Sedans Take Back Seat to SUVs, Trucks at 2019 Chicago Auto Show

It’s billed as North America’s largest and longest-running auto show, now in its 111th year. The 2019 Chicago Auto Show offers a lineup of nearly 1,000 vehicles occupying nearly 1 million-square-feet of space at the McCormick Place Convention Center.

A special preview for members of the media at the annual show is a chance for manufacturers to show off their latest and greatest products about to enter the market.

What is notable about this year’s event is what some manufacturers aren’t showing off — new sedans.

Customers want trucks, SUVs

“Over 10 years, there has been a consistent movement of customers in the United States and around the world, but even more so in the United States, moving away from sedans and more traditional passenger sedans into more utility vehicles,” said Joe Hinrichs, president of Ford Motor Co.’s Global Operations.

“Nearly 7 out of 10 vehicles sold today are trucks or SUVs in the U.S. market. They like the ride high, the seating height, the utility of the vehicle. And now, we can give them the fuel efficiency that they used to get out of sedans. So, that’s where customers are going.”

All reasons Ford is going the extra mile and planning to invest $1 billion to upgrade its Chicago manufacturing facility, which produces the popular Explorer Sport Utility Vehicle, or SUV — also used as a law enforcement vehicle — and the new Lincoln Mariner luxury SUV.

But while Ford is offering new options for consumers, it is also discontinuing models of the Focus, Fiesta and Fusion cars, ending production later this year.

“We’ve been planning our business to incorporate the expectation that some of those cars will go away,” Hinrichs said. “Then bring in new products to enter the market to supplement some of that volume that was lost so that we can keep our plants full.”

The new family car

“We have the debate a lot about is the compact SUV the new family sedan, and in many instances, you can say yes,” said Steve Majuros, marketing director for cars and crossovers for the General Motors Chevrolet brand. He introduced two new trucks in Chevy’s popular Silverado lineup to media at the auto show.

The prominence, and choices, of SUVs, crossovers and trucks in GM’s current lineup promoted at the auto show stands in contrast to its perennial attraction in recent years, the Chevrolet Volt. Even though it is the top-selling electric plug-in vehicle of all time, sagging sales have led GM to cease production in March.

“Volt was a great product for us,” said Majuros. “(It) had a great run — two generations. But what has happened is as the ability to produce pure electric and the kind of cost configuration and range of what people are looking for, Volt had its time, but was a great stepping stone for us to lead us to the future, which was pure electrification.”

Joining the Volt on the chopping block is the Cruze, a compact car manufactured at GM’s Lordstown Assembly plant in Ohio. Chevrolet does plan to keep making the Malibu midsize sedan and the Bolt all-electric vehicle, among a few other options.

“We’re not abandoning the car market completely,” Majuros assured. “We’re right-sizing our portfolio. We’re reacting to what the consumers are looking for.”

What they are looking for are trucks and SUVs, which made up about 70 percent of the 17 million vehicles sold in the U.S. in 2018, a trend expected to continue this year.

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Trump Receives Update on China Trade Talks 

President Donald Trump received an update on trade talks with China on Saturday at his Florida retreat after discussions in Beijing saw progress ahead of a March 1 deadline for reaching a deal.

Trump, at his Mar-a-Lago club, was briefed in person by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross, White House Chief of Staff Mick Mulvaney and trade expert Peter Navarro, said White House spokeswoman Sarah Sanders. Treasury Secretary Steven Mnuchin, economic adviser Larry Kudlow and other aides joined by phone. 

The White House offered no additional detail. 

Both the United States and China reported progress in five days of negotiations in Beijing this week, but the White House said much work remained to be done to force changes in Chinese trade behavior. 

Shortly after the meeting with his trade team, Trump said on Twitter the talks in Beijing were “very productive.” 

At a White House press conference on Friday, he said the talks with China were “very complicated” and that he might extend the March 1 deadline and keep tariffs on Chinese goods from rising. 

U.S. duties on $200 billion worth of Chinese imports are set to rise from 10 percent to 25 percent if no deal is reached by March 1 to address U.S. demands that China curb forced technology transfers and better enforce intellectual property rights. 

China’s vice premier and chief trade negotiator, Liu He, and Lighthizer are to lead the next round of talks next week in Washington. 

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Gone in a New York Minute: How the Amazon Deal Fell Apart

In early November, word began to leak that Amazon was serious about choosing New York to build a giant new campus. The city was eager to lure the company and its thousands of high-paying tech jobs, offering billions in tax incentives and lighting the Empire State Building in Amazon orange.

Even Governor Andrew Cuomo got in on the action: “I’ll change my name to Amazon Cuomo if that’s what it takes,” he joked at the time.

Then Amazon made it official: It chose the Long Island City neighborhood of Queens to build a $2.5 billion campus that could house 25,000 workers, in addition to new offices planned for northern Virginia. Cuomo and New York Mayor Bill de Blasio, Democrats who have been political adversaries for years, trumpeted the decision as a major coup after edging out more than 230 other proposals.

But what they didn’t expect was the protests, the hostile public hearings and the disparaging tweets that would come in the next three months, eventually leading to Amazon’s dramatic Valentine’s Day breakup with New York.

Immediately after Amazon’s Nov. 12 announcement, criticism started to pour in. The deal included $1.5 billion in special tax breaks and grants for the company, but a closer look at the total package revealed it to be worth at least $2.8 billion. Some of the same politicians who had signed a letter to woo Amazon were now balking at the tax incentives.

“Offering massive corporate welfare from scarce public resources to one of the wealthiest corporations in the world at a time of great need in our state is just wrong,” said New York State Sen. Michael Gianaris and New York City Councilman Jimmy Van Bramer, Democrats who represent the Long Island City area, in a joint statement.

The next day, CEO Jeff Bezos was on the cover of The New York Post in a cartoon-like illustration, hanging out of a helicopter, holding money bags in each hand, with cash billowing above the skyline. “QUEENS RANSOM,” the headline screamed. The New York Times editorial board, meanwhile, called the deal a “bad bargain” for the city: “We won’t know for 10 years whether the promised 25,000 jobs will materialize,” it said.

Anti-Amazon rallies were planned for the next week. Protesters stormed a New York Amazon bookstore on the day after Thanksgiving and then went to a rally on the steps of a courthouse near the site of the new headquarters in the pouring rain. Some held cardboard boxes with Amazon’s smile logo turned upside down.

In this Nov. 14, 2018 file photo, protesters hold up anti-Amazon signs during a coalition rally and press conference of elected officials, community organizations and unions opposing Amazon headquarters getting subsidies to locate in New York.

They had a long list of grievances: the deal was done secretively; Amazon, one of the world’s most valuable companies, didn’t need nearly $3 billion in tax incentives; rising rents could push people out of the neighborhood; and the company was opposed to unionization.

The helipad kept coming up, too: Amazon, in its deal with the city, was promised it could build a spot to land a helicopter on or near the new offices.

At the first public hearing in December, which turned into a hostile, three-hour interrogation of two Amazon executives by city lawmakers, the helipad was mentioned more than a dozen times. The image of high-paid executives buzzing by a nearby low-income housing project became a symbol of corporate greed.

Queens residents soon found postcards from Amazon in their mailboxes, trumpeting the benefits of the project. Gianaris sent his own version, calling the company “Scamazon” and urging people to call Bezos and tell him to stay in Seattle.

At a second city council hearing in January, Amazon’s vice president for public policy, Brian Huseman, subtly suggested that perhaps the company’s decision to come to New York could be reversed.

“We want to invest in a community that wants us,” he said.

Then came a sign that Amazon’s opponents might actually succeed in derailing the deal: In early February, Gianaris was tapped for a seat on a little-known state panel that often has to approve state funding for big economic development projects. That meant if Amazon’s deal went before the board, Gianaris could kill it.

“I’m not looking to negotiate a better deal,” Gianaris said at the time. “I am against the deal that has been proposed.”

Cuomo had the power to block Gianaris’ appointment, but he didn’t indicate whether he would take that step.

Meanwhile, Amazon’s own doubts about the project started to show. On Feb. 8, The Washington Post reported that the company was having second thoughts about the Queens location.

On Wednesday, Cuomo brokered a meeting with four top Amazon executives and the leaders of three unions critical of the deal. The union leaders walked away with the impression that the parties had an agreed upon framework for further negotiations, said Stuart Appelbaum, president of the Retail Wholesale and Department Store Union.

“We had a good conversation. We talked about next steps. We shook hands,” Appelbaum said.

An Amazon representative did not respond to a request for comment for this story.

The final blow landed Thursday, when Amazon announced on a blog post that it was backing out, surprising the mayor, who had spoken to an Amazon executive Monday night and received “no indication” that the company would bail.

Amazon still expected the deal to be approved, according to a source familiar with Amazon’s thinking, but that the constant criticism from politicians didn’t make sense for the company to grow there.

“I was flabbergasted,” De Blasio said. “Why on earth after all of the effort we all put in would you simply walk away?”

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Payless ShoeSource to Close All Remaining US Stores 

Payless ShoeSource is shuttering all of its 2,100 remaining stores in the U.S. and Puerto Rico, joining a list of iconic names like Toys R Us and Bon-Ton that have closed down in the last year. 

 

The Topeka, Kan.-based chain said Friday that it will hold liquidation sales starting Sunday and wind down its e-commerce operations. All of the stores will remain open until at least the end of March and the majority will remain open until May. 

 

The debt-burdened chain filed for Chapter 11 bankruptcy protection in April 2017, closing hundreds of stores as part of its reorganization. 

 

At the time, it had over 4,400 stores in more than 30 countries. It remerged from restructuring four months later with about 3,500 stores and eliminated more than $435 million in debt. 

 

The company said in an email that the liquidation did not affect its franchise operations or its Latin American stores, which remain open for business as usual. It lists 18,000 employees worldwide. 

 

Shoppers are increasingly shifting their buying online or heading to discount stores like T.J. Maxx to grab deals on name-brand shoes. That shift has hurt traditional retailers, even low-price outlets like Payless. Heavy debt loads have also handcuffed retailers, leaving them less flexible to invest in their businesses. 

 

But bankruptcies and store closures will continue through 2019, so there’s “no light at the end of the tunnel,” according to a report by Coresight Research. 

 

Before this announcement, there had been 2,187 U.S. store closing announcements this year, with Gymboree and Ascena Retail, the parent of Lane Bryant and other brands, accounting for more than half the total, according to the research firm. This year’s total is up 23 percent from the 1,776 announcements a year ago. Year-to-date, retailers have announced 1,411 store openings, offsetting 65 percent of store closures, it said. 

 

Payless was founded in 1956 by two cousins, Louis and Shaol Lee Pozez, to offer self-service stores selling affordable footwear. 

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Amazon’s Exit Could Scare Off Tech Companies From New York

Amazon jilted New York City on Valentine’s Day, scrapping plans to build a massive headquarters campus in Queens amid fierce opposition from politicians angry about nearly $3 billion in tax breaks and the company’s anti-union stance.

With millions of jobs and a bustling economy, New York can withstand the blow, but experts say the decision by the e-commerce giant to walk away and take with it 25,000 promised jobs could scare off other companies considering moving to or expanding in the city, which wants to be seen as the Silicon Valley of the East Coast.

“One of the real risks here is the message we send to companies that want to come to New York and expand to New York,” said Julie Samuels, the executive director of industry group Tech: NYC. “We’re really playing with fire right now.”

In November, Amazon selected New York City and Crystal City, Virginia, as the winners of a secretive, yearlong process in which more than 230 North American cities bid to become the home of the Seattle-based company’s second headquarters.

New York Mayor Bill de Blasio and Gov. Andrew Cuomo heralded the city’s selection at the time as the biggest boon yet to its burgeoning tech economy and underscored that the deal would generate billions of dollars for improving transit, schools and housing.

Opposition came swiftly though, as details started to emerge.

Critics complained about public subsidies that were offered to Amazon and chafed at some of the conditions of the deal, such as the company’s demand for access to a helipad. Some pleaded for the deal to be renegotiated or scrapped altogether.

“We knew this was going south from the moment it was announced,” said Thomas Stringer, a site selection adviser for big companies. “If this was done right, all the elected officials would have been out there touting how great it was. When you didn’t see that happen, you knew something was wrong.”

Stringer, a managing director of the consulting firm BDO USA LLP, said city and state officials need to rethink the secrecy with which they approached the negotiations. Community leaders and potential critics were kept in the dark, only to be blindsided when details became public.

“It’s time to hit the reset button and say, “What did we do wrong?”‘ Stringer said. “This is fumbling at the 1-yard line.”

Amazon said in a statement Thursday its commitment to New York City required “positive, collaborative relationships” with state and local officials and that a number of them had “made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward.”

Not that Amazon is blameless, experts say.

Joe Parilla, a fellow at the Brookings Institution’s Metropolitan Policy Program, said the company’s high-profile bidding process may have stoked the backlash. Companies usually search for new locations quietly, in part to avoid the kind of opposition Amazon received.

“They had this huge competition, and the media covered it really aggressively, and a bunch of cities responded,” Parilla said. “What did you expect? It gave the opposition a much bigger platform.”

Richard Florida, an urban studies professor and critic of Amazon’s initial search process, said the company should have expected to feel the heat when it selected New York, a city known for its neighborhood activism.

“At the end of the day, this is going to hurt Amazon,” said Florida, head of the University of Toronto’s Martin Prosperity Institute. “This is going to embolden people who don’t like corporate welfare across the country.”

Other tech companies have been keeping New York City’s tech economy churning without making much of a fuss.

Google is spending $2.4 billion to build up its Manhattan campus. Cloud-computing company Salesforce has plastered its name on Verizon’s former headquarters in midtown, and music streaming service Spotify is gobbling up space at the World Trade Center complex.

Despite higher costs, New York City remains attractive to tech companies because of its vast, diverse talent pool, world-class educational and cultural institutions and access to other industries, such as Wall Street capital and Madison Avenue ad dollars.

No other metropolitan area in the U.S. has as many computer-related jobs as New York City, which has 225,600, according to the Bureau of Labor Statistics. But San Francisco, San Jose, Seattle, Washington, Boston, Atlanta and Dallas each have a greater concentration of their workers in tech.

In the New York area, the average computer-related job pays roughly $104,000 a year, about $15,000 above the national average. Still, that’s about $20,000 less than in San Francisco.

Even after cancelling its headquarters project, Amazon still has 5,000 employees in New York City, not counting Whole Foods.

“New York has actually done a really great job of growing and supporting its tech ecosystem, and I’m confident that will continue,” Samuels said. “Today we took a step back, but I would not put the nail in the coffin of tech in New York City.”

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Chinese Leader Meets with US Trade Delegation in Beijing

Chinese President Xi Jinping met Friday with members of the U.S. trade delegation in Beijing where China and the U.S. are attempting to hammer out a trade deal.

U.S. Treasury Secretary Steven Mnuchin posted on Twitter Friday that he and U.S. Trade Representative Robert Lighthizer had “productive meetings with China’s Vice Premier Liu He.”

Another round of negotiations between the two countries will continue next week in Wahington, Chinese state media reported.

Earlier, a top White House economic adviser expressed confidence in the U.S. – China trade negotiations in Beijing.

“The vibe in Beijing is good,” National Economic Council Director Larry Kudlow told reporters at the White House Thursday.

Kudlow provided few details but said the U.S. delegation led by Lighthizer was “covering all ground.”

“That’s a very good sign and they’re just soldiering on, so I like that story,” Kudlow said, “And I will stay with the phrase, the vibe is good.”

Negotiators are working to strike a deal by March 1, to avoid a rise in U.S. tariffs on $200 million worth of Chinese goods from 10 percent to 25 percent. President Donald Trump suggested earlier this week that if talks are seeing signs of progress, that deadline could be pushed back.

When asked Thursday if there would be an extension, Kudlow said, “No such decision has been made so far.”

Analysts such as William Reinsch, a former president of the National Foreign trade Council and senior advisor at the Center for Strategic and International Studies, say the talks are complicated by the three main areas under negotiation.

“Market access, which I think is well on the way to completion. Some Chinese offers on intellectual property, which I think they are not going to offer what we want…And some compliance in enforcement matters.”

Reinsch told VOA’s Mandarin service that U.S. negotiators are specifically seeking ways to hold China accountable for the commitments it makes in any deal.

Munich security conference

 

While American and Chinese negotiators continue talks in Beijing, both countries are setting up for another potential face-off in Europe.

 

The U.S. and China are sending large delegations to Friday’s Munich Security Conference in Germany, a high-level conference on international security policy. Vice President Mike Pence leads the U.S. delegation while Politburo member Yang Jiechi will be the most senior Chinese official.

Yang Jiechi is heading the largest-ever Chinese delegation to the conference traditionally attended by the U.S. and its European allies. He is pushing back against Washington’s campaign pressing Europe to exclude Chinese tech giant Huawei from taking part in constructing 5G mobile networks in the region.

U.S. officials say allowing the Chinese company to build the next generation of wireless communications in Europe will enhance the Chinese government’s surveillance powers, threatening European security.

Although the technology behind 5G is complex, Brad Setser, a senior fellow at the Council on Foreign Relations and former deputy assistant secretary at the U.S. Treasury Department, said the decisions for European countries is simple.

“Given the nature of modern telecommunication, countries do have to make a choice about whether or not they believe that Huawei, given its relationship, not an ownership relationship, with Chinese government, can be trusted to provide the backbone of their future telecommunication system.”

Both Pence and U.S. Secretary of State Mike Pompeo warned allies in Poland and other Central European countries this week on the dangers of closer ties with Beijing and collaboration with Chinese firms. In Budapest, Hungary on Monday, Pompeo said American companies might scale back European operations if countries continue to do business with Huawei.

Huawei has repeatedly denied its products could be used for espionage.

U.S. prosecutors have filed charges against Huawei including bank fraud, violating sanctions against Iran, and stealing trade secrets. The company refuted these accusations and rejected charges against its chief financial officer Meng Wanzhou, who is currently on bail in Canada following her arrest in December.

This year’s Munich Security Conference topics include the “great power competition” between the United States, China, and Russia. Conference organizers have listed US-China tensions as one of their top 10 security issues of 2019.

VOA’s Mandarin Service reporter Jingxun Li contributed to this report

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