GM Layoffs; United Technologies To Split; Dan Loeb And Campbell’s Kiss And Make Up

by 3 weeks ago

The Water Coolest

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THE HEADLINES

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ALLOW ME TO REINTRODUCE MYSELF

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GM is finishing what the coal and steel industry started … the complete and utter economic undoing of the Rust Belt. GM will layoff some 14k employees and close multiple factories as part of a broader cost saving scheme. GM estimates the cuts will save $6B per year by the end of 2020. Note that there may be some overlap between previously announced voluntary buyouts of long-tenured employees.

Both salaried and factory workers, including 6k blue collar plant employees and 8k of the company’s “suits,” will be forced to live in a van down by the river … or at the very least find a new employer. Plants in Detroit, Ohio, and Baltimore are earmarked for closure. You know, only economic bastions that just scream “we shall overcome.” A Toronto plant will also be closed, and Justin Trudeau is already playing the I’m not mad, I’m disappointed card in true Canadian fashion. Unsurprisingly, the White House is also mad as hell.

As consumer sentiment shifts, so does GM’s lineup of vehicles. Sedans are being replaced by crossovers and SUVs in garages across America. In turn, the Buick LaCrosse, Chevy Impala, Cadillac CT6, Chevy Volt, and the Chevy Cruze compact (and the factories that make them) will be jettisoned from General Motor’s portfolio.

The times they are a-changin’ in the automotive industry: tech bros named Hunter with degrees from places like MIT are replacing middle-aged men named Chet who love taking Nance to the local Chili’s. GM has grown its autonomous/electric vehicle division, Cruise, by 1k employees in the past year alone and is on track to pour $1B into the group in 2018.

Water Cooler Talking Point: “‘Merry Christmas ya filthy animals’ – Mary Barra, probably.”

 

THE END OF AN ERA

All good things must come to an end. Just like The Beatles and Creed before it, United Technologies, one of the last great American industrial conglomerates, is breaking up. The company plans to announce its split into three individual companies later today.

United Technologies will remain intact. However, the company is breaking off its Otis and Carrier branches, which make and service elevators and HVAC systems, respectively. The split is set to be finalized by 2020.

UTC’s move comes after the company finalized a $23B deal to acquire Rockwell Collins, an aviation electronics manufacturer. The “United Technologies” brand will live on as a pure aerospace play, which includes Rockwell Collins, Pratt & Whitney, and UTC Aerospace Systems.

Water Cooler Talking Point: “Great, so now if I want to buy a jet engine, an elevator, and an industrial-grade air conditioner, I have to make three trips?”

 

LOCKED AND LOEB-ED

“It’s all for naught.” – Eeyore, and probably Dan Loeb.

When he isn’t busy preaching about the end of the world as we know it, eternal pessimist and prolific activist investor Dan Loeb is busy throwing shade at a condensed soup company. But it appears that the proxy fight between Dan Loeb’s Third Point and Campbell’s soup is finally over.

Loeb, who owns roughly 10% of Campbell’s shares, accused the maker of Chunky of “mismanagement, waste, ill-conceived strategy, and inept execution.” What began with the glass-half-empty hedgie recommending that the company replace the entire board and sell itself ended with a compromise: Third Point was awarded two seats on the board. AKA Campbell’s told Loeb “no soup for you!”

Campbell’s placated Danny Activism by allowing Third Point to appoint former Gerber CEO Kurt Schmidt and Comscore president Sarah Hofstetter to the board, expanding it to 14 directors. TP will also “have a say in choosing a CEO” (read: be allowed to be in the room while its CEO candidate is overlooked). In return the hedge fund will drop its lawsuit and pinky promise that it will stop penning strongly worded letters to the soup company.

Water Cooler Talking Point: “Can we all agree that these nominations are a slap in the face to Donovan McNabb and his mama?”

 


IN OTHER NEWS

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  • Donny Politics has suggested that a 10% tariff could be placed on iPhones and computers that are imported from China. He also said it’s “highly unlikely” that he would delay an increase in tariffs from 10% to 25% slated for January 1st, which is just four days before a summit with Chinese president Xi Jinping. If the two countries don’t make a deal he said that he plans to place tariffs on $267B worth of goods that remain duty free.

 

  • Satya Nadella may have needed a new pair of neatly pressed chinos after the morning he had. Microsoft briefly overtook Apple as the most valuable company in the world for the first time in eight years. Microsoft hit a market cap value of $812.93B, ever so slightly topping Apple’s $812.60B. Suck it, Bezos.

 

  • Fiat Chrysler is looking into selling its robotic arm division, Comau, for between $1.7B and $2.3B. Sale of the unit would allow Fiat to focus its resources on building and selling cars. It’s worth noting that the strategic review is in its early stages and no final decision has been made.

 

  • Dave Stephenson, come on down. Airbnb has filled their CFO vacancy with Mr. Stephenson, the former VP and CFO of Amazon’s Worldwide Consumer Organization. This comes at an important time for Airbnb ahead of an anticipated IPO in the next year.

 

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