TIME - Business

West Coast Farmers Had A Hellish Summer. It Might Not Be An Aberration.

Wed, 21 Oct 2020 20:03:30 GMT

Larry Tristano is looking out over what used to be his lush 13-acre farm in Santa Rosa, California. Less than a month ago, the fields were full, and he and his small team at Triple T Farm were harvesting cherry tomatoes, peppers, eggplants, and squash.

Now, there’s nothing but burnt ground. On Sept. 27, two raging Northern California wildfires, the Glass and Shady fires, converged, rapidly burning thousands of acres. The family homes on the property—where he and two more generations of his family lived—were burnt into ash; so were the barns, tools, livestock, an SUV and more. “After the fires in Paradise, I drove through and said, ‘I feel so sorry for these people.’ But you’ll never know how anybody feels until you’ve gone through it,” Tristano says, choking back tears. “It’s just horrible.”

Up and down the West Coast, farmers are reeling from a hellish summer of consecutive and overlapping crises. First, COVID-19 spread across the country, endangering the lives of farmworkers who were deemed as essential and devastating the restaurant market. Record-breaking hot stretches, which made this August the hottest one on record in California, burnt crops and decreased yields. Then a new wave of fires descended across the forests and hills, displacing workers, demolishing homes and blanketing regions with stifling smoke. “We’re trying to put the best food on the table and it’s been very, very rough,” Tristano says.

While some might chalk up these events to a series of freakish aberrations, there are signs that none of these crises will disappear anytime soon. Climate change is facilitating record-breaking heat spells; fires are raging every season in part due to poor forest management; many employers are resigned to COVID-19 lingering through the start of next year’s planting season. Once a land of bounty, the Golden State has turned into an unrelenting minefield of obstacles that have exposed the many flaws of an entire ecosystem.

As West Coast farmers and farmworkers start thinking about long-term solutions, they are often stumped. “We’re focusing on ‘How I get through today,’ but this might be what California looks like every August and September,” says Lorraine Walker, who runs Eatwell Farms in Dixon, California. “I have spoken with a few farmers and asked them, ‘What are you planning? Everyone’s response is, ‘We don’t really know.'”

Jenna Schoenefeld—The New York Times/ReduxA volunteer with GleanSLO organizes strawberries in a bin at a farm in San Luis Obispo, Calif., on June 4, 2020. Before the pandemic, GleanSLO volunteers typically gleaned from backyard fruit trees—now they visit farms.

COVID-19’s “Rollercoaster Ride”

The agricultural output of the West Coast is massive. California’s Central Valley grows a staggering quarter of the nation’s food and 40% of its fruits, nuts and other table foods. Oregon raked in $238 million in 2019 from wine, while Washington produces 65% of the nation’s fresh apples. If you buy a piece of produce from your typical American supermarket, there’s a good chance it came from a West Coast farm.

But the state of farms in the United States was precarious even before COVID-19 struck earlier this year and plunged the nation into a recession. In 2019, the number of farms filing for bankruptcy increased 24% from the previous year, while the U.S. farm debt grew to $425 billion. Foreign competition, trade wars, regulations and unpredictable weather made life hard on farmers. In California, massive wildfires ripped through expanses of fields that grow wine grapes, tomatoes and other goods.

COVID-19 added a new chaotic layer of unpredictability. “It’s been a rollercoaster ride, from panic buying to loss of demand to the food service business disappearing,” says Joe Pezzini, the president and CEO of Ocean Mist Farms, which is based in Castroville, Calif. “Every day’s been a new challenge.” Some farms took a huge hit from the loss of critical buyers like restaurants and school systems; others were buoyed by the increased interest in home cooking with fresh produce. The decreased price of many crops hit some farmers hard; others were able to float through thanks to government loans. As farmers realized they had excess supply, they dumped milk, slaughtered livestock and smashed eggs.

Regardless of COVID’s impact on a farm’s bottom line, the workforce bore the brunt of the risk. There are 400,000 agricultural workers in California, a population that was deemed essential during the pandemic. Researchers and advocates estimate between 60% and 75% of them are undocumented, and a majority are Latinos. Their typical lack of unionization and the constant fear of deportation have long made them vulnerable to workplace coercion. “The inequities that COVID-19 has highlighted, they existed pre-COVID,” Estella Cisneros, the legal director of the Agricultural Worker Program at California Rural Legal Assistance, Inc., says. “There’s a lot of pressure on farmworkers to continue working, and a lot of fear of retaliation.”

This year, Cisneros says that her office has fielded many complaints from California farmworkers who say their employers are not taking proactive steps to protect them or are simply ignoring Cal/OSHA regulations about protective equipment. “Some workers said that instead of being given masks, they were given something that much more resembled hairnets,” she says.

Many of the farmworkers that the CRLA assists are part of an aging population, have preexisting conditions like heart disease and diabetes, and have little access to healthcare or job alternatives. Harrowing statistics have confirmed how vulnerable Latino populations are to the virus: In California, they represent 61.1% of COVID-19 cases and 48.6% of deaths, despite making up only 38.9% of the population. “It’s highlighted how at the mercy these workers are at the hands of people who are not the workers themselves,” Cisneros says.

In Oregon, Reyna Lopez, the executive director of the farmworker union PCUN (Pineros y Campesinos Unidos del Noroeste), says that a quarter of farmworkers polled in a member phone survey said they hadn’t seen any improvements in safety measures being taken by employers. “We’ve also heard that enforcement of the rules isn’t good—and when there is a complaint, people aren’t seeing it getting investigated,” she says.

Lopez and Cisneros are both fighting for the extensions of OSHA regulations related to COVID-19 in their states. They worry that the virus will continue to spread through vulnerable communities if workers are kept in packed labor housing units and sent out into the fields and processing plants in unsafe conditions, especially once the season picks back up next spring. “We have to be ready for May, when we’ll see lots of people coming for the harvest,” Lopez says. “This year, that’s when we saw a lot of outbreaks.”

Brian L. Frank—The New York Times/ReduxWorkers pick corn in the pre-dawn hours to avoid the heat of the day in California’s San Joaquin Valley on Aug. 21, 2020.

A Record-Breaking Heat Wave

Some farm owners have viciously complained about regulations like a rising minimum wage and water restrictions, saying they are squeezing their already meager margin of profit. “The costs are becoming so exorbitant, you’re seeing a lot of ground be idle or sold to other growers,” says Bruce Blodgett, the executive director of the San Joaquin Farm Bureau Federation. “People seem to forget we compete in a world marketplace that doesn’t have the labor or regulatory costs we do. Farmers are saying, ‘I’ve had enough, I can’t compete.’”

While Blodgett and others fight a battle over regulation, they’re also getting hammered by increasingly chaotic weather systems. Blodgett says that heavy rains during cherry harvest season in May slashed the potential cherry revenue in half. Then a record-breaking scorching summer set in, threatening both the crops and the ability of farmworkers to work in the face of heat exhaustion. In August, nearly 14,000 lightning strikes hit California over a 72-hour period. In early September, L.A. County hit an unprecedented 121 degrees.

Some 300 miles north of Los Angeles on the central coast of California lies Taylor Farms, which produces salads and vegetable kits and racks up billions a year in total sales. For the last two decades, Taylor Farms’ crops have thrived in the moderate climate of Salinas, where the coastal breeze and fog suppress summer temperatures and allow leafy greens to thrive.

But this year, record high temperatures hit Salinas once again, forcing Taylor Farms into a work schedule they’ve never tried before: complete night shifts, with workers reporting at midnight and working through 6 or 7 in the morning. “We kept people as cool as we could. At the same time, it was an awful rough six weeks for everybody who’s in this business,” Mark Borman, the president of Taylor Farms California, says. Despite the change, Borman says the company has lost about 23% of its projected yield over the last four weeks due to the heat wave.

Ocean Mist Farms, which specializes in artichokes and brussels sprouts and operates in the same area, was similarly impacted. “Lettuce gets burn on it, and there may be a supply issue coming up for Thanksgiving,” Pezzini, the CEO and president, says. “You have to salvage what you can.”

Bigger companies like Taylor Farms and Ocean Mist have some flexibility to deal with climate change: they can simply alter or move their operations. Pezzini hopes to move his artichokes and brussels sprouts closer to the coast where it’s cooler, and has been using drip irrigation in order to combat the water drought plaguing the state. Borman is looking at his options outside the state entirely. “Today, we grow more and more lettuce in Central Mexico. We’re growing more in Colorado,” he says. “We want to diversify our growing regions, so as things continue to change, we’ll have the right development from a seed perspective and have some flexibility.”

But smaller farmers aren’t afforded the same adaptability. Walker, at Eatwell Farms, says her tomato crop was “beyond disappointing” this year due to the combination of an extremely hot August followed by weeks of smoke blocking the sun. She says she might plant her tomatoes earlier in the season when it’s cooler—but that would impact the planting of her winter crops before it. “We don’t have much wiggle room,” she says.

Courtesy Kendra KimbrauskasThe view from Shimanek Bridge Farm near Scio, Ore., when wildfires swept through the area in September.

“The Sun Didn’t Rise”

While rising temperatures threaten livelihoods, they mostly don’t threaten actual lives. But the fires that follow the heat waves do. Over five million acres have burned in California, Oregon and Washington combined during what has been the most active fire year ever on the West Coast. Experts say that climate change, lightning strikes and poor forest management have combined to provide the kindling for infernos that have killed over thirty people and destroyed thousands of buildings.

Kendra Kimbrauskas, the co-owner Shimanek Bridge Farm near Scio, Oregon, had previously not thought much about the risk of fires when in September, she woke up to a strange sight. “The sun didn’t rise. It was black like it was midnight,” she recalls. “The ash was falling, and it looked like it was in the middle of winter, with snowflakes in your headlights. At like 11 a.m., the sun finally came through and turned everything a really eerie red—like blood red.”

Kimbrauskas hooked up her horse trailer and headed to the county fairgrounds, where she stayed for almost a week. While her farm was ultimately untouched by the fires, many were not—and she dove into a community rescue effort to save the many animals that had been left behind. She ended up using her truck and a trailer to transport abandoned animals to the Linn County Expo Center, where a noisy scene was developing. “We’re talking hundreds of farms, thousands of animals,” she says. “It was like Noah’s Ark, with any animal you can imagine that people were scrambling to get out of danger: horses, sheep, bunnies, ducks, geese, alpacas.”

Kimbrauskas says she has committed to regenerative farming practices that will hopefully lead to more fire-resilient farms. But this experience has shown her how even the best preventative measures may not be enough. “We also have to be prepared to just leave,” she says. “If we don’t have a plan, we may lose our lives.”

Amanda Lucier—The New York Times/Redux Julio Hernandez cuts the hair of his brother, Alvaro Hernandez, at a farm that opened space to people displaced by wildfires in Central Point, Ore., on Sept. 26, 2020. The Almeda Fire leveled some of the only affordable housing for the immigrants who work the fields, kitchens and construction sites of southern Oregon.

Lopez, of PCUN, said that many farmworkers in areas adjacent to evacuation zones were still told to go back to work and endure hazardous air quality. “It’s really important for people to understand there were thousands of outdoor farmworkers still out there working while this was still happening,” she says. “We spoke to a farmworker, Manuel, who said that during the peak of the wildfires, he was feeling nauseated, had a headache, and his body was hurting. He’s still not feeling 100%.”

Many more lost their homes. In Phoenix, Ore., about 200 miles south of Scio, a wildfire ripped through a predominantly Latino community, destroying nearly 1,000 housing units, most of them mobile homes and RV parks. Many members of the community are agricultural workers who toil at the area’s food processing plants and wineries, and have nowhere to turn. “In less than five minutes, everything was gone,” Phoenix resident Jairo Gomez told the Washington Post.

Larry Tristano, in Santa Rosa, suffered the same fate. He himself was in Wyoming when the fire rolled through—but his family was still in their Santa Rosa house and scrambled to get out when they learned of the evacuation order. “My wife grabbed our parents’ wedding pictures, her mother’s scrapbooks, personal things, clothes, our dogs, and that was it,” he says.

Two days later, Tristano returned to nothing. “The only thing that survived was one greenhouse and the tractor. Everything else is gone,” he says. In response, he started doing the only thing he knows how to do: farming the land. “We got a generator. We hooked up the well. Our vegetable crops did survive, and we’re actually back at the market on a limited supply. We’re not going to let this beat us.” Over two weeks, over $29,000 has been raised on GoFundMe for the farm’s workers and its recovery.

Jessica Christian—The San Francisco Chronicle/Getty ImagesGround scorched by the Glass Fire leads to an untouched vineyard along Silverado Trail in Calistoga, Calif., on Sept. 29, 2020.

While Tristano is plowing ahead, there are many signs that the triple crisis for West Coast farmers is far from over. In Washington, the apple crop will be up to 10% smaller than expected due to wildfires and extreme windstorms battering orchards. Economic recovery has been slow, and COVID-19 could very well be lingering when many farm workers return in full force to plant seeds in the spring, threatening their health and slowing down schedules. And federal assistance has been underwhelming: while President Trump has spearheaded record farm subsidies, most of the money has flowed to Southern states and big farms, a nonpartisan watchdog agency found.

Borman, of Taylor Farms, says these compounding issues could affect the consumer through higher prices or a decreased selection. Restaurants may start building their menus around less perishable greens, like cabbage or iceberg lettuce, to protect against volatility. He expects some farmers to move out of the region to greener pastures, “whether that be into central Mexico or even further south into South America.”

As far as how West Coast farmers are adapting to these looming struggles, Borman doesn’t have an answer. “It was a really tricky year. There’s a lot of uncertainty, but I don’t know if there’s a lot of strategy coming out of it yet,” he says. “Honestly, everybody’s a little shell-shocked right now.”

Pet Owners Are Diverse, but Veterinarians Are Overwhelmingly White. ...

Wed, 21 Oct 2020 12:35:02 GMT

As a child, Tierra Price was mesmerized by Dr. Dolittle, portrayed by Eddie Murphy in the 1998 film—not only because he could talk to dogs and sad circus tigers, but because he was a person of color who treated animals. “That resonated deeply with me,” says Price, who wore an oversized white coat and carried around a stuffed Dalmatian for her first-grade career day. “I grew up thinking that I was going to be one of the first Black veterinarians because I had never seen any,” says Price, now 26.

There were no Black doctors at vet clinics near her Louisville, Ky. home or at the local animal shelter where she volunteered. Price didn’t see her first real Black veterinarian until she was 19 and participating in a veterinary program for minority undergraduates. By the time she started veterinary school, she felt like an outcast. In 2018, Price created an online networking group for Black vets just to connect and commiserate with people who looked like her. “I was going into a profession I didn’t really belong in,” she says.

“In this day and time, you don’t stay that way unless you’re ignorant to the fact that diversity is good.”Years later, not much has changed. Veterinarians are projected to be among the most in-demand workers in the next decade. As more people of all races own pets, the U.S. Bureau of Labor Statistics (BLS) predicts jobs for vets and vet technicians will grow 16% by 2029. Nearly 65% of white households have pets, 61% of Hispanic households have pets, and almost 37% of Black households have pets, according to the most recent industry data. Yet pet lovers are faced with a predominantly white world once it’s time to see a vet. Of the more than 104,000 veterinarians in the nation, nearly 90% are white, less than 2% are Hispanic and almost none are Black, according to 2019 BLS figures.

This spring, Kimberley Glover spent nearly two months searching for a Black veterinarian in Birmingham, Ala., to care for her 2-year-old puppy Stokely—named after civil rights activist Stokely Carmichael—and to serve as a role model for her two children, who attend predominantly white schools. After scouring the internet and Facebook groups for Black pet owners, she finally received a suggestion from a college classmate, but the clinic was too far away.

“I have given up the search, honestly,” says Glover, 46. “It just tells me there’s more work to do.” Price, who graduated from the Virginia-Maryland College of Veterinary Medicine in May and is now a veterinarian in Los Angeles, agrees. “We have so much catching up to do,” she says.

Stark disparities have permeated the vet world for decades, advocates say, long before George Floyd’s death in May sparked a national movement for racial justice. In 2013, the profession was dubbed the whitest in America. “It has always been a problem,” says Annie J. Daniel, who founded the nonprofit National Association for Black Veterinarians (NABV). “This was just the wake-up call.”

Despite youth outreach efforts at schools and community partnerships to grow the number of Black veterinarians, the group has barely moved the needle since it was formed in 2016. In fact, the number of Black vets dropped from 2.1% of the total vet population in 2016 to below 1% in 2019, which Daniel says is largely due to systemic racism. “In this day and time, you don’t stay that way unless you’re ignorant to the fact that diversity is good,” Daniel says. “Or,” she adds, “you just don’t care that you’re purposefully omitting a group of people.”

Courtesy Tierra PriceAt age 6, Price attends her first-grade career day dressed as a veterinarian. She brought a stuffed animal and made sure her name tag said DVM, “so I wouldn’t be mistaken for an MD,” says Price.

Many issues prevent the veterinary profession from becoming more diverse. Chief among them is a lack of access and exposure to veterinarians at an early age, particularly among children who live in urban or low-income areas, where pet healthcare is considered more of a luxury, advocates say. “It’s not that they don’t want to become veterinarians,” Price says, “but they don’t know that it’s a career option.”

Such was the case for Dr. Will Draper, 53, who didn’t live near vet clinics or animal shelters while growing up in a predominantly Black community in Inglewood, Calif. Differing cultural views on animals also limited his exposure to veterinarians. “I didn’t really have many pets growing up because my father didn’t like animals,” says Draper, who now runs his own practice in Decatur, Georgia with his wife. Draper loved animals, but he didn’t realize he wanted to enter the field until his father took him to see the College of Veterinary Medicine at his alma mater, Tuskegee University. The historically Black college has educated more than 70% of the nation’s current Black vets. Draper was hooked after one visit.

‘Mountains and mountains of debt’

For many others, getting into vet school and paying for it pose additional challenges. On top of requiring prospective students to complete a number of undergraduate prerequisite courses, which can be costly, many top vet schools require or recommend that applicants have hundreds of hours of clinical experience working with animals and licensed veterinarians. Even before the pandemic, Price says that was tough for applicants who don’t live near clinics or shelters, especially if they have to work to support themselves or their families. “A lot of the experience that you have to have to get into veterinary school, you’re not paid for,” Price says. “That really selects for populations that have the luxury of forgoing income.”

In 2019, veterinary students in the U.S. graduated with an average of $150,000 in debt, according to the American Veterinary Medical Association (AVMA). Yet federal data shows the median annual wage for veterinarians in 2019 was about $95,000. Starting salaries were much lower. It costs graduate students attending in-state vet schools at Cornell University in New York and at the University of California, Davis upwards of $32,000 per academic year for just tuition and fees, according to the schools’ websites. Tuition for Tuskegee’s vet school costs more than $20,000 per semester. “When they come out of veterinary school,” Price says, “they’re under mountains and mountains of debt.”

While many young veterinarians are wracked with student debt, no matter their race, daily discrimination in the workplace is another job challenge. Draper—who stars in a reality TV show called Love & Vets on Disney Plus—is often the first Black veterinarian his clients have ever seen. In turn, at least two have refused his service. More than 30 years ago, Draper says an older white man balked when he saw that Draper was Black. The man insisted a white doctor treat his chihuahua, Tiny, who was suffering from congestive heart failure.

“He said Tiny doesn’t see colored people,” Draper recalls. He saved the chihuahua that day, but the man referred to Draper as “the colored doctor” for the next couple of appointments. “Nobody would have blamed me if I told that guy to screw off,” Draper says. “But that’s not what it was about.” When asked if clients have mistaken Draper for a technician or assistant, Draper laughs. “All the time,” he says, adding that they often insist on speaking to the clinic’s owner. “One time, I even said, ‘Hold on,’” Draper says. “I walked away and came back and said, ‘I am the owner.’”

Courtesy Will DraperDraper with Bella, a French Bulldog, at The Village Vets on Oct. 8. Bella’s front leg is “back to 100% now, fortunately,” says Draper.

For Black veterinarians and pet owners, systemic racism in the industry is the norm. That’s why Cheryl Kearney, 65, has no problem driving more than 50 miles to and from Detroit each time her 6-month-old kitten, Roger, needs to see a doctor. Kearney says she’s had negative experiences with her own white doctors speaking to her condescendingly, assuming that because she’s a Black woman, she wouldn’t understand their explanations unless they dumbed them down. Kearney says she couldn’t bear enduring that discomfort when it came to caring for her “baby” Roger, so she made it a point to find a Black vet. “It was a much more personal experience,” she says.

Dion Hobbs, a 46-year-old Houston financial advisor, also noticed that difference when he switched to a Black vet. Hobbs had been taking his 11-year-old dog Sadie to the same vet, who’s white, for more than a decade when Sadie cut open her back leg in June—her first major injury. Hobbs says he was disappointed with the clinic’s bedside manner during a vulnerable and frightening time.

“Competency wasn’t the issue,” he says. “I thought there would at least be a little bit more warmth in the conversion.” Hobbs says he doesn’t think race played a major role in what he considered Sadie’s chilly treatment, but he saw the experience as an opportunity to give his business instead to a Black veterinarian, who he says has shown more compassion. “If I’m going to spend my dollars,” he says, “why not have it go to someone who looks like me?”

An industry slow to change

When an industry is stifled by homogeneity, it can breed a culture of leaders often inflexible to change, advocates say. Amid a pandemic, when social distancing restrictions limited in-person appointments, some veterinarians criticized the AVMA for not tweaking its telemedicine policy, which discourages vets from prescribing medication or diagnosing new pet patients remotely except in emergency situations. The AVMA said it does not regulate or set laws that govern the use of telemedicine, but some vets say industry leaders should be better champions for changing those laws nationwide. For some, it was the latest example that the industry was not keeping up with the times.

“Pets need us. People need us, and aspiring veterinarians need us to drive a change for the profession.”“The veterinary industry, in general, has been very resistant to change in every facet,” Price says. Since July, nearly 6,000 people have signed an online petition, written by nearly a dozen multicultural advocacy groups, calling for the AVMA to take concrete steps to assess where it stands with inclusion issues and to ensure an equitable process for all. “Our profession could really benefit from more diversity because it brings creativity,” Price says. “It brings innovation and it brings new ideas.”

In a statement to TIME, the AVMA, which has more than 95,000 members, said it was “building on” efforts to “further infuse” inclusion into its programs and outreach. It added that it would develop new programs to bring leaders of color to the forefront and that it would work to amplify multicultural vet advocacy groups. In July, the AVMA approved the idea of forming a commission to assess diversity issues, but it has not yet been created. “Transformative change doesn’t happen overnight,” says AVMA President Dr. Douglas Kratt. “It will take an industry-wide, profession-wide collaborative effort to move the needle and to attract more young people to consider a career in veterinary medicine. No single organization can do this alone.”

Now, amid America’s racial reckoning, more leaders are pledging to step up. On Sept. 14, Banfield Pet Hospital, one of the nation’s largest employers of veterinary professionals, announced it would invest $1 million in diversity efforts and ensure at least 30% of its veterinarians and support staff are people of color by 2030. “This is absolutely just the start,” says Dr. Molly McAllister, Banfield’s chief medical officer. Banfield also gave $125,000 to help in-need Tuskegee vet students afford their schooling. “This is a critical time,” McAllister says. “Pets need us. People need us, and aspiring veterinarians need us to drive a change for the profession.”

Amanda Lopez for TIMEFlossie runs alongside Price during a visit to the Culver City dog park on Oct. 12.

A new vet school that opened at the University of Arizona in August is among those that have stopped requiring applicants to have a minimum number of hours of clinical experience. Instead, applicants can explain how they’ve found success in the face of hardship or how they’ve adapted to change. Of the 110 students in its inaugural class, 33% were minorities, officials say.

“We should not exclude someone from our profession just because they may come from an underserved community,” says Julie Funk, the vet school’s dean. “The very future of the veterinary profession is dependent on our ability to serve society as a whole.” Several other vet schools have recently hired managers to oversee diversity efforts or have donated to scholarships that help underrepresented minority students. The Association of American Veterinary Medical Colleges says it reached a milestone in 2020 of having about 20% of its total enrollment consisting of racial and ethnic underrepresented minorities.

There’s no better moment for industry leaders to commit, advocates say. The demographics of the U.S. are changing, and so are those of pet owners. A record high number of Americans own pets, according to the American Pet Products Association trade group, with estimates ranging from 56.8% to more than 65% of U.S. households. Minority groups are fueling that growth, a 2019 study found. Between 2008 and 2018, the number of Hispanic pet owners increased 44%, the number of Black pet owners grew 24% but the white pet owner population went up only 2%, according to the study. At this rate, Daniel says, the industry could suffer financially if it doesn’t keep up with the needs of the changing pet-owning population.

“We have to do more,” Daniel says, “and this is the time.”

China Reports Faster Economic Recovery After Bringing COVID-19 Under Control

Mon, 19 Oct 2020 03:23:55 GMT

(BEIJING) — China’s economic growth accelerated to 4.9% over a year earlier in the latest quarter as a shaky recovery from the coronavirus pandemic gathered strength.

Figures announced Monday for the three months ending in September were in line with expectations after the ruling Communist Party declared the outbreak under control in March and began reopening factories, shops and offices.

Factory output rose, boosted by foreign demand for Chinese-made masks and other medical supplies. Retail sales, which had lagged behind the manufacturing rebound, finally returned to pre-virus levels.

The economy “continued the steady recovery,” the National Bureau of Statistics said in a report. However, it warned, “the international environment is still complicated and severe.” It said China still faces “great pressure” to prevent a resurgence of the virus.

China, where the pandemic began in December, became the first major economy to return to growth with a 3.2% expansion in the quarter ending in June. Output contracted 6.8% in the first quarter after Beijing shut down the world’s second-largest economy.

Authorities have lifted curbs on travel and business but visitors to government and other public buildings still are checked for the virus’s telltale fever. Travelers arriving from abroad must be quarantined for two weeks.

Last week, more than 10 million people were tested for the virus in the eastern port of Qingdao after 12 cases were found there. That broke a streak of almost two months with no virus transmissions reported within China.

Industrial production rose 5.8% over the same quarter last year, the National Bureau of Statistics reported, a marked improvement over the first half’s 1.3% contraction.

Chinese exporters have benefited from the economy’s relatively early reopening and global demand for masks and other medical supplies. They are taking market share from foreign competitors that still are hampered by anti-virus controls.

Retail sales returned to positive territory in the latest quarter, rising 0.9% over a year earlier.

That was up from a 7.2% contraction in the first two quarters as consumers, already anxious about a slowing economy and a tariff war with Washington, put off buying. In a sign demand is accelerating, sales in September rose 3.3%.

China has reported 4,634 coronavirus deaths and 85,685 confirmed cases, as well as three suspected cases.

Economists say China is likely to recover faster than some other major economies due to the ruling party’s decision to impose the most intensive anti-disease measures in history. Those temporarily cut off most access to cities with a total of 60 million people.

Private sector analysts say as much as 30% of the urban workforce, or as many as 130 million people, may have lost their jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.

The ruling party promised in May to spend $280 billion on meeting goals including creating 9 million new jobs. But it has avoided joining the United States and Japan in rolling out stimulus packages of $1 trillion or more due to concern about adding to already high Chinese debt.

Mars CEO Grant Reid Wants Candy to Lift One Million People Out of Poverty. ...

Sun, 18 Oct 2020 10:50:45 GMT

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Oct. 18; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

Many candy lovers (at least this one) aren’t aware that chomping into a Milky Way bar may make one complicit in child-labor law violations and deforestation. The commodities that go into candy and gum—cocoa, mint and palm oil—are produced by some of the most impoverished people in the world, living in some of the world’s most environmentally vulnerable areas. Grant Reid, the CEO of Mars—the 109-year-old, $40 billion privately held pet-care, candy and food behemoth—has embarked on a multiyear effort to make the global food-supply chain more equitable and sustainable. He’s working with NGOs, governments and suppliers around the world to achieve that goal. As a private company with the third, fourth and fifth generations of the founders involved (they are referred to as G3, G4 and G5), Mars is better able to tackle complex, long-term problems than public corporations, which are subject to the brutal fun-house ritual known as quarterly earnings calls with Wall Street analysts.

Reid recently joined TIME for a video conversation about Mars’ diverse portfolio. The company’s pet-food and pet-care business, featuring brands like Pedigree (dog food) and Whiskas (cat food), is performing strongly in the pandemic as furry companions have become as popular as toilet paper; the pet business is now bigger than candy or food sales. He also discussed Mars’ ambitions, including the company’s belief that “everyone working within our extended supply chains should earn sufficient income to maintain a decent standard of living,” and its plan to reduce its carbon footprint by 67% by 2050.

Subscribe to The Leadership Brief by clicking here.

(This interview with Mars CEO Grant Reid has been condensed and edited for clarity.)

I hate to start out with a Grinch-like question, but how much will the curtailing of Halloween this year impact Mars?

Digital is changing everything, so we’ve taken the opportunity to put together a really cool app called Treat Time, which allows you to customize your door, just like a real door at home. People can collect points and then take it to the store and get real candy. We’re using the adversity we face with COVID and trying to bring that feeling of joy to kids and parents.

Still, do you anticipate a revenue hit without kids trick-or-treating door to door?

Nobody really knows. Our role is just to make sure that we have the right products available for the consumers and try and make it as fun and as accessible as possible. We’ll find out in the next few weeks.

With people hunkered down at home and not going to the office and on dates, I understand that the gum business has taken a hit. (Mars owns Wrigley.)

We’re pretty confident it will bounce back, but that’s definitely a challenge. If people aren’t popping it for fresh breath because they’re not socializing as much, then there’s bound to be a hit.

By what order of magnitude is the gum category down?

Off the top of my head, I’d say probably 15, 20%.

Mars has a customized M&M business, including making specially emblazoned ones for the White House: Has M&M consumption in this Administration gone up in this White House and on Air Force One?

I have no idea. Hopefully he’s using it as a treat like it should be and others are using it as a treat.

Running a private company, do you wake up every morning and dance a little jig that you don’t have to deal with Wall Street analysts?

Maybe not every morning, but probably every second morning. Joking aside, I’ve been at Mars for 31 years, and I’m here not only because of the job. I’m here because I work for real people who really care about making a difference in society. The second thing, because it’s a private business, we put 90%-plus of the money back into our brands, our businesses.

We have a philosophy, which is ‘Profit without purpose isn’t meaningful, and purpose without profit isn’t possible.’

Commodities are hugely important to Mars. Can you talk about your experience in the field and the company’s evolving approach?

So I bought commodities myself. I’ve walked cocoa fields in Ghana and Côte d’Ivoire and Brazil, and I’ve seen peanuts in Nicaragua, farms in New Zealand for dairy products. When I bought commodities, we bought on price, quality and delivery. Now quality and price and delivery are still as important today as they were before, but the definition of quality isn’t just good taste now. The definition of quality is what’s it doing to the environment, what’s it doing to the people in the supply chain?

You just reached a significant milestone in your big palm-oil initiative. What drove your efforts there?

Probably not a lot of people know that palm oil goes in almost all products—it’s incredible—from shampoos to chocolate and everything in between. A lot of palm oil comes from areas that have been taking down tropical rain forests. When they burn that, it releases tremendous amounts of greenhouse gas. We’ve tried for some years to work with the commodity suppliers, and we found that we really weren’t making much progress. So we took a leadership position. We said, “We need a new theory of change.” And the new theory of change is we’re not just going to go out to 1,500 palm-oil suppliers, we’re going to work with a much smaller group who really care and really want to make a difference. So we’ve cut down from 1,500 suppliers where we didn’t know where the palm oil was really coming from, down to about 100 suppliers, and by 2022 we’ll probably be down to more like 50. We know exactly where it’s coming from, that it’s not causing deforestation.

And you are making similar progress with cocoa and across your supply chain?

We want at least a million people to benefit from working with Mars through our extended supply chain. And that’s where we start. I mean, cocoa is certainly a big part of that, but it includes all of our raw materials; we buy sugar, we buy mint, we buy fish from Thailand. We’ve done a lot of work on mint. We’ve worked with companies like Danone and the Livelihood Funds to really change the way that vanilla is grown. We’re very active in a number of areas to try and make sure that a million people really benefit from working with us. We have a philosophy, which is “Profit without purpose isn’t meaningful, and purpose without profit isn’t possible.”

And when you look at your carbon footprint, you are looking across your entire supply chain, not just your own company?

Our ambition is to cut our greenhouse-gas emissions by 67% by 2050. We’re on a great path to that because as the company grows, our greenhouse-gas emissions are going down. And we’ve done that in a number of ways. We’ve used, coming back to the commercial-procurement side, novel ways of approaching it. So we’ve invested in wind farms, for example, in the U.S., the north of Scotland, Mexico and China; 53% of our total electricity use around the world comes from renewable sources, and our mission is to get that to 100. What we do is we work with partners to invest in wind farms, and we give them a long-term contract, and that allows us to get renewable energy. We [also] looked at our operation; how much greenhouse-gas emissions are coming from our factory, from our associates driving cars? But what you find is that’s probably 10 to 20% of your total carbon footprint; 80% is in your extended supply chain. Unless you solve your widest supply chain, nothing’s going to happen.

We want at least a million people to benefit from working with Mars through our extended supply chain.

We’ve talked a lot about all the good things you’re doing. What is your secret shame? Where could you be doing better?

I think we’re falling short pretty much everywhere. I mean, that’s just business, right? I’d love to be growing more, and I’d love to make a bigger difference in the environment. I’d love to do even more, faster. We call it at Mars “a healthy dissatisfaction.”

Broadly, how is capitalism working?

Anytime there’s anybody who’s in forced slavery in a supply chain or you’re burning down forests and causing other issues or viruses escaping or greenhouse gases, you can’t be comfortable that capitalism is working perfectly. You’ve got to keep working on it.

Where did you grow up?

In a small mining village in Scotland. The work ethic was pretty strong. I’ve worked in glass-bottle-making factories, I’ve dug trenches, I’ve painted bridges—all those things as I was working my way through college. I was the first in my family to go to university.

What does America mean to you?

It means opportunity and freedom.

Do you think that is changing?

No. I came to America 30 years ago in a fairly midlevel position. I’m an American citizen now. My wife’s an American citizen. Both my kids are American. I’ve got a life I could only have dreamt about back in my poor mining village in Scotland.

What is the most beautiful place you’ve ever seen on your business travels?

New Zealand, round about the Queenstown area.

What was the saddest thing you ever saw on your business travels?

The poverty in Côte d’Ivoire.

What is your preferred method for having meetings?

I have a signature process called walk-and-talk. It changes the dynamic; it makes it more personal. You’ve got a closer engagement. I think people feel like they’ve got more focus from me. I’ve done that for many years.

What type of behavior do you not tolerate in the workplace?

The obvious ones, obviously, you know: sexual harassment, bullying. That’s all unacceptable. But the micro things, like coming to meetings late. That doesn’t work for me. So I just close the door and we start the meeting. If I’m the only one there, I’ll start. It’s not O.K. for me to be late, either.

REID’S FAVORITES

LEADERSHIP BOOK: Tactical Genius in Battle. I found it in an old book sale—it had to be at least 20 years ago. It takes you through all the great generals and talks about how they won battles and how they think. I call it vision/commitment, speed/agility, communication and capability.

AUTHORS: Churchill for nonfiction and Dickens for fiction.

APP: Audible. If I’m driving long distances or I’m out for a run, I can listen to books and learn.

EXERCISE: I’ve always liked exercise, whether it’s walking the dog, riding a bike. So I walk, I run, I do quite a bit of weight training, and I’ve done a lot of martial arts over the years, so boxing, judo, kickboxing, jujitsu. A little bit less of that since I broke my collarbone in judo, but I still hit the heavy bags.

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Workers Who Were Laid Off Say They’re Being Passed Over—For Their Own Jobs

Thu, 15 Oct 2020 12:40:09 GMT

Like millions of Americans who lost their jobs during the pandemic, Jorge Padilla had hoped to work for many more years before the economic meltdown interrupted his plans. But in March, Padilla was laid off from his job as a banquet server in the Las Vegas area when tourism all but disappeared, and even though his old company has ramped up hiring again, it hasn’t contacted him.

Padilla says that’s because Station Casinos, which owns the Green Valley Ranch Resort Spa and Casino where he worked for nine years, is making anyone who wants a job reapply and is hiring mostly lower-paid workers rather than longtime employees like him. “We worked hard for this company, and we were loyal for many years,” says Padilla, 57, who used to pull in about $13.40 an hour plus tips, which amounted to up to $40 an hour in the busy season. “Now it’s time for them to give us a chance to come back.”

Labor unions agree, and as the bleak U.S. job situation shows no sign of a major revival, they are pushing for legislation to ensure that people who lost jobs in the pandemic get first dibs when those positions reopen. Such ordinances, known as Right to Recall or Right of Recall bills, have passed in both the city and county of Los Angeles, San Diego, Oakland, and Long Beach. Drafts of similar bills are circulating in Honolulu, Providence, R.I., and in Tacoma, Wash. A Baltimore city council committee approved one such bill in September, but it has not yet been signed by the mayor.

The hospitality industry says such bills hamper efforts by companies struggling to survive and slow economic recovery. “This type of mandate creates a new operational burden as employers are trying to get back to business and reopen as best they can,” says Troy Flanagan, the vice president of government affairs and industry relations at the American Hotel and Lodging Association. Among other things, Flanagan says some of the mandates give workers a few days to decide whether they want to return to work, which delays quick hiring.

Without legal guarantees, though, older workers like Padilla say they’ll struggle to find jobs in a crowded labor market. “They’re looking for young people, they never think, ‘this old man, he dedicated his life to this company,’” he says. “But I’m ready to go back to work.”

Station Casinos said in a statement provided to TIME that 1,300 workers who were laid off have returned to work, making the same or more money than they did before the layoffs, “unless they took a job in a different classification.” It did not respond to questions about whether it was also hiring new workers for lower pay in place of longer-term workers. The company’s website has dozens of jobs posted, including for a part-time food server and a bus person who could earn, according to the website, “up to $12.65 an hour.”

The Culinary Workers Union Local 226, which represents some Station Casinos employees, says that 58% of Station Casinos workers in its bargaining unit have lost their jobs and that those who want to return to work are being asked to reapply as new employees and are receiving $3-$4 less per hour than they did previously. It showed TIME a worker’s earnings statement that included a line in all caps saying: “Your hourly rate has been changed from 16.3000 to 13.1000,” indicating a pay cut.

As jobs return, no guarantees

The U.S. economy shed 22.3 million jobs between March and April alone, according to Bureau of Labor Statistics data, and these losses were concentrated among lower-wage jobs in fields like hospitality. About 14 million jobs have come back since then, but there’s no guarantee they went to the same people who lost them. About 10% of firms who were adding employment between February and June were growing from external hires, rather than from recalls, even if they had shed their initial workforce, according to a July paper by economists from the Federal Reserve and the University of Chicago.

This is not necessarily surprising; employers often use recessions to pay new workers less because they have such a large pool of potential applicants to choose from, says Ruth Milkman, the Labor Studies Chair at the City University of New York’s School of Labor and Urban Studies.

“We worked hard for this company, and we were loyal for many years.”The pandemic has particularly decimated the minority workforce; Latinos lost 6 million jobs between February and April and have only gained about half of them back; Black workers lost 3.5 million jobs between February and April and have gained 1.3 million back, according to Bureau of Labor Statistics data. Without a resurgence in the hospitality and entertainment jobs that were dominated by Latino and Black workers—which is unlikely as long as the pandemic continues— these individuals could experience long-term financial hardship. Because many were in low-wage jobs in the first place, they don’t have the savings that higher-wage workers might have collected.

Unions say that without legislation to prevent them from doing so, hotels and hospitality companies will lay off older workers who may make more money and workers who have advocated for unions.

“Employers have taken this moment to terminate wholesale entire workforces up and down our jurisdiction,” says Kurt Petersen, the co-president of Unite Here Local 11, which represents more than 30,000 hospitality workers in Southern California and Arizona. “They are hiring back selectively who they want to bring back, and I think they are going to want to whiten the workforce, make it younger, and purge ‘troublemakers,’ and higher cost employees.”

Bill Clark—CQ/Roll Call, Inc/Getty ImagesThe Las Vegas Strip on Aug. 23, 2020. The coronavirus pandemic has devastated tourism in the city, leaving laid-off workers like Jorge Padilla struggling to get by and hoping their former employers give them their jobs back.

The hospitality industry says it wants to bring back trained employees but that the need for them is not yet there.

Some employees who had seniority might not be trained in the work that hotels need them to do when they’re recalled, says Amy Rohrer, president of the Maryland Hotel Lodging Association, which opposes the Baltimore ordinance. “We need flexibility to bring back the employees who will ensure smooth operations for the hotel and make our guests feel comfortable when they’re traveling,” she says. “Who is to say that an employee with four years of experience, who is very eager to return back to work, is not the right employee over a five-year employee who may not be as eager to return to work?”

A California veto, but success in San Francisco

The hospitality industry scored a victory in California in September when Gov. Gavin Newsom vetoed a statewide right to recall bill, saying it placed “too onerous a burden on employers navigating these tough challenges.”

But efforts are succeeding on a local level. The San Francisco Board of Supervisors in June passed an emergency ordinance requiring businesses to offer jobs to former employees ahead of new applicants, in order of seniority. Emily Haddad, a laid-off barista, was among those who spearheaded the effort.

Haddad worked for the San Francisco bakery Tartine and helped organize a union drive that culminated in a vote on March 12 on whether employees wanted to be represented by the International Longshore and Warehouse Union (ILWU) (Some of the ballots have been challenged, and the National Labor Relations Board is still investigating the election results.)

When the city issued a stay at home order a few days later to prevent the spread of the coronavirus, Tartine let go of workers from its four San Francisco locations. They included Haddad. A few weeks later, more people lost their jobs when Tartine’s Berkeley bakery was closed after the hotel housing it terminated its contract.

When Tartine started bringing people back as it opened for takeout, Haddad says it recalled workers who had been vocally anti-union and passed over others. “I will probably never get hired back to Tartine because I was one of the main vocal union organizers,” she says.

Frustrated by their experience, Haddad and her co-workers, alongside the ILWU, helped persuade the Board of Supervisors to pass the right to recall ordinance, which applies to employers with 100 or more employees who laid off at least 10 people due to the pandemic. It is not retroactive.

A spokeswoman for Tartine says the bakery does not hire based on an employee’s view about unions. The company says it began rehiring on May 15, that “all employees were recalled based on classification seniority,” and that it has strictly adhered to the San Francisco ordinance since its passage.

Workers in jurisdictions without right to recall legislation have no remedy. Some are finding that government programs meant to protect them, such as the Payroll Support Program under the CARES Act, which compensated the aviation industry to preserve jobs, are not effective.

“Who is to say that an employee with four years of experience, who is very eager to return back to work, is not the right employee over a five-year employee?” Jilma Guevara, 58, worked as a security agent for Eulen America, a contractor at Miami International Airport, for six years, inspecting cargo put on passenger planes. She was laid off March 23 and told that she’d have to reapply for her job; despite doing so twice, she says she’s heard nothing. She thinks it’s because she was trying to help organize a union.

Guevara says she always got positive feedback from her supervisors at work. “They had no reason to lay me off, but they found an opportunity with the pandemic,” she says. Other Eulen workers say that because they were laid off and not temporarily furloughed, they must undergo new background checks and fingerprinting, at their own expense, if they want to reapply for jobs.

An Oct. 9 report from the Select Subcommittee on the Coronavirus Crisis found that Eulen was one of more than a dozen companies that laid off workers despite receiving money from the Payroll Support Program. Eulen received $26 million from the Program, which was part of the CARES Act and which provided aviation companies with financial assistance to cover paychecks of workers to protect their jobs. The report found that the Treasury Department allowed some companies to receive funding and still lay off workers.

Eulen said in a statement provided to TIME that it had to reduce its workforce early in the pandemic before it received any government support. Its goal is to hire as many former employees as possible, the company said, and it does so by contacting those in good standing and inviting them to apply.

Joe Raedle—Getty ImagesA protester at Miami International Airport on May 12, 2020, where workers were demonstrating against layoffs by the Eulen America aviation company.

Economic data suggests that when people lose their jobs, they usually cycle through short-term and lower-paid jobs, sometimes even switching fields, before finding something stable. They often end up in jobs that pay less, says Robert E. Hall, a Stanford economics professor who recently co-authored a paper looking at the impact of job losses on individuals. One study showed that men who were laid off when the unemployment rate was above 8% lost out on about 2.8 years of earnings. By contrast, many furloughed workers, who eventually get called back to their jobs, preserve their pay rate.

The disruption that comes from a layoff is one reason that some European governments began paying companies to keep workers on payrolls during the pandemic. The Paycheck Protection Program in the U.S. sought to do a similar thing, but some employers that received government money did not keep people on payrolls.

An offer she couldn’t accept

Some laid-off workers say they’re already getting offered lower-paid jobs—sometimes at the same company where they’d worked before. That’s what Caitlin Hickey says happened to her. Hickey, 31, was a regional supervisor for recreational programs and events at a rock climbing gym in San Diego, and was making around $26.50 an hour.

When the pandemic hit and business tanked, HIckey says the gym wanted her to run an indoor summer camp. She says she refused because of health concerns and was laid off but told she’d be in good standing if she wanted to reapply with the company when it started hiring again. A week later, she says the gym emailed her and other laid-off workers with an offer for a front desk job in Reno, Nev., 560 miles away, paying $13.50 an hour.

“It took me too long to get to $26 an hour—six years—that I couldn’t start over,” says Hickey, who turned down the offer. She’s now considering going back to school.

The company Hickey worked for, Mesa Rim Climbing Centers, says it laid off 125 employees and furloughed 65 at the beginning of the pandemic and has since recalled 61 people at the same position and wages, and one person for a different job. When it opened a new facility during the pandemic, it did email laid-off workers to let them know about open front desk positions, the company said. Those jobs may have been lower-paid than their previous jobs, but higher than minimum wage, it said.

Being asked to start over at a lower wage, without the benefits of vacation days or health insurance or other things they’d taken years to earn, is exactly what workers like Jorge Padilla are afraid of. He and his wife both worked for Station Casinos, and they’re now living off savings and unemployment. His health insurance, a benefit from his former job, expired in September, and he says he’ll run out of money in a few months.

Padilla liked his job, even though during the busy season he’d sometimes work until 10 p.m. and have to be back at work the next morning at 3 a.m. But he’d perfected the challenges of carrying a tray with 10 plates on it and of creating relationships with guests.

He’s ready to be doing that job again, and it breaks his heart that a stranger may be taking his place.

BTS’s Parent Company Is Going Public. Here’s How the Music Industry Could Replicate Its ...

Thu, 15 Oct 2020 02:33:14 GMT

Over the weekend, BTS held a concert for nearly one million fans. The catch: it was virtual, streamed over their proprietary platform. In a music industry beset with the challenges of pandemic shutdowns, the globally-famous pop group has carved a path to ongoing connection, thanks to the foresight of their management agency, Big Hit Entertainment, and its founder and co-CEO Bang Si-hyuk (nicknamed Bang PD by fans). Big Hit’s IPO, with shares releasing to the public on Oct. 15, suggests that the scrappy South Korean unicorn has ambitions—and strategies—intended to match and overcome the challenges of their beleaguered business.

Bang’s music empire is built on the strength of the seven young artists of BTS who debuted in 2013, competing with South Korea’s older and larger “Big 3” K-pop entertainment agencies—SM Entertainment, YG Entertainment and JYP Entertainment—and excelling beyond them, placing his group at the top of global charts. Now, with the Big Hit IPO releasing shares on the Kospi stock index for retail investors, Big Hit is taking their successes even further. South Korean news has reported that the entertainment agency will become the region’s largest, entering into global competition. The IPO saw shares priced at about $118, with a valuation of just over $4 billion; when shares were listed, that price and valuation doubled to over $8 billion. (The world’s largest music label, Universal Music Group, is estimated to IPO at a valuation north of $30 billion in the next few years.) Estimates suggest the K-pop industry produced sales revenues of about $5 billion annually; Big Hit alone reported over $500 million in revenue for 2019.

The company’s choice to go public, and its road to getting there, holds a set of lessons about the future of global music and performance, and how some are attempting to innovate in an industry that has been facing an existential crisis due to the advent of streaming and piracy and the global coronavirus restrictions on live performance. “Everybody’s known for years that BTS and smart M&A [mergers and acquisitions] have propelled Big Hit to the front of the pack, but finally seeing that value gap quantified is sure to raise a lot of eyebrows,” says Jakob Dorof, a Seoul-based K-pop analyst and Asian music industry consultant. “In one fell swoop, this IPO is going to show the world the value not only of the company that made BTS, but also of K-pop itself.”

The K-pop model

Currently, Big Hit represents three of its own acts, owns label Source Music and game developer Superb Corp, and is the largest shareholder in fellow South Korean agency Pledis Entertainment, although BTS accounts for the lion’s share of its business. Like other K-pop agencies, Big Hit manages its artists and their careers at every level: it selects them and trains them at a young age, helps them develop their artistic direction and music, sets up their touring plans, supports their virtual presences on proprietary platforms and manages their brand partnerships, endorsements and sponsorship deals, making them a full-service, one-stop shop for every aspect of crafting and monetizing a celebrity presence. It’s distinct from the U.S. recording company model, where A&Rs simply scout and sign new talent for an agreed-upon number of records. Some contracts are more involved than others, but Korean entertainment companies like Big Hit are generally known to be longer-term and more all-encompassing, while record labels often leave artists to select independent management, publicity and publishing teams.

The completism of the K-pop model has led agencies to rake in serious money over the past decade; Big Hit’s 2019 profit exceeded $80 million. Those returns can be at least partially attributed to K-pop’s growing global popularity. On Spotify, for instance, K-pop listening has climbed 2,500% over the past six years, and in 2019 the South Korean music industry had an export value of about $560 million. That popularity peaked with BTS this year, despite market downturns and live performance losses due to COVID-19. BTS’s dominance on Spotify also serves as a good case study: it was the first group from Asia to surpass 5 billion streams, hitting 12 billion in October 2020, and their song “Dynamite” broke record streams within the first 24 hours of its global release, making them the first Korean artists to debut atop the global chart. They have 32 million monthly listeners. (The Weeknd and Drake, the platform’s most popular artists, have about double that.)

Whether out of desire or necessity, K-pop artists are also deeply loyal to their management companies. With all the early investment, it’s rare for a group to break away from their starting team. “Usually the opportunity cost of leaving is just too much,” Dorof says. “For K-pop artists, leaving a company isn’t like trying to find new management—it’s like trying to find new parents.” While Western artists often chafe at contracts, the K-pop world has doubled down on the arrangement. Some have criticized the relationship, alleging abuse and secrecy, but that doesn’t seem to have affected the massive success of the model.

The Big Hit difference

A K-pop company going public isn’t unique to Big Hit, as Paul Han, co-founder of K-pop news site Allkpop.com, explains to TIME. “What is different is [the Big 3 K-pop companies] launched with relatively small market caps when they were small companies with a lot of room for growth. Big Hit is going public when they’re at the top of K-pop, and their 10-figure market cap is larger than the Big 3 combined,” Han says. “I think it suggests a lot more capital investment will be pouring into K-pop so it can grow even further in the global market.” Dorof concurs: Big Hit will open “at roughly three or four times the current value of any of the storied ‘big three’ companies in the Korean market, so it’s going to be a vertiginous shift in scale for the industry.”

In contrast, the biggest two U.S. record labels—Universal and Sony—are owned by larger management groups that publicly trade on different exchanges (Vivendi in France, Sony in Japan). Their music portfolios are just a slice of the businesses. The third largest U.S. label, Warner Music Group, just IPOed this summer at a valuation of about $15 billion. Universal is expected to IPO at about double that, thanks to its powerful publishing arm and a deal with China’s Tencent. The scale of these legacy operations is considerable. They also each have made inroads as distribution platforms for K-pop groups, complicating the competition.

But Big Hit, like its Korean competitors, is much more than just a music label, and has room to grow in new directions. From the start, they have invested in developing proprietary technology platforms that connect their acts with the fans, owning the engagement experience from top to bottom. In the U.S., an artist’s presence is often more atomized: they might manage their own social media while also lending their name to separate sponsorship deals and appearing on other media channels, from TV to streaming platforms, of which they have no ownership themselves. Fans may need to make a Ticketmaster account to buy show tickets, follow their website for new music updates and discover via an ad that they’re promoting a special meal at McDonald’s, with little centralization.

Connecting with a Big Hit act, on the other hand, is a fairly unified experience. To buy tickets to a show or branded merchandise, a fan needs to download their app; to watch exclusive digital content, or to stream a virtual concert, that also all happens on their owned networks. Han sees this breadth of Big Hit’s ownership as a critical piece of what sets their business strategy apart. “They’re letting investors know that they’re not a one-trick pony and they have many avenues for growth,” he says. That includes diversifying their portfolio with the extra acts, as well as investing in their tech platforms and virtual performance opportunities. “K-pop companies build up and stake rights in their artists’ IP portfolios: their stage names, their songs, their choreo and videos, their live show, their lore—all these things that Big Hit is leveraging so successfully in video games, cartoons, comic books, avatars, and on and on,” says Dorof. Like Disney franchises, the IP is comprehensive. And like those franchises, the fandoms are intense: the company’s most recent corporate briefing has been viewed over 3 million times on YouTube.

That fandom is aggressively managed. “The artist-fan relationship is so important and investing efforts in developing that is what builds loyalty and a strong fandom,” says Kossy Ng, Head of Artists & Label Partnerships Asia at Spotify, highlighting the power of BTS’s “ARMY” fanbase. She is particularly intrigued by the BTS audience’s expansion beyond that region, including in Latin America and the U.S., the most popular market for the group on that platform. And when Spotify launched in Russia, for instance, BTS immediately became one of the country’s top-streamed artists, according to the platform. “They’re truly a global phenomenon at this stage,” Ng says.

Beyond Korea

K-pop has always stood out in the global music landscape, not so much because of its sound—hip-hop, rock, punk and pop are all represented in the Korean music scene—but because of the “idol”-making process. But there’s still plenty non-idol-making companies could learn from Big Hit’s strategy, starting with the way they develop stars. “K-pop companies have such a powerful model precisely because they find talent that’s not yet ready for the market and take ownership of getting them there,” Dorof says. “These days Western labels busy themselves by scrambling to outbid each other for the next kid with the latest TikTok hit—who probably doesn’t know why their song was a hit, how to make another, or what to do with themselves onstage—then somehow trick that kid into signing away their masters.”

Big Hit Entertainment

Big Hit’s approach to owning engagement and revenue streams holistically also matters. Han says that, especially with COVID-19 shutting down many of the traditional performance paths to revenue, developing alternative ways to connect with fans like devoted social media platforms can reap big rewards. “It should teach many companies that being diverse will help when one sector of your business can suffer greatly,” Han says of the Big Hit example. “What’s different is that Big Hit seems to be making moves to create technologies and compete with the internet search and application giants like Naver and Kakao, while the other entertainment labels mainly focus only on entertainment. They are using the huge reach of their artists to help promote the use of their own technology applications. They’re diversifying from entertainment into internet and technology.”

On October 10 and 11, 2020, Big Hit showed just how that works. BTS’s virtual two-day concert required sign-in via their WeVerse platform, with tickets starting at about $44; nearly one million people watched globally. The next day, Big Hit announced that a new “rookie” group developed as a joint project, called Enhypen, was opening up an online membership platform for special access in advance of the group’s debut. Enhypen hasn’t released any music, but they already have 3 million followers on WeVerse and a million on Instagram.

Facebook Has Finally Banned Holocaust Denial. Critics Ask What Took Them So Long

Mon, 12 Oct 2020 18:47:09 GMT

Facebook updated its rules on Monday to explicitly ban any content that “denies or distorts” the Holocaust, after years of allowing people to deny that the genocide occurred.

The move reverses Facebook’s previous stance, which was articulated by CEO Mark Zuckerberg in years of interviews as not wanting his company to be an arbiter of truth.

“I’m Jewish, and there’s a set of people who deny that the Holocaust happened. I find that deeply offensive. But at the end of the day, I don’t believe that our platform should take that down because I think there are things that different people get wrong,” he told Vox’s Recode in 2018.

Zuckerberg’s position, and Facebook’s, has “evolved” since then, he said in a Facebook post published Monday. “I’ve struggled with the tension between standing for free expression and the harm caused by minimizing or denying the horror of the Holocaust. My own thinking has evolved as I’ve seen data showing an increase in anti-Semitic violence, as have our wider policies on hate speech.”

“Our decision is supported by the well-documented rise in anti-Semitism globally and the alarming level of ignorance about the Holocaust, especially among young people,” said Facebook’s vice president of content policy, Monika Bickert, in a statement.

Civil rights groups welcomed the news, but questioned Facebook’s timing. “As Facebook finally decides to take a stance against Holocaust denial and distortion, they claim it is because of their work with the Jewish community over the past year,” said Jonathan Greenblatt, the CEO of the Anti Defamation League (ADL), in a statement. “We question this claim because if they had wanted to support the Jewish community, this change could have been implemented at any point in the last nine years.”

Although Facebook has over the past few years gradually imposed new guidelines on hate speech and content that the company defines as having the potential to incite violence, it has until recently largely stayed away from making decisions about individual conspiracy theories or claims to truth. (Last year, it said it would not fact check political ads placed by politicians or pressure groups on its platform, for example.) The first sign of a shift came as the coronavirus pandemic spread around the world, when Facebook announced it would limit the spread of COVID-19 misinformation on its platform. Then, in August, Facebook announced it would begin to consider conspiracy theories about Jewish people “controlling the world” as bannable hate speech. And on Oct. 7, the company announced it would ban QAnon, a sprawling, false conspiracy with anti-Semitic elements that says President Trump is bringing an elite cabal of child-molesters to justice. Less than a week later, it banned Holocaust denial too.

“I half-heartedly applaud the move,” says Yael Eisenstat, Facebook’s former head of global elections integrity for political ads, who left the company in 2018. “The fact that Zuckerberg has finally, after years of advocacy from anti-hate groups like the ADL and others, accepted that Holocaust denial is a blatant anti-Semitic tactic is, of course, a good thing. The fact that it took him this long to accept that these organizations had more experience than him and knew what they were talking about is dangerous.”

Notably, Facebook’s statement also did not mention the role that its own platform has played in allowing hate speech, including anti-Semitism, to propagate more broadly

“More importantly, [Zuckerberg] still seems to ignore why Facebook is so ripe for spreading hate speech and disinformation to begin with,” she tells TIME. “If he does not accompany this decision with what so many have been calling for, a complete retooling of how the business model works, then it will just be another whack-a-mole content moderation plan without changing any of the core mechanisms that encourage and amplify this kind of behavior.”

That retooling of the platform, critics hope, would see Facebook change its criteria for deciding if a post should be seen by more people. Currently, it prioritizes “engagement,” or how many people interact with a post, which critics say gives the most inflammatory of statements an unfair advantage, contributing over the long term to a coarsening of public debate.

“Facebook could, if they wanted to, fix some of this,” Eisenstat also said in a TED Talk published in August. “They could stop amplifying and recommending the conspiracy theorists, the hate groups, the purveyors of disinformation and, yes, in some cases even our president. They could stop using the same personalization techniques to deliver political rhetoric that they use to sell us sneakers. They could retrain their algorithms to focus on a metric other than engagement, and they could build in guardrails to stop certain content from going viral before being reviewed. And they could do all of this without becoming what they call the arbiters of truth.”

Gas Prices Fall to $2.25 per Gallon on Average in U.S.

Mon, 12 Oct 2020 01:54:19 GMT

(CAMARILLO, Calif.) — The average U.S. price of regular-grade gasoline fell half a penny over the past two weeks to just under $2.25 per gallon.

Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday prices may change a little in the coming days as hurricanes pummel the Gulf Coast, impacting oil production. Still, a decline in demand for gasoline because of the pandemic means there is plenty of petroleum available for motorists.

Nationwide, the highest average price for regular-grade gas is in the San Francisco Bay Area at $3.36 per gallon. The lowest average is in Houston at $1.78 per gallon.

The average price of diesel in the survey taken Friday was $2.50 a gallon, down a penny from two weeks earlier.

Roger Ferguson, CEO of TIAA, on Why You Shouldn’t Watch the Wild Stock Market All Day

Sun, 11 Oct 2020 10:50:06 GMT

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Oct. 11; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

Roger Ferguson’s Wall Street career has been marked by a series of crises. Ferguson is the president and CEO of TIAA, the Fortune 100 financial giant that is a major provider of retirement services for teachers and employees at more than 15,000 nonprofits and other institutions. He is currently working with his team to ensure that the COVID-19 economic downturn doesn’t jeopardize TIAA’s $1.1 trillion in assets under management. The company is the No. 1 manager of farmland investments worldwide and one of the largest commercial real estate investors globally. Ferguson, 69, came to TIAA as CEO in 2008, amid another financial crisis; previously, he was the vice chairman of the Federal Reserve on 9/11, personally leading the central bank’s nimble response to that catastrophe.

Ferguson, who has bachelor’s and law degrees from Harvard—plus an economics Ph.D. from the school— is one of only four Black CEOs running a Fortune 500 company. He recently joined TIME from his home in Washington, D.C., for a conversation about the impact of climate change on investing, his advice to individual investors in a time of wild market swings and what specific steps corporate America should take to get serious about diversity.

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(This interview with TIAA CEO Roger Ferguson has been condensed and edited for clarity.)

What do you think of the frothy stock market, and should the many people who rely on TIAA for retirement advice watch the swings closely?

Well, to start with your second question, certainly my advice to the vast majority of our participants is you don’t need to watch the stock market closely every day. Our participants have many other things to do, as you well know. They’re dedicated to education, to health care, to K-to-12 education. So focusing on their jobs is much more important than focusing on the ups and downs of the market.

What’s accounting for the market strength and volatility?

Very low interest rates tend to almost always translate into rising equity markets for a variety of reasons. The other thing we’ve seen in this market is it’s been very driven by headline news. So concerns about COVID may drive the market down a little bit. Optimism about a potential cure may drive the markets up or a potential vaccine may drive the markets up. And the other thing that we’ve seen in this market, certainly the recent rally, is it’s been fairly narrow. Much is being driven by tech companies and other companies that are what I describe as sort of on trend, the kinds of companies that do well in this sort of lockdown, work-from-home environment.

Any other guidance for investors?

When markets are highly volatile, we try to discourage people from taking dramatic action, because we know that the average retail investor probably gets out at the low point and is very slow to get back in.

A low-interest-rate environment has reinforced one of the important premises around retirement investing and any investing, which is that it’s important to have a broadly diversified portfolio and to have a long time frame.

I think the Fed’s response to the current crisis has been very strong.

You’re a former vice chairman of the Federal Reserve. What is your analysis of the Fed’s response to the current economic crisis brought on by the pandemic?

I think the Fed’s response to the current crisis has been very strong. The challenge will be to figure out when and how to start to unravel some of this. But I think it’s too early for them to even start to contemplate that at this stage.

And on the fiscal side, would you give the same high marks to the Congress?

Yes. They got off to a relatively quick start compared to 2008, 2009, when Congress wasn’t sure they wanted to take any action. The stock market went down quite dramatically a day or two, and then that finally got them to take action. The early response from the fiscal authorities in the United States showed that they’ve learned lessons from the last time and were moving relatively quickly.

What is your view about another round of stimulus?

My view, as with many other things, [is] two things. One is it sort of depends on the prognosis for the virus itself and vaccines. Those seems to be off a bit. But I also take a cue from my former colleagues in the Federal Reserve who have been encouraging more fiscal stimulus. And I would trust their astute judgment of the U.S. economy.

You played a critical role in an earlier crisis: You were vice chairman on the day the planes struck on 9/11. The chairman [Alan Greenspan] was out of the country. What emotions and memories do you have of that day?

So many things well up. Obviously, first, the phenomenal tragedy and loss of life. I think it stands still as the largest single loss of life in a day in America. Secondly, though, I must say it was another chance to show that the Federal Reserve could move nimbly and appropriately. And it fell on me to be sort of the leader of the Federal Reserve system, not just on that day but for most of the week thereafter. And the third thing that wells up is how much teamwork was called for to make all that come together. And the fourth was the value of clear communications and fortitude in the leadership ranks.

What experience provided you with the wherewithal to step up as leader at that moment?

It was from many years having studied both the Federal Reserve and the financial systems. So a technical knowledge. And the fact that I had been fairly active across the system, had built relationships with the Federal Reserve presidents and others.

Was there anything in how you grew up, in your background, other than the technical knowledge that prepared you for that moment?

Well, you have to understand, I grew up—obviously I’m African American. I grew up in a very segregated Washington. I think at the end of the day, these stories are stories about resilience. I didn’t have a hardscrabble upbringing in the sense of deep poverty. But certainly we never had a lot of money. And just the resilience to learn, to plug, to keep moving forward, to not let the negative things that happened for a Black kid growing up in the ’60s and ’70s throw you off your mark. I think people rise to the challenge if they’ve had over time to rise to different kinds of challenges and haven’t always had it handed to them on a silver platter. If there was a silver platter in my house, I didn’t know where it was.

There has never been a Black Fed chair. Is that any sort of commentary about systemic or institutional racism in this country?

It’s actually commentary about a number of things. One is the fact that, indeed, this country has a racist history. I’m not saying it’s a racist country. We have a history of slavery. And then a history of Jim Crow and then a history of segregation. And separate but equal. So one of the things it tells us is that the training that was called for, for some of these jobs, was not so equally thread across the country. It’s also quite clear that some sectors, even to this day, have a lack of diversity. And the kinds of people who were selected for those jobs tend to come out of the financial sector. And that has been the case for a long time. It’s also quite true—and my friends Ben Bernanke and Janet Yellen have been working on this in the AEA [American Economics Association]—that the economics profession is, shall we say, not at the pinnacle of diversity either. So I think this is a reflection of a number of factors that go back to, from my standpoint, education, training, educational opportunities.

How much do you attribute the current political and racial climate to the current President?

I think where we are when it comes to race relations in America is tied to this 30- to 40-year trend of rising inequality. And my philosophy or theory of this is when you have a period of rising inequality—and therefore a sense that for many people the pie is sort of smaller while there are a few who are getting bigger chunks, for many it’s smaller—that is an environment that tends to lend itself to us-vs.-them kind of thinking. This rising racial tension, rising social tension—being an economist, I tend to go back to sort of economic roots as one of the things that drives that. The other thing that we’ve failed to explain is how greater equality actually creates a bit of a rising tide. There’s a McKinsey study on wealth equality … if the average Black family had the wealth of the average white family, the economy overall would be 6% to 8% larger. I would look deeper than a particular individual because I think we’re going to need to get to deeper solutions to deal with these fundamental societal issues that have emerged over the last several years.

How can companies do a better job on diversity and inclusion?

First, to be clear, it takes time. Secondly, it has to start at the top of the house. Third is all of this has to do with hiring and promotion. So what does that mean? You’ve got to have diverse slates of candidates. And insofar as you can do it, you have to have diverse slates of interviewers. Also, one has to look very, very closely at internal mobility. I see in many companies the ability to bring in lots of diverse talent and then sort of watch it fade away, depart, leave after three, four or five years. So it’s not good enough just to have a really good hiring process. It’s also a development process. And frankly, recognizing, in all honesty, that really good, diverse talent is a bit of a scarce resource. If need be, making sure you’re investing and, indeed, overinvesting to bring people along.

Returning to investing for a bit, I was just talking to a Wall Street friend who described the current bond environment as return-free risk. Do you agree with that analysis?

[Laughs.] Certainly one who has been watching the market for a long time could not have imagined the kind of very low interest rates we have here in the U.S. Or negative rates in other countries. And so we are in highly unusual times.

TIAA advocates for annuities for many of your investors. Why are they such a good investment, and why have they gotten such a bad rap?

I think many people don’t really understand annuities in the following sense. When you ask individuals if they want to have a guaranteed income for life or a personal pension or retirement paycheck, they almost always say yes, they do. If you said you wanted an annuity, they sometimes said no. So the first thing that we know about annuities is that it’s a question of framing, explaining what it is as opposed to using jargon. Secondly, to be fair, there are some annuities that have more bells and whistles, and maybe aren’t as good as the ones that we offer.

What first drew you to economics?

I fell in love with economics when I was 15 or 16. My mother was a public-school teacher in Washington, D.C., and put a huge amount of weight on education. My father was a mapmaker, a cartographer for the U.S. Army. He was a child of the Depression, and although we didn’t have much money, he was very interested in banking and investments. And while many folks would sit around the table talking about a variety of different things, my father and I would spend much of my formative time talking about investments, interest rates, banks and how the financial system functioned.

If there was a silver platter in my house, I didn’t know where it was.

Let’s talk about TIAA’s portfolio. How does climate change influence your view of your farmland holdings?

We want to own lands that hopefully are resilient to those kinds of big moves. I was talking the other day to the folks who oversee the wine grapes that we grow. And talking about the locations that we have to be less dependent on irrigation. We also were talking about ways to use recycled water appropriately to irrigate land. If one is going to be in the business of agriculture and managing agricultural lands, or leasing to others, you have to take into consideration how do you make sure you do that in a way that’s consistent with the possibility that one of your most important inputs, mainly water, might become more and more scarce.

Do you own wineries?

We don’t own wineries. We own vineyards that grow the grapes that go into a range of wineries. If you drink wine, you may be supporting the retirement of your favorite college professor.

Last question: Is there another profession that interests you? You ever think about if you were doing it again, what you would do?

There’s never going to be another profession other than economics. I joke, though, whenever I retire from doing this, the next thing I want to do is to be a mail carrier. The Postal Service as you know was created by Ben Franklin, and it is one of the great democratizing institutions ever. The thought that the average person could send a letter across this country for a predicted, specified amount—the stamp—was quite a revolutionary idea. In Europe, mail delivery, postal service, was something that was sort of for the elites. It’s one of those sort of thankless [jobs that] without which we couldn’t have the society that we have today. And people have often taken it for granted. The fact we have mailboxes on corners, and get letters delivered anyplace in the world, is frankly a miraculous concept. So if I had another job to do, that would contribute greatly to America, it would be to be a mail carrier.

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FERGUSON’S FAVORITES

BUSINESS BOOKS: My favorite business books are things written by Mike Porter. Right now, all my leadership books are biographies, learning how leaders have gone through things. There’s a recent book out about Abraham Lincoln putting him into his social context that is spectacular. [Abe: Abraham Lincoln in His Times, by David S. Reynolds.]

APP: Exercise apps.

EXERCISE: I am deeply into cardio. So 60 minutes on an elliptical.

Do you listen to news or TV when you’re working out?

No, I don’t. [Laughs.] I try to calculate calories burned per period of time. So it’s a bunch of mental math.

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Cybersecurity Pioneer John McAfee Arrested in Spain on U.S. Tax Evasion Charges

Tue, 06 Oct 2020 09:55:37 GMT

Elusive cybersecurity pioneer John McAfee was arrested in Spain for tax evasion in the U.S., the Justice Department in Washington said.

McAfee is accused of failing to file U.S. tax returns from 2014 to 2018 and hiding assets including real estate, a vehicle and a yacht in the name of others, prosecutors said. An indictment returned in June was unsealed on Tuesday after he was taken into custody. He’s being held pending extradition, the Justice Department said.

He was arrested on Oct. 3 at Barcelona airport while traveling to Istanbul, according to an official at Spain’s national police force, who can’t be identified under internal policies.

U.S. prosecutors claim McAfee earned millions of dollars through the promotion of cryptocurrencies, speaking engagements, consulting jobs and the sale of the rights to his life story for a documentary, but never filed tax returns. Instead, his income was paid into accounts held in the names of others, prosecutors claim. He faces as long as five years in prison if convicted of tax evasion and a year if found guilty of failing to file taxes.

It’s the latest legal complication for the eccentric software mogul, who was a person of interest in a murder in Belize, though not charged with a crime, and last year he was detained in the Dominican Republic for entering the country with a cache of firearms and ammunition. He was also briefly a candidate for president in this year’s U.S. election, ending his run from abroad in March.

The criminal charges were announced just hours after the U.S. Securities and Exchange Commission sued McAfee for promoting the sale of cryptocurrencies without disclosing that he was being paid to do so.

The commission claims McAfee recommended at least seven initial coin offerings to his Twitter followers from at least November 2017 to February 2018 without revealing that he earned more than $23 million to boost them. He’s also accused of denying that he was being paid when asked by investors.

The SEC is seeking to force McAfee to disgorge all his ill-gotten gains, and to prohibit him from taking part in the issuance, purchase or sale of any digital asset securities and unspecified monetary penalties.

McAfee didn’t immediately respond to a request for comment.

The commission also accused McAfee of claiming to be an investor or technical advisor, “creating the impression that he had vetted these companies, that they were benefiting from his technical expertise, and that he was willing to invest in the ventures.”

When a blogger exposed that he was being paid, McAfee was still holding “virtually worthless” securities from the offerings he promoted and encouraged investors to buy them — without revealing that they were his own securities and he had paid a third party to recommend them, according to the complaint.

McAfee also engaged in a practice called scalping, in which he accumulated large amounts of digital securities and promoted them on Twitter without disclosing his intention to sell, the SEC said.

McAfee founded his epynonymous software firm in 1987. Intel Corp., seeking to build security features directly into its chips, bought the company for $7.7 billion in 2010, with TPG and Thoma Bravo taking stakes later. In 2016, Intel announced that it had signed a deal to transfer a 51% stake in the business to TPG for $1.1 billion. The company filed to go public last month.

–With assistance from Olga Kharif, Thomas Gualtieri and Laura Millan Lombrana.

Is It Moral to Have Facebook as a Client? Colleen DeCourcy, Wieden+Kennedy Co-President, ...

Sun, 04 Oct 2020 10:50:18 GMT

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Oct. 4; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

“We’re at our best when we’re in the eye of the cultural storm,” says Colleen DeCourcy, co-president and chief creative officer of Wieden+Kennedy (W+K), the agency behind some of the most striking advertising of the past three decades, including Nike’s “Just Do It” campaign. But storms take a toll. In recent months, Wieden+Kennedy has grappled with the morality of having Facebook for a client. The debate over creating the agency’s signature heart-tugging work on behalf of Facebook—which has been sharply criticized for spreading disinformation and faced a boycott this summer over its role in fomenting hate speech—comes as W+K is facing COVID-19-induced business pressures that forced it to cut its staff by 11% in July. DeCourcy, acknowledging some colleagues were “very upset” about the Facebook relationship, said she was hopeful that Facebook would “put things in place.” But, she adds, “I think that our patience will not be infinite.”

Despite these challenges, W+K continues to pick up new clients, including McDonald’s. Recent popular spots include a split-screen piece for Nike, which seamlessly blends pairs of sports scenes (a burly discus thrower’s twirl morphing into a ballerina twirling across a stage; Tiger Woods snapping his club on his knee after missing a putt, morphing into a batter snapping his bat on his knee after striking out.) The 90-second ad has received over 58 million views since being posted July 31. One advertising trade publication called it “maybe the best COVID spot yet.”

DeCourcy, 55, who rides motorcycles and has a tattoo on her left forearm that reads “Your faith needs to be greater than your fear,” joined TIME for a video conversation from her New York–area home. (The interview was briefly interrupted by FreshDirect delivering “1,700 pints of ice cream.”) She shared her views on keeping creativity fresh, the President’s mass-communication skills and the intense internal conversations about Facebook.

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(This interview with Wieden+Kennedy co-president and chief creative officer Colleen DeCourcy has been condensed and edited for clarity.)

Can you walk us through the evolution of ads during COVID? There was a supercut of the initial ads and a lot of snarky commentary about everyone using the same sad, plinky piano music. How many distinctive stages have there been?

There are three or four. The first one would have been “you’re not alone.” It is sometimes hard to remember now, but people were really scared. In the very beginning, we felt a call to remind people that we were all in it together, to bring some sort of hope to the moment. The second one would have been “proof of life.” At that point we went from the black screen, white letters, into something that was a lot of fun. The third one was “we shall overcome.” And I think the fourth one is “light at the end of the tunnel.”

Can you expand on the second one, “proof of life”?

Well, you know, proof of life, really when people were so embedded in their homes, and in that second stage where we were handing cameras to people and having them shoot their lives within their four walls. It was sort of like “This is what’s happening for me.” I think that was the phase that people related to the most. It’s like “Oh, that’s going on in my house.”

Do you have a signature approach, a house style?

It’s a pretty broad space for Wieden+Kennedy. I’ve always thought that Wieden+Kennedy is a set of values applied to an industry that’s kind of harmful when it works outside of a set of values. What you see in our work is a soul, a conscience, a sense of humor. Usually self-deprecation. An optimistic view of humanity and what it’s actually capable of. If you had to really pin down a house style, it’s that we’re champions of people.

For me, one of your iconic ads is the P&G spot about mothers of Olympic athletes.

I can’t disagree with you there! That spot is so beloved, it’s like your favorite family member. And that was a real stepping-out for us. We had a client that wasn’t the type of client we usually work with. We had them sponsoring an Olympics, and so naturally, their minds went to “P&G supports athletes.” We kept rolling it around, rolling it around. We just couldn’t make anything come out of it. Athletes weren’t better athletes because they used Bounty. Athletes were better athletes because their mothers dedicated their lives to doing two jobs. And P&G helped those mothers.

It feels like your work is moving from that emotional tugging at the heartstrings to a little more irreverent style, such as “Dilly-Dilly” for Bud Light and the “Smell Like a Man” campaign for Old Spice. It’s almost like you drove a stake through your own heart. Was that intentional?

I think this is one of the great reckonings of our time.In some ways it was. I will say we still do both. But there really were discussions. There was a moment after “Imported From Detroit” and “Halftime in America” [two somber Chrysler spots, one narrated by Clint Eastwood, that the agency produced for consecutive Super Bowls] where there was sort of a communal discussion amongst all the creative leaders at the agency, which was “Oh my God, we created a monster. I mean all these manifestos. If we have to do one more, we think we’ll die.”

Describe the evolution of your agency’s work.

It is sort of a pulling back from the grand loftier narratives and elevating the smaller human quirkier stories.

It’s also a very sharp tone difference, from emotional, almost sentimental, to—

Sassy. It’s a little smart-ass, it’s a bit of a wink. We try to always keep the self-deprecation in it because that optimism we feel about people does not have room for sarcasm or negativity. Again, when you’re doing mass communications, how do you keep talking like your granddad when the kids are buying the stuff at McDonald’s? So it behooves us to continue to change.

And that was a conscious slaying of the king?

Yeah, it was. When something is so successful, that’s when you need to break it down. That’s when businesses go bad, when you keep doing what got you famous. But you don’t really know, when it’s something like creativity, which are the load-bearing walls.

Can you just expand on that a little bit? That’s such an interesting notion, load-bearing wall.

I think a common mistake that a lot of companies make is if you’re successful, you start to codify the way you do things as being your culture. And what everyone always says is “Don’t break the culture.” And what that means in invisible ink underneath is “Stop telling us to do things differently.” By figuring out what the load-bearing walls are, what I mean is which things can you destroy and take apart without toppling the whole house?

So what core beliefs are keeping up the house?

One is this idea that through our work, we will be making some kind of difference. So I have never worked at a place before where when a brief came in, the first thing all the creatives did was go, “Hey big company, do you think that’s true?” Usually the kind of questions you get are “Well, what do you think they want to say? Well, how much money do they have to do it? Well, where do they want to shoot?” And the staff here is like “Do we want to work with them?” The ability for dissension and debate is a load-bearing wall.

I want to push back on that just a little bit because I do think your old-school body of work—the Nike, the P&G, the inspiring manifesto, whatever you would call it—does sort of have a message. But “Dilly Dilly”? I know it has sold a lot of beer, but there’s a mindless aspect to it.

[Laughs.] That is very much what the guys wanted to say with the work. We had in that period of time a lot of “millennials want” and a list of things millennials like. I can’t tell you how much every single client came to us with the same thing. And it was they [millennials] want purpose. They care about personal rights and personal politics. They want to do good in the world. And we went through a series of work with—like that first round of work was very much like “So how do we do that with a beer?” And we came out with the election spot with Amy Schumer and Seth Rogen, and they were taking on equal pay for women and gay rights and all this stuff. It didn’t move the product at all. What came out of that was that group of people saying, “Man, the truth is it’s beer. It’s fun. It’s mindless. It’s something you do with your friends.” And so you have little catchphrases, and you have the same joke you tell over and over. You can’t apply this lofty stuff to everything.

What is your analysis of Donald Trump, his ability to stay on brand and to command the moment? Strictly as a marketing professional, do you have to tip your hat to him?

I wouldn’t tip my hat because I think it’s not professional. What I would say is I look at him and there is an innate—it’s like that guy is plugged into these tremors. And he just feels them and he’ll say whatever has to be said to bring them to the fore. It’s almost like a shock machine. That kind of shock and awe is a portion of mass communications. But again, if we’re a set of values applied to mass communications, that is an absence of [Trails off.]

Who I do think are really amazing are the Lincoln Project’s [ads]. They are swift and I am very, very smitten.

Don’t be a pleaser, be a solver. Don’t laugh if it’s not funny.

Is there any client you would refuse to create advertising for? I ask because of your work for Facebook, which has become such a corrosive force in our democracy and our mental health.

I will tell you that it has certainly created a lot of hard conversations inside the agency. I’ll tell you the two reasons why for 2020, anyway, we were sticking it out. Where we chose to dig in with Facebook was Facebook Groups. In its early days during COVID, Facebook Groups did a lot of amazing things. So it was this way of using your actions, not talk. So that was one of the reasons that we helped. If we could make a push that says people have the power, and if we could show a way that was the right way to use Facebook while Facebook put things in place, hopefully, that we’re going to help stop the bad. And let’s face it, there are more people on Facebook than there are people in the Catholic Church. So how do you be in the zeitgeist without understanding that? But it’s a moment-by-moment decisionmaking process for us.

So there’s people internally that would prefer you did not have Facebook as an account? What is the explicit concern?

The concern was that we had civil rights leaders showing up at Facebook. And I run a company that cares so deeply and desperately about equity. And people finding their voice. And it was all happening at a time when because of COVID, our clients weren’t spending and the industry was contracting. It was truly one of those famous battles of the head and the heart. I think this is one of the great reckonings of our time.

If you were a betting person, do you think Facebook will be a client next year?

If I was a betting person? I wouldn’t put too many of my dollars on that space.

Switching gears, how do you lead a shop full of creatives?

It really is the flashlight. Creative people don’t check lists well, it’s not how they’re inspired. So what you do is you put light on the thing that we’re all moving toward. And you let them find through their own expression and creativity their way to that. But you make that a very crisp circle of light, and everyone has to get inside that circle.

What does your tattoo [“Your faith needs to be greater than your fear”] say about your leadership credo?

It’s just about if you let fear decide where you can go, you just have to throw yourself forward and believe. What is it Kurt Vonnegut said? “Jump off a cliff and grow your wings on the way down”? It represents the thing I know that I have to do to always be moving forward. It’s the role I’ve put for myself as a leader. In groups of people, I’m the one that says, ”Come on, what’s the worst that can happen?”

You’ve thrived in a male-dominated industry and faced down a lot of sexism on the way up. What advice do you give to young women?

Don’t be a pleaser, be a solver. Stick up for your ideas, what you think matters most. Don’t laugh if it’s not funny. Stuff like that.

I understand you just sold your beloved 2011 Triumph Bonneville motorcycle.

I sold it to a young woman in advertising so that she could experience the same freedom on it that I did.

Any ads that you remember from your childhood?

The Pillsbury Dough Boy! I was in love, in love, in love with that. I remember badgering and badgering and badgering my mother to bring home from the grocery store some Pillsbury biscuits. And she brought it in, and we were going to make them. And I took the thing and slapped it on the counter. And when the guy didn’t come out, I dissolved. I lost my will to live.

DECOURCY’S FAVORITES

BUSINESS BOOK: Small Is Beautiful: A Study of Economics as if People Mattered by E.F. Schumacher.

AUTHOR: Michael Ondaatje.

APP: I am a Stitcher addict.

EXERCISE/STRESS-RELIEF ROUTINE: It’s kind of embarrassing to say this, but I’m not a big exerciser. But I am constantly moving all the furniture around in my house. I’m a chronic redecorator.

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Massive Layoffs Are Underway Across the U.S., Threatening the Already Frail Recovery

Fri, 02 Oct 2020 20:48:48 GMT

U.S. employers brought back 661,000 workers in September, according to U.S. Bureau of Labor Statistics figures released Friday. The unemployment rate clocked in at 7.9%, down from 8.4% in August. About half of the jobs lost to the pandemic have returned.

The problem, economists say, is that the pace of recovery is slowing. Going forward, we may see only incremental employment gains at best, at least until the virus is completely under control. “It will be hard to get a full recovery before we get a vaccine or big advancement in therapeutics,” says Sarah House, senior economist at Wells Fargo. “The second half of the recovery will be a lot longer.” Massive layoffs planned by major companies in the coming days and weeks are also likely to take a toll.

The big job gains over the summer were the result of furloughed workers coming back to their jobs when local economies reopened. For example, the Cheesecake Factory announced at the end of August that it had brought back just about all of the 41,000 staffers who were unable to work when lockdowns began in March. The company’s permanent layoffs totaled just 175.

But employment gains from reopening were easy. Now, companies that are suffering deeper fundamental impacts from the pandemic—in sectors like travel, hospitality and energy—are now adjusting to a new normal. In many cases, that means permanent cuts. Several major corporations announced huge layoffs in recent days: 28,000 at Disney. 3,600 at Ralph Lauren. 3,800 at Allstate insurance. 2,000 at Marathon Petroleum. 31,000 at American Airlines and United Airlines, combined.

“These numbers are worrisome,” says Betsey Stevenson, professor of public policy and economics at University of Michigan. “When they let people go, it’s not temporary layoffs. These are companies struggling to keep people on and thought could get to the other end [of the pandemic]. But the end is not in one or two months. And maybe not in six months.”

The labor market is losing momentum as 10.7 million Americans are still out of work compared with February. About 1.5 million people filed initial unemployment claims last week, according to BLS data released yesterday, either through their state or through the federal Pandemic Unemployment Assistance program, which was designed for gig workers like Uber drivers. Those who have lost their jobs may find it even tougher than usual to find a new one, given that they’re competing with more than 10 million other unemployed Americans.

Some businesses had been using federal stimulus programs like the CARES Act, passed in March, as a backstop. But provisions of the law have expired or will expire by year’s end, including layoff protections for aviation workers that ran through the end of September. As a result, airlines that accepted Washington’s financial help have been free to lay off workers since Thursday. Air carriers have urged Congress to pass another round of aid; both American Airlines and United Airlines have pledged to reverse course on their furloughs if such help materializes. House Speaker Nancy Pelosi on Friday asked airlines to pause layoffs, promising industry-specific help is on the way.

But even if the airlines get more help, it’s unlikely a broader relief bill will pass Congress. The Democratic-controlled House of Representatives on Thursday passed a $2.2 trillion coronavirus relief bill, which includes some aid for small businesses. But the legislation, which doesn’t have bipartisan congressional support and is opposed by the White House and Treasury Secretary Steven Mnuchin, is a nonstarter in the Republican-led Senate.

“If they don’t get additional support, which is our expectation with our forecast, companies need to put that in their calculus in terms of their revenue forecasts and staffing needs,” notes House.

The continued unemployment crisis, compounded by massive layoffs, could have serious economic consequences even for those Americans fortunate enough to remain employed. If people don’t get back to work, it could dampen consumer spending, which accounts for two-thirds of U.S. GDP. Less spending could in turn trigger even more layoffs, potentially causing a downward spiral. “There’s still some firepower among consumers, but so long as this goes on, then the gains we’ve seen thus far are in jeopardy,” says House.

“We’re at an inflection point,” Stevenson adds. “Half the people who were temporarily laid off have come back. It was always clear that we weren’t going to get 100%. We may only get to 70.”

Amazon Says Nearly 20,000 Front-Line U.S. Workers Tested Positive For Coronavirus

Fri, 02 Oct 2020 02:14:42 GMT

(NEW YORK) — Amazon said Thursday that nearly 20,000 of its front-line U.S. workers have tested positive or been presumed positive for the virus that causes COVID-19.

But the online retail behemoth, revealing the data for the first time, said that the infection rate of its employees was well below that seen in the general U.S. population. The disclosure comes after months of pressure from Amazon workers and labor groups calling for the company to divulge the COVID-19 numbers.

Amazon said in a corporate blog that it provided the data as part of its effort to keep employees informed, and to share details and best practices with governments and other companies.

”We hope other large companies will also release their detailed learnings and case rates because doing so will help all of us,” Amazon said. “This is not an arena where companies should compete — this is an arena where companies should help one another.”

The Seattle-based company said that it examined data from March 1 to Sept. 19 on 1.37 million workers at Amazon and Whole Foods Market across the U.S.

It said it compared the COVID-19 case rates to the general population, as reported by Johns Hopkins University for the same period. Based on that analysis, if the rate among Amazon and Whole Foods employees were the same as that for the general population, it estimated it would have seen 33,952 cases among its workforce. That is 42% higher that Amazon’s actual rate.

The company also said it is conducting thousands of tests a day, which will grow to 50,000 tests a day across 650 sites by November.

Companies have no legal obligation to publicly reveal how many of their workers have contracted the virus, and few are doing so.

Employers do have to provide a safe working environment, which means they must alert staff if they might have been exposed to the virus, according to guidelines from the Occupational Safety and Health Administration, the federal agency that enforces workplace safety. They are also obligated to keep track of COVID-19 infections contracted on the job, and must report to OSHA if there is a hospitalization or death related to the disease.

A perceived lack of transparency has left workers at various retailers, including Amazon and Walmart, to become amateur sleuths in their spare time. Unions and advocate groups have taken up the cause, too, creating lists or building online maps of stores where workers can self-report cases they know about.

In a statement emailed to The Associated Press Thursday night, Walmart said that “we believe that Walmart associates’ rate of infection tracks, or is below, the current rate of infection of the general public nationwide.” It didn’t explain why it doesn’t provide numbers.

Marc Perrone, president of the United Food and Commercial Workers International Union, which represents grocery and meatpacking workers, called Amazon’s disclosure as “the most damning evidence we have seen that corporate America has completely failed to protect our country’s frontline workers in this pandemic.”

UFCW is calling for immediate action by federal regulators and a full congressional investigation.

“This titanic safety failure demands the highest level of scrutiny,” Perrone said.

California Gov. Signs Law Requiring Corporations to Have Board Members From Racial or Sexual ...

Thu, 01 Oct 2020 10:20:34 GMT

(SACRAMENTO, Calif.) — Hundreds of California-based corporations must have directors from racial or sexual minorities on their boards under a first-in-the-nation bill signed Wednesday by Gov. Gavin Newsom.

The diversity legislation is similar to a 2018 measure that required boardrooms to have at least one female director by 2019. Like that measure, it could face court challenges from conservative groups who view it as a discriminatory quota.

Supporters evoked both the coronavirus pandemic that is disproportionately affecting minorities and weeks of unrest and calls for inclusion that followed the slaying of George Floyd in May in the custody of Minneapolis police.

After Floyd’s death, many corporations issued statements of support for diversity, but many haven’t followed through, said Assemblyman Chris Holden (D-Pasadena), who co-authored the bill.

“The new law represents a big step forward for racial equity,” Holden said. “While some corporations were already leading the way to combat implicit bias, now, all of California’s corporate boards will better reflect the diversity of our state. This is a win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

By the end of 2021, the more than 660 public corporations with California headquarters must have at least one board director from an “underrepresented community,” according to the measure.

Those who qualify would self-identify as Black, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or as gay, lesbian, bisexual or transgender.

The measure requires at least two such directors by the end of 2022 on boards with four to nine directors. Three directors are required for boards with nine or more directors. Firms that don’t comply would face fines of $100,00 for first violations and $300,000 for repeated violations.

At an online signing ceremony, Newsom said it was important for minorities to have a voice on the boards of powerful corporations.

“When we talk about racial justice, we talk about empowerment, we talk about power, and we need to talk about seats at the table,” Newsom said.

The legislation was part of a package of racial justice measures signed by Newsom before a midnight deadline. Others bar the use of peremptory challenges to remove potential jurors based on racial, religious or gender identity; allow judges to alter sentences that are believed to involve racial or ethnic discrimination; and set up a state task force to study the idea of reparations to African Americans for slavery.

The text of the corporate diversity bill cited the Latino Corporate Directors Association, which said 233 of 662 publicly traded companies headquartered in California had all-white boards as of this year. Nearly 90% didn’t have any Latino directors, although Latinos make up 39% of the state’s population. Only 16% had an African American board member.

The only official opponent in a legislative analysis was former California commissioner of corporations Keith Bishop. He objected that that bill, coupled with the existing diversity law, would make it more desirable for corporations to pick women who also are members of the underrepresented communities to simultaneously meet both sets of quotas, to the detriment of men or women who do not meet the qualifications in the new bill.

U.S. Blocks Palm Oil From Company That Supplies Major Brands After Investigation Alleges Forced ...

Thu, 01 Oct 2020 06:37:45 GMT

The United States will block shipments of palm oil from a major Malaysian producer that feeds into the supply chains of iconic U.S. food and cosmetic brands. It found indicators of forced labor, including concerns about child workers, along with other abuses such as physical and sexual violence.

The order against FGV Holdings Berhad, one of Malaysia’s largest palm oil companies and a joint-venture partner with American consumer goods giant Procter & Gamble, went into effect Wednesday, said Brenda Smith, executive assistant commissioner at the U.S. Customs and Border Protection’s Office of Trade.

The action, announced a week after The Associated Press exposed major labor abuses in Malaysia’s palm oil industry, was triggered by a petition filed last year by nonprofit organizations.

“We would urge the U.S. importing community again to do their due diligence,” Smith said, adding companies should look at their palm oil supply chains. “We would also encourage U.S. consumers to ask questions about where their products come from.”

Malaysia is the world’s second largest producer of palm oil. Together with Indonesia, the two countries dominate the global market, producing 85 percent of the $65 billion supply.

Palm oil and its derivatives from FGV, and closely connected Malaysian state-owned Felda, make their way into the supply chains of major multinationals. They include Nestle, L’Oreal, and Unilever, according to the companies’ most recently published supplier and palm oil mill lists. Several huge Western banks and financial institutions not only pour money directly or indirectly into the palm oil industry, but they hold shares in FGV.

Smith said the agency carried out its own year-long probe and combed through reports from nonprofits and the media, including the AP’s investigation.

AP reporters interviewed more than 130 former and current workers from eight countries at two dozen palm oil companies — including Felda, which owns about a third of the shares in FGV. They found everything from unpaid wages to outright slavery and allegations of rape, sometimes involving minors. They also found stateless Rohingya Muslims, one of the world’s most persecuted minorities, had been trafficked onto Malaysian plantations and forced to work.

Many of the problems detailed by Smith mirrored those found by The AP. She said the Customs agency found indicators of restriction of movement on plantations, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, excessive overtime, and concerns about potential forced child labor.

After the U.S. ban, Malaysian palm oil producer FGV Holdings Berhad vowed to “clear its name.” FGV said all the issues raised “have been the subject of public discourse since 2015 and FGV has taken several steps to correct the situation.”

“FGV is disappointed that such decision has been made when FGV has been taking concrete steps over the past several years in demonstrating its commitment to respect human rights and to uphold labor standards,” it said in a statement.

FGV said it wasn’t involved in any recruitment or employment of refugees and doesn’t hire contract workers. Migrant workers are recruited through legal channels, and it said it ensured they are not charged fees.

As of August, FGV’s 11,286 Indonesian workers and 4,683 Indian workers formed the majority of its plantation workforce.

FGV said it is introducing the use of electronic wallet cashless payroll system for its workers. It doesn’t retain workers’ passports and has safety boxes throughout all its 68 housing complexes for them to keep their passports.

It said it had invested 350 million ringgit ($84 million) over the past three years to upgrade housing facilities, and provides medical benefits. It said it has a code of conduct that its suppliers and vendors are required to comply with, adding that any allegation of physical or sexual violence as well as intimidation or threats will be acted upon.

FGV said it has submitted evidence of compliance of labor standards to the U.S. CBP office since last year.

Felda and the Malaysian government did not respond to questions from AP about the findings of its investigation.

FGV Holdings has been under fire for labor abuses in the past and was sanctioned by the global Roundtable on Sustainable Palm Oil certification group two years ago. The association promotes ethical production — including the treatment of workers — with members that include growers, buyers, traders, and environmental watchdogs.

Though Asian banks are by far the most robust financiers of the plantations, Western lenders and investment companies have poured billions of dollars into the industry in recent years, allowing for the razing and replanting of ever-expanding tracts of land. Some hold shares in FGV itself — including Vanguard Group, BlackRock, Charles Schwab, State Street Global Advisors, HSBC, and even the California Public Employees’ Retirement System — according to the financial data analysis firm, Eikon.

The AP did not receive comment from any of those financial institutions on Wednesday, but when asked more broadly about their ties to the palm oil industry last week, most responded by noting their policies vowing to support sustainability practices, with many also incorporating human rights into their guidelines.

Multinational food and cosmetic companies responded in a similar way last week, saying they do not tolerate labor and human rights abuses and will immediately investigate complaints they receive and take action, including suspension of a supplier, if necessary.

This is the first time Customs has issued an order related to palm oil, though shipments from other sectors have been detained after similar investigations into forced labor were conducted. They include seafood, cotton and human hair pieces believed to have been made by persecuted Uighur Muslims inside Chinese labor camps.

Under Wednesday’s order, palm oil products or derivatives traceable to FGV will be detained at U.S. ports. If the company is unable to prove that the goods were not produced with forced labor, it can be exported.

“For all these years these companies have refused to pay for remediation or publicly cut ties with FGV, so now the U.S. government has acted for them,” said Robin Averbeck of the San Francisco-based Rainforest Action Network, which was among a group of nonprofits that filed one of two petitions against FGV last year. “Procter & Gamble and other brands must stop paying lip service to human rights and address forced labor and other labor abuses once and for all.”

Disney to Lay Off 28,000 Employees at Its California and Florida Theme Parks Due to the Pandemic

Tue, 29 Sep 2020 21:18:54 GMT

(ORLANDO, Fla.) — Squeezed by limits on attendance at its theme parks and other restrictions due to the pandemic, The Walt Disney Co. said Tuesday it planned to lay off 28,000 workers in its parks division in California and Florida.

Two-thirds of the planned layoffs involve part-time workers but they ranged from salaried employees to nonunion hourly workers, Disney officials said.

Disney’s parks closed last spring as the pandemic started spreading in the U.S. The Florida parks reopened this summer, but the California parks have yet to reopen as the company awaits guidance from the state of California.

In a letter to employees, Josh DÁmaro, chairman of Disney Parks, Experience and Product, said his management team had worked hard to try to avoid layoffs. They had cut expenses, suspended projects and modified operations but it wasn’t enough given limits on the number of people allowed into the park because of social distancing restrictions and other pandemic-related measures, he said.

“As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of COVID-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic,” he said.

Disney officials said the company would provide severance packages for the employees, where appropriate, and also offer other services to help workers with job placement.

TikTok Gets Reprieve in U.S. as Judge Temporarily Blocks Trump’s App Store Ban

Mon, 28 Sep 2020 01:02:39 GMT

President Donald Trump’s ban on TikTok was temporarily blocked by a federal judge, dealing a blow to the government in its showdown with the popular Chinese-owned app it says threatens national security.

U.S. District Judge Carl Nichols granted a preliminary injunction against the ban on the widely used video-sharing network after an unusual Sunday morning hearing. The judge refused to grant an injunction against a November deadline for a sale. TikTok’s owner, ByteDance Ltd., had requested the hold after the president ordered TikTok out of American app stores unless the company sold a stake in its U.S. operations to a domestic buyer.

The ban, scheduled to go into effect at 11:59 p.m. in New York, would have removed TikTok from the app stores run by Apple and Google’s Android, the most widely used marketplaces for downloadable apps. People who don’t yet have the app wouldn’t be able to get it, and those who already have it wouldn’t have access to updates needed to ensure its safe and smooth operation. TikTok is used regularly by 19 million Americans.

ByteDance is fighting the Trump administration in court even as it pursues its approval for the sale of a stake in the U.S. business to Oracle Corp. and Walmart Inc. Trump has called for bans on both TikTok and WeChat, owned by China’s Tencent Holdings Ltd., arguing that the apps could give China’s government access to millions of Americans’ personal data. The bans are part of an increasingly hard line he has taken on Beijing as the election approaches.

Even as the sale of TikTok is still awaiting final U.S. approvals, two of China’s most prominent state-backed media mouthpieces last week denounced the deal.

“What the United States has done to TikTok is almost the same as a gangster forcing an unreasonable and unfair business deal on a legitimate company,” the state-run China Daily wrote in a Wednesday opinion piece. Hu Xijin, the influential editor-in-chief of the Party-run Global Times, tweeted that Beijing likely wouldn’t approve the current agreement as it endangered China’s national security.

A lawyer for TikTok told the judge at Sunday’s virtual hearing that the ban was irrational given that ByteDance is in talks to strike a deal the president himself has demanded.

“How does it make sense to impose this app-store ban tonight when there are negotiations underway that might make it unnecessary?” attorney John Hall asked.

Hall said banning TikTok from U.S. app stores would undermine security by preventing existing users from receiving weekly security updates. He argued that the government has less burdensome alternatives, such as the stake sale, to achieve its national-security aims. ByteDance says Trump is exceeding his authority with the ban.

“The consequences immediately are grave,” Hall told the judge. “It would be no different than the government locking the doors to a public forum, roping off that town square.”

His language echoed the ruling of a judge in California who put a hold on Trump’s WeChat ban last week, citing its effect on free speech and the irreparable harm that the ban would cause to the business.

Daniel Schwei, a lawyer for the Justice Department, countered that “the concern here is about data security risk and leaving data vulnerable to the Chinese government. It is a threat today, it is a risk today, and therefore it deserves to be addressed today.” The U.S. government decided last week to extend its deadline to allow for more sale discussions.

In a filing on Friday, the U.S. cited FBI Director Christopher Wray’s assessment that China poses the “greatest long-term threat to our nation’s information and intellectual property.”

TikTok is “challenging a national security determination by the president as well as the judgment of the secretary of commerce about what’s necessary to mitigate those national security harms,” Schwei told the judge. “And I think the court owes significant deference to that.”

In a separate case, a federal judge in Pennsylvania on Saturday rejected a request by TikTok users to halt the ban, saying the consequences of the ban wouldn’t be severe enough for the users to justify an injunction temporarily blocking the order while the litigation continues.

The case is TikTok Inc. v. Trump, 20-cv-2658, U.S. District Court, District of Columbia (Washington).

Sherrilyn Ifill, President of the NAACP Legal Defense and Educational Fund, on the Battle Over ...

Sun, 27 Sep 2020 10:50:44 GMT

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Sept. 27; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

With the President and Attorney General waging an unceasing disinformation campaign to undermine public confidence in the presidential election, Sherrilyn Ifill, president and director-counsel of the NAACP Legal Defense and Educational Fund (LDF), is bracing for post–Nov. 3 battle. In an earlier stint at the LDF, one of the nation’s premier civil rights organizations, Ifill specialized in litigating voting-rights cases. After leaving to teach law and write books, she returned in 2013, as the first female director to head the organization founded by Thurgood Marshall in 1940. (The LDF became a separate entity from the NAACP in 1957.)

Under Ifill, the LDF has grown dramatically. Its staff has nearly doubled in size since 2016 to over 100 employees, nearly half of them attorneys. And that was before donations exploded after the killing of George Floyd. Floyd’s murder sparked a wave of national protests and new awareness among many white Americans of the nation’s institutional racism. A surge of financial support, along with a pre-existing 80th-anniversary LDF campaign, is helping to fuel another round of expansion under Ifill. Next year the organization plans to hire 40 more staffers and open its first Southern office in order to establish an on-the-ground presence in the region of the country that still accounts for the vast majority of its cases. (The LDF has offices in New York City and Washington, D.C.)

Ifill, 57, joined TIME for a video conversation from Baltimore to discuss the intense efforts to suppress voting rights, her reaction to the latest developments in the Breonna Taylor case and the importance of filling Ruth Bader Ginsburg’s Supreme Court seat after the Inauguration. Ifill, noting that early voting has already started in some states, tweeted that “it would be an obscenity to rush through the confirmation of a SCOTUS nominee during a presidential election.”

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(This interview with LDF president and director-counsel Sherrilyn Ifill has been condensed and edited for clarity.)

What is your reaction to the death of Ruth Bader Ginsburg?

One of the things I love about Justice Ginsburg is that when she was lauded and described as a courageous pioneer, she was always careful to say that she regarded Thurgood Marshall as the lawyer who exhibited true courage because he litigated cases where he had to fear for his own life and safety.

What is your view on how the process for replacing her should be handled?

We oppose any effort by President Trump and Senate majority leader [Mitch] McConnell to nominate and hold a vote on a replacement for Justice Ginsburg until our election is completed, a new Senate is sworn in on Jan. 3, 2021, and the next President is inaugurated on Jan. 20, 2021. This election is already under way. Early and absentee voting have commenced in multiple states across the country. Trying to rush through a nomination and appointment to the country’s highest court during this electoral period would represent a perilous setback for our democracy.

What do you think of the grand jury’s decision in the Breonna Taylor case?

What this means is that no one will face accountability for taking the life of a promising young Black woman—blow for the Taylor family, for the Louisville community and for the Black community that has been working for justice for Ms. Taylor across the nation. The announcement reaffirms that we need a drastic transformation in the regime of impunity that protects police officers who kill innocent Black people, and in how we define and support public-safety infrastructures in our country.

What are the other core issues facing your organization today?

They’re all interrelated, but I think without question, the issue of voter suppression sits at the top of the list. The ability to participate in the political process unlocks many of the other issues. It unlocks the opportunity to advance criminal-justice reform. It unlocks the possibilities of education equity. It unlocks the key to fair housing practices and to issues that address economic advancement. So to be in a moment in 2020, where we’re facing what is the most extraordinary level, depth and breadth of voter suppression that I have witnessed in the decades that I have been a voting-rights lawyer, is actually quite astonishing.

When did this cycle of intense voter suppression begin?

The June 2013 Shelby County v. Holder decision from the United States Supreme Court was a game changer. Prior to that decision, most of the states in the South and a number in the North as well, including three boroughs of New York City [Brooklyn, Manhattan and the Bronx], could not make voting changes unless they were first to be precleared by a federal authority, either the Attorney General or the federal District Court in D.C. So you had a screen for voter suppression. The Supreme Court’s decision in 2013 meant that jurisdictions since 1965 that had been unable to make voting changes without first having them reviewed to determine whether they were discriminatory in their effect, now could do so and began doing so with great alacrity. Even worse, the tactics used by these jurisdictions became copied; it became a kind of copycat crime. Now places that have not had a long history of voter suppression were getting into the act too. This problem, which I think most people understood to be a largely, although not exclusively, regional problem, has been nationalized. Now we find voter suppression everywhere.

I hate to ask this next question because it legitimizes something that’s unthinkable, but what preparations are you making for post–Nov. 3rd if the President challenges the legitimacy of the election?

The good news is that we’ve faced contested elections in the past. We did have Bush vs. Gore. Obviously, it was a considerably different time and considerably different candidate. We do know what the laws are that are in place. We do know that we have the capacity to do a legal challenge. The Supreme Court did not issue its decision which ended the recount in Florida until Dec. 12th, and I encourage people to remember that. The Republic did not fall apart.

Beyond the legal issues, what are your concerns about the upcoming election?

We’re facing what is the most extraordinary level, depth and breadth of voter suppression that I have witnessed in the decades that I have been a voting-rights lawyer.What is more worrisome than the President potentially legally challenging the outcome of the election is the President creating an atmosphere of panic and disinformation. We have our concerns, especially given the environment of the riling-up of armed militia groups, which the President has been unwilling to tamp down in his rhetoric, and which he may be inclined to actually rile up during that period. So there’s significant safety issues. And we have yet to see a concerted, direct effort by Attorney General [William] Barr to address the reality of white-supremacist violence in the country, and to articulate any plan or steps that the Department of Justice, the FBI or other federal law-enforcement agencies would undertake to protect against that.

Back to the legal issues. How do you prepare for those?

We very often have litigation that we have to file on Election Day because of lack of access for Black voters in communities around the country. Sometimes, we file suit within days of elections because of voters that were illegally placed on inactive lists or unable to cast true ballots. In the days that follow, there are going to be absentee ballots that should be counted. We have been encouraging elderly members of our community and others who are vulnerable to COVID-19 to vote absentee. The President has been engaged in a disinformation campaign about the legitimacy of absentee voting, which is a legitimate form of voting. We want to make sure that the votes are counted. This is about participation, and we want to make sure that African-American voters have a meaningful opportunity to feel that they participated in the political process. So there’s quite a bit of work to do after the election, no matter who thinks that they’re ahead and no matter what the incumbent may decide to do in terms of challenging the outcome.

Do you have an Election Day battle plan? Will you have people on the ground around the country?

Yes and yes. And like any person going into battle, I would be foolish to share the battle plan.

Fair enough.

But suffice it to say that, yes, we’ll be mostly focused on the South and have been since we were founded in 1940. The majority of Black people still live in the South, and that’s where our attention has been focused over the years. We know the places where there have been problems in the past.

Another big area of focus is police brutality and the subsequent response by law enforcement to the protests.

Criminal justice in general has long been a huge issue for the LDF. We have a long history of working in the death-penalty space. We challenge racism in the criminal-justice system at every level. Exclusion from juries, and so forth. But the issue of police brutality and police violence against unarmed African Americans has been part of LDF’s work since Thurgood Marshall, who was the first director-counsel of the organization.

Where have your efforts been focused?

Obviously, since 2014, when Eric Garner was killed in New York and the nation, the world, saw that video of him being choked to death and saying “I can’t breathe.” Mike Brown was killed later that year, and in early 2015, just a few months thereafter, we launched a policing-reform campaign to address the issue of police violence against unarmed African Americans because we felt that a moment was upon us that required us to really marshal significant resources to address this issue. We at that time had a fully engaged Department of Justice. And both Attorney General [Eric] Holder and then Attorney General [Loretta] Lynch were quite committed to using the resources of the department to fulfill the commitment to ensuring that there is constitutional policing. The President himself created a task force, a 21st century policing task force.

What are the most effective ways to combat police brutality?

We try to push measures of accountability. We’re after all a legal organization. A lot of the issue of police violence against unarmed African Americans is grounded in the lack of accountability: what I call the regime of impunity that has been allowed to develop and that lies at the doorstep of the legal system that has allowed this to happen. We’re supportive of the George Floyd Justice and Policing Act that was passed by the House in June, that includes many of the measures that we have been championing for a number of years.

The President is running on law and order. What is your view of framing the current protests under the law-and-order banner?

It’s a tried-and-true dog whistle, the law-and-order dog whistle, and we recognize it for what it is. The bottom line is a majority of Americans understood, saw the video of George Floyd being tortured and killed. And understood that something was deeply broken with policing in this country as it relates to African-American communities. And so we were very clear that, of course, we encourage peaceful protests, but we’re also very clear that the overwhelming majority of the protests have been peaceful. People are in the streets because they are impatient now with change. It’s five years, six years since we saw Eric Garner being killed saying “I can’t breathe” and George Floyd being killed saying “I can’t breathe.” Six years between them. It’s failure to change things significantly so that the George Floyd video didn’t happen. But it did happen, and not only did it happen, the officer was so certain that nothing had changed that he was kneeling on George Floyd’s neck with his hands in his pockets looking dead into the camera, unafraid, because he felt certain that nothing had changed.

This is an obvious question, but how important are the videos in pulling back the curtain for white America?

I find it very sad that it is so important. But it is. And the reason I find it sad is because this issue has been with us certainly for my entire lifetime. These are matters that have been discussed year after year, decade after decade. So frankly, one of the things I think we have to confront as a democracy is the fact that this could have gone so unrecognized by so much of the white population, despite it being the constant subject of conversation. So how is it possible that these videos were so surprising? How is it possible that so many white people had not heard of The Talk? At some point, we have to actually have a conversation about that.

You wrote a book on lynching, On the Courthouse Lawn, that Bryan Stevenson called a “seminal work.” How do you put the police brutality we’re witnessing in the context of the nation’s reprehensible history of lynching?

What connects all of this is this narrative about Black people in general, and certainly about Black men, that brands Black men and people as criminals and that assigns to Black people a lesser level of humanity. Something that’s intolerable becomes tolerable. And I wrote the book about lynching because that’s at its most extreme. It’s at its most extreme to have a crowd of people watching the torture and killing of someone. And I wanted to understand how that crowd could be filled with ordinary white people—with housewives and law students and pharmacists.

The book focuses on how much has to go wrong for there to be a culture of lynching, multiple system failure.

One way that it happens is this narrative that assigns a lack of humanity to Black people. But it also happens because institutions failed to do their job. Because the legal profession failed to do its job. Because prosecutors, even though they had evidence of who the lynchers were, didn’t prosecute them. Because local sheriffs knew who the lynchers were and didn’t arrest them. Because members of the media chose not to report about lynching, or reported about lynchings before they happened, almost inviting people to this event. So I was very interested in the individual complicity. But also in the institutional complicity and trying to really look at the role that all of these institutions played in allowing this to happen.

Do you have another book planned about this period in American history?

I’m actually restraining myself! Yes, absolutely. I’ve got three books in the queue. One is the next period to come. Not actually about this period. About what I think we can learn from this period about what the next period really must be for our democracy. But I’ve also been working on a book about the 14th Amendment, and I’d actually stopped writing a book about Supreme Court confirmation hearings on race, when I took this job.

Is there any tangible value in that consciousness raising that’s under way? What do you hope people will do beyond making a donation and having a book group to discuss books like Isabel Wilkerson’s Caste?

It’s now time for us to have the courage and to be bold enough to recognize that we have to think in more transformational terms.We have these moments when there’s a reckoning. This is one of those moments when Americans of goodwill, those who care about democracy, of whatever race, feel drawn to this and feel compelled to speak and feel compelled to work for change. They make our democracy better. They make our democracy better when we have moments when a majority of Americans can link arms and unite in the need for transformation. The first and most important thing is for people to understand that what has been happening is not working. Whatever has been happening, whatever reforms have been imposed, are not working. And it’s now time for us to have the courage and to be bold enough to recognize that we have to think in more transformational terms.

Did you ever cross paths with Thurgood Marshall?

My first case ended up in the Supreme Court. I was at that time not even five years out of law school. Anyway, the then head of the Legal Defense Fund, Julius Chambers, argued the case. I had litigated the case through that trial and in the Fifth Circuit Court of Appeals. So I got to sit at the counsel table before Thurgood Marshall. I’ll never forget it. I mean it was just—I actually—when I think about it now, it almost makes my head spin because it felt so surreal.

Did you have a moment, any eye contact, any exchange from the bench?

No, I was just sitting there, wide-eyed and blubbering.

What do you think of Attorney General William Barr?

[Long pause] I don’t think in my lifetime I’ve ever seen an Attorney General quite like this one. And I don’t mean that as a compliment. I am deeply concerned with what I regard as an abdication of core responsibilities around civil rights enforcement. I’m astonished to see the extent to which the Attorney General is willing to say things that are blatantly irresponsible but that parrot some of the language of the President. So recently, the effort to kind of discredit absentee voting, even though he himself has voted absentee in both 2012 and 2019 in Virginia—this is extremely irresponsible conduct. I find his rhetoric, his language and the absence of civil rights enforcement, the refusal to engage in pattern-and-practice investigations of police departments engaged in unconstitutional policing—these are very serious matters. At the end of the day, the Attorney General remains the chief law-enforcement officer and the chief enforcer of the nation’s civil rights laws. Or at least should be. But now we find ourselves in 2020 with state civil rights violations and a federal government that is unwilling to take on the role of enforcer of the nation’s civil rights laws. To the contrary, it’s actively engaged in dismantling the civil rights infrastructure.

What is your view of reparations?

I view the term quite expansively. I think when most people talk about reparations, they’re talking about reparations for slavery, which is a form of reparations and certainly should be studied. We support HR40, which was the deal in the House for a commission to study reparations. It’s hard for me to understand how and why people would be against a commission to study reparations.

Are there other measures that should be considered?

For every white person who feels that their family just worked really hard, I can point you to a federal housing policy that also explains why your grandparents or great-grandparents would have had a better shot at accumulating wealth through homeownership than mine.I think that the conversation about reparations should be expanded. I wrote about it in the context of lynching. I use that term in its original meaning, that it is to repair. What is required to repair the damage done to communities that suffered from lynchings, which were after all mass kind of events of public terrorism? I think that there is reparation that should be studied for 20th century segregation and housing segregation, in particular, which is the principal reason for the deep wealth disparities and inequalities that exist between Blacks and whites in this country. For every white person who feels that their family just worked really hard, I can point you to a federal housing policy that also explains why your grandparents or great-grandparents would have had a better shot at accumulating wealth through homeownership than mine.

It’s been such an event-filled year. Has there been a moment this year that in particular stands out where you are filled with I’m going to rage, despair and then hope?

I would say that I really was very moved by the family of Jacob Blake, who was shot seven times in Kenosha, Wis. By the mom who expressed a kind of incredibly beautiful vision of who we are, that was obviously very much infused with her faith. But also by the sister who expressed the kind of dry-eyed conviction about what has to change. I felt their pain. It was awful that they even had to be in that position. But what I saw was incredible beauty. What I saw was incredible depth. What I saw was incredible nobility.

And rage?

During the Wisconsin primary, when we saw all those people standing on lines, I was outraged, furious, that the Supreme Court had refused to take up the matter and really had ignored the findings of the district court about what the effects would be. The decision happened to come out the same week that it was reported that although Black people constitute 28% of the population of Milwaukee, they were constituting 70% of COVID deaths. And when I saw all of those people standing on that line to vote, it just absolutely outraged me that they would be compelled to be put in that position. And then at the same time it lifted my spirits that they were willing to be put in that position. That they were determined to vote no matter what, and that they put their masks on. Some came with chairs, and they came with water bottles, and they were prepared to stand in line for hours despite the knowledge of the deadliness of the pandemic. And it still infuriates me now, just talking about it.

You have almost a quarter of a million Twitter followers. Do you think social media on balance has been a force for good or evil?

I think that unregulated social media is the problem. I think that social media has the potential to be a force for good. I try to use it for good. And I try to use it responsibly, as a source of information, and encouragement, and camaraderie. But I also think that it is the Wild West. And especially after what we saw happen in Kenosha, where you have a group that posts the kind of call to arms, to have people come and converge on the place armed to confront protesters—something that actually violates existing Facebook policy but that didn’t come down.

I saw that you retweeted Naomi Osaka’s tweet after she won the U.S. Open tennis championship: “I’d like to thank my ancestors because every time I remember their blood runs through my veins I am reminded that I cannot lose.” What about that statement moved you?

I love to see someone so young to be able to understand how important it is to be able to tap into that power, to see yourself in a lineage. And to be able to draw some of your strength and your determination from that recognition. It’s beautiful.

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IFILL’S FAVORITES

LEADERSHIP BOOKS: I’m a big reader of kind of civil rights movement books, but I actually believe that they are leadership books. Certainly John Lewis’ Walking With the Wind is—my copy is extremely dog-eared. Taylor Branch’s Parting the Waters about King. And then, of course, the books about the leaders in the Legal Defense Fund. Jack Greenberg’s Crusaders in the Courts. Constance Baker Motley’s Equal Justice Under Law. Just really extraordinary books about what it was like to work in, and lead, the LDF during the most volatile civil rights periods in our country’s history.

AUTHOR: To me, there’s no greater novelist than Toni Morrison. I also read a lot of her essays, which I love also, not just her novels. And James Baldwin because I think that this country is deeply mysterious, and I very much enjoy the journey of trying to understand this country.

APP: Apple Music. I can’t imagine how I could conceive of kind of doing this work and holding myself together without my music.

EXERCISE: Every other day, I try to get on the Peloton.

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Trump Blesses Oracle’s TikTok Deal, Delaying Potential U.S. Ban

Sun, 20 Sep 2020 14:22:57 GMT

Donald Trump gave his blessing to Oracle Corp.’s bid for the American operations of TikTok, putting the popular video-sharing app on course to escape a U.S. ban imposed as part of his pressure campaign against China.

“I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.”

The new company, which will be called TikTok Global, has agreed to funnel $5 billion in new tax dollars to the U.S. and set up a new education fund, which Trump said would satisfy his demand that the government receive a payment from the deal. “They’re going to be setting up a very large fund,” he said. “That’s their contribution that I’ve been asking for.”

Oracle plans to take a 12.5% stake in the new TikTok Global, while Walmart Inc. said it has tentatively agreed to buy 7.5% of the entity. Walmart’s Chief Executive Officer Doug McMillon will serve on TikTok Global’s board of directors, the retailer said in a statement. Four of the five board seats will be filled by Americans, according to the statement.

TikTok’s Chinese owner ByteDance Ltd. is seeking a valuation of $60 billion for the app, according to a person familiar with the matter. Oracle and Walmart would pay a combined $12 billion for their stakes if they agree to that asking price. The final valuation had not been set as the parties worked out the equity structure and measures for data security, the person said. Terms are still in flux and the proposed valuation could still change.

The TikTok deal was forced by a pair of bans Trump issued in August over concerns that ByteDance posed a national security risk, thrusting the video-sharing app into the center of the president’s confrontation with Beijing.

Shortly after Trump signaled his approval, the Commerce Department on Saturday delayed by a week a ban that would have forced Apple Inc. and Alphabet Inc.’s Google to pull the TikTok video app from their U.S. app stores on Sunday.

Trump is ramping up pressure on Chinese-owned apps in the weeks before the Nov. 3 presidential elections, citing national security concerns about the data U.S. citizens provide to them and the potential for Beijing to use them for spying. The president is trailing his opponent Joe Biden in polls and has sought to portray himself as tougher on Beijing than the Democrat.

TikTok said in a statement that it was “pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the U.S. administration and settle questions around TikTok’s future in the U.S.”

The company confirmed Oracle will host all its U.S. data and secure its computer systems. Oracle’s Generation 2 Cloud fully isolates running applications and responds to security threats autonomously, according to the statement, which eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation.

“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud,” said Oracle CEO Safra Catz in a statement. “We are a 100% confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users.”

Oracle will get full access to review TikTok’s source code and updates to make sure there are no back doors used by the company’s Chinese parent to gather data or to spy on the video-sharing app’s 100 million American users, according to people familiar with the matter.

TikTok Global, together with Oracle, SIG, General Atlantic, Sequoia, Walmart and Coatue will create an educational initiative to develop and deliver an online video curriculum driven by artificial intelligence, according to the statement.

TikTok said it’s working with Walmart on a commercial partnership and said that it will take part in a TikTok Global financing round along with Oracle before an initial public offering in which the investors can take as much as a 20% cumulative stake in the company.

TikTok Global will likely be headquartered in Texas and will hire “at least” 25,000 people, Trump said. TikTok will need to hire thousands of content moderators, engineers, and marketing staff that were previously located in China and around the world. The company will also pay more than $5 billion in new tax dollars to the Treasury, according to the statement.

To sweeten the deal for Trump, TikTok promised to hire an additional 15,000 jobs, more than the 10,000 positions the company already pledged to fill earlier this year. It’s unclear if there’s a timeline to achieve that target, or guarantees that it will follow through. Facebook Inc., the largest U.S. social media company, employed about 45,000 people in 2019, while Twitter Inc. employed only 4,900, according to data compiled by Bloomberg.

Proponents of the deal told the Trump administration that the new company would be controlled by American investors by counting the passive stakes of existing shareholders in TikTok’s Chinese parent, people familiar with the matter said. Although ByteDance will have an 80% stake in the new company, existing U.S. investors hold a 40% stake in ByteDance. That tallies up to 53% ownership by U.S. companies and investors — although that doesn’t entail majority control or voter rights, the people said.

TikTok Global, which will be an independent company, will hold an initial public offering in less than 12 months and the stock will be listed on a U.S. exchange, according to the statement. After going public, U.S. ownership of TikTok Global will increase and continue to grow over time, it added.

While the Chinese government must now sign off on the transaction for it to go forward, as of earlier this week, ByteDance was growing increasingly confident that the proposal would pass muster with Chinese regulators, people familiar with the matter told Bloomberg.

Early reaction from Chinese state media appeared positive. “This scheme is still unfair, but it avoids the worst result, that TikTok is shut down or sold to a U.S. company completely,” wrote Hu Xijin, the influential editor in chief of China’s state-owned Global Times.

Under the terms of the agreement reached early in the week, ByteDance would retain a majority of TikTok’s assets and control over the algorithm, with Oracle and other U.S. investors taking minority stakes.

Larry Ellison, co-founder and executive chairman of Oracle Corp., speaks during the Oracle OpenWorld 2018 conference in San Francisco, California, U.S., on Monday, Oct. 22, 2018. Ellison announced a series of updates injecting more automation and intelligence into Oracle’s data cloud applications.

Trump seemed to contradict that on Saturday. “It will have nothing to do with China, it’ll be totally secure, that’ll be part of the deal,” he said. “All of the control is Walmart and Oracle, two great American companies.”

Trump spoke with Oracle Chairman Larry Ellison and Walmart’s McMillon on Friday, telling them he still expected the U.S. government to receive a cash payment as part of the transaction, according to people familiar with the matter. They agreed to the educational donation as a way to satisfy Trump’s demand, one of the people said. ByteDance first heard about the $5 billion education fund from news reports, a company spokeswoman said.

The deal came together last weekend, the result of high-level negotiations between ByteDance, Oracle and top Trump administration officials after ByteDance rejected a bid from Microsoft Corp. and Walmart to buy the U.S. TikTok service outright.

Beijing has signaled it would greenlight a deal as long as ByteDance doesn’t have to transfer the artificial intelligence algorithms that drive TikTok’s service, Bloomberg has reported.

The Treasury Department said the deal is subject to a security agreement that requires approval by the Committee on Foreign Investment in the U.S., or Cfius. The term sheet that’s been negotiated between Cfius and the companies will now have to be formalized in a document that details the mechanics for implementing the terms of the deal.

That document would likely include requirements related to the establishment of the new company, arrangements governing its relationship with ByteDance, whether an IPO is part of the deal, whether ByteDance will have to divest its entire stake in the IPO and what would happen if for some reason the IPO doesn’t occur, said Aimen Mir, a lawyer at Freshfields Bruckhaus Deringer LLP and a former deputy assistant secretary for investment security at Treasury.

In a video posted on TikTok with the caption #WeAreTikTok and we are here to stay, interim head of TikTok Vanessa Pappas thanked users for “sticking by us,” she said. “We’re here for the long run.” In the comments below, users said they were happy that the ongoing drama around the ban would subside. “This on and off situation is working on my nerves,” said @iamdavante, who has 4.1 million followers on the video app.

—With assistance from David McLaughlin, Nick Wadhams and Saleha Mohsin.

Lego Makes a Hundred Billion Bricks a Year. ...

Sun, 20 Sep 2020 10:50:17 GMT

(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, Sept. 20; to receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)

“Washington Man Designs Lego Basilica Replica.” This is not an Onion headline. The global lockdown has driven many to distraction. For parents with young children, the restrictions and closures have made this a particularly bonkers time. In March, after Lego employees realized that nearly 90% of the world’s school-age kids were outside of their normal learning environments, they posted a number of play ideas and building suggestions online. The company says the digital content has reached more than 80 million users around the world, helping provide inspiration that has made the world’s living rooms awash with castles, ships, trucks, treehouses and fantastical figures. “It was not about trying to sell more,” says Lego CEO Niels Christiansen. “At the center of it is really creative ideas of what to build.” Still, consumer sales at Lego rose 14% in the first half of 2020, according to the family-owned company, which was founded in 1932 in Denmark. Total revenues at Lego increased by 7% in the first half of the year, to approximately $2.5 billion.

Christiansen, 54 and an engineer by training, recently joined TIME for a video conversation from his home office in Copenhagen. He talked about the surprising complexity of making plastic bricks, Lego’s ambitious plan to wean itself off of petroleum-based plastic by 2030—the company has already tested over 300 sustainable materials for making plastics—and the one product Lego will never make.

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(This interview with LEGO CEO Niels Christiansen has been condensed and edited for clarity.)

Lego crowdsources new product ideas from devotees, including its new player piano. I’d like to start with questions crowdsourced from my nieces and nephews and family friends who are passionate about Legos. First, why don’t Lego characters have noses? (Max, 8)

It’s because we can do most of the impressions that we want with the mouth and eyes, whether they smile, whether they wear glasses or not. It’s also to keep things as simple as possible while still providing diversity and creativity. I guess there’s been no reasons for noses.

Have you designed a set of Legos? (Emmett, 7)

In my life, I’ve built many, many, many Lego creations, but I did not yet have the opportunity of turning one of them into a set, unfortunately.

Do you have a pet project now that you’re advocating for, any breaking news?

Yes, I have the privilege of once a year I get into a huge room and see all the different proposals for what could be sets to launch in one- or two-year horizon. And I do have my favorites. The problem is that when I come out of that room I have my mind erased so I cannot tell anybody about anything.

So here’s a socially minded question from Henry, 9. Some kids can’t afford Legos. What are you doing to help disadvantaged children acquire Legos?

Even though it’s a question from a kid, that’s something that is very, very important to us. We are donating a lot of sets to kids around the globe who are not so fortunate they can have sets. We have done a lot of that also during COVID. It’s the fact that 25% of all our dividends, our profits, go to the Lego Foundation. And the Lego Foundation makes grants on learning through play with a particular focus on kids who are in less fortunate situations.

Back to Emmett. He asks, What’s your favorite Lego set?

It changes over time, but now it is a Bugatti. It can actually drive and go into gear. I find it so amazing. It was very, very difficult. That’s my favorite right now.

And Henry asks, If I want my parents to buy me more Legos, can you recommend a study that shows Legos benefit learning? P.S., I’ll tell my friends about it.

There are a lot of skills around resilience and problem solving and creativity that you learn through play.In 2018, we talked to 13,000 families about play and the benefits of play. The Lego Foundation does a lot of studies for this to be research based. There are a lot of skills around resilience and problem solving and creativity that you learn through play. And children should play enough at an early age that they acquire those skills. Kids today are tested more, they are under more pressure, they’re in school more, they’re in after school, they’re at sports. And for them to deal with this rapidly changing environment, they need those basic fundamental skills that come through play. So I think that would be wise if Henry were to refer to the Lego Foundation’s reports on the importance of learning through play.

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Will there be Lego people with masks, wearing masks for the virus? (Nadia, 10)

We don’t have it at the moment. I would not say that it could not happen.

Now for the boring, adult questions. What was your most intense supply-chain disruption that Lego experienced as a result of COVID?

We have a supply chain based on five big factories around the globe with a lot of flexibility in our operating model shifting between those. But we did have two months of forced closure of our Mexican factory, and the Mexican factory is the prime factory supporting the Americas. So that was a very significant disruption for us.

For all the fun associated with Lego, you also pride yourself on your manufacturing prowess.

We’re not playing around. We are world leaders in molding in plastic. It’s unbelievably high tech. The product is very creative, but manufacturing it is a very, very structured and very well-controlled process. That complexity is really, really high.

In engineering speak, what level of precision is required to make Legos?

Our tolerances are extremely tight.

All to make plastic bricks?

We manufacture around a hundred billion bricks a year.A lot of people think, “O.K., how difficult can it be to put some bricks into a package?” We manufacture around a hundred billion bricks a year. So a hundred billion bricks in many, many different shapes and sizes and colors. And these bricks need to be available in the exact right moment that you put these 200 or 5,000 bricks into one box. If there is one brick in one color that’s not there, then we cannot produce the set. We have a huge complexity in the logistics behind making sure that we have all the right elements and all those ready at the right point in time.

Aside from those logistics, what makes Legos so challenging to make?

Just imagine, you take these bricks and they fit together beautifully. You can take them apart and they fit together again and you can do that thousands of times. These bricks, some of them they would be sitting around in your attic or your basement for 40 years and they still work. And whatever brick you bought 40 years ago still connects beautifully with a brick you bought yesterday. That takes an amazing precision. But also longevity and robustness in the plastic material. So we are really, really world-leading in doing that. And though the brick itself may look trivial, to bring the safety and the functionality so they can be sitting—sometimes it lies around in the window in the sun for two weeks and then they put it in the refrigerator and then they do all kinds of stuff, they leave it outside and they bring it in. And it cannot be brittle, it cannot break, it cannot be sharp or have sharp edges if it breaks. The safety level and quality level is unbelievably high, much higher than you would normally find in a toy or anything else.

You have a goal of making Lego bricks from sustainably sourced material by 2030, instead of petroleum-based material. Are you on target?

Making bricks out of sustainably sourced materials is not trivial. That’s why we’ve given ourselves another 10 years to get there. But I’m also honest to say there’s some uncertainty in that because those materials do not exist today. It’s not like I just could go out and say O.K. and say, Listen, if I paid 20% more, then I get this material and then I can just do it tomorrow. Because it’s not there.

Are you out to replace plastic?

We are not looking to get out of plastic. We are looking to sustainably source plastic. We already have some sugarcane-based plastic materials that still have all the same good characteristics that I talked about before.

How important are your licensed products?

It’s not half of our business, but it’s a significant part of the business where we are linked to external IP.

I understand that 60% of your product line every year is new.

Yes. I don’t know any company that would do that!

The Lego Millennium Falcon Collector’s Edition is today the most complex Lego set ever sold, with over 7,500 bricks and an $800 price tag. Is there anything planned that is at that level of complexity and expense?

We have 250 designers, 40 different nationalities, so I’m sure they’ll come up with something that’s even stronger in the future than the Millennium Falcon.

How do you get to be a Lego designer? What are their backgrounds?

You cannot take the Lego designer [degree program] at any university. I cannot give you a formula. It’s anything from an engineer to an artist and anything in that spectrum.

What essential human instinct does Lego tap into?

Endless creativity. You can express yourself, you can try things out and play, and you can build. You can be proud of the creation you have actually done. You can improve it all the time, you can get new ideas. I think that’s what we all like, and often as we have also done here we talk about the Millennium Falcon or the big sets like the Bugatti. You build those, but let’s also remember that most of the Lego buildings, and actually the Lego building that I have really liked most as a child, was really this free building. I think that’s the big, big strength compared to any other toy where you buy something that is more or less finished and then you play with that. Here you get to create what you then will role-play, and you can improve it. And it’s kind of a continuous process where you’re in the driver’s seat.

There’s a lot of concern about distracted attention spans and too much screen time.

A couple of years ago, I often got the question, Is the brick still relevant? And everything shows the brick is probably more relevant than ever. Kids really like this physical play. We also know that parents are very aware of that. I get letters from moms who say, Listen, I’m so happy with this new set. Now my son or daughter has not been playing on the screen for three days, and they have been so immersed into this creation they have done.

Who is your biggest competitor?

Everybody else fighting for children’s time.

What toy company do you admire the most that’s not Lego?

Disney.

What is one thing Lego will never do?

We will never produce military toys.

CHRISTIANSEN’S FAVORITES

BUSINESS BOOK: You may find me boring, but that’s actually Michael Porter’s old book Competitive Strategy. It’s a very fundamental book on how to do strategy.

AUTHOR: On my vacations I like to read Ken Follett.

APP: Spotify.

DAILY EXERCISE ROUTINE: Swim in the morning, in the ocean, and then I do Pilates.

BREAKFAST: I eat a special type of yogurt that originates from Iceland. It’s called Skyr.

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