Coal Keeps Powering India as Booming Economy Crushes Green Hopes

Rajesh Kumar Singh
Mon, Apr 15, 2024


(Bloomberg) -- Built along a stretch of salt flats in southern India, the Tuticorin power plant epitomizes a quagmire for the world’s fastest-growing major economy: how to provide reliable energy to 1.4 billion people.

For starters, the 1,050-megawatt coal plant, one of the region’s largest, was supposed to shut down. Opened four decades ago, the facility is too cramped to install retrofits to meet the government’s pollution norms, prompting India’s power ministry to plan its closure by 2022. Yet the facility continues to run at full blast, clocking 90% utilization in February. Aging boilers guzzle coal from mines nearly 2,000 kilometers away — a transport distance that only adds to the nation’s emissions footprint.

Electricity consumption in India is growing at the fastest rate of any major economy, driven by rising temperatures and incomes, which have pushed up sales of power-intensive appliances like air conditioners. That explosive equation has exposed the country’s teetering grid. Though Prime Minister Narendra Modi has promised to rapidly build out solar and wind generation to replace polluting fossil fuels, his administration hasn’t been able to keep up with demand, giving a second life to old, inefficient coal plants like the one in Tuticorin.

In recent months, Modi has green-lit a fresh wave of power station development and extended the lifespan of many existing coal assets. It’s a decision that puts India at odds with global allies who’re shunning the fuel on climate grounds, threatening Modi’s ambitions to curb air pollution and reduce the world’s third-largest share of greenhouse gas emissions.

Those dynamics will also hand the nation a crucial role in dictating the speed of the world’s retreat from coal. Demand in China, currently the top consumer, probably peaked last year and the rate of future growth will increasingly be driven by India and Southeast Asia’s rising economies, according to the International Energy Agency.

“The message is clear to both the international and domestic audiences: We’re all in for climate actions, but India’s domestic interests will take priority,” said Ashwini K. Swain, a fellow at Sustainable Futures Collaborative, a climate think tank in New Delhi.

India’s power ministry and Tamil Nadu Generation and Distribution Corp., which runs the Tuticorin coal plant, didn’t respond to requests for comment.

India has a long way to go to ensure reliable and affordable electricity. In Oct. 2021, the country was hit by a massive coal and power crisis, just as the economy began to emerge from the Covid-19 pandemic. Years of weak demand had led to sluggish growth in mining, transportation and power generation capacities.

Soon after the situation improved, officials realized the crisis wasn’t a blip. Energy demand rose to a new high the following summer, causing the worst supply shortages in eight years. In 2023, even though that squeeze eased at the national level, Maharashtra, one of India’s most industrialized states and home to its financial capital Mumbai, faced an alarming 10% peak deficit in August.

While shortages raised expectations that the country would accelerate the shift to green energy, India’s response was exactly the opposite. Officials pushed for more mining, abandoned plans to retire old power plants, raised targets to add coal-fired electricity and successfully lobbied international forums to adopt resolutions that wouldn’t hinder fossil fuel use.

“As a country, we should play to our strength, and coal is our strength,” said Prakash Tiwari, a former operations director at state-run NTPC Ltd., the nation’s largest power producer.

Alternative energy solutions haven’t yet caught on for financial, political and safety reasons.

More than 35 miles from Tuticorin, a dusty road leads to two solar power plants surrounded by sprawling wind parks. Ayana Renewable Power, which runs one of the facilities, sees a future in renewable power with energy storage to serve industrial users. That trend is rising in India, although far from becoming a source of mass power supplies. Solar accounted for 6% of generation in 2023, according to Bloomberg calculations based on power ministry data.

State-run power producer NLC India Ltd., which runs the other plant, is committing more than twice as much money to expanding mining, coal and lignite-fired power capacity than to building renewables, according to Chairman M. Prasanna Kumar.

Natural gas, pushed by producers as a less-polluting alternative to coal, has also struggled to compete. Nearly 25 gigawatts of gas-fired power capacity has been idling for years, priced out by other power sources, including coal. India doesn’t have enough domestically produced subsidized fuel to run the plants and operating these assets on imported liquefied natural gas is often too costly in India’s price-competitive electricity market.

Building hydropower dams is also fraught. Most of India’s potential there is locked in the fragile Himalayan region, where frequent extreme weather events, such as flash floods, jeopardize projects. The risks have galvanized local opposition against large dams, delaying plans by years and adding to costs that have rendered many of them unpalatable.

Nuclear power has seen a revival in many parts of the world for its low-emissions energy. But there, too, the industry in India has moved too slowly to make a mark and questions about safety persist. The nation’s nuclear liability law holds vendors and suppliers responsible for accidents. Many are still haunted by the Bhopal gas tragedy of 1984, which killed thousands of people exposed to toxic chemicals.

Consider Kudankulam, about 90 miles south of Tuticorin. The site hosts two reactors of 1 gigawatt each and four more are being added. In the nearby village of Idinthakarai, 52-year-old Mildred, who goes by one name, has been at the forefront of protesting the plant’s construction. She’s traveled across the country to discuss the risks of nuclear energy.

“Why can’t these be our main source of energy?” the activist asked on a recent day, pointing to a few rotating wind turbines near her home.

In 2008, India struck an agreement with the US to share nuclear technology and fuel, clearing the runway for new projects. India has also signed deals with foreign reactor suppliers, including General Electric-Hitachi, Westinghouse Electric Corp. and Areva SA, which later transfered the project to state-run peer Electricite de France SA. GE-Hitachi has since backed out, citing the liability law.

In the western state of Maharashtra, India had planned to build the world’s largest nuclear power plant, a mammoth 9.6 gigawatts facility near sprawling Alphonso mango orchards.

But locals resisted selling their land when Kiran Dixit, then an executive director of the state monopoly Nuclear Power Corp. of India Ltd., visited the area.

They thought prices were too low and worried that the plan would harm the livelihood of fishermen and the mango trees. The company tried to put those fears to rest and the land was eventually acquired, Dixit said. Still, the Jaitapur project has yet to significantly break ground as the two sides continue to discuss terms of the deal.

Bloomberg Businessweek

UAW seeks landmark win in third Tennessee VW plant vote
Nora Eckert
Wed, April 17, 2024 

 Signs stand outside a Volkswagen plant during a vote among local workers over whether or not to be represented by the United Auto Workers union in Chattanooga,

By Nora Eckert

DETROIT (Reuters) - A Volkswagen plant nestled against dense forests and Interstate 75 on the southern border of Tennessee has become a battleground over worker representation that could sway the future of the American auto industry.

The United Auto Workers is attempting for the third time to organize the 4,300 eligible workers in Chattanooga, where VW assembles the ID.4 electric SUV. The vote at VW's only nonunion plant globally is scheduled to begin on Wednesday and conclude late on Friday.

The UAW, which has been shrinking, sees the VW vote as the first of a series that would spread unions beyond Detroit-owned automakers and into the U.S. South, which has been unfriendly terrain for organized labor. A Mercedes-Benz factory in Vance, Alabama, may hold a vote soon.

The environment has never been better for the UAW. Public support for unions has soared in recent years and last autumn U.S. President Joe Biden walked picket lines outside Detroit, where the union secured record contracts with the Big Three automakers: General Motors, Ford Motor and Stellantis.

"This is the best chance they’ve ever had," Cornell University labor professor Art Wheaton said of the UAW.

For decades, the union has struck out at southern auto plants. In addition to two narrow losses at VW previously, it sustained three more significant misses at southern factories owned by Nissan.

Pablo Di Si, head of Volkswagen's North American business, told Reuters last month the company will remain neutral ahead of the vote.

Union-backing workers at the VW plant hope this time to win, and say they want better pay and benefits and improved plant safety.

Kelcey Smith, who joined a union organizing committee after being hired about a year ago, said the union's deals following a six-week strike against the Detroit automakers inspired him. The UAW won record contracts, including double-digit pay increases and the return of cost-of-living adjustments.

Smith wants some of those perks himself.

“It showed not only me, but the rest of the country and the world, that if you just come together as a collective group, you can bring change for yourself and your families,” he said.

Some employees at the plant say the risks of organizing outweigh the potential rewards, worrying that increased labor costs for VW could endanger job security.

Anti-UAW organizations have also made their voices heard, with billboards near the Chattanooga plant urging passersby to visit a Web page that spotlights a union bribery scandal that resulted in federal convictions of several former UAW leaders. The current UAW leadership was elected after that issue was resolved with federal officials.

The opposition will test UAW President Shawn Fain as he embarks on an ambitious organizing drive across the South and West. Fain and his team have committed $40 million through 2026 to organize more than a dozen nonunion shops owned by EV makers like Tesla and foreign automakers including Toyota Motor.

Fain has rejected descriptions of nonunion automakers as the enemy, portraying those workers instead as future UAW members.

RIDING DETROIT WINS

Victor Vaughn, 55, who has been part of the volunteer committee of VW employees who organized meetings at the local UAW hall, said momentum built within their ranks after the union's wins in Detroit.

"They work for different companies, but they're just like you and me, and they're fighting for the same issues,” he said.

The new contracts in Detroit - including a 25% wage increase over four years - also caught the attention of Biden, who is courting UAW members as key voters, especially in Michigan, in this autumn's election. His opponent, former President Donald Trump, has also held events in Michigan to woo auto workers.

"I want this type of contract for all autoworkers," Biden said at a UAW event last November. He also supports the union’s broader organizing efforts.

Many nonunion automakers, including VW, offered raises after the Big Three talks, which many analysts saw as a move to keep their plants union-free.

Matching the UAW would be even costlier. Tesla would incur $1.2 billion in additional labor costs this year if it were to match UAW pay, according to Deutsche Bank.

Winning the VW vote is critical, however, because the UAW continues to shrink, from a high of 1.5 million members in the 1970s to 370,000 last year, its lowest level since 2009. The current organizing push targets 150,000 nonunion workers, which would double the UAW’s size.

The Volkswagen facility is the first of this group to gather enough worker support to hold an election with the National Labor Relations Board.

While UAW officials are confident about their chances in Chattanooga, narrow losses in 2014 and 2019 still haunt them.

Volkswagen has been more open to a UAW election in this round, said Georg Leutert, director of automotive at IndustriALL Global Union, a Switzerland-based federation of unions. However, some managers in the Tennessee plant have resisted unionization, he said.

Officials with IG Metall, a German union representing VW workers in that country, support the UAW.

Tennessee is a right-to-work state, meaning UAW membership would not be mandatory for plant workers.

Tennessee Governor Bill Lee said earlier this month that VW workers would "risk their futures" by voting to unionize. Tennessee has a GM plant in Spring Hill that is unionized.

For VW workers in Tennessee like Darrell Belcher, a 13-year veteran at the plant who previously opposed the union, the UAW offers no guarantees. He cited the recent layoffs or buyouts of factory workers at Stellantis and GM.

Belcher asks co-workers excited to join the UAW: “What do you actually expect to get, and what are you willing to lose?"

(Reporting by Nora Eckert in Detroit; Additional reporting by Victoria Waldersee and Christina Amann in Berlin; Editing by Ben Klayman and Matthew Lewis)

Southern governors tell autoworkers that voting for a union will put their jobs in jeopardy

Associated Press
Tue, April 16, 2024 

DETROIT (AP) — On the eve of a vote on union representation at Volkswagen's Tennessee factory, Gov. Bill Lee and five other southern governors are telling workers that voting for a union will put jobs in jeopardy.

About 4,300 workers at VW's plant in Chattanooga will start voting Wednesday on representation by the United Auto Workers union. Vote totals are expected to be tabulated Friday night by the National Labor Relations Board.

The union election is the first test of the UAW's efforts to organize nonunion auto factories nationwide following its success winning big raises last fall after going on strike against Detroit automakers Ford, General Motors and Jeep maker Stellantis.

The governors said in a statement Tuesday that they have worked to bring good-paying jobs to their states.

“We are seeing in the fallout of the Detroit Three strike with those automakers rethinking investments and cutting jobs,” the statement said. “Putting businesses in our states in that position is the last thing we want to do.”

Lee said in a statement that Alabama Gov. Kay Ivey, Georgia Gov. Brian Kemp, Mississippi Gov. Tate Reeves, South Carolina Gov. Henry McMaster and Texas Gov. Greg Abbott have signed on to the statement. The offices of Abbott, Ivey, Kemp and Reeves confirmed their involvement, and McMaster posted the statement on his website.

The governors said they want to continue to grow manufacturing in their states, but a successful union drive will “stop this growth in its tracks, to the detriment of American workers.”

The UAW declined comment.



 UAW President Shawn Fain speaks to the media after visiting the Volkswagen plant in Chattanooga, Tenn., on Monday, Dec. 18, 2023. Workers at at the Tennessee plant are scheduled to finish voting Friday, April 19, 2024, on whether they want to be represented by the United Auto Workers union. (Olivia Ross/Chattanooga Times Free Press via AP, File)
After a series of strikes against Detroit automakers last year, UAW President Shawn Fain said it would simultaneously target more than a dozen nonunion auto plants including those run by Tesla, Nissan, Mercedes-Benz, Hyundai, Kia, Toyota, Honda, and others.

The drive covers nearly 150,000 workers at factories largely in the South, where the union thus far has had little success in recruiting new members.

Earlier this month a majority of workers at a Mercedes-Benz plant near Tuscaloosa, Alabama, filed papers with the NLRB to vote on UAW representation.

The UAW pacts with Detroit automakers include 25% pay raises by the time the contracts end in April of 2028. With cost-of-living increases, workers will see about 33% in raises for a top assembly wage of $42 per hour, or more than $87,000 per year, plus thousands in annual profit sharing.

VW said Tuesday that its workers can make over $60,000 per year not including an 8% attendance bonus. The company says it pays above the median household income in the area.

Volkswagen has said it respects the workers’ right to a democratic process and to determine who should represent their interests. “We will fully support an NLRB vote so every team member has a chance to vote in privacy in this important decision,” the company said.

Some workers at the VW plant, who make Atlas SUVs and ID.4 electric vehicles, said they want more of a say in schedules, benefits, pay and more.

The union has come close to representing workers at the VW plant in two previous elections. In 2014 and 2019, workers narrowly rejected a factorywide union under the UAW.


The UAW could make history in the next 72 hours as VW workers vote on union

Jamie L. LaReau, Detroit Free Press
Wed, April 17, 2024 

The UAW is on the precipice of potentially making history this week as some 4,300 autoworkers at a Volkswagen plant in Tennessee vote on whether they want union representation.

The polls opened at 4:45 a.m. Wednesday. The secret-ballot voting, which takes place inside the plant and is run by the National Labor Relations Board, goes until 8 p.m. Friday, with results expected later that night, according to the NLRB and a Volkswagen spokesman.

Labor experts say if the UAW wins at VW Chattanooga, it will be a historic and hard-won victory, after repeated failures over the past decade to organize foreign automaker plants in the South. For one thing, it would add thousands of members to the UAW. 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.

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

"This is a defining moment for the UAW. A victory really sets a precedent and breaks the glass ceiling that you can’t organize auto factories in the South," said Harley Shaiken, a labor expert and professor emeritus at the University of California-Berkeley. "A victory doesn’t automatically translate into a victory at other nonunion automakers, but it sets the standard and the momentum. So victory is a huge gain.”
GOP governors in South resist UAW

If the vote fails, Shaiken said it will be disappointing, but the UAW still stands a chance with other nonunion factories. Last week, Mercedes-Benz workers in Alabama petitioned the NLRB to allow them to vote on joining the UAW.

Just hours before voting was to start, Tennessee Gov. Bill Lee and five other Republican governors in Southern states with nonunion automakers, penned and signed a lengthy letter Tuesday saying they are "highly concerned" about the UAW's unionization campaign, which they said 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 stated. "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 — in fact, in this year already, all of the UAW automakers have announced layoffs."
Big wins, temporary layoffs

The letter goes on to insinuate the election of union representation will mean job cuts.

"We’ve seen it play out this way every single time a foreign automaker plant has been unionized; not one of those plants remains in operation," the letter said. "And we are seeing it in the fallout of the Detroit Three strike with those automakers rethinking investments and cutting jobs."

The UAW did not immediately respond to a request for a comment about the letter.

But in terms of rethinking investments, not necessarily. Just days after union members ratified the GM contract, the automaker initiated a $10 billion stock buyback program to cover added labor costs, the Free Press reported. Layoffs are nuanced. GM did say in December it would lay off 1,314 employees at two factories in Michigan due to end of production of two vehicles. GM is retooling one of the plants, Orion Assembly, to build new electric pickups in late 2025. As the Free Press reported, GM said it will offer affected employees jobs elsewhere in the company.

At Ford Motor Co., a supplier issue earlier this year forced it to pause production of the new 2024 Ford F-150 for more than five days at the factories that build the pickup, resulting in temporarily laying off about 5,200 UAW workers.

At Stellantis, the company has trimmed its workforce in recent months, but the overall picture is murky because it hasn’t clarified how many jobs are being eliminated. The company noted that a round of cuts announced in December for plants in Detroit and Toledo was significantly smaller than originally described, but a separate round of cuts affecting supplemental workers across company facilities rolled out last month.

Jason Coburn, 46, of Auburn Hills, center, shares a light moment of laughter on the picket line with Gary Phillips 63, of Harrison Twp, left, and strike captain Vern Armstead, 64, of Davisburg, Mich., at the GM Customer Care and Aftersales plant in Pontiac, Mich., on Monday, Oct. 30, 2023.

None of those temporary layoffs have overshadowed the driving force behind VW workers signing cards on the UAW's website seeking to join the union: The UAW's big contract wins against the Detroit Three last fall followed a 46-day strike.

The union won members a cost-of-living-adjustment, the elimination of wage tiers and bonuses for retirees. Right after the UAW won wage gains of 25% across 4½-year contracts with the Detroit automakers, Nissan, Honda, Hyundai, Toyota and Volkswagen all offered raises of 9% to 14% to their U.S. workforces.

Therefore, Shaiken said the governors' letter is not likely to sway the vote much, noting that, "the governors have written an ideological statement, not what is taking place in the working world today."

Here's the average pay at VW

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. The UAW has declined to say how many employees at the VW factory have signed the union cards, but it has previously stated it wanted 70% of a workforce to sign cards before an organizing committee made up of plant workers filed a petition to take a plant vote.

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

VW broke ground on the Chattanooga plant in 2009 and has invested $4.3 billion in it over the years, a VW spokesman said. The plant assembles the the ID.4 EV and houses the company's Battery Engineering Lab. It also builds the Atlas and Atlas Cross Sport.

Its production supports about 125,000 direct and indirect jobs across the country, he said. The automaker supports employees’ right to decide the question of representation and the NLRB's secret ballot election, the spokesman said, adding that VW believes employees already have a strong voice in the Chattanooga plant.

"Part of being invested in people and their well-being is listening. Everyone has direct access to their manager and our plant leadership is right off the factory floor," the spokesman said, adding that the CEO’s desk is near the plant floor and “anyone can come up and express concern or express feedback.”

The average Chattanooga employee will gross $60,000 this year, the VW spokesman told the media. According to the U.S. Census Bureau, the median household income in Chattanooga in 2022 was $57,703. If an employee meets attendance requirements and takes overtime, many will earn $70,000, he said. VW contributes up to 9% toward employees' 401(k) plans, according to its fact sheet at www.vw.com/chattanooga.
Favorable odds for the UAW

The UAW has a history of trying to organize, and failing, in the South, particularly at that 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.

But the circumstances for UAW have improved greatly since 2019 vote, said Art Wheaton, director of labor studies at Cornell University's School of Industrial and Labor Relations. He said the governors' letter is unlikely to impact results this time because in an election year, what matters most is that the workers at least get a chance to vote.

"The odds are much more in their favor this time as they only need to increase by 2% from their last vote," Wheaton told the Free Press. "About 75% to 80% of the general public supported UAW in Detroit Three strikes. Losing the election would certainly sting, but it would not be fatal."

Last month UAW President Shawn Fain 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.

If Fain fails, Erik Gordon, a professor at the Ross School of Business at the University of Michigan, said, "It won't end their campaign to organize Southern plants. They might rethink their approach, but they won't rethink their goal of getting control over all the country's car and truck manufacturing."

More: Stellantis shareholders OK dividend, support Tavares pay package

Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.

This article originally appeared on Detroit Free Press: UAW is poised to make history if VW workers elect to unionize this week

Volkswagen: Can the United Autoworkers Union win in the American south?

Natalie Sherman 

BBC- Business reporter, New York
Tue, April 16, 2024 

Yolanda Peoples has worked on prior union drives that failed during her 13 years at Volkswagen [BBC]

Yolanda Peoples has tried for more than a decade to convince her co-workers at Volkswagen's factory in the southern state of Tennessee that joining the United Autoworkers Union (UAW) would pay off in increased job security, higher wages and a more comfortable retirement.

Colleagues in Chattanooga have twice rejected the idea.

Now, as her factory faces another vote on the question, this daughter and granddaughter of UAW members thinks she might finally have made her case.

"The whole atmosphere feels different," she said. "They understand more about what we're fighting for."

The election, which involves roughly 4,300 workers and starts on 17 April, is the first to emerge from a campaign UAW leaders announced last year to try to win new members at 13 foreign-owned car factories based in the south.

The share of workers represented by unions has fallen steadily in the US since the 1980s.

But the pandemic ushered in an unusually hot jobs market and rapid rise in living costs, emboldening workers across the country to make demands.

The number of mass strikes and petitions from workers hoping to join unions jumped in 2022 and 2023, drawing in Hollywood actors, UPS delivery drivers, Starbucks baristas, nurses, casino workers and others.

The US has seen increased labour unrest [Getty Images]

Since 2021, there has even been a small uptick in the number of union members.

At the top of both political parties, President Joe Biden and former president Donald Trump have paid close attention to the signs of worker discontent, abandoning the free-trade orthodoxy that dominated both US political parties for decades in favour of protectionist economic policies long championed by organised labour.

"More people are demanding better pay, a piece of the action and a lot of this is a post-Covid thing," says Kent Syler, professor of political science at Middle Tennessee State University. "Is it enough in a very red state like Tennessee to move the needle? It's hard to say."

Prior efforts to unionise in Chattanooga and elsewhere in the south have failed in the face of fierce criticism from local politicians, Republicans, who warned a vote for the union could threaten government support for Volkswagen and make the state less appealing for business investment.

The UAW's ties to the Democratic Party remain a liability on the factory floor, especially in an election year.

Jeff Irvin Jr, who has worked at the Chattanooga plant since 2010, says he has supported the union in the past, but is on the fence this time. He says the UAW's recent endorsement of Mr Biden has given him pause.

"It's hard to back an organisation that backs a president that is failing the American people on almost every level," he wrote in an email to the BBC.

The UAW, which has seen its sway fall as its membership and slice of the industry shrank, declared its ambitions last year weeks after a headline-drawing strike won big pay raises and other benefits for members at General Motors, Ford and Stellantis.

Union supporter Zachary Costello says attitudes have shifted since he started to work at Volkswagen seven years ago [BBC]

Those gains helped re-ignite interest, says Jeremy Kimbrell, who has tried, and failed, to drum up union support repeatedly over his two decades working for Mercedes in Alabama. He noted that soon after, many rival carmakers, including Volkswagen, Mercedes and Nissan, announced big wage increases of their own.

"Some of the veteran workers saw it as like a slap in the face - as they could have given it to us all along," Mr Kimbrell said. "With that big jump [the UAW] got this time, it was just abundantly clear that that was a better way."

A victory for the union would set factory workers up to pay UAW dues and negotiate collectively with companies over wages and benefits. Analysts say it could also convince other factories to follow suit.

As well as Chattanooga, the union is expecting an election at a Mercedes-Benz factory in Vance, Alabama next month. It has also claimed significant progress signing up supporters for elections at Hyundai and Toyota.

Campaigners say they are trying to steer clear of national politics and remain hopeful that shifting attitudes towards organised labour will finally give their cause a shot.

"It feels way different," said Volkswagen worker Zachary Costello, one of the union's vocal supporters at the Chattanooga factory. "There's a lot more open acceptance of unionising across the shifts."

American University professor Stephen Silvia, who has written a book about prior UAW campaigns in the south, says the organisation has its "best chance" yet of victory, after refreshing its reputation and approach with new leadership.

The UAW's new boss, Shawn Fain, shakes hands with Joe Biden while endorsing him for president [Getty Images]

He says policies introduced by Trump and Biden to protect US car jobs have also strengthened the union's ability to demand more for workers without stoking fears the demands will hurt companies and backfire in the long run.

Volkswagen declined to answer questions about next steps should the UAW win but said in a statement that it "fully" supported a vote and was "proud" of its record in Chattanooga - where the average annual salary is more than $60,000.

At firms such as Starbucks and Amazon, union election victories have been bogged down as companies appeal the outcome or slow-walk contract negotiations.

Volkswagen worker Jose Sandy says there is still "a lot of scepticism" about the UAW and its ability to make a difference.

Jose Sandy [Getty Images]

The union need "to deliver on what they have have said they're going to do and it's not clear to me yet how they're going to do it," says Mr Sandy, who has been digging into Volkswagen's financial statements, concerned the union's claims about the company are misleading.

Still, he says he is keeping an open mind and leaning toward a yes vote: "I'm willing to give them the benefit of the doubt."

The South has few unionized auto plants. Workers say this one could be next.

Jeanne Whalen,

 (c) 2024 , The Washington Post
Mon, April 15, 2024 









The South has few unionized auto plants. Workers say this one could be next.

CHATTANOOGA, Tenn. - Growing up in eastern Tennessee, Jeremy Collins didn’t know many people with unionized jobs. But he remembers reading good things about unions fighting for the eight-hour work day and against child labor.

That’s why Collins plans to vote yes when employees at his Volkswagen factory decide this week whether to join the United Auto Workers. And he thinks many of his co-workers will do the same - possibly making their factory one of the few auto plants in the South to unionize.

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Of 26 Volkswagen workers who stopped to talk to a Washington Post reporter outside the factory gates this month, more than two-thirds said they planned to vote yes in the historic ballot that will test the UAW’s strategy of organizing a dozen automakers’ southern factories. Six workers said they were undecided and two were opposed.

“I’m pretty vocal about the union at work, and I usually ask a lot of people how they feel,” Collins said, en route to his shift building Atlas SUVs and electric ID.4 vehicles. “And from all the people I talk to, I’ve only come across three people who are against it.”

Those who spoke with The Post are a small fraction of the more than 4,000 workers eligible to vote in the ballot. And the UAW has failed in two previous efforts to organize the factory, in 2014 and 2019. But the union is expressing optimism this time around, saying that a supermajority of workers signed union authorization cards supporting UAW membership.

Volkswagen Chattanooga would be the first auto plant in the South to unionize through an election since the 1940s, although there are other unionized auto factories in the South.

The union drive in Chattanooga is happening as both President Biden and former president Trump vie to make the case that they can deliver for blue-collar factory workers. A yes vote, even in red Tennessee, could help shore up Biden’s support among union voters across the United States, including those still dubious about the improved economy. Biden’s staunch support of union workers has earned him the UAW’s endorsement and assistance on the campaign trail from its fiery president, Shawn Fain.

Tennessee Republicans have seized on that relationship in their efforts to thwart the unionization drive. In an impromptu news conference next to the factory this month, local Republicans warned that workers in this right-leaning county would be aligning themselves with the Democrats by voting yes.

“I hope that the Tennessee workers will recognize that the UAW represents the party of President Joe Biden, and their values and political contributions, which are completely inconsistent with the people of southeast Tennessee,” state Sen. Bo Watson told attendees.

The conservative editorial page of the Chattanooga Times Free Press has carried similar messages, as has a mysterious website that workers say appeared recently, stillnouaw.com, which features photos of Biden and Fain and a social media post from former president Donald Trump attacking the UAW president. During a visit to Chattanooga last week, Republican Gov. Bill Lee cautioned that joining the union would be “a big mistake.”

Some conservative VW workers say they wish politicians would butt out.

“I really don’t appreciate what our local leaders have said about the UAW. I think they should have stayed out of it,” Ethan Triplett, a VW worker who votes Republican, said as he arrived for his shift. “I’ve seen what the UAW can do for all the plants up north and everything. … And I feel like they can do some good down here.”

Triplett and others said their main complaints include the factory’s inflexible sick-day policies and its tendency to haul in workers for compulsory overtime shifts on Saturdays. They also want better retirement and health-care benefits.

The election stakes are high for the UAW and its new president. The union scored big contract wins after striking against Ford, General Motors and Stellantis last year, but union membership has fallen precipitously in recent decades and continued to drop by 3.3 percent last year, to 370,000 workers. A team of UAW staffers has decamped to Chattanooga to help run the election drive, working on laptops at the union hall of the International Brotherhood of Electrical Workers (IBEW), where the UAW is renting space.

Although this would be the UAW’s first foray in the South at a foreign auto plant, both GM and Ford have UAW factories in Kentucky, Tennessee and Texas. Those had an easier path to unionization through procedures included in the automakers’ national agreements with the union.

VW says it is remaining neutral on the unionization effort. The union has disputed that, accusing the company of destroying union materials in a factory break room and other union-busting behavior. The company refutes the allegations, saying it is standard VW procedure to clear break rooms of all stray materials every day.

The factory is VW’s only plant worldwide that isn’t represented by a union or a similar body that advocates for workers. “We respect our employees’ right to decide who represents them in the workplace and have throughout this process,” Volkswagen said in a statement about the Chattanooga vote, adding that it is proud of the working conditions and pay it offers.

The average production worker in Chattanooga will earn more than $60,000 this year before overtime and bonuses, with hourly wages ranging from $23.40 to $32.40, the company said. Skilled team leaders earn up to $42.25 an hour. Since 2009, VW has invested more than $4.3 billion in the factory, making it one of the biggest employers in this picturesque city on the Tennessee River, in the foothills of the Appalachian Mountains.

Charles Wood, head of the local chamber of commerce, said he worries that unionization could cause VW to shift more investment to its factory in Puebla, Mexico. That plant is unionized, but its workers earn less, making it a cheaper place to produce.

“The risk for Chattanooga is we become less competitive long-term,” he said, adding that VW has played a huge role in helping the region recover from factory closures and tough economic times that started in the 1960s.

Sarah Roberts, who works in the factory’s logistics department, said she plans to vote no, because she developed negative views of unions while growing up in Michigan. Her father, an automotive engineer, worked stints in various auto factories, trying to improve their manufacturing processes, she said. “Out of all the plants he’s been in, every one that has been under the UAW for more than 10 years is now shut down,” she said.

Among some conservative workers, the UAW’s endorsement of Biden is not helping the union’s case.

Members of a worker committee helping organize the drive say some workers have bashed the Biden endorsement. Kelcey Smith, one of dozens on the committee, said he heard a colleague tell a union meeting a few months ago that some people on the factory floor were upset about it.

“He believed that it was having an effect on some of the minds of some of the workers as far as voting for the union was concerned,” Smith said in an interview. UAW staffers at the meeting advised workers to reassure colleagues that they can vote for whomever they like.

Most workers who spoke with The Post said they are focusing more on workplace issues than politics.

The union “can support whoever they want,” said Krantzsy Boursiquot, a worker who described himself as apolitical and a nonvoter. Like others, he is most concerned about mandatory overtime on Saturdays, which the company sometimes calls with only two days’ notice, and managers’ refusal at times to approve sick days.

“I feel like, as they’re pushing for excellence every year, coming up with a new model every year, trying to increase profits for their shareholders, they should have that same energy when it comes down to their employees. And they don’t,” Boursiquot said.

Volkswagen spokesman Michael Lowder said the company has several channels for employee feedback and takes worker input seriously.

Gathering on a recent evening at the IBEW union hall, workers on the unionization organizing committee said they are pushing for stronger benefits.

Yolanda Peoples, who used to belong to the UAW when she worked at a now closed General Motors factory in Doraville, Ga., says she wants better health-care coverage that will reduce her out-of-pocket costs for medication. She would also like a defined-benefit pension instead of the 401(k) that VW provides.

“The 401(k) is based on the stock market … and whether it’s up or down,” she said. “I want more stability.”

VW contributes 4 percent of an employee’s pay to the 401(k) if the worker contributes 5 percent, VW spokesman Lowder said. The company also contributes 5 percent of each employee’s paycheck to a separate defined contribution plan, with no employee contribution required, he said.

Robert Soderstrom, who builds car doors, hopes a union can help protect workers from having to do the jobs of two people when someone calls in sick. “Oftentimes we won’t have a full crew,” he said. “If we’re a man short, they’ll be like, well, Robert, today you’re working two [jobs] … they’re not slowing the line down.”

Outside the factory gates, Justin DeLong stopped briefly to voice his support for the UAW, saying that many of his relatives in Upstate New York are union workers.

“I don’t understand why the South is afraid of unionization,” he said before rushing through the turnstile to his shift.


The Union Election At Tennessee's Volkswagen Plant Has Massive Stakes

Dave Jamieson

HUFFPOST
Tue, April 16, 2024 

People listen as organizers speak at the IBEW Local 175 hall on Sunday, April 14, 2024, in Chattanooga, Tennessee, where Volkswagen workers are trying to join the United Auto Workers union. 

SETH HERALD for HuffPost

CHATTANOOGA, Tenn. — Roughly 4,000 Volkswagen workers here will decide this week on whether to form a union at their assembly plant. Their votes will shape more than just the future of their jobs — they could mark a turning point for both the United Auto Workers and the auto industry in the South.

The election begins Wednesday and runs through Friday. The union previously lost two factorywide elections at the facility, including a stinging 833 to 776 defeat in 2019. Zachary Costello quietly supported that organizing effort. This time he’s made his feelings known to anyone who will listen, throwing himself into the campaign as a member of the organizing committee.

“I don’t want to narrowly lose again. This time, I’m not sitting on the sideline,” said Costello, 34. “To me it feels like the most important thing I’ve ever been a part of, to the point where it doesn’t even feel real.”

Volkswagen worker Zachary Costello quietly supported the union in the past. This time he grew much more vocal: "I don't want to narrowly lose again." SETH HERALD for HuffPost

The UAW already represents Ford and General Motors workers at auto plants in the South, but for decades the union has struggled to organize foreign-owned “transplant” automakers in the region, where union membership tends to be low and politicians are generally hostile to labor groups.

As a result, the UAW has lost membership as a share of the industry, forcing the union into a more defensive posture in the places where it represents autoworkers — primarily Midwestern plants run by Ford, GM and Jeep parent company Stellantis. Meanwhile, much of the electric-vehicle boom is expected to take place down South, making the union’s inroads there all the more important.

There are reasons to think this election at Volkswagen of America will be different than previous failed attempts.

The UAW is coming off a headline-grabbing strike last year against the “Big Three” automakers that resulted in significant wage gains and further chipped away at a “two-tiered” system pitting newer hires against veterans. Its fiery new president, Shawn Fain, has struck fear in the heart of corporate boardrooms and overshadowed the corruption scandals under previous UAW leaders.

And autoworkers have been rapidly signing union cards not just at Volkswagen but at Mercedes-Benz and Hyundai plants in Alabama — organizing efforts that a Chattanooga victory could turbocharge.

But Volkswagen workers aren’t so concerned with the UAW’s fortunes; they’re wondering whether union representation will improve their jobs. Costello said that he’s been pleasantly surprised by union support from co-workers he assumed would be “anti’s.”

“It put me in my place because I thought I knew people and I didn’t,” he said. But from other workers he still hears the same arguments from 2019: The union is corrupt, the union is a bunch of outsiders, the union will cost them their jobs.

Meanwhile, some politicians, like GOP Gov. Bill Lee, have tried to tip the scales against the union. Echoing the fear-mongering from Tennessee Republicans during previous UAW campaigns, Lee recently warned that unionizing the Chattanooga plant would be a “big mistake.”

“We’ve seen plants close that made the decision to go union,” he said balefully. “So I hope that’s not what happens here.”

In 2014, state lawmakers threatened to take away tax subsidies if the plant went union.

A woman takes a UAW yard sign at a local union hall in Chattanooga. SETH HERALD for HuffPost

One of the union’s challenges is that Volkswagen has always paid decently for the area. The company says the average plant employee will earn above $60,000 this year. Production workers start out near $23 per hour and top out above $32, which beats being a picker at the Amazon warehouse a mile down the road. But the contracts that the UAW just won will push top rates well beyond that figure at U.S. automakers’ plants, climbing to nearly $43 for production workers at Ford by 2028.

In interviews, several Volkswagen workers who support the UAW drive said that the job can be grueling for the pay. One of the top grievances is time off: Workers said that they routinely burn through their paid leave during plant shutdowns for retooling and maintenance; otherwise they wouldn’t get paychecks. They also complained of repetitive-motion injuries and a pressure to ignore aches and pains as they move SUVs, including Volkswagen’s electric ID.4, off the line.

“The safety and the consideration for ergonomics and people’s sanity just kind of takes a back seat to the production,” Costello said.

Volkswagen said through a spokesperson that it had recently increased emergency paid time off “based on employee feedback.” The company also defended its safety record, saying it was proud of “the world-class production environment we have created in Chattanooga.”

“We take safety very seriously in the plant and our injury rates are significantly below the industry average,” the company said.

Costello said that he still experiences back pain from the way he twisted his body over and over handling seat belts in a previous job at the plant. He’s been telling co-workers that even if their wages are better than at other jobs they’ve had, they should still expect more.

“We should not be living on subsistence. We should not just be proud that we can afford an apartment and put food on the table,” he said. “We should be thriving. What kind of bleak existence do we live in where it’s greedy to want more than to just survive?”

Union supporters spent the final days and weeks of the campaign trying to rally support among co-workers. SETH HERALD for HuffPost

‘Fear Ruled The Day’

During its earlier organizing efforts in Chattanooga, the UAW was hobbled by the concessions it had made to help stabilize the Big Three in the wake of the Great Recession. The givebacks narrowed the compensation gap between union and nonunion auto plants, leaving workers at places like Volkswagen to rightfully wonder what the benefits of union membership would be. A federal corruption investigation that led to several guilty pleas by union officials didn’t help.

But the union’s image has changed dramatically in the past year. As part of a consent decree with the Justice Department following the corruption probe, UAW members cast ballots in a direct election for union leaders in 2023, rather than having them chosen through an opaque delegate system that critics long said was rigged. The reformer Fain harnessed a rank-and-file thirst for change and defeated the establishment candidate, laying the groundwork for the Big Three strike.

News of the walkouts in September had an immediate effect inside the Volkswagen plant, according to Yolanda Peoples, a union supporter and assembly worker who was around for the two earlier, failed organizing efforts. Plenty of workers like Peoples had been pushing for a union all along, but the public contract battle — with Fain literally tossing Ford’s offer in the trash can — made some workers reconsider their expectations for the job.

“A lot of people there didn’t really know about the UAW,” Peoples said. But the strikers were “people that do the same thing that you do every day, and they’re standing up against these big corporations, getting what they feel as though they deserve. ... It made it look possible. The exposure was wonderful for us at the plant,” she said.

Fain spoke about the battle with U.S. automakers in terms of class struggle, deeming the contract victory “a turning point in the class war that has been raging in this country for the past 40 years.”

Volkswagen employee Isaac Meadows said the company pushes workers hard inside the plant, as if they're "robots." "It's not unreasonable for us to ask for more," he said. SETH HERALD for HuffPost

Volkswagen union supporter Isaac Meadows has moderated that message for the Chattanooga audience. He noted that a lot of workers are grateful for their jobs and don’t want an adversarial relationship with the company. But just about everybody has something that they want changed, whether it’s more paid leave, a higher top pay rate or some kind of recourse against discipline that can impact bonuses.

“We do great work for the company. The company is making a lot of money off of our work. It’s not unreasonable for us to ask for more,” said Meadows, who moved from Nevada a year and a half ago intent on getting a job at the factory. “That’s been my message. It’s a little tamer than Shawn.”

He added: “The car is the only important thing in that plant. ... The job itself is very fun, but they push really, really hard. We’re not robots, but they push us like we’re robots.”

In 2014, Volkswagen seemed to almost welcome the union because the company sought to create a German-style works council, which many legal experts thought necessitated a union to be legal. But the company and the UAW faced extraordinary pressure from Republican politicians looking to keep a union out as part of their business-friendly, “right-to-work” pitch to employers. Just 6% of Tennessee workers are union members, compared with 10% across the U.S.

Tennessee’s then-Sen. Bob Corker, a Republican, said publicly that the plant would get a new SUV production line if workers rejected the UAW, while state legislators said that Volkswagen’s tax incentives could disappear with a union victory. In 2019 Volkswagen invited Lee, the governor, to give a speech at the plant discouraging unionization and urging workers to keep a “direct relationship” with the company.

Lee has publicly opposed the union drive once again, but the political interference seems more muted this time.

A letter of community support for the union campaign. 

SETH HERALD for HuffPost

Unions in general are very popular at the moment, and nearly 60% of U.S. adults supported the Big Three strikers even though the work stoppage would squeeze car and truck inventories. Chattanooga’s GOP congressman, Rep. Chuck Fleischmann, recently told HuffPost that he’d “stayed out of it this time.”

“I have never really been pro-union,” Fleischmann said, “but this is something that I’m going to let the workers decide.”

Workers said in interviews that some supervisors have made their anti-union positions clear, but for the most part the company has not been pressuring them to vote against the union and hasn’t been forcing workers to attend anti-union meetings. (Volkswagen said that supervisors hold daily meetings but are “staying neutral and fact oriented.”) Peoples said workers are less receptive to arguments that a union will cost the plant production, noting how much both Volkswagen and the government have invested in the plant since its 2009 groundbreaking.

Troy Hunt, a longtime union backer, said that “fear ruled the day” in the earlier organizing efforts. This time he’s seen co-workers more open with their support and managers less aggressive with their opposition. He attributed the company’s cautious stance in part to the Volkswagen Group works council in Europe throwing its backing behind the campaign. The council’s president noted that the Chattanooga facility was an outlier globally at Volkswagen for not having employee representation.

“I think the company has been leaned on ... to appear neutral,” Hunt said. “I know supervisors who truly are neutral. I know some supervisors who are not. But the company, right now, I believe they’re trying to appease those in Germany that are watching.”

Volkswagen said it hopes every worker will “review the relevant facts” before voting. “We respect our employees’ right to decide this important issue through a democratic process,” the company said in a statement.

A group calling itself Still No UAW has been placing signs near the factory urging workers to vote no. A visit to the group’s website pulls up the image of a social media post from Donald Trump’s Truth Social platform in which the former president called Fain a “Weapon of Mass Destruction on Auto Workers.” The site highlights the UAW’s support of President Joe Biden and its political spending to help Democrats. The group didn’t respond to interview requests submitted through the site.

Assembly worker Patricia McFarland said that she’s been putting out union T-shirts on a chair inside the plant, and some workers have left anti-union messages beside them. McFarland had worked in union auto plants in Michigan before moving to Tennessee two years ago. She said it’s been difficult speaking to many of her co-workers, particularly the younger ones, about whether they should unionize.

“One kid said to me that he’s really big into cars, and if we get a union, the prices of cars are going to go up to where nobody can afford to buy them,” McFarland said. “A lot of these kids … they’re happy with the money that they get.”

McFarland has been supporting the union effort primarily because of the work pace. She said supervisors expect her to accept aches and pains “just because I’m older.”

“They work you to death,” she said. “I’m 56 years old and I have never worked this hard in my entire life.”

Volkswagen employee Patricia McFarland said she's 56 years old and never worked so hard in her life. 

SETH HERALD for HuffPost

The ‘UAW Bump’

Several nonunion manufacturers boosted pay following last year’s strikes, likely to help discourage unionization. Fain has called these raises the “UAW bump.” (At a Senate hearing, the union leader said it stands for “U Are Welcome.”) At Volkswagen, the year-end pay hike was 11% — as it turns out, the same immediate raise that UAW members received. Volkswagen said the increase was the result of its regular annual compensation review.

The company also slashed the time it takes to reach top pay after the UAW won a similar concession from the Big Three, demonstrating how the union can still set industrywide standards.

But organizing the likes of Volkswagen, Mercedes, Toyota and Hyundai would increase the union’s bargaining power across the sector, including in Detroit. Ford, GM and Stellantis like to point to their higher labor costs relative to the foreign automakers and the nonunion, Texas-based Tesla. So the UAW’s power will always be limited as long as the Big Three′s competitors remain nonunion, said Art Wheaton, an expert in labor negotiations at Cornell University.

“This is a big deal, since you need to increase market share of the number of plants that are unionized to give you more leverage,” he said. “Really the UAW needs to have more than just the Detroit Three organized if they want to have the same sort of impact to lift wages and benefits.”

Workers will cast votes in the union election through Friday, April 19, with a ballot count expected that night. 

SETH HERALD for HuffPost

Peoples, the assembly worker, turned into a union leader in part because her father had worked in General Motors’ Doraville, Georgia, assembly plant outside Atlanta, a UAW-represented facility that closed in 2008. She doesn’t feel that Volkswagen’s 401(k) plan is preparing her for retirement in the way her father’s pension did for him.

Peoples said that union supporters like herself learned a lot from the earlier, failed efforts. This time she’s tried to focus on explaining to others what negotiating a contract might look like, or what union representatives could do for them inside the plant, “instead of just telling them, ‘Vote yes, vote yes,’” she said. And this time they aren’t knocking on workers’ doors, which many found intrusive. “That’s one of the biggest things that people hated,” she said.

In 2019, when the union ended up losing by just 57 votes, Peoples felt as though the campaign had been rushed. She feels optimistic this week because she’s convinced that union supporters slowed down and put in the necessary work. She’ll know for sure once the ballot count gets underway Friday night.

“This time we took our time. We educated a lot of people,” Peoples said. “ And that’s one of the reasons why I feel as though it’s different this time.”

The Fed may have pumped so much money into the economy that it's now taking way longer to cut rates

Huileng Tan
Wed, April 17, 2024 


US Fed chair Jerome Powell has signaled a delay in expected interest rate cuts.


He said the Fed needs more time to be confident that its fight against inflation is working.


An analyst suggests excess money, a result of pandemic-era policies, may be drained from the economy this year.

US Federal Reserve chair Jerome Powell damped expectations of impending interest rate cuts on Tuesday — a sign that the Fed may have pumped so much money into the economy during the pandemic that the surplus is still making its way through the country.

Speaking on a panel discussion at the Wilson Center in Washington, Powell said while inflation pressure has eased in the last year, it hasn't come down enough in recent months.

"The recent data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence," Powell said Tuesday

This means that the Fed isn't confident at this point that inflation is headed to its 2% target level in the longer term.

Strong job growth is contributing to price gains. In particular, the Personal Consumption Expenditures Price Index — a key inflation metric for the Fed — was little changed in March over its 2.8% reading in February, Powell pointed out.

So the Fed can keep interest rates higher for longer to cool price rises — although the central bank also has room to cut should the labor market "unexpectedly weaken," Powell added.

"If higher inflation does persist, we can maintain the current level of restriction for as long as needed," he said.

Higher interest rates make borrowing more expensive for anything from mortgages to credit cards — it encourages people to save rather than spend, which in theory, helps bring down prices. But it takes a while for the effects to be felt, and the risk is that the central bank raises rates to the point where the economy slows down and even tilts into recession as demand contracts.

Conversely, lower interest rates encourage borrowing and spending — thus driving the economy when growth slows, such as during the COVID-19 pandemic when the Fed cut rates massively and pumped money into the system.
Excess money may be drained from the economy this year, an analyst said

Powell's comments on Tuesday were a departure from just a month ago, when Fed officials stuck to their expectations of three rate cuts this year.

They also illustrate the Fed's tricky balance as it tries to steer the US economy into a "soft landing," thus averting a recession.

Jim Reid, a research strategist at Deutsche Bank, wrote in a note on Tuesday that he believes it will be "incredibly difficult" to achieve a soft landing for the US economy because it's moved from the largest jump in the money supply since the World War II to the largest contraction since 1930.

Even though the Fed has tightened the money supply — hiking interest rates 11 times since March 2022 — the scale of the COVID-19 stimulus and money supply is still taking time to work through the system, Reid added in the note published before Powell's comments on the same day.

But Reid thinks the excess money could be drained from the economy later this year, when money supply in the economy normalizes.

"If that's correct, then maybe cutting rates in preparation for that is actually the correct thing to do," said Reid. "However, faced with inflation that is currently accelerating, that would be very, very difficult for the Fed to communicate and be comfortable doing."

Deustche Bank is just pricing in one Fed rate cut, in December 2024.
Demand, supply chain snarls, and fiscal stimulus also contribute to inflation

To be sure, money supply isn't the only thing that contributes to inflation.

As Bill Dudley, a former president of the Federal Reserve of New York, explained in an opinion piece for Bloomberg in February 2023, other factors influencing the US economy include consumer demand and stimulus money, and the Fed keeping rates "too low for too long."

"If rates had been considerably higher, earlier, the economy would have grown more slowly, the labor market wouldn't be as tight and wage and price inflation would be lower," wrote Dudley.

Fed Chair Powell had said inflation was "transitory" amid the COVID-19 pandemic but stopped using the term in 2022 amid persistent price rises.

The Fed will gather on April 30 to May 1 for its next policy meeting.

Fed's Powell: Elevated inflation will likely delay rate cuts this year

CHRISTOPHER RUGABER
Updated Tue, April 16, 2024 

Federal Reserve Board Chair Jerome Powell speaks at the Business, Government and Society Forum at Stanford University in Stanford, Calif., April 3, 2024. On Tuesday, April 16, 2024, Powell will appear at the Washington Forum on the Canadian Economy. 

(AP Photo/Jeff Chiu)

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell cautioned Tuesday that persistently elevated inflation will likely delay any Fed interest rate cuts until later this year, opening the door to a period of higher-for-longer rates.

“Recent data have clearly not given us greater confidence" that inflation is coming fully under control and "instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said during a panel discussion at the Wilson Center.

“If higher inflation does persist," he said, “we can maintain the current level of (interest rates) for as long as needed.”

The Fed chair's comments suggested that without further evidence that inflation is falling, the central bank may carry out fewer than the three quarter-point reductions its officials had forecast during their most recent meeting in March.

His remarks Tuesday represented a shift for Powell, who on March 7 had told a Senate committee that the Fed was “not far” from gaining the confidence it needed to cut rates. At a news conference on March 20, Powell appeared to downplay that assertion. But his comments Tuesday went further in dimming the likelihood of any rate cuts in the coming months.

“Powell’s comments make it clear the Fed is now looking past June,” when many economists had previously expected rate cuts to begin, Krishna Guha, an analyst at EvercoreISI, said in a research note.

In the past several weeks, government data has shown that inflation remains stubbornly above the Fed's 2% target and that the economy is still growing robustly. Year-over-year inflation rose to 3.5% in March, from 3.2% in February. And a closely watched gauge of “core” prices, which exclude volatile food and energy, rose sharply for a third straight month.

As recently as December, Wall Street traders had priced in as many as six quarter-point rate cuts this year. Now they foresee only two rate cuts, with the first coming in September.

Powell's comments followed a speech earlier Tuesday by Fed Vice Chair Philip Jefferson, who also appeared to raise the prospect that the Fed would not carry out three cuts this year in its benchmark rate. The Fed's rate stands at a 23-year high of 5.3% after 11 rate hikes beginning two years ago.

Jefferson said he expected inflation to continue to slow this year with the Fed’s key rate “held steady at its current level.” But he omitted a reference to the likelihood of future rate cuts that he had included in a speech in February.

Last month, Jefferson had said that should inflation keep slowing, “it will likely be appropriate” for the Fed to cut rates “at some point this year” — language that Powell has also used. Yet neither Powell or Jefferson made any similar reference Tuesday.

Instead, Powell said only that the Fed could reduce rates “should the labor market unexpectedly weaken.”

Fed officials have responded to recent reports that the economy remains strong and inflation is undesirably high by underscoring that they see little urgency to reduce their benchmark rate anytime soon.

On Monday, the government reported that retail sales jumped last month, the latest sign that robust job growth and higher stock prices and home values are fueling solid household spending. Vigorous consumer spending can keep inflation elevated because it can lead some businesses to charge more, knowing that many people are able to pay higher prices.

Operator of Japan's wrecked Fukushima Daiichi nuclear plant prepares to restart another plant

MARI YAMAGUCHI
Mon, April 15, 2024 

 The Kashiwazaki-Kariwa plant in Kashiwazaki, Niigata prefecture, northern Japan, on April 2021. The operator of the tsunami-wrecked Fukushima Daiichi nuclear power plant said on Monday that it has obtained permission from safety regulators to start loading atomic fuel into a reactor at its only operable plant in north-central Japan, which it is keen to restart for the first time since the 2011 disaster. Tokyo Electric Power Company Holdings, or TEPCO, said that it obtained the Nuclear Regulation Authority’s approval to load nuclear fuel into the No. 7 reactor at its Kashiwazaki-Kariwa nuclear power plant in Niigata and it was to start the process later Monday.

(Kyodo News via AP, File)More


TOKYO (AP) — The operator of the tsunami-wrecked Fukushima Daiichi nuclear power plant said on Monday that it has obtained permission from safety regulators to start loading atomic fuel into a reactor at its only operable plant in north-central Japan, which it is keen to restart for the first time since the 2011 disaster.

Tokyo Electric Power Company Holdings, or TEPCO, said that it obtained the Nuclear Regulation Authority’s approval to load nuclear fuel into the No. 7 reactor at its Kashiwazaki-Kariwa nuclear power plant in Niigata and it was to start the process later Monday. The loading of the 872 sets of fuel assemblies is expected to take a few weeks.

The Kashiwazaki-Kariwa plant, which is the world’s biggest, has been offline since 2012 as part of nationwide reactor shutdowns in response to the March 2011 triple meltdowns at the Fukushima Daiichi plant.

Reactors 6 and 7 at Kashiwazaki-Kariwa had cleared safety tests in 2017, but their restart preparations were suspended after a series of safeguarding problems were found in 2021. The Nuclear Regulation Authority lifted an operational ban at the plant four months ago.

TEPCO, heavily burdened with the growing cost of decommissioning and compensation for residents affected by the Fukushima disaster, has been anxious to resume its only workable nuclear plant to improve its business. TEPCO is also struggling to regain public trust in safely running a nuclear power plant.

Prime Minister Kishida Fumio’s government has reversed earlier plans for a nuclear phaseout and is accelerating the use of nuclear power in response to rising fuel costs related to Russia’s full-scale invasion of Ukraine and pressure to meet decarbonization goals.

During his visit to Japan in March, the head of the International Atomic Energy Agency chief, Rafael Mariano Grossi, expressed his agency's support for increasing Japan's nuclear power capacity as the country looks to it as a stable, clean source of power.

IAEA has since also sent a team of experts to the Kashiwazaki-Kariwa plant to provide technical assistance.

TEPCO in a statement said it will ensure safety as the plant starts back up. “We will steadily put forward each step, and we will stop when we find issues and take necessary measures."

The restart, however, remains uncertain because it is subject to the local community’s consent. A Jan. 1 earthquake in the nearby Noto region rekindled safety concerns.

Niigata Gov. Hideyo Hanazumi has yet to make clear whether he will agree to restart No. 7 reactor. Citing extensive road damage caused by the Noto quake, Hanazumi raised questions about the current evacuation plans in communitie