⚒️The Bulletin #41: WeWork files for Bankruptcy, A New Union Contract for Ford Workers and EP's Entrepreneurship Spotlight Event!
In this week's bulletin - WeWork's $18 million bankruptcy, union workers reach a new contract with Ford, and EP's newest Entrepreneurship Spotlight event
Welcome back to another week of The Bulletin💖 Stay warm out there as the weather gets chillier— it is so exciting that we’re a week out from Thanksgiving! 🦃
⚒️WeWork files for Bankruptcy (Adam Neumann remains a Billionaire)
WeWork, the once high-flying co-working company, has declared bankruptcy amid a changing landscape for office space. Despite its financial troubles, its co-founder, Adam Neumann, has retained substantial net worth, with reports suggesting it's at least $1.7 billion. This news comes as WeWork's bankruptcy filing revealed the company had $15 billion in assets and $19 billion in liabilities.
WeWork's bankruptcy is attributed to several factors, including a rapid rise in interest rates and a slower return to office work, which led to unsustainable leases and increased competition in the commercial real estate market. WeWork struggled with high vacancy rates, with a 28% vacancy and a 72% occupancy rate in the second quarter of 2023, significantly higher than the national average.
As part of its restructuring in bankruptcy, WeWork is shedding unprofitable leases, with plans to terminate nearly 70 of them, 35 of which are in New York City. The company is also renegotiating leases with over 400 landlords to reduce future rent obligations.
Despite WeWork's bankruptcy, the flexible office space industry does not seem to be going away, and the demand for such spaces remains. WeWork’s bankruptcy has had a non-uniform impact on the market, and the various players in the space face varying challenges as they adapt to the changing landscape of co-working.
Meanwhile, Adam Neumann has been focusing on his new venture, Flow, which aims to oversee multifamily residential properties, and has already received substantial funding. WeWork's bankruptcy represents a significant shift in the commercial real estate industry and raises questions about the future of office space in the post-pandemic era.
🚗Ford Workers Ratify a New Contract
Workers at Ford Motor's Chicago assembly plant have voted to approve a proposed contract with the automaker, according to the United Auto Workers (UAW) union's local chapter. The agreement garnered 57% of the votes in favor. The ratification comes after a strike by UAW members against Detroit's Big Three automakers, which include Chrysler-owner Stellantis, General Motors, and Ford.
The UAW's new contract, covering 57,000 Ford workers, offers raises of 33% or more over the contract's duration, including cost-of-living adjustments to keep wages in line with inflation. The majority of workers at Ford's Michigan assembly plant have already approved the tentative deal.
The deals with the automakers come at a time when they are facing challenges transitioning to electric vehicles (EVs) and competing with market leader Tesla. The contracts are expected to add significant labor costs per vehicle, which may impact profitability.
In a related development, the UAW also reached a tentative agreement with General Motors, following agreements with Ford and Stellantis. The deals promise substantial pay raises for workers— including a cost-of-living pay that would bring raises to a compounded 33%, with top assembly plant workers making more than $42 per hour. Top-scale workers there now make around $32 per hour. Some wage tiers were also eliminated, and it would take just three years for new workers to get to the top of the assembly pay scale, the union said.
The contracts still need to be ratified by UAW members at all three companies, but they are likely to bring labor peace to the domestic auto industry. Significantly, President Biden has praised the agreements, saying workers need “a fair shot”, and emphasizing their significance for collective bargaining.
💡Join EP’s Entrepreneurship Spotlight Event
The Advertisement & Branding team of EP is planning a student-spotlight social media event for entrepreneurs on campus. If you are an aspiring or current entrepreneur and interested in putting your work and process on display in video/vlog format, we encourage you to fill out this form, which will be used to gauge interest in the event!
🍉 What we are consuming in Venture
The book, The Hard Thing About Hard Things by Ben Horowitz. In this book, the co-founder of Andreessen Horowitz and one of Silicon Valley's most respected and experienced entrepreneurs, draws on his own story of founding, running, selling, buying, managing, and investing in technology companies to offer essential advice and practical wisdom for navigating the toughest problems business schools don't cover.
Another book, BURN RATE: launching a startup and losing my mind by Andy Dunn. Burn Rate is a behind-the-scenes account of Andy Dunn's personal journey building and leading the menswear startup Bonobos. The book provides an inside look at the challenges of launching a startup, from scrappy early days to scaling the digitally-native fashion brand, with candid reflections on the mental health toll and burnout of startup life.
This article from the Washington Post, addressing society’s fear of AI.
That’s it for this week, feel free to email me at zyn_yee_ang@brown.edu with any inquiries!
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