Discover more from The 21 Hats Morning Report
‘I’m Not Going to Back Down’
An Australian entrepreneur risks everything to fight an American trademark.
Good morning!
Today’s highlights: Manufacturers turn to ‘second-chance’ employees. Staffers strike over a CEO’s stance on remote work. Regulators go after ‘death zone’ warehouses.
INTELLECTUAL PROPERTY
An Australian company’s attempt to scrap a U.S. trademark on the word “Ugg” has been rejected by an American appellate court: “It’s the latest step in a five-year, high-stakes legal battle between the brand’s owner in the United States, Deckers Outdoor Corporation, and a company called Australian Leather. They have been wrangling over ownership of the name of a shoe that has been derided as unfashionable and downright ugly but that has still found its way onto the feet of celebrities like Oprah Winfrey and Tom Brady. ... In Australia, the word is used as a catchall term for sheepskin boots lined with fleece that have been made since the 1930s. They were popularized by surfers in the 1960s. The term isn’t trademarked there, and anyone can sell ugg boots. It was registered as a brand in the United States in the 1980s by the Australian entrepreneur Brian Smith.”
“Dean Wilkie, a senior lecturer in branding and marketing at the University of Adelaide, said: ‘In the Australia market, a regular person on the street, if you go up to them and say do you think it’s right that this American brand is stopping people using ‘ugg’ on sheepskin boots, most of us would be outraged ...’”
“On the other hand, he acknowledged, Deckers spent years building up Uggs into a sophisticated lifestyle brand — a far cry from the situation in Australia …”
[Australian Leather’s owner, Eddie Oygur] “put everything on the line: the business he had run for nearly 40 years and a house he had mortgaged to pay his legal fees. He said he had spent over a million dollars on the case, lost the majority of his staff and seen the legal challenge scare off many of his customers.”
“‘God help me, I’m not going to back down,’ he said. ‘They gave me no choice. Absolutely no choice.’” READ MORE
HUMAN RESOURCES
On Friday, the CEO of Washingtonian magazine published an op-ed (highlighted in Friday’s Morning Report) under the headline, ‘As a CEO, I want my employees to understand the risks of not returning to work in the office.’: “‘Although there might be some pains and anxiety going back into the office, the biggest benefit for workers may be simple job security,’ [CEO Cathy Merrill] wrote in her conclusion. ‘Remember something every manager knows: The hardest people to let go are the ones you know.’ Washingtonian staffers were shocked. Many perceived the op-ed to be directed in part to them — a veiled threat to their jobs.’”
“By Friday morning, many of Washingtonian’s editorial staff of about 25 pledged that they wouldn’t publish anything on the magazine’s website or social media channels for the day.”
“Merrill has spent the hours since the op-ed published doing damage control. About 10 minutes before her employees announced their strike on Twitter, she sent them a memo saying she would not change their health-care coverage, retirement plans or status to contractors.”
“My intent was to write about how worried I and other CEOs are about preserving the cultures we built up in our offices,’ she told employees. ‘But I understand that some of you have read it as threatening.’” READ MORE
Manufacturers are giving workers with criminal records another chance: “The manufacturing sector has 500,000 jobs open today — a number that will swell to 4 million over the course of the next decade. Finding workers to fill those jobs is a challenge. To help bridge the gap, The Manufacturing Institute, the workforce development and education partner of the National Association of Manufacturers, recently announced a new partnership with the Charles Koch Institute to expand so-called second chance hiring opportunities in the industry, following the model Nehemiah has been working on for 11 years.”
“Out of Nehemiah [Manufacturing’s] 180 employees, nearly 80 percent are ‘second chance’ hires, part of a greater push for inclusive capitalism the company first embraced a decade ago.’
“One in three Americans have a criminal record, and the partnership and accompanying grant will allow NAM to help educate and provide resources for manufacturing employers to attract and retain new talent, said Carolyn Lee, executive director of The Manufacturing Institute.”
“‘There are high rates of retention for the second chance population. It can be a great platform and a pathway to a successful career with the manufacturer,’ Lee said.” READ MORE
Uber and Lyft are being forced to pay what they say are record wages: “Uber and Lyft are facing a supply shortage, as returning and newly vaccinated customers again flood the apps, only to find out there aren’t enough drivers to serve them. It’s resulting in longer wait times and higher fares for riders. The companies cited drivers’ ongoing hesitance regarding fears of contracting the coronavirus and lingering concerns that demand has dried up, even as customers in many major cities have resumed riding. Uber and Lyft are offering incentives and paying out what they say are record wages as they attempt to lure drivers back to the apps.”
“‘One of our top priorities is to rebuild the driver base,’ Uber CEO Dara Khosrowshahi said on Wednesday’s company earnings call. ‘With demand currently outstripping supply, driver earnings are at historically elevated levels.’”
“Khosrowshahi said on the call that driver earnings are at ‘historically elevated levels,’ with median earnings of $37 an hour in New York and Philadelphia, $36 in Chicago and $33 in Austin, well over what drivers might typically earn.” READ MORE
THE ECONOMY
Was the disappointing April jobs report just a blip—or evidence of something bigger: “From Wall Street to the White House, expectations were high for a hiring surge in April with potentially a million Americans returning to work. Instead, the world learned Friday that just 266,000 jobs were added, a massive disappointment that raises questions about whether the recovery is on track. ... One way to make sense of this weak jobs report is to do what Wall Street did and shrug it off as an anomaly. ... But another way to look at this is there is a great reassessment going on in the U.S. economy. It’s happening on a lot of different levels. At the most basic level, people are still hesitant to return to work until they are fully vaccinated and their children are back in school and day care full time.”
“All the job gains in April went to men. The number of women employed or looking for work fell by 64,000, a reminder that child-care issues are still in play.”
“A Pew Research Center survey this year found that 66 percent of the unemployed had ‘seriously considered’ changing their field of work, a far greater percentage than during the Great Recession.”
“The average hourly rate in the hospitality sector is up roughly $1 compared to the pre-pandemic going rate. But the bigger issue appears to be that warehouses have hiked wages by more than a dollar and now pay $26 an hour on average — far more than the roughly $18 average in hospitality.” READ MORE
Prices continue to rise up and down supply chains: “Costs are rising at every step in the production of many goods. Prices for oil, crops and other commodities have shot up this year. Trucking companies are paying scarce drivers more to take those materials to factories and construction sites. As a result, companies are charging more for foods and consumer products including foil wraps and disposable cups. Kellogg, maker of Frosted Flakes, Cheez-Its and Pringles, said Thursday that higher costs for ingredients, labor and shipping are pushing it and other food makers to raise prices. ‘We haven’t seen this type of inflation in many, many years,’ Chief Executive Officer Steve Cahillane said.”
“Investors and economists are watching whether the higher prices drive up broader measures of inflation, which have been muted for years.”
“As higher costs ripple through supply chains, more companies are concluding that their customers will accept higher prices.” READ MORE
REGULATION
Air quality officials in Southern California are going after warehouse distribution centers: “The rules apply to nearly 3,000 warehouses across the region and mark the first comprehensive effort to limit the environmental impacts of the booming goods-movement industry. As massive logistics warehouses have proliferated in areas that are disproportionately Black and Latino, increasing numbers of diesel trucks are plying routes closer to homes, schools and neighborhoods that are already burdened with some of the dirtiest air in the nation.”
“The regulations will have the greatest effect in the Inland Empire, where relatively cheap land within a reasonable drive of the nation’s largest port complex has triggered development of massive distribution and fulfillment centers, including mega-warehouses that exceed 1 million square feet.”
“Dubbed both America’s shopping cart’ and ‘diesel death zones,’ these communities have only grown busier during the COVID-19 pandemic, as online shopping pushes the volume of cargo moving through the region to record levels.”
“Under the rules, warehouses 100,000 square feet or larger — about the size of two football fields — must take steps to cut or offset emissions associated with their operations or pay a mitigation fee to fund similar air quality improvements nearby.” READ MORE
SOCIAL MEDIA
Clubhouse is finally available on Android—even as iPhone downloads collapse: “The rollout comes after iPhone app downloads tumbled to about 922,000 downloads worldwide in April, down from 2.7 million installs in March and 9.6 million in February, according to app analytics company Sensor Tower. Clubhouse lets users listen into conversations as they're happening live as a twist on podcasts. Its debut a little more than a year ago, at a time when people were desperate for human connection during coronavirus pandemic lockdowns, helped the app take off in popularity.” READ MORE
OBITUARY
Paul Van Doren, co-founder of iconic Vans Shoes has died at 90: “‘Paul was not just an entrepreneur; he was an innovator. The Van Doren Rubber Co. was the culmination of a lifetime of experimentation and hard work in the shoe industry. Like Paul, from the first day of business, Vans was uniquely innovative. When the first Vans store opened, there were no stand-alone retail stores just for sneakers. Paul’s bold experiments in product design, distribution, and marketing, along with his knack for numbers, and a genius for efficiency turned Paul’s family shoe business into an all-American success story.”
“The business was so new that many of the boxes on the shelves didn’t actually have shoes in them. First-day customers — between 12 and 16 in all — tried on samples and placed orders. The shoes were manufactured onsite overnight and picked up the next day.”
“An early embrace by the skateboarding crowd, which would often seek a single replacement shoe (the uneven wear a result of braking or sliding with a particular foot), helped buoy the young company.”
“In 1982, the company saw its fortunes change dramatically when Sean Penn wore a pair of black-and-white checkerboard slip-ons in his Jeff Spicoli surfer-stoner role in ‘Fast Times at Ridgemont High.’”
“‘Fast Times’ definitely put us on the map,’ Van Doren said in 2016. ‘We were about a $20-million company before the movie came out, and we were on track for $40 million to $45 million after that.’” READ MORE
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