Low-skilled labor in the US will soon rise in price. Texas may embrace its massive infrastructure investment plan. American Homebuilders at a Crossroads: no more houses to sell, business needs to be developed.
Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
The Little Victory of the Working Man is a Step Backward for All Exploiters
New York City has passed several laws, aimed at improving the situation of workers, working in the delivery industry. What awaits delivery men:
- Couriers from food delivery services will now be allowed to use the restrooms of restaurants, when will they pick up orders.
- Food delivery services will be required to show couriers how much they will receive money for the delivery of the order, as well as approximate time, which will take delivery and the length of the way.
- Delivery services will be required to inform customers, how much of the tip they left will the courier receive directly, - and the couriers of the company will be required to tell about, how many tips did the client leave, and also when and how to change their size.
New York is a city, important for all delivery services both because of its size - it has 8.4 million people, - and because of the example he sets: other major cities in the United States and the world will take note of the events in the Big Apple and, maybe, imitate the developments of this city. For, to paraphrase Tolstoy, all major cities are the same in their misfortunes.
New laws in New York are bad news for many. First of all - for the delivery services themselves, and for a number of reasons: couriers will become more selective in terms of choosing orders, which in the future will force services to pay extra to them, and all this will complicate the cooperation of services with restaurants.
Need to say, relations between them were already bad before the pandemic: services took a big commission, — and the pandemic has exacerbated these contradictions to the maximum: service fees have grown, while food service margins have fallen hard. Can, certainly, laugh at that, that "an army of couriers will lead to a toilet collapse in restaurants", but the inconvenience for restaurants will be quite significant: in New York, an army of food delivery couriers is operating - 80 thousand people. So the load on the infrastructure of restaurants will be significant and will further anger catering. Maybe, this will encourage many restaurants with sufficient order volume to create their own food delivery applications, that will compete with large services like Uber.
For the restaurants themselves and in principle for all employers, relying on cheap labor of low-skilled workers, this New York initiative will mean a direct and indirect rise in the cost of labor - after all, working conditions in delivery will improve, what can attract waiters there. All this is happening against the backdrop of, how the largest US retail and logistics companies are implementing a mass recruitment program ahead of the New Year holidays: Amazon, Walmart, UPS and FedEx are going to hire 335,000 new employees in these few months.
Understandably, that these companies will have more resources, than restaurants and food delivery services, - and this will already contribute to the growth of wages in the labor market. But this discussed improvement in working conditions for couriers will force the large companies listed above, maybe, improve your offer too - with understandable poor results for your reporting. Actually, FedEx's Operating Expenditures Hugely Rise This Season - Scary to Think, what awaits her and other large companies in the next quarter.
Severe Texas frosts
Maybe, do you remember, how this year the state of Texas was covered with frost. In the homeland of Matthew McConaughey, oil refineries and oil production enterprises then stopped, as well as the failure of the gas and electricity supply systems. Not even a year has passed, how industry experts shared their views on what happened: NPO "North American Power Supply Reliability Corporation" (NERC) presented a critical analysis of the situation with the Texas frosts.
The report is interesting with recommendations to strengthen the energy infrastructure of the state. Although there are no figures yet on the cost of such a project, already "by eye" can be said, that only on the scale of Texas we are talking about many billions of dollars of investment and even, probably, many tens of billions of dollars. In similar circumstances PG&E in California plans to spend $40 billion to strengthen its energy infrastructure, to protect her from natural disasters.
Certainly, NERC recommendations may well be ignored by companies. But, Considering, that the recommendations mentioned came in the context of a discussion of large-scale infrastructure investments by the US government, here it is quite possible at least partial implementation of the program to strengthen the energy infrastructure of Texas. And this will give a strong impetus to the development of engineering and infrastructure issuers in the United States.
Houses of horror
The past week was mixed for homebuilding companies. On the one side, New home sales and prices are on the rise. But there is one caveat. The problem is, that the construction companies themselves are unhappy with the current circumstances, which neutralize the positive effect of the above news.
D. R. Horton, for example, gave forecast for this quarter worse than expected: sales will amount to 6.9 billion dollars against the expected 7.1 billion. AND, which is much more important, the company lowered its sales forecast for the next quarter: from 8.15 billion and 23.75 thousand houses to 7.8 billion and 21.5 thousand houses. For the full 2021, the company expects revenue in the region of 27.5 billion - below the previously expected 27.85 billion. The reason for this is the lack of materials and components, from wood and copper to windows and doors. A similar situation with their competitors from KB Home (NYSE: KBH) и Lennar (NYSE: LEN).
At the same time, all these companies have seen a significant increase in the gross margin of their business - precisely because of the ability to drive up prices.. Therefore, we can expect, that these companies will now begin to invest in the modernization of their business and its digitalization, to get the most out of available resources. This will be a big plus for companies., making software in the construction industry, like Procore (NYSE: PCOR).
