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In wake of recent layoffs, Pritzker points at Federal Reserve

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Illinois

Lion Electric Co. laid off 300 more people or about a third of its workforce Wednesday as the slow rollout of electric school bus subsidies in the United States and Canada caused a sharp drop in revenue.

Wednesday’s job cuts, announced in a news release, mark the company’s fourth round of layoffs since November. Most of them, officials said, will be temporary. […]

Marie-Eve Labranche, a spokeswoman, declined to say how many Joliet workers were laid off. But on a conference call, Lion Electric officials said they were indefinitely delaying truck production in Joliet, partly over uncertainty around the future of subsidies after the U.S. presidential election. […]

Officials said that delays in government bus subsidies and slower-than-expected adoption of battery-powered freight trucks are prompting the cash crunch.

In a release, the company predicted deliveries will increase in the coming months as the U.S. Environmental Protection Agency releases more subsidies. It’s also working with the Canadian government to expedite the subsidies.

* From Gov. Pritzker’s Q and A yesterday…

Reporter: Over the last year, we’ve seen 1300 layoffs at John Deere, specifically in the Quad Cities…

Pritzker: And elsewhere.

Reporter: Right, but there were other layoffs announced at Jelly Belly recently up in Waukegan. A report yesterday, that Lion Electric has been struggling to get off the ground. How do you rate the state of the US economy broadly right now, and especially just given this is a presidential year, is this a liability for Kamala Harris?

Pritzker: Listen, the Federal Reserve is responsible for where interest rates are right now, and they could lower interest rates. I encourage them to lower interest rates. That will help all these companies and help us grow the economy more than it is already growing.

And as you’ve seen, some companies have struggled. Deere is in an industry that has struggled broadly. The electric car industry hasn’t struggled. It’s growing still, but it’s not growing at the same rate that it was. It will come back. But once again, interest rates are holding them back from making the investments that are necessary. So we’ve got a lot of challenges. They’re going to face the US economy. But I must say, broadly, I think that given all the challenges and circumstances that were inherited by Joe Biden when he took over from Donald Trump, who, by the way, lost us millions of jobs, and now we’ve gained almost 16 million jobs under Joe Biden. It seems like President Biden, Vice President Kamala Harris, have done an amazing job. Now, there’s more work to do. We all want to grow more and more jobs every year. I think Kamala Harris is the right person to do it.

Reporter: Is there anything you can do on John Deere? I mean, we’re here talking about incentives.

Pritzker: I meet with these companies regularly. And I call them and talk to them when they announce layoffs to try to figure out how do we help their workers, number one, and also, how do we help the company to recover from whatever they’re going through? All these companies are companies that are on a generally upward trajectory over the last decade, but are having a hard time in the moment, because of some of the challenges the Federal Reserve has brought.

* On a related note…

The Federal Reserve said Wednesday that greater progress has been made in reducing inflation to its 2% target, a sign that the central bank is moving closer toward cutting its key interest rate for the first time in four years.

In a statement issued after it concluded its two-day meeting, the Fed also said that “job gains have moderated” and acknowledged that the unemployment rate has risen. The Fed is required by Congress to pursue stable prices and maximum employment, and the statement said the central bank is “attentive to the risks” to both goals, a shift after several years of focusing exclusively on combatting inflation. […]

The Fed is seeking to strike a delicate balance: It wants to keep rates high enough for long enough to quell inflation, which has fallen to 2.5% from a peak two years ago of 7.1%, according to its preferred measure. But it also wants to avoid keeping borrowing costs so high that it triggers a recession. So far, it is on track for a so-called “soft landing,” in which inflation falls to 2% without a recession.

Yet with the unemployment rate ticking higher for three months in a row, some economists have raised concerns that the Fed should have cut rates Wednesday or should cut them more quickly later this year.

The number of Illinois’ unemployment claims year to date vs. the same period in 2023 dropped by 2.3 percent.

* Roundup from Isabel…

SJ-R | Unemployment claims in Illinois declined last week:

* Sun-Times | Boeing names new CEO as it posts loss of more than $1.4 billion in second quarter: Boeing announced its new CEO as it reported a loss of more than $1.4 billion on falling revenue during the second quarter. The loss was wider and the company’s revenue lower than Wall Street’s dismal expectations, as both Boeing’s commercial-airplanes business and defense unit lost money. […] Boeing Chairman Steven Mollenkopf said Ortberg was chosen after a “thorough and extensive search process” and “has the right skills and experience to lead Boeing in its next chapter.” Ortberg has earned a reputation for running complex engineering and manufacturing companies, Mollenkopf said.

* Tribune | CVS doubling down on primary health care, opening new clinics in Chicago, even as Walgreens pulls back: CVS announced the plans Thursday, saying the Oak Street Health locations will be in CVS stores in 14 states, including Illinois. It plans to open another 11 in-store clinics next year. Oak Street Health provides primary care for people on Medicare, focusing on low- to moderate-income seniors in underserved communities. […] CVS leaders hope that by combining the clinics and the pharmacies, they’ll be able to draw more patients to Oak Street. Also, doctors and nurses and Oak Street will work directly with the CVS pharmacists on-site every day to better coordinate care and improve patients’ health, Pykosz said.

* Utility Drive | Illinois can replace fossil plants with storage, capacity from queues: NRDC: Illinois could reliably replace its fossil-fueled power plants by 2030 with nearly 3 GW of battery storage and about 7.7 GW of resources that are seeking to connect to the grid in the state, according to a report released Thursday by the Natural Resources Defense Council. […] The consulting firm found that adding 2,972 MW of 4-hour battery storage at retiring power plant sites, plus a mix of generation in interconnection queues could lead to a reliable grid without the need to build transmission to import power from neighboring states.

* Bloomberg | EPA issues emergency fuel waiver to address Midwest shortages: The EPA issued an emergency waiver of fuel rules in four Midwest states to address shortages tied to a power outage at an Exxon Mobil Corp. refinery in Joliet. The order waives Reid vapor pressure and reformulated gasoline requirements in Illinois, Indiana, Michigan and Wisconsin through Aug. 20.

* Tribune | Instead of competing for land, some farmers and solar developers want to work side by side: While there are very few agrivoltaic projects in Illinois, early research and small projects show synergies between solar energy and agriculture. The co-location of solar panels and agriculture could keep farmers in business, improve ecosystem health, feed the country and provide clean energy.

* WQAD | Over 300 salaried John Deere workers laid off in Illinois Quad Cities: A total of 298 employees at John Deere World Headquarters in Moline and 21 employees at Harvester Works in Moline were laid off, according to emails obtained by News 8 on Tuesday. Those emails were sent to the Illinois Department of Commerce & Economic Opportunity by Deere officials and say that the affected employees are salaried, adding that they are not represented by a union. Impacted workers will receive an additional 60 days of compensation.

posted by Rich Miller
Thursday, Aug 1, 24 @ 1:23 pm

Comments

Speaking of layoffs in Illinois, the impending layoffs at Western Illinois University should be updated at the emergency scheduled Board of Trustees meeting, Aug. 6th. To date, 36 faculty lines have been terminated. In addition, there will be some who elected to retire (no numbers given yet). After that, it will be interesting to see how many more positions are given 6 mo. and how many are given 12 mo. notices of termination on August 6th.

Comment by H-W Thursday, Aug 1, 24 @ 1:29 pm
Land Value Tax allows businesses to improve their property without taxes climbing at the same exact rate as the property improvement

Comment by Macon Bakin Thursday, Aug 1, 24 @ 1:30 pm
John Deere spent $7 billion in Stock buybacks last year and $2.3 billion in Dividends and added 1,000 jobs to their Mexican operations. John Deere struggling my rear. It isn’t about interest rates, but Commodity prices that are down significantly: corn, Cotton, soybeans and wheat are down and that impacts farm revenue and projections for new equipment demand. Corn is down about 30% in the last twelve months.

Comment by Steve Goldberg Thursday, Aug 1, 24 @ 1:42 pm
If the current interest rates are preventing a business from expanding, it might just be a sign that the business’s expansion plans are not that great. The Fed seems to be doing the best it can.

Comment by Three Dimensional Checkers Thursday, Aug 1, 24 @ 1:46 pm
===adding 2,972 MW of 4-hour battery storage===

One way to store grid-scale energy is through pumped-storage hydropower (https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricity). You can use the solar generated during the day to pump water into an elevated reservoir, and generate hydro power off of that at night. It has been done for over a century to run a coal plant at peak efficiency instead of adjusting to demand, and the cost and system losses are generally more favorable that batteries. There is even one in Michigan that uses Lake Michigan as the lower reservoir. The bluffs along the Mississippi River could serve as a natural location for us.

Comment by thechampaignlife Thursday, Aug 1, 24 @ 2:14 pm
Thinking the Lion situation had more to do with poor investment research and decision making by Team Pritzker than the Federal Reserve.
They should either acknowledge the mistake (that will never happen) or at least come up with a better story than blaming the Federal Reserve.

Comment by Back to the Future Thursday, Aug 1, 24 @ 2:48 pm
Somebody help me understand the rhetorical bridge work being done here.

My understanding is that Lion had a major order cancel. Deere is shuffling its workforce to other countries to make heavy equipment that managers cannot afford off-the-line nor justify as a long-term capital investment (Topic for another day: Right to Repair would help).

Isn’t the Fed’s announcement more reactive to these slow downs - not vice versa?

Thank you.

Comment by Dirty Red Thursday, Aug 1, 24 @ 2:52 pm
It’s tricky to try to push the Fed in any direction. Best to provide your best info on what’s happening in the economy. Overdo it and they tend to emphasize their independence from elected officeholders.

Comment by Walker Thursday, Aug 1, 24 @ 4:06 pm
CPI up 3% from last June to this June. However, June was down .1%. This is a good trend. But can it last. When we see inflation holding study at 2% for a few months then we should have interest rates lowered- but not until then.

We still have $34 trillion in federal debt to be financed. This should be a real concern but neither the public nor our elected officials seem to worry about it. They should.

We are a natin that loves to spend and borrow and that means the pressure on the Feds to prematurely lower rates is exacerbated.

Comment by Mason County Thursday, Aug 1, 24 @ 4:09 pm
== One way to store grid-scale energy is through pumped-storage hydropower ==

Slightly off topic, but I’ve always wondered why that wasn’t part of the Hunter Lake Plan. The height difference isn’t huge, but Hunter was planned to be higher than Springfield Lake

Comment by RNUG Thursday, Aug 1, 24 @ 7:01 pm