The union leader clamping down on U.S. commerce
As the strike shutting down East and Gulf Coast ports enters a third day, the man behind the work stoppage shows no signs of relenting.
Meet Harold Daggett, 78, the president of the International Longshoremen’s Association. He is taking advantage of organized labor’s resurgent power to pose a major challenge to the American economy in the name of higher pay for his members.
“We’re going to show these greedy bastards you can’t survive without us,” Daggett said in a speech on Tuesday as the I.L.A.’s roughly 45,000 members walked off the job at more than a dozen ports. The union is pressing major shipping companies for steep rises in pay and benefits, including a 61.5 percent increase in wages over six years.
But Daggett isn’t stopping there, demanding limits on ports’ adoption of automation technology despite the U.S. falling behind other global terminals in efficiency.
The economic stakes are huge: The ports account for about 60 percent of container-based U.S. trade, handling nearly $600 billion worth of imports, according to S&P Global Market Intelligence.
“People are going to sit up and realize how important longshoremen jobs are,” Daggett told The Wall Street Journal. “They won’t be able to sell cars. They won’t be able to stock malls. They won’t be able to do anything in this country.”
Daggett has led the union since 2011, after rising through the its ranks. Such is his stature that the I.L.A. recently introduced a statue of him outside its headquarters.
That’s despite criticism of his pay — he made $728,694 as head of the I.L.A., according to federal filings — and longstanding accusations that he has mob ties. (He denies the claims.)
Daggett seems to be fully aware of his power over even the White House, which has avoided antagonizing a powerful union leader whose political support it needs. President Biden has pressured shippers to improve their offer to reopen talks.
That said, Daggett appears to be courting Democrats and Republicans alike: He met with Donald Trump at Mar-a-Lago in advance of the strike.
Some believe challenging Daggett may be the best way to end the fight. Analysts at JPMorgan Chase and Moody’s expect the standoff to end only if the government intervenes.
That may be painful: Last month, Daggett warned Biden not to invoke federal law to break the strike, threatening to slow down any restarted operations. “In today’s world, I’ll cripple you,” Daggett said.
HERE’S WHAT’S HAPPENING
Tesla sales rise, suggesting a potential rebound in consumer interest in electric vehicles. The car maker said on Wednesday that global sales rose 6.4 percent in the third quarter, the first such increase this year. But the figures came in below analyst expectations, and Tesla shares fell more than 3 percent on the news.
President Biden opposes an Israeli attack on Iran nuclear sites. Biden said that he would not support strikes on the facilities in retaliation for Tehran’s missile assault on Tuesday, amid worries of a worsening war in the Middle East. But he said that the Group of 7 nations had agreed to impose new sanctions on Iran.
The owner of the Miami Dolphins is said to be close to selling minority stakes. Stephen Ross, the N.F.L. team’s owner, is in advanced talks with Ares Management and Joe Tsai, the billionaire owner of the Brooklyn Nets, according to Bloomberg. An agreement would be one of the first deals since the league allowed private equity firms to buy into teams.
The clouds hanging over OpenAI’s big round
OpenAI has finally closed its mega fund-raising round, valuing the ChatGPT creator at a staggering $157 billion — nearly double its valuation from just nine months ago.
That gives the unprofitable start-up billions more to keep up with rivals in the artificial intelligence race. But the round also illustrates how much tougher that competition is getting.
Who’s in: OpenAI raised $6.6 billion from investors led by Thrive Capital, Josh Kushner’s venture capital firm. The round also included Microsoft, Nvidia, SoftBank’s Vision Fund, Fidelity, the Emirati investment firm MGX, Tiger Global Management, Coatue Management, Khosla Ventures, Altimeter Capital and Cathie Wood’s ARK Venture Fund.
The round underscores a widespread belief in OpenAI’s dominance. Potential investors were reportedly asked to commit at least $250 million just to see the company’s financial documents. Several went beyond that, with SoftBank investing about $500 million and Tiger about $350 million.
Thrive put in $750 million of its own money and $550 million from other investors through a special purpose vehicle, which makes OpenAI one of its single-biggest investments. The firm’s thesis, DealBook hears: OpenAI leads the sector on several fronts, including its products, training data and engineering talent, and will grow more valuable as A.I. is on the path to become a trillion-dollar industry.
But OpenAI also faces steep challenges. The start-up is expected to lose $5 billion this year, and keeping up with bigger rivals including Google and Amazon will force it to keep raising new capital.
That’s pushing OpenAI to abandon some of its long-held precepts. Terms of the new round give the start-up two years to convert to a for-profit business from a nonprofit organization, or the new funding will become debt.
OpenAI is also said to have made a big demand of investors. They had to pledge not to invest in certain major competitors, according to The Financial Times and The Wall Street Journal. Those companies include Anthropic, which was created by OpenAI alumni; Safe Superintelligence, which was recently co-founded by OpenAI’s former chief scientist; and xAI, which is run by Elon Musk, an OpenAI co-founder.
The stipulation most likely ruled out many potential investors, given how widely venture firms are spreading their A.I. bets. That OpenAI was still able to draw prominent investors for its round shows its power in the industry. But it also suggests that the company is worried about growing competition.
A Harris-Trump split on manufacturing and trade
One of the few things that Vice President Kamala Harris and Donald Trump agree on is the need to bolster manufacturing at home.
But the presidential candidates are proposing different approaches to doing so — forcing companies to prepare for either path come November.
Harris appears likely to continue the Biden administration’s approach. President Biden has used industrial policy to try to revive growth and jobs, with the Inflation Reduction Act and the CHIPS and Science Act spurring private companies to invest billions in clean energy and semiconductor making.
Harris is promising tax credits to support manufacturing in biotech and aerospace, as well as the iron and steel industries.
Trump is talking about tariffs and trade fights. He has promised to take an even more aggressive approach than he did in his first term, proposing a 60 percent tariff on Chinese imports and a more than 10 percent tariff on goods from elsewhere. Trump has also threatened 100 percent tariffs on cars coming from Mexico.
And he’s gone after individual companies, warning John Deere of penalties if the farm equipment maker moved production to Mexico.
(Worth noting: Trump has a track record of making policy claims and threats that don’t become reality. And America’s trade deficit with China soared while he was president.)
Blue-collar political support and bolstering U.S. industry are driving the push. Both candidates have spent considerable time and political capital courting working-class Americans, especially in battleground states.
But in a fraught geopolitical environment, both Harris and Trump also want to strengthen homegrown manufacturing to maintain access to critical supplies for industries including defense and technology.
Companies are bracing for disruption either way. Harris has said she would continue using “targeted” tariffs, possibly mirroring Biden’s imposition of levies for specific industries rather than blanket restrictions. She has also said she would work with allies, as Biden has done, particularly to counter China.
But Trump’s approach may herald more battles. Trading partners like the European Union retaliated against U.S. tariffs by slapping import restrictions on prominent American goods such as Harley-Davidson motorcycles. And in March, a European tariff on American whiskey will take effect unless a deal is worked out.
Jordan takes on NASCAR
Michael Jordan was famous for taking on defenses on the basketball court. Now, his NASCAR team is going after the family that controls the motor sport.
Jordan’s 23XI Racing and another team, Front Row Motorsports, have sued NASCAR and its C.E.O., Jim France, accusing them of anticompetitive behavior that they say is unfairly hurting their returns.
The lawsuit is the latest move in a long-running fight. Jordan and Curtis Polk, his longtime business partner, bought a NASCAR team in 2020 and have invested millions in it.
Their bet: The value of NASCAR broadcast rights would grow and that the competition could evolve into a spectator sport with far wider appeal. That hunch was validated when NASCAR signed a deal last year with Amazon, Fox, NBC and Warner Bros. Discovery worth $7.7 billion.
But many teams say they can’t make money because of how NASCAR is run. 23XI has accused NASCAR of not fairly sharing the huge broadcast revenues, and teams say they collectively expect to lose more than $200 million over the next five years if nothing changes.
Bob Jenkins, the owner of Front Row Motorsports, told CNBC that he hadn’t turned a profit in 20 years.
NASCAR’s ownership is different from other sports leagues. Unlike the N.B.A. and the N.F.L., which are jointly owned by the team owners, NASCAR has been controlled by the France family since 1948. Teams aren’t permanent franchises but instead depend on a charter, which they can lose if they perform poorly or don’t race their cars consistently.
NASCAR controls the sport, including buying the racetracks and forcing teams to buy from suppliers it has chosen. “The France family operates NASCAR like a closed-door shop, wheeling and dealing its monopoly power in smoke-filled backrooms,” 23XI Racing and Front Row Motorsports claim in their lawsuit.
Jordan wants more money and permanent change. Jeffrey Kessler, the prominent sports lawyer who represents the plaintiffs, said that they were seeking an injunction to “end NASCAR’s exclusionary practices and restore competition.” 23XI Racing and Front Row Motorsports are also seeking monetary damages over the “below market” terms of their team charters.
NASCAR didn’t respond to a request for comment.
THE SPEED READ
Deals
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Levi Strauss is considering the sale of its Dockers brand, which weighed down on otherwise positive quarterly results. (CNBC)
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Toyota will invest $500 million in Joby Aviation, a flying taxi company that aims to start commercial services next year. (FT)
Elections, politics and policy
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Jack Smith, the special counsel pursuing the federal election case against Donald Trump, in newly unsealed court filings made his case for why the former president is not immune from prosecution on federal charges of plotting to overturn the 2020 election. (NYT)
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“Elon Musk Gave Tens of Millions to Republican Causes Far Earlier Than Previously Known” (WSJ)
Best of the rest
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A former romantic partner of Pavel Durov, the founder of the messaging app Telegram, has accused him of abusive behavior. (NYT)
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Four months after Adam Neumann failed to buy WeWork, he has now introduced a competitor to his former company. (Bloomberg)
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“LVMH Took Over the Paris Olympics. Now It’s Snagged Formula One.” (WSJ)
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