before the U.S. Supreme Court this fall. If it is not overturned, the law will apply even to meat packed outside the state — the way Smithfield now plans to supply the local market — but company officials say that in any case, its passage reflects a climate inhospitable to pork production in California.Passions have sometimes run high outside the plant as animal rights activists have condemned the confinement and treatment of the pigs being slaughtered inside. Protesters have serenaded and provided water to pigs whose snouts stuck out of slats in arriving trucks.In addition to its objections to Proposition 12, Smithfield maintains that the cost of utilities is nearly four times as high per head to produce pork in California than at the company’s 45 other plants around the country, though it declined to say how it arrived at that estimate.John Grant, president of the United Food and Commercial Workers Local 770, which represents Ms. Robles and other workers at the plant, said Smithfield announced the closing just as the sides were to begin negotiating a new contract. “They’re kicking us out with no answers,” said Teresa Robles, who has worked at the factory for four years.Mark Abramson for The New York Times“A total gut punch and, frankly, a shock,” said Mr. Grant, who worked at the plant in the 1970s. He said wage increases were a priority for the union going into negotiations. The company has offered a $7,500 bonus to employees who stay through the closing and has raised the hourly wage, previously $19.10 at the top of the scale, to $23.10. (The rate at the company’s unionized Midwest plants is still a bit higher.)But Mr. Grant said the factory shutdown was an affront to his members, who toiled through the pandemic as essential workers. Smithfield was fined nearly $60,000 by California regulators in 2020 for failing to take adequate measures to protect workers from contracting coronavirus.“After all that the employees have done throughout the pandemic, they’re now all of a sudden going to flee? They’re destroying lives,” said Mr. Grant, adding that the union is working to find new jobs for workers and hopes to help find a buyer for the plant.Karen Chapple, a professor of city and regional planning at the University of California, Berkeley, said the closing was an example of “the larger trend of deindustrialization” in areas like Los Angeles. “It probably doesn’t make sense to be here from an efficiency perspective,” she said. “It’s the tail end of a long exodus.”Indeed, the number of food manufacturing jobs in Los Angeles County has declined 6 percent since 2017, according to state data.  And as those jobs are shed, workers like Ms. Robles wonder what will come next.More than 80 percent of the employees at the Smithfield plant are Latino — a mix of immigrants and first-generation native-born. Most are older than 50. The security and benefits have kept people in their jobs, union leaders say, but the nature of the labor has made it hard to recruit younger workers who have better alternatives.On a recent overcast morning, the air in Vernon was thick with the smell of ammonia. Workers wearing surgical masks and carrying goggles and helmets walked into the plant. The sound of forklifts hummed beyond a high fence.Massive warehouses line the streets in the area. Some sit vacant; others produce wholesale local baked goods and candies. Mario Melendez, who has worked at the plant for a decade, says he feels betrayed by the company.Mark Abramson for The New York TimesMs. Robles started at the Smithfield plant four years ago. For more than two decades she owned a small business selling produce in downtown Los Angeles. She loved her work, but when her brother died in 2018, she needed money to honor his wish to have his body sent from Southern California to Colima, Mexico, their hometown. She sold the business for a couple of thousand dollars, then started at the factory, making $14 an hour.“I was proud,” she said, recalling the early months at her new job.Ms. Robles is the sole provider for her family. Her husband has several health complications, including surviving a heart attack in recent months, so she now shoulders the $2,000 mortgage payment for their home in the Watts neighborhood of Los Angeles. Sometimes her 20-year-old son, who recently started working at the plant, helps with expenses.“But this is my responsibility — it is on me to provide,” she said.Ms. Robles has long recited the Lord’s Prayer every night before bed, and now she often finds herself repeating it throughout the day for strength.“They’re kicking us out with no answers,” she said.Other workers, like Mario Melendez, 67, who has worked at the plant for a decade, shares that unmoored feeling.It’s an honor to know his labor helps feed people across Southern California, he said — especially around the holidays, when the factory’s ribs, ham and hot dogs will be part of people’s celebrations.But the factory is also a place where he contracted coronavirus, which he passed along to his brother, who died of the virus, as did his mother. He was devastated.A truck carrying pigs entering the plant. Animal rights activists have sometimes protested outside.Mark Abramson for The New York Times“A terrible shock,” said Mr. Melendez, who says he feels betrayed by the company.So does Leo Velasquez.He started on the night shift in 1990, making $7 an hour to package and seal bacon. A few years later, he moved to days, working 10-hour shifts.“I’ve given my life to this place,” said Mr. Velasquez, 62.Over the years, his body began to wear down. In 2014, he had shoulder replacement surgery. Still, he had hoped to continue at the factory until he was ready to retire.“That’s not going to happen,” he said. “Where I go from here, I do not know.” More

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    America’s Safety Net for Workers Hurt by Globalization Is Falling Apart

    A 60-year-old program that provides retraining to workers whose jobs are eliminated because of foreign competition has expired, leaving many at risk.WASHINGTON — In September, the lighting factory in Logan, Ohio, where Jeff Ogg has clocked in nearly every day for the last 37 years, will shut its doors, driven out of business by a shift from fluorescent lighting toward LED technology that is often made cheaply in China.At 57, Mr. Ogg is not yet ready to retire. But when he applied to a national retraining program that helps workers who have lost their jobs to foreign competition, he was dismayed to see his application rejected. A follow-up request for reconsideration was immediately denied.The program that Mr. Ogg looked to for help, known as Trade Adjustment Assistance, has for the past 60 years been America’s main antidote to the pressures that globalization has unleashed on its workers. More than five million workers have participated in the program.But a lack of congressional funding has put the program in jeopardy: Trade assistance was officially terminated on July 1, though it continues to temporarily serve current enrollees. Unless Congress approves new money for the $700 million program, it will cease to exist entirely.Established in 1962, trade assistance was intended to help workers whose factory and other jobs were increasingly moving overseas as companies chased cheap labor outside the United States. It provides services like subsidies for retraining, job search assistance, health coverage tax credits and allowances for relocation.But the benefits have been gradually scaled back given a lack of funding, including limiting who qualifies for assistance. A year ago, the program was restricted to workers who make goods, even though jobs in services have also undergone a wave of offshoring as companies set up call centers and accounting departments overseas. In addition, only those whose jobs shifted to countries that have a free-trade agreement with the United States — like Canada and Mexico, but not China — were eligible for assistance.On July 1, the program stopped reviewing new applications and appeals from workers whose applications have been rejected, and it will be phased out.While often criticized as inefficient and bureaucratic, the program has been the country’s primary answer to trade competition for decades. Its disappearance may leave thousands of workers without critical support as they seek new jobs. In 2021, the Department of Labor certified 801 petitions for trade adjustment assistance from various workplaces, covering an estimated 107,454 American workers.The decision over whether to reauthorize the program has become a casualty of an intense fight in Congress over what to include in a sprawling bill aimed at making America more competitive with China. The centerpiece of the legislation is $52 billion in funding for semiconductor manufacturing in the United States, but lawmakers have been clashing over whether to include other provisions related to trade, such as funding for worker retraining.House Democrats had proposed including other trade provisions as well, including measures to increase scrutiny on investments that might send American technology overseas and eliminate tariff exemptions for small-value goods imported from China.The State of Jobs in the United StatesJob gains continue to maintain their impressive run, easing worries of an economic slowdown but complicating efforts to fight inflation.June Jobs Report: U.S. employers added 372,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the sixth month of 2022.Care Worker Shortages: A lack of child care and elder care options is forcing some women to limit their hours or has sidelined them altogether, hurting their career prospects.Downsides of a Hot Market: Students are forgoing degrees in favor of the attractive positions offered by employers desperate to hire. That could come back to haunt them.Slowing Down: Economists and policymakers are beginning to argue that what the economy needs right now is less hiring and less wage growth. Here’s why.On Tuesday, the Senate voted to advance a smaller legislative package that includes funding for the chips industry and broader research and development, but lacks funding for Trade Adjustment Assistance or other trade-related measures. The chips legislation will still require further approval in both the House and Senate.Supporters of Trade Adjustment Assistance say that they will not stop pushing for its reauthorization, and that funding for the program could still be included in other legislation.Senator Sherrod Brown, Democrat from Ohio, blamed Republican lawmakers for “holding T.A.A. hostage” and said he would continue fighting to reauthorize the program.“They have sold out American manufacturing over and over by voting for trade deals and tax policy that send jobs overseas, and continue to block investments to empower workers who lose their jobs because of those bad trade deals,” Mr. Brown said in emailed remarks. “T.A.A. serves workers — like those in Logan, Ohio — who have their lives upended through no fault of their own.”The program and its benefits are already out of reach for Mr. Ogg and 50 others who work at the Logan plant, which manufactures the glass tubes in fluorescent lighting fixtures that were once ubiquitous in schools and offices. The plant tried to transition to making LED lights in recent years, but found those lights could be purchased more cheaply from abroad.“Our plant, our people, most of them have been there 25-plus years,” said Mr. Ogg, who is the president of the local United Steelworkers union. “You work in the same place that long, that’s all you know.”Mr. Ogg said he had no complaints about his career at the plant, where he estimates the average wage is between $25 and $30 an hour — enough for him to buy a home and raise three children. But he’s feeling unsure about what to do next. He previously worked as a mechanic, but said the type of machinery that he had worked on was no longer around.“A lot has changed,” Mr. Ogg added. “If you’ve been stuck in one place for 30-some years, you’re going to need some help to go to the next level.”Trade Adjustment Assistance was intended to do just that — help workers who need new skills to compete in a more globalized economy. The program offered income support to workers who lost their jobs and exhausted unemployment benefits while they retrained for other jobs. Those who are 50 and older and take on lower-paying jobs could qualify for a wage insurance program that temporarily boosted their take-home pay.Some academic research has found benefits for those who enrolled in the program. Workers gave up about $10,000 in income while training, but 10 years later they had about $50,000 higher cumulative earnings than those who did not retrain, according to research from 2018 by Benjamin G. Hyman, an economist at the Federal Reserve Bank of New York.Still, those relative gains decayed over time, Mr. Hyman’s research shows. After 10 years the incomes of those who received assistance and those who did not were the same — perhaps because the jobs that workers in T.A.A. trained for had also become obsolete as a result of automation and trade competition. Yet Mr. Hyman concluded that earnings returns from the program “may be larger and more effective than previously thought.”The United Steelworkers Local 1999 in Indianapolis, which fought to save manufacturing jobs from companies like Rexnord, which moved its operations to Mexico in 2017.Alyssa Schukar for The New York TimesThe program fell victim to concerns over its expense and efficiency, as well as what was left out of the broader package of trade legislation. In the past, the funding for the program was coupled with something called Trade Promotion Authority, which streamlined the process for congressional approval of U.S. trade agreements.The combination of Trade Promotion Authority and Trade Adjustment Assistance was a political formula that worked for decades, said Edward Alden, a senior fellow at the Council on Fore­­­ign Relations. Presidents promised businesses more access to foreign markets, and they made commitments to providing labor unions and their supporters with compensation if jobs were lost in the process.But American views on trade have turned more negative in recent years, as China began dominating global industries and as income inequality widened. Democrats have grown so disillusioned with the effects of global trade and split over its benefits that the Biden administration has declined to push for new pacts.Before writing any new trade deals, Mr. Biden said he would first focus on boosting American competitiveness, including by investing in infrastructure, clean energy, and research and development. And when Trade Promotion Authority expired last year, Biden administration officials did not lobby Congress to reauthorize it.Some Republicans are balking at reapproving trade adjustment assistance when the president shows little intention to open up new overseas business opportunities through trade agreements.“America’s on the sidelines right now on trade, and President Biden’s moratorium on new trade agreements seems firm,” Representative Kevin Brady, Republican of Texas, told reporters late last month. “There would have to be a much stronger ironclad commitment to resuming American leadership in trade to even begin this discussion on extending T.A.A.”“We’re open to creative ideas here, but if we don’t have a serious, significant trade agenda that opens up markets for American workers, T.A.A. doesn’t make much sense,” Mr. Brady added.Mr. Biden’s plans to boost American competitiveness have only been partly fulfilled. While Congress approved billions of dollars for new infrastructure investments, other aspects of the president’s domestic agenda, including funding for the energy transition, have crumbled. Lawmakers have struggled to amass the support even for legislation in favor of expanded funding for the semiconductor industry, which is widely seen as key to American industry and national security.With so many other legislative goals at stake, the termination of a decades-old solution to the economic trade-offs of free trade has garnered little attention.“The old consensus on trade is gone,” said Mr. Alden of the Council on Foreign Relations. “And we don’t have a new one.”Catie Edmondson More

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    GM Quarterly Sales Fall Amid Shortage in Computer Chips and Other Parts

    The auto industry is facing worrying signs all across its horizon, including rising interest rates and fears of a recession.But the biggest problem still seems to be making enough cars.General Motors said Friday that its U.S. deliveries of new vehicles in the second quarter declined 15 percent from a year earlier, while Toyota Motor reported a drop of 23 percent in U.S. sales. The obstacle continues to be an inability to get enough computer chips to finish vehicles.For now, at least, consumers are still eager to buy. Manufacturers are selling practically every car or truck they make and have seen no sign that inventory is building up on dealer lots, even as new-vehicle prices have climbed to record highs.“That tells me that the vehicles are still moving, and that’s probably the No. 1 thing that I’m looking at,” Paul Jacobson, the chief financial officer of General Motors, told financial analysts at a conference last month.G.M. sold 582,401 cars and light trucks from April to June, down from 688,236 a year earlier. Toyota sold 531,105, down from 688,813. Honda said its U.S. sales fell 51 percent to 239,789 vehicles.G.M. noted that its factories were holding 95,000 vehicles manufactured without certain electric components that were in short supply because of the chip shortage.At times automakers have dropped some features from vehicles because they or their suppliers didn’t have the chips they require. Honda has shipped vehicles without advanced parking sensors, and Volkswagen has produced models that don’t have blind-spot monitors that the vehicles would normally include.G.M. plans to install the missing parts in its vehicles when they become available and then make deliveries to dealers.If those vehicles had been shipped, its second-quarter sales would probably have been nearly level with its year-ago total.“We will work with our suppliers and manufacturing and logistics teams to deliver all the units held at our plants as quickly as possible,” said Steve Carlisle, executive vice president and president, North America.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.In a filing with the Securities and Exchange Commission, G.M. said the backlog would affect second-quarter net income, which it projected to be $1.6 billion to $1.9 billion. A consensus of analysts’ forecasts compiled by Bloomberg had pointed to earnings of $2.4 billion.Because the company expects to ship most or all of the 95,000 partly completed vehicles by the end of the year, it reaffirmed its full-year outlook for net income of $9.6 billion to $11.2 billion.That may be why G.M.’s stock rose on Friday despite the lowered forecast. Its shares ended the day 1.3 percent higher, outpacing the overall market.But that outlook also assumes that demand will hold up as threats to the U.S. economy mount. Consumers are being squeezed by rising prices for gasoline and groceries. The average price paid for new vehicles in May was $47,148, up more than $5,000 from a year earlier, and the average monthly car payment was over $700, more than $100 higher than a year earlier, according to data from Cox Automotive, a market researcher. Since new models are in short supply, consumers are often paying $3,000 or more above sticker prices.And last month, the Federal Reserve increased its benchmark interest rate by three-quarters of a point, in a bid to slow the economy and tamp down inflation, and has indicated that further increases may be necessary. Higher interest rates make home and auto loans more expensive, and the Fed’s move has already resulted in a slight slowdown in housing.Some economists believe the risk of a recession is moderated by the increased savings that most consumers have built up since the coronavirus pandemic started in 2020. Eighty percent of consumers have more money in their checking accounts now than two years ago, Jonathan Smoke, the chief economist of Cox Automotive, told reporters this week on a conference call.“These consumers are able to withstand inflation because they’ve got quite a bit of cushion and their wage growth is strong enough to deal with pricing increases,” he said.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Companies Brace for Impact of New Forced Labor Law

    Billions of dollars could be at stake as a law banning imports of products from China goes into effect.WASHINGTON — A sweeping new law aimed at cracking down on Chinese forced labor could have significant — and unanticipated — ramifications for American companies and consumers.The law, which went into effect on Tuesday, bars products from entering the United States if they have any links to Xinjiang, the far-western region where the Chinese authorities have carried out an extensive crackdown on Uyghur Muslims and other ethnic minorities.That could affect a wide range of products, including those using any raw materials from Xinjiang or with a connection to the type of Chinese labor and poverty alleviation programs the U.S. government has deemed coercive — even if the finished product used just a tiny amount of material from Xinjiang somewhere along its journey.The law presumes that all of these goods are made with forced labor, and stops them at the U.S. border, until importers can produce evidence that their supply chains do not touch on Xinjiang, or involve slavery or coercive practices.Evan Smith, the chief executive at the supply chain technology company Altana AI, said his company calculated that roughly a million companies globally would be subject to enforcement action under the full letter of the law, out of about 10 million businesses worldwide that are buying, selling or manufacturing physical things.“This is not like a ‘picking needles out of a haystack’ problem,” he said. “This is touching a meaningful percentage of all of the world’s everyday goods.”The Biden administration has said it intends to fully enforce the law, which could lead the U.S. authorities to detain or turn away a significant number of imported products. Such a scenario is likely to cause headaches for companies and sow further supply chain disruptions. It could also fuel inflation, which is already running at a four-decade high, if companies are forced to seek out more expensive alternatives or consumers start to compete for scarce products.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.Lessons From History: Henry Ford believed short-term interests must not squeeze out investment in a business’ resilience. His management philosophy yields powerful insights about the current crisis.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.Failure to fully enforce the law is likely to prompt an outcry from Congress, which is in charge of oversight.“The public is not prepared for what’s going to happen,” said Alan Bersin, a former commissioner of U.S. Customs and Border Protection who is now the executive chairman at Altana AI. “The impact of this on the global economy, and on the U.S. economy, is measured in the many billions of dollars, not in the millions of dollars.”Ties between Xinjiang and a few industries, like apparel and solar, are already well recognized. The apparel industry has scrambled to find new suppliers, and solar firms have had to pause many U.S. projects while they investigated their supply chains. But trade experts say the connections between the region and global supply chains are far more expansive than just those industries.According to Kharon, a data and analytics firm, Xinjiang produces more than 40 percent of the world’s polysilicon, a quarter of the world’s tomato paste and a fifth of global cotton. It’s also responsible for 15 percent of the world’s hops and about a tenth of global walnuts, peppers and rayon. It has 9 percent of the world’s reserves of beryllium, and is home to China’s largest wind turbine manufacturer, which is responsible for 13 percent of global output.Direct exports to the United States from the Xinjiang region — where the Chinese authorities have detained more than a million ethnic minorities and sent many more into government-organized labor transfer programs — have fallen off drastically in the past few years. But a wide range of raw materials and components currently find their way into factories in China or in other countries, and then to the United States, trade experts say.In a statement on Tuesday, Gina Raimondo, the secretary of commerce, called the passage of the law “a clear message to China and the rest of the global community that the U.S. will take decisive actions against entities that participate in the abhorrent use of forced labor.”The Chinese government disputes the presence of forced labor in Xinjiang, saying that all employment is voluntary. And it has tried to blunt the impact of foreign pressure to stop abuses in Xinjiang by passing its own anti-sanctions law, which prohibits any company or individual from helping to enforce foreign measures that are seen as discriminating against China.Though the implications of the U.S. law remain to be seen, it could end up transforming global supply chains. Some companies, for example in apparel, have been quickly severing ties to Xinjiang. Apparel makers have been scrambling to develop other sources of organic cotton, including in South America, to replace those stocks.But other companies, namely large multinationals, have made the calculation that the China market is too valuable to leave, corporate executives and trade groups say. Some have begun walling off their Chinese and U.S. operations, continuing to use Xinjiang materials for the China market or maintain partnerships with entities that operate there.Uyghur workers at a factory in Xinjiang, China, in 2019. A wide range of raw materials and components from Xinjiang currently find their way into factories in China or in other countries, and then to the United States.Gilles Sabrié for The New York TimesIt’s a strategy that Richard Mojica, a lawyer at Miller & Chevalier Chartered, said “should suffice,” since the jurisdiction of U.S. customs extends just to imports, although Canada, the United Kingdom, Europe and Australia are considering their own measures. Instead of moving their operations out of China, some multinationals are investing in alternative sources of supply, and making new investments in mapping their supply chains.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    Ford Plans 6,000 New Union Jobs in Three Midwestern States

    Ford Motor said on Thursday that it was planning to invest $3.7 billion in facilities across the Midwest, much of it for the production of electric vehicles, which the company said would create more than 6,000 union jobs in the region.“We’re investing in American jobs and our employees to build a new generation of incredible Ford vehicles,” Jim Farley, the company’s president and chief executive, said in a statement. “Transforming our company for the next era of American manufacturing requires new ways of working.”The announcement, made jointly with the United Automobile Workers union, detailed investments in three states. Ford said it would invest $2 billion and create about 3,200 union jobs in Michigan, including many tied to production of the new F-150 Lightning pickup truck, the company’s highest-profile and most important bet on electric vehicles.In Ohio, Ford will spend over $1.5 billion and create nearly 2,000 union jobs, primarily to build commercial electric vehicles in the middle of this decade. The company also said it would add over 1,000 union jobs at an assembly plant in Kansas City, Mo., that will produce commercial vans, some gas-powered and some electric.The company had indicated that some of the investments would be coming, like the expansion of production capacity for the F-150 in Michigan, but had not detailed the magnitude.The moves follow Ford’s announcement last year that it would build four factories in Kentucky and Tennessee — three battery factories for electric vehicles and a truck assembly plant — irking union officials and elected leaders in Midwestern states, who worry about losing manufacturing jobs to the South.In addition to the new Midwestern jobs, Ford said it would convert nearly 3,000 temporary jobs into permanent full-time positions before the date that its contract with the U.A.W. calls for — which is after two years of employment.“We are always advocating to employers and legislators that union jobs are worth the investment,” the U.A.W. president, Ray Curry, said in a statement. “Ford stepped up to the plate by adding these jobs and converting 3,000 U.A.W. members to permanent, full-time status with benefits.”Assembling the F-150 Lightning at the Dearborn Truck Plant. Ford will add about 3,200 jobs in Michigan, many tied to the electric truck’s production.Brittany Greeson for The New York TimesSam Abuelsamid, an auto industry analyst at Guidehouse Insights, said the changes were important as a way to help Ford attract and retain labor in a tight job market, while potentially helping the company avoid costly labor unrest during negotiations over a contract that expires next year as it spends billions on the transition to electric vehicles. A six-week strike by workers at General Motors in 2019 cost that company billions of dollars.“I’m sure one thing Ford would absolutely love to avoid is the potential for a strike,” Mr. Abuelsamid said. “Keeping a positive relationship with the U.A.W. now is to their benefit.”But the investments appear unlikely to substantially diminish the broader threat that the shift toward electric vehicles poses to the autoworkers union and to employment in the U.S. vehicle manufacturing industry, which stands at around one million.“It’s about changing the perception of what’s happening,” Mr. Abuelsamid said. “It’s a balancing act between your work force and your investors,” who would prefer to see labor costs rise more slowly or decline at unionized automakers like Ford and General Motors.Because electric vehicles incorporate far fewer moving parts than gasoline-powered vehicles, they require significantly less labor — about 30 percent less, according to figures that Ford has generated.As a result, estimates suggest that the toll of electrification on auto industry jobs could be significant absent large new government subsidies. A report released in September by the liberal Economic Policy Institute, which has ties to organized labor, found that the auto industry could lose about 75,000 jobs by 2030 without substantial government investment.By contrast, the report found, if additional government subsidies encourage the domestic manufacturing of components and greater market share for vehicles assembled in the United States, the industry could add about 150,000 jobs over the same period.President Biden has backed substantial subsidies for electric vehicles, including vehicles made by unionized employees, but those measures have languished in the Senate and their prospects are uncertain.In the meantime, much of the job growth tied to electric vehicles has occurred at nonunion facilities owned by newer automakers like Tesla, Rivian and Lucid, or U.S.-based battery facilities owned wholly or in part by foreign companies like the South Korean manufacturers SK Innovation and LG Chem.In Thursday’s announcement, Ford noted that its new battery and vehicle production facilities in the South would create about 11,000 jobs. But those employees will not automatically become union members, and workers in those states tend to face an uphill battle in unionizing.For investors, however, Ford’s additional investments in electric vehicles appears to be welcome news as the company seeks to reinvent itself amid competition from the likes of Tesla and Rivian. Ford’s stock price, which had dropped substantially this year, rose more than 2 percent on Thursday.Ford also said Thursday that it sold 6,254 electric vehicles in May, a jump of more than 200 percent from a year earlier. That number included 201 F-150 Lightnings, which the company started producing in April.The company has about 200,000 reservations for the Lightning, which is central to its efforts to catch up to Tesla, and stopped accepting new ones because production will take months to meet demand.Ford indicated that sales of the truck would be much higher in the coming months as production increased and trucks in transit reached dealerships. Ford is aiming to produce 150,000 Lightning trucks a year by the end of 2023.Sales of electric vehicles — and conventional cars — have been limited by a shortage of computer chips. Ford’s overall sales of new vehicles in May fell 4.5 percent from a year earlier. Auto executives are also increasingly worried that the supply of lithium, nickel and other raw materials needed to make the batteries that power electric cars is not keeping up with the growing demand for those vehicles.Vikas Bajaj More

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    In South Korea, Joe Biden Seeks to Rebuild Economic Ties Across Asia

    The president plans to unveil a new regional economic framework, but some in the region wonder whether it will be an empty exercise.PYEONGTAEK, South Korea — When President Biden arrived on his inaugural mission to Asia on Friday, the first place he headed from the airplane was not a government hall or embassy or even a military base, but a sprawling superconductor factory that represented the real battleground of a 21st-century struggle for influence in the region.The choice of destination to begin a five-day trip to South Korea and Japan underscored the challenges of Mr. Biden’s effort to rebuild American ties to a region where longtime allies have grown uncertain about Washington’s commitments amid anti-trade sentiment at home, while China has expanded its dominance in the economic arena.The president hopes to lure countries back into the American orbit despite his predecessor Donald J. Trump’s decision five years ago to abandon a far-reaching trade pact known as the Trans-Pacific Partnership — but not by rejoining the economic bloc, even though it was negotiated by the Obama administration that he served as vice president. Instead, under pressure from his liberal base at home, Mr. Biden plans to offer a far less sweeping multinational economic structure that has some in the region skeptical about what it will add up to.Mr. Biden will formally unveil the Indo-Pacific Economic Framework on Monday in Tokyo, bringing together many of the same countries from the trade partnership to coordinate policies on energy, supply chains and other issues, but without the market access or tariff reductions that powered the original partnership. Eager for American leadership to counter China, a number of countries in the region plan to sign up and hail the new alignment but privately have expressed concern that it may be an empty exercise.The framework is essentially “a new packaging of existing Biden administration priorities in this economic policy area,” said Scott A. Snyder, the director of U.S.-Korea policy at the Council on Foreign Relations. “And whether or not it really takes off depends on whether partners believe that there’s enough there there to justify being engaged.”Mr. Snyder added that he thought South Korea, for one, was taking seriously the Biden administration’s commitment to invest in the region. “I think they’re believing,” he said. “And we’ll see whether they’re whistling past the graveyard.”But even Mr. Biden’s own ambassador to Japan, Rahm Emanuel, acknowledged the uncertainty in the region over the new economic framework. Countries want to know, “what is it we are signing up for?” he told reporters in Tokyo on Thursday. Is this an alternative to the Trans-Pacific Partnership? “Yes and no,” he said.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.A New Normal?: The chaos at ports, warehouses and retailers will probably persist through 2022, and perhaps even longer.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.The framework is not a traditional free trade agreement but instead an architecture for negotiation to address four major areas: supply chains, the digital economy, clean energy transformation and investments in infrastructure. Jake Sullivan, the president’s national security adviser, said it would be “a big deal” and a “significant milestone” for relations with the region.“When you hear some of the, ‘Well, we don’t quite know. We’re not sure because it doesn’t look like things have looked before,’ I say, ‘Just you wait,’” he told reporters on Air Force One as it made its way across the Pacific. “Because I think this is going to be the new model of economic arrangement that will set the terms and rules of the road for trade and technology and supply chains for the 21st century.”Mr. Sullivan said there will be “a significant roster of countries” joining the framework when Mr. Biden kicks it off on Monday, but administration officials have not identified which countries. Japan, which has signaled that it would rather the United States rejoin the Trans-Pacific Partnership, will nonetheless embrace the new framework as the best it can get at the moment, as will South Korea. Singapore, Thailand and the Philippines have indicated interest in joining, while India and Indonesia have expressed some reservations.Prime Minister Pham Minh Chinh of Vietnam said this month that it was still not clear what the new framework would mean in concrete terms. “We are ready to work alongside the U.S. to discuss, to further clarify what these pillars entail,” he said at a forum held by the Center for Strategic and International Studies.The Financial Times reported that the administration had diluted the language of the organizing statement to entice more countries to join. Some countries are concerned that the United States will force labor and environmental standards on them without the trade-offs of better trading terms, which are off the table because of liberal opposition within Mr. Biden’s party.“There’s a reason that the original T.P.P. was derailed,” Senator Elizabeth Warren, Democrat of Massachusetts, said at a hearing last month. “It would have off-shored more jobs to countries that use child labor and prison labor and pay workers almost nothing. Let me be clear: The I.P.E.F. cannot be T.P.P. 2.0.”Mr. Emanuel said the administration would describe the new framework process as a “consultation to negotiation,” as he put it. “We have to have an approach that respects countries where they are,” he said. “Meaning where Japan is or where Australia is, is not necessarily where Vietnam or Thailand or the Philippines are.”Moreover, he said, the administration wanted a framework that could survive beyond Mr. Biden’s presidency, unlike the Trans-Pacific Partnership. “We have an interest in saying we are still a player in the Pacific, and China has an interest in saying the U.S. is on its way out,” Mr. Emanuel said.Mr. Biden’s visit to the Samsung semiconductor facility immediately after disembarking from Air Force One served as a reminder of how critical the region is to his immediate priority of unsnarling the supply chain problems that have hurt American consumers back home.Shortly after landing at Osan Air Base, Mr. Biden joined President Yoon Suk-yeol of South Korea at the plant, praising it as a model for the type of manufacturing that the United States desperately needs to head off soaring inflation and to compete with China’s growing economic dominance.“This is an auspicious start to my visit, because it’s emblematic of the future cooperation and innovation that our nations can and must build together,” Mr. Biden said, noting that Samsung will invest $17 billion to build a similar plant in Taylor, Texas.“Our two nations work together to make the best, most advanced technology in the world,” Mr. Biden added, surrounded by monitors showing Samsung employees listening to his remarks. “And this factory is proof of that, and that gives both the Republic of Korea and the United States a competitive edge in the global economy if we can keep our supply chains resilient, reliable and secure.”Employees at the Samsung plant. Mr. Biden’s commerce secretary warned this year that the United States was facing an “alarming” shortage of semiconductors.Doug Mills/The New York TimesWhile demand for products containing semiconductors increased by 17 percent from 2019 to 2021, there has not been a comparable increase in supply, partly because of pandemic-related disruptions. As a result, automobile prices have skyrocketed and the need for more chips is likely to increase as 5G technology and electric vehicles become more widespread.The United States already faces an “alarming” shortage of the semiconductors, Gina Raimondo, Mr. Biden’s commerce secretary, warned this year, adding that the crisis had contributed to the highest level of inflation in roughly 40 years.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    The Era of Cheap and Plenty May Be Ending

    Supplies of goods are coming up short in the pandemic, and prices have jumped. Some economists warn that the changes could linger.For the past three decades, companies and consumers benefited from cross-border connections that kept a steady supply of electronics, clothes, toys and other goods so abundant it helped prices stay low.But as the pandemic and the war in Ukraine continue to weigh on trade and business ties, that period of plenty appears to be undergoing a partial reversal. Companies are rethinking where to source their products and stocking up on inventory, even if that means lower efficiency and higher costs. If it lasts, such a shift away from fine-tuned globalization could have important implications for inflation and the world’s economy.Economists are debating whether recent supply chain turmoil and geopolitical conflicts will result in a reversal or reconfiguration of global production, in which factories that were sent offshore move back to the United States and other countries that pose less of a political risk.If that happens, a decades-long decline in the prices of many goods could come to an end or even begin to go in the other direction, potentially boosting overall inflation. Since around 1995, durable goods like cars and equipment have tamped down inflation, and prices for nondurable goods like clothing and toys have often grown only slowly.Those trends began to change in late 2020 after the onset of the pandemic, as shipping costs soared and shortages collided with strong demand to push car, furniture and equipment prices higher. While few economists expect the past year’s breakneck price increases to continue, the question is whether the trend toward at least slightly pricier goods will last.The answer could hinge on whether a shift away from globalization takes hold.“It would certainly be a different world — it might be a world of perhaps higher inflation, perhaps lower productivity, but more resilient, more robust supply chains,” Jerome H. Powell, the Fed chair, said at an event last month when asked about a possible move away from globalization.Still, Mr. Powell said, it’s not obvious how drastically conditions will change. “It’s not clear that we’re seeing a reversal of globalization,” he said. “It’s clear that it’s slowed down.”Prices Have Shot UpPrices for durable goods had been falling for decades. Lately, though, they’ve been a major factor pushing inflation higher.

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    Annual Change in the Personal Consumption Expenditure Index by Category
    Source: Commerce DepartmentBy The New York TimesThe period of global integration that prevailed before the pandemic made many of the things Americans buy cheaper. Computers and other technology made factories more efficient, and they chugged out sneakers, kitchen tables and electronics at a pace unmatched in history. Companies slashed their production cost by moving factories offshore, where wages were lower. The adoption of steel shipping containers, and ever larger cargo ships, allowed products to be whisked from Bangladesh and China to Seattle and Tupelo and everywhere in between for astonishingly low prices.But those changes also had consequences for American factory workers, who saw many jobs disappear. The political backlash to globalization helped carry former President Donald J. Trump into office, as he promised to bring factories back to the United States. His trade wars and rising tariffs encouraged some companies to move operations out of China, although typically to other low-cost countries like Vietnam and Mexico.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The pandemic also exposed the snowball effect of highly optimized supply chains: Factory shutdowns and transportation delays made it difficult to secure some goods and parts, including semiconductors that are crucial for electronics, appliances and cars. Shipping costs have soared by a factor of 10 in just two years, erasing the cost savings of making some products overseas.Starting late in 2020, prices for washing machines, couches and other big products jumped sharply as production limitations collided with high demand.Inflation has only accelerated since. Russia’s invasion of Ukraine has further snarled supply chains, raising the prices of gas and other commodities in recent months and helping to push the Fed’s closely watched inflation index up 6.6 percent over the year through March.That is the fastest pace of inflation since 1982, and price gains are touching the highest level in decades across many advanced economies, including the eurozone and Britain.Many economists expect price increases for durable goods to cool substantially in the months ahead, which should help calm overall price gains. Data from March suggested that they were beginning to moderate. Rising Fed interest rates could help temper buying, as borrowing to buy cars, machines or home improvement supplies becomes more expensive.But there are still questions about whether — in light of what companies and countries have learned — major products will return to the steady price declines that were the norm before the coronavirus.It’s not clear yet to what extent factories are moving closer to home. A “reshoring index” published by Kearney, a management consulting firm, was negative in 2020 and 2021, indicating that the United States was importing more manufactured goods from low-cost countries.But more firms reported moving their supply chains out of China to other countries, and American executives were more positive about bringing more manufacturing to the United States.Duke Realty, which rents warehouse and industrial facilities in the United States, expects the change to be a source of demand in years to come, though the reworking may take a while. Customers are “now future-proofing their supply chains,” Steve Schnur, the firm’s chief operating officer, said on an earnings call last week.“Some reshoring is occurring — let’s make no mistake about that,” Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said in an interview. But the data show that most businesses are mitigating risk by building up their inventories and finding additional suppliers in low-cost countries, Dr. Okonjo-Iweala said. That process could end up integrating poorer countries in Africa and other parts of the world more deeply into global value chains, she said.Janet L. Yellen, the Treasury secretary, said last month that supply chains had proved too vulnerable given the pandemic and the war in Ukraine, and urged a reorientation around “a large group of trusted partners,” an approach she called “friendshoring.”The approach might result in some higher costs, she said, but it would be more resilient, and a large enough group would allow countries to maintain efficiencies from the global division of labor.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    The prospect of lockdowns in Beijing fuels more concerns about supply chain disruptions.

    The prospect of further lockdowns in China prompted a fresh wave of economic anxiety on Monday as investors and companies whose supply chains run through China contemplated the impact of 70 new virus cases that the Beijing government said it had detected over the weekend.The city government ordered one of its districts to test all 3.5 million of its residents for coronavirus in the coming days, a move that may be a prelude to a larger lockdown in China’s capital city. Shanghai, a major port and business center, has been locked down for roughly a month, part of China’s “zero Covid” strategy. Other Chinese cities both large and small have announced their own restrictions on the movement of residents in a bid to keep the virus from spreading.The lockdowns present yet another challenge for global supply chains that have been stressed by pandemic shutdowns and the war in Ukraine, leading to greater competition for goods and higher prices that are fueling inflation worldwide.While the Chinese authorities have sought to keep factories and especially ports operating by keeping workers on the premises in so-called closed-loop systems, the lockdowns have interrupted shipments and lengthened delivery times for many of the global companies that depend on Chinese factories.Phil Levy, the chief economist at Flexport, a freight forwarder, said in an email that while Beijing is an important city, “it is not at the heart of factory production or supply chain operations.” He said lockdowns there would have a more limited impact than previous restrictions in Shanghai and Guangdong, where ports continued to mostly operate.But the effects would depend on where outbreaks occurred — for example whether they shut down a port — and how long lockdowns persisted, Mr. Levy added. “This is a relatively slow part of the year, but there is plenty of catch-up to be done, and things will soon be due to build. The costs will mount the longer this lasts.”The disruptions that are still unfolding in Shanghai and other Chinese cities are likely to reverberate along global supply chains in the coming months. Andrea Huang, a senior director at Overhaul, which monitors company supply chains, said with lockdowns not expected to ease until early or mid-May, the ripple effects for industries like auto and consumer electronics would extend into June or July.In Shanghai, the local authorities on Friday selected some companies in the automotive, semiconductor and other key industries to restart production, but the vast majority of enterprises remain shuttered.Activity at the port has also slowed. According to data from Project44, a logistics platform, the number of vessels that were berthing at the Shanghai port last week had dropped by about half since the lockdown began, while the number of vessels seeking to call at the nearby port of Ningbo jumped as shipping companies tried to get around restrictions. The time that imported containers were spending in the port had also risen sharply, from 4.6 days on March 28 to 14 days on April 23, the company said, as coronavirus testing requirements for truck drivers limited the ability to get containers in and out of the port.Fears of broader lockdowns weighed on global stocks on Monday, while oil and other commodities also fell in anticipation of lower demand.Elisabeth Waelbroeck-Rocha, chief international economist at S&P Global Market Intelligence, said that, in addition to disrupting global supply chains and fueling inflation, coronavirus outbreaks and accompanying lockdowns had undermined Chinese economic growth in March and April, making China unlikely to reach its target of 5.5 percent growth in gross domestic product in 2022.The epicenter of the outbreak shifted from Jilin Province in the northeast to Shanghai, a manufacturing base for high-end auto components, but smaller-scale outbreaks in other regions have largely been brought under control, she wrote in a note. More