How a Canadian rail shutdown could worsen US inflation
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(NEW YORK) — Two major Canadian freight rail companies locked out thousands of workers on Thursday, shutting down cross-border shipping routes and risking serious damage for the U.S. economy, industry experts told ABC News.
The rail lines carry everything from chemical inputs to auto parts, holding the potential to cause shortages for a range of products American consumers and businesses depend on. While the damage is minimal so far, a prolonged shutdown of weeks or months could slow U.S. economic growth, rekindle inflation and put some workers out of a job, the experts said.
“Right now, I do not think the sky is falling,” Joseph Schofer, a professor emeritus of civil and environmental engineering at Northwestern University, told ABC News. “In a week or two, effects will begin to develop.”
The shutdown will cost the Canadian economy about $250 million per day, according to Brendan La Cerdaa, director of economic research at Moody’s Analytics. If the strike continues for a week or two, the U.S. economy could start suffering costs of about $70 million per day, La Cerda said.
More than 9,000 Teamsters workers are off their jobs after Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd. (CPKC) locked them out when they failed to reach a deal on a new contract. It’s the first time both railways have been simultaneously halted.
“Throughout this process, CN and CPKC have shown themselves willing to compromise rail safety and tear families apart to earn an extra buck. The railroads don’t care about farmers, small businesses, supply chains, or their own employees. Their sole focus is boosting their bottom line, even if it means jeopardizing the entire economy,” Teamsters Canada Rail Conference President Paul Boucher said in a statement on Thursday.
In a statement, CN said it had negotiated with workers in good faith for nine months, offering better wages and shorter hours.
“Without an agreement or binding arbitration, CN had no choice but to finalize a safe and orderly shutdown and proceed with a lockout,” the company said on Thursday.
Similarly, CPKC said the lockout came about after months of unsuccessful negotiations.
“We fully understand and appreciate what this work stoppage means for Canadians and our economy. CPKC is acting to protect Canada’s supply chains, and all stakeholders, from further uncertainty and the more widespread disruption that would be created should this dispute drag out further resulting in a potential work stoppage occurring during the fall peak shipping period,” the statement said.
What does the Canadian rail shutdown mean for the U.S. economy?
A brief shutdown of the top two Canadian freight rail companies would not meaningfully impact the U.S. economy, experts told ABC News. However, they added, a prolonged lockout would damage the nation’s economic performance and risk accelerating inflation.
Many companies rely on Canadian rail lines to deliver raw goods that play a vital role in the supply chain. Affected industries include auto companies, chipmakers and fertilizer manufacturers, experts said. Perishable goods also reach U.S. consumers on trains from Canada.
As a smaller-scale version of the supply blockage incurred during the COVID-19 pandemic, a Canadian freight rail shutdown could hinder economic activity of businesses that import raw materials, rising prices for consumers who encounter shortages for some products.
“The producers will probably absorb some of those price increases in the short term, but eventually they could get passed on to consumers,” Kyle Handley, a professor of economics at the University of California, San Diego, told ABC News.
Over the coming weeks, a shutdown could slow gross domestic product growth and cause layoffs at directly impacted firms, such as auto factories, Jeff Macher, a professor of strategy and economics at Georgetown University’s Center for Business and Public Policy, told ABC News.
“A prolonged stoppage could lead to a certain amount of job losses,” Macher said.
The potential supply disruption could arrive at a vulnerable period for the U.S. economy. Growth is cooling but remains solid. Price increases have slowed dramatically but remain higher than the Federal Reserve’s target level.
For now, questions remain over the duration and scale of the U.S. economic fallout, experts said.
“If the stoppage ends within a week or so, it’ll have no effect on U.S. GDP,” Macher said. “If it extends beyond that, then it could bleed into and impact the U.S.”
ABC News’ Aaron Katersky and Zunaira Zaki contributed reporting.
(SEATTLE) — Tens of thousands of striking Boeing machinists are casting ballots on Monday over whether to approve a contract offer that could end their work stoppage after seven weeks.
The new offer delivers higher pay increases and a bolstered ratification bonus that would deliver each worker $12,000 if the union approves the deal, according to the International Association of Machinists and Aerospace Workers (IAM), the union representing 33,000 Boeing workers in Washington, Oregon and California.
The ongoing standoff has strained the finances of both sides. Union members have received $250 per week from a strike fund, beginning in the third week of the work stoppage. That compensation marks a major pay cut for many of the employees.
Boeing and its shareholders have lost about $5.5 billion since the strike began in September, according to an estimate last month from the Anderson Economic Group. Shares of Boeing have plummeted 40% this year but have ticked up slightly over the past month.
Union members resoundingly defeated two previous proposals from Boeing, but the latest offer marks the best deal the workforce is likely to receive, the union said in a public letter to membership on Saturday.
“This is truly the time to lock in these gains and work to build more in future negotiations,” IAM President Jon Holden and the union’s negotiating committee told members. “Allow yourself to capture this win and be proud of your sacrifice.”
The proposed contract would deliver a 38% raise over the four-year duration of the contract, upping the 35% cumulative raise provided in a previous offer overwhelmingly rejected by workers in a vote two weeks ago. Workers had initially sought a 40% cumulative pay increase.
The proposal also calls for hiking Boeing’s contribution to a 401(k) plan, but it declines to fulfill workers’ call for a reinstatement of the company’s defined pension. Workers lost a traditional pension plan in a contract ratified by the union in 2014.
Nearly two thirds of union members rejected the most recent contract offer in a vote last month. The outcome followed the overwhelming defeat of a previous proposal in September, which drew rebuke from more than 90% of union members.
“It’s time we all come back together and focus on rebuilding the business and delivering the world’s best airplanes,” Boeing CEO Kelly Ortberg wrote in a memo to employees on Friday. “There are a lot of people depending on us.”
It will take a majority vote of union members to approve the contract offer. If workers ratify the deal, they can return to work as early as Wednesday, the union said.
“The decision to end this strike is right where it needs to be — in the membership’s hands,” Holden and the negotiating committee said in their public letter.
(NEW YORK) — Much like its fellow fast food competitors slashing prices and offering special discounts to lure in customers, Arby’s is adding a new deal to its menu with its Double the Meats Meal.
For just $7, the new Double the Meats Meal includes a Double Roast Beef or Double Beef ‘N Cheddar sandwich, along with a medium fry and medium drink.
The Double Roast Beef sandwich boasts two times the amount of slowly roasted, thinly sliced-to-order, signature roast beef piled high on a toasted sesame seed bun.
The Double Beef ‘N Cheddar also piles on a double portion of roast beef, topped with cheddar sauce and zesty Red Ranch, served on a toasted onion roll.
The new deal comes on the heels of similar promotions and discounts from Arby’s competitors. In June, McDonald’s launched a $5 Meal Deal that includes a McDouble or McChicken sandwich, small french fries, a four-piece Chicken McNuggets and a small soft drink. Earlier this month, the fast food giant extended the popular deal through December.
Several other fast food chains including Burger King, Wendy’s, Starbucks and Taco Bell have rolled out comparable discounts, hoping to entice customers looking to stretch their dollars as much as possible.
The Rimac Nevera electric hypercar holds more than 20 performance records. — Rimac Group
(NEW YORK) — Mate Rimac has a tall order: trying to convince drivers that electric supercars are superior to combustion vehicles.
Rimac, the 36-year-old engineering savant from Croatia who started his namesake company 15 years ago, recently pulled the sheet of his latest creation: the Nevera R, an aerodynamically perfected supercar designed to hug every tight corner and give maximum driving pleasure. The performance numbers are nearly impossible to comprehend: 2,107 horsepower and a 0-60 mph time of 1.74 seconds.
This insanely powerful supercar is breaking industry records. There are, however, snags in Rimac’s master plan. He has acknowledged that turning enthusiasts to electric proselytes could take months, if not years.
Rimac spoke to ABC News earlier this month about the challenges of selling his seven-figure sports cars, taking over French marque Bugatti as CEO and why government officials are making a mistake by pushing electric-vehicle mandates. He’s also a big supporter of autonomous driving.
The interview below has been edited.
ABC News: You introduced the Nevera R electric hypercar to the world at Monterey Car Week. The horsepower that car produces — 2,107! — is mind-blowing. How did you accomplish this?
Mate: I started the company 15 years ago when I was like 20 years old in order to push the limits and show what technology can bring to the table … that the future of automotive is not going to be boring. And the whole goal, my whole focus of the company and of me the last few years, has been to achieve that. It’s not just the car. It’s building the capabilities, the company around it, to actually do it in Croatia, a country that has never built cars before.
The last 15 years of this journey has been leading up to developing this technology, the team, the resources, the factory, the equipment and actually a whole industry.
ABC News: Is horsepower the one metric that matters most to your customers?
Mate: No, absolutely not. It’s the whole package. So performance is being commoditized right now. More and more cars come to the market at a relatively affordable cost that offer quite good performance, incredible performance actually when you compare it to a few years ago when it was only reserved for extreme hypercars. It’s all about emotions and that’s always a challenge with electric cars: How do you convey emotion without the sound of a combustion engine? But everyone who tries a Nevera is like, “Yes, we can see that this car was developed by people who love cars, like proper car guys.” Despite being electric, the Nevera offers a lot of emotion. That’s the most important thing.
ABC News: And how exactly are you delivering that emotion?
Mate: Well, there’s different things. The Nevera has four electric motors that can do crazy drift modes and on a flip of a switch it’s like a track monster. Everything changes — the suspension, the power distribution, it goes from rear-wheel drive to all-wheel drive, it can adjust it exactly as you want. Like it gives a totally different experience.
Emotion for me is the ability to go sideways, to control the car, stuff like that. And we can do all of that with this car.
ABC News: Why are you limiting production of the Nevera R to 40 units? When does production begin?
Mate: The Nevera was 150 units, and the Nevera R is 40 additional. We want to keep exclusivity. The Bugatti Tourbillon is limited to 250 and we could have sold a lot more, but for us it’s important to have exclusivity and it’s also important for the value of the cars later.
We start production early next year and the cost of a Nevera R is 2.3 million euros.
ABC News: Here we are, talking about the electric Nevera R, an engineering triumph, but you made a comment this past spring that high-end buyers don’t want electric supercars. Is that still true? Are you having trouble selling the Nevera to enthusiasts?
Mate: I think electric cars, in any category, need to bring something special. Just making an car electric is not going to cut it. People are thinking, “Let’s just make an electric car and it will sell … or the regulation will force people to go electric.” And I am not totally against that — I am totally against forcing this on people who don’t want an electric car. I am all for bringing something unique, something cool, something different that’s better and maybe more affordable — maybe not in this market segment but in general.
An electric car should be better in every aspect, including price, compared to its competition and then people will buy it.
ABC News: There’s another trend in the industry where automakers are taking electric sports cars but giving them gearboxes and fake engine sounds. Is this something you’ve thought about?
Mate: No, we don’t do this. We have decided from the beginning we only do authentic things. There are no fake sounds, there are no artificial gear shift changes. The Hyundai Ioniq 5 Ns have that, it’s a gimmick. But we don’t think that’s appropriate for this category of cars.
ABC News: When do you think electric sports and supercars cars will be widely accepted?
Mate: Oh, I think that will be a while. People in this segment still prefer combustion cars. But I think we are the player when it comes to electric performance in this segment.
ABC News: So will the next Rimac sports car or Nevera successor have an internal combustion engine?
Mate: It could be anything. From the beginning, I never said that we are exclusively electric. We were whatever is most exciting. The Nevera R has four electric motors — that is not something you can achieve with a combustion engine. But when it comes to power source, it can be anything. It could be a combustion engine with an interesting fuel, it could be fuel cell that does not run on hydrogen. We are really looking at lots of stuff. The next car doesn’t necessarily have to be purely electric — whatever is most exciting and most technically interesting. I have been doing electric cars now for 15 years … I am very excited to look at other stuff as well.
ABC News: Where are you seeing the most demand for your cars?
Mate: The U.S. is the biggest customer base, closely after that is Europe. So like 40% [of sales] are in the U.S., 30% is Europe and then the rest of the world.
ABC News: What are the challenges of running two high performance and ultra luxe brands like Bugatti and Rimac? They compete for the same customers and that’s a very limited pool.
Mate: These customers have multiple cars, it’s not just like they buy just one car. They want to be a part of something. It’s about the people behind it, it’s about the events, meeting each other. [Customers] are becoming part of a story. They’re also becoming a part of history. We are creating history together.
Many of the customers decided to join Rimac because they’re also part of Bugatti or vice versa and they deal with the same people, they go to Croatia, they have the Croatia experience, so it actually works well. With Bugatti you have to be careful, it’s an old brand with a lot of heritage. You have to be very respectful to the brand. You cannot do something that’s crazy. A lot of our Nevera customers are also Bugatti customers.
ABC News: What is the biggest obstacle for all automakers and the industry right now?
Mate: There are three big topics. One is electrification. A lot of people invested a lot into electrification and maybe it was a bit too fast. The other area is China. The third one is autonomous driving and finding new ways of moving around where ownership isn’t really necessary anymore. The lower-end brands are really in the trenches, they have issues. It’s for sure an interesting time and in the next year we’ll see lots of changes in the industry.
ABC News: There are concerns about a recession in the U.S. Has the company been impacted at all?
Mate: This talk has been going on for years, basically since COVID started. We have never been more successful. We sold out of the Tourbillon — all 250 cars. We just presented it two months ago. It’s completely sold out. We are basically sold out until the end of this decade with Bugatti for a car that’s $4.6 million. The market is still strong in this segment.
ABC News: You’re also developing a driverless robotaxi that could be in service as soon as 2026. These types of vehicles have received a lot of bad press lately and have been involved in serious safety accidents. Why robotaxis? You design cars for real-life drivers.
Mate: Yeah, but do you really like to drive in every situation? Like how many times would you rather spend your time doing something else — watching a movie, or typing on your phone or typing some emails but you can’t because you’re driving or even worse you’re doing it while you’re driving. Not every drive is necessarily exciting and let’s be honest — how many people really care about it? I am not saying car ownership should go away or people shouldn’t drive cars anymore. God forbid.
We just think it makes sense. When an autonomous car in this stage has an accident, even if it’s a minor one, of course it will be blown out of proportion. But eventually autonomous cars will be a lot safer, a lot safer than human drivers and they will save millions of lives.
ABC News: So you have taken over Bugatti, you’re building electric hypercars and you also want to build robotaxis.
What is next on your list to accomplish?
Mate: [laughs]. Oh Jesus Christ, nothing. I made a vow to myself to finish all these things and then I don’t know. I might take a long vacation.
