Car Dealers Are Renting Cars to Display
That’s because their lots are empty, and it now seems the chip shortage could last for years.
Good morning! .
Here are today’s highlights:
The overheated housing market may be cooling off.
United Airlines employees are 97 percent vaccinated—but six are suing.
Supplemental unemployment benefits have ended, but there’s been no surge in hiring.
Should non-compete clauses be legal?
Facebook says Facebook ads are more effective than its own tools suggest—and blames Apple: “In a blog post Wednesday, Graham Mudd, Facebook’s vice president of product marketing, said the company has heard from many advertisers that privacy changes in the online advertising industry have had a greater-than-expected impact on their operations. Mr. Mudd suggested that Facebook’s tools may be underreporting information such as sales and app installs, meaning that ad campaigns on the platform are showing better results than the data show. Facebook estimates that its tools are undercounting how often campaigns are driving iOS users to visit a website and take an action, otherwise known as a website conversion, by about 15 percent, according to the blog post.”
“Mr. Mudd also said Facebook has embarked on a multiyear effort to develop technologies that collect less personal identifying information from users but still allow it to show personalized ads and measure their effectiveness.”
“The company has generated more than $54 billion in revenue from advertising in the first six months of this year, up from roughly $36 billion in revenue during the same period last year.” READ MORE
The chip shortage will cost automakers more than $2 billion in sales: “That’s the latest dire forecast from AlixPartners, which predicts global automakers will build 7.7 million fewer vehicles due to the chip crisis this year. That’s almost double the consultant’s previous estimate of 3.9 million. Despite ongoing efforts to shore up the supply chain, semiconductor availability has worsened as automakers exhaust stockpiles and other industries have no more to spare.”
“‘The barrel is empty, there’s nothing left to scrape,’ Dan Hearsch, managing director of AlixPartners automotive and industrial practice, said in an interview.”
“Key supply centers in Southeast Asia have been hit with factory shutdowns as Covid-19 outbreaks spread. It now takes a record 21 weeks to fill chip orders and auto executives say the shortage could last for years.”
“As inventory on dealers’ lots has dwindled, car prices have skyrocketed, reaching a record $43,355 in the U.S. in August, according to researcher Cox Automotive.”
“Supply is so constrained, some dealers have resorted to renting cars so they have something to display in their showrooms, Hearsch said.” READ MORE
There are signs the overheated housing market is cooling off as some shoppers take a pause: “August existing-home sales posted a 2 percent decline from July, the biggest monthly decline since April, the National Association of Realtors said Wednesday. Sales last month also slid 1.5 percent from a year earlier, the first year-over-year decrease since June 2020. Home sales surged in the second half of last year and first half of 2021 after pandemic-related lockdowns pushed the normally busy spring selling season into the fall and winter. As lockdowns lifted, buyers raced to find more space for their families to work and attend school from home, and wealthy households invested in vacation properties.”
“Families have resettled and are sending their children back to school. More workers are starting to return to their offices.”
“Some prospective buyers can no longer afford to buy, and others have taken a break from house hunting after losing out on multiple offers, real-estate agents say.”
“While home prices remain near record highs, the pace of price growth is also slowing. The median existing-home price rose 14.9 percent in August from a year earlier, NAR said, to $356,700. That is down from a nearly 18 percent increase the prior month.” READ MORE
Six employees have sued United Airlines over its vaccine mandate: “The suit, filed Tuesday in federal court in the Northern District of Texas, alleges that the company is discriminating against employees who have a religious objection to receiving the vaccine, or who qualify for accommodations on medical grounds. The employees allege that United has made it difficult for employees to seek such accommodations and effectively terminates those who secure them. United said in August that it would require all U.S. employees to be vaccinated against Covid-19 or face termination, making it the first major airline and one of the first large U.S. companies to announce such a requirement.”
“The employees’ legal challenge shows the difficult decisions companies face as they develop and enforce new policies around Covid-19 vaccinations.”
“United Chief Executive Scott Kirby has said he believes requiring vaccines for all employees is crucial to keeping them safe and helping raise vaccination rates.”
“United said that about 97 percent of its employees, excluding those who have sought exemptions, now have been vaccinated against the coronavirus.” READ MORE
The end of supplemental unemployment benefits has not produced the surge of employment many expected: “Emergency unemployment benefits in the U.S. expired two weeks ago, but employers who expected an increase in job applications are still largely waiting for them to roll in. Federal programs that had offered an extra $300 per week for jobless Americans, provided extended benefits for the long-term unemployed and gave special aid for the self-employed expired Sept. 6. Economists and companies expected a wave of interest from workers as the financial lifeline was pulled away, hoping it would provide the incentive to get back into the workplace.”
“Joanie Bily, chief workforce analyst at Atlanta-based EmployBridge, was one of the people who thought that her company would see a ‘significant increase’ in the number of online applications once boosted benefits ended.”
“‘I’ve been asking all of our locations across the U.S.: Are you busier? How does it feel since the benefits have ended?’ said Bily, whose firm connects employees with companies across the U.S., focusing on manufacturing, logistics, and call centers. ‘I pulled the data last night and I thought it would be better, but it’s not.’”
“In the restaurant industry, job applications have declined about 3 percent to 4 percent each week for the past nine weeks, including the period following the expiry of boosted benefits, according to Restaurant365, a restaurant-management software company.” READ MORE
Perhaps there’s another explanation for the labor shortage:
Liz Ann Sonders @LizAnnSondersU.S. is seeing nearly 2 million more retirements than would be expected as per pre-COVID trend line @SoberLook @uscensusbureau @ipums @DeutscheBank https://t.co/f9inX4HYy6
Daniel Kahneman says companies should ask each job candidate the same questions: “You have to break up the problem into attributes of the candidate and score each attribute sequentially. That’s the method I put in place 65 years ago when I set up an interviewing system for the Israeli army. No prediction of performance is very good, but this way is quite a bit better.”
“The simplest thing is to list the attributes of the job before you interview. Pick maybe half a dozen traits needed to succeed, whether punctuality, technical skill, even anger management. Then think of questions that can help you determine if candidates have these attributes.”
“List the questions for each trait and score each trait, maybe from one to 10, before moving to the next.”
“Ask the same questions, in the same order, of each candidate.” READ MORE
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An EPA ruling aims to cut the use of hydrofluorocarbons 85 percent over 15 years: “There is broad bipartisan support for curbing these super-pollutants, which are short-lived and often used in refrigeration and air conditioning White House officials said the new rule tackles global warming while supporting jobs to manufacture new alternatives.”
“The EPA is putting a cap on hydrofluorocarbons through 2023, allocating allowances for companies to make or import them over the next two years. The agency will scale back their use further through 2036 with additional regulation.”
“Seepage of the super-pollutants is pervasive at many U.S. supermarkets, where networks of chiller pipes leak the invisible gases. Several big chains, including Aldi and Amazon-owned Whole Foods, have taken steps to use alternative refrigerants in stores.”
“Stephen Yurek, head of the Air-Conditioning, Heating and Refrigeration Institute, a trade group, said in a statement that the rule is ‘a critical step in the 15-year industry-supported process of phasing down HFCs and represents a win for both the climate and the American economy.’” READ MORE
Gopuff, the fast-growing delivery-app startup, is opening physical stores: “The Philadelphia-based company plans to open a retail store in San Francisco, selling a wide range of items that include ice cream and Covid-19 testing kits, according to an application submitted to the city’s Planning Commission. The 12,000-square-foot site would help the firm fulfill online orders, too. Gopuff already has storefronts open in Florida and Texas, according to the company. It also owns more than 160 BevMo! stores after buying the California liquor delivery service last year.”
“[The startup] now sports a valuation of $15 billion and offers its roughly 30-minute deliveries in more than 1,000 cities.” READ MORE
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Should non-compete clauses be legal? “Proponents say non-compete agreements reduce the risk that trade secrets and other intellectual property will be expropriated by departing executives and provide greater incentives for companies to train and educate employees. Opponents say non-competes prevent talent from being leveraged toward growth and progress, which hurts innovation.”
Yes: “Imagine you’re a partner at a venture-capital fund considering whether to invest in a startup—call it Alpha—that has developed proprietary, AI-based algorithms to predict market trends. You discover that Alpha’s chief executive officer isn’t bound by a ‘covenant not to compete,’ a contractual clause that restricts employees from working at competitors for a limited time—usually one or two years—after they leave. How concerned should you be?”
No: “Enforcement of non-competes favors incumbent firms by making it harder for startups to recruit experienced executives. Markets, in turn, become more concentrated. There are cases where a new employer can negotiate the release of an executive from a previous employer’s non-compete. But more often, established companies with ample resources can use non-compete litigation strategically, chilling movement of talent to startups that lack the resources to contest noncompetes in court.” READ MORE
THE 21 HATS PODCAST
Can an Entrepreneur Raise an Entrepreneur? This week, in episode 77, Jay Goltz and Diana Lee discuss the dangers of mixing entrepreneurship and parenting. As it happens, Jay and Diana were both raised in family businesses, but they offer contrasting approaches to the challenges of raising a family and building a business. Plus: what the upheaval in the auto industry means for Diana, how to think about the president’s vaccine mandate, and whether Jay has resolved his crazy double-billing problem with AT&T.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren