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Seattle CEO who set firm's minimum wage to $70G says he has hit hard times

The Seattle CEO who reaped a publicity bonanza when he boosted the salaries of his employees to a minimum of $70,000 a year says he has fallen on hard times.

Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.

Only three months ago Price was generating headlines—and accusations of being a socialist — when he announced the new salary minimum for all 120 employees at his Gravity Payments credit card processing firm. Price said he was doing it, and slashing his $1 million pay package to pay for it, to address the wealth gap.

“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”

The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.

“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” Gravity financial manager Maisey McMaster, 26, told the paper.

She said when she talked to Price about it, he treated her as if she was being selfish and only thinking about herself.

“That really hurt me,” she said. “I was talking about not only me, but about everyone in my position.”

Approaching burnout, she quit.

Grant Moran, 29, also quit, saying the new pay-scale was disconcerting

“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”

Price said McMaster and Moran, or even critic Rush Limbaugh, the talk show host, were not wrong.

“There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs,” he said.

The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.

Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”

“It pains me to hear Brian Canlis say that,” Price said. “The last think I would ever want to do is make a client feel uncomfortable.”

The Times said Price has dozens of new clients inspired by his move but those accounts won’t start generating profits for at least another year.

Making matters worse for Price is a lawsuit his older brother filed two weeks after the pay hike announcement.

Lucas Price, who owns 30 percent of the company, accuses his brother of taking millions of dollars out of the company while denying him the benefits of his minority ownership.

The lawsuit has forced Gravity to pay mounting legal fees at a time when the new salary scale is being eaten up by profits.

“We don’t have a margin of error to pay those legal fees,” Dan Price said.

Click for more from The New York Times

http://usnewsplus.com/2015/08/02/seattle-ceo-who-set-firms-minimum-wage-to-70g-says-he-has-hit-hard-times/

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Hard times for the coal industry may get a lot tougher yet

Mine workers Adam Powell and Darrin Francis, at the Springvale mine near Lithgow. Photo: Wolter Peeters

Matt Fusarelli, general manager of research firm AME, was doing his best to lift the gloom at the biennial Resources and Energy Investment Conference in Sydney this week.

Yes, commodity prices had tanked, but NSW still accounted for 15 per cent of the world’s thermal coal exports, and our shipments were even good for the planet, he told the audience.

"Every tonne of coal that leaves Newcastle Port actually decreases total global emissions of carbon dioxide," Fusarelli said.

The coal market may remain oversupplied for another seven years. Photo: Marina Neil

Australia’s coal displaces a tonne of the Indian or Chinese variety "which is substantially higher in deleterious elements and you have to burn a lot of it for the same energy content", he said.

Being slightly less toxic, though, is not necessarily a huge selling point for a fuel that is increasingly on the nose at home and abroad.

Investors are among those dismayed at the industry’s failing fortunes. Local coal miners, such as Whitehaven, have lost about 80 per cent of their value since the peak of the market in March 2011.

Coal has its critics, with its pollutants near the top of the list. Photo: Daniel Munoz

US energy giant Peabody Energy has fared even worse. This week it revealed a $US1.05 billion ($1.44 billion) loss for the June quarter on falling sales and said jobs cuts would include another 300 in Australia.

China’s Shenhua Energy, which wants to build a controversial $1.7 billion open-cut coal mine in the Liverpool Plains, also reported ominous results. Formerly the world’s biggest coal producer, Shenhua’s first-half revenues slumped by about one-third and its profits by 43 per cent compared with a year ago.

"I’m not sure how it could get any worse at the moment," Robin Griffin, senior coal analyst with Wood Mackenzie, says.

Solar energy is catching on: a paraboloid solar concentrating reflector being developed in India. Photo: Dhiraj Singh

Griffin had told the Sydney conference it would take seven years before the market for thermal coal used in power stations "returned to balance" (See chart below). The prospects for metallurgical or coking coal consumed in steel furnaces were marginally better with demand likely to match supply by 2020.

Jobs, exports

The NSW Minerals Council said coal had a strong future, with 34,800 people directly employed in the industry. That figure, though, is down about 11 per cent, or 4800, from two years ago.

It notes that exports of coal from the state are up 21 per cent to Taiwan and 8 per cent to South Korea over the nine months to September. (See chart below.)

The price of coal is down about 25 per cent in US dollar terms over the past year but the Australian dollar has fallen almost as much, helping local suppliers.

Griffin estimates global coal prices will start to pick up, perhaps as soon as next year. While that should help local miners, their costs are likely to rise as well – because of increasing costs of inputs such as diesel – limiting the potential for profit gains.

Paris, renewable energy

Hopes for an early recovery may may prove optimistic.

Before the international climate summit in Paris at the end of the year, it’s a fair bet coal will cop more flak for its relatively high global warming impacts.

Pollution levels vary according to the quality, but burning black coal has about 50 per cent higher CO₂ than oil and double that of natural gas. (Brown coal, which supplies most of Victoria’s electricity, is worse still.)

Griffin says his firm has anticipated potential cuts in coal use should nations strike an ambitious Paris pact to cut emissions but concedes that coal might be further curtailed.

"There’s almost a competition to come up with the greatest renewable energy target and that has an impact on sentiment that could flow through to [coal] prices," he says.

Wood Mackenzie forecasts a steady increase in renewable energy, as shown in the following chart (JKT is Japan, Korea, Taiwan, while SEA is South-east Asia, GW is gigawatts of capacity):

Labor last week joined in the race, promising to set a goal for Australia of tripling the present share of electricity sourced from solar, wind and other renewable energy by 2030 if it wins government.

The opposition’s move sparked claims by the Abbott government that electricity prices would be hiked. At least one union, though, expects the coal-fired power sector will shrink and demanded Labor prepare to include compensation to help workers exit the industry.

The NSW government, meanwhile, said $13 billion was lined up for approved or potential new renewable energy projects. A spokesman for Energy Minister Anthony Roberts said "there are no coal-fired power plants planned or likely in the foreseeable future".

‘Hysteric rhetoric’

Reinhold Schmidt, chief executive of Yancoal Australia, agrees times are tough for his industry.

"The harsh reality of the current global market is one of oversupply, poor prices and little room for improvement at this time," Schmidt says."Although prices will eventually improve as new markets expand, current expressions of optimism need to be tempered as Australian operations work to sustain themselves during these difficult operating conditions," he says.

Schmidt, though, took aim at "hysteric rhetoric" from certain "influential commentators and influencers" that appears to be turning even the previously pro-mining NSW coalition government against the industry.

While Alan Jones wasn’t named, the radio shock jock has lately added Shenhua’s Liverpool Plains mine to his anti-coal campaigns.

"We need to ask whether legislation and policy is being changed with purpose and a truth of intent, or for political point-scoring when mining is no longer a favoured child," Schmidt had earlier told the conference.

While some speakers warned of valuable skills being lost in the industry, Schmidt said the next generation should still consider a career in mining.

"We need to help students understand they can still have a future in coal, contrary to the rhetoric of the anti-mining antagonists who want to suggest the industry is on its last legs," he says.

China, India hopes dashed?

Conference speakers singled out China and especially India as offering the best hope for a near-term recovery for coal.

AME’s Fusarelli noted the Chinese government this year ordered power plants in smog-choked east coast cities to cut their sulphur-dioxide emissions by two-thirds from current regulations by 2020, offering Australian suppliers some hope.

Griffin, though, says 85 per cent of Chinese thermal coal producers were running at a cash loss, with local authorities unwilling to let them close. That could see more barriers to imports.

India, often held up as Australia’s coal saviour, may also disappoint.

Tim Buckley, a former Citigroup analyst now with the Institute of Energy Economics and Financial Analysis, said India is committed to accelerate the take-up of renewable energy fivefold, raising the clean energy capacity in the nation to 175 gigawatts by 2022 from about 37 GW now.

He notes a recent auction for 300 megawatts of solar secured average winning bids of just 5.35 rupees (11 cents) per kilowatt-hour – locked in for 25 years, without an adjustment of inflation. That compares with a landed coal price of 6 rupees and 5.75 rupees for gas.

The IEEFA takes a starkly contrarian view of India’s coal import appetite, predicting such imports will cease by 2021.

And China’s prospects for coal demand appear to be fading too, Buckley says, noting Shenhua’s 5.8 per cent drop in coal-fired power in China, compared with a year earlier.

In sum, the seaborne coal trade is "dead, or at least in permanent structural decline," he says, with the IEEFA tipping a 30 per cent decline this decade from a peak in 2013.

If Buckley is right, Australia’s coal industry’s slump has a long way to go.

http://usnewsplus.com/2015/07/30/hard-times-for-the-coal-industry-may-get-a-lot-tougher-yet/

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