Daily Business Briefing
June 1, 2021Updated
June 1, 2021, 6:20 p.m. ET
A JBS plant in Minnesota. About 25 plants canceled shifts scheduled for Monday, with some of them citing “server problems.”Credit…Bing Guan/Reuters
The White House on Tuesday said that a breach at JBS, the world’s largest meat processor, was a ransomware attack, as some of the company’s plants were partly or fully shut down in its aftermath.
“Meat producer JBS notified us on Sunday that they are the victims of a ransomware attack,” Karine Jean-Pierre, a deputy press secretary, told reporters aboard Air Force One on Tuesday. Ms. Jean-Pierre said that the Federal Bureau of Investigation was investigating the hack and that the Cybersecurity and Infrastructure Security Agency was also involved.
Operations at most JBS plants were affected, according to Facebook posts meant for employees. About 25 plants in the United States and Canada posted to Facebook that they had canceled shifts scheduled for Monday or Tuesday, with some of them citing “server problems.” Many of the company’s poultry plants were starting to bring workers back Tuesday, but at least three of the company’s 11 beef plants were still shuttered, according to the posts.
“I can confirm that the attack affected the plant in Brooks and the roughly 2,500 unionized workers employed there,” said Scott Payne, a spokesman for the United Food and Commercial Workers Local 401 in Canada, referring to a beef plant in Alberta. “All shifts were canceled yesterday. The morning shift was canceled today. But the afternoon shift has been rescheduled to operate today.”
JBS has said only that it was the target of an “organized cybersecurity attack” that affected systems in North America and Australia, and that it did not expect that any customer, supplier or employee data was affected. JBS couldn’t immediately be reached to comment. Ms. Jean-Pierre said that JBS had informed the Biden administration that the ransom demand came from “a criminal organization likely based in Russia.”
“The White House is engaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals,” she said.
In two weeks, President Biden is scheduled to meet the president of Russia, Vladimir V. Putin, in Geneva for a summit in which a variety of cyberattacks, mostly emanating from Russia, are already on the American agenda. One recent breach leveraged software called SolarWinds to infiltrate upward of 250 federal agencies and businesses. It has been considered the most damaging attack because it got to the question of whether the United States can trust its supply chain of software.
In May, parts of the country experienced gasoline shortages after a ransomware attack on the Colonial Pipeline caused some panic buying.
SolarWinds, the United States has said, was the work of the S.V.R. — one of Russia’s premier intelligence agencies. The Colonial Pipeline attack appeared to be the work of a ransomware group, which Mr. Biden said was based in Russia. The culprit behind the JBS attack has not been publicly identified.
David E. Sanger, Noam Scheiber and Julie Creswell contributed reporting.
— Mohammed Hadi and William P. Davis
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Companies can require vaccines only for employees returning to the workplace, the Equal Employment Opportunity Commission said.Credit…John Muggenborg for The New York Times
The agency that enforces workplace discrimination laws has said — twice — that companies can make their employees who are returning to the job get vaccinated against Covid-19.
But so far, few companies have decided to move forward, as many are still engaging in internal debates about how to safely restore their offices to operations that resemble what they were before the pandemic.
Pressed by some of the nation’s biggest business groups, including the U.S. Chamber of Commerce, the Equal Employment Opportunity Commission said Friday that companies could mandate vaccines as a requirement for coming into the office. The agency had issued a similar note in December.
Some companies say they are wary of setting mandates until the vaccines have received full approval by the Food and Drug Administration, which so far has granted emergency use authorization. Another reason many companies remain hesitant, according to executives, lawyers and consultants who advise companies, is the long list of legal considerations the E.E.O.C. says they must follow before mandating vaccines.
While Saks and Delta Air Lines have said they will require vaccines for at least some employees, most have arrived at a solution more like that of JPMorgan Chase. The bank, which opened its offices on a voluntary basis on May 17 and will require most workers to return to their desks in rotations starting in July, has said it is strongly encouraging but not yet mandating vaccines.
Jamie Dimon, the bank’s chief executive, said at a House Financial Services Committee hearing last week that he felt it was safe for employees to return to the office.
“No one’s being forced to do anything,” Mr. Dimon said. “We want everyone to be vaccinated — we’re not requiring that.”
Vaccine mandates must abide by the Americans With Disabilities Act and the Civil Rights Act of 1964, the E.E.O.C. said. That means companies must accommodate employees with health concerns like allergies and keep that information confidential.
“I think that the fact that it takes the E.E.O.C. several pages of notes to talk about all the steps you need to take to reasonably accommodate someone who has a disability or a religious reason why they can’t get a vaccine is one of the reasons why employers might still choose not to mandate,” said Douglas Brayley, an employment lawyer at Ropes & Gray.
Companies are considering whether to offer incentives for employees to get vaccinated, or to show proof of vaccination, while stopping short of a mandate. But even trying to nudge workers can be legally fraught.
The E.E.O.C. said Friday that employers could offer inducements as long as they were not “coercive,” or so strong that they made participation essentially involuntary. The agency did not define what constitutes a coercive incentive.
“They don’t want to go out on a limb when there are still cases yet to happen and allegations have to be made,” Mr. Brayley said.
The agency also reminded employers to consider that access to the vaccine is not yet equitably distributed. Certain groups of people face greater barriers to vaccination, and the agency said employers should consider that in any back-to-work requirements.
A long list of companies, including the Olive Garden parent Darden Restaurants and McDonald’s, are offering paid time off for employees to be vaccinated. Amazon is offering frontline workers who get vaccinated a bonus of up to $80. Walmart workers are being offered a $75 bonus, but they must provide proof they have been vaccinated.
Some companies, like JPMorgan and Goldman Sachs, are allowing employees who have been vaccinated to go without masks while in the office, following guidance that the Centers for Disease Control and Prevention issued last month on masks and social distancing. Walmart will allow vaccinated employees to go mask-free in its stores and offices. None of the companies require employees to provide proof of vaccination to go without masks.
Workplace policies allowing vaccinated workers to go mask-free raise questions about whether companies are prepared to monitor who is wearing masks.
“When you see an employee without a mask, are you going to run back to H.R. and verify that that person really was fully vaccinated?” asked Jessica Kuester, an employment benefits lawyer at the law firm Ogletree Deakins.
Sharon Masling, an employment specialist at the law firm Morgan Lewis, said companies might be more inclined to mandate vaccines as vaccines became more widespread and obtained full F.D.A. approval.
“I can say that we are getting more questions about requiring vaccines for employees than we were even a month ago,” Ms. Masling said.
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The oil market is expected to tighten as increased economic activity across the globe leads to more petroleum consumption.Credit…Jonathan Drake/Reuters
It did not take long. With oil futures rising to levels not seen since 2018, officials from the Organization of the Petroleum Exporting Countries and allied producers like Russia met on Tuesday and decided to stick with a plan to gradually ease production curbs agreed to in April.
OPEC meetings sometimes drag on for days, but Tuesday’s gathering required less than half an hour, Prince Abdulaziz bin Salman, the Saudi oil minister, said during a news conference. The rising price of oil probably didn’t hurt.
The group, known as OPEC Plus, is still adjusting to a market that collapsed a year ago when the pandemic took hold of the global economy, forcing a huge cutback in petroleum output. Under the plan the group agreed to in April and confirmed on Tuesday, the oil states will add 350,000 barrels per day in June and 441,000 barrels per day in July.
Saudi Arabia will also continue to unwind the one million barrels a day in voluntary cuts it announced this year. The Saudis plan to produce 350,000 barrels a day in June and 400,000 barrels a day more in July on top of the other states’ expansions.
Analysts say that even with these modest additions in production, the oil market is likely to be tight as increased economic activity leads to more petroleum consumption, burning off the glut that built up in the early months of the pandemic. “Demand growth is outpacing supply gains,” even with the OPEC Plus increases, said Ann-Louise Hittle, an analyst at Wood Mackenzie, a market research firm.
Oil prices rose on Tuesday. Brent crude, the international benchmark, settled above $70 a barrel, while the U.S. benchmark, West Texas Intermediate, gained about 3.5 percent, to more than $68.50 a barrel. Both prices were the highest since October 2018.
OPEC ministers are watching indirect talks between Iran, a member of the cartel, and the United States that could lead to an easing of sanctions and a surge in Iranian crude onto the world market. OPEC figures that the outcome of the talks is still unclear and that a major increase in Iranian oil output, if it comes, is months away.
Prince Abdulaziz said that the issue of Iran had not been discussed during the meeting but that OPEC Plus would continue its recent practice of holding monthly meetings to decide on adjustments in output as necessary.
“We know the situation prevailing today allows us to proceed with what we are planning in July,” he said.
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Credit…Aaron P. Bernstein/Reuters
The Federal Reserve’s Board of Governors is expected to have several openings over the coming year, allowing the Biden administration a chance to partly remake a body largely appointed by former President Trump, potentially by increasing diversity and including candidates who are more aligned with its economic priorities.
But there might be one position fewer to fill than many Democrats had been hoping for. Randal K. Quarles, the Fed’s vice chair for supervision, suggested during an event on Tuesday that he might stay at the central bank once his leadership term ends.
Mr. Quarles’s term as vice chair runs through mid-October, and his term as head of the global Financial Stability Board wraps up in December. Once those leadership roles end, he could stay at the Fed as one of its seven governors until 2032.
“I’ll serve out my full F.S.B. term,” Mr. Quarles said during a Politico event on Tuesday. “There’s a tradition in our family that people serve out their full terms on the Federal Reserve Board of Governors, even if they’re no longer the chair or the vice chair.”
He said he “hasn’t decided that yet” when asked if that meant he would serve through 2032, just that there’s familial precedent for it.
Mr. Quarles is married to a relative of Marriner Eccles, who was a long-serving Fed chair before the Truman administration declined to reappoint him in 1948. Mr. Eccles chose to stay on as governor until he resigned in mid-1951, and ended up playing an important role in striking the agreement that secured the Fed’s independence from elected government. The Fed has been free ever since to set policy to achieve macroeconomic goals — stable inflation and high employment — rather than partisan ones.
As the Fed’s first official vice chair for banking supervision, Mr. Quarles has helped loosen safeguards put in place following the global financial crisis.
His stance on regulation makes it highly unlikely that the Biden administration would reappoint Mr. Quarles to his leadership role, because his views are at odds with those of the White House. If he were to stay on as a governor, though, it could ramp up pressure on the administration to find a powerful and knowledgeable replacement for Mr. Quarles, one who could balance his influence on regulatory measures.
Richard H. Clarida, the Fed’s monetary policy vice chair, will see his term as governor expire in early 2022. Jerome H. Powell, the Fed’s chair, will see his leadership role end early next year, though his governor role lasts into 2028. Mr. Powell became a governor during the Obama years but elevated to his current position during the Trump administration. There is one open spot on the Fed board already.
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A Krispy Kreme store in Times Square.Credit…Amr Alfiky/The New York Times
Krispy Kreme, the doughnut giant owned by the European investment firm JAB Holding, is planning to sell stock to the public.
The company revealed its financials for the first time on Tuesday as it prepares for a public listing in the United States. The company’s sales grew 17 percent to $1.1 billion its last fiscal year, up from $959 million (not $959,000, as previously written here) the year before. Losses, though, nearly doubled, to $60 million from $34 million as the company doubled down on efforts to transform itself. That includes the $20 million it spent on consulting and advisory fees, personnel transition costs, buying out its franchisees and other initiatives.
JAB acquired Krispy Kreme for roughly $1.35 billion in 2016, adding the doughnut seller to a portfolio of consumer brands that now includes the sandwich shop Panera and the coffee chain JDE Peets.
The firm has since taken JDE Peets public and is laying the groundwork to do the same with Panera. The I.P.O. market has been wide open for consumer brands like Oatly, the dairy-free milk producer, and Honest Company, the online consumer products retailer. Digital brands like Warby Parker, the eyeglass store, and AllBirds, the Silicon Valley shoe favorite, are also considering offerings.
But unlike many of those brands, Krispy Kreme is no start-up. The 83-year old company first went public in 2000 before its sale to JAB. It must contend with new health trends, as well as a dining backdrop that has transformed considerably over the past year, as restaurant giants poured money into technology to adapt to the remote needs of customers. Among the leaders was Dunkin’ Brands, which was acquired by Inspire Brands, the parent of Arby’s, for $11 billion last year.
Krispy Kreme says it is not a restaurant but “an affordable indulgence.” The brand said in its I.P.O. prospectus its doughnuts are “world-renowned for their freshness, taste and quality,” and it highlighted its ability to create “major media-driven events,” like its doughnut giveaway to promote coronavirus vaccinations.
Shares will trade on the Nasdaq stock exchange under the symbol DNUT.
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Stocks were mostly unchanged on Tuesday as new data showed evidence of a strengthening global economic recovery but included signs that manufacturers are struggling to keep up with demand, which could increase inflationary pressures.
The S&P 500 and the Nasdaq composite ticked down less than 0.1 percent.
Commodities and bond yields saw gains, though they ended the afternoon well below their highs of the day.
The yield on 10-year Treasury notes was at 1.61 percent, up two basis points but down from 1.64 percent earlier in the day. West Texas Intermediate, the U.S. crude benchmark, gained 2.1 percent to $67.72 a barrel, as the Organization of the Petroleum Exporting Countries and its allied producers including Russia decided on Tuesday to continue gradually increasing production quotas.
Shares of AMC Entertainment, the world’s largest movie theater chain, jumped 23 percent. The company’s shares were caught up in a trading frenzy earlier this year, when small investors briefly pumped up so-called meme stocks. The volatility has continued, and on Tuesday, AMC shares closed at prices not seen since late 2016.
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The sudden lack of child care systems at the height of the pandemic has been blamed for causing what many economists call the world’s first “she-cession” — when more women than men, particularly those with children, were either pushed out of their jobs or were forced to downsize their careers.
But a new study published in April by the National Bureau of Economic Research, which analyzed employment figures in 28 developed countries in North America and Europe, presents a more nuanced picture of the damage. The economic damage was indeed worse for women in almost every country analyzed: The number of women in the labor force, compared with men, fell in 18 of the 28 countries, reports The New York Times’s Alisha Haridasani Gupta.
Credit…The New York Times | Source: Matthias Doepke, Northwestern University Department of Economics
And part of the disproportionate impact on women globally was, undoubtedly, related to the extent of school closures. Schools have been closed the longest in the United States and Canada, according to data from UNESCO, the U.N.’s education agency, and employment among women fared the worst in both those countries.
In France, schools were closed for a total of 11 weeks, and employment losses for women were among the lowest of the 28 countries analyzed, said Matthias Doepke, an author of the study and an economist at Northwestern University. However, France also ended up with higher coronavirus infection and death rates than other European countries.
But school closures alone don’t explain how a country like Germany, where schools were shut for 30 weeks, kept unemployment levels for women low, Mr. Doepke said, suggesting that other factors, like labor protections or the ability to work remotely, played equally significant roles in employment.
Credit…By The New York Times | Source: United Nations Educational, Scientific and Cultural Organization
One critical difference between the United States and Germany (as well as several other countries in Europe) is the expansive furlough programs, in which workers remained employed and received subsidized paychecks while working reduced hours or none at all. Often, those paychecks were larger for parents.
And the study found that the single biggest indicator of job losses for American women in the last year was actually whether they could work from home in the first place. Among mothers of prekindergarten children who could not work remotely, their hours declined by almost 18 percentage points more than fathers’ work hours. But for mothers who could work remotely, that gap was two to three percentage points.
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The pandemic has slowed sawmill operations, causing a shortage of lumber that has hampered home building in the United States.Credit…Octavio Jones for The New York Times
As the pandemic hampered factory operations and created chaos in global shipping, many economies around the world were bedeviled by shortages of a vast range of goods including electronics, lumber and clothing.
The shortages reflect the disruption of the pandemic combined with decades of companies limiting their inventories, The New York Times’s Peter S. Goodman and Niraj Chokshi report.
Over the last half-century, Toyota has captivated global business in industries far beyond autos. It pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them. Companies have embraced Just In Time to stay nimble, allowing them to adapt to changing market demands, while cutting costs.
But the tumultuous events of the past year have challenged the merits of paring inventories, while reinvigorating concerns that some industries have gone too far, leaving them vulnerable to disruption.
The most prominent manifestation of too much reliance on Just in Time is found in the very industry that invented it: Automakers have been crippled by a shortage of computer chips — vital car components produced mostly in Asia. Without enough chips on hand, auto factories from India to the United States to Brazil have been forced to halt assembly lines.
But the breadth and persistence of the shortages reveal the extent to which the Just in Time idea has come to dominate commercial life. This helps explain why Nike and other apparel brands struggle to stock retail outlets with their wares. It’s one of the reasons construction companies are having trouble purchasing paints and sealants. It was a principal contributor to the tragic shortages of personal protective equipment early in the pandemic, which left frontline medical workers without adequate gear.
Just In Time has amounted to no less than a revolution in the business world, but the shortages raise questions about whether some companies have been too aggressive in harvesting savings by cutting inventory, leaving them unprepared for whatever trouble inevitably emerges.
No pandemic was required to reveal the risks of overreliance on Just In Time combined with global supply chains. In fact, experts have warned about the consequences for decades.
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Brent Ozar, 47, and his wife have been working remotely in Iceland since January and will stay until the fall before returning home to San Diego.Credit…Béatrice de Géa for The New York Times
Let’s say you’re thinking about becoming a digital nomad this summer, making the most of your company’s work-from-home policy as borders reopen before the bosses require you back in the office. The streets of Rome and the foothills of Iceland’s glaciers are appealing, but have you thought much about the logistics of keeping up with your job, or about the tax consequences?
As tempting as it all is, the reality can be complicated, experts say.
“The tax system globally right now is not prepared for what the work force is going through,” said David McKeegan, a co-founder of Greenback Tax Services, an accounting firm for U.S. expatriates. “I think at some point we’ll see a system where people are asked on the way in or out if they were working and countries will try and get some more tax revenue from this very mobile work force.”
Here is a look at how working remotely from abroad could affect Americans’ take-home pay, addressing questions such as:
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Can I work from outside the United States for a few weeks or months without being double-taxed?
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Am I on the hook for U.S. taxes no matter where I go?
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Can I “forget” to mention my plans to my boss?
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