When the vultures come…
Fear the vulture and the vulture will come. Fear nothing and you are the vulture. — Suzy Kassem
Elon Musk really set the cat among the pigeons recently with his plans to re-open the Fremont Tesla plant for production against Alameda county’s demands it remain shut until May 18th.
Whether you agreed with Musk or not, any legal action taken against him, and him against Alameda county, would have likely to have been the first of many bitter lawsuits that will come in the wake of COVID-19. Yes, lawsuits were always likely to some degree post-COVID, but we are waiting for a catalyst, something that will act as a tipping point. Alameda backed off eventually, but the threat of an event that sparks widespread litigation against local governments over COVID-19 still haunts us.
When the pandemic eventually recedes, and life begins to return to some form of new normal, many are going to be left picking up the pieces of their lives, former businesses and jobs.
It’s at this point the vultures will come.
Auto Manufacturing
In March of this year many of the auto-manufacturers in conjunction with the UAW took the lead on the COVID-19 situation. They negotiated with one another and then shut down production at their North American plants.
Ford and GM’s announcement of the plant shutdown followed a negotiation with the United Auto Workers. — Car And Driver
Autoworkers were furloughed, but the companies continued to move forward with shipments to dealerships, having employees work remotely, sanitizing manufacturing locations and updating their plans for re-opening plants based upon safety and perceived sales. The key point here was this was largely done by the manufacturer in response to market conditions and internal pressure. As the situation has eased overseas, plants have re-opened. Additionally, some US plants re-opened to produce PPE and ventilators for healthcare workers.
As March gave way to April the larger manufacturers pushed their reopening dates into May, while smaller companies and suppliers in some states began to kick back into gear, following CDC guidelines. Effectively following the same recommendations that manufacturers, factories and shippers deemed essential by various states and the federal government had followed throughout the pandemic so far.
While production had been suspended, some states such as Michigan brought in stay at home orders. As the auto-manufacturers pushed forward with reopening dates in May, these states either through negotiation with the manufacturers, or of their own volition granted them permissions to commence production again, avoiding lengthy legal battles. When May snuck up upon us Mercedes-Benz among others were already back in operation in the South and had been since the end of April.
Regardless of your position on the rights and wrongs of opening up the manufacturing base again, this is, simply how it is right now and how it went down.
Then the Tesla situation blew up (and it wasn’t related to the charger, no!)in California.
Tesla, California and lock-downs.
The short story is that, Alameda county in California, where Tesla has a manufacturing facility was in negotiation with Tesla execs on when to reopen. Musk, who seems to have had a bee in his bonnet over the general manner in which lock downs have been rolled out was pushing for May 8th, while the county was pushing for May 18th.
Things began to break down on Thursday, Mr. Haggerty said, when a Tesla executive called him and told him Mr. Musk was thinking about suing him. — Neal Boudette and Emily Flitter — New York Times
Allegedly the two parties came to blows, and Musk threatened to sue, and then tweeted the following:
The interesting byproduct of this, isn’t whether Musk got to open early (in the end he did). It isn’t whether he is right or wrong, petulant or a genius. It’s not whether the county had the right to do this, or was even right to do this.
No, it’s these two things:
- How were businesses across the country deemed essential in the pandemic and what advantages did this give some companies over others?
- If the rules applied to essential businesses are deemed good enough, what is the barrier to allowing other industries to adopt them and re-open?
And it’s is precisely because of these two questions, a litigation tsunami is likely to start.
Regardless if you believe Ford and GM should have stopped shipping already manufactured vehicles to dealerships, or Tire factories should have ceased production until June, as far as we can see the major manufacturers drove the shut down of their own facilities based on the afore mentioned market conditions and have reopened based upon them, with states and counties working alongside or at the very least not standing in their way.
While auto plants have come back to life, the Tesla plant in Fremont was idled, not due to market conditions but due to the local county refusing to permit them to be opened on health grounds. This raises the question, were Tesla back then given the option to apply the same rules that Amazon, who run a fulfillment center down the road adhere to, in order to open early? In turn if not, did Tesla act in good faith and offer to provide the same protection or better than what Amazon had been providing? There seems to have been some effort on their part based upon their published Return to Work playbook that was circulating last month.
So if Alameda couldn’t show a good reason on why they delayed auto-manufacturing opening based upon localized conditions while other counties in CA not to mentioned other states in the union re-opened then storm clouds are on the horizon. And from where we are standing, the sky is looking awfully grey right now. Alameda ended up conceding and giving Musk his way, but a precedence was surely set?
Of course it’s not just a problem for Fremont, but for any state, county or city attempting to navigate the minefield that is COVID-19. This smells like a legal nightmare as these political entities are forced in the face of bankrupt businesses and high unemployment to justify their actions.
What happens when accusations of “picking the winner” start to be made? When “discovery” finds emails along the lines of “Fuck you <insert CEO>” among the inboxes of those driving the state lock-down mandates? The vultures will feast. And it will be taxpayers money in already strapped towns and cities funding the banquet.
Meanwhile, some corporations will be sitting back counting the fat profits they made.
Amazon — so what is essential?
Nearly 1 million retail workers were furloughed in a single week recently, according to the Washington Post, and more than 250,000 stores have been shuttered, according to GlobalData Retail. Some analysts predict 15,000 retail stores will close permanently this year, which would mark a 60 percent increase from last year’s record closures. — Amazon was already powerful — Vox — Jason Del Rey
Amazon has not only ridden through the pandemic avoiding blanket lock-down rules shuttering fulfillment centers, they’ve profited heavily from the pandemic.
While cards shops, gift stores and gaming outlets have been closed as non-essential, Amazon has scooped up their market share by being permitted to use amazon.com to sell non-essential items.
Now it is certainly true that these smaller locales can sell remotely, however they lack economies of scale and infrastructure that Amazon sports, and one of their key selling points — being a local brick and mortar store you just pop into has been negated by the stay and home orders.
Effectively franchises such as Hallmark stores have had to sit back and watch as Amazon ate up their business. One can only assume Hallmark and similar have captured some sales through their online platform, and not lost it to Amazon, when shoppers purchasing their 14th case of toilet paper, throw some birthday cards in too.
“They had the rug pulled out from under them and are unfairly disadvantaged, while their competitors, like Amazon, Walmart, and arguably Target are allowed to stay open and widen their lead,” said Sucharita Mulpuru, a retail analyst at Forrester research — Amazon was already powerful — Vox — Jason Del Rey
We don’t really know what things will look like once a vaccine has been achieved. We do know that around 43 million Americans have had to claim some sort of unemployment benefit. We do know the country is racked in turmoil over the murder of George Floyd. We do know many people will not have jobs to return to. We have an inept leader more interested in self-aggrandizement and fanning the flames of social unrest.
People are angry and somewhere the vultures are waiting, waiting for lawsuits to start. And states, towns and counties up and down this land will be forced to justify their actions in response to the Coronavirus. Actions taken in the light of poor and uncoordinated leadership from the top.
Questions will be asked about how decisions were made around essential businesses. They will be asked why Bezos was allowed to rack up billions, while other companies were hamstrung. We’ll discover we weren’t all in this together.
And we’ll all be paying for the vultures feast.
