WEBVTT - Starbucks Baristas Are Unionizing 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:32.760 YouTube search Bloomberg Global News. Certainly tough in the overall market, 0:00:32.800 --> 0:00:36.440 trades and broad based selling, but not selling investors snapping up. 0:00:36.440 --> 0:00:38.879 In fact, shares of Tapestry stock has been as high 0:00:38.920 --> 0:00:40.920 as nineteen percent in today's sessions, still holding on to 0:00:41.000 --> 0:00:44.280 about a fourteen percent gain, and this despite the parent 0:00:44.320 --> 0:00:46.599 of Coach and Kate Spade cutting its profit outlook due 0:00:46.600 --> 0:00:49.880 to pandemic closures in China. Meantime, a bright spot North 0:00:49.920 --> 0:00:52.880 American demand lifting third quarter sales above estimates. So let's 0:00:52.920 --> 0:00:55.400 get to the quarter and find out what the consumer 0:00:55.480 --> 0:00:57.760 is up to. Delighted to be talking once again with 0:00:58.200 --> 0:01:01.720 Joanne Krivosant. She is you have Tapestry and she is 0:01:01.800 --> 0:01:04.320 on the phone in New York City. Joanne, So nice 0:01:04.319 --> 0:01:06.800 to have you here with Tim and myself. How are 0:01:06.920 --> 0:01:13.000 you and how is the retail environment doing well? Thank you, 0:01:13.080 --> 0:01:15.959 Carol and Tim. It's it's great to be here. Thanks 0:01:16.000 --> 0:01:18.880 for having me. Um. What we're seeing in our business 0:01:18.959 --> 0:01:22.320 is strength and momentum across our business. As you mentioned, 0:01:22.319 --> 0:01:25.959 our third quarter outperformed, led by strength in North America, 0:01:26.440 --> 0:01:30.080 and we drove double digit global sales growth across all 0:01:30.080 --> 0:01:32.920 of our brands at Coach, at Kate Spade, and at 0:01:32.959 --> 0:01:37.080 Stuart Whitzman. And you know, Tapestry is a powerful combination 0:01:37.120 --> 0:01:41.120 of iconic brands that offer tremendous value for consumers, and 0:01:41.240 --> 0:01:45.080 we have a platform that we've transformed to drive innovation 0:01:45.160 --> 0:01:48.920 and customer engagement, and that model is delivering results. We're 0:01:48.920 --> 0:01:53.000 seeing that in the strength of our digital business, increased 0:01:53.000 --> 0:01:56.760 customer acquisition and pricing power across brand. So a lot 0:01:56.800 --> 0:01:59.559 of things are are working and performing, and it really 0:01:59.600 --> 0:02:02.320 reflects the strategies that that we've put in place over 0:02:02.360 --> 0:02:05.880 the last few years, UM to stay closer to our consumers. 0:02:05.920 --> 0:02:08.799 And drive growth behind our our powerful brands. So we 0:02:08.840 --> 0:02:10.600 want to dig deeper into that. But let me ask you, 0:02:10.600 --> 0:02:13.160 if you had to describe the consumer in a word 0:02:13.240 --> 0:02:14.880 or a few words, how would you do it? And 0:02:14.880 --> 0:02:17.280 would you say that the consumers back at pre pandemic 0:02:17.360 --> 0:02:19.440 levels or maybe even better or still a little bit 0:02:19.520 --> 0:02:24.240 under it. Yeah, the consumer is quite resilient. UM. You know, 0:02:24.320 --> 0:02:28.760 we've been driving growth above pre pandemic levels for several 0:02:28.840 --> 0:02:32.560 quarters UM. And you know that's that's most apparent in 0:02:32.600 --> 0:02:35.120 our Coach brand, where we've had more quarters in a row, 0:02:35.200 --> 0:02:38.399 but also true at Cape Spade and at Stuart Whitzman 0:02:39.000 --> 0:02:41.560 and UM. You know, our business in the third quarter 0:02:41.720 --> 0:02:45.840 reflects really the strength and momentum we're seeing around the world. 0:02:46.040 --> 0:02:48.480 You know, we talked about our growth in North America. 0:02:48.520 --> 0:02:52.240 We drove growth in North America in the last UH 0:02:52.240 --> 0:02:55.360 in the last quarter, UM, but we also saw strength 0:02:55.440 --> 0:02:58.200 around the world in all areas except for China. So 0:02:58.280 --> 0:03:01.560 we saw strength in Europe UM and strong growth in 0:03:01.760 --> 0:03:05.240 rest of Asia as well as in Japan. So UM 0:03:05.360 --> 0:03:08.840 business is performing UM. In fact, even in China going 0:03:08.880 --> 0:03:11.760 into the quarter, we saw strength and and UM you 0:03:11.800 --> 0:03:14.679 know that business only started to weekend when we saw 0:03:14.720 --> 0:03:17.720 the disruption related to COVID in the market towards the 0:03:17.800 --> 0:03:20.680 end of the quarter. Um. So we're seeing a consumer 0:03:20.720 --> 0:03:23.520 that is engaging with our brands. They're getting out into 0:03:23.520 --> 0:03:27.360 the real world. There are real life occasions and um, 0:03:27.760 --> 0:03:30.680 you know, we see them engaging with our brands, uh, 0:03:30.720 --> 0:03:34.240 and our categories and handbags and footwear. Um. And in fact, 0:03:34.280 --> 0:03:36.960 we're we just came off a great Mother's Day, so 0:03:37.000 --> 0:03:41.200 that that continues and the consumer really continues to engage 0:03:41.560 --> 0:03:44.080 both again with our brands and in our categories. Joan, 0:03:44.120 --> 0:03:45.400 I want to I want to hit on the China 0:03:45.440 --> 0:03:48.080 point and dig into that a little bit, because you 0:03:48.200 --> 0:03:51.160 had to have in North America, you overcame pandemic related 0:03:51.160 --> 0:03:53.080 weakness in China when you look at the results overall. 0:03:53.120 --> 0:03:55.520 But I'm but I'm wondering from a planning perspective, how 0:03:55.560 --> 0:03:58.840 you're thinking about how long these lockdowns last and how 0:03:58.920 --> 0:04:00.640 long you're going to see that weakness in China where 0:04:00.640 --> 0:04:04.680 business has just dried up since this resurgence of COVID. Yeah, 0:04:04.680 --> 0:04:07.600 the business was disrupted, but it was disrupted in a 0:04:07.680 --> 0:04:10.560 very discrete way. UM, you know, by the by the 0:04:10.600 --> 0:04:13.240 impact of COVID in the market. And you know, our 0:04:13.280 --> 0:04:16.599 business has been quite resilient over the last two years. 0:04:16.680 --> 0:04:19.000 As I said, you know, we've been driving growth above 0:04:19.040 --> 0:04:22.560 pre pandemic levels for some time, UM, and that shows 0:04:22.640 --> 0:04:24.760 the resilience of our model and the way that we're 0:04:24.800 --> 0:04:27.839 able to shift UM. Two changes that we're seeing in 0:04:27.880 --> 0:04:32.520 demand and changes in the supply chain and supply around 0:04:32.520 --> 0:04:36.000 the world. And our latest disruption has been in China. 0:04:36.080 --> 0:04:38.520 But as as I mentioned, we had strength in the 0:04:38.560 --> 0:04:41.479 market and we've been driving strength as as China came 0:04:41.480 --> 0:04:44.760 out of the first round of lockdowns, the consumer was 0:04:44.800 --> 0:04:49.119 incredibly resilient UH, and we were driving growth significantly above 0:04:49.200 --> 0:04:53.240 pre pandemic levels for a number of quarters. UM. Again, 0:04:53.279 --> 0:04:55.520 as you pointed out, you know, they've they've been hit 0:04:55.560 --> 0:04:58.680 by another round of COVID lockdowns and that has impacted 0:04:58.680 --> 0:05:03.040 traffic UM in the lockdown cities, but also more broadly, UM. 0:05:03.040 --> 0:05:07.000 It's also impacted some of the distribution centers and logistics 0:05:07.040 --> 0:05:09.960 in the market UM, and so we're feeling the impacts 0:05:09.960 --> 0:05:12.800 of that. Our expectation is that, you know, we expect 0:05:12.800 --> 0:05:15.800 Shanghai to begin to reopen. It's beginning of June, and 0:05:15.880 --> 0:05:19.640 we expect a gradual recovery, probably more gradual than what 0:05:19.720 --> 0:05:22.640 we saw last time we came out of lockdown, but 0:05:22.680 --> 0:05:26.039 we do expect a gradual recovery. And you know, our 0:05:26.080 --> 0:05:29.119 brands are targeting the middle class consumer in that market, 0:05:29.120 --> 0:05:32.840 which is an attractive market and growing market, and we 0:05:32.920 --> 0:05:36.640 feel well positioned um as that market recovers over the 0:05:36.680 --> 0:05:40.960 near term, but as well UM for long term growth. Uh, 0:05:41.000 --> 0:05:44.520 you know, with longer runway ahead go in. There's so 0:05:44.600 --> 0:05:46.320 much stress out there. It feels like, certainly when we 0:05:46.360 --> 0:05:48.400 watch the financial markets, right and we look at some 0:05:48.480 --> 0:05:51.760 individual names, even though your stocks rallying, it's down about 0:05:53.200 --> 0:05:55.480 this year, but it's it's broad based selling. It feels 0:05:55.520 --> 0:05:59.520 like no market or sector is immune. It certainly seems 0:05:59.560 --> 0:06:01.919 in the Star Excel off you sound pretty calm, and 0:06:01.960 --> 0:06:06.800 you sound I don't know, is it cautiously optimistic optimistic? UM, 0:06:07.000 --> 0:06:10.960 help me understand fundamentally what the outlook looks like? That 0:06:11.080 --> 0:06:12.960 might you know? I think we're all trying to figure 0:06:12.960 --> 0:06:15.640 out what is the outlook amid a rising rate environment, 0:06:16.160 --> 0:06:19.360 and what is the business environment and what's the market environment? Um? 0:06:19.440 --> 0:06:23.680 Could you seem pretty calm? Yeah? Well, and we are 0:06:23.760 --> 0:06:28.080 optimistic We're very confident. You know, we have such iconic 0:06:28.160 --> 0:06:31.880 brands in our in our portfolio, and our focus has 0:06:31.920 --> 0:06:35.520 been on, you know, restoring the health of our brands 0:06:35.560 --> 0:06:39.200 and driving better and stronger engagement with consumers. And when 0:06:39.240 --> 0:06:42.279 we do that, the business perform. So we're really focused 0:06:42.320 --> 0:06:45.880 on fundamentals UM and you know when we talk about transformation, 0:06:45.920 --> 0:06:50.800 actually I heard you discussing investment UM in the business 0:06:50.800 --> 0:06:52.720 in the in the show just prior to when I 0:06:53.120 --> 0:06:56.159 came on. You know, we're investing, and we're investing in 0:06:56.320 --> 0:07:00.640 digital tools and innovation and technology that's making us better. 0:07:00.760 --> 0:07:04.080 And as we focus on the fundamental we're seeing traction. 0:07:04.320 --> 0:07:08.520 We're engaging customers, were acquiring more customers. We acquired one 0:07:08.520 --> 0:07:11.960 point four million customers in the last quarter alone, and 0:07:12.000 --> 0:07:15.960 since we've embarked on our transformation, we've acquired thirteen million 0:07:16.040 --> 0:07:19.560 new customers to our brands over the last twenty one months. 0:07:19.560 --> 0:07:22.080 And these are customers who are coming in and engaging 0:07:22.120 --> 0:07:24.840 with our brands. They're shopping at higher a you are, 0:07:24.960 --> 0:07:29.680 higher prices than average, and they're coming back more frequently UM. 0:07:29.720 --> 0:07:33.160 And these customers are also increasingly younger. So as we 0:07:33.240 --> 0:07:36.080 focus on the fundamentals of our business. It gives us 0:07:36.120 --> 0:07:39.880 confidence because we're seeing much stronger engagement, much healthier brands, 0:07:39.880 --> 0:07:43.000 and much stronger engagement with our consumers. Joanne'm wondering about 0:07:43.000 --> 0:07:45.760 your pricing power because you said that there these customers 0:07:45.760 --> 0:07:48.720 are paying more than they were paying earlier. How much 0:07:48.720 --> 0:07:51.000 of that has to do with inflation? Where where are 0:07:51.000 --> 0:07:53.360 you seeing a rise in costs right now on your 0:07:53.480 --> 0:07:56.120 production ended, in your supply chain, And how much are 0:07:56.160 --> 0:07:58.600 you absorbing of that versus passing it along to the customer? 0:07:59.040 --> 0:08:01.800 Because as Saunders and analysts with global data set in 0:08:01.840 --> 0:08:05.560 a note after your results, Uh, the customers that you 0:08:05.600 --> 0:08:09.520 have at Tapestry can cope better with inflationary impacts than 0:08:09.520 --> 0:08:14.120 the average customer. Yeah. And the way we think about 0:08:14.120 --> 0:08:18.000 our pricing power is really in terms of delivering value 0:08:18.040 --> 0:08:21.280 to consumers UM and and that's how we've been thinking about. 0:08:21.280 --> 0:08:24.040 In fact, we started this pre pandemic before we started 0:08:24.040 --> 0:08:27.240 to see pressure on the cost side of the equation, 0:08:27.280 --> 0:08:30.160 and those pressures are real. We're seeing pressure on the 0:08:30.160 --> 0:08:32.760 cost side of the equation like others in the industry, 0:08:33.280 --> 0:08:36.040 UM a lot of pressure in freight related to the 0:08:36.080 --> 0:08:39.760 supply chain dislocations that we're seeing, but our focus really 0:08:39.960 --> 0:08:43.120 on the pricing side of it. In the pricing powers 0:08:43.240 --> 0:08:47.120 really driven by the value we're delivering to consumers and 0:08:47.160 --> 0:08:51.720 those emotional connections that we're developing are allowing us to 0:08:51.840 --> 0:08:54.400 drive pricing power, and we're seeing that across our brands. 0:08:54.800 --> 0:08:57.079 You know, some of the investments we've we've made and 0:08:57.520 --> 0:09:01.120 tools and technology or helping us leverage data better in 0:09:01.520 --> 0:09:05.319 across our value chain, so that's making us more informed 0:09:05.400 --> 0:09:08.520 on pricing decisions. It's also making us more informed on 0:09:08.640 --> 0:09:12.040 our assortment decisions and our inventory management so we've got 0:09:12.040 --> 0:09:16.120 the right inventory. We're seeing higher skew productivity UM with 0:09:16.160 --> 0:09:19.760 more concentration behind more powerful items, and that allows us 0:09:20.240 --> 0:09:23.160 UM to drive pricing power as well and to clarify 0:09:23.160 --> 0:09:26.400 our messages with consumers. So on the value side of 0:09:26.440 --> 0:09:30.440 the equation, we continue to deliver unbeatable value for our 0:09:30.480 --> 0:09:34.360 consumers across all of our brands, and that's helping us 0:09:34.400 --> 0:09:37.520 more than offset the pricing pressure that that we're seeing 0:09:38.120 --> 0:09:41.080 UM in terms of costs, in terms of our expectations 0:09:41.080 --> 0:09:43.600 going forward. You know, doing when you were part of 0:09:43.600 --> 0:09:46.079 a Bloomberg panel that we did, you and I did 0:09:46.080 --> 0:09:48.920 it with a few other heads of companies about a 0:09:49.000 --> 0:09:51.480 year ago, and we talked about disruption as a new 0:09:51.480 --> 0:09:53.880 economic driver. I think part of the conversation we also 0:09:53.920 --> 0:09:56.720 got into what consumers want in terms of sustainability, and 0:09:56.800 --> 0:09:58.840 E s G is such a big part of everywhere. 0:09:58.880 --> 0:10:00.760 Tim and I are back from Milk and we talked 0:10:00.760 --> 0:10:03.920 about it with every conversation. I am curious about how 0:10:03.960 --> 0:10:06.080 you guys apply it at the company, and and I'm 0:10:06.120 --> 0:10:09.640 really intrigued about this craftsperson Is apprenticeship program because I 0:10:09.679 --> 0:10:13.040 think it's a way of creating jobs, uh and also 0:10:13.400 --> 0:10:18.640 you know, creating really strong sustainability initiatives at the company. Exactly. Yeah, 0:10:18.640 --> 0:10:21.120 We're we're really thrilled to bring that to bear. That 0:10:21.120 --> 0:10:25.360 that UM UM Craftsman Apprenticeship program and the way we 0:10:25.440 --> 0:10:27.559 think about E s G. E s G has has 0:10:27.600 --> 0:10:30.680 been part of the fabric of our company from the beginning, 0:10:30.960 --> 0:10:34.240 and and we value UM and we think about it 0:10:34.280 --> 0:10:37.360 in terms of what we're bringing and delivering for our people, 0:10:37.880 --> 0:10:41.520 for our planet and for our communities. And part of 0:10:41.559 --> 0:10:46.839 that UM effort, and some of those efforts include UM Sustainable, 0:10:47.080 --> 0:10:51.720 UM Materials and and the Circular economy and Coach is 0:10:51.720 --> 0:10:54.600 a great example of where we're leaning into the circular 0:10:54.640 --> 0:10:58.959 economy with our our Reloved program that takes product that 0:10:59.040 --> 0:11:02.480 can no longer be paired um and and we we 0:11:02.520 --> 0:11:05.440 relove it literally and when we restore it and we 0:11:05.480 --> 0:11:08.440 bring it back to health, our designers are working on it, 0:11:08.480 --> 0:11:12.480 are our repair centers are working on this product and 0:11:12.760 --> 0:11:15.760 restoring it and bringing it back, and we've seen unbelievable 0:11:15.840 --> 0:11:19.439 reaction from consumers. This is something consumers are asking for, 0:11:19.559 --> 0:11:22.400 It's something our associates love to do. And as we 0:11:22.480 --> 0:11:26.320 think about scaling these programs, we are looking for more 0:11:26.360 --> 0:11:30.120 people to get involved in terms of leather craftsmanship, and 0:11:30.160 --> 0:11:33.520 that's part of the apprentice program that we're developing to 0:11:33.600 --> 0:11:36.600 allow us to further scale these programs. Can say I'm 0:11:36.600 --> 0:11:38.760 an older consumer, but my daughter is nineteen and she's 0:11:38.760 --> 0:11:40.720 a younger consumer. Those are the kind of things that 0:11:40.760 --> 0:11:42.960 really make us take a second look at a brand. 0:11:43.000 --> 0:11:45.720 So I think you guys are onto something. You're listening 0:11:45.760 --> 0:11:49.600 to Bloomberg Business Week with Carol Messer and Bloomberg Quick 0:11:49.640 --> 0:11:53.640 Takes Tim Stinovic on Bloomberg Radio. The cover story of 0:11:53.640 --> 0:11:56.400 Bloomberg Business Week, The new issue just out on newsstands 0:11:56.480 --> 0:11:59.199 online at Bloomberg dot com slash business Weekend on the 0:11:59.240 --> 0:12:02.559 Bloomberg terminal. It's about the return of the company's longtime 0:12:02.600 --> 0:12:05.240 CEO at Starbucks, along with the rise of a union 0:12:05.240 --> 0:12:10.440 movement among its baristas. We're talking, of course, about Howard Schultz. 0:12:10.840 --> 0:12:13.400 This story by Josh Idolson. Check it out. It's the 0:12:13.400 --> 0:12:15.400 cover story, as Carol mentioned, of the new issue of 0:12:15.520 --> 0:12:18.280 Business Week magazine. It's available on newsstands, on the Bloomberg 0:12:18.320 --> 0:12:21.640 and at Bloomberg dot com slash business Week. Josh's labor 0:12:21.640 --> 0:12:23.640 reporter for Bloomberg News. He joins us on the phone 0:12:23.640 --> 0:12:26.120 from San Francisco. With us here in person is the 0:12:26.240 --> 0:12:29.240 editor of Bloomberg business Week, Joel Webber. He's with us 0:12:29.240 --> 0:12:31.520 in the Bloomberg Interactive Broker studios. Joel, I want to 0:12:31.520 --> 0:12:34.000 start with you because this is the third time that 0:12:34.040 --> 0:12:37.320 Howard Schultz has been at the home of Starbucks. What 0:12:37.480 --> 0:12:40.960 is the Starbucks that he found when he returned just 0:12:41.040 --> 0:12:44.920 about a month ago as CEO. The surprise I think 0:12:44.920 --> 0:12:47.839 that probably awaited him was one that he was not 0:12:48.120 --> 0:12:51.000 probably familiar with from his other stints, which was this 0:12:51.120 --> 0:12:56.560 newfound power that the labor has and Starbucks, which I 0:12:56.600 --> 0:12:59.880 found really surprising the workers of Starbucks. Have you know, 0:13:00.080 --> 0:13:03.720 for all of this talk about unionization sweeping the country 0:13:03.840 --> 0:13:07.640 right now, Amazon being one that we've talked about extensively, 0:13:08.559 --> 0:13:11.839 all those all of those roads lead back to what 0:13:12.080 --> 0:13:15.600 has been happening at Starbucks, and Starbucks has been really 0:13:15.760 --> 0:13:18.760 the workers of Starbucks have been galvanizing force that a 0:13:18.800 --> 0:13:22.640 lot of other workers in corporate America have been inspired by. 0:13:22.760 --> 0:13:25.640 And and Josh to his credit, saw this long ago 0:13:25.720 --> 0:13:28.440 and started reporting the heck out of it and going 0:13:28.480 --> 0:13:31.360 to as many states and and talking to as many 0:13:31.400 --> 0:13:34.360 workers who were behind the scenes of that union effort. 0:13:34.440 --> 0:13:38.480 And so what you really have here is a CEO 0:13:38.679 --> 0:13:43.000 who helped build this company into a global brand, comes 0:13:43.040 --> 0:13:46.480 back to it and has found that the workers aren't 0:13:46.520 --> 0:13:50.319 buying that same vision that he had laid out long ago. 0:13:50.880 --> 0:13:53.800 And you see this tension between the workers and Schultz 0:13:53.880 --> 0:13:56.680 and and it even culminates with, you know, the workers 0:13:56.720 --> 0:14:00.320 being invited to the White House um and the company 0:14:00.400 --> 0:14:03.360 sort of saying, hey, you know we we we got 0:14:03.360 --> 0:14:06.360 cut out of this. So so josh Um, what what 0:14:06.480 --> 0:14:09.600 do you know? You're somebody who follows um labor obviously 0:14:09.720 --> 0:14:12.400 very closely. I think Josh is like probably as good 0:14:12.440 --> 0:14:14.440 as it gets in terms of labor reporting in this 0:14:14.480 --> 0:14:18.480 country right now. And what really distinguishes the Starbucks story 0:14:19.080 --> 0:14:23.280 for a wider audience here, so in recent decades in 0:14:23.320 --> 0:14:27.440 the United States, it's pretty much unheard of for workers 0:14:27.480 --> 0:14:30.800 to win a labor board election at a company as 0:14:30.880 --> 0:14:34.000 prominent as Starbucks where there isn't a union already and 0:14:34.040 --> 0:14:37.280 there isn't some kind of deal between the union and 0:14:37.320 --> 0:14:41.440 the company to play nice. And that this union not 0:14:41.560 --> 0:14:45.720 only won that first election in Buffalo, but has now 0:14:45.800 --> 0:14:50.160 won at sixty some stores and is petitioning to unionize 0:14:50.440 --> 0:14:55.160 hundreds of Starbucks cafes around the country. Is a movement 0:14:55.280 --> 0:14:59.280 with little precedent in the twenty one century United States 0:14:59.280 --> 0:15:01.720 at a big company me and it is being done 0:15:01.760 --> 0:15:05.840 mainly through workers mentoring each other. Not just workers organizing 0:15:05.840 --> 0:15:09.280 their coworkers, but workers training other workers to train other 0:15:09.280 --> 0:15:12.840 workers to train other workers to organize their coworkers. And 0:15:12.880 --> 0:15:15.720 that is how, as one worker put at, this ultimate 0:15:15.840 --> 0:15:20.360 group project has spread so quickly and has proven so 0:15:20.480 --> 0:15:24.680 difficult for Starbucks despite all the resources at its disposal 0:15:24.840 --> 0:15:29.520 and the goodwill that it's had to stem this movement 0:15:29.640 --> 0:15:32.280 from growing and spreading further. There are a lot of 0:15:32.320 --> 0:15:34.480 directions I want to go, Josh, but one question that 0:15:34.640 --> 0:15:38.960 continues to stick out to me is, you know, Starbucks 0:15:38.960 --> 0:15:42.480 is as corporate is very pushing back, very aggressively when 0:15:42.480 --> 0:15:44.760 it comes to these unionization efforts on an individual level, 0:15:44.760 --> 0:15:46.760 even before Howard Schultz came back, remember he flew to 0:15:46.800 --> 0:15:51.960 Buffalo to meet with those unionizing employees. What is what 0:15:51.960 --> 0:15:54.920 what does that stake here for Starbucks? If there is 0:15:55.000 --> 0:16:00.320 widespread unionization across US stores here to what that does 0:16:00.360 --> 0:16:04.440 that affect Starbucks business? Well, there are two big reasons 0:16:04.520 --> 0:16:08.600 that companies tend to resist unionization, and one is money 0:16:08.640 --> 0:16:12.760 and the other is power. Of course, for the union 0:16:13.320 --> 0:16:18.160 to prove its worth two workers, it is going to 0:16:18.240 --> 0:16:21.640 need to show that it can extract things from Starbucks 0:16:21.680 --> 0:16:24.160 that workers one an otherwise get, and some of those 0:16:24.200 --> 0:16:26.840 things are going to cost money. But the other reason 0:16:26.880 --> 0:16:30.680 that companies fight unions, and that they often are willing 0:16:30.720 --> 0:16:33.160 to spend a whole lot of money both on anti 0:16:33.240 --> 0:16:38.560 union consultants and on making improvements to try to modify people, 0:16:39.200 --> 0:16:42.160 is that they don't want to give up that control 0:16:42.320 --> 0:16:46.600 over how the businesses run. And Starbucks for years has bragged, 0:16:46.720 --> 0:16:49.960 including Howard Scholtz has bragged that there's an empty chair 0:16:50.000 --> 0:16:53.320 at the board meeting that represents workers voice. So now 0:16:53.360 --> 0:16:56.120 you have workers saying, why is the chair empty? Put 0:16:56.200 --> 0:16:58.720 us in the chair instead. And in fact, in Buffalo, 0:16:59.080 --> 0:17:03.280 they're in collective bargaining negotiations proposing that Starbucks should have 0:17:03.440 --> 0:17:07.040 to put a representative of the workers on its board. 0:17:07.359 --> 0:17:12.320 And so for Starbucks to become substantially unionized would mean 0:17:13.040 --> 0:17:19.040 that Starbucks executives have less unilateral ability to decide what 0:17:19.160 --> 0:17:22.080 the business model should be, what the rules should be. 0:17:22.800 --> 0:17:26.800 And that's part of why the stakes here are so high. Josh, 0:17:26.800 --> 0:17:28.399 what happened at the company? I thought this was the 0:17:28.400 --> 0:17:31.879 one where they paid their workers as well, they had 0:17:31.960 --> 0:17:34.160 nice benefits. I mean, this is something at Chultz kind 0:17:34.160 --> 0:17:36.920 of took pride in as you as you report what happened. 0:17:38.000 --> 0:17:41.199 So workers would answer that question in two different ways, 0:17:41.280 --> 0:17:45.120 and one is to say it's not as dreamy as 0:17:45.119 --> 0:17:48.520 it may sound. Even the fifteen dollar minimum pay that 0:17:48.520 --> 0:17:52.560 the workers will be guaranteed by August is not a 0:17:52.640 --> 0:17:55.399 living wage for someone with a child. In a city 0:17:55.480 --> 0:18:00.600 like Seattle, the staffing issues have been egregious at times, 0:18:00.800 --> 0:18:04.600 especially during COVID, and the handling of COVID disappointed some 0:18:04.720 --> 0:18:07.679 orders and left them feeling betrayed. The other answer they 0:18:07.680 --> 0:18:11.240 would give is that it's not enough to be better 0:18:11.280 --> 0:18:16.600 than other fast food companies, and that they believe they 0:18:16.600 --> 0:18:21.080 should have more say in their working conditions and therefore 0:18:21.200 --> 0:18:24.320 in their lives, and that there is no one particular 0:18:24.440 --> 0:18:28.520 thing that Starbucks could solve that would make them go 0:18:28.640 --> 0:18:33.280 back to being okay with the company having all the control. 0:18:34.080 --> 0:18:36.840 And where does where do things stand with Schultz? Because 0:18:37.200 --> 0:18:39.840 as you write, this is not a He's not permanently 0:18:39.880 --> 0:18:42.320 CEO right now, right He's just back on an entering basis. 0:18:42.359 --> 0:18:46.680 So where where will this dispute go? That's what they've said. 0:18:46.760 --> 0:18:49.080 There's supposed to be a permanent announcement in the fall. 0:18:49.240 --> 0:18:53.880 There are some people hoping that Schultz stays on. But 0:18:54.240 --> 0:18:58.560 it is a fight that is deeply personal for Howard Schultz. 0:18:58.720 --> 0:19:02.600 This is his baby, and he has come back and 0:19:02.840 --> 0:19:08.879 made these personal appeals to workers, sometimes emotionally intensely, and 0:19:08.880 --> 0:19:10.920 as we see in the rooms that we go into 0:19:10.960 --> 0:19:14.400 in this story, and so this is not a struggle 0:19:14.840 --> 0:19:16.800 that he's going to be able to shrug off. Whether 0:19:16.840 --> 0:19:19.240 he's in the CEO seat or not, and some other 0:19:19.240 --> 0:19:22.159 companies watching this very very closely. Um, Josh, thank you 0:19:22.240 --> 0:19:24.600 so much, really appreciate it. Josh Idelson, He's labor reporter 0:19:24.600 --> 0:19:27.080 at Bloomberg News. This is the cover story of the 0:19:27.119 --> 0:19:29.600 new issue of Bloomberg Business Week on newsstands right now, 0:19:29.600 --> 0:19:31.960 on the Bloomberg and of course online. Till Webber, he 0:19:32.080 --> 0:19:35.600 is the editor of Bloomberg Business Week magazine. This is 0:19:35.640 --> 0:19:39.560 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:19:39.640 --> 0:19:43.080 Tim Stinovic on Bloomberg Radio. So Tim and I were 0:19:43.080 --> 0:19:45.000 at the Milk and Institute Global Conference last week. We 0:19:45.000 --> 0:19:47.840 talked a lot about the Market's big topic touched on 0:19:47.880 --> 0:19:50.080 and so many panels and conversation was E S G. 0:19:50.359 --> 0:19:52.199 So we're going to get into that along with the 0:19:52.240 --> 0:19:55.440 macro environment with our guest. Great to be talking once 0:19:55.440 --> 0:19:58.159 again with us is Dave Getland. Excuse me, Dave Getlind 0:19:58.200 --> 0:20:01.119 chairman and CEO Carrier Global. You know, the company for 0:20:01.240 --> 0:20:04.760 making HVAC systems, refrigeration, so many different things that certainly 0:20:04.760 --> 0:20:07.240 affect all of us on a daily basis. And he's 0:20:07.280 --> 0:20:09.679 here in our Interactive Broker studio how are you. I'm 0:20:09.720 --> 0:20:12.320 doing great. Thank you for having me. It's great to 0:20:12.359 --> 0:20:14.560 have you here. Dave, and I do think about Tim 0:20:14.560 --> 0:20:16.680 and I were just talking. I mentioned when you walked 0:20:16.680 --> 0:20:19.880 in that we're watching the volatility in the market. Uh, 0:20:19.880 --> 0:20:22.199 and we're seeing so many asset classes come undone, it 0:20:22.240 --> 0:20:24.840 feels like, but in a controlled way. And yet we 0:20:24.960 --> 0:20:28.440 just talked to the CEO of Tapestry. She was calm, said, 0:20:28.440 --> 0:20:31.920 consumers are spending. She was optimistic. How do you see 0:20:31.960 --> 0:20:34.359 the environment, how do you kind of cross that with 0:20:34.359 --> 0:20:36.560 what we're seeing in the financial markets. We feel the 0:20:36.560 --> 0:20:39.360 same way. We feel very confident in where we are 0:20:39.359 --> 0:20:41.320 and where we're going. And a big part of it 0:20:41.359 --> 0:20:43.520 has to do with the secular trends you mentioned like E. 0:20:43.720 --> 0:20:46.119 S G. But we looked at our first quarter orders 0:20:46.119 --> 0:20:50.480 were up ten percent. Our backlog is up over thirty 0:20:50.520 --> 0:20:53.919 percent versus last year. So demand has continued to be 0:20:54.000 --> 0:20:56.800 very strong. Backlog up because of supply chain problems are 0:20:56.840 --> 0:20:59.119 just demands. Well partly we have some overdoke because the 0:20:59.160 --> 0:21:01.399 supply chain, but it's really because it demand. Our orders 0:21:01.400 --> 0:21:04.320 have been strong multiple quarters in a row. They continue 0:21:04.359 --> 0:21:07.080 to be strong. United States is very strong. Europe continues. 0:21:07.119 --> 0:21:09.040 There's a lot of anxiety about Europe, but if you 0:21:09.080 --> 0:21:11.080 were to be in one of our internal meetings, you'd 0:21:11.080 --> 0:21:14.120 be very bullish on Europe. Orders across our portfolio continue 0:21:14.920 --> 0:21:17.439 to be very strong. We have obviously a watch like 0:21:17.480 --> 0:21:21.000 others on China, but demand in our residential business, large 0:21:21.040 --> 0:21:24.800 commercial are like commercial business which is h VACT for 0:21:25.760 --> 0:21:28.600 things like K through twelve very very strong in United 0:21:28.600 --> 0:21:31.359 States retail with people coming back, So we do see 0:21:31.480 --> 0:21:34.040 very very strong demand right now. Would you say that 0:21:34.080 --> 0:21:38.040 the primary driver of demand is reopening, that desire for 0:21:38.160 --> 0:21:40.880 businesses and schools to make sure that they have clean 0:21:40.920 --> 0:21:43.160 and healthy air for the people who are in their buildings. 0:21:43.359 --> 0:21:44.800 That's a big piece of it. If you take K 0:21:44.920 --> 0:21:49.080 through twelve, it's a vertical that's traditionally been starved for capital, 0:21:49.200 --> 0:21:50.840 and all of a sudden in the last in the 0:21:50.920 --> 0:21:53.280 last year, they've been given a hundred and ninety billion 0:21:53.320 --> 0:21:56.720 dollars in governments, yes, by the US government, and it 0:21:56.760 --> 0:21:59.960 comes in three essays. The last essay is a billion 0:22:00.040 --> 0:22:02.080 that's going to be spent over these next few years, 0:22:02.119 --> 0:22:03.439 and a good chunk of that's going to go to 0:22:03.600 --> 0:22:06.160