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Caught between the need to respond to slumping demand and political promises, Detroit's auto makers are choosing to preserve their economic health. General Motors Co. and Ford Motor Co. are cutting their American workforces, the WSJ's John D. Stoll and Mike Colias report, pulling back their production in an arena that's been an engine of growth for U.S. employment since the financial crisis. The new cuts could far outpace the job commitments the companies have made in recent months after criticism from President Donald Trump. The changing reality of the automotive market may outweigh the political concerns, however. Ford is aiming to cut $3 billion in costs and has already staggered assembly-plant schedules, pushing fewer cars to dealer lots. With auto sales plateauing, car makers are facing a growing glut of inventory, a clear sign that production capacity is too high.
E-commerce disruptors are turning to a new path to sales growth as they reach for a bigger share of the retail market: brick-and-mortar stores. More specialty web retailers are taking their online strategies into stores, the WSJ's Eliot Brown reports, in a sign that some believe they are reaching the limits of online expansion. They're not necessarily doing it through their own storefronts: Companies including bed-in-a-box e-tailer Casper Sleep Inc. and razor subscription service Harry's Inc. have recently struck deals with Target Corp. to sell their goods. Such deals mark a kind of watershed for e-commerce, suggesting the online specialists are looking to tap into bigger markets and the supply chains behind them. They say they're facing the reality that e-commerce, for all its explosive growth, is still just a small fraction of overall retail sales. The new deals allow them to leverage their brands with more conventional retailers, while blurring the lines still more between digital and store sales.
Wal-Mart Stores Inc. is bracing for the arrival in the U.S. of a European grocer with a track record of disruption that could jolt an already-embattled retail industry. German discount chain Lidl expects to open 20 stores in Virginia, North Carolina and South Carolina, the WSJ's Sarah Nassauer and Heather Haddon report, and is already mapping the distribution channels at dozens more stores. Lidl's impending arrival is already sending tremors through grocery chains and their suppliers, with many looking at how the company's move into the U.K. in 1994 helped upend that country's grocery sector. Many are concerned about a potential price war, and worry that Lidl's attention to popular store brands will provide another blow to big consumer brands that are already being hurt by broader shopping trends. One major supplier to Wal-Mart is considering offering Lidl distinct products -- for example, a different size or flavor than Wal-Mart carries -- to avoid getting caught in the middle of a pricing battle.
ECONOMY & TRADE
The U.S. industrial sector may finally be on a growth path, even if cars aren't coming along for the ride. U.S. industrial production rose in April at the fastest pace in more than three years, the WSJ's Jeffrey Sparschott reports, and long-lagging manufacturing output led the expansion with the factory sedtor's strongest gain since early 2014. That's critical news for a range of operators across distribution channels, from bulk shipping companies on the water to freight railroads and truckload carriers on land. U.S. factory activity was stagnant through much of 2015 and 2016 as the dollar strengthened, making U.S. goods more expensive to sell overseas, and global economic growth remained tepid. Now, the dollar is stable and overseas demand has picked up, helping American factories. The growth comes as the auto industry, which helped drive manufacturing output in April, is starting to pull back. But sectors such as electronics and food manufacturers posted smaller but perhaps more enduring gains.
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IN OTHER NEWS
U.S. housing starts fell in April for the third time in four months. (WSJ)
The eurozone's trade surplus with the rest of the world reached a record level in March as exports jumped 13%. (WSJ))
U. K. consumer prices rose at the fastest pace in over three years. (WSJ)
The European Union's top court curbed the bloc's power to sign off trade pacts without explicit backing from EU members, raising risks to future deals. (WSJ)
The International Energy Agency says moves by OPEC countries to extend their production cuts won't be enough to rebalance global supply and demand. (WSJ)
Home Depot Inc.'s first-quarter sales and profit grew sharply as the retailer benefited from an improving housing market. (WSJ)
Dick's Sporting Goods Inc. is scaling back store openings after reporting that sales at existing stores fell short of forecasts. (WSJ)
A supplier of Craftsman power tools to Sears Holdings Corp. is threatening to back out of its contract over concerns about the retailer's ability to pay its bills. ( Chicago Tribune)
Transportation Secretary Elaine Chao says federal spending would make up $200 billion of the administration's $1 trillion infrastructure plan. (Detroit News)
AB InBev-owned Anheuser-Busch is adding distribution centers in Los Angeles and Columbus, Ohio, to give the brewer greater flexibility in its beer distribution. (Columbus Dispatch)
Campbell Soup Supply Co. will get a $1 million tax break by temporarily ceding ownership of its planned Findlay, Ohio, distribution center to the regional port authority. (The Courier)
Chinese parcel carrier YTO Express will use a new headquarters in Hong Kong as its base for an ambitious global expansion. (South China Morning Post)
Freight exchange DAT said North American truck volume expanded sharply in April while shipping rates remained high. (Fleet Owner)
Truckload carrier Werner Enterprises Inc. introduced a last-mile service aimed at e-commerce shipments. (Logistics Management)
China Cosco Shipping Group has set up a fund to invest in shipping assets world-wide. (Splash 24/7)
Suicide rates on commercial shipping vessels have more than tripled in the past year and make up 15% of deaths at sea, an insurance group says. (Lloyd's List)
Swiss startup Teleretail AG is building a delivery robot it says can travel 50 miles. (TechCrunch)
Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.
Write to Paul Page at email@example.com
(END) Dow Jones Newswires
May 17, 2017 06:53 ET (10:53 GMT)