In an about-face, Lordstown Motors says it has enough money and will start building trucks.
18 min readDaily Business Briefing
June 16, 2021, 3:07 p.m. ET
June 16, 2021, 3:07 p.m. ET
A day after ousting two top executives, the electric truck start-up Lordstown Motors said on Tuesday that it was on track to start production in September even if it does not raise additional funding, contradicting what it told securities regulators just a week ago.
In a filing to the Securities and Exchange Commission last week, Lordstown said it needed to raise more money and might not survive. Then, on Monday its founder and chief executive, Steve Burns, and the company’s chief financial officer resigned.
But in a news conference hosted by the Detroit-based Automotive Press Association, the company’s new executive team presented a far more optimistic outlook without providing many details.
Lordstown’s president, Rich Schmidt, said that the company would start making trucks at its plant in Lordstown, Ohio, in late September and that it had enough money to last until May 2022. He said the company would be able to make about 15,000 trucks over the next 24 months.
He also said the company was still actively seeking new funding to increase production.
“It’s a new day at Lordstown Motors, and there is no and will be no disruption to our plans to start production,” the company’s new executive chairwoman, Angela Strand, said. She had previously served as the lead independent director on Lordstown’s board.
Lordstown’s stock had climbed to nearly $31 a share earlier this year, but fell to about $7 in May, after Mr. Burns acknowledged that the thousands of “pre-orders” the company had been touting were not binding orders. Some large orders the company had announced had also come from “influencers” who did not plan to buy the trucks themselves, the company said on Monday.
Mr. Schmidt, who joined Lordstown in 2019 after a stint at Tesla, said on Tuesday that the company had “binding” orders for all the trucks the company is likely to make in 2021 and 2022. But he declined to disclose the total number, name specific customers or say whether they had paid deposits to secure their orders.
“Those are firm orders,” Mr. Schmidt said. “They have been reconfirmed last week.”
Lordstown shares jumped more than 10 percent on Tuesday.
He said production would start in September even though the company’s Endurance truck has not passed all the required crash and engineering tests needed to be cleared for sale in the United States. Trucks that roll off its assembly line would be held until the testing is complete and then modified, if necessary, before being shipped to customers, a highly unusual practice in the auto industry.
Mr. Schmidt offered little detail on what prompted Mr. Burns’s departure. About a dozen other senior executives were also let go on Monday.
Lordstown gained attention in 2019 when it agreed to buy a plant that General Motors was closing. The shutdown drew scorn from President Donald J. Trump, and G.M. sold the plant to Lordstown for just $20 million. Mr. Trump later hosted Mr. Burns at the White House.
Lordstown plans to make a rugged, electric pickup truck for commercial customers like mining and construction businesses. Mr. Burns had hoped the company would become the Tesla of the pickup market. But investors grew concerned about Lordstown’s prospects after a small investment firm, Hindenburg Research, published a report in March that raised questions about interest in the company’s trucks.
Southwest Airlines flights within the United States were temporarily suspended on Tuesday afternoon, the second major disruption to the company’s operations in less than 24 hours.
The F.A.A. said in a statement that the airline had requested the nationwide grounding as it “resolved a reservation computer issue.” In a separate statement, Southwest said it had canceled nearly 500 flights and, it blamed the disruption on “intermittent performance issues with our network connectivity.”
“Teams are working quickly to minimize flight disruptions and customer impact,” the airline said. “We appreciate our customers’ patience as we work to get them to their destinations.”
The airline experienced a similar outage late Monday, which it had blamed on a third-party provider of weather data. Both disruptions prompted widespread complaints on social media from frustrated travelers. A spokesman, Dan Landson, said the company was “investigating the root cause of each event.” The airline does not believe the disruptions on Monday and Tuesday were related, and there was no indication that they were the result of a breach or a hack, he added.
More than 1,500 Southwest flights were delayed on Monday, accounting for about a quarter of all flight delays within the United States, according to FlightAware, a flight tracking service. By Tuesday afternoon, Southwest had canceled about 14 percent of its scheduled flights for the day and delayed another 33 percent.
The disruptions come as airlines aim to capitalize on a rebound in travel after the coronavirus pandemic force many people to stay home for more than a year. On Tuesday, Southwest said it was celebrating its 50th anniversary with a half-off sale on fall fares.
Airlines have high hopes that a summer travel boom will allow them to make money again. Southwest turned a profit in the first three months of the year, the first major U.S. airline to do so.
The Transportation Security Administration screened more than 2 million people at airports on Sunday, more than at any point since March 2020.
Southwest pioneered the low-fare business model that many other airlines have copied over the years and carried more passengers than any other U.S. airline in 2019. The company, based in Dallas, has been the most consistently profitable large airline in the United States.
Charitable giving in the United States rose in 2020, fueled in part by a rising stock market and government stimulus checks, with organizations focused on civil rights and the environment seeing big increases in donations, according to a report released Tuesday.
Total charitable donations rose 5 percent to $471.4 billion, a record level, according to the annual Giving USA Foundation report. It helped, the report said, that the S&P 500 rose more than 16 percent by the end of the year and that personal income rose as the government rolled out stimulus spending, including checks sent directly to Americans. The backdrop of a national conversation over race, in the aftermath of the murder of George Floyd by a Minneapolis police officer, also fueled fund-raising.
“In some ways, 2020 is a story of uneven impact and uneven recovery,” said Amir Pasic, dean of Indiana University’s Lilly Family School of Philanthropy, which released the report in partnership with the Giving USA Foundation. “Many wealthier households were more insulated from the effects of Covid-19 and the ensuing economic shock, and they may have had greater capacity to give charitably than households and communities that were disproportionately affected and struggled financially.”
Foundations increased giving the most, a 17 percent jump to a record $88.6 billion. Giving by companies fell 6.1 percent to $16.9 billion, which the report attributed to a decline in corporate profits and the economic slump.
Individuals increased giving by 2.2 percent, while bequests, planned giving after someone dies, rose by 10.3 percent.
Organizations focused on civil rights and the environment saw the biggest increase in receipts compared with 2019.
Giving to religion, education, human services, foundations, public-society benefit groups and international affairs also rose.
Giving to groups focused on health care fell 3 percent, as participation in big fund-raisers like walks and runs fell because of the pandemic. Organizations involved in the arts saw a drop in fund-raising of about 7.5 percent, which is a common pattern during economic slumps.
Some of the world’s largest banks were left on the sidelines Tuesday as the European Union began selling bonds to finance the bloc’s recovery from the pandemic, part of a new form of collective financing for Europe.
Ten banks that have been penalized for violating antitrust laws were excluded, at least initially, from joining together with other banks to market 80 billion euros, or $97 billion, in NextGenerationEU bonds that will be sold this year. By the end of 2026, the bloc intends to raise €800 billion from bond sales.
The banks, which include big names like JPMorgan Chase, Barclays, Bank of America and Deutsche Bank, can still sell the bonds as primary dealers, but they will miss out on the fees that come with being part of the so-called syndicates that take the lead in such sales.
Their exclusion was first reported by The Financial Times. The banks may be able to join syndicates in the future if they demonstrate that they have taken the required steps to prevent wrongdoing.
Johannes Hahn, the European commissioner for budget and administration, said he could not predict when the restrictions on the banks may be lifted, saying that “it depends on the quality of the material and information provided to us.” But he said the information would be assessed “as fast as possible because we have every interest to include all the key players and banks.”
Apart from lost fees, the exclusion of the banks — the list also includes Nomura, UniCredit, Citigroup, Crédit Agricole, NatWest and Natixis — is a blow to their prestige because of the bond sale’s historic nature.
On Tuesday, €20 billion of 10-year bonds were sold, the largest amount the union has raised in a single transaction. It was oversubscribed by seven times, Ursula von der Leyen, the president of the European Commission, said. The bonds will pay interest of less than 0.1 percent. It is “a key milestone in the implementation of our recovery plan,” Ms. von der Leyen said.
Before the pandemic, the European Commission, the European Union’s administrative arm, had never sold bonds in large quantities. The decision to issue debt that all E.U. members are responsible for repaying was seen as a major step forward for European unity.
All of the excluded banks have been cited by the European Commission for illegally colluding in financial markets. In April, Bank of America, Merrill Lynch and Crédit Agricole were among banks fined millions of euros for violations that included coordinating on the sale prices of bond issues. Deutsche Bank also took part in the cartel but was not fined because it revealed the existence of the wrongdoing, which took place for several years beginning 2010.
In May, the European Commission cited Bank of America, Natixis, Nomura, NatWest and UniCredit for colluding on the sale of European government bonds between 2007 and 2011, during the sovereign debt crisis that nearly destroyed the eurozone. Bank of America and Natixis escaped fines in that case because the statute of limitations had expired. NatWest, called Royal Bank of Scotland at the time, was not fined because it revealed the cartel.
Last year, Barclays, JPMorgan Chase and Citigroup were among banks that paid millions of euros in fines for manipulating currency markets.
Representatives for JPMorgan, Deutsche Bank, Bank of America, Barclays, NatWest, Natixis and UniCredit declined to comment. The other three banks did not immediately respond to requests for comment.
Eshe Nelson contributed reporting.
Carrie Budoff Brown, who has led Politico’s U.S. newsroom since 2016, is leaving to join NBC News, the network announced Tuesday.
In an email to staff, Noah Oppenheim, the president of NBC News, said Ms. Brown would become a senior vice president of “Meet the Press,” a role that will put her in charge of the long-running Sunday morning public affairs show. The executive producers of “Meet the Press” and its MSNBC spinoff, “MTP Daily,” will report to Ms. Brown, Mr. Oppenheim added.
Ms. Brown, who did not immediately reply to a request for comment, joined Politico when it was a scrappy start-up in 2007. She served as a White House reporter before a stint overseeing its European newsroom from Brussels. She was promoted to U.S. editor in 2016, reporting to the editor in chief, Matthew Kaminski.
She follows other longtime Politico journalists out the door. The writers of Politico’s Playbook newsletter — Jake Sherman and Anna Palmer — along with John Bresnahan, a congressional reporter, left in December to start a rival site, Punchbowl News. Politico’s chief executive, Patrick Steel, announced in February that he would leave the company this summer.
Politico’s publisher, Robert Allbritton, told employees of Ms. Brown’s departure in an email on Tuesday.
“Her decision does not come as a surprise,” he wrote. “In recent weeks, she and I have had searching and quite gratifying conversations about her professional life, her interests and the abundant possibilities ahead of her. This choice is not what I would wish for myself, which is that she would stay at Politico to continue to learn and lead as she has done for the past decade and a half.”
“Meet the Press” has been an NBC staple since 1947. Chuck Todd has been the moderator since 2014.
Twenty-five states will halt some or all emergency unemployment benefits, with many Republican governors blaming the programs for a shortage of workers in many industries as businesses reopen.
The changes affect four programs:
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Federal Pandemic Unemployment Compensation, which provides eligible individuals with $300 a week on top of their regular benefits.
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Pandemic Emergency Unemployment Compensation, which extends benefits for workers who have exhausted their state allotment.
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Pandemic Unemployment Assistance, which covers freelancers, part-time hires, seasonal workers and others who do not normally qualify for state unemployment benefits.
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Mixed Earner Unemployment Compensation, which offers additional assistance for people who make their income by combining a salaried job with freelance gigs.
Stocks on Wall Street dipped on Tuesday, with the S&P 500 retreating from a record high, as government reports showed that prices for businesses jumped and retail sales dropped in May.
A measure of wholesale prices known as the Producer Price Index rose in May, according to numbers released on Tuesday by the Labor Department, the latest data point showing that inflation is increasing at a faster pace. Prices were up 6.6 percent in May compared with the prior year, the largest year-over-year increase since the Department of Labor started calculating the numbers in 2010. Costs rose 0.8 percent in May from April, compared with a 0.6 percent increase in April from the prior month.
The price of goods rose 1.5 percent in May from the prior month, while the cost of services ticked up 0.6 percent.
“The ongoing mismatch between supply and demand continues to fuel price pressures, while the influence of base effects after last spring’s collapse in prices likely peaked last month,” analysts at Oxford Economics wrote in a note. “Looking past the noise, producer price increases will slow as supply constraints relax and recalibrate to demand in the second half of 2021.”
The Federal Reserve’s rate-setting committee will announce on Wednesday the decision from its latest meeting. In April, “a number” of the committee’s members said it might be time to start talking about talking about pulling back support for the economy, according to minutes from the meeting.
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The S&P 500 fell 0.2 percent on Tuesday, while the Nasdaq composite dropped 0.7 percent.
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European stocks were slightly higher, with the Stoxx Europe 600 closing with a near 0.1 percent gain. Markets in Asia were mixed.
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Oil prices rose, with West Texas Intermediate crude, the U.S. benchmark, gaining as much as 1.9 percent, to about $72.25. Shares of energy companies climbed as well. Exxon Mobil jumped 3.6 percent, and Occidental Petroleum, Chevron and others were also higher. Diamondback Energy was up more than 5 percent.
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Shares of DraftKings, the fantasy sports company, tumbled about 4 percent after the investment fund Hindenburg Research, which has a short position on the company, released a report accusing it of having skirted the law. Hindenburg Research has previously gone after the electric-vehicle companies Lordstown Motors and Nikola. Both companies have since stumbled, with Lordstown Motors recently saying it may not have enough cash to begin production.
Coral Murphy Marcos contributed reporting.
Ikea France was fined 1 million euros ($1.2 million) by a French court on Tuesday after it was found guilty of carrying out illicit surveillance on union organizers, employees, job applicants and even disgruntled customers for nearly a decade, capping a long-running case that had riveted national attention.
The court in Versailles, where a trial was held in April, gave the former chief executive of Ikea France, Jean-Louis Baillot, a suspended two-year prison sentence and ordered him to pay a fine of 50,000 euros, according to the 100-page verdict.
A lawyer for Mr. Baillot said he denied wrongdoing and was considering an appeal. The lawyer for Ikea France, Emmanuel Daoud, said the company was studying the court’s decision. The company’s fine was less than the 2 million euro penalty sought by prosecutors.
During the trial, Mr. Baillot and Mr. Daoud denied having ordered up any surveillance, and painted the operations as being the work of a single man, Jean-François Paris, the French unit’s head of risk management at the time. Mr. Paris testified that Ikea France executives had been aware of and supported the activity.
The court handed Mr. Paris a suspended 18-month prison sentence and a 10,000 euro fine.
Prosecutors said that Ikea France engaged in widespread snooping to investigate employees, check up on workers on medical leave and size up customers seeking refunds for botched orders. A former military operative was hired to execute some of the more clandestine operations.
The French unit also illegally conducted background checks on at least 400 job applicants, and used the information to weed out some candidates without their knowledge. It also targeted union members who made efforts to lead strikes and recruit members, surveilling them and even planting a mole at an Ikea store where union activity was strong, prosecutors charged.
The case stoked outrage in 2012 after emails detailing some of the activities were leaked to the French news media. There is no evidence that similar surveillance happened in any of the other 52 countries in which Ikea operates.
Mr. Daoud, Ikea France’s lawyer, noted that the court didn’t find that “systemwide surveillance” had been carried out.
Adel Amara, a union leader at an Ikea store who was a target of the surveillance, said Tuesday that while he was disappointed that harsher penalties weren’t handed out, justice had been served.
“This trial marks the start of a new era, of an ongoing movement,” he said. “Where bosses can be sentenced, where they are no longer kings and where citizens are being defended.”
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At a time when corporate leaders are increasingly expected to act as moral arbiters, the professional services giant PwC has spotted a business opportunity: teaching executives how to be more trustworthy.
On Tuesday, it unveiled a plan to focus the firm, which offers an array of accounting and consulting services, around the concept of trust. (It also announced a goal of investing $12 billion in recruiting, training and technology, with plans to add 100,000 new workers.)
It’s an offering aimed directly at corporate America’s need to account for more than just profits and shareholders.
Executives are now regularly under pressure to speak out on issues such as racial justice and the environment. And businesses are in the unusual position of being the most trusted institutions in society, more than governments, nonprofit groups and the media, according to the latest edition of a long-running survey by the public relations firm Edelman.
Those heightened expectations have created a new opportunity for PwC, said Tim Ryan, the firm’s U.S. chairman and senior partner. “The skill sets you need today to be a C-suite executive are fundamentally different from even five years ago,” he said in an interview. “No different than how technology defined the last 10 years, trust will define the next 10 years.”
As part of PwC’s overhaul, the firm will combine its accounting and tax services into a new division called, unsurprisingly, trust solutions.
PwC’s U.S. arm will also spend $300 million on new initiatives centered on the trust theme. The main one is the PwC Trust Leadership Institute, which will teach clients how to handle issues such as transparency, ethics, data security, corporate governance and politics and policy — without prescribing specific solutions.
Addressing broken trust is something that the Big Four accounting firms, including PwC, have experience with, given their legal run-ins over issues like international tax shelters and the improper mixing of auditing and consulting services.
To increase PwC’s commitment to investing in a more diverse work force and improving economic mobility, both topics that its leadership institute covers as essential to building trust, the company has committed $125 million to give 25,000 Black and Latino college students career coaching and mentoring. PwC aims to hire 10,000 of them over the next five years.
The seeds of the initiative were planted two years ago, Mr. Ryan said, when PwC began a strategic review, consulting with clients on new directions for the firm. By that point, Mr. Ryan had already been thinking about diversity and inclusion and reporting PwC’s progress on those issues.
Then the pandemic and social justice protests after the killing of George Floyd inspired the firm’s leadership to pursue what will become its new identity.
Mr. Ryan said corporate executives often learned softer skills on the job and needed help thinking through decisions in a way that maximized trust. That many executives are falling short is understandable, he added — but the onus is on them to make up for lost time.
“I don’t in any way view it as an indictment of current leadership,” Mr. Ryan said. “The world is changing.”
Chanel, the French fashion house known for its No. 5 perfumes and quilted leather handbags, spent record amounts maintaining its stores, supply chain, advertising and fashion shows in 2020, despite the strain of pandemic lockdowns and sales volatility in one of the most tumultuous years in retail history.
The company said Tuesday
that revenue for 2020 was $10.1 billion, down 18 percent compared with the previous year. Operating profit fell 41.4 percent in the same period, to just over $2 billion. But unlike some industry rivals that were forced to slash costs last year, Chanel spent $1.36 billion on “brand support activities” like advertising and runway shows, and $1.12 billion on capital expenditure investments such as the acquisition and renovation of its boutiques network, new offices and the ecosystem of small artisanal workshops that produce its luxury wares.
“One of the luxuries of being a privately owned luxury company is that we could prioritize protecting our employees and vulnerable supply chain partners even if we knew it would have a detrimental effect on short-term profitability and cash flow,” said Chanel’s chief financial officer, Philippe Blondiaux. “It was the most challenging year ever for this company. But for us, the most important thing was to defend our values and way of doing business.”
At a time when the global fashion industry has come under more scrutiny than ever for its environmental practices, Chanel said it had issued 600 million euros, or $727 million, in sustainability linked bonds, which are an increasingly popular way for companies to raise money for environmental or social projects without spending restrictions, but with penalties paid to investors if they miss specific targets.
Mr. Blondiaux said the September issuance was the first of its kind by a luxury brand, and underscored the brand’s commitment to its climate goals. A week ago, Chanel committed $25 million to a new climate adaptation fund that aims to invest in sustainable agriculture practices, protect forests and support small-scale farmers in developing countries.
At a time of heightened competition in high-end retail and persistent rumors that Chanel could be a takeover target, the storied French fashion house — one of the last large privately owned brands — began publishing results in 2018 to fend off approaches.
“Despite the difficulties of 2020, we are in a great place to continue building the Chanel business and the long-term valued upheld by the brand,” Mr. Blondiaux said.
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There were 213 audience-less episodes of “The Late Show With Stephen Colbert,” broadcasts that came with off-camera chuckles from his executive producer, Chris Licht, and his wife, Evie, in place of big laughs from a packed hall. The usually buttoned-up host ditched his suit and grew out his hair. Mr. Colbert was back in his element on Monday, connecting with a capacity crowd 460 days after the coronavirus pandemic had emptied the theater where he has worked since 2015. The return to the stage of late night’s highest-rated host was one of the clearest signs yet, in television and in New York cultural life, that things were starting to get back to normal.
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Washington Prime Group, which oversees 102 shopping centers in the United States, said on Sunday that it had filed for Chapter 11 bankruptcy after its business took a hit during the pandemic. The company said foot traffic at its properties had been depressed and that it had been “forced to provide certain tenants with rent relief through a combination of rent deferrals and abatements” to stave off bankruptcies and lease abandonments last year. The company said in a statement that it expects business to continue as usual throughout the restructuring.
