Peak irony from the UAW corruption investigation, car rationing in New Delhi, a meh German economy, and Ford bails on another one of its tech ventures. All this and more in in The Morning Shift for Friday, September 13, 2019.
1st Gear: The UAW Corruption Mess Isn’t Going Anywhere Time Soon
U.S. prosecutors charged senior UAW official Vance Pearson with corruption-related crimes similar to the ones previous UAW officials have been charged with. Specifically, he allegedly oversaw a slush fund for embezzling money and throwing lavish parties “including $440 bottles of champagne originally created to please a Russian czar and scantily clad women to light union leaders’ cigars.”
Much of the complaint centers on conferences held by the UAW’s Region 5 in Palm Springs, California. The allegations include that, through a “master account” set up at a Palm Springs hotel, union officials embezzled more than $600,000 spent on lavish living for weeks or months at a time. Agents had also found similar payments from accounts at two other hotels.
The complaint singles out a dinner at a local restaurant on New Year’s Eve 2016 that cost $6,600, including four bottles of Louis Roederer Cristal champagne for a total of $1,760.
About that Cristal:
The complaint quotes from the Louis Roederer website that the Cristal was “created in 1876 to satisfy the demanding tastes of (Russian) Tsar Alexander II,” who was assassinated by a revolutionary in 1881.
Corrupt union officials drinking $440 bottles of champagne created for a Russian Tsar who was assassinated by a left-wing revolutionary paid for by a union slush fund is just too much irony for me on this lovely Friday morning.
In any event, we’re well past the point of whether the UAW corruption investigation would wrap up prior to major contract negotiations with the Big Three, as talks with GM are coming down to the wire and investigators appear to be circling around UAW’s president, Gary Jones. Pearson was Jones’s deputy on the regional level before Jones became president and investigators recently raided Jones’s house. Although Jones hasn’t yet been charged with anything, it is seemingly getting closer.
Aside from its demonstrable impact on hundreds of thousands of American workers who are just trying to get a fair deal, the really frustrating thing about the UAW scandal is how precisely it comports with what anti-union zealots imagine all unions are like. The actions by UAW officials seem so precisely engineered to stoke cynicism in the American labor movement it could double as a Heritage Foundation fever dream. American auto workers and the American labor movement in general deserve so, so much better.
2nd Gear: The White House Is Still Very, Very Mad At California
The party of small government and state’s rights strikes again!
The Trump administration is moving forward with a plan to revoke California’s authority to set its own vehicle greenhouse gas standards and declare that states are pre-empted from setting their own vehicle rules, three people briefed on the matter said on Thursday.
The only reason the White House is doing this is because the California Air Resources Board struck a deal on fuel economy standards with Ford, VW, BMW and Honda that rebukes the White House’s attempt to freeze standards at the 2020 level until 2026, a move that even the automakers don’t want because they’ve already planned their businesses around gradually increasing standards. The Department of Justice also launched an antitrust investigation into the agreement which is odd considering there’s a whole exemption in antitrust law for state regulations.
If the White House moves forward with this, it will almost certainly result in years and years of court battles, another outcome automakers don’t want because it will make uncertainty that much more permanent.
3rd Gear: German Economy Is Doing Not Bad, Also Not Great
Here is some...good news? The German Economy Ministry does not predict an economic downtown for Europe’s largest economy, according to Reuters:
“The German economy is going through a weak phase,” the ministry said in its monthly report.
“A bigger downturn or even a pronounced recession is not expected at the moment. However, indicators don’t point to an economic turnaround for the better either,” it added.
“Meh” is pretty much the best we can hope for these days, isn’t it?
4th Gear: New Delhi Banning Half Of All Cars In November To Limit Pollution
I was not alive back then, but I’m told there was once a time when Americans could only get gas every other day depending on their license plate number, and that lots of people complained about this as an unacceptable inconvenience. Well, imagine if you couldn’t even use your car every other day, because that’s what’s going down in New Delhi in November:
India’s capital New Delhi will enforce strict restrictions on use of private cars from Nov. 4-15 to curb pollution, its chief minister said on Friday, in an effort to help improve air quality that tends to deteriorate sharply in winter months.
Private vehicles will only be allowed to use roads on alternate days during the period, Arvind Kejriwal told a news conference, depending on whether their registration plate ends in an odd or even number.
Don’t use the things that pollute when pollution is highest? What a novel idea.
5th Gear: Yet Another Automaker Bails On Yet Another Car Subscription Experiment
Remember when Ford bought Canvas, the subscription car app? Neither do I. Anyways, they’ve sold it to Fair, the subscription car app founded by former TrueCar CEO that has close ties to Uber. More from Automotive News:
The sale of Canvas is the latest example of the industry resetting its expectation on subscription services, which initially were met with much hype and excitement.
Cadillac in late 2018 indefinitely paused its Book by Cadillac subscription program, and though executives have vowed to relaunch it, they have not provided a time frame. Volvo revamped its program, Care by Volvo, after pushback from dealers and an investigation by the California Department of Motor Vehicles into whether it violated state franchise laws.
Ford, by comparison, had treaded carefully in the sector. Since starting Canvas as a pilot program, Ford Motor Credit Co. said it had serviced 3,800 customers. Lincoln executives last year voiced surprise over lackluster demand, noting that those who signed up were looking for short-term solutions and often dropped out after a few months.
Fair mostly exists as a vehicle rental platform for Uber drivers, and both are closely tied to the investment firm Softbank. Fair got a $385 million pump from Softbank’s Vision Fund, while Softbank was Uber’s largest shareholder prior to the IPO.
Reverse: You Get A Car! You Get A Car! You Get A Car!
Neutral: What Would You Use A Car Subscription Service For?
I’ve never really understood the point of these. Ironically given how enmeshed Fair is with Uber, I find they’re too expensive to compete with ridehailing for people who don’t own cars but have little to offer for people who do. So...who are they for?
Correction 7:58 p.m. E.S.T.: A previous version of this post mentioned TWU in place of UAW in one paragraph. This was in error. TWU is not involved in any corruption scandal.