Indianapolis - Circa April 2020: Tesla electric vehicles awaiting preparation for sale. Tesla EV Model 3, S and X are a key to a cleaner and greener environment.
Tesla Model S and Model X owners have complained about potentially dangerous flaws with suspension systems at least since 2015. Now, the Chinese government has taken action—and the company is blaming the countryÃÛèÖÊÓƵ drivers.
ChinaÃÛèÖÊÓƵ State Administration for Market Regulation ordered a recall for about 30,000 Model S and Model X vehicles manufactured at TeslaÃÛèÖÊÓƵ Fremont, California, plant and exported to China. The affected cars were built from 2013-17.
Model S and Model X vehicles sold in the U.S. and Europe were built at the same factory using the same suspension systems. More than 250,000 were sold worldwide.
The traffic safety regulator for the United States, the National Highway Traffic Safety Administration, said last week that it is “aware of the Tesla recall due to suspension problems in China. At this time, the agency has not received significant complaints related to these issues in the United States. The agency is in contact with Tesla and monitoring the situation closely, and will not hesitate to take action to protect the public against unreasonable risks to safety.â€
Tesla has dissolved its media relations department and stopped responding to media inquiries in 2019. Emails to Tesla Chief Executive Elon Musk and to the defunct media relations department did not receive an immediate response.
But in a letter sent by a Tesla attorney to NHTSA on Sept. 4, the company blamed Chinese drivers for the problem, said there was no safety issue, and said it didn’t plan to issue a recall outside China.
The China recall offered little detail. The recall does not involve the Tesla Model 3, including the made-in-China version Tesla began assembling at its new Shanghai factory late last year.
Tesla owners at the Tesla Motors Club forum have been complaining about suspension issues since at least 2015, complaints that continue to this day. Many report that a ball joint connected to a control arm comes loose.
The company has issued service bulletins in the U.S. directing Tesla employees to replace suspension parts on vehicles that are brought in with relevant mechanical problems or to have the wheels aligned. The bulletins call the issue a “known non-safety-related condition.â€
In the letter to NHTSA, Tesla attorney Elizabeth H. Mykytiuk wrote that “the root cause of the issue is driver abuse ... that is uniquely severe in the China market.†Although the letter referred to “curb impact†and “severe pothole strike,†it offered no detail to support the claim that drivers in China abuse their cars.
The letter said “Tesla is not aware of any crashes, injuries, or deaths†related to the suspension issue. But it noted that affected owners will “receive new components†with “improved performance in abuse scenarios.â€
Given the way accident statistics are collected in the U.S., itÃÛèÖÊÓƵ difficult to determine whether the suspension issues caused deaths or injuries, and if so, how many. NHTSA has not released such figures. Insurance companies collect such data but keep it confidential.
In the past, Tesla has attempted to keep a lid on the suspension problems. In 2016, the auto industry news site Daily Kanban reported Tesla was repairing suspensions outside the ownerÃÛèÖÊÓƵ warranty coverage. The article quoted from a Tesla “goodwill†repair contract that required that the Tesla owner keep the agreement confidential and agree not to sue the company based on suspension issues.
After the nondisclosure requirement prompted a media stir, Tesla dropped it.
In the U.S., automakers are required to issue voluntary recalls for safety-related defects. In a 2014 tweet, since deleted, Musk declared that “the word ‘recall’ needs to be recalled.â€
In the letter to NHTSA, the company said a recall was not necessary even after ChinaÃÛèÖÊÓƵ safety agency, as Mykytiuk put it, “opined†that it was. Tesla “decided to do a voluntary recall†rather than contest the recall order, she wrote.
NHTSA is investigating possible defects in Model S and X vehicles produced over roughly the same period, after allegations that the company installed cooling tubes that were prone to leak, causing a potential fire hazard.
NHTSAÃÛèÖÊÓƵ website shows 351 complaints about Model S suspension systems, far more than for competing automakers. For instance, for the 2016 model year, there were 116 Model S suspension complaints, compared with three suspension complaints for BMW 200, 300, 400, 500, 600 and 700 Series vehicles, and none for Audi models A3, A4, A5, A6, A7 and A8.
Several complaints include phrases such as “control arm had snapped†and “left front control arm broke at 70 mph on highway.†One says the “ball joint snapped like glass during normal driving. As an engineer this scares the daylights out of me.â€
A surge in outdoor activities because of the coronavirus pandemic fueled new interest in recreational vehicles, helping Winnebago Industries post solid results for its fourth quarter and fiscal year.
The maker of motorhomes, towable RVs and travel trailers reported Wednesday that fourth quarter revenue increased 39% to $739 million.
Winnebago—based in Forest City, Iowa, but with its management offices in Eden Prairie—said some of that increase is tied to the acquisition of luxury motorhome maker Newmar Corp. last November.
Absent the acquisition, though, the companyÃÛèÖÊÓƵ revenue still increased 15% in the quarter, with the strongest performance in the towable RV segment.
“In the face of the unprecedented impacts of the COVID-19 pandemic, our strong fourth-quarter finish to the year was a testament to the incredible resolve of our world-class team, the strength of our portfolio of leading outdoor lifestyle brands, and our efficiency in quickly and safely resuming operations to meet tremendous consumer demand,†said Winnebago Chief Executive Michael Happe in a news release.
The pandemic fueled a resurgent interest in outdoor pursuits and products from bicycles to motorhomes. The RV Industry Association recently projected that total RV shipments across the industry for 2020 would be 424,400 units, a 4.5% growth in units over 2019, despite an industrywide shutdown of almost two months due to the coronavirus pandemic.
The industry group sees see the sales trends continuing into next year, projecting a record 507,200 units sold in 2021, a 19.5% increase over the projected 2020 total.
“This new forecast confirms what we have been seeing across the country as people turn to RVs as a way to have the freedom to travel and experience an active outdoor lifestyle while also controlling their environment,†said RV Industry Association President Craig Kirby in a news release.
Airline travel and hotel stays are down due to the pandemic, as companies curtailed discretionary travel and others curtailed recreation travel. However, some families have turned to RVing as an alternative to maintain social distance and other recommendations to stem the spread of the virus.
“Our consumers combined the imperative of the safety of their families with their strong desire to be immersed in the experiences they could control, and consequently flocked to the outdoor recreation lifestyle like never before,†Happe told analysts.
Winnebago earned $42.5 million, or $1.25 per share, in the fourth quarter, an increase over the $31.9 million, or $1.01 per share, earned in the same quarter last year. Adjusted EPS for the fourth quarter was $1.45 per share, a 45% increase over the year-ago quarter, and more than 50% better than the 93 cents per share analysts were expecting.
For the full fiscal year, Winnebago had total revenue of $2.4 billion, including $388.4 million in revenue from the Newmar acquisition. The company earned $61.4 million, or $1.84 per share, compared to $111.8 million, or $3.52 per share in fiscal 2019.
Adjusted EPS for fiscal 2020 was $2.58 per share down from the $3.45 in fiscal 2019, the adjusted EPS excludes financing and acquisition related costs.
Winnebago in November 2019 acquired Newmar for $270 million in cash plus 2 million shares of Winnebago stock. Revenue for the Motorhome segment was $302 million in the fourth quarter, a 50% increase over the fourth quarter last year fueled by the contribution of $126 million in revenue from Newmar during the quarter.
The Towables segment, which represents 56% of overall fourth-quarter revenue, saw its revenue increase 35% during the quarter to $414 million. The company said backlog for orders in Towables segment increased to a record $748 million, as dealers saw sizable inventory reductions in order to meet demand.
Winnebago hasn’t provided earnings guidance for 2021, but Happe also expressed confidence that renewed interest in all things outdoors will continue.
“As we look ahead to fiscal 2021, we are encouraged by the ongoing outdoor recreation demand trends we are experiencing,†he said in the news release. “We have built a strong and growing position in the RV market, and our customers continue to view all our brands as a trusted and safe way to have extraordinary experiences as they travel, live, work, and play in the outdoors.â€
The resurgent COVID-19 pandemic is pushing back the recovery in air travel, turning winter into a survival test for carriers now pinning hopes on a spring rebound.
Airlines are urging governments to introduce more testing and travel bubbles to help spur demand. The industry is on track to burn through an estimated $77 billion in cash the second half. The International Air Transport Association has called for fresh government support, while stressing the safety of flying.
The pain is evident across the globe, where airlines have rescinded earlier forecasts that called for traffic to gradually increase toward normal levels during the fourth quarter. Instead, carriers are retrenching and shoring up their finances.
Hong KongÃÛèÖÊÓƵ Cathay Pacific Airways Ltd. will slash more than 5,000 jobs and close a regional carrier to reduce its cash burn. British Airways parent IAG SA no longer expects to break even during the last three months of the year and has slashed capacity. American Airlines Group Inc. authorized the sale of $1 billion in shares as it burns up to $30 million a day this quarter.
One exception is in China, where the pandemic is in check and domestic flights have surged past where they were a year ago. In the U.S., airlines carried 1 million passengers on a single day for the first time since March. Still, air travel is at about the level it was more than three decades ago.
“It is still very unclear as to whether China is a model for what recovery will look like in other short- to medium-haul markets such as the U.S. or Europe, or whether aspects of its geography and culture make it different,†Nick Cunningham, an analyst at Agency Partners, wrote in an Oct. 23 note.
There are some signs of progress toward standards that would unlock long-distance travel, which has lagged behind domestic and regional flying. An international protocol will be ready in the next four weeks, said Gloria Manzo, the chief executive officer of the World Travel & Tourism Council.
“We can’t wait for a vaccine,†Manzo said at the Future Hospitality Summit on Monday. Travel corridors between London and Dubai, as well as London and Newark, New Jersey, are ready but hinge on government signoffs, she said.
The pace of a reopening will factor into production plans for planemakers Airbus SE and Boeing Co. Airbus is preparing to ramp up output next year of its most important jet, the A320neo, in a sign of growing confidence that jetliner demand is poised to recover. The European planemaker stressed that the plans are tentative and no decisions have been made.
Boeing is getting ready to unground its workhorse 737 Max jet, which has been sidelined for 17 months after two fatal crashes. U.S. and European regulators are in the final phases of approving the planeÃÛèÖÊÓƵ re-entry into service. Chinese authorities say the plane is a priority but have no clear timetable for its return.
AmericaÃÛèÖÊÓƵ youngest workers started the year with a rare opportunity to slingshot their careers in the hottest job market in decades.
They’ll end 2020 facing some of the nationÃÛèÖÊÓƵ bleakest employment prospects and the most volatile job market ever for recent college graduates.
The unemployment rate for young people ages 20-24 was 12.5% in September, the highest among adults. Joblessness for them peaked at nearly 26% at the height of the pandemic in April—quadruple the level two months earlier—a bigger jump than in any previous recession back to the 1940.
Although the overall U.S. labor market is gradually improving, it remains far below its pre-pandemic health. Jobless claims fell to 787,000 in the week ended Oct. 17 at the same time that the number of Americans on extended unemployment benefits rose, according to Labor Department data.
Economists say the longer young people are forced to delay their careers, the worse their prospects will be in the future to hold a job, accumulate wealth, or even get married or start a family.
For Tessa Filipczyk, this year was supposed to springboard her career in marine and coastal science. Graduating in June from the University of California at Davis, Filipczyk, 22, had applied for jobs related to ocean conservation, marine plant research and climate change advocacy. But none of those have panned out.
Now, sheÃÛèÖÊÓƵ tutoring three children she used to baby-sit, and itÃÛèÖÊÓƵ just eight hours of work a week.
“I was like ‘OK, I’m going to find a job; I’m going to work for a year and then I’m going to go to grad school,’†said Filipczyk, whoÃÛèÖÊÓƵ living with her parents in Burlingame, California. “That all just got swept under the rug by COVID.â€
Long-run potential
The labor market of 2020 is a gallery of shattered expectations and the fate of young people like Filipczyk could stifle the long-run potential for the economy, which needs a growing labor force to expand.
“There is a structure to the labor market—if you miss the entrance, how do you get back in?†said Julia Coronado, founder of MacroPolicy Perspectives. “If you veer off the career path by necessity, how do you get back into the pipeline?â€
The dramatic swings in unemployment this time around for adults in their early 20s illustrate how volatile the job market is for graduates and nongraduates alike.
For recent college graduates, unemployment during the pandemic peaked at 20% in June, the highest of any age group with at least a bachelorÃÛèÖÊÓƵ degree, Labor Department data show. That compares with a 13% peak in the recovery after the last recession.
To be sure, workers younger than 20 saw an even bigger spike in unemployment rates, and young people typically always get hit hard during a downturn.
Long periods of unemployment, or working part-time gigs or temporarily in jobs outside their desired fields, can jeopardize young professionals’ future salary increases and opportunities for them to build key relationships.
“They take jobs that will help them live and pay the bills, and when times get better they try and switch over to a preferred career path,†said Ernie Tedeschi, a policy economist at Evercore ISI. “They haven’t built the skills and the professional networks and that puts them at a persistent professional disadvantage.â€
During prior recessions, recent graduates were able to build connections through coffees and other in-person networking events. But thatÃÛèÖÊÓƵ more difficult during a global pandemic. Otherwise-normal parts of job hunting, such as interviewing in person, are also more complicated.
The longer the pandemic drags on, the larger the backlog of young people, according to Economic Policy Institute senior economist Elise Gould. Older workers could take jobs that would typical go to entry-level applicants, Gould said.
‘Left out’
Employers “don’t necessarily even have to pay more to get workers with more experience,†Gould said. “So those young workers may be left out.â€
Job seekers who face high unemployment rates at the start of their careers may endure lower salaries during the first decade of their professional lives, said Jesse Rothstein, an economist and professor at the University of California at Berkeley who recently wrote a paper about the impact on college graduates in the wake of the 2008 financial crisis.
Employment rates for those who graduated college in the aftermath of the 2008 financial crisis remained significantly lower over the past decade compared with older workers, Rothstein found. The last recession also prompted many young people to go back to school, while others changed professions frequently.
Zainab Ghadiyali, 35, from San Francisco, is a case in point. After graduating in 2009 with a degree in chemistry, she struggled to find a research job before eventually landing a position at a nonprofit. She later went back to school to study computer science.
Now, after working eight years in tech, sheÃÛèÖÊÓƵ taking a career break entirely. SheÃÛèÖÊÓƵ writing a blog and pursuing other hobbies before deciding her next move.
“Getting rejected constantly and being in that emotion was pretty hard,†Ghadiyali said of her early post-grad challenges. “Learning how to write code was far easier.â€
recreational vehicle truck isolated on white background
If you popped back into your office lately, itÃÛèÖÊÓƵ still a pretty lonely place.
The vast majority of folks are still working at home because of the COVID-19 pandemic.
Among the 10 major U.S. markets Kastle Systems tracks, only 27.4% of workers have left home and returned to their offices.
“The nation continues to return to offices, with building occupancy rates rising in nine out of the 10 cities,†the researchers who prepared the Kastle Systems’ report said.
For the second month in a row, Dallas-Fort Worth led the country in the share of workers who have returned to office spaces.
For the week of Oct. Oct. 19-23, 43.3% of D-FW office employees were back at their desks—the largest share of any metro area in the country, according to a new report from Kastle Systems.
The percentage of people back in the workplace in D-FW is up from 36% in early September and less than 25% in early April.
Most metro areas still have a long way to go to get back to pre-pandemic office occupancies.
Only 14.7% of San FranciscoÃÛèÖÊÓƵ office worker population is back. And in New York City, almost 83% of employees are still working at home.
In Houston, 36.8% of workers are back in the office. And in Austin, the occupancy level is up to 35.4%.
With the COVID-19 pandemic resurging, many major U.S. office employers have recently said they don’t expect their workers to be back from home until next some time next summer.
Uncertainties about the future of the office market have already affected leasing.
So far in 2020, net office occupancy in the Dallas-Fort Worth area has fallen by more than 2.5 million square feet—the biggest such decline in more than a decade.
