UK

Asda’s billionaire bosses knew payroll switch would spark crisis – but went ahead regardless


Luke Barr
Sat, 20 April 2024

Mohsin Issa has made clear Asda's IT changeover is one of his top priorities - Jon Super

Asda’s billionaire bosses forged ahead with a botched IT transition despite being warned in advance that thousands of workers would be paid incorrectly, The Telegraph can reveal.

Senior figures were told in advance of the problems underlying the changeover, which has impacted 30,000 employees and left some hundreds of pounds out of pocket.

The IT changeover is being overseen by the company’s billionaire co-owner Mohsin Issa, who has made clear it is one of his top priorities.

The crisis has led to calls from unions for Mr Issa to apologise. The revelation that he was warned about issues with payroll ahead of the transition are likely to only heighten pressure on the billionaire tycoon.


Problems relating to the payroll first arose last month. Asda has been unable to fix the issue since.

The ongoing payroll crisis at Britain’s third-largest supermarket led to further problems on payday last week, with internal systems inundated with complaints. Some employees were underpaid while others were overpaid.

Financial pressures led to store managers making £200 petty cash payments to affected staff last month, although it is understood this will not be the case this time around.

A senior employee at Asda said there had been “thousands and thousands of complaints”, adding: “We knew it was going to happen.”

In response to the latest issues regarding pay, a GMB spokesman said: “GMB reps have been meeting with Asda management consistently over this issue.

“We have asked for simple things to protect colleagues – for example, adequate levels of petty cash to cover any underpayments. We have also asked for a public apology from Mohsin Issa who had overseen what is fast becoming a shambles.

“Asda knew how problematic these pay rounds were going to be but continued regardless – Mohsin Issa must bear responsibility for the stress and anguish this is causing hard-working Asda colleagues.”

An Asda spokesman said: “The first payroll run with a large-scale systems migration rarely passes without any issues in any industry.

“For Asda colleagues, we unreservedly apologise to those impacted and continue to work with colleague representatives, including our unions, to rectify any outstanding issues – as a top priority.

“For the April payroll, Asda can confirm that the number of payroll queries was significantly reduced.”

The latest payroll debacle has fuelled tensions internally, coming against a backdrop of cost-cutting across the business driven by a growing debt finance bill. Asda is struggling under the weight of billions of pounds of debt and battling falling market share.

Details of the challenges facing Asda come just days after it emerged Zuber Issa, Mohsin’s brother, was nearing a deal to sell his 22.5pc stake in the retailer.

The proposed sale of his shares to TDR Capital will hand majority control of the business to the private equity giant, which helped to finance the Issa brothers’ 2021 takeover of the supermarket.

The deal would increase TDR’s ownership of Asda to around two-thirds.

Billionaire Issa Nears Deal to Sell Asda Stake to TDR Capital

Sabah Meddings
Fri, 19 April 2024 




(Bloomberg) -- TDR Capital is closing in on a deal to buy gas-station billionaire Zuber Issa’s stake in Asda as the private-equity firm tightens its grip on one of Britain’s biggest supermarket chains, according to people familiar with the discussions.

The agreement for Issa’s 22.5% stake would give TDR majority control and could be announced in coming weeks, the people said, asking not to be named with negotiations in flux. They declined to specify the terms being discussed. TDR’s holding in Asda would rise to about two-thirds, while the transaction would further the dismantling of the relationship between brothers Zuber and Mohsin Issa.

The brothers teamed up with London-based TDR to buy Asda for £6.8 billion ($8.45 billion) just three years ago from Walmart Inc. Their tenure has been rocky, with critics questioning the new owners’ commitment to Asda’s historic focus on keeping prices low.

As food and gas prices surged in 2023 amid historic inflation, Asda, the third-largest UK grocer, had to rebut claims by Britain’s antitrust regulator that it was gouging customers.

Born in Blackburn, England, the sibling duo founded EG Group and built up a $30 billion empire of gas stations and convenience stores across Europe, the US and Australia over the span of two decades, financing their ambitions with dozens of debt-funded deals. Since 2015, TDR has backed most of their significant acquisitions.

Read More: UK Brothers’ $30 Billion Empire Built on Debt Is Showing Cracks

However, higher interest rates have pushed up the cost of servicing their debts and squeezed profits, forcing the pair to sell down assets. The latest deal would further unwind their business interests from each other and from TDR.

Zuber Issa began talks earlier this year about selling his stake in Asda, and plans to step back as co-chief executive officer of EG Group.

Mohsin Issa also intends to relinquish day-to-day control of Asda to focus on running EG Group. A search to find a new CEO for Asda is already under way, with headhunters from Spencer Stuart conducting a search, according to people familiar with the matter.

When the latest maneuvering is complete, Walmart will retain its 10% stake in the grocer, with Mohsin owning 22.5% and TDR the rest, the people said.

Representatives for TDR, Asda and the Issa brothers declined to comment, as did Spencer Stuart.

EG Group sold the majority of its UK and Ireland fueling outlets to Asda last year, in a move which helped repair EG’s balance sheet but left the supermarket chain with heavy debt.

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SAME PROBLEM AS ENRON

‘No dividing line’: consultants advising private water companies also work for their regulator, Ofwat


Andrew Kersley
Sun, 21 April 2024 

Sewage floats on the River Thames in Berkshire after storm water discharges by Thames Water this month. Photograph: Maureen McLean/Rex/Shutterstock

The water industry regulator has spent £26.7m on business consultants in the past five years, including several companies that have simultaneously worked for private water firms, the Observer can reveal.

The findings prompted environmental campaigner Feargal Sharkey to call for Ofwat to be abolished as fellow campaigners said there appeared to be no dividing line between “those who are meant to enforce the law and those who routinely break it”.

The Observer analysed invoices paid to Ofwat’s private sector suppliers from 2019 to the first three months of 2024, collated by procurement specialists Tussell.


The firm that received by far the most income from Ofwat over that period was PwC – which netted more than £11.5m, almost half the total.

PwC audits the accounts of Thames Water, which submitted plans last week to raise bills by 56% over the next five years, as well as providing services to the wider sector.

In a document sent to potential industry clients in 2013, the firm said its “leading role in professional and standard-setting organisations puts us in an ideal position to advise on regulatory, operating effectiveness and other developments”.

Several of the other consultancy companies used by Ofwat advertise their services working for the water industry on their websites.

In March it was revealed that raw sewage was discharged into waterways for 3.6m hours in 2023 by England’s privatised water firms, more than double the figure in 2022.

At the core of the issue has been claims that water companies have invested too little in infrastructure while paying huge dividends to shareholders.

The water industry has paid shareholders £78bn in dividends in the just over three decades since it was privatised, while amassing £64bn of debt, despite being debt-free when sold to the private sector.

“What we’re looking at right now is nothing more than the physical mani­festation of three decades of political neglect, regulatory failure and corporate greed,” said Sharkey. “Ofwat needs to be abolished, and it needs to happen today,” he added. “The whole of the regulatory system of the water industry needs dismantling and utter reform, as do those companies that have milked us for nearly £80bn worth of cash, leaving over £60bn of debt behind them.

“The truth is we need to point the finger at the regulator, who simply wasn’t up to it, wasn’t capable and has to go.”

Surfers Against Sewage chief executive, Giles Bristow said: “The regulators have already been exposed for schmoozing water industry fat cats at exclusive members clubs and now this - is there anything that divides those who are meant to enforce the law and those who routinely break it?

“For people across the country, who are rightly furious about the sewage being dumped into our rivers and seas, this is a bad look at a bad time for a supposedly expert independent body.

“It’s time for Ofwat to get their house in order and put clear water between themselves and our scandal-ravaged water industry, because, right now, the picture looks very murky indeed.”

Related: ‘Dirty secret’: insiders say UK water firms knowingly break sewage laws

An Ofwat spokesperson said PwC was its “main delivery partner” during its price review process – where Ofwat outlines the maximum water companies can charge to users and service standards for the industry. The spokesperson said the firm delivered “additional technical expertise in areas such as financial modelling, economics and engineering”.

They added that a “rigorous conflict procedure” ensured that “any potential conflicts of interest were identified and managed appropriately”.

A spokesperson for PwC said the firm adheres “strictly to all regulatory, professional, ethical and independence standards”, and has no “decision-making responsibility” in its services to

Powering down: end times for the UK’s final coal-fired station

Jillian Ambrose

THEGUARDIAN
Sun, 21 April 2024

Ratcliffe-on-Soar power station, the UK’s only remaining coal-burning plant.

Photograph: Christopher Thomond/the Observer

From the northernmost reaches of the River Soar in Nottinghamshire, the towers of Britain’s last coal-fired power station emerge from the flat countryside like concrete monuments to another time.

For more than half a century Ratcliffe-on-Soar has burned millions of tonnes of coal to generate the electricity needed to power the British economy. But one by one Britain’s coal power stations have closed, leaving Ratcliffe the sole survivor. In less than six months it, too, will finally power down for good, extinguishing the last embers of the once-mighty coal industry.

With its last winter behind it, the sprawling site, which covers the same acreage as the City of London, is quiet save for the hum of a single turbine and the crackle of electricity power lines overhead.

It once employed up to 3,000 people, but now a total of about 350 engineers are working there, in shifts, as Ratcliffe ekes out its final months, unsure of how many hours the site has left to run before it closes around the end of September.Interactive

“Last Saturday night was my last night shift,” says Ian Jackson, a shift leader at the site. “I’ve worked night shifts for the past 30 years. In that time, I’ve become a father and a grandfather. My family has only ever known me as a shift worker.”

Jackson was on duty in January this year, when Ratcliffe was called upon to fire up all four of its generating units and supply extra power as an icy Arctic blast chilled the country. It was almost definitely the last time the plant will run at full capacity. Jackson was also there earlier this month, when the first of these units was put into “preservation”, awaiting the plant’s final shutdown.

“It was the quietest I’ve ever seen the team,” he says. “You could see people reflecting on the moment. There were quite a few lifers there, but it was emotional for all of us. What it will be like for us when it does close, I can’t imagine.”
‘The end of the first Industrial Revolution’

When Ratcliffe was opened in 1968 by the Central Electricity Generating Board, the very first series of Dad’s Army was about to be broadcast, the Beatles were topping the charts and coal power was in its heyday.

Coal-fired stations mushroomed through Britain’s mining heartlands in the late 1960s and 1970s to provide baseload power for Britain’s electricity network. The 2,000-mega­watt Ratcliffe broke up the skyline for drivers on the new M1 motorway, and provided power to heat and light 2m homes.

It was built in an area rich in coal, where collieries employing tens of thousands of miners dotted the landscape. By the early 1980s, Ratcliffe was burning 65% of south Nottinghamshire’s coal output.

The new power stations were built at speed. At the time, their scale and engineering complexity were unprecedented, and their impact on the climate unforeseen.

When Ratcliffe generates its last megawatts this year, it will represent the final dismantling of Britain’s coal heritage and end almost 150 years of coal-powered economic growth.

“It’s the end of the first Industrial Revolution, really,” says engineering manager Nigel Bates. He first stepped on to the Ratcliffe site more than 40 years ago, as a 16-year-old mechanical apprentice with a handful of O-levels. “Coal started it all, and soon we’re going to end it,” he says.Interactive

For many, the closure of Britain’s last coal plant cannot come soon enough. Coal power is considered an environmental disaster, threatening the globe with climate catastrophe. Experts believe the world needs to close coal power plants at almost five times the present rate, and to stop building new ones, to meet Paris climate agreement goals.

Britain has sought to lead the way internationally: in 2016 ministers set out a plan to ban coal power from the UK by 2025. And they brought the deadline forward by a year in 2021 as the government prepared to host the Cop26 climate talks in Glasgow.

“The time is right, realistically,” Bates says. “We need to do our bit for the planet and this place is well past its sell-by date. It was built to run for 25-30 years. And 57 years later, we’re still here.”

Coal-fired power plants generated four-fifths of the UK’s power for decades until the North Sea boom saw a dash for gas-fired plants through the 1990s.

Over the past decade, coal power has been relegated to the margins of Britain’s power system by costly carbon taxes and the rise of cheap renewables. Some plants, such as Drax in North Yorkshire, adapted to replace coal with wood pellets. But most were forced to close, calling time on an industry created in 1882, when the Edison Electric Light Station in Holborn, London, became the world’s first plant to generate electricity for public use.

“For a time, coal plants like Ratcliffe made up the backbone of the energy system,” says Peter O’Grady, Ratcliffe’s site manager. “Latterly, I guess, we have been the scaffolding that the energy system has leaned on to enable renewables to play a bigger part.”

Coal was responsible for just 1% of the power generated in the UK last year, and was called on to increase its output only as a last resort (contributing 3.4% during this winter’s cold spell). “Whether coal has provided 80% of Britain’s power or nearly zero, we’ve been here to help keep the lights on,” O’Grady says.
‘They don’t make them like this any more’

On a cool spring day, Ratcliffe’s turbine hall continues to hum. Sean Atton strides along its steel grids, passing a turbine that spins at 3,000 times a minute. He returned to work at the site last year, after a stint at another of Britain’s big power plants, to lead a skeleton team of engineers tasked with decommissioning the plant over a period of about two years.

“They don’t make them like this any more,” he says, from the top of the plant’s 60-metre boiler house. To the west, Ratcliffe’s eight giant concrete cooling towers crowd the skyline.

It has been estimated that at Britain’s coal-generating peak, there were as many as 250 cooling towers up and down the country. Today, only 50 remain, with between five and 10 demolished each year. By the end of this decade, Ratcliffe’s towers will be gone too.

East of the boiler house, Ratcliffe’s near-empty coal yard stands as a reminder, if one were needed, that the site’s operational life is running low, too. The yard has taken more than 140,000 deliveries of coal since the late 1960s – originally from the collieries that mined Britain’s rich seams of coal.Interactive

At its peak in the early 1980s, Ratcliffe would burn as much as 6.5m tonnes of coal in a single year. Over the past winter it needed less than 960,000 tonnes of coal, and that was imported from South Africa and Australia.

For Chris Kitchen, general secretary of the National Union of Mineworkers (NUM), the closing of Ratcliffe marks the end of an industrial decline which has its roots four decades ago in the miners’ strikes of 1984-85.

At the time, Ratcliffe was close to the centre of the bitter internal battle that brought the NUM to its knees. Some Nottinghamshire miners opposed the union bosses and the way strikes were called, and this led to the formation of the breakaway Union of Democratic Mineworkers in 1985, as Margaret Thatcher’s government brought the industry to heel.

“It was a very strange time,” recalls Richard Montgomery, who has worked as a mechanical engineer at Ratcliffe for the past 43 years. “We had all been brought up in an era of unions, so we felt this loyalty to the union but we also felt strongly that we needed to keep the lights on. It was very difficult to cross the picket lines as a young man back then.”

In the intervening 40 years, the pits have closed and communities have been left to founder. The NUM’s membership has tumbled from 170,000 in 1981 to just 82 today, echoing the collapse in mining and power station jobs.

British mining had been in decline for many years before Thatcher’s decision to shutter its older collieries. But the economic scars of the abrupt closures reverberate in today’s climate agenda through the calls for a “just transition” to protect communities built on fossil fuels.

Kitchen fears that while Britain may be greener, it has lost something important in the process. “Since the miner’s strike, Britain has talked about opening up to do business with the world,” he says. “But we’ve been opened up to being exploited by the world. That’s what capitalism does.

“We have lost jobs to other countries, as well as our energy security and the ability to control our own costs. The coal industry never made great profits, you know. It was about the national good. I’m not a dinosaur who wants to exist in the dark ages. We do need to address climate change. But let’s do it without the blinkers on.”

‘To me, it’s home’

For Ratcliffe’s remaining staff, the abiding memory of the site will be of a community forged by a sense of duty instilled under the days of state ownership.

“We have been bound by a common purpose – keeping the lights on,” says Montgomery. “We do feel that responsibility, and it has kept us together through it all. If it’s 3am and we’re struggling to keep the lights on, we’ll all be there in our overalls. It’s ingrained into you: you keep the lights on at whatever cost.”

Bates recalls how during the “beast from the east” storm, which plunged Britain into Arctic temperatures for about a week in 2018, workers would set off for the site in the early hours of the morning to be sure they made it in for their shifts.

“What makes a person do that when it would be the easiest thing in the world to say, ‘I can’t be there. It’s snowing’? I think it’s instilled as part of this sense of service that isn’t usual in today’s society.”

About half Ratcliffe’s current workforce will remain on the site until 2025 to decommission it before the demolition begins. It will be a complicated process: the plant is tucked into a triangle formed by the main railway line to London and the A453 linking Nottingham to the M1. It’s an inconvenient location for a controlled implosion of eight giant concrete towers.

In the coming months, Ratcliffe is expected to set out plans for its green legacy. Its owner, the German energy giant Uniper, has already set out plans to produce green hydrogen at the site by the turn of the decade.

According to Ruth Edwards, the Conservative MP for nearby Rushcliffe, it is a transformation that will bring jobs and investment to the whole east Midlands region.

“The closure of Ratcliffe-on-Soar, the last coal-fired power station in the UK, is a big moment. Its closure is a time to recognise the huge contribution the power station has made and to celebrate the progress the UK has made in decarbonising its energy supply,” she says. “The future of the site as a green energy hub is incredibly exciting.”

But many who have grown up with the towers as a fixture on the Nottinghamshire skyline have more mixed feelings. “I’m gutted, to be honest,” says Claire Taylor, manager at the Victoria pub in Beeston, a few miles from the Ratcliffe site. “I’m going to miss those towers when they’re gone. So many of us will. To me, they look like home.”

Revealed: UK handed North Sea oil licences to IDF-linked firm

Paul Dobson
Sun, 21 April 2024 

There are calls for the drilling licences to be reviewed (Image: Supplied)


The National:

A FOSSIL fuel giant awarded new North Sea oil licences by the UK Government has links to an Israeli company which has been supplying fuel to the IDF.

Vehicles belonging to the Israel Defense Forces (IDF) can refuel at hundreds of petrol stations owned by Delek Israel under a contract agreed in 2020.

Delek – The Israel Fuel ­Corporation (referred to henceforth as Delek ­Israel) is part-owned by Israeli ­energy conglomerate, Delek Group, which also owns the Aberdeen-headquartered oil company Ithaca Energy. Delek describes Ithaca as its ­“operational arm” in the North Sea.


Ithaca was given three UK oil ­licences in October, despite ­existing UN concerns about its parent ­company’s involvement with illegal Israeli settlements in the occupied West Bank.

Ithaca paid out hundreds of ­millions of pounds in dividends to Delek last year, prompting concerns North Sea oil revenue is going to a firm which – due to its links to the IDF – is implicated in the “horrors” unfolding in Gaza.

READ MORE: Husam Zomlot: It is humiliating other nations have say on Palestine's fate

Critics including Amnesty International and senior opposition ­politicians have called for Ithaca’s ­licences to be reviewed and potentially revoked in light of our findings.

The awarding of the oil licences to Ithaca was announced by the UK’s North Sea regulator weeks after the attacks on October 7, when Hamas killed around 1200 people, mostly ­Israeli civilians.

More than 34,000 ­Palestinians have now reportedly been killed by the ­Israeli military since the ­Hamas ­attacks which sparked the latest ­escalation of the conflict in Gaza. The conflict has threatened to spill out into a ­regional war in the last week after Israel and Iran launched direct attacks on each other.

The National: A view of the al-Shifa Hospital in Gaza City, Gaza on April 1, 2024

Media in Israel reported in June 2020 that Delek Israel and another fuel company had won a tender run by the country’s Ministry of Defense (MoD) to provide refuelling services to the IDF and MoD.

The exact value of the contract is not known but reports suggest it is worth hundreds of millions of Israeli shekels which would equate to tens or potentially hundreds of millions of pounds.

The original contract between the MoD and Delek Israel was for an ­initial three years from 2020 to 2023, with the option for it to be extended for another two years, according to media reports and Delek’s 2020 ­annual financial report.

Subsequent annual reports do not confirm the extension, but the IDF’s website includes a page ­dedicated to the “complete list” of petrol ­stations where its vehicles can refuel. It ­includes a spreadsheet which lists more than 200 Delek Israel petrol stations across the country which are part of the scheme.

The photo agency Getty ­published a photograph of an IDF ­Hummer being refuelled at a petrol ­station bearing the Delek Israel logo near the border with Gaza on ­November 19, weeks after the Israeli offensive began.

The Ferret understands that the contract primarily allows ­commercial cars used by military personnel to ­refuel. While some all-terrain ­vehicles used in combat could refuel at Delek Israel’s petrol stations, heavier ­armoured vehicles like battle tanks do not.

The Delek Group currently owns around 25% of Delek Israel, ­having sold a large amount of shares in late 2020 due to financial pressures. ­However, the contract to supply fuel to the IDF was signed while Delek Group was still the largest ­shareholder in Delek Israel.

READ MORE: David Pratt: Can we say that the West favour's Israel over Ukraine?

Delek Group was among 112 companies named in a list produced by the UN Human Rights Council of companies where their activities in the occupied West Bank “raised ­particular human rights concerns”.

The West Bank – located on the west bank of the River Jordan near ­Jerusalem – has been occupied by ­Israel since 1967. Israeli settlements in the West Bank are considered ­illegal under international law.

Conflict between Israeli settlers and Palestinian populations has stretched back decades. But according to the NGO Human Rights Watch, settler violence against Palestinians has ­escalated since October 7 and the Israeli military has either taken part or failed to protect Palestinians from violent attacks in the West Bank.

The UN list – compiled ­after a fact-finding mission to the West Bank – included companies which it assessed were involved in ­activities in the occupied territories which “raised particular human rights concerns”.

DELEK was one of the companies listed because it provided “services and utilities to support the maintenance of Israeli settlements” and was using natural resources in the occupied territories for “business purposes”. A new version of the list was published in June 2023, and Delek was still named as supporting the settlements.

Delek bought Ithaca Energy in 2017 and it has since grown into one of the biggest oil producers in the North Sea with nearly 600 staff.

Ithaca paid out £320 million in ­dividends to shareholders in 2023 and wants to increase that to nearly £340m in 2024. Delek owns around 88% of Ithaca shares, suggesting it would have been in line for around £280m in dividend payments from Ithaca in 2023.

According to research by think tank Common Wealth, Ithaca is the ninth biggest oil and gas company in the North Sea with stakes in 83 ­licences in total.

The company holds a 20% stake in the controversial ­Rosebank field, north west of Shetland, which was approved by the UK ­Government last year in the face of vocal opposition by climate scientists and campaigners.

Neil Cowan, the programme ­director for Amnesty International in Scotland, claimed that any North Sea oil licensee with “business links to Israel’s illegal settlements and the war crimes being ­perpetrated in Gaza should expect to lose their licence”.

Cowan added: “By supplying fuel to the Israeli military while ­Israeli ­forces commit war crimes and ­possible ­genocide in Gaza, Delek is ­complicit in those acts, as well as ­Israel’s ­ongoing system of apartheid against the Palestinians, of which the settlements are a key part.

“There must be consequences for anyone here in the UK who is ­actively implicating themselves in the horrors we’re watching unfold – from businesses to UK ministers and officials blatantly flouting their own rules over not exporting UK arms when there’s a clear risk of them being misused.”

Former Labour shadow chancellor, John McDonnell (below), told The Ferret that if the UK Government is to have “any credibility on human rights these licences must be reviewed in light of the UN’s investigations”.


“The Government’s handing out of licences to a company engaged in supporting the expansion of Israeli settlements in the West Bank flies in the face of UN resolutions outlawing these settlements and gives a lie to the prime minister’s claims of upholding international law and human rights,” McDonnell claimed.

Ithaca, Delek, the UK Government’s energy department, the ­Israeli embassy in London and the IDF were all asked to comment but none responded.

On its website, Ithaca says it is ­committed to “do[ing] the right things in the right way” and that environmental, social and governance (ESG) considerations are “interwoven into our balanced business strategy”.

Ithaca has adopted the UN’s ­sustainable development goals, ­including to contribute to “peace, ­justice and strong institutions”.

As well as for its activities in the West Bank, Delek has come under fire in recent years for its plans to develop gas fields off the coast of the disputed territory of Western Sahara.

Western Sahara was annexed by Morocco in the 1970s, but its ­sovereignty there is disputed by the indigenous Sahrawi people.

Norway’s massive sovereign wealth fund – built largely on the back of oil revenues – announced it was ­divesting from Delek in December ­because its activities in Western ­Sahara were “a serious violation” of “basic ethical norms”.

Meanwhile, Norway’s state-run oil company, Equinor, is ­partnering with Ithaca on the ­Rosebank field – which Equinor has an 80% stake in – a fact that has drawn growing criticism from both ­campaigners and politicians in the Scandinavian country.

The Ferret is an editorially independent, not-for-profit co-operative run by its journalists and subscribers. You can find it at https://theferret.scot/ and can subscribe for £5 a month here: https://theferret.scot/subscribe/

Big Oil’s Carbon Capture Conundrum

Many energy experts and environmentalists worry that the huge rush to fund CCS tech is a dangerous distraction. 

Editor OilPrice.com
Sat, 20 April 2024 


Hard-to-abate industries, particularly oil and gas, are racing to increase their carbon capture capacity as they strive to decarbonise operations. Despite being some of the biggest carbon emitters, many oil and gas majors are optimistic they can dramatically reduce their emissions by using carbon capture and storage (CCS) technology. This is, realistically, one of the few ways that oil and gas companies can reduce while keeping their fossil fuel output high. However, energy experts and environmentalists are now worried that Big Oil is becoming overly reliant on CCS tech instead of striving for meaningful change towards a green transition.

CCS technology has been around for years but has so far not succeeded in capturing carbon dioxide at the rate required to decarbonise large-scale hard-to-abate operations. Companies and governments worldwide have pumped huge quantities of funding into CCS in recent years in a bid to develop the technology required to effectively capture and store huge amounts of CO2 from industrial and oil and gas operations. However, scientists are still uncertain about whether today’s technology can capture the massive quantity of carbon emissions that many oil majors are promising.

The International Energy Agency (IEA) has deemed CCS technology as “critical” to achieving net-zero emissions around the globe. It is viewed as one of the few possible ways to decarbonise hard-to-abate industries that we continue to rely on until alternative production methods and materials are developed. The IEA also warned that it is not sustainable for oil and gas companies to mitigate major new fossil fuel projects simply by incorporating CCS tech into operations. Many oil majors have invested heavily in CCS tech to justify their ongoing exploration activities and huge oil and gas output, which is expected to continue for decades to come. But the IEA has repeatedly stated that this is at odds with a net-zero scenario by 2050.

CCS typically works by using chemical absorption to capture the CO2 emitted from a chimney at a facility. The emissions are then condensed into a liquid to be transported through a pipeline to be stored thousands of feet underground in depleted oil wells or geological formations. This process is anything but straightforward and rolling out CCS tech on a commercial scale is both complicated and expensive. According to the IEA, more than one billion metric tonnes of CO2 must be captured annually by 2030, which is over 20 times that captured in 2022. This figure rises to six billion tonnes in 2050, around 130 times more than in 2022.

Despite big promises, many companies are falling short of their carbon capture targets. To date, only five percent of announced CCS projects have reached a final investment decision, according to the IEA. There is still little evidence to suggest that CCS tech can be rolled out economically on a commercial scale.

Oil and gas companies have earmarked significant funds for CCS tech over the coming years, in the hope that will be able to continue pumping oil and gas for decades to come. Chevron expects to spend $10 billion on emissions-reducing technologies, while Exxon has pledged an investment of $20 billion. The projected total spending on CCS projects is around $241 billion globally by 2030. The U.S. and the U.K. are currently leading these efforts with investment pipelines of $85 billion and $45 billion, respectively, by 2030.

Many energy experts and environmentalists worry that the huge rush to fund CCS tech is a dangerous distraction. Oil and gas companies have been forced to accelerate their ESG efforts due to pressure from governments and international organisations, as well as high consumer expectations. However, most of these companies expect oil and gas production to continue to be their principal activity for the coming decades, meaning they need a quick way to decarbonise operations without cutting output. Without a proven track record, this could be a dangerous approach to decarbonising as, if CCS tech does not live up to expectations, it could have dire repercussions.

CCS technology is still extremely expensive, and it has a poor track record of working as effectively as anticipated. 

One 2022 study of CCS projects found that more were failing than succeeding, including Chevron’s Gorgon liquefied natural gas facility in Australia. This is the world’s biggest CCS project to date, at a cost of $3 billion, and it was found to be working at just a third of its expected capacity. At this rate, it will be impossible for companies that are relying on CCS tech to meet their climate targets in the coming years. Nevertheless, oil and gas companies worldwide continue to make bold claims about the potential for CCS tech, without sufficient evidence to back it up. The failure of CCS technologies in oil and gas operations could be catastrophic, leading to much higher-than-anticipated carbon emissions and contributing to a delay in the global green transition.

By Felicity Bradstock for Oilprice.com

LA REVUE GAUCHE - Left Comment: Search results for CCS 

Louisiana’s flagship university lets oil firms influence research – for a price

Sara Sneath in New Orleans

The Guardian
Sun, 21 April 2024 

The director of LSU’s Institute for Energy Innovation said being able to work with oil and gas companies is ‘really a key to advancing energy innovation’.

Composite: The Guardian/Getty Images/Alamy

For $5m, Louisiana’s flagship university will let an oil company weigh in on faculty research activities. Or, for $100,000, a corporation can participate in a research study, with “robust” reviewing powers and access to all resulting intellectual property.

Those are the conditions outlined in a boilerplate document that Louisiana State University’s fundraising arm circulated to oil majors and chemical companies affiliated with the Louisiana Chemical Association, an industry lobbying group, according to emails disclosed in response to a public records request by the Lens.

Related: How to spot five of the fossil fuel industry’s biggest disinformation tactics

Records show that after Shell donated $25m in 2022 to LSU to create the Institute for Energy Innovation, the university gave the fossil fuel corporation license to influence research and coursework for the university’s new concentration in carbon capture, use and storage.

Afterward, LSU’s fundraising entity, the LSU Foundation, used this partnership as a model to shop around to members of the Louisiana Chemical Association, such as ExxonMobil, Air Products and CF Industries, which have proposed carbon capture projects in Louisiana.

For $2m, Exxon became the institute’s first “strategic partner-level donor”, a position that came with robust review of academic study output and with the ability to focus research activities. Another eight companies have discussed similar deals with LSU, according to a partnership update that LSU sent to Shell last summer.

Some students, academics and experts said such relationships raise questions about academic freedom and public trust.

Asked to comment, the Institute for Energy Innovation’s director, Brad Ives, defended the partnerships, as did the oil majors. Two more companies have since entered into partnerships with the Institute for Energy Innovation, said Ives. But Shell is the only company to have donated at the level that gave the company a seat on the advisory board that chooses the institute’s research. The head of the Louisiana Chemical Association and the Louisiana Mid-Continent Oil and Gas Association also sit on the advisory board, which can vote to stop a research project from moving forward.

Ives said being able to work with oil and gas companies is “really a key to advancing energy innovation”.

A spokesperson for Shell said: “We’re proud to partner with LSU to contribute to the growing compendium of peer-reviewed climate science and advance the effort to identify multiple pathways that can lead to more energy with fewer emissions.”

An ExxonMobil spokesperson said: “Our collaboration with LSU and the Institute for Energy Innovation includes an allocation for research in carbon capture utilization and storage, as well as advanced recycling studies.”

LSU has long had a close-relationship with oil majors, the names of which hang from buildings and equipment at the university. Nearly 40% of LSU funding comes from the state, which received a good chunk of its revenue from oil and gas activities until the 1980s. In recent years, oil and gas revenue has made up less than 10% of the state budget.

But the new, highly visible partnership with Shell took the closeness a step further, promising corporations voting power over the Institute for Energy Innovation’s research activities in return for their investment.

“I have a hard time seeing a faculty member engaged in legitimate research being eager for an oil company or representative of a chemical company to vote on his or her research agenda,” said Robert Mann, political commentator and former LSU journalism professor. “That is an egregious violation of academic freedom.

“You don’t expect to see it written down like that,” Mann said, after the Lens asked him to review the boilerplate document that outlines what companies can expect in return for their donations to LSU’s Institute for Energy Innovation. It is not appropriate, Mann said, for faculty research to be driven by the decisions of the dean of a university, let alone an outside industry representative. “If you’re a faculty member in that unit you should know that the university is fine with auctioning off your academic freedom,” he said. “That’s what they’re doing.”

Ives of LSU said its Institute for Energy Innovation is no different to similar institutes across the US, including the Texas Bureau of Economic Geology, which performs research supported by corporate donors. “I think researchers saying that somehow having corporate funding for research damages the integrity of that research is a little far-fetched,” Ives said.

Related: World’s largest oil companies ‘way off track’ on emissions goals, report finds

Research performed at the institute is subject to the faculty’s individual ethics training and subject to peer-review, he said. “A donor that provided money that goes to the institute isn’t going to be able to influence the outcome of that research in any way.”

Asked about the relationship with the institute and industry, Karsten Thompson, the interim dean of the College of Engineering at LSU said: “To me, it’s not a conflict at all. It’s a partnership because they’re the ones that are going to make the largest initial impacts on reducing CO2 emissions.”

Some observers, noting that fossil fuel companies have previously shown a vested interest in obscuring scientific conclusions, question the reliability of academic studies sponsored by fossil fuel companies. Exxon, for example, denied the risk of human-caused climate change for decades, noted Jane Patton, an LSU alumna and the US fossil economy campaign manager for the Center for International Environmental Law.

After the Lens asked her to review LSU communication on the matter, Patton said she suspected that fossil fuel companies have had a say in what does and doesn’t get studied in relation to risky endeavors, such as carbon capture, which involves chemically stripping carbon dioxide from industrial emissions and piping it underground. For her, the LSU documents basically proved her fear. “This is the first time I’ve seen actual evidence of it,” Patton said. “This is a gross misuse of the public trust.”

To Patton, the perceived blurring of academic objectivity could not come at a worse time in Louisiana, as the climate crisis makes the state less habitable and housing more expensive. “It’s just disheartening,” she said. “To find that the state’s flagship institution is allowing industry to determine the research agenda. No wonder it’s so hard to find peer-reviewed research about how bad this is.”

Records show that Shell helped to tailor what LSU students would learn in the six courses offered under the institute’s carbon capture, use and storage (CCUS) concentration that debuted a couple years ago. The LSU alumnus Lee Stockwell, Shell’s general manager of CCUS, sat on the search committee for the Energy Institute executive director, served on the petroleum engineering advisory board, and was very involved in shaping the carbon capture curriculum.

Stockwell directed questions about Shell’s partnership with the university to LSU.

Stockwell was not the only oil representative to help design the curriculum. BP, Chevron, ConocoPhillips and ExxonMobil also had representatives on the ad hoc advisory committee that designed carbon capture coursework within the petroleum engineering department, according to a July 2022 email from Thompson. At least one cohort of students took two elective courses at LSU designed by the oil majors and another 10 students were expected to take the full concentration beginning in 2022.

LSU is not alone in this practice, Thompson said. At most engineering departments in the country, an active Industrial Advisory Committee (IAC) weighs in on curricula, so that degrees evolve as technology changes, helping students land internships and jobs.

LSU faculty has not been similarly engaged with renewable energy companies, because oil and gas companies have the resources to tackle the climate crisis now – and are not reliant on future technology, Thompson said. “Renewable energy is much more abstract,” he said. “So, I think that’s the difference. It’s not that we don’t care as much.”

Related: ‘A Trojan horse of legitimacy’: Shell launches a ‘climate tech’ startup advertising jobs in oil and gas

Fossil fuel companies have been finding their way into classrooms for decades, in part to help the industry retain a positive public image in the face of a heating planet.

Some students do not approve of the university’s partnerships with fossil fuel companies, or any financial ties with them.

For a decade now, students across the nation have filed complaints and demanded divestment from fossil fuels and hundreds of institutions have agreed. Locally, the LSU Climate Pelicans, an interdisciplinary group of students, have called for the university to divest endowment funds from the fossil fuel industry.

Inspired by the Climate Pelicans’ work toward divestment, the LSU graduate student Alicia Cerquone, who sits on the LSU’s student senate, sponsored a divestment resolution. The measure passed in a 37-2 vote last year, according to LSU’s student newspaper. Though investment in fossil fuels amounts to only 2 to 3% of the endowment, it’s an important philosophical step, Cerquone said.

Cerquone is also troubled by the influence that industry has on the Institute for Energy Innovation and fears other corporations could control other departments’ curriculums. “These entities are going to have a say in what we pay to learn here,” she said.

The fossil fuel industry has made forays into academia beyond Louisiana. ExxonMobil and Shell have both helped fund a similar Energy Initiative at Massachusetts Institute of Technology (MIT), where the highest-level donors can have an office on MIT’s campus, according to Inside Climate News. In 2021, Exxon funded and co-wrote a research paper with MIT researchers with conclusions that supported the argument for federal subsidies for carbon capture and use.

This story is co published with the Lens, a non-profit newsroom in New Orleans and part of its Captured Audience series, which is supported by a grant from the Fund for Investigative Journalism

Tesla Semi trucks in short supply for PepsiCo as its rivals use competing EV big rigs

Fri, Apr 19, 2024,
By Jessica DiNapoli

NEW YORK (Reuters) - Key Tesla customer PepsiCo made initial payments for 100 Tesla Semis in 2017, intending to use the electric-truck fleet to haul its Cheetos, Lays potato chips and Pepsi soda pop to retailers.

But according to the food-and-drinks maker and one of its executives with knowledge of the deal, PepsiCo was using only 36 of Teslas promised 100 electric trucks as of this month.


The shortfall, which hasn't been previously disclosed, lays bare the challenges for Tesla as it seeks to become a high-volume player in the truck-manufacturing business. Other would-be Tesla customers including food distributor Sysco, UPS and Walmart Canada continue to wait for Tesla Semi trucks and are turning to rival electric-truck makers.

The struggles of shipping enough Semis come at a bad time for Tesla, which has seen growth for its consumer electric vehicles slow, forcing it to cut prices and hurt margins. In addition, Reuters reported this month that Tesla had decided to cancel its long-promised inexpensive car that investors had hoped would drive further growth.

Diesel-powered 18-wheelers are a major source of pollution. As companies pledge to slash their greenhouse gas emissions, the proposition for Tesla is clear.

"People might wonder why build a semi truck?" Musk said at the carmaker's gigafactory in Sparks, Nevada, in late 2022, when Tesla delivered the Semis to PepsiCo. "It's 20% of U.S. vehicle emissions."

Under the Biden administration, companies using electric trucks qualify for large subsidies to offset their purchases. PepsiCo secured over $20 million in government grants to cover the cost of 32 of the Semis, plus federal subsidies of $40,000 per vehicle.

Tesla, which will report quarterly results on Tuesday, did not return a request for comment.

A PepsiCo spokesperson said in a statement that the company's plans for the Semis can shift when technology and the need to establish infrastructure is involved.

The soda and snack producer was the first of Corporate America to take delivery of any of Tesla's highly-anticipated Semi trucks. "The 100 (Tesla Semis) we have a deposit on, we’ll get those out in ‘23 for sure," Mike O’Connell, PepsiCo’s vice president of supply chain, told Reuters at the time.

But, as of this month, PepsiCo was "focused on best leveraging the 36 (Tesla Semi) vehicles that are currently in our fleet," a spokesperson told Reuters in early April. That’s the same number PepsiCo first started with when it began using the trucks to transport goods from its Modesto food manufacturing plant and Sacramento bottling site, PepsiCo executives said.

Tesla has been looking to build a truck-making business for years.

Tesla had said it would have the Semi in production by 2019. In October 2022, Musk told investors that his goal was to make 50,000 Semis in 2024. Tesla finally unveiled the Tesla Semi truck in late 2022.

But in June 2023, Musk said at an energy conference that "there just weren't enough batteries" for Tesla to reach "volume production" of the truck, without quantifying how many Semis that would be. He said Tesla would reach volume production in 2024 "as the battery problem gets solved."

Svein Sollie, the transportation director at ASKO Norway, the logistical arm of Norway's largest food retailer NorgesGruppen, used his personal credit card to put down an initial deposit on 10 of the Tesla Semis in 2017 but has not received any.

"We are not happy with the situation at Tesla," Sollie said. "(It's) almost seven years now, it's a long time to wait.”

UPS reserved 125 Tesla Semi tucks in 2017, one of Tesla's biggest orders at the time. A spokesperson for the package delivery company told Reuters on April 16 that it is "working closely with Tesla to determine a date for us to take delivery of the trucks," but declined to provide additional details.

Meanwhile, UPS, Walmart Canada, Sysco and Schneider National, a transportation company that works for PepsiCo's Frito-Lay, said they are turning to Daimler Truck, maker of the Freightliner eCascadia. All four companies said they had begun to put dozens of eCascadia electric big rigs on the road.

The eCascadia's range is around 230 miles, while the Tesla Semi can go about 500 miles. Schneider said it uses nearly 100 eCascadia trucks to haul goods including PepsiCo's Frito-Lay products.

Daimler Truck North America said the eCascadia is used in more than 55 separate companies' fleets.

To be sure, Tesla has its own fleet of close to 100 Semi trucks that are traveling between its factories in Fremont, California and Sparks, Tesla executive Lars Moravy said on reality show Jay Leno's Garage in December.

In addition, logistics provider Martin Brower has said on its website that it used two Tesla Semis to make deliveries to its restaurant customers earlier this year, as part of a pilot. It did not respond to additional requests for comment.

In Tesla's quarterly earnings call on Jan. 24 Andrew Baglino, an executive who has since left the company, said Tesla recently began expanding its plant in Nevada to manufacture the Semi. Musk said in March that it would "make sense to also build the Semi in Europe" at the company's factory outside of Berlin, according to local news reports.

Pepsi Chief Sustainability Officer Jim Andrew said in a recent interview with Reuters that PepsiCo was working on building out the infrastructure to support an electric fleet, including employees who can service the vehicles and power grids strong enough to charge them.

"You're talking about a system," Andrew said. "All of those things have to happen before we can electrify the fleet."

A PepsiCo spokesperson said the company would be deploying more electric vehicles from a range of manufactures as they are available.

PepsiCo investor Green Century Capital Management has reservations about the company's time table for rolling out the Semis.

"The fact they're running behind schedule is concerning," said Andrea Ranger, a shareholder advocate at Green Century. The investment firm has followed PepsiCo's use of electric vehicles and is pushing the company to consider its impacts on biodiversity at its annual meeting in May.

In Europe, ASKO Norway is using electric semis from Scania and Volvo while it waits for Tesla, according to Sollie. He said Tesla told him that Tesla is prioritizing Semi deliveries to Pepsi and other U.S. customers.

(Reporting by Jessica DiNapoli in New York; additional reporting by Nick Carey in London and Hyun Joo Jin in San Francisco; Editing by Alistair Bell)

UAW scores historic landslide victory to unionize the first foreign automaker in the US

Jamie L. LaReau, 

Detroit Free Press
Updated Sat, April 20, 2024 

The UAW made American labor history Friday with its biggest organizing win in decades when workers at the Volkswagen Chattanooga plant in Tennessee voted to join the union.

The National Labor Relations Board said the vote was 2,628-985, or 73% approval, in voting that ended at 8 p.m. Friday.

"In a historic victory, an overwhelming majority of Volkswagen workers in Chattanooga, Tennessee, have voted to join the UAW," union spokesman Jonah Furman wrote in a media statement as the vote-counting was still wrapping up. "... The outcome is clear: Volkswagen workers in Chattanooga are the first Southern autoworkers outside of the Big Three to win their union."

An aerial view of the Volkswagen Chattanooga plant in Tennessee where workers will start voting April 17, 2024 on whether or not to unionize.


After the vote, UAW President Shawn Fain told reporters at the plant that their decision reflects the fact that working-class people are “fed up with being left behind” and living paycheck-to-paycheck.

"This gives workers everywhere else the indication that it's OK and it can be done," Fain said about organizing the VW plant. "All we heard for years is that we can't do this in the South. And you can. Workers can do it. It's time for workers to take more control of their lives. The only way they can take control of their work lives is by forming a union."

In a statement, VW confirmed the union's victory and said 3,613 votes were cast, which is 83.5% of employees who were eligible to vote.

"Volkswagen thanks its Chattanooga workers for voting in this election," the company said in a statement.

It was another big win for Fain, building on the momentum of 25% raises won last fall after a 46-day strike against Ford, General Motors and Stellantis, Detroit-rooted automakers with long union histories. In February, the UAW announced it would commit $40 million to organize workers at nonunion facilities and battery plants.

The UAW had twice tried and failed to organize the Chattanooga plant. The vote makes it the first foreign auto plant in the U.S. South that the union has ever organized.




"Fain has been able to pull off what some other union leaders have failed to do with big contract victories," Richard Bensinger, a veteran union organizer who helped lead the Starbucks union campaign and the former national organizing director of the AFL-CIO, told the Free Press. "He has dramatically pivoted from the strikes to organizing. Exciting. Workers I know at both plants say there's overwhelming support, and the politicians are more reticent this time around, I think, afraid of alienating so many Southern union supporters."

Art Wheaton, director of labor studies at Cornell University's School of Industrial and Labor Relations, said the Detroit automakers played a role in the union's victory too.

“By having Ford, GM and Stellantis, after the ratification of the new contracts, immediately go to their stockholders and say, ‘It’s no big deal, we can still be very profitable,’ meant Chattanooga workers didn’t have to listen to the Republican governors who said that a union will shut them down," Wheaton said. "Ford, GM and Stellantis showed that (a rich contract) does not dramatically damage their bottom line and they can still afford to give stock buybacks, give their CEOs big paychecks, and now the workers can afford to buy groceries.”

More: Bill Ford on UAW strike: 'We can stop this now,' urges focus on nonunion automakers

An attempt to thwart the union

On Tuesday, just hours before the voting was set to start, Tennessee Gov. Bill Lee and five other Republican governors in Southern states with nonunion automakers issued a lengthy letter in an attempt to thwart a union at VW Chattanooga. It said they were "highly concerned" about the UAW's unionization campaign, which is "driven by misinformation and scare tactics."

"Companies have choices when it comes to where to invest and bring jobs and opportunity," the governors' letter argued. "We have worked tirelessly on behalf of our constituents to bring good-paying jobs to our states. These jobs have become part of the fabric of the automotive manufacturing industry. Unionization would certainly put our states’ jobs in jeopardy."

A Volkswagen employees works the assembly line at Volkswagen Chattanooga in Tennessee.

The letter did not dissuade workers at the VW plant because Friday’s win was “pretty clear cut that the opposition arguments made by some of the politicians weren’t winning the day,” said Peter Berg, a professor of employment relations and director of the School of Human Resources and Labor Relations at Michigan State University.

But while the argument that workers would suffer under collective representation didn’t win the day at VW, Berg questions if it will have sway elsewhere.

The drive behind VW workers signing cards on the UAW's website seeking to join the union followed the UAW's contract wins from the Detroit Three. Besides the 25% raise, the union won members a cost-of-living-adjustment, the elimination of wage tiers and bonuses for retirees. Right after the UAW struck those deals, Nissan, Honda, Hyundai, Toyota and Volkswagen all offered raises of 9% to 14% to their U.S. workforces.

Democratic politicians were quick to celebrate the UAW's Tennessee victory.

President Joe Biden called out the Southern governors, saying in an official statement: "Let me be clear to the Republican governors that tried to undermine this vote: There is nothing to fear from American workers using their voice and their legal right to form a union if they so choose. In fact, the growing strength of unions over the last year has gone hand-in-hand with record small business and jobs growth alongside the longest stretch of low unemployment in more than 50 years."

Biden, whose reelection bid has been endorsed by the UAW, celebrated post-pandemic labor success, noting, "these union wins have helped raise wages and demonstrate once again that the middle class built America and that unions are still building and expanding the middle class for all workers."

Michigan Gov. Gretchen Whitmer tweeted that it was "a victory for all American workers."

Added Sen. Elizabeth Warren, D-Massachusetts, "The power of labor unions is growing, and the American labor movement is stronger than ever."

Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, told the Free Press that unionizing Volkswagen helps the Detroit Three automakers by weakening foreign automakers' cost advantage — but will likely increase auto prices for consumers. While foreign automakers often pay union wages to deter union organizing, additional costs associated with health care and retirement and overall operations will increase, costs now absorbed by Ford Motor Co., General Motors and Stellantis, he said.

Growing union strength in the Deep South diminishes the ability of governors who recruit business with promises of nonunion shops, Elson said.

“A union always makes your plant more expensive because of the threat of shutdown and other issues,” he said. “Anytime workers are organized, it’s more difficult to run a business in a sense that you have an opposing force that doesn’t always agree. The competitive advantage of foreign automakers has lessened. The cost of the foreign car goes up, and that’s how foreign automakers compete. Getting a foreign car at a lower price is less likely. For the consumer, it’s not a good thing.”

The climate is right to organize now, “and much easier,” with an administration in Washington that is the most pro-labor in memory, Elson said.

Whether this is a bellwether for organizing, he didn’t know. The federal government, in many ways, has replaced unions when it comes to worker safety protections, he said. These days, unions focus on wages, hours and other benefits, said Elson, a longtime member of the American Association of University Professors union.
'Fain has broken the mold'

The win shatters the notion that unions can’t organize in the South, said labor expert Harley Shaiken, a professor emeritus at the University of California-Berkeley. It also “really lights up the sky in its ability to inspire” the workers at the dozen or so other nonunion automakers where the union is trying to organize, to seriously consider unionizing, he said.

For Fain, this victory solidifies his leadership. First, he delivered at the bargaining table winning big wage increases and other benefits with the Detroit carmakers and now he has organized where the union has never been able to organize before, Shaiken said.

UAW President Shawn Fain speaks during a Facebook livestream on Tuesday, Jan. 16, 2024.

"Shawn Fain has broken the mold," Shaiken said. "He has done the impossible in quick order by putting in enormous energy and new approaches to work. Saying it can’t be done, he seems to interpret as 'we’ll do it.' "

Wheaton agreed saying Fain's charisma was not as effective as his use of data to support his demands.

“He is a dramatic improvement in terms of saying we’re not going to do things the old way, we’re going to do things the new way and also employ a great use of data in showing, here’s the profits they’re making and what you’re getting,” Wheaton said. “All of America is behind that. The ‘haves’ have plenty and they don’t need to have it all. I think this says a lot about him.”

The addition of some 4,300 workers to the union's roster is good, but what is more important is the standard it sets going forward to win more membership, Shaiken said.

"This is a small step to a single plant that sets a direction that can be transformative," Shaiken said.
A change for America

Bensinger called the victory a “pivotal moment in our nation's history, in that this finally marks the reversal of a 40-year decline in unions.”

Indeed, UAW membership is far below its 1979 peak of 1.5 million. The union currently counts almost 400,000 active members and 580,000 retired members. That decline, labor experts said, hurts the national economy even nonunionized workers.

“When we had strong unions and a large middle class, the auto industry was entirely unionized,” Bensinger said. “Over the past four decades, unionization of the industry sunk to less than 50%. With the unionization of the Southern auto plants, we are beginning the process of rebuilding the middle class. This is great news for our democracy.”

Bensinger said during the Starbucks campaign, he learned the new generation of workers believes in unions and recognizes that organizing is the only way their lives will change.
'I want a union, tell me what to do'

Renee Berry, 58, is pro-union. Berry's job at VW Chattanooga is to deliver vehicle parts to the assembly line. She’s worked for 14 years at the factory that now builds the ID4 electric SUV and the Atlas and Atlas Cross Sport SUVs. She said she voted “yes” to unionize because having had three surgeries since starting there, she wants improved plant safety. She also wants a pension, better health care and to not have to use paid time off days during mandatory plant shutdowns if she wants to get paid during those shutdown weeks.

Berry believes the only way to get those improvements is with a union. The UAW provided Berry to the Detroit Free Press for comment. Berry was part of the volunteer organizing committee and she helped staff the voting center. She said when she looked out at the lines this week, “All I could see in the line was red T-shirts in support of the union."

Renee Berry has worked at VW Chattanooga plant in Tennessee for 14 years. Berry said was part of the volunteer organizing committee at the plant and she voted “yes” for a union in 2014, 2019 and this year. She wants improved safety, a pension, health care and better paid time off guidelines and believes workers will only get those with a union.More

Still, having lived through the votes in 2014 and 2019 only to be disappointed at the loss, Berry knew to be cautiously optimistic.

"It’s a lot different this time," Berry told the Free Press. "Third time’s a charm. The people who were on the fence, the things that happened to us earlier, has happened to them now. So now … they can get on board. Now, they say, ‘I want a union. Tell me what I need to do.’ "

VW spokesman Michael Lowder addressed the PTO issues Berry raised, saying summer shutdown week usually occurs during the Fourth of July holiday. So employees would need to use only four PTO days because July 4 is a paid holiday. For the December holiday shutdown, he said the company pays for that time off as company holidays and no PTO is required.

"We understand that PTO is a significant issue and priority for employees. We want them to have work-life balance and are constantly looking for ways to bolster our benefits on this front," Lowder said. "We recently announced a policy change to increase emergency PTO days. Direct feedback from employees via the Engagement Committee helped inform this decision."

Berry spoke to the Free Press earlier in the evening, saying that if the union won the vote, she will “shed tears. It’s going to be emotional, but it’s going to happy.”

And if it fails, Berry said, "We are going to keep on trying. We’re not going to give up. Those who voted against it, something will happen to them to change their mind.”
Up next: Mercedes Benz

The workforce at VW Chattanooga was one of the first nonunion automakers in the country to launch its public campaign to unionize, with 30% of the workers at the plant signing the cards in December. But that didn't guarantee a win.

The UAW has a history of trying to organize but failing in the South, particularly at the Chattanooga plant, which is VW's only plant in the United States. In 2014, the union was confident it would win a vote at the VW plant because it had a majority who had signed cards in favor of a union.

But on Day One of a three-day vote, the Republican leadership of Tennessee mounted a campaign to vote no. The GOP's campaign worked, in part because the former mayor of Chattanooga insinuated that VW would not allocate future products to the plant if it unionized. In 2019, the UAW again narrowly lost a vote at the plant.

Still, MSU's Berg was not surprised that VW was first to vote and it passed, he said.

Up next will be the workforce at Mercedes-Benz plants in Alabama. Both Mercedes-Benz and the UAW agreed to an election, according to the National Labor Relations Board. The vote is set for May 13-17 at the Mercedes-Benz plants in Vance and Woodstock, Alabama.

The vote comes after what was said to be a supermajority of Mercedes-Benz employees at the plants filed a petition earlier this month with the board's Region 10 office in Atlanta seeking to represent about 5,200 production workers.

Fain last month told the Free Press he expects to organize at least one new automaker plant in the country this year, possibly more. Fain said all he needs is one plant to take it to a vote and win to provide the momentum to win more, he said.

Berg said, "Let’s see what happens with Mercedes."

More: GM's top engineer behind Chevrolet's iconic Corvette set to retire after 47 years

Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. 

Free Press autowriter Phoebe Wall Howard contributed to this report.

This article originally appeared on Detroit Free Press: UAW scores win in Volkswagen Chattanooga plant unionization vote




UAW wins big at Volkswagen in Tennessee – becoming the first foreign-owned factory in the American South to unionize

Bob Bussel, University of Oregon
Sat, April 20, 2024 

Volkswagen workers celebrate in Chattanooga, Tenn., after their bid to join the UAW union prevailed. AP Photo/George Walker IV

A decisive majority of the Volkswagen workers employed at a factory in Chattanooga, Tennessee cast their ballots in favor of joining the United Auto Workers union, the German automaker announced on April 19, 2024.

Persuading any Southern autoworkers to join a union had long been one of the U.S. labor movement’s most enduring challenges, despite persistent efforts by the UAW to organize this workforce.

To be sure, the UAW already has members employed by Ford and General Motors at facilities in Kentucky, Texas, Missouri and Mississippi.

However, the union had previously tried and largely failed to organize workers at foreign-owned companies, including Volkswagen and Nissan, in Southern states – where about 30% of all U.S. automotive jobs are located. It was the UAW’s third election at the same factory since 2014. The prior two ended in narrow losses.

The victory follows the UAW’s most successful strike in a generation against Detroit’s Big Three automakers, through which it won higher pay and better benefits for its members in 2023.

Volkswagen said it will await certification of the results by the National Labor Relations Board, the federal agency responsible for enforcing U.S. workers’ rights to organize. As long as neither side challenges the results within five business days, the NLRB will certify them – greenlighting the start of bargaining over a contract.

The union has already scheduled another election that will occur less than a month after the Volkswagen vote. More than 5,000 workers at the Mercedes-Benz plant in Vance, Alabama, will have their say on whether to join the UAW in a vote that will run May 13-17, 2024.

Volkswagen automobile plant employee Kiara Hughes celebrates the union’s win on April 19, 2024. AP Photo/George Walker IV
$40 million campaign

The UAW has pledged to spend US$40 million through 2026 to expand its ranks to include more auto and electric battery workers, including many employed in the South, where the industry is quickly gaining ground.

Based on my five decades of experience as a union organizer and labor historian, I anticipate that, recent momentum aside, the UAW will face resistance from the other foreign automakers that operate in the South. The pushback is also coming from Southern politicians, many of whom have expressed concern that UAW success would undermine the region’s carefully crafted approach to economic development.

But the outcome of this first election among Volkswagen’s more than 4,300 workers in Tennessee who were eligible to vote represents an impressive first step in the union’s ambitious campaign to organize foreign-owned automakers in the South and other nonunion factories across the country. With about 73% of the workers who voted choosing to say “yes,” according to the company and additional sources, I believe that this historic victory will boost UAW organizing in the South and will likely inspire other workers seeking to unionize their workplaces.

A sign of things to come? AP Photo/Rogelio V. Solis
Lauding the ‘perfect three-legged stool’

After the region’s formerly robust textile industry imploded in the 1980s and 1990s because of an influx of cheap imports, Southern business and political leaders revived the region’s manufacturing base by successfully recruiting foreign automakers.

The strategy of those leaders reflects what the Business Council of Alabama has described as the “perfect three-legged stool for economic development.” It consists of “an eager and trainable workforce with a work ethic unparalleled anywhere in the nation,” accompanied by a “low-cost and business-friendly economic climate, and the lack of labor union activity and participation.”

The prospect of a low-wage and reliable workforce has lured the likes of Nissan, BMW, Mercedes-Benz, Kia, Honda, Volkswagen and Hyundai to the South in recent decades.

Although many of those companies negotiate constructively with unions on their home turf, the lack of union membership and the protections that go with it have proved a draw for them in the United States.
Blaming unions for bad job prospects

One way automotive employers in the South have blocked unions is by portraying them as outdated institutions whose bloated contracts and rigid work rules destroy jobs by making domestic auto companies uncompetitive.

Automotive executives in the South argue the region has developed an alternative labor relations model that provides management with flexibility, offers wages and benefits superior to what local workers have earned previously and frees employees from any subordination to union directives.

Automakers with plants in the South also draw on another powerful resource in resisting the UAW: public intervention by top elected officials.

The United Auto Workers had sought to organize Volkswagen employees in Chattanooga, Tenn., twice before. Elijah Nouvelage/Getty Images
Making dire warnings

With the UAW ramping up its organizing efforts again, Southern governors are sounding alarms once more.

On the eve of the Volkswagen election in Chattanooga, six of these governors issued a joint statement denouncing the UAW as a “special interest” that would “threaten our jobs and the values we live by.” They asserted that a vote for the UAW would undermine their ability to attract auto manufacturers and “stop growth in its tracks.”

The UAW counters that union membership means workers will get predictable raises, better benefits and improved workplace policies.

Although these arguments from anti-union politicians haven’t changed much over the years, the context certainly has.

The UAW’s big wins on pay and benefits resulting from its 2023 strike against General Motors, Ford and Stellantis have increased its clout and credibility.

Many automakers with a U.S. workforce not covered by the UAW – including Volkswagen, Honda, Hyundai and other foreign transplants – responded by raising pay at their Southern plants. The union justifiably describes those raises as a “UAW bump.”

The UAW is citing these pay hikes in its outreach to workers at Tesla and other nonunion companies.

“Nonunion autoworkers are being left behind,” the UAW’s recruiting website warns. “Are you ready to stand up and win your fair share?”

The pitch continues: “It’s time for nonunion autoworkers to join the UAW and win economic justice at Toyota, Honda, Hyundai, Tesla, Nissan, BMW, Mercedes-Benz, Subaru, Volkswagen, Mazda, Rivian, Lucid, Volvo and beyond.”

Some Southern autoworkers, meanwhile, have been expressing concerns over scheduling, safety, two-tier wage systems and workloads that they believe a union could help resolve.

It’s also clear they’ve been emboldened by the gains they have seen UAW members make.

Revving up

The UAW’s campaign is just starting to rev up. And the timing is ideal.

A 2023 National Labor Relations Board ruling provides unions with additional leverage in this process. If management refuses to grant the union’s request for recognition, the employer would then be required to seek an NLRB representation election.

To win, unions normally need a majority of those voting. But in accordance with the new ruling, if management is found to have interfered with workers’ rights during the election process, it could then be required to bargain with the union.

The UAW says it’s waging organizing campaigns at more than two dozen other nonunion plants, including factories run by Hyundai in Montgomery, Alabama, and Toyota in Troy, Missouri.

I believe that the stakes are high for all workers, not just those in the auto industry.

As D. Taylor, the president of Unite Here, a union that represents workers in a wide range of occupations, recently observed: “If you change the South, you change America.”

This is an updated version of an article published on March 8, 2024.

I was briefly a member of the United Auto Workers in the 1970s.