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Will Europe's ban on Russian diesel hike global fuel prices?
Europe is taking another big step toward cutting its energy ties with Russia, banning imports of diesel fuel and other products made from crude oil in Russian refineries.
The European Union ban takes effect Feb. 5 following its embargo on coal and most oil from Russia. The 27-nation bloc is trying to sever its last uses of Russian energy and stop feeding the Kremlin's war chest as the anniversary of the invasion of Ukraine nears.
The newest ban has risks: Diesel prices have already jumped since the war started on Feb. 24, and they could rise again for the fuel that is key to the global economy.
“We’re leaving money in the road to provide our services,” said Hans-Dieter Sedelmeier of the family-run German bus and travel company Rast Reisen.
Most things people buy or eat is transported at some point by trucks, which mostly run on diesel. It also powers farm equipment, city buses and industrial equipment. The higher cost of diesel is built into the price of almost everything, helping push up inflation that has made life harder for people worldwide.
Here are key facts about the upcoming European embargo:
WILL THE EMBARGO PUSH UP DIESEL PRICES?
That depends. Diesel, like crude oil, is sold globally, and Europe could look for new sources, such as the U.S., India or countries in the Middle East. If that goes smoothly, the impact on prices might be temporary and modest.
Europe has already cut Russian diesel imports almost in half, from 50% of total imports before the war to 27%. U.S. suppliers have stepped up supplies to record levels, from 34,000 barrels a day at the start of 2022 to 237,000 barrels per day so far in January, according to S&P Global.
Read more: What's the effect of Russian oil price cap, ban?
The EU’s top energy official, Kadri Simson, says markets have had time to adjust after the ban was announced in June. Europeans also appear to have stocked up on Russian diesel before the deadline, with imports rising last month.
There is a complicating factor: The Group of Seven major democracies are talking about imposing a price cap on Russian diesel heading to other countries, just as they did on Russian crude. As with oil, the idea is to keep Russian diesel flowing to world markets but reduce Moscow’s revenue.
If the cap works as advertised, global diesel flows should reshuffle, with Europe finding new suppliers and Russian diesel finding new customers, without a major loss of supply.
But it's hard to say how the cap will work without knowing where the price will be set and whether Russia will retaliate by withholding shipments.
“When Russian exports are constrained, for whatever reason, that would of course cause some trouble in this whole reshuffle process," said Hedi Grati, head of fuels and refining research for Europe at S&P Global Commodity Insights. “Europe would be competing with other big importers, and that would cause upward pressure on pricing.”
If the cap doesn't block large amounts of Russian diesel, there might be “a short-lived price spike” as the market adjusts. For one, tankers would have a longer journey to Europe from the U.S., Middle East or India than from Russia's Baltic Sea ports, stressing shipping capacity.
But massive new refining capacity is launching in Kuwait and Saudi Arabia later this year and in Oman in 2024. That “could further alleviate any pressure points from this divorce from Russia,” Grati said.
WHAT COULD A DIESEL PRICE CAP ACCOMPLISH?
The hope is to reproduce the effect of the oil price cap, which barred Western companies that largely control shipping services from handling Russian crude priced above $60 a barrel.
Read more: Russia rejects $60-a-barrel cap on its oil, warns of cutoffs
Russia says it won't sell oil to countries observing the price ceiling, but the cap and falling demand from a slowing global economy has meant customers in China, India and elsewhere can buy Russian oil at steep discounts, cutting into the Kremlin's revenue.
Boosted by more expensive crude, diesel prices rose to over $1,000 a ton last week from $800 a ton in early December. Diesel costs more than $40 per barrel above the crude used to make it.
One reason for the price hike was a late December storm in the U.S. that disrupted refineries, said Barbara Lambrecht, an analyst at Commerzbank.
WHAT HAPPENS IF DIESEL GETS MORE EXPENSIVE?
Fuel prices have been a major factor behind painful inflation in Europe that has robbed consumers of purchasing power and slowed the economy.
Diesel prices at the pump have swung from 1.66 euros per liter ($6.43 a gallon) to 2.14 euros per liter ($8.29 a gallon) in the course of a year.
“That is a gigantic increase,” said Christopher Schuldes, the third generation of his family to run German trucking company Schuldes Spedition.
The company has 27 diesel trucks and 50 employees in the small town of Alsbach-Haehnlein between Frankfurt and Heidelberg in southwest Germany. It already has cut fuel costs by equipping trucks with efficient engines, ensuring trucks leave fully loaded and training employees in fuel-efficient driving.
“We did all that a long time ago, long before Russia invaded Ukraine," Schuldes said. “There's no more room for optimization.”
To ease the extra diesel costs, the company tried negotiating higher prices with customers who have long-term contracts. Some agreed, some didn’t. Even if a contract allows prices to rise with diesel costs, there’s a two-month lag.
Regarding the embargo, “I am of two minds about it,” Schuldes said. “I have to see that the company is in good shape, and that our purchasing is as economical as possible. On the other hand — on the personal level — I say Russia must not be supported.”
Meanwhile, Rast Reisen, the bus and travel company near Freiburg im Breisgau in southwestern Germany, has seen diesel fuel rise from 12%-15% of costs to 20%-25%. Because 15 of its 25 buses are part of the regional public transport network, the company can't automatically raise fares, and government increases so far are “a droplet on a hot stone,” said Sedelmeier, managing director for public transport.
Read more: Russian oil cap begins, trying to pressure Putin on Ukraine
Rast Reisen had to add a 10- to 15-euro diesel surcharge to trips to popular destinations like northern Germany's island of Sylt or Croatia's coast because prices spiked after catalogues were printed. Next year, prices for trips will simply be higher.
WHAT COULD GO WRONG?
Energy markets are looking to China and wondering when the world's second-largest economy will recover after the end of drastic COVID-19 restrictions. With low demand for fuel at home, the Chinese government let refineries ramp up their exports.
But if travel picks up in China, that diesel may disappear from the world market, raising prices as competition for fuel increases.
Adani accuses short-seller Hindenburg of attacking India
India’s Adani Group, run by Asia’s richest man, has hit back at a report from U.S.-based short-seller Hindenburg Research, calling it “malicious”, “baseless” and full of “selective misinformation.”
Shares in the conglomerate have suffered massive losses since Hindenburg issued its report alleging fraud and other malfeasance. On Monday, shares in some Adani companies recovered some lost ground. The flagship company, Adani Enterprises, gained 3.2% and Adani Ports & Special Economic Zone Ltd. added 3.3%. But shares in other Adani listed companies fell between 5% to 20%.
Adani’s 400-page rebuttal issued late Sunday accused Hindenburg of attacking India and its institutions and of breaking securities and foreign exchange laws. Adani has also accused Hindenburg, which said it was betting against the group’s companies, of trying to derail a share sale originally expected to bring in about $2.5 billion.
Read more:
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” Adani's statement said.
In response, the Hindenburg firm denied the accusations and said Adani's response largely confirmed its findings and failed to address key questions. It said the group was trying to conflate its rise with the success of India itself.
“We believe India is a vibrant democracy and emerging superpower with an exciting future. We also believe India's future is being held back by the Adani Group," Hindenburg said in a statement. “We also believe that fraud is fraud, even when it's perpetrated by one of the wealthiest individuals in the world," it said.
Read more: Adani’s 750 MW power to come to national grid in March: Nasrul Hamid
Gautam Adani and his family have built a vast fortune mining coal to fuel energy-hungry India’s fast-growing economy. Businesses in the conglomerate span industries including infrastructure, ports, data transmission, media, renewable energy, defense manufacturing and agriculture. Adani's own net worth has skyrocketed nearly 2,000% in recent years.
With a net worth of nearly $125 billion late last year, Adani surpassed Amazon boss Jeff Bezos to briefly become the world's second-richest man, according to Bloomberg's Billionaire Index. After last week's losses, Bloomberg's index ranked him seventh richest in the world with a fortune worth $92.7 billion.
The report from Hindenburg said it judged the seven key Adani listed companies to have an “85% downside, purely on a fundamental basis owing to sky-high valuations.”
Hindenburg said its report, “Adani Group: How the World’s 3rd Richest Man is Pulling the Largest Con in Corporate History,” followed a two-year investigation. It listed 88 questions it invited the company to answer. Most of the allegations involved concerns about the group’s debt levels, activities of its top executives, use of offshore shell companies and past investigations into fraud.
Investors began dumping Adani-linked shares on Wednesday, wiping out some $48 billion in market value.
Over the weekend, Adani said it would carry on with its share sale in Adani Enterprises as scheduled, despite the value of its shares falling well below the price range of the offering. On Monday, Adani Enterprises was trading at 2,850 rupees ($35), up 3.2% but well below the band of 3,112 to 3,276 rupees initially set for the offering which closes Tuesday.
In its response to Hindenburg, the Adani Group said none of the 88 questions in its report was “based on independent or journalistic fact finding.” It rejected numerous questions as baseless, misleading or biased. In response to other questions, the group attached documents and tables of data and said it had followed local laws.
Read more: Adani Group mulls suing US short-seller for fraud claims
Adani also dismissed concerns over its debt-fueled growth, saying the “leverage ratios of Adani portfolio companies continue to be healthy and are in line with the industry benchmarks of the respective sectors.”
In an interview with CNBC TV-18 on Monday, Adani's chief financial officer Jugeshinder Singh said the group's gross debt was $30 billion, out of which $9 billion was from Indian banks.
Hindenburg said only 30 pages in Adani's response focused on issues it raised and the rest consisted of court records, general information, company financials and “irrelevant corporate initiatives.” Adani failed to specifically answer 62 of the 88 questions it had posed, it said.
Late Thursday, Jatin Jalundhwala, head of the Adani group’s legal department, said the group was considering legal action against Hindenburg. Hindenburg said it stood by its report and would welcome legal action by the Adani group.
Automakers Renault, Nissan make cross-shareholdings equal
Nissan and Renault have changed their mutual cross-shareholdings equal at 15%, ironing out a source of conflict in the Japan-French auto alliance.
Renault Group will transfer 28.4% of the Nissan shares it owns into a French trust, so its stake will be the same 15% that Nissan Motor Co. has in the French automaker.
Read more: Nissan plans to halt production in Russia
Voting rights would be “neutralized” for most decisions, the two companies said in a statement Monday.
The move had been anticipated because of leaks to various media outlets.
Read more: Nissan has launched all-new Nissan Magnite in Bangladesh
The Nissan-Renault alliance began in 1999, at a time when the Japanese automaker was in tough financial straits. The disparity was a cause of friction, especially after Nissan became far more profitable than Renault.
Taxes slow India's solar power rollout but boost manufacture
In May last year Fortum India, a subsidiary of a Finnish solar developer, won the bid for a solar power project in the state of Gujarat. The project was due to be completed three months ago and would have generated enough electricity for 200,000 homes.
But like many other solar power projects in the country, it's been delayed as Fortum India struggles to source and pay for necessary components.
“For the last six months, we have not been able to finish developing any new projects,” said Manoj Gupta, who oversees Fortum India's solar projects in India.
Gupta said solar panels and cells have become obstructively expensive because of protective taxes the Indian federal government implemented in April last year. The basic customs duty imposes a levy of 40% on imported solar modules and 25% on solar cells.
The government says it wants to encourage the domestic manufacture of components required to produce solar power and reduce the country's reliance on imports.
Read more: Bangladesh, India don’t compete with each other in garment sector, says BGMEA President
But solar developers say homegrown producers, while rapidly growing and being pushed along by policy initiatives, are still too fledgling to meet demand. Current cell and module manufacturing capacity in India is around 44 gigawatts per year, just a fraction of what's needed to meet India's renewable aims.
In 2022, India had a target to install 100 gigawatts of solar energy as part of goal to add 175 gigawatts of clean electricity to its grid. But only 63 gigawatts of solar power were ultimately installed last year, according to Indian federal government data. India missed its 2022 renewable energy target by just nine gigawatts.
“Without these duties we would have easily achieved our targets for larger solar projects, at least,” said Jyoti Gulia of the renewable energy research and advisory firm JMK Research.
Most solar developers in India and around the world rely on China, with the nation producing more than 80% of the world's solar components, according to the International Energy Agency. Many countries have tried to encourage domestic production to limit dependence on the country. The United States' recent climate law, for example, also incentivizes homemade renewable energy manufacturing.
“China controls the market and we saw during both the pandemic and the geopolitical conflict between our countries that they just stopped the supply chain completely,” said Chiranjeev Saluja from the Indian solar manufacturer Premier Energies. “I think the government wants to develop the whole solar ecosystem, that is the intent behind such policies.”
Saluja added that a bustling solar manufacturing industry also had wider economic benefits.
“The jobs in manufacturing are well-paying, secure jobs. And while developers employ only a handful of people, to manufacture cells required to produce one gigawatt of solar energy, you will need at least 500 people,” he said.
A 2022 report found that India’s renewable energy sector could employ more than one million people by 2030, but only if domestic manufacturing continued to scale up considerably.
Another Indian government policy that mandates that solar components can only be bought from government-approved manufacturers to ensure that the modules and cells are of good quality is also stalling projects, according to analysts.
Read more: Indian investors can set up industries in Bangladesh through buy-back arrangement: PM
Developers are unable to purchase from southeast Asian countries as manufacturers there have yet to be approved or have not applied. Many of those countries have free trade agreements with India which would make them exempt from import taxes.
“The situation is quite grim today,” said Vinay Rustagi, managing director at the renewable energy consultancy Bridge to India. “Global supply chain issues, material shortages and, of course, the duty on solar components has led to a lot of projects being postponed.”
Rustagi said the growth in domestic manufacturing as a result of the tax is “encouraging, but I do not think it is sustainable.” He added that the government “should be aiming to create strong domestic capabilities that can be a preferred choice without any taxes or duties.”
Solar manufacturers do not agree.
“We have allowed for dumping from other countries for too long. Otherwise domestic manufacturing would have taken a strong root already,” said Gyanesh Chaudhary, vice chairman at Vikram Solar, an Indian solar manufacturer.
“These taxes and policies were announced well in advance and there was enough time to factor them into costs,” Chaudhary said. “Mandates such as the approved list of manufacturers are to make sure the quality of products coming into India are of a certain minimum quality.”
But Srivatsan Iyer of solar developer Hero Future Energies said the unpredictability of the sector made it hard to factor in the extra costs.
“Land, connectivity to the project site, supply chain issues are just some dynamic factors and, of course, the pandemic,” said Iyer of the difficult landscape for solar projects. “With these duties, clean power is just more expensive for India now.”
Iyer is worried that the extra costs could also thwart India's next renewable energy target in 2030. But he's hopeful the government might defer some duties in the upcoming federal budget announcement scheduled for Feb. 1.
The government hasn't yet given any indication that it will make amendments to its tax policy.
IMF expected to approve Bangladesh’s $4.5 billion loan package on Monday
Bangladeshi officials have received indications from the International Monetary Fund (IMF) that the multilateral lender's board has agreed in principle to approve the country's loan request.
Several officials of the Ministry of Finance said that the IMF will approve the loan for Bangladesh on Monday (Jan 30).
An IMF team led by Rahul Anand visited Dhaka from October 26 to November 9, 2022, to thrash out the details of the program.
Read: IMF to support Bangladesh’s aspirations of becoming a higher-income country by 2041: DMD
After that the IMF's deputy managing director, Antoinette Monsio Sayeh, visited Bangladesh from January 14-18 and praised the economic development and social progress she witnessed during her visit, saying it has left an impression on the whole world. Sayeh also congratulated Prime Minister Sheikh Hasina on that.
Former IMF economist Dr Ahsan H. Mansur told UNB that is known of the visits and discussions held with the Ministry of Finance, Bangladesh Bank, National Board of Revenue, Ministry of Planning, Bangladesh Bureau of Statistics (BBS), and others indicates the global lender has reached an agreement to provide $4.5 billion loan to the country.
The first instalment of the IMF loan is just awaiting formalities, he said.
"We are getting the loan just the way we wanted. A total of $4.5 billion will be leant to Bangladesh," Finance Minister AHM Mustafa Kamal told the media earlier.
The amount will be disbursed in seven installments till December 2026. The first installment of $447.78 million will be cleared in February. The remaining amount will be in six equal instalments of $659.18 million each.
Read: Bangladesh Bank expects first instalment of $4.5 b IMF loan to arrive by next month: Spokesman
The interest rate of the loan will depend on the market rate at the time of maturity. The Finance Ministry has calculated that the rate would be around 2.2 percent, sources said.
The IMF earlier stated that its delegation led by Rahul Anand and the Bangladesh authorities had agreed on a program to support Bangladesh's economic policies with a 42-month arrangement of about $3.2 billion under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) as well as of about $1.3 billion under the Resilience and Sustainability Facility (RSF).
Trade through Hili land port resumes after 2-day holiday
Export-import activities between Bangladesh and India through the Hili land port in Dinajpur resumed today after a two-day holiday on the occasion of India’s Republic Day.
Abdur Rahman Liton, president of Hili Customs C&F Agents Association, said that trade via the land port was suspended on January 26 and 27 due to India's 74th Republic Day and weekly government holiday.
“Export and import of goods via the port has restarted. Vehicles coming from India with goods have started entering the land port since noon,” said Abdur Rahman.
However, the movement of travelers through the land port has been as usual, said Md Badiuzzaman, in-charge of the Hili immigration check post.
Myanmar opium cultivation surged 33% amid violence, UN finds
The production of opium in Myanmar has flourished since the military's seizure of power, with the cultivation of poppies up by a third in the past year as eradication efforts have dropped off and the faltering economy has led more people toward the drug trade, according to a United Nations report released Thursday.
In 2022, in the first full growing season since the military wrested control of the country from the democratically elected government of Aung San Suu Kyi in 2021, Myanmar saw a 33% increase in cultivation area to 40,100 hectares (99,090 acres), according to the report by the U.N. Office on Drugs and Crime.
“Economic, security and governance disruptions that followed the military takeover of February 2021 have converged, and farmers in remote, often conflict-prone areas in northern Shan and border states have had little option but to move back to opium,” said the U.N. office's regional representative Jeremy Douglas.
Read more: Myanmar violence has displaced more than 1 million, says UN
The overall value of the Myanmar opiate economy, based on U.N. estimates, ranges between $660 million and $2 billion, depending on how much was sold locally, and how much of the raw opium was processed into heroin or other drugs.
"Virtually all the heroin reported in East and Southeast Asia and Australia originates in Myanmar, and the country remains the second-largest opium and heroin producer in the world after Afghanistan," Douglas said. "There is no comparing the two at this point as Afghanistan still produces far more, but the expansion underway in Myanmar should not be dismissed and needs attention as it will likely continue — it is directly tied to the security and economic situation we see unfolding today.”
The so-called Golden Triangle area, where the borders of Myanmar, Laos and Thailand meet, has historically been a major production area for opium and hosted many of the labs that converted it to heroin. Decades of political instability have made the frontier regions of Myanmar, also known as Burma, largely lawless, to be exploited by drug producers and traffickers.
Most of the opium exported by Myanmar goes to China and Vietnam, while heroin goes to many countries across the region, Douglas said.
“It is really where the value is for traffickers,” he said. “Very high profits.”
The cultivation of opium had been trending downward in recent years before the military took control of the government in 2021.
Production estimates hit a bottom of 400 metric tons (440 tons) in 2020. After rising slightly in 2021, that spiked in 2022 to an estimated 790 metric tons (870 tons), according to the report.
Since it took control of the government, the military's use of deadly force to hold on to power has escalated conflict with its civilian opponents to the point that some experts describe the country as now being in a state of civil war.
The costs have been high, with 2,810 people killed by government forces to date and 17,427 detained, according to the Assistance Association for Political Prisoners.
The violence has meant that the government has been unable to reach some areas to carry out drug eradication raids, and has also had to divert its resources elsewhere. Consequently, eradication efforts appear to have decreased substantially, with 1,403 hectares (3,467 acres) reported eradicated in 2022 — some 70% fewer than in 2021.
Read more: Myanmar military killed at least 142 children in past 16 months: UN expert
At the same time, as the conflict continues to take its toll on Myanmar's economy, an increasing number of rural households have been pushed into relying more on opium cultivation for income, the U.N. said.
“The expansion of opium production that is underway is fundamentally about poverty and people in rural areas reacting to the economic situation,” Douglas said. “It has always been there in tough times. At the same time, the security situation is clearly difficult with increasing frequency and intensity of conflict, and those involved in the drug economy have been left largely unchecked.”
Its synthetic drug economy has also been surging for the same reasons, with reported regional seizures of methamphetamine and other drugs reaching record levels. In a single bust in September in Laos, for example, authorities seized 33 million methamphetamine tablets along with 500 kilograms (1,100 pounds) of crystal methamphetamine.
Tesla says its 4Q profit rose 59%, expects strong demand
Tesla on Wednesday posted record net income in the fourth quarter of last year, and the company predicted that additional software-related profits will keep its margins higher than any other automaker.
The Austin, Texas, maker of electric vehicles and solar panels said it earned $3.69 billion from October through December, or an adjusted $1.19 per share. That beat estimates of $1.13 that had been reduced by analysts, according to FactSet. The company’s profit was 59% more than the same period a year ago.
Revenue for the quarter was $24.32 billion, which fell short of the $24.67 billion that analysts expected.
CEO Elon Musk said that despite price cuts of up to 20% on some of its vehicles announced earlier this month, demand for Tesla products is strong and sales are constrained by production.
Some analysts have said the price cuts were a sign Tesla's sales are softening. But so far in January, Tesla has seen the strongest orders year-to-date in its history, Musk said on a webcast with analysts.
Read more: Elon Musk defiantly defends himself in Tesla tweet trial
“We think demand will be good despite probably a contraction in the automotive market as a whole,” he said. “Demand far exceeds production,” Musk said, adding that Tesla is even making small price increases.
Tesla said in its investor letter Wednesday that it would produce about 1.8 million vehicles this year, and Musk predicted that sales would also hit that number.
Previously Tesla has said its deliveries would grow at a 50% annual rate most years. But 1.8 million would be about a 40% growth rate.
Musk said it’s possible Tesla could build 2 million vehicles this year. “There would be demand for that, too,” he told analysts.
On Jan. 13, the company cut prices in the U.S. and China, its two biggest markets, leading many analysts to believe that demand had fallen due to high prices and rising interest rates.
Morgan Stanley analyst Adam Jonas wrote in a note to investors early Wednesday that demand is a problem.
“In our view, the price cuts are indeed a response to slowing incremental demand relative to incremental supply,” he wrote.
Tesla's automotive gross profit margin, which is revenue minus cost of goods sold, fell from 30.6% in the fourth quarter of 2021 to 25.9% in the same period in 2022 as previous discounts took hold.
Shares of Tesla were up slightly Wednesday, closing at $144.43. They rose another 5.5% in extended trading following the earnings report.
Morningstar Equity Strategist Seth Goldstein, who covers Tesla, said Musk addressed fears about demand falling by releasing the 1.8 million sales projection. At least for this year, though, he sees Tesla's profit margins eroding further due to the price cuts.
“Longer term I think the profit margins will bounce back,” he said.
Average sale prices, he said, rose in the fourth quarter even with price cuts in China, Goldstein said, and the company was able to increase productivity at new factories in Texas and Germany. But that wasn't enough to offset higher raw materials and shipping costs, he said.
Read more: Tesla says it sold a record 1.3 million vehicles last year
Tesla also said it has rolled out its “Full Self-Driving” software to about 400,000 users, and that it recognized $324 million in revenue from “Full Self-Driving” software during the quarter. Despite its name, “Full Self-Driving” cannot drive itself, and Tesla warns drivers that they must be ready to intervene at any time.
The company said it knows there are questions about macroeconomics in the face of rising interest rates. “In the near term we are accelerating our cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase of our roadmap,” the letter said.
Musk was asked how Tesla would mitigate brand damage since his $44 billion takeover of Twitter, based on Morning Consult poll results showing a steep favorability decline among Democrats.
But Musk said he has 127 million followers on the social media platform, and his following keeps growing. “That suggests that I’m reasonably popular,” he said, adding that the number of followers speaks for itself.
For the full year, Tesla made $12.56 billion in net income, or an adjusted $4.07 per share.
The company's stock tumbled 65% last year on fears that Musk was distracted by his $44 billion acquisition of Twitter. But so far this year they’re up about 35%.
Price cuts that began Jan. 13 fueled concerns on Wall Street that demand for Teslas was falling as intense competition arrives from startups and legacy automakers.
Amazon workers hold first UK strike, adding to labor turmoil
Amazon warehouse workers went on strike for the first time in Britain on Wednesday because of a dispute over pay and working conditions, adding to a wave of industrial labor action across the country fueled by the soaring cost of living.
Union members voted to walk off the job for one day at the e-commerce giant's fulfillment center in Coventry, a city about 100 miles (160 kilometers) northwest of London near Birmingham.
Amanda Gearing, a senior organizer with the GMB union, said Amazon staff who worked through tough conditions during the COVID-19 pandemic are just “trying to get decent pay." Another big issue is performance targets set by an algorithm that piles extra pressure on workers, she said.
The union is fighting for a bigger pay raise than the company's offer, which it says amounts to an extra 50 pence (61 cents) an hour.
Amazon, which operates 30 fulfillment centers in the United Kingdom, said 2,000 workers are employed at the Coventry facility. The union says 98% of those who took part in the vote decided to strike, and Amazon said that amounts to only 178 workers.
The company said it's offering “competitive pay” starting at 10.50 to 11.45 pounds an hour, depending on location. Amazon says that is a 29% increase in the minimum hourly wage for employees since 2018.
Business at Seattle-based Amazon boomed during the pandemic but, like other tech companies, it has been reversing recent expansions as it faces economic uncertainty. This month, it announced 18,000 layoffs.
Read more: Google axes 12,000 jobs, layoffs spread across tech sector
Amazon staff are the latest group of British workers to join the picket lines as high food and energy prices drive the highest inflation in decades. Nurses, ambulance workers, train drivers, border staff, driving instructors, bus drivers, teachers and postal workers have all walked off their jobs in recent months to demand higher pay amid the cost-of-living crisis.
Amazon routinely faces protests and walkouts from workers who want higher wages and better working conditions, including elsewhere in Europe, such as Spain and Germany.
Last year on Black Friday, a coalition of unions and advocacy groups coordinated walkouts in more than 30 countries under a campaign called “Make Amazon Pay.” Organizers said they wanted the company to boost pay for hourly workers, extend sick leave and end its effort to fend off unionization, among other things.
In October, the company suspended dozens of workers at a New York warehouse after many of them staged a protest and refused to return to their shifts following a trash compactor fire.
Read more: Microsoft, amid layoffs, says quarterly profit declined 12%
Microsoft, amid layoffs, says quarterly profit declined 12%
Microsoft on Tuesday reported a 12% drop in profit for the October-December quarter, reflecting the economic uncertainty it said led to its decision to cut 10,000 workers.
The company reported quarterly profit of $16.43 billion, or $2.20 per share.
Excluding one-time items such as $800 million to pay severance to laid-off employees, the company based in Redmond, Washington, said it earned $2.32 a share, which topped Wall Street expectation for adjusted earnings of $2.29 a share. Microsoft’s stock was up more than 4% in extended trading following the release of its earnings report.
Read more: Job cuts in tech sector spread, Microsoft lays off 10000
The software maker posted revenue of $52.75 billion in the October-December period, its second fiscal quarter, up 2% from the same period a year ago. Analysts polled by FactSet expected Microsoft to post revenue of $52.99 billion for the quarter.
Microsoft last week blamed “macroeconomic conditions and changing customer priorities” for its decision to cut nearly 5% of its global workforce. It’s one of a number of tech companies, including Google, Amazon, Salesforce and Facebook parent Meta, to announce mass layoffs.
Microsoft's personal computing business, centered on its Windows software, was widely expected to continue a deterioration that began earlier last year due to economic uncertainties and crimped demand. Quarterly sales from that segment dropped 19% to $14.24 billion, the company said Tuesday.
The company gets licensing revenue from PC manufacturers who install its Windows operating system on their products.
Market research firm Gartner reported that worldwide PC shipments in the October-December quarter declined 28.5% from the same period of 2021, the steepest quarterly decline since Gartner began tracking the market in the 1990s.
Read more: Google axes 12000 jobs, layoffs spread across tech sector
Among the factors reducing consumer demand for PCs were increased inflation, higher interest rates, the expectation of a global recession and the fact that many people already bought new computers during the COVID-19 pandemic, Gartner said.
With a weak PC market, analysts were closely watching for results from Microsoft's other big business segments — namely, its cloud-computing division, where sales grew 18% to $21.51 billion. Revenue also grew from the company's workplace software segment — which includes the Office suite of products — by 7% to $17 billion.
In a bid to further integrate the latest advances in artificial technology into its products, Microsoft on Monday announced a “multiyear, multibillion dollar investment” in the artificial intelligence startup OpenAI, maker of ChatGPT and other tools that can write readable text and computer code and generate new images.