Monday, December 2, 2019

CEO Daily: Amazon's Web

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December 2, 2019

Good morning.


This weekend's must-read was the New York Times‘ lengthy story on Amazon's "expansive, creeping" influence in the city of Baltimore. You don't have to be a fan of the story's sometimes prosecutorial tone to appreciate the power of its reporting. One thing it demonstrates is the yawning gap between life for the "haves" of the fourth industrial revolution—those who have a good education, live in a thriving metropolis, etc.—and the "have-nots."


Some of the takeaways:


 Although Baltimore is a massive Amazon hub—with two giant fulfillment centers, and a rapidly expanding airport operation—it was never seriously considered as a site for Amazon's second headquarters. In a statement, Amazon said its criterion for choosing a new headquarters was "the availability of tech talent….Nowhere did Amazon say HQ2 was a project designed to help communities in need."


 With substantial local subsidies, the fulfillment centers are located at sites once occupied by G.M. and Bethlehem Steel factories. Some comparisons: "In the G.M. plant's final years, line workers made an average of $27 an hour, equivalent to more than $35 today. G.M. workers could make $80,000 annually with overtime." At Amazon, pay starts at $15.40, and "even a veteran worker…would have to put in considerable overtime to get to $40,000". Moreover the G.M. plant employed 8,000 at its peak, and Bethlehem Steel employed 30,000. Amazon has a total of 4,500 workers at the two warehouses.


 While we write frequently in this space about how management has changed in the 21st century, with leaders called on to provide inspiration and purpose to talented young people who insist on doing good in the world, that clearly doesn't apply to Amazon's warehouse workers. They seem to work in a data-charged version of Frederick Winslow Taylor's 20th century "scientific management. "Amazon's system automatically generates any warnings or terminations regarding quality or productivity without any input from supervisors," according to a court filing by Amazon's lawyers.


You can read the entire story here.


Separately, Fortune publishes its "crystal ball" predictions for 2020 this morning. I won't give them away here, except this one: our seers believe the S&P 500 will inch up to 3,200 by year's end.


More news below.



Alan Murray
@alansmurray
alan.murray@fortune.com


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TOP NEWS


Chinese Manufacturing


Chinese manufacturing is expanding more briskly than had been expected, according to the latest Caixin/Markit manufacturing Purchasing Managers' Index. The November PMI came in at 51.8, up slightly from October's 51.7—economists had been expecting 51.4. China's official PMI, which polls more big businesses and state enterprises, was 50.2 for November. CNBC


U.S. Parts


Analysts reckon Huawei's latest smartphone, the Mate 30, contains no parts from American companies. This seems to be the result of the Trump administration's May ban on U.S. firms' shipments to the Chinese telecoms giant—many of those companies now have the go-ahead to resume business with Huawei, but that ship may have now sailed. Wall Street Journal


Iran Sanctions


Speaking of U.S. bans, the "Instex" mechanism for bypassing American Iran sanctions just gained more participants. The European channel, which allows Iran to keep exporting oil in exchange for other products and services, was initiated by France, Germany and the U.K. Now Belgium, Denmark, Finland, Norway, Sweden and the Netherlands are also on board. Guardian


Nomura CEO


Koji Nagai is stepping down as Nomura CEO after seven years in the role. He will be replaced from April 1 by current COO Kentaro Okuda, and will likely become the brokerage giant's chairman. Nagai had been under shareholder pressure over Nomura's first full-year loss in a decade. Financial Times



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Content From Deloitte

Industry Adopts Blockchain


Most industry leaders no longer ask "Will blockchain technology work?" They ask "How can we make blockchain technology work for us?" Read Deloitte's new report to see how leaders in individual industries are adopting blockchain to create long-term value.


Learn more


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AROUND THE WATER COOLER


Digital Currency


Europe's failure to create a digital currency and otherwise modernize its financial system could ultimately threaten its sovereignty. As Fortune's Geoffrey Smith writes: "While diehard crypto fans continue to amuse themselves with projects intended to link future trade between colonized planets, digital currency is more clearly than ever an issue of utmost seriousness for the institutions that matter." Fortune


Oil Production


Saudi Arabia wants OPEC to extend oil production cuts through to mid-2020—a move that would be most helpful for Aramco's upcoming IPO, the pricing of which is coming in a few days' time. Not in Aramco's favor: growing unrest in the Middle East, which Saudi Arabia fears might lead to a drop in oil prices. WSJ


Leaders Resign


Two prime ministers have fallen on their swords. Iraq's Adel Abdul Mahdi quit yesterday following weeks of deadly protests—his resignation followed the killing of 50 demonstrators. And Malta's Joseph Muscat will leave office next month amid accusations of corruption and cronyism related to the assassination of investigative journalist Daphne Caruana Galizia. BBC


Facebook Ads


Facebook has removed a political ad from the U.K.'s Conservative Party, because it included doctored footage from the BBC. The ad was edited to use clips out of context, for example showing journalist Laura Kuenssberg saying "A pointless delay to Brexit" when the omitted context would have shown that she was quoting Prime Minister Boris Johnson. The BBC complained to Facebook. Telegraph


This edition of CEO Daily was edited by David Meyer. 



WE NEED YOUR HELP


Know a standout female leader at your company or another? Tell us about her! We're taking nominations for Fortune's upcoming Most Powerful Women Next Gen Summit, where we convene ascending leaders to converse about business, share advice, and connect with one another. It's Dec. 10-11 in Laguna Niguel, Calif. Submit your nominations to MPWNextGen@fortune.com. They can register here.



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