Port Strikes, Acquisitions, and More!
Editor’s Note: Happy Wednesday, dear reader!
Let’s get to it!
East and Gulf Coasts Prepare for Major Strike
East and Gulf Coast port authorities and supply-chain partners are bracing for a potential disruption that could ripple through the national economy.
The Port Authority of New York and New Jersey is taking steps to prepare for the looming work stoppage by the International Longshoremen’s Association (ILA), a union representing tens of thousands of dockworkers, as they continue tense contract negotiations with the United States Maritime Alliance (USMX).
“We are coordinating with partners across the supply chain to prepare for any impacts,” a spokesperson from the Port Authority told CBS MoneyWatch.
Each year, $240 billion in goods pass through the two ports, supporting more than 600,000 jobs.
“We urge both sides to find common ground and keep the cargo flowing for the good of the national economy.”
With the clock ticking, both sides appear locked in a stalemate. The USMX has issued statements expressing frustration at the lack of engagement from the ILA.
“Despite additional attempts to engage with the ILA and resume bargaining, we have been unable to schedule a meeting,” the alliance said, adding that — while it wants to negotiate — “time is running out if the ILA is unwilling to return to the table.”
For its part, the union insists that USMX has failed to offer an acceptable wage increase. Negotiations broke down in June when the ILA walked away, citing the introduction of automation at the Port of Mobile in Alabama as a violation of their current contract.
Automation, the union argues, threatens jobs, and the ILA is demanding protection against it, along with substantial wage increases for their 85,000 members.
A strike could affect ports from Maine to Texas, halting operations at facilities that account for about 60% of U.S. shipping traffic. The economic fallout could be significant. A report from Oxford Economics warns that even a short strike could snarl supply chains well into 2025.
“Even a two-week strike could disrupt supply chains until 2025,” wrote Grace Zwemmer, associate U.S. economist with Oxford Economics.
The ILA has threatened to strike if a new labor agreement with USMX isn’t reached by October 1, when the current contract expires.
Private Equity Firms Consider Potential Smartsheet Acquisition
Popular collaboration software company Smartsheet (NYSE: SMAR) is set to be acquired by private equity firms Blackstone (NYSE: BX) and Vista Equity Partners in an all-cash deal that would value the company at approximately $8.4 billion.
The acquisition, announced Tuesday, comes after months of speculation surrounding Smartsheet’s potential sale as it faced increasing competition from other software giants like Atlassian.
As part of the deal, Smartsheet shareholders will receive $56.50 per share. That represents a 41% premium over the company’s average closing price for the last three months.
Mark Mader, Smartsheet’s CEO, expressed optimism about the acquisition and the company’s future under its new ownership.
“As we look to the future, we are confident that Blackstone and Vista’s expertise and resources will help us ensure Smartsheet remains a great place to work where our employees thrive,” Mader said in a statement.
Following the announcement, Smartsheet’s stock rose 6%, signaling investor confidence in the deal.
Private equity interest in enterprise software has surged in recent years, with firms like Blackstone and Vista Equity Partners targeting companies that have shown resilience and potential for long-term growth.
By acquiring Smartsheet, the two firms are betting on the continued demand for collaboration and project management tools in a hybrid work environment.
U.S. Seeks to Ban Chinese Tech From American Roads
The U.S. Commerce Department has proposed a sweeping ban on key Chinese software and hardware in connected vehicles — effectively putting the brakes on nearly all Chinese cars entering the U.S. market.
The new regulation would not only prevent future imports but also force American automakers to purge Chinese tech from vehicles already on U.S. roads.
The Biden administration has raised alarm bells over Chinese companies potentially collecting data from U.S. drivers and infrastructure through these connected vehicles. The White House has been particularly concerned about the risk of foreign adversaries manipulating cars via their internet-connected systems.
In a briefing this week, Commerce Secretary Gina Raimondo emphasized the risks posed by foreign-built vehicle software, saying it could be used for surveillance or, in the worst case, to cause widespread crashes or block roads.
“In an extreme situation, a foreign adversary could shut down or take control of all their vehicles operating in the United States,” she warned.
This proposal comes hot on the heels of other recent U.S. measures aimed at limiting Chinese involvement in critical industries.
Earlier this month, the Biden administration slapped 100% tariffs on Chinese electric vehicles (EVs) and raised duties on key components like EV batteries.
The proposed ban would go into effect in phases. Software prohibitions would start with the 2027 model year, while hardware restrictions would begin by 2029.
Unsurprisingly, China isn’t thrilled. The Chinese Embassy in Washington criticized the proposed action, calling on the U.S. to “create a level playing field” and warning that China will defend its interests.
Cobalt’s Critical Role
Cobalt has become essential in modern technology — particularly in lithium-ion batteries used in electric cars, laptops, and smartphones.
The metal’s ability to increase battery life and energy density has driven a surge in demand, especially as the market for electric vehicles (EVs) expands.
Currently, 71% of the cobalt mined globally is used in battery production, with 45% going toward electric vehicle batteries and 26% for portable devices, according to the Cobalt Institute’s 2023 annual report.
Take a look:
You will find more infographics at Statista
As the global shift toward electrification continues, projections suggest cobalt demand could increase fourfold by 2030, driven largely by the growth of EVs.
However, researchers are exploring alternative battery technologies that do not rely on cobalt, aiming to reduce the industry’s dependence on the metal and address ethical and environmental concerns surrounding its extraction.
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