Shares of Beyond Meat Inc.
BYND, -3.27%
shot up 14% in premarket trading Thursday, after McDonald's Corp.
MCD, +0.29%
said it will trial a plant-based burger made by Beyond Meat. Starting Sept. 30, McDonald's will sell what it will called the P.L.T. -- Plant. Lettuce. Tomato. -- in 28 restaurants in Southwestern Ontario. The trial is slated to run for 12 weeks.
The United Auto Workers strike at
General Motors Co.
is starting to take a toll on businesses throughout Michigan, creating a growing threat to the state’s already-slowing economy.
Michigan’s economy faces the greatest exposure from a prolonged strike, because it has about 15 GM manufacturing facilities employing tens of thousands of workers, more than any other state. Lost earnings to workers will result in lower sales-tax and income-tax revenues for the state, and some local businesses near idled GM plants are already reporting lost sales.
“The impact to Michigan is noticeable, but it’s largely localized,” said Patrick Anderson, chief executive of Anderson Economic Group, a consulting firm based in East Lansing, Mich. “If the strike continues through this week, it’s going to go outside just auto workers” and cities with big factories.
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Michigan relies far more on the automotive industry for wage and salary income than the U.S. as a whole. The sector accounts for 7% of such income, compared with less than 2% nationally, according to Moody’s Investors Service.
In Flint, Jeanne Bonner, a manager at Latina Restaurant & Pizzeria, near GM’s truck assembly plant there, said business is off 10% to 20% since the strike began. Some servers have had their hours cut. Gone are more than half a dozen lunch orders that are called in every day, and dinner traffic has declined, she said.
“It’s affecting everybody,” said Ms. Bonner. “A lot of people’s business is from the shop.”
The work stoppage had cost GM hourly workers and others in Michigan not working due to the strike a total of about $9.3 million a day in lost wages by the end of last week, according to the Anderson Economic Group. For the state, that meant about $400,000 in income-tax revenue a day.
GM has approximately 49,000 salaried and hourly employees in Michigan, with more than 17,000 represented by the UAW.
Parts suppliers in Michigan and elsewhere have begun idling plants and laying off workers, extending the ripple effects from the strike by 46,000 UAW members, which centers on a dispute over wages and health care and giving temporary employees full-time status.
“The suppliers are not going to build the parts and put them on the truck,” Mr. Anderson said.
Supplier
Magna International Inc.
of Troy, Mich., which makes everything from seats to powertrains, has instituted temporary layoffs at some operations in the U.S. and Canada, half of which have been affected by the strike. In other cases, workers are getting training or conducting maintenance, said Scott Worden, a spokesman. “We are encouraged to see both sides continuing to work towards an agreement,” he said.
Michigan’s economy could be vulnerable to a prolonged strike because it has already been slowing, several economists said.
Employers added an average of 75,000 nonfarm jobs a year in the state between 2010 and 2017. That rate slowed to 43,000 jobs a year during 2017 and 2018. From January through August this year, just 3,500 jobs were added.
“If you squint, nothing has happened. No jobs have been added in Michigan since January,” said Charles Ballard, a professor of economics at Michigan State University. “Now you add this additional headwind. It has the potential to put us into job losses.”
“There is some risk of recession in the state or a contraction that hurts state tax revenues,” Moody’s analyst Ted Hampton said in an interview, though he and other economists said the strike probably would have to last at least a month for that to happen.
Michigan Gov.
Gretchen Whitmer,
a Democrat, is facing off with the Republican-controlled legislature over the state budget as an end-of-month deadline looms. GOP lawmakers have offered to spend less on infrastructure projects than the governor wants, and on Tuesday she accused them of playing “shell games” with the budget.
Other GM suppliers such as Kirchhoff Automotive, which has two manufacturing plants and one engineering and sales office in Michigan, are taking a wait-and-see approach. “At the moment, it’s kind of hard to say what’s going to happen,” said Nathalia Abreu, Kirchhoff’s communication and marketing manager for North America.
The strike is stressing some cities where plants are located. In Warren, home to a big GM facility, Mayor Jim Fouts said policing the picket lines and plant entrances is costing money and manpower and keeping officers from patrolling streets.
Mr. Fouts said he has fielded complaints about traffic and safety from both sides of the strike and finds himself caught in the middle. He grew up in a union household and is sympathetic to the UAW, he said, while he appreciates GM’s investments in his city.
“It’s a tough situation,” he said. “It looks like it could be a long strike because everyone is digging in their heels.”
A man uses a vape as he walks on Broadway in New York City, US. Photo: Andrew Kelly/Reuters
Shares in tobacco giant Imperial Brands (IMB.L) crashed by 10% on Thursday after it warned of a slowdown in the US vaping market.
Imperial said that revenue growth was set to be slower than expected this year due to the “challenging” US vaping market and changes in Africa, Asia, and Australia.
“Whilst this is disappointing for the current year, we believe that NGP [next generation products] provides a significant opportunity to deliver additive growth to complement our Tobacco business,” Imperial said in a statement.
Imperial owns brands like Lambert & Butler cigarettes, Rizla rolling papers, and Golden Virginia tobacco. It’s “next generation products” include vaping product Blu.
Imperial said “environment has deteriorated considerably over the last quarter with increased regulatory uncertainty, including individual US state actions.”
“This has prompted a marked slowdown in the growth of the vapour category in recent weeks, with an increasing number of wholesalers and retailers not ordering or not allowing promotion of vaping products,” Imperial said on Thursday.
Nicholas Hyett, an equity analyst at investment platform Hargreaves Lansdown, said: “Vaping’s only a small contributor to revenues and profits at the moment, which is why full year earnings per share look set to come in flat year-on-year, but hopes had been high that the vaping segment would drive growth as traditional tobacco declines.”
Imperial is not the only company to have suffered from the US vaping crackdown in recent weeks.
The CEO of Juul, America’s biggest vaping company, resigned earlier this week as the company agreed to stop marketing, amid pressure over its marketing to teens.
Tobacco giants Philip Morris (PM) and Altria (MO), which owns 35% of Juul, also ended merger talks on Wednesday. Analysts said the vaping crackdown was likely a factor in ending the $200bn deal.
“It is not a good time to be a vaping company,” Russ Mould, investment director at stockbroker AJ Bell said. “Political and regulatory pressures are coming down hard on the sector.
“While the public has been slowly switching from cigarettes to smoke-free products, there is a growing negative backlash in other circles caused by concerns over the large number of younger people vaping and the potential health threats.”
Trump told reporters Wednesday at the United Nations in New York that a US-China deal could come sooner "than you think," according to multiple reports.
"Investors have been 'trade war' bearish for so long that any sliver of optimism is cheered," wrote Stephen Innes, a market strategist for Asia Pacific at AxiTrader.
Japan's Nikkei(N225) also edged up 0.2%, after Trump and Japanese Prime Minister Shinzo Abe signed a trade deal Wednesday, which reduced tariffs on some agricultural and industrial goods for both sides.
"We welcome these achievements as tangible evidence of the strength of the relationship between our two nations," the two leaders said in a joint statement.
China's Shanghai Composite Index(SHCOMP) opened higher, but slid into negative territory in the morning trade and lost 0.7%.
"We're telling China and all nations, know that we will sanction every violation of sanctionable activity," Secretary of State Mike Pompeo said at a conference organized by the group United Against Nuclear Iran.
Elsewhere in the regions, Korea's Kospi(KOSPI) added 0.1%.
CNN's Nicole Gaouette and Jennifer Hansler contributed to the report.
The chief executive of Juul Labs, the dominant e-cigarette company that has been the target of public and regulatory outrage over the soaring use of teenage vaping, stepped down on Wednesday.
The executive, Kevin Burns, will be replaced by K.C. Crosthwaite, an executive from Altria, the major tobacco company that owns a 35 percent stake in Juul, the San-Francisco-based company.
Juul also said it would end one of its campaigns, “Make the Switch,” which the Food and Drug Administration had criticized as an effort to portray its e-cigarettes as safer than traditional cigarettes. The company also said it would not fight the Trump administration’s proposal to ban flavored e-cigarettes.
In addition, Altria and Philip Morris International said on Wednesday that they had ended talks to merge, dashing the chances of reuniting the two arms of what had once been Philip Morris.
In a statement, the companies said they would instead focus on rolling out the IQOS heated tobacco product in the United States. They emphasized that IQOS, which Philip Morris International sells abroad, is not “an e-vapor product,” unlike Juul’s devices.
This is a developing story. Check back for updates.
Thomas Cook's German subsidiary has announced it is filing for insolvency in an attempt to save its national brands after the collapse of the UK parent company on Monday.
Almost 100,000 holidaymakers are travelling with the German affiliates and it is not clear what the bankruptcy proceedings will mean for them.
The German government has already granted a €380m (£335m; $420m) bridging loan to the holiday airline Condor.
Condor is 49% owned by Thomas Cook.
The central state of Hesse, where Condor is based, also stepped in to rescue the airline, arguing that it was profitable.
The company said it was "operationally healthy" and the six-month loan was aimed at preventing any "bottlenecks" resulting from its British parent company. The funding will be paid out pending an agreement with the European Commission.
Thomas Cook Germany is also based in Hesse and state premier Volker Bouffier said it was in principle willing to step in to help that company too.
It said that it had long been burdened by the weak Thomas Cook business in Great Britain and by Brexit.
How are European tourists affected?
A total of 600,00 holidaymakers have been caught up in the collapse of the UK company. Many have travelled from the UK but Thomas Cook's empire stretches across Europe and tens of thousands have travelled with its subsidiaries.
The UK's Civil Aviation Authority has had the task of bringing back more than 150,000 holidaymakers. It repatriated more than 14,000 passengers on Tuesday and was expecting to bring back another 16,500 on Wednesday.
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Thousands of Dutch, Belgian and Polish tourists are still abroad, but the biggest group affected outside the UK is from Germany. A spokeswoman said on Wednesday that 97,000 people were currently travelling with the company.
Thomas Cook Germany employs some 2,000 people and has several national brands, including Neckermann, Öger Tours, Air Marin and Bucher Reisen. A thousand people are employed by the company near Frankfurt.
It said it was talking to the German foreign ministry as well as the travel bankruptcy insurer, Zurich, about repatriating customers. Like Condor, it has asked the Hesse state government and the federal government for a bridging loan.
Thomas Cook's Polish subsidiary, Neckermann Polska, has suspended its activities and said it will also file for bankruptcy.
Why has Germany's Thomas Cook filed for bankruptcy?
The German subsidiary believes its brands have a future and is in negotiations with investors and hotel operators to continue in business.
Thomas Cook GmbH said it had been forced to seek insolvency to extricate itself from its (UK) parent company's "financial tie-ups and related liabilities".
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"We owe this to our long-standing customers, committed employees and other partners who have supported us so much over the years and in the last difficult weeks," said chief executive Stefanie Berk.
Founded in 1841, parent company Thomas Cook filed for bankruptcy after failing to secure emergency funding of £200m from the UK government.
In the UK, anyone who has bought a package holiday covered by the Air Travel Organiser's Licence scheme (Atol) will have the cost refunded.
However, some customers whose future holidays have been cancelled have seen the price of replacement deals spiral.
How have businesses around the world been affected?
There is concern in countries such as Egypt and Greece that local businesses could be financially impacted by loss of tourism.
The Gambia's government has held an emergency meeting. There is concern that Thomas Cook's collapse will hurt tourism, which provides about a third of the country's GDP
In Egypt, Thomas Cook operator Blue Sky said reservations until April 2020 have been cancelled. The company runs many charter flights from the UK to Sharm El-Sheikh and officials say resorts there will be affected
In Cyprus, the loss for hoteliers and the wider economy is about €50m, according to deputy tourism minister Savvas Perdios. Hotels are owed money for July, August and September, he added
Greek tourism minister Grigoris Tassios has said hotels expect losses on payments from recent months. He said they would attempt to recover money from Thomas Cook in court
In India, Goa's Travel and Tourism Association said that the loss of Thomas Cook is a "big, big, blow to the industry"
Spain's Balearic Islands faces losses running into millions of euros. Thomas Cook has a tax office in Palma with hundreds of employees, and also works with hotels in the Balearic Islands and Canary Islands
Turkey's Hoteliers Federation (TUROFED) has warned that the country could miss out on up to 700,000 tourists a year due to the collapse.
Thomas Cook holidaymakers and crew are free to leave Cuba, according to the Civil Aviation Authority.
Repatriation flights have been arranged with the aid of the British Ambassador to Cuba, it said.
Tourists had said they were prevented from leaving their hotels until they paid extra for their stay.
One holidaymaker, Sue Petrow, who was due to leave, said her hotel had told her she could be held at the airport unless she paid her bill.
Cabin crew from Thomas Cook had also said they were effectively being "held hostage" by security guards at a hotel.
But Dame Deirdre Hutton, the chair of the Civil Aviation Authority (CAA), told the BBC's Today programme: "That has been sorted out by the ambassador overnight, and the Cuban flight is in the air on its way back, which is very good news."
"It's also an example of how we're working very closely with the Foreign Office, which is great."
"It's very distressing for people who are finding difficulties with their accommodation, but what we've done is issue guarantees to the... hotels with Atol-protected British tourists," she added.
The British Ambassador to Cuba said hotels had been instructed to allow customers to depart without paying additional charges.
Antony Stokes said on Twitter: "Very grateful for patience of all affected in distressing circumstances."
Urgent for #ThomasCook customers: hotels in #Cuba now have authority/instruction to allow customers, and air crew, to depart without paying (on basis of ATOL guarantee). Very grateful for patience of all affected in distressing circumstances
Sue Petrow said she and other guests had refused to pay extra charges demanded by the hotel.
Holidaymakers like Sue may have paid for their rooms and meals months in advance, but hotels would normally only receive the money from Thomas Cook several weeks after their stay.
Reports suggested there was widespread concern in Cuba over whether the industry insurance fund Atol, which covers payments in the event of a firm failing, would foot the costs.
The fund covers bills that have been run up since Thomas Cook's collapse on Monday morning.
However, bills run up at hotels before Thomas Cook's collapse will not be covered. Affected hoteliers will have to apply to the liquidators for their money.
Counting costs
Dame Deirdre said the CAA had issued guarantees for payment to 3,000 hotels around the world, and had already started making the first payments. The CAA had 200 staff working with Thomas Cook employees, she added.
"Given how much those hotels are owed by Thomas Cook, it's hardly surprising that they are suspicious and angry," she said.
Thomas Cook owes hotels £338m, with one hotel in Mexico owed £2.5m, she added.
The Insolvency Service has written to local tourist boards to make sure hotels are working with the CAA on payments, Dame Hutton said.
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Repatriation
On Monday, the CAA launched the UK's largest peacetime repatriation operation to bring more than 150,000 people back to the UK after the collapse of the holiday firm.
So far, more than 95% of people have been brought back on their original day of departure, the CAA said.
On Tuesday, 70 flights brought back more than 14,000 passengers, it said. There are 70 flights scheduled on Wednesday, bringing back a further 16,500 people.
The flying programme will continue until 6 October with more than 1,000 flights planned.
Richard Moriarty, chief executive of the CAA, said: "I would like those remaining on holiday to enjoy the rest of their stay because we aim to also fly you home on the day when you were originally booked to fly with Thomas Cook, or very shortly thereafter.
"This remains a highly complex operation and I would like to thank holidaymakers for their patience as some inconvenience and disruption is likely."
