Trump Tweets Out Boeing’s Air Force One; Lego’s Brick-By-Brick Expansion Plans; SeaWorld Sees Layoffs

Boeing going gone…

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President-elect Donald Trump was on Twitter. Again. This time he was telling Boeing to cancel the order for the new Air Force One that’s in the works.  In his usual eloquent manner he said that the cost to build the plane “is totally out of control.”  And just what exactly does “out of control” look like when you’re building a fleet of aircraft for the Commander-In-Chief? Well, it depends on who you ask but Trump has that figure pegged at $4 billion, though it’s not entirely clear where he got it. Another report has the Air Force budgeting the new planes at about $1.6 billion. However, it’s expected that the fleet of planes will cost $102 million this fiscal year, and another $3 billion over the next five years. So maybe Trump’s got his ducks in a row on this one. His tweets went on to say: “I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money, but not that much money.” He probably would prefer if Boeing weren’t making that money off taxpayers’ backs. The Pentagon wants to replace the current fleet as it will have reached its 30 year service life in 2017. It has been around since 1990, has flown over one million miles and, in all fairness, could use  more than few upgrades – whether Trump’s on board or not. Which he won’t be because the aircraft is not scheduled to be ready for another ten years or so. Naturally, shares of Boeing fell on the news of Trump’s sentiments. In the meantime, 56% of Americans think Donald Trump uses Twitter way too much. Perhaps the time has come for his cabinet members and advisers to take away his phone.

Lego to stand on…

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Lego CEO Jorgen Vig Knudstorp is stepping down from his position and that’s actually good news. Knudstorp is leaving his post in order to move on to greener pastures as Chairman of  the Lego Brand Group. The toy company is on a mission to restructure itself to keep up with its growth momentum. By creating the Lego Brand Group, the company plans to explore new business ventures, opportunities and ideas that will help expand the brand in new, exciting and highly profitable ways. For the first half of the year the company posted an unwelcome surprise drop in profit of $499 million though its revenue still went up. The company blamed Americans, or rather, the fact that sales in the United States were flat. But, that’s probably the same thing. In any case, as part of his new gig, Knudstorp will be overseeing the family’s 75% stake in the company which is currently run by fourth generation Lego owner Thomas Kirk Kristiansen. Chief Operations Officer Bali Padda will take over for Knudstorp, officially becoming the first non-Dane to hold the post. The privately held company is headquartered in Denmark and employs over 18,000 people. Knudstorp, who said he plans to stay at Lego for the rest of his career, joined the company back in 2001, when the company was losing about $1 million a day. Lego just couldn’t compete with an exponentially-increasing digital toy industry. But it turns out it didn’t need to when it made Knudstorp CEO in 2004. Under his leadership, he made changes, booted people, brought in new folks and saw Lego’s revenue jump fivefold. Last year the company fiscally surpassed both Mattel and Hasbro, even with all their Barbie/ My Little Pony/Hot Wheels/electronic toys, to become the number one toy company in the world. No small feat considering that unlike Mattel and Hasbro, Lego pretty much makes just one product with assorted variations: a plastic brick.

Under water?

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With shrinking attendance, decreasing revenue and dwindling profits, SeaWorld announced plans to say a not so warm goodbye to 320 of its employees, both salaried and hourly. It was only back in 2014 that SeaWorld said goodbye to another unlucky 300 employees. The  soon-to-be-former employees will be receiving “enhanced severance benefits” which is fancy talk for some cash and maybe health insurance to tide them over for a little while. SeaWorld has even offered to help them find work elsewhere. How moving. The entertainment company is on a mission to restructure itself in any way possible to keep it from losing any more money than it already has. Of course, cost-cutting always factors in, along with examining how best to improve and streamline the rest of the business. Back in March SeaWorld made the decision to stop breeding Orca whales and also scrapped the shows in which the whales starred. SeaWorld is also blaming Disney and Universal for their disappointing digits, unable to woo away visitors from their PETA-friendlier attractions. Also, there seemed to be a drop in Brazilian visitors, presumably because they remained in Brazil for the Olympics, one might suspect, which apparently affected SeaWorld’s earnings.  Who knew SeaWorld relies on a Brazilian contingent to patronize its parks to help churn out a buck or two?

Grocery Disrupt: Amazon’s Latest Venture Good Become a Store Near You; Tyson’s New Add-Venture; Trump’s Taxing Tariff Tweets

Move over, humans…

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Just when you to start to wonder what else Amazon could possibly do to disrupt and reinvent the retail shopping experience, along comes Amazon Go, an actual brick-and-mortar-store brought to you by the e-commerce giant. Talk about irony. The concept, which is still being tested by Amazon employees, allows shoppers to literally grab food and walk out. No lines. No cashiers. Customers just take their cellphones and tap them on a turnstile to get logged into the store’s network, which in turn connects to the Amazon Prime app, already conveniently installed on their phones. Customers pick items off the shelf and put them into their cart while, with the aid of sensors and artificial intelligence, the same items are also placed in virtual shopping cart. If a shopper decides that they don’t want an item, they simply place it back on the shelf and the item also disappears from the virtual cart. Like magic. Should you crave something a bit more immediate, the store also offers up fresh food, prepared on site. Once customers are done, they simply walk out while the app does all the work, which basically involves adding everything up and then charging respective Amazon accounts. The company has been on the hunt to gain a big presence in the food retail industry, an industry which still fiscally eludes it, and also happens to be one of the biggest retail industries. Ever.  Its fresh food delivery is nice and all, but Amazon’s set its sights on competing with the big grocery players like Wal-Mart, Krogers and Target. The food retailer index took a 1% dive on Amazon’s news while shares of Amazon went up. But established grocers can breathe a very brief sigh of relief easy as Amazon still has a few months before it opens up the store to the public. And humans, fear not. One tech investor said that people are still a very big, necessary component of the retail experience and to scrap the notion that jobs will be lost to machines. Phew.

Speaking of food…

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What to do when you’re a $20 billion company whose prime business is chicken, beef and pork, and you keep losing money to the alternative-meat and fresh-food industry? Why, you set up a venture capital firm, of course. And that’s just what Tyson Foods did in an attempt to compete with a burgeoning industry that is literally eating into its business model. Apparently, plant-based protein and food sustainability is where it’s at these days and if you can’t beat ’em then join ’em by investing in their start-ups. Hence we have Tyson New Ventures LLC, a $150 million venture capital firm that Tyson launched to tap into a market that favors more plant-based and fresh food. The venture capital firm will look to companies that are working on making food-related “breakthroughs” and new innovative technology and business models that relate to food. Tyson already announced its first investment a few months ago, when it bought a 5% stake in Beyond Meats, a company that makes meat-like products. Tyson has got nothing to lose either, considering its last earnings report was nothing short of dismal, and the news that its long-time CEO Donnie Smith was stepping down did nothing to instill confidence in investors. Tyson isn’t the only firm to try out this venture capital idea. Other companies like Campbells Soup, Coca Cola, General Mills and Kellogg’s have all established similar firms with pretty much the same objective: to continue to be a prominent player in a shifting market and industry landscape.  So far this year venture firms have already thrown $420 million into various food and agricultural companies. In 2015 that number approached $650 million.

A day without Trump?

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Over the weekend, President-elect Donald Trump mentioned, in a series of tweets of course, that he wants to get back at U.S. companies who dare shift jobs and production overseas. His preferred revenge tactic would be in the form of a 35% tariff and, strangely enough, his fellow Republicans don’t seem to be on board. The top House Republican, House Majority Leader Kevin McCarthy, does not support Trump’s tariff idea and thinks that the best, most effective way to create and keep jobs in the U.S. is via major tax reform. There seem to be a whole bunch of issues at play with Trump’s (overly) ambitious tax-revenge plans, including the fact that such a move goes against the whole spirit of free trade and has the potential to spark trade wars. And nobody likes wars, whether they involve armed conflict or goods and services. Tax specialists and other assorted experts have also said that it’s fairly debatable as to whether or not Trump’s tactics are even legal.  Republicans are, however, partial to over-hauling the corporate tax code in an effort to keep U.S. companies from fleeing to more tax-hospitable countries. They’d like to cut that pesky corporate tax rate to 20% or less which would allow the U.S. to be more competitive globally. House Republicans are also in favor of imposing corporate taxes to all imported goods and services and scrapping them for exports. But leave it to the critics to argue that changes like that might be seen as violations of the World Trade Organization.  In any case,  it remains to be seen how exactly Trump will get his way, if he does. That’s because tariffs aren’t typically applied to specific companies but rather entire classes of goods. Besides, the president doesn’t get to make those kinds of decisions anyway. That’s for Congress to decide and Congress doesn’t seem, shall we say, receptive, to Trump’s tariff talk.