CHINA'S 1929 IN SLOMO

Evergrande crisis: a third of China's developers may face pressure with US$84 billion in debt maturing by end of 2022, 

S&P warns

Chad Bray and Pearl Liu chadwick.bray@scmp.com; pearl.liu@scmp.com
Wed, October 27, 2021

A third of China's property developers could see their liquidity "acutely strained" in the worst case scenario as weaker sentiment and new government regulations weigh on their funding sources, with a "real" risk of default as some US$84 billion in debt is set to mature by the end of next year, according to S&P Global Ratings.

The credit rating company said that more than half of its rated portfolio of Chinese property developers are "most at risk" under such a scenario as their bonds are rated as junk, from "B-" to "B+", or two levels below investment grade.

"The entities have also made heavy use of funding via joint ventures and trust loans, given they have been largely shut out of more conventional funding," S&P analysts Matthew Chow and Aeon Liang said in a research note. "New regulations and weak sentiment are squeezing these capital channels.

"The idea that entities may be abruptly deprived of such funding, threatening refinancing plans and potentially triggering defaults, is a large part of our scenario analysis."

Concerns are rising about the high level of debt carried by China's developers as a massive liquidity crisis at China Evergrande Group, the mainland's biggest home builder by sales, has spooked financial markets.

Evergrande, the world's most indebted developer, missed a series of interest payments on its offshore debt in September and October as it strains under more than US$300 billion in total liabilities and faces a difficult combination of government regulations restricting borrowing by overburdened developers and weakening property sales.

The Shenzhen-based developer averted a default last week after it wired a missed payment on a US$2.03 billion bond just ahead of the expiration of a 30-day grace period. Failing to make the payment would have triggered cross-defaults on much of its onshore debt.

However, Evergrande is far from out of the woods as it faces another deadline on Friday to make good on a missed coupon payment from September and a deadline to make three more payments on November 11. The company has US$37 billion in total borrowings that are set to mature by the end of June 2022.

The concerns over Evergrande have been amplified as several smaller developers, including Fantasia Holdings Group, Modern Land (China) and Sinic Holdings Group, have defaulted on their debt in recent weeks.


SCMP Graphics alt=SCMP Graphics

The recent defaults have dampened sentiment in the capital markets, according to Simon Lee, primary analyst with rating company Pengyuan International.

"Property developers are expected to face more refinancing challenges in a tight credit environment," Lee said. "We expect those property developers with lower land bank quality, weaker sales execution capability and higher leverage to face a substantial increase in credit spread as the credit risk and default risk have been escalated."

Several heavily indebted developers will see their debt mature in the coming months.

A view of Evergrande's The Vertex project in Cheung Sha Wan. Photo: K.Y. Cheng

Henan-based Central China Real Estate, which wrote to the provincial government in early August asking for help, has a bond set to mature on November 8, with US$386 million in remaining principal.

Guangzhou-based Agile Group Holdings, whose 11 bonds have seen their prices slump amid investors concerns over its off-balance debts, has a US$200 million bond set to mature on November 18.

On Wednesday, S&P downgraded another debt-laden Chinese developer, Kaisa Group Holdings, to "CCC+", or three levels below investment grade, saying the its capital structure is "unsustainable given the company's sizeable near-term debt maturities, weakening liquidity, and inadequate free cash flow through 2022".

The exterior of Kaisa Group's Concerto development in Sham Shui Po. Photo: Xiaomei Chen 

Kaisa's offshore bonds have seen wild swings in recent weeks amid speculation about the firm's ability to service its debt. Last week, Chinese Estates Holdings, once Evergrande's second-biggest shareholder, sold high-yield bonds issued by Kaisa at a loss.

Shenzhen-based Kaisa, the first Chinese developer ever to default on its offshore debt six years ago, has a US$400 million bond set to mature in December.

The National Development and Reform Commission (NDRC) summoned several of China's biggest offshore bond issuers for a meeting on Tuesday, promising to ease access to foreign exchange cash to help them meet their obligations.

In its note on Wednesday, S&P said that residential property sales in China could fall by 10 per cent next year amid weaker sentiment, and another 5 to 10 per cent in 2023, setting the stage for a difficult operating environment for the mainland's developers.

An overdue IOU posted by an Evergrande supplier on the social-media platform Weibo. Photo: Weibo

Another sign of strain is commercial bills, effectively "I owe yous" (IOUs) issued by Evergrande and other developers.

The total amount of outstanding commercial bills by rated developers increased by more than 30 per cent to about 125 billion yuan in 2020 as developers have turned to them amid the tight financing and restrictive regulatory environment, S&P said. The risk to developers is manageable, but suppliers and service providers could stop taking the bills if things worsen, the ratings company said.

"In a more extreme scenario, non-payment risk of developers could cause construction suspension, putting a hard stop to developers' cash flows. Project delivery and revenue booking would deteriorate rapidly, hitting the credit metrics of developers," S&P's Chow and Liang said. "The affected general contractors and suppliers may then stop paying their own suppliers, or stop work for other property developers, causing spillover effects."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.

Xpeng Soars Above Buy Point After Showcasing Flying Car Ahead Of Tesla

APARNA NARAYANAN
10/25/2021

China's Xpeng Motors (XPEV) showed off a flying car and plans for superchargers as a new EV looms, intensifying the EV startup's challenge to Tesla (TSLA) in one of the world's biggest electric-car markets. Xpeng stock surged Monday, topping a buy point.

At its annual Tech Day in Guangzhou Sunday, Xpeng unveiled the sixth generation of its flying car, reports in local media said. The vehicle, from affiliate HT Aero, can both drive on land like a normal car and fly in the air.

HT Aero, backed by Xpeng and its CEO He Xiaopeng, raised $500 million last week from outside investors, including venture capitalists.

By 2024, HT Aero plans to mass produce the flying car, it said. The vehicle is likely to cost around RMB 1 million ($157,000). In May, Tesla CEO Elon Musk claimed a version of its upcoming Roadster will be able to fly "very briefly."

On Sunday Xpeng, the emerging Tesla and Nio (NIO) rival, also discussed next-gen superchargers while alluding to a new electric vehicle. Xpeng currently has 439 'supercharging' or fast-charging stations across China vs. 1,000 Tesla Supercharger stations in that country.

At the Guangzhou Auto Show in November, Xpeng is set to debut a new flagship SUV, possibly called the G-7 and based on the existing P7 electric sedan.

In 2022, Xpeng plans to offer highly advanced driver-assist systems and a self-driving car service in its home market. And by 2025, Xpeng's CEO said he sees EVs making up 50% of China's "new energy vehicle" market, which includes hybrid-electric vehicles.

In September, the share of plug-in electric cars in China reached an all-time high of 20%, or one in five new cars, spearheaded by robust Tesla Model 3 and Y sales.

Xpeng Stock, EV Stocks

Shares of Xpeng popped 11.5% to 48.09 on the stock market today. Xpeng stock has just topped a 48.08 buy point in a choppy cup base, according to MarketSmith chart analysis. Despite sharp pullbacks this year amid China's tech crackdown, XPEV stock has never traded below the IPO price of 15 since its August 2020 debut.

Among other EV stocks, Nio rose 6.15% while Tesla vaulted nearly 13% to a fresh high and a $1 trillion market cap Hertz on Monday ordered 100,000 Tesla EVs as its rental car fleet looks to go electric. Li Auto (LI) advanced 6.1% and BYD (BYDDF) added 5.4% to another all-time high, rallying further on strong EV sales.

Last Thursday, Deutsche Bank analysts raised their price target on Xpeng stock by $6 to $57. They expect higher EV sales than previously seen for the emerging Tesla rival. They're also bullish about the market for flying cars in China and Europe.

Xpeng continues to push tech innovations. This past summer, the EV startup unveiled the P5, an EV with an autonomous driving system enabled by 32 sensors, including 2 Lidar units and 13 high-definition cameras. It will bring highly automated driving from highways to city roads for the first time, Xpeng said.

That system is expected to be Level 3, which means drivers can hand over complete control to the car under certain conditions.

Tesla-Hertz deal is a 'major win-win for both sides:' Hedge fund veteran

Ines Ferré
·Markets Reporter
Wed, October 27, 2021

The Tesla (TSLA)-Hertz deal is a "major win-win" for both sides, says Nicholas Colas, co-founder of DataTrek Research.

The hedge fund veteran says the arrangement is a "fascinating case study in how new and old industries still need each other to maximize the impact of disruptive technologies on the one hand and leverage that same technology to remake a stale business model on the other."

Hertz Global Holdings has placed an order of 100,000 Tesla cars in a step towards electrifying its rental fleet. The vehicles are set for delivery by the end of 2022. Charging stations will also be installed.

Shares of Tesla soared on the news earlier this week, pushing the electric vehicle giant's market cap past $1 trillion for the first time ever.

"Hertz locks up a significant part of Tesla’s production over the next year, and at what should be healthy margins," wrote Colas in a note to investors.

"Tesla now has 10 percent of its total future 12-month production capacity spoken for, something which will help it plan plant utilization and optimize for efficient production," said Colas.

He goes on to point out the car rental company has a large footprint in the U.S., including major airports and large cities. Hertz will be a useful partner as Tesla grows the number of charging locations for its electric vehicles.

"While these will be only for rental customers at first, we can see Hertz monetizing “charging as a service” for Tesla owners," wrote Colas.

He points out the U.S. car rental industry missed the "ride-sharing" disruption, but it can "make a comeback" by getting involved with electric vehicle makers working on autonomous driving.

"This, we suspect, is Hertz’s endgame strategy. They know that by being a major EV buyer they will have an edge as these vehicles eventually transition to autonomous driving," wrote Colas.

Hertz Global Holdings just came out of bankruptcy over the summer. The company entered Chapter 11 in May 2020, during the pandemic as economies shut-down amid global lockdowns.

Uber partners with Hertz to offer 50,000 Tesla rentals to U.S. ride-hail drivers

Wed, October 27, 2021

By Tina Bellon

(Reuters) -Uber Technologies Inc on Wednesday said it is launching a new partnership with rental car company Hertz to offer 50,000 Tesla Inc vehicles as a rental option for its ride-hail drivers by 2023.

Uber drivers can rent a Tesla through Hertz starting on Nov. 1 in Los Angeles, San Francisco, San Diego and Washington DC, with the program later this year expanding to cities nationwide, the ride-hail company said in a blog post https://www.uber.com/newsroom/hertztesla.

The announcement comes after Hertz on Monday said it would order 100,000 Tesla vehicles by the end of 2022, meaning that half of the rental company's Tesla fleet would be reserved exclusively for Uber drivers.

News of the biggest-ever Tesla order led to a share price rally and saw the electric vehicle company's market value surpass $1 trillion on Monday.

Tesla shares on Wednesday were up 3%, while Uber shares were down 1.4%. Hertz shares were up 2%.

Hertz on Wednesday also announced a separate partnership with online used-car dealer Carvana Co, whose shares rose 3% in morning trade. Under the agreement, Hertz would reduce its reliance on mass auctions to offload used rental fleet vehicles and instead sell vehicles directly to consumers through Carvana's sales channels.

For Uber drivers, Tesla rentals will start out at $334 a week, including insurance and maintenance, and consist mostly of the company's Model 3 sedan. Uber said the rental cost would drop to $299 per week or lower as the program expands in the coming year.

Wednesday's deal represents Uber's most significant step so far in expanding the use of EVs on its platform. The company has vowed to operate only electric vehicles on its United States, Canadian and European platform by 2030, and worldwide by 2040.

But only a few ride-hail drivers can afford the higher EV sticker prices and in 2019, only 0.15% of all Uber miles in the United States and Canada were driven in electric vehicles, company data showed.

Ride-hail drivers produce more pollution per passenger mile traveled because they spend more than a third of their time driving around empty. Researchers generally assume that electrifying one ride-hail vehicle reduces the same amount of CO2 as converting three regular gas-powered vehicles.

Hertz, which is emerging from bankruptcy, hopes the EV focus will allow the once-dominant brand to stand out against competitors.

Carmakers also consider partnerships with ride-hail companies as a convenient way to expose more consumers to non-fuel-powered vehicles.

Tesla did not respond to a request for comment.

(Reporting by Tina Bellon in Austin, Texas; editing by Richard Pullin and Mark Porter)

Hertz Teams With Uber, Carvana in Big Shift to Electric Cars

Erik Schatzker
Wed, October 27, 2021

(Bloomberg) -- Hertz Global Holdings Inc., fresh off a blockbuster order for 100,000 Teslas, reached an exclusive agreement to supply Uber drivers with electric vehicles and signed up Carvana Co. to dispose of rental cars it no longer wants.

Taken together, the deals represent a trifecta of aggressive and innovative initiatives with the potential to upend the car-rental business and hasten the transition to greener transportation. The order for Model 3s on Monday, the largest-ever for EVs at $4.2 billion, was such a watershed moment that it propelled Tesla Inc.’s valuation past $1 trillion.

Just as surprising: The company behind it all is barely out of bankruptcy. Only 17 months ago, with the Covid-19 pandemic raging, Estero, Florida-based Hertz was so troubled and its future so uncertain that it sought protection from creditors. Now, under the control of hedge fund and private-equity owners, Hertz is leaning on mobile technology and digitization to transform a stodgy industry known for uninspiring cars and poor customer experiences.

“Our approach is very strategic and very deliberate in terms of how we want to disrupt ourselves and, hopefully, disrupt the industry,” Mark Fields, who’s serving as interim chief executive officer at Hertz, said in an interview. “Instead of asking why, we’re asking why not.”

Under the agreement with Uber Technologies Inc., drivers for the ride-hailing giant who previously had to provide and maintain their own EVs will be able to rent one of 50,000 Teslas from Hertz instead. The program, which starts Nov. 1, is an alternative to buying or leasing, and many drivers may find it more appealing.

Had Uber bought and rented out the Teslas itself, some states might classify drivers as employees. The arrangement with Hertz allows Uber to increase the number of rides taken on EVs without having to change its business model.

“Now is the time to drive a green recovery from the pandemic,” Dara Khosrowshahi, chief executive officer of San Francisco-based Uber, said in a statement.

New Strategy

Partnering with Uber and Phoenix-based Carvana addresses two key weaknesses in the rental industry: asset-utilization -- how actively a car is rented out; and resale recovery -- how much of the purchase price is recouped when the car is sold.

Through the new deal with Carvana, one of the two biggest online car marketplaces, Hertz hopes to eliminate the discounting necessary when selling vehicles from its fleet through dealers and wholesalers. Buyers will be able to pick up cars as soon as the following day. Carvana, home of the car vending machine, earns a commission.

“This provides us with a very effective direct-to-consumer sales channel,” Fields said.

By opening part of its EV fleet to ride-hailing, Hertz aims to maximize revenue per vehicle and improve profit margins. For example, cars typically rented out to leisure customers on the weekend could be used for Uber rides Monday to Friday.

Uber Rates

Under the Uber agreement, drivers will pay a starting rate of $334 a week to rent a Tesla Model 3 with unlimited miles, plus expenses for recharging and incidental damage. That’ll gradually drop to $299. Initially, the program is open only to drivers with a 4.7-star rating and a minimum of 150 trips.

Drivers won’t be able to turn on Tesla’s autopilot feature, Fields said.

Uber is offering drivers a zero-emissions incentive of $1 a ride for using EVs and 50 cents for every rider who chooses to go green. As with all rentals, Hertz covers or absorbs the cost of financing, maintenance, insurance and depreciation.

What Bloomberg Intelligence Says:

“Uber’s partnership with Hertz is probably aimed at fending off disruption from a direct rollout of robo-taxis, built on a network of electric and autonomous vehicles. Renting rather than buying vehicles suggests Uber will keep operating an asset-light model, though high variable costs could be a persistent drag on the contribution margin in the near term.”-- Mandeep Singh, BI senior technology industry analystClick here to read the research.

Hertz has been renting to Uber drivers since 2016. The new relationship builds on that program, adding at least 50,000 Teslas to the pool of available vehicles by 2023 and possibly as many as 150,000. The EVs will be available first in Los Angeles, San Francisco, San Diego and Washington, D.C., with a nationwide rollout to follow in coming weeks.

And because the deal is exclusive, none of Hertz’s rivals in the U.S. can rent Teslas to Uber drivers. They can, however, offer other cars. Lyft Inc. has committed to switch entirely to EVs by 2030.

New Investors

By embracing electrification, Hertz is positioning itself as the green alternative to Enterprise Holdings Inc. and Avid Budget Group Inc. That may appeal to the scores of companies looking to burnish their climate credentials, as well as to consumers wanting to reduce their carbon footprint. According to Uber, drivers who go electric cut tailpipe emissions much more than the average car owner.

Knighthead Capital Management, a distressed debt hedge fund, and Certares Management, a buyout firm specializing in travel, won the bankruptcy auction for Hertz with a $6 billion bid. The initiatives they’ve announced come ahead of a relisting of Hertz shares on the Nasdaq Stock Market.

Early indications are the strategy is paying off. Hertz’s market valuation, based on over-the-counter trading, jumped about $1.2 billion Monday after it announced its deal with Tesla, and stood at $12.9 billion as of Tuesday’s close.

Hertz shares gained as much as 4% in trading Wednesday morning in New York. Uber shares rose as much as 1.2% , while Carvana advanced as much as 5%. Tesla gained as much as 3%.

Fields acknowledged that with so many changes to its way of doing business, there’s a risk Hertz stumbles or something out of its control goes wrong.

“There are lots of moving parts here,” Field’s said. “When there are hiccups, we need to be agile in learning and fixing those things.”

Tesla Hits $1 Trillion Market Cap On Hertz Deal

THE ENEMY OF MY ENEMY
Amazon Signs Satellite Pact With Verizon in Challenge to Musk

Thomas Seal
Tue, October 26, 2021

(Bloomberg) -- Amazon.com Inc. struck a deal to use Verizon Communications Inc.’s network to link up its thousands-strong planned fleet of satellites, stepping up a rivalry with Elon Musk’s StarLink system.

Amazon’s billionaire founder Jeff Bezos has committed $10 billion to satellite subsidiary Kuiper Systems LLC, which plans to launch 3,236 satellites into low-earth orbit to provide broadband internet access.

Amazon will now explore ways this so-called “constellation” of spacecraft could link up to Verizon’s terrestrial telecommunications network and connect remote areas and businesses, the companies said in a statement Tuesday.

The deal will escalate the new space race fueled by billionaire investment. Bezos, the world’s second-richest man, is clashing with the world’s richest, Elon Musk, whose Space Exploration Technologies Corp. has sent more than 1,500 low-earth orbit satellites into space, and also competes with Bezos’s Blue Origin on launch technology.

Musk recently teased Bezos after his immense wealth surpassed that of the Amazon founder. He’s now worth more than a quarter of a trillion dollars, compared to Bezos’s $193 billion.

Kuiper Systems in September filed a scathing comment with the Federal Communications Commission, accusing Musk and his companies of flouting regulations with a general attitude that “rules are for other people.”

The bid to provide low-earth orbit satellite broadband is also drawing in other investors, including more billionaires and governments. Ventures like OneWeb, backed by Indian telecommunications tycoon Sunil Mittal and the U.K. government, recently struck a deal with AT&T Inc. to hook up customers via existing land-based networks.

Amazon and Verizon will study technical and commercial models for new services, and will look at expanding Verizon’s network using Kuiper’s satellite broadband. Verizon and Amazon have already collaborated on other communications technology, such as edge computing.

A spokesman for Verizon said it’s a global partnership with Amazon and it’s open to exploring similar deals with other companies, but declined to comment on the finances of the deal.

Activist Investor Loeb Takes Shell Stake, Pushes to Break Up Company

Scott Deveau and Laura Hurst
Wed, October 27, 2021


(Bloomberg) -- Activist investor Dan Loeb has built a position in Royal Dutch Shell Plc and is pushing for a break-up of the energy giant, marking the most serious challenge yet to its strategy of embracing the energy transition while continuing to pump oil and gas.

Loeb’s Third Point LLC has taken a $750 million stake, according to a person familiar with the matter. The firm said in a letter Wednesday to investors that Shell would benefit from breaking off its liquefied natural gas, renewables and marketing businesses into a standalone company. That would separate it from Shell’s legacy energy business, which would include the upstream, refining and chemicals operations.

A break-up of the 188-year-old Anglo-Dutch oil major, which has a market capitalization of about $190 billion, would be a truly seismic event for the global energy industry as it grappling with ever-louder demands to curb greenhouse while trying to remain economically viable. Loeb’s move comes less than a year after activist investor Engine No. 1 ran a successful proxy contest to elect new directors to the board of Exxon Mobil Corp., in part over what it says is the company’s lack of action on climate change.

Read More: Shell Shows It Favors Investor Returns Over Renewables Deals

Loeb argues the past two years have been difficult for Shell’s shareholders, with a major dividend cut and a well-publicized order from a Dutch court to change its business model. In fact, he said, it’s been a difficult two decades for shareholders, with annualized returns of just 3%.

“Shell’s board and management have responded to this with incrementalism and attempts to ‘do it all.’ As the saying goes, you can’t be all things to all people,” Loeb said in the letter. “In trying to do so, Shell has ended up with unhappy shareholders who have been starved of returns and an unhappy society that wants to see Shell do more to decarbonize.”

Loeb said he has already started early engagement with the company, and is confident its board and management will formulate a plan to reach its decarbonization goals while improving returns for shareholders.

Loeb said he believed Shell was one of the cheapest large cap stock in the world. He noted that it trades at a 35% discount on most metrics to its peers, Exxon Mobil Corp. and Chevron Corp., despite having higher quality assets a more sustainable business mix.

‘Incoherent, Conflicting’ Strategies

He argues that’s because it has too many competing stakeholders, pushing it in too many directions, resulting in “an incoherent, conflicting set of strategies attempt to appease multiple interests but satisfying none.”

That’s also why splitting up the business would make sense, Loeb said. The standalone legacy energy business could focus on slowing down its spending, selling assets, and returning cash to shareholders as a standalone entity.

At the same time, he estimates that the LNG, renewables and marketing activities, which he refers to as Shell’s energy transition businesses, are expected to generate over $25 billion in earnings before interest, tax, depreciation and amortization in 2022. On a standalone basis, that might be worth as much as the enterprise value of the entire company, despite only generating about 40% of its business, according to Loeb.

He said the energy transition business could aggressively invest in renewables and other carbon-reduction technologies.

“Pursuing a bold strategy like this would likely lead to an acceleration of C02 reduction as well as significant increased returns for shareholders, a win for all shareholders,” he said in the letter.

Shell is due to report its earnings on Thursday. A company representative wasn’t immediately able for comment. Shell’s American Depositary Receipts rose as much as 3.9% in New York trading. Dow Jones reported the news earlier.

Dutch Court

Shell has come under fire from activists, the courts and its own investors over its role in climate change. In May, a Dutch court said that the company would have to slash its carbon emissions 45% by the end of the decade, going far beyond Shell’s own plans.

Read More: Shell to Appeal Landmark Dutch Climate Change Case (1)

The oil major has succumbed to pressures to reduce emissions by putting to vote an energy transition strategy that will see see Shell produce more gas, less oil and ramp up investments in renewables. Still, for some investors, that’s not enough. On Tuesday, the Netherlands’ largest pension fund and once-ally of Shell said it would divest its fossil fuel assets.

WOKE CAPITALI$M 
Citigroup Offers Social Bonds After Agreeing to Racial Audit

Caleb Mutua
Wed, October 27, 2021



(Bloomberg) -- Citigroup Inc. is returning to the social bond market with a $1 billion deal just days after it became the first Wall Street bank to agree to audit its business to determine if and how it contributes to racial discrimination.

The social bond is maturing in four years and is part of a $4 billion, three-part transaction, according to a person with knowledge of the matter. The longest portion of the overall offering, a $1.25 billion 21-year security, will yield 0.98 percentage point above Treasuries, after initial discussions of around 1.2 percentage points, said the person, who asked not to be identified as the details are private.

The bank last week agreed to do a deep dive into its business to see if, and how, it contributes to racial discrimination. The audit will focus on its 2020 commitment to dedicate $1 billion toward initiatives it hoped would help close the persistent racial wealth gap in the U.S., where the average net worth of a White family is nearly ten times higher than that of a Black family.

The debt will be Citigroup’s second syndicated social bond after it sold $2.5 billion in October last year -- the largest-ever deal of its kind from the private sector -- to help fund the construction, rehabilitation and preservation of affordable housing for low-and moderate-income populations in the U.S. Its social bonds are meant to support lending to social inclusive businesses across the bank’s emerging-market footprint, the person said in relation to Wednesday’s deal.

Global sales of social bonds from corporations and governments are at a record $217 billion so far this year, according to data compiled by Bloomberg. That’s more than the $162 billion raised in the whole of last year.

Issuance of the bonds surged at the height of the pandemic as governments, supranational entities and companies boosted borrowing to get through the pandemic. Moody’s Investors Service expects the trend to endure long after the effects of the pandemic subside and social issues to increasingly permeate other sustainable debt instruments like sustainability-linked bonds, analysts led by Matthew Kuchtyak wrote in a report Wednesday.

“Regardless of the structure used, investors will increasingly consider the link between an issuer’s social financing and its overarching ESG credentials and sustainability strategy,” the analysts wrote.

Citigroup joins other big U.S. banks that have sold corporate investment-grade debt after reporting strong third-quarter earnings. Goldman Sachs Group Inc. has so far brought the biggest bond deal in this reporting season, raising $9 billion in the high-grade market. Morgan Stanley sold $5 billion of debt followed by a $3.25 billion self-led bond deal from Bank of America Corp.

(Updates with deal size in first paragraph, launch details in second, issuance data in fifth, a chart and Moody’s analysis in sixth and seventh)

GREEN CAPITALI$M

Al Gore teams with Goldman Sachs, Microsoft, and Harvard on a climate asset fund

Katherine Dunn
Wed, October 27, 2021,



Al Gore's investment management firm will launch a new climate-focused asset fund ahead of COP26, the global climate conference that begins next week.

Just Climate was launched by Generation Investment Management, a London- and San Francisco–based investment firm founded in 2004. Gore is chairman of Generation; founding partner David Blood, a former CEO of Goldman Sachs Asset Management, will serve as chair of Just Climate.

The new fund is backed by a household-name group of investors. Those include Microsoft's Climate Innovation Fund; the IMAS Foundation, a foundation tied to the parent foundation that controls Ikea; Harvard Management Company, which invests Harvard's endowment; an impact investing subsidiary of Goldman Sachs; Hall Capital Partners; and the investment fund of the Republic of Ireland.


“The sustainable investment industry has grown rapidly in recent years, a welcome development that gives the world a better chance of creating a net-zero, prosperous, equitable, healthy, and safe society," Gore said in a release. "However, the climate crisis now demands an increase in the speed and scale of our collective actions by accelerating our current efforts and at the same time innovating new climate financing models."

The group behind the fund said it would invest in "catalytic" climate solutions in energy, transport, and industry, as well as "natural" climate solutions, food, agriculture, and oceans. One thing missing in the fund's initial announcement, however, are the numbers—it's not yet clear how large it will actually be. Generation had about $36 billion under management as of June 2021, according to its website.

The fund is only one of a host of high-profile climate-focused funds that have been emerging—or gaining momentum—in recent months, as climate pressure intensifies, as well as the opportunities for businesses willing to invest in the energy transition. Other high-profile efforts include Bill Gates–backed Breakthrough Energy Ventures, which makes early investments in climate and renewable technology.

Major agencies have warned that the scale of investment required to increase the renewable energy supply is enormous. This month, the International Energy Agency puts the figure at about $4 trillion per year.

However, while the need for dramatic investment in climate solutions is uncontroversial, the extent to which investments made by financial institutions and investment managers serve those goals has increasingly drawn skepticism. In one now well-known example, the former head of sustainable investing at BlackRock hit out at ESG investing, calling it "sustain-a-babble." Gore himself has warned that "the threat of ESG is rising."

But in July, Gore spoke to Fortune about his perspective on the pace of momentum behind action on climate change, adding that he was hopeful. He summed it up in a favorite quote: "Things take longer to happen than you think they will, and then they happen faster than you thought they could."

That "really does describe where the world has been and is going, and the speed with which the transition is taking place in the real economy."

Why job applicants are being ghosted despite high demand for workers

Tue, October 26, 2021

Scott Blumsack, Monster SVP of Research and Insights, joins Yahoo Finance to discuss the challenges in job searching as applicants experience being ghosted when applying for open positions.
Video Transcript

ALEXIS CHRISTOFOROUS: I want to switch gears now and take a look at the job market because if you've applied for a job recently and you never heard back from the recruiter, you've got plenty of company. A new Monster poll finds a whopping 90% of job seekers were ghosted by their would be employer. And it is making them lose faith in the system.

Here to talk about it is Scott Blumsack, Monster's SVP of Research and Insights. Scott, good to see you. You know, I was a little bit surprised to hear this because we keep talking about how companies are having a tough time filling open positions. So any idea why these would be employers are ignoring these applicants?

SCOTT BLUMSACK: Yeah, no, and first of all, thanks so much for having me again. It's great to be here. And we had the same reaction that you did when we first saw the output of our report in terms of seeing a real dramatic uptick in terms of this trend and this feeling of frustration amongst candidates. And I think it really has to do with a couple of things.

On the candidate side, we've talked for a while around how the current environment is giving them a lot of confidence. And in many cases, that's causing them to perhaps look for jobs that may not be the right fit. So it's really important for candidates to focus on those jobs where they really have sort of the skills and the experience to be able to stand out to employers.

And then also, on the employer side, I think what we're hearing from employers is a high degree of sort of stress around having to manage the inflow of candidates, as they're oftentimes doing more with less. And I think in certain cases, there are a lot of candidates that are sort of slipping through the cracks and aren't being followed up upon. And it's really important for employers to acknowledge that, because based on our research, we found that almost a third of candidates who do get ghosted by employers will not look for another job with that employer again.

KARINA MITCHELL: And I'm glad you touched on the stress factor because you also say that there is a degree of application fatigue that sets in. Can you explain what that is? And you say it's emotional and physical, right?

SCOTT BLUMSACK: Yeah, no, no, absolutely. You know, as candidates are applying to more and more jobs, and in some cases, kind of falling into this black hole where they're not hearing back from candidates, that can be very distressing for candidates. We found that almost half of candidates experience a high degree of frustration with the process. 30% were feeling-- really feeling exhausted. And really, 3/4 were feeling levels of sort of anxiety and stress over the process. And even in the best of times, you know, the job process is often one that's not without stress.

ALEXIS CHRISTOFOROUS: And talking about stress, I understand that most of the respondents say that being ghosted after a first date is not nearly as bad as being ghosted after a job interview. Tell us about that.

SCOTT BLUMSACK: Yeah, exactly. So when we talked to and heard from candidates, you know, 90% responded that they had been ghosted. And in those cases, almost a third said that they would no longer look for another job with that particular employer. 2/3 said that actually being ghosted was more-- you know, they'd rather be ghosted on a first date versus be ghosted by an employer. So it really just signals how personal and impactful this can be to candidates.

KARINA MITCHELL: I want to jump in with this. I get emails every day from various companies and job posters offering me a job. And, you know, some of them are the most ludicrous things that I'm clearly not fit to do, like, you know, drive a truck for Amazon. And I'm not knocking that job. We need a lot more truck drivers at the moment, right? But something I'm clearly not qualified for. So what is wrong with the system right now in the way that employers and employees are matched through many of these boards that are available and job recruiters?

SCOTT BLUMSACK: Yeah, no, I mean, I think it really comes down to being able to clearly articulate the skills and experiences that you're looking for on the employer side, and as a candidate, really taking that into account and really being able to showcase that you have those skills and experiences to do the job well and really stand out. It's really on both sides to make sure that they're going after the right fit for that particular job.

ALEXIS CHRISTOFOROUS: Any advice, words of wisdom you can give folks who are feeling that application fatigue and saying, you know what? I just can't take the rejection, because being ghosted is sort of a form of rejection, sort of the worst kind, right? You don't even get a response because you don't know if your application went into the great dark abyss. Did they see it? How should an applicant follow up and how many times before they start feeling like, you know, they're becoming a pain?

SCOTT BLUMSACK: Yeah, now, certainly, persistence and perseverance kind of through some of these difficulties is, first and foremost, what a candidate needs to do. They shouldn't take these types of things personally. And they should really focus, again, on coming back to, what are the skills that I have? What are the experiences that I have? How does that relate to this specific opportunity? And really try and demonstrate that throughout the application process.

KARINA MITCHELL: I was going to ask you really quickly, as we enter the holiday period, what are you seeing as far as the number of applications? And is there a sort of match going forward into next year as far as the number of openings and the number of people applying? What are you seeing in numbers there?

SCOTT BLUMSACK: Mm-hmm, yeah, so there still is this supply-demand imbalance that exists in the marketplace where there's more employers looking to fill jobs than there are candidates looking for jobs. And we expect that trend to continue, but improve upon over the next several months. I think going into the holiday season, one of the things that we're seeing is, on the candidate side, more of an interest in pursuing part-time and seasonal work.

So we do think there will be demand there on the candidate side to help with some of the shortfalls that we're seeing. So we see the situation starting to improve over the next several months, but we don't see sort of this magic bullet where, all of a sudden, supply and demand come back into alignment in the immediate term.

ALEXIS CHRISTOFOROUS: All right, I like your advice about not taking it personally. Scott Blumsack, Monster SVP of Research and Insights, thanks so much for being with us.

Week 3 of strike at Kellogg’s plant in Lancaster; Secretary of Labor visits LANCASTER


by: Bryan MunozPosted: Oct 27, 2021 / 06:34 PM EDT / Updated: Oct 27, 2021 / 06:34 PM EDT

LANCASTER, Pa. (WHTM) — Secretary of Labor Marty Walsh visited the Kellogg’s plant in Lancaster County, where hundreds of workers have been on strike here for almost 22 days now.

“We want to fight for what we fairly believe is ours because at the end of the day if it wasn’t for the workers there would be no Kellogg’s,” Kerry Williams, the local union president, said.

These union employees, along with hundreds more at three other Kellogg’s plants across the country, want the cereal company to change a system that gives newer workers fewer benefits and lower pay.

That’s why Labor Secretary Marty Walsh was in Lancaster County today. He wanted to make one thing clear about why he was there.

PREVIOUS COVERAGE: Kellogg’s employees go on strike in Lancaster County, Saturday marks day 4

“To support the workers that are here today, to let me know that they are not alone, that we hear them and we stand with them,” Walsh said.

Walsh spent time talking to workers and hearing their stories and said the change they’re hoping to make through this strike would affect decades to come.

“They are exercising their right to free speech and trying to get better working conditions not just for them but for their families and for the generation of people that are coming behind them,” Walsh said.

PREVIOUS COVERAGE: Kellogg’s plant in Lancaster to continue with temporary non-union employees while strike continues

He understands the sacrifices being made to make this possible.

“When workers take the vote to strike, they take that very seriously because they understand that when they go on the street, they usually lose their rights for getting wages, money, and their healthcare,” Walsh added.

With strikes going on all across the country, the local union president has a message for everyone walking the line: “hold out as long as you can. one day longer, one day stronger.”

Contract talks to resume at Kellogg's amid cereal strike

OMAHA, Neb. (AP) — Contract talks between the Kellogg Co. and its 1,400 striking cereal plant workers are set to resume next week.

© Provided by Associated Press Larry Gamble, who has worked at the Kellogg plant for 13 years, and Sharnita Childress, who has worked at the plant for 8 years, picket with other union workers outside of the plant in Battle Creek, Mich. on Tuesday, Oct. 19, 2021. Around 1,400 union workers from Michigan, Tennessee, Pennsylvania and Nebraska have been on strike for the past two weeks. 

(Nicole Hester/The Grand Rapids Press via AP)

The Battle Creek, Michigan-based company said Tuesday that the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union that represents those workers agreed to return to the bargaining table starting next Tuesday. The workers have been on strike since Oct. 5.

The strike includes four plants in Battle Creek; Omaha, Nebraska; Lancaster, Pennsylvania; and Memphis, Tennessee that make all of Kellogg's brands of cereal, including Rice Krispies and Apple Jacks.

The company has said it's not clear how the strike will affect cereal supplies in stores because it has restarted production at all four cereal plants with salaried employees and outside workers.

Kellogg workers strike, denounce two-tier contracts

October 24, 2021





Republished from Socialist Resurgence’s website

By ERWIN FREED

On Tuesday, Oct. 5, workers at all four Kellogg plants in the United States walked off the job after failing to reach an agreement on a new contract. The old contract expired that day at midnight.

The Kellogg strike is the third national strike of a major food manufacturing company this year, following Nabisco and Frito Lay. All three companies, which together employ over 3000 workers, are organized with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM). Kellogg is the largest workforce of the three, with over 1400 workers between all of its plants.

The main issues that Kellogg workers are fighting for are against two-tier contracts and for maintaining and strengthening cost of living adjustments (COLA). The company made major revenue gains during the pandemic.

On Oct. 6, Socialist Resurgence members walked the picket line and spoke to striking workers with Local 374G at the 2050 State Road plant in Lancaster, Pa. That plant appears to be basically shut down. The small trickle of scabs and supervisors on site are inadequate to run the line at anything approaching full capacity.

Smash two tier! A lesson for the whole labor movement

The most burning issue spoken of by workers in Lancaster was the two-tier employment-track implemented in the 2015 contract. That change has created three tracks into which people are hired—“provisional,” “transitional,” and “legacy.” Basically, the only workers in the legacy category have been at Kellogg since before 2015. Provisional and transitional workers do not have the company-sponsored health-care or pension plans that the legacies maintain. The difference between the tiers was emphasized by one transitional worker we spoke with on the line, who emphasized that she makes at least $12 per hour less than her legacy co-workers for exactly the same job. All workers we spoke with talked about how the two-tier system causes frictions in the shop. The two tier was implemented with a false promise by the company that it would only be “temporary” and people hired into the lower tiers would quickly qualify for the full benefits of the original contract.

The decision to go on strike to maintain basic solidarity and return to a single wage scale for all workers is an example for workers in every industry. Two tier has been implemented across the country in thousands of shops with classic union benefits in order to stop workers from gaining a living wage, pension, health, and various fringe benefits. The set-up also pits workers against each other, with the lower tier angry that their fellow unionists are on a different track than they are, and the higher tier under constant threat of being fired so that the company can pocket the difference in costs.

Labor has been considering its options on how to fight two tier since the trend began with force in the 1980s. Kellogg workers are giving a definite example on how workers can fight and win against the divisions created by management. Following in the footsteps of the 2019 UAW strike at GM, which struck an important blow against two tier at one of the world’s richest companies, BCTGM workers are utilizing the working class’ most important weapon for the shop floor—going on strike.

Working conditions get worse

Kellogg was once a highly sought after place to work. In Lancaster, the plant used to be home to thousands of jobs with good union wages and benefits. Now, the company is having trouble hiring people into the lower tiers, and understaffing is rampant. Forced overtime is now a “done deal” and even workers who have been on the job for decades are often unable to get a single day off. Socialist Resurgence spoke to one warehouse worker who said that he is the only full-timer on his shift in the plant, which produces around 1 million pounds of cereal a day, and has to work back-to-back doubles every weekend, despite having worked for the company for 16 years.

Due to automation and a hyper-focus on the bottom line, hundreds, potentially thousands, of jobs have been permanently lost at Kellogg. The company is more concerned with profits than quality. In a burning example during the contract negotiations that led to two tier, the Memphis plant locked out workers for nine months in 2014. One of the scabs brought in to keep cereal production running urinated on the assembly line and was later indicted on charges of tampering with consumer products with the intent to cause serious injury.

Militancy rising

The working class in the United States is reaching a new level of militancy. The strike tactic, long growing dusty on the shelf, is being revitalized among a large number of industries in the face of economic, health, and climate crises. Over 84,000 workers are poised to potentially walk out by the end of the month in everything from health care to basic industry to film production.

Crain’s Detroit Business reports,“The number of actions is unusual. Kellogg says this is the first time its U.S. cereal workers have gone on strike since 1972. Nabisco workers last walked off the job in 1969.” While that article calls the strikes “rare,” the opposite appears to be the case as two tier is becoming a fight increasingly seen as necessary to take head-on.

Socialist Resurgence stands wholeheartedly with BCTGM workers on strike. We recommend that our readers do whatever they can in solidarity actions, from taking pictures and videos in support of the strike to walking the picket line.

Photo: Striking workers at the Kellogg plant in Lancaster, Pa. (John Leslie / Socialist Resurgence)

Kellogg's Puts Out Ad for Strike Replacement Workers 'to Cross the Picket Line'

BY EWAN PALMER ON 10/15/21 AT 5:17 AM EDT
The Kellogg company has posted a job advert seeking temporary workers to replace those currently on strike at the company's cereal production plants across the country.
More than 1,400 Kellogg employees walked out on October 5 at plants at Battle Creek, Michigan; Omaha, Nebraska; Lancaster, Pennsylvania; and Memphis, Tennessee, threatening production and supply of some Kellogg's most popular cereals.
The company is now seeking production associates willing to "cross the picket line" and keep the production line running during the ongoing strike.
"While these are temporary positions at this time, they could lead to permanent opportunities in the future," the job advert on Kellogg's website states.
READ MORE Photo of Kellogg's Worker on Strike Braving Torrential Rain Goes Viral
The move to bring in non-union workers was predicted at the start of the strike by Daniel Osborn, president of the local Bakery, Confectionery, Tobacco Workers and Grain Millers International Union in Omaha. BCTGM has been contacted for comment.
The union has said the industrial action is over a contract dispute about health care, retirement benefits, and holiday and vacation pay.
It also said the company threatened to move American jobs to Mexico if they do not accept the terms of new contracts (offered on October 1) following the expiration of earlier contracts at midnight October 4-5.
The Kellogg Company has called the union claims "grossly misleading," and said it has "not proposed moving any serial volume of jobs outside of the U.S."
On Tuesday, the company released a video message featuring spokesperson Kris Bahner, warning it was "deeply concerned" about what the strike would mean for its employees.
"Being away from work puts our people and their families in a difficult position and can create financial hardships. Our number one priority is to get back to the negotiations table and reach a contract, so our employees can get back to their jobs and their lives. We're especially concerned that the union struck without allowing members to vote on the company's October 1 offer."

Workers demonstrate in front of the Kellogg's cereal plant on October 7, 2021, in Battle Creek, Michigan. The company has launched an advert seeking temporary workers during an ongoing strike. REY DEL RIO/GETTY IMAGES

READ MORE
List of Kellogg Products as Workers Go on Strike
Companies Hit By Worker Strikes in Recent Weeks, John Deere Latest Impacted
U.S. Workers Are on Strike Over 'Low-Wage S*** Jobs'—Ex-Secretary of Labor

Bahner denied that the company is asking workers to give up their health care, retirement benefits or vacations pay, and that the compensation and benefits they are currently on are some of the best in the industry.
Bahner also described the claims from the unions that Kellogg threatened to move jobs to Mexico if they don't agree to their proposals as "completely false."
"We've not proposed moving any serial volume of jobs outside of the U.S. as part of these negotiations. Kellogg is ready, willing and able to continue negotiations at any time.
"In the meantime, we have a responsibility to our business customers and consumers to run our plants despite the strike," she added.

Kellogg's Cereal plant workers demonstrate in front of the plant on October 7, 2021 in Battle Creek, Michigan. Workers at Kellogg’s cereal plants are striking over the loss of premium health care, holiday and vacation pay, and reduced retirement benefits.REY DEL RIO/GETTY IMAGES

Kellogg’s mobilizes scabs to break 

strike of 1,400 workers

Carlos Delgado

Food manufacturer Kellogg’s announced Wednesday that it plans to use white collar workers and “third-party resources” as scabs in a strikebreaking maneuver against the 1,400 workers who have launched a strike at its four US cereal plants this week.

Picket line in Omaha, Nebraska (source: BCTGM Facebook page)

The company announced on its “Kellogg's’s Negotiations” website that they are “implementing contingency plans to mitigate supply disruptions, including using salaried employees and third-party resources [hiring scab labor] to produce food.”

Workers on social media expressed outrage at the company’s actions. Several pointed to an incident that occurred in 2014 during an illegal lockout of the workforce at the company’s Memphis, Tennessee plant in which a scab worker recorded video of himself urinating on a conveyor belt of the puffed rice used to make Rice Krispies Treats.

Other workers noted the inherent safety hazard of bringing in workers unfamiliar with dangerous production equipment. Mark Gregory, a third shift mechanical operator, told a local news reporter, “They can try to run the plant. I know they think it's easy for us to run the plant, but it takes a lot of skill to run the facility. I hope nobody gets hurt. Equipment in there is very dangerous, we spend a lot of time learning how to run the equipment.”

Workers launched the strike Tuesday morning, shutting down four plants which account for all production of Kellogg's cereals in the United States: Battle Creek, Michigan (also the location of the company’s global headquarters); Omaha, Nebraska; Lancaster, Pennsylvania; and Memphis, Tennessee. Kellogg's is one of the largest producers of cereals and snack foods, with products including Frosted Flakes, Rice Krispies, Pop-Tarts, and Pringles.

Kellogg’s workers are fighting against cuts to jobs, wages and benefits, and the expansion of the hated two-tier structure, which forces new hires to labor for less pay than their co-workers on the same line. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) agreed to the provision that created the second tier, which is currently capped at 30 percent of the workforce. The company is seeking to lift that cap and expand the number of ultra-exploited “casual” workers who receive a poverty wage.

In addition, workers have been forced to work under a brutal overtime regime during the pandemic, during which the company’s revenues have soared amid rising demand for snack products. According to its 2020 annual report, the company made $1.76 billion in profit on $13.8 billion in sales in 2020. Kellogg’s CEO Steve Cahillane received $11.6 million in total compensation in 2020, a nearly $2 million increase from his 2018 package of $9.9 million.

In a widely shared Facebook post, one Kellogg’s worker wrote, “Imagine if you started working at a job that proclaimed to have the best benefits. Then come to find out you will never ever see those benefits because you were hired in after a certain time...Then explain to your family that you put in for a day off months in advance for a special occasion only to be denied that day off...Explain to your family that Santa is going to be late cause you just got forced over 10 minutes before the end of your shift to work another 8 hours. Oh, and after you get home you only get 4 hours of sleep because you have to be back to work...This isn't about employees being greedy. This is about equality and quality time with family.”

The wife of another worker posted a picture listing the multi-million dollar compensation packages of Kellogg’s’ top executives, commenting, “Kellogg’s thinks it’s ok to pay new employees significantly less, and give them less benefits because the men and women who work SEVEN DAYS A WEEK YEAR ROUND cost the company too much money...let’s take a look at who is really costing the company too much money.”

The BCTGM union, meanwhile, has offered workers no serious strategy for victory. Earlier this year, the BCTGM forced through sellout agreements to shut down strikes of Nabisco and Frito-Lay workers, isolating Kellogg’s workers before their strike even began.

A Nabisco worker in Chicago warned Kellogg’s workers, “Make sure they count the votes in front of them. Because they didn’t count the votes In front of us, we all know that the union just wanted us to go back to work. At the end of the day is all about money. Do you really think that the union wanted to keep paying us? And also ask for more than $105 [in strike pay] that we got.”

After the sellout contract was forced through, he said, “We’re all still working about 20 plus hours overtime for nothing.”

Another Nabisco worker in Richmond expressed his support for Kellogg’s workers and said, “Fight for what you deserve.” He added, “Sixteen-hour days is the normal [shift] being forced over [on] us. The company does what it pleases,” while the union did nothing to stop the sweatshop conditions.

The BCTGM has been promoting reactionary nationalism to undermine the solidarity of workers at precisely the moment when international unity is most needed. Kellogg's is a multi-national corporation with factories in 18 different countries outside of the United States. Any serious strategy to defeat the company requires the international unity of US workers with their brothers and sisters around the world.

The BCTGM, however, is promoting “America First,” anti-Mexican chauvinism, claiming that workers must unite along national lines to prevent the company from relocating operations to Mexico. In a blatantly racist comment to Yahoo Finance, BCTGM Local 3G President Trevor Bidelman claimed, “You’re told quite rightly not to drink the water in Mexico. So I don’t know why you would want to eat the food that was made from that water.”

In fact, Bidelman and the union did nothing when Kellogg’s announced plans in September to cut 212 jobs from its Battle Creek workforce by 2023. According to a local news report at the time, Bidelman claimed he was “blindsided” by the proposed cuts and offered only the hope that the union could provide “input” on the company’s decision.

The BCTGM is promoting GoFundMe pages to “crowdfund” resources for striking workers, signaling to workers that they are going to be largely on their own to survive during the strike, even as the union sits on $32 million in assets and $11 million in income built from workers’ dues money. Both the union and the company fear the outbreak of a genuinely militant and independent struggle by workers, and they are no doubt working behind the scenes to shut the strike down as quickly as possible.

The gravest warning must be made against any illusions in the BCTGM. As at Nabisco, Frito-Lay, and countless other struggles in recent decades, the unions follow a tried-and-true strategy of isolating strikers, starving them out with meager strike pay, and ramming through a company-backed concessions contract when workers have reached the breaking point.

Kellogg's workers hold immense social power, and can win all their demands and more. However, victory will require workers to take the initiative into their own hands. The World Socialist Web Site urges Kellogg’s workers to immediately build rank-and-file strike committees comprised of the most militant and trusted workers to take the struggle into their own hands.

Such committees will facilitate the free sharing of information among workers at every plant, enabling workers to develop and implement a strategy for victory. They will allow workers to link up their struggles with those in Frito-Lay and Nabisco plants, as well as across other industries and internationally, in a common struggle for wages, benefits, and healthy working conditions.

Why Are Kellogg’s Workers On Strike?

Errol Schweizer

FORBES

Kevin Bradshaw, Vice President of BCTGM Local 252G and coworkers on the picket line at Kellogg's in ... [+] KEVIN BRADSHAW, BCTGM LOCAL 252G

Kevin Bradshaw is Vice President of BCTGM Local 252G in Memphis, Tennessee.

Dan Osborn is President of BCTGM Local 50G in Omaha, Nebraska.


Note: This interview has been edited for length and clarity.

Errol Schweizer: What is your role at Kellogg's?

Kevin Bradshaw: As an employee, I work in the warehouse, making the product and shipping it all over the world. I've been doing it for about twenty years. I'm the vice president of the local here.

Dan Osborn: My job at Local 50G is I'm president. Normally my role is the business end of the local union. Recently it's been to organize the strike that's going on right now, as well as talk to the media and get our message out. At Kellogg's, I'm a mechanic. I've been a mechanic for eighteen years. My attendance rate is 99% as a dedicated employee.

Errol: What are the issues here?

Kevin: The issue here is all about the future of the working person in America. Here at Kellogg’s it's about reducing the hourly wage rate. It's about cutting benefits, pension, retirement and health care that's essential for any working person in America and working person in the world.

We went into an impasse last year, about benefits and wages and insurance that were supposedly unsustainable for the company. And we pushed back because we wanted to work with the company in good faith. But the things that they're asking for are just outrageous. I mean, they're ridiculous. Taking someone's pay and cutting it by $13 an hour. There's no way to actually ever maximize pay, no way to retire with insurance or health care or pension plans. And to just work every day, seven days a week, twelve, sixteen hours a day, and never have anything to show for it at the end of your career.


Dan: Our CEO, from 2020 to 2021, has taken a twenty percent increase in his compensation, as well as the top executives, they've been taking increases. So this contract that expired on October 4th, we are currently on a two tier wage system. Thirty percent of employees are on a lower tier making eleven, twelve dollars an hour less, higher insurance premium, less vacation, lower vacation pay. So we're all about the equalization of wages, we want to bring those thirty percent up to the higher tier level of workers. The company's proposal was to eliminate that thirty percent cap and eventually get everybody on that lower tier while the company is making record profits.

BCTGM Local 50G members on the picket line at Kellogg's in Omaha, Nebraska. DAN OSBORN, BCTGM LOCAL 50G

Errol: How has the Covid-19 pandemic impacted working conditions?

Dan: 2020 is actually when this contract expired the first time. We worked under an extension of that same contract for a year up until October 2021. In 2019, Kellogg's Omaha did not hire any employees. They then shortened our numbers. In my business, we run a twenty four hour cycle, seven days a week, 365 days. There's a couple days where we shut down to fumigate for bugs, things like that. But normally we're running full production all the time. So when you do not have enough employees, that has to be covered by employees who are at work in the form of forced overtime. That's twelve hours a day. I work a 7:00 to 3:00 shift. So they come up to me at 2:59 and tell me I got to work till 7:00 P.M. Then come up to me at 6:59 and tell me I got to be back in at 3:00 A.M. to cover vacancies. And so everybody in the plant was already working a lot of overtime and then the pandemic hit. And at one point, we had close to one hundred people out either with COVID-19 or from COVID-19 protocols. And so that only increased the overtime that we were working and we did not shut the plant down. We continued providing cereal to the nation. And we did so tirelessly. We worked and worked and worked and Kellogg's continued to make record profits through the pandemic. So you know, we are not asking for wage increases. We're not asking for better benefits.

BCTGM Local 50G members on the picket line in Omaha, Nebraska. DAN OSBORN

Errol: What's at stake?

Kevin: What we're standing for is for Kellogg's to continue to be fair to employees because of the work we do and the money that we make them. And we just want to keep things the way they are, to be able to pay people what they deserve the paid. Because what they're asking for is just ludicrous. We just want to be able to protect the future worker. “Well, if you guys accept this, they won't have anything to do with you, but everybody coming behind you, now you no longer have healthcare benefits. But you still can come work here for 13 dollars an hour less than what we make.” So why would people want to be in a union that sold them out for something as crazy as this? So we're fighting for the working class, we're fighting for families, we're fighting for loved ones, we’re fighting for America. Your fight is our fight.


BCGTM social media infographic. BCGTM

Dan: They said they are prepared to move these production facilities down to Mexico. The main thing that would cost Kellogg's money is equalization of wages within our ranks. Kellogg's came out in the media and stated that our proposals would cost the company $60 million. In 2020, during the negotiations, before we started the extension, there was a Kellogg's executive who stated in negotiations that he's willing to spend $10 million a day to keep us out on the street. And to get rid of our union essentially. Well, if he's willing to spend $10 million a day, I'm not a mathematician, but that's six days out on the street.

And that that doesn't make any sense to me. That's who we're dealing with right now. And it's frustrating at a time, where it's hard to find employees, at a time where they're making profits. It doesn't make any sense and I can't wrap my head around the timing. I keep coming back to the same thing and its corporate greed. I know that's a slogan that gets thrown around a lot. But this is what it is.


Local 252G members on strike. KEVIN BRADSHAW

Errol: So should folks skip the Frosted Flakes?

Kevin: Oh, yeah. I mean, they got to go. Leave the cereal in the store. We make the lowest cost of cereal in the United States right here in Memphis, Tennessee, along with my three other sister plants in Omaha, Nebraska, Lancaster, Pennsylvania and Battle Creek, Michigan. They talked about the $120,000 that we made a year but they didn't tell anyone that comes from mandatory daily overtime, fifteen hours a day, seven days a week non-stop. So we're fighting for our families, and we're here to stay. One day longer, one day stronger, and they’re threatening to bring scabs to replace us. We know during a lockout from 2013 they spent over almost $50 million in ten months to try to save $8 million with scabs. And we had scabs working in the plant that actually got tried and convicted and are in jail right now for urinating on the cereal belts. No one wants to eat “rice pispies”. You know what I mean? We want to eat Rice Krispies.

BCTGM Local 252G Member on the picket line in Memphis, Tennessee. KEVIN BRADSHAW

Errol: How can folks support you?

Kevin: You can support us by going to the Union page and you'll get all the links that you need. I just want to say we appreciate all the support in Memphis, from the religious community, the Memphis Police Department, the Fire Department. We have people on the line right now like Dr. Earl Fisher, who's a pastor here in the city of Memphis. We have a lot of support from a lot of different organizations.

Dan: Go online and do a quick Google search and figure out what brands Kellogg's has. I mean they're a giant corporation and do your part and boycott it. Kellogg's isn't the only game in town. When you're at the store all you have to do is make a conscious decision to put that box of Apple Jacks back and grab one of the others.

The second item would be to go to our website and donate through PayPal PYPL -3.3%, 5 bucks, 10 bucks. We have people battling cancer out on these picket lines right now. We have people whose families we have autistic children that need medical attention. So that that that would definitely help ease some of our struggles that we're dealing with.


Follow me on Twitter or LinkedIn. Check out my website.

Errol Schweizer
I have worked in retail, CPG and food policy for over 25 years, including 7 years as V.P. of Grocery for Whole Foods. \