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    Published on: March 30, 2023

    Howard Schultz, the three-time Starbucks CEO and current board member and significant shareholder in the coffee company, testified yesterday to the US Senate Committee on Health, Education, Labor and Pensions about the company's anti-union positions and whether it has violated federal labor laws.

    Schultz's position , essentially, was that a) employees have the right to unionize, b) the company has a right to offer a non-union future, c) Starbucks is more generous and benevolent than virtually any other US company, d) the company has adhered to the letter of the law, and e) his personal involvement in the union issue was minimal, since he spent the last year focused on the operations side of a company that had "lost its way" under the previous CEO, focusing more on Wall Street short-term targets as opposed to “playing the long game.”

    •  Some context from the Wall Street Journal:

    "U.S. baristas across 291 Starbucks stores have voted to unionize, representing roughly 3% of the chain’s 9,300 U.S. locations, the National Labor Relations Board said Monday. The federal agency said it had certified defeats for unionization votes at 58 locations. The single-store unions represented around 7,000 Starbucks employees, the NLRB said. 

    "Starbucks hasn’t signed a collective bargaining agreement since it began negotiating with the Starbucks Workers United union of baristas last October. The company has restricted most new perks allotted in the past year to nonunion stores, saying unionized locations need to bargain for the benefits."

    •  All Things Considered on National Public Radio set the scene:

    "It was a hearing for the history books: Billionaire Howard Schultz, the resolutely anti-union architect of Starbucks, faced Sen. Bernie Sanders, the outspoken champion of the union movement in Congress.

    "Schultz was once a prominent Democrat hailed as a progressive corporate pioneer of better pay and benefits for service industry workers. On Wednesday, under threat of subpoena, he appeared in the Senate to address allegations that Starbucks has been breaking labor laws as it fights its employees' nationwide unionization push."

    •  From the Seattle Times coverage:

    "The hearing, named 'No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks,' had Democrat senators criticizing Starbucks’ alleged labor-law violations and Republican senators defending the company’s actions, slamming Sanders for being biased, and criticizing the National Labor Relations Board. The crowd in attendance included Starbucks workers and union representatives.

    "Sanders said in his opening remarks that he would ask Schultz if he would commit to exchange proposals with the union as a first step toward collective bargaining. Schultz declined.

    "'What Starbucks is doing is not only trying to break unions, but even worse,' Sanders said. 'They are trying to break the spirit of workers who are struggling to improve their lives. And that is unforgivable.'

    "During the testimony, Schultz said several times that Starbucks will abide by the law and respect workers’ right to unionize. He said Starbucks will prove NLRB complaints, totaling 80, are untrue allegations … 'I support the law, and I also take offense with you categorizing me or Starbucks as a union buster when that is not true,' Schultz said."

    •  From Fox News:

    "In his opening statement to the committee, Schultz listed off a series of benefits Starbucks has offered its employees over the last four decades, noting it was the first company in the nation to offer share ownership to both full and part-time workers starting in 1991, which he called 'unprecedented.'

    "He said employee retention at Starbucks is twice the industry average, and the company offers paid sick leave, fully paid parental leave, and an array of other benefits.

    "'There's literally no company, no company in our competitive set of retail that offers higher value benefits than Starbucks in the United States,' Schultz told the panel."

    •  From the Wall Street Journal coverage:

    "Mr. Schultz defended the company’s preference to work directly with employees to meet their needs. He said that unionized stores now have twice the attrition rates than those that aren’t unionized, and baristas that had voted for a union often no longer work at company stores.

    "Asked about allegations that Starbucks closed stores with union activity, Mr. Schultz said that the company closed many profitable locations because of crime, drug use and homeless individuals that had made its workers feel unsafe."

    And, the Journal writes:

    "Mr. Schultz said that Starbucks 'unequivocally' hasn’t broken any federal labor laws and he was confident that the allegations would be proven false. 'We treat our people fairly. We have done nothing that is nefarious,' he said.

    "Some Senators also asked Mr. Schultz if it was fair to fight against baristas seeking to unionize for better pay and benefits when the company is generating billions of dollars in sales and the ex-CEO is personally wealthy. Mr. Schultz said Starbucks taps its profit to pay its workers an average wage of $17.50 an hour, and that he acquired his wealth through decades of work."

    •  From the Associated Press:

    "'We’ve done everything that we possibly can to respect the right under the law of our partners’ ability to join a union,' Schultz said. 'But conversely, we have consistently laid out our preference, without breaking any law, of communicating to our people what we believe is our vision for the company'."

    •  From the New York Times:

    "When Mr. Schultz appeared … he encountered a Democratic Party much changed since some of his earlier trips to Washington.

    "In 1994, President Bill Clinton invited Mr. Schultz to the White House for a private briefing on the company’s health care benefits. Two years later, the president praised Starbucks when introducing Mr. Schultz at a conference on corporate responsibility. At the time, Bernie Sanders was a backbencher in the House of Representatives.

    "On Wednesday, Mr. Sanders, now chairman of the Senate committee, appeared to regard Mr. Schultz with something bordering on disdain.

    "Before a question, Mr. Sanders, a Vermont independent who caucuses with the Democrats, felt the need to remind Mr. Schultz that federal law prohibits a witness from 'knowingly and willfully making' a false statement relevant to an inquiry. The chairman then asked him if he had participated in decisions to fire or discipline workers involved in a union campaign. (Mr. Schultz said he had not.)"

    •  From the Washington Post:

    "Under oath, Schultz rebutted being involved in decisions about firing or disciplining Starbucks union organizers. He said he had not taken part in closing unionizing stores. And he said he was not prepared to follow an order from an administrative law judge to distribute a video of himself reading a notice to Starbucks’ employees about their union rights.

    "'I am not, because Starbucks coffee company did not break the law,' Schultz said."

    •  From Slate:

    "Senator Bill Cassidy of Louisiana, the highest-ranking Republican on the HELP committee, followed Sanders’ opening statement by condemning the hearing, which 'clearly presumes that Mr. Schultz is guilty before the allegations are fully investigated.' He called it a 'smear campaign'."

    •  And more from the New York Times:

    "Senator Mitt Romney of Utah, a former chief executive, said it was 'somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job.' He suggested that while a union might be necessary at companies 'that are not good employers,' that was not the case at Starbucks."

    •  From The Hill:

    "Only a couple of Republicans were critical of Schultz. Sen. Roger Marshall (R-Kansas) said that the large number of unfair labor practice charges indicates there 'may be some smoke and fire together there.'

    "'Any large corporation shouldn’t necessarily be bragging about $15 to $20 wages,' Sen. Mike Braun (R-Indiana) told Schultz, adding that smaller, Main Street businesses typically pay more."

    •  More from Slate:

    "Witnesses testified in the second part of the hearing, including Starbucks workers who described in excruciating detail how the company cut hours for union supporters, leading to the loss of benefits. They also detailed how the scheduling system, insufficient wages, and expensive benefits forced many Starbucks employees to work second jobs - which was all the more difficult because the company required them to be on call even when they weren’t working."

    •  More from the AP:

    "Jaysin Saxton, a disabled U.S. Coast Guard veteran and former Starbucks shift supervisor, testified that the company fired him in July after he led a two-day strike at his Augusta, Georgia, store, which voted to unionize last spring. Saxton has filed unfair labor practice charges with the NLRB.

    "Prior to the union vote, Saxton said Starbucks flooded the store with managers who disciplined employees for minor violations and held required meetings where they threatened employees with a loss of benefits if they voted to unionize. After the union vote, he said, seven workers were fired and others at the store saw their hours cut."

    •  From Politico:

    "With over 80 legal complaints from the National Labor Relations Board against the company, though, Democrats on the Hill weren’t buying it. It made for a rough day for the Starbucks CEO.

    "'It is akin to someone ticketed for speeding 100 times saying ‘I’ve never violated the law because every single time the cop got it wrong,' said Sen. Chris Murphy (D-Conn.).

    "As much as anything else, the hearing laid bare the state of labor relations in the United States today. Popular approval of unions is higher than it’s been in over a half-century. The left is making increasingly more noise about what they argue are unfair labor practices. But for now, management at large corporations need only withstand some tough criticism and the occasional financial penalty as the cost of doing business."

    KC's View:

    There must've been a sign on the entrance door to the hearing room:  

    No nuance allowed.

    The hearing also struck me as a perfect reflection of one of my favorite Pete Hamill lines, that ideology is a lousy substitute for thought.

    In FaceTime I already talked about this a little bit, but the more I think about it, the more appalled I am by how few exchanges of ideas took place in the hearing.  It was all about taking positions and making speeches, not actually trying to learn anything.  (When Sen. Rand Paul started quoting Ayn Rand as he defended Starbucks, my hair started to hurt.)

    For example, when Schultz talked about the company having lost its way, it never was explored whether that created legitimate reasons for some employees to believe that unionization was a preferred option.  Since the union movement started when Schultz wasn't CEO, and he said that he had little to do with anti-union activities when he returned as CEO, and now he's not CEO anymore, I might've asked him why employees should have faith in new management.

    I might've drilled down more with questions about actual working conditions at Starbucks stores - the shift from hot drinks to cold drinks, the pandemic pressures created on individual store employees, and the degree to which top management is able to really understand what's happening on the front lines.

    I also would've liked to know more about the allegations that the Buffalo area employee who precipitated the unionization movement there was actually on the payroll of organized labor at the same time.  (This would strike me as the very essence of bad faith bargaining.)

    I also want to see the results of an objective investigation into whether the NLRB is putting its finger on the scale in favor of organized labor.  That probe should be expedited.

    I walked away from watching the hearing feeling like nobody really was listening.  I think it is fair to say that a) Starbucks traditionally has been an enlightened, progressive company, b) size and circumstances have made it harder to work at many of its stores than ever before, c) there is a fundamental disagreement between management and some employees about how to resolve differences, d) and management will do everything possible, walking right up to the legal lines, taking as long as it can, to delay the certification of any union at any store.

    I know that in any hearing of this kind, there have to be rules.  But I also think that people have to be allowed to complete their thoughts, to answer questions fully, to make their points.  Schultz clearly was frustrated by the rules of the hearing, and I don't blame him.  He also clearly is frustrated by the laws that govern how companies such as his have to deal with unions, and it remains to be seen how much blame he's going to have to take on that one.

    I think there is the lesson in here for every retailer.  The one thing that seems incontrovertible - even Schultz seems to acknowledge this, though he doesn't want to take any blame responsibility - is that there was a disconnect between company leadership and the front lines.  If you, as a leader, let that happen, if you allow walls to go up between you and your stores and front line staffers, then you may experience the same problems as Starbucks.  You may not end up in a Senate hearing, but you will suffer the results of what happens when you are not listening.

    Published on: March 30, 2023

    Advertising Age has a piece about a numb er of New York City restaurants that decided to package and sell some of their signature items during the pandemic when their traditional business models collapsed, and now are continuing to - both direct-to-consumer and via supermarkets - as a way of driving new revenue streams and brand awareness.

    Carbone, for example, "not only is a classic New York Italian restaurant but also the inspiration behind a jarred pasta sauce brand called Carbone Fine Food, which started about two years ago, according to Eric Skae, who is the brand’s CEO. 

    "Currently, the sauces are the brand’s only product. While they started out only being sold DTC, the company has expanded its retail footprint - Carbone jars can now be found on grocery store shelves across the U.S. at places such as Whole Foods."

    Or Momofuku:  "The restaurant group, which got its start with Momofuku Noodle Bar in Manhattan’s East Village neighborhood, started hiring for its DTC arm (which sells some of its ingredients, including its seasonings and air-dried noodles) in 2019. Although the brand started out as DTC, its products are now sold in national retail locations such as Whole Foods, Target and Publix, according to Momofuku CEO Marguerite Mariscal.

    "A stat that 'really kicked off' the brand’s DTC efforts, Mariscal said, was that 90% of its social media followers didn’t live in cities where Momofuku operates restaurants. When Momofuku began the DTC business, it counted more than 2 million followers, stemming from its brand accounts and the social media following of celebrity chef founder David Chang."

    KC's View:

    During the pandemic I argued that while supermarkets were talking about becoming "groceraunts," restaurants ought to be focused on becoming "restaurmarkets," which would allow them not just to serve meals in traditional ways, but also have markets where they could sell both prepared meals and ingredients.

    This hasn't happened to the degree I thought it would.  I still think that it would allow restaurateurs to spread their bets out a little bit.  But we're seeing with brands like Carbone's - which seems to be following the Rao's playbook - is a desire to find alternative and supplemental revenue streams.

    Published on: March 30, 2023

    National Public Radio (NPR) has a story about how, "for decades, scientists thought that animal viruses seldom jump into people. They thought these spillovers were extremely rare. But in the past few years, studies have been showing that this thinking is wrong … In fact, there's likely a whole group of animal viruses making people sick all over the world that doctors know nothing about. They've been hidden. They masquerade as a regular cold, flu or even pneumonia.

    "For example, if you have a respiratory infection in the U.S., doctors can identify the pathogen causing the infection only about 40% of the time. There's growing evidence that the other 60% of infections could be caused by animal viruses such as a dog coronavirus found in Malaysia, Haiti and Arkansas."

    Scientists are looking at a basic question, focusing on a particular virus found in cows:  "If this virus can infect so many different animals and is found in so many cows, does it make people sick? Especially the people who work closely with cows on dairy farms or ranches?

    "In 2019 and 2020, scientists at Boston University ran a small and simple experiment. They went to five dairy farms in the West and Southwest, and they washed out the workers' noses before and after their shifts working on the farms. Then they looked for influenza D inside the washes.

    "The researchers studied only 31 workers over the course of only five days. But they found quite a lot of the virus. 'We found about two-thirds of the participants were exposed to influenza D at some point during our study period,' says environmental epidemiologist Jessica Leibler, who led the study."

    KC's View:

    The role of disease in our work and personal lives, and its ability to disrupt both, has become a core reality in recent years.  And so, when I saw this story I could not help but share it.

    Published on: March 30, 2023

    Fast Company reports on how "a seafood company known as Nueva Pescanova is hoping to open the world’s first-ever large-scale octopus farm in Spain’s Canary Islands."

    An excerpt:

    "You might be surprised that it hasn’t happened already, given the global popularity of octopus-based dishes. Octopus, eaten cooked or raw, and sometimes while still alive, is an adored culinary delicacy in many regions throughout Europe, east Asia, and northern Africa.

    "Or maybe you’re surprised that it’s happening at all, especially right now, when octopus sentience has become a fairly mainstream topic of conversation … If you’re an octopus sympathizer, the idea of commercial octopus farming might cause a pit in your stomach. It certainly does for me - because we have significant evidence suggesting the social and emotional complexity of octopuses. Scientists have observed them forming complex societies, complete with hierarchies and land disputes."

    The story notes that "currently, the most common means of slaughtering octopuses are clubbing, suffocation, and slicing open the brain. The authors of the 2021 review find all of these methods to be unambiguously inhumane. If there are other, more humane methods, we’ve yet to see how they could be implemented at scale in a for-profit aquaculture program."

    You can read the entire story here.

    KC's View:

    I love grilled octopus.  But that whole "clubbing, suffocation, and slicing open the brain" thing, I must admit, will make me think twice about ordering it anytime soon.

    Published on: March 30, 2023

    From CNN:

    "Woolly mammoth remains, with fur and tissue still in tact, are regularly found entombed in Arctic permafrost. Their discovery has allowed scientists to sequence the mammoth genome and learn intriguing details about the lives of these extinct Ice Age giants.

    "Now, some of that information is being used to grow an approximation of mammoth meat in a lab.

    "Vow, an Australian cultured meat startup, has made what it describes as a mammoth meatball. The project’s goal, according to the company, is to draw attention to the potential of cultured meat to make eating habits more planet friendly … Advocates hope cultured meat will reduce the need to slaughter animals for food and help fight the climate crisis. The food system is responsible for about a third of global greenhouse gas emissions, most of which result from animal agriculture."

    KC's View:

    First of all, I think about Jurassic Park, and my conclusion is that if wooly mammoths ever are brought back from extinction, they're gonna be pissed.

    Second, I find it fascinating that the scientists who created the wooly mammoth meatball haven't actually eaten it.  According to  James Ryall, Vow’s chief scientific officer, "Normally, we would taste our products and play around with them. But we were hesitant to immediately try and taste because we’re talking about a protein that hasn’t existed for 5,000 years. I’ve got no idea what the potential allergenicity might be of this particular protein."


    Published on: March 30, 2023

    •  The Washington Post has a story saying that "coupon clippers don’t have much to celebrate these days. Anyone who was hoping 2023 would bring a resurgence in coupon-filled Sunday newspaper inserts has so far been disappointed. Inserts with manufacturer’s coupons are thinner, or even nonexistent, leaving consumers struggling to find new ways to save on food or personal care or household products."

    That said, "While paper coupons may be disappearing, digital coupons are still an option. Stores like Target, as well as grocery retailers such as Publix and Kroger, have digital savings offers."

    Published on: March 30, 2023

    •  Winn-Dixie parent company Southeastern Grocers has announced "its partnership with Relocalize to pilot ice manufacturing in the world’s first autonomous micro-factory, designed to help eliminate middle-mile logistics to reduce global greenhouse gas emissions, water waste and plastic pollution to nourish both people and the planet."

    The announcement says that "SEG and Relocalize are committed to revolutionizing the food industry with the introduction of this first local micro-factory that is centrally managed by an AI-powered software platform and utilizes robotics for 100% of production labor. This innovative and automated manufacturing process allows the grocer to scale production and create waste-reduction solutions throughout the full lifecycle of the product – all at a lower economic and environmental cost."

    •  Sprouts Farmers Market announced it "will eliminate single use plastic bags at checkout by the end of 2023. With this decision, Sprouts will remove over 200 million single use plastic bags from circulation each year.

    "Sprouts has already eliminated single use plastic bags at 132 of its California stores and will roll out this initiative in phases next month, beginning with Nevada, Utah, Maryland, Pennsylvania and Virginia stores."

    •  From Axios:

    A shortage of truck drivers and skilled machine operators is inspiring the development of autonomous vehicles for use in construction, farming, heavy industry and even freight rail."

    According to the story, "Caterpillar deployed its first (truly massive) autonomous mining trucks in 2013, and now has nearly 600 in operation. It wants to bring autonomy to smaller vehicles, including bulldozers.

    "In agriculture, Deere & Company has introduced autonomous tractors to help growers cope with a shortage of workers.

    "Startups such as SafeAI and Teleo are retrofitting older construction machines with autonomous or remote-operated technology."

    What's next, the story says, will be "shipping containers that can move themselves on railroad tracks."

    I was with them until the railroad thing.  Pretty sure that recent derailments teach us that trains probably shouldn't be autonomous until the infrastructure is improved and modernized.

    Published on: March 30, 2023

    Executive Suite is sponsored by Robin Russell Executive Search.

    •  CNBC reports that "CEO Jeff Gennette will retire early next year after a four-decade career at the company, the department store chain announced Wednesday morning.

    "Gennette, 61, plans to step down in February. He will be succeeded by Tony Spring, CEO of the company’s higher-end department store banner, Bloomingdale’s.

    "In addition to the CEO change, Macy’s Chief Financial Officer Adrian Mitchell, 49, will take on an expanded role and also serve as the company’s chief operating officer."