Business briefing

The daily business briefing: June 21, 2017

Embattled Uber co-founder Travis Kalanick resigns as CEO, Ford shifts its Focus manufacturing move to China, and more

1

Embattled Uber CEO Travis Kalanick resigns

Uber co-founder Travis Kalanick resigned as CEO of the ride-hailing service on Tuesday under pressure from shareholders after a tumultuous year. Earlier in the day, five major Uber investors demanded that Kalanick step down immediately. The group included the venture capital firm Benchmark, which has one of its partners, Bill Gurley, on the Uber board. In a letter titled "Moving Uber Forward," the investors told Kalanick, 40, that the company needed new leadership. The company has shaken up its leadership after months of turmoil over allegations of an unhealthy corporate culture that permitted sexual harassment and misconduct. Kalanick said he loved Uber the company but "accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight." He will remain as a board member.

2

Ford shifts Focus production move to China instead of Mexico

Ford Motor Co. said Tuesday that it would shift most production of its next version of Focus compact cars to China rather than Mexico. The change will save Ford $1 billion in investment costs by allowing Ford to scrap plans for a new plant in San Luis Potosi, Mexico, and spend less money retooling an existing manufacturing facility in China to produce the cars for sale in North America. The current Focus is being phased out at a Wayne, Michigan, plant, which will switch to production of a new Ranger midsize truck late next year and a Bronco SUV in 2020. Ford said the decision, the first major production move since Jim Hackett replaced Mark Fields as CEO of Ford last month, will provide more job security for the Wayne workers, as consumer demand for cars falls and sales of bigger, more profitable vehicles rise.

3

Department store stocks fall after Amazon unveils Prime Wardrobe

Amazon on Tuesday announced the launch of its Prime Wardrobe service, which will let the online retail giant's Prime subscribers order clothing and try it on before deciding whether to buy it. Customers will be able to send back — for free — what they don't want by putting it in a box and leaving it outside their door, and they will receive a discount of 10 percent if they keep three or four items, and 20 percent if they keep five or more. Department store shares fell after Amazon released a video describing the new service. Nordstrom closed down by nearly 4 percent on Tuesday, and JC Penney and Ross Stores dropped by roughly 5 percent.

4

Oil prices fall into bear market territory, dragging down stocks

Global stocks fell for a second straight day on Wednesday as oil prices continued to drop, entering bear market territory on increasing concern over signs that global oversupply would continue despite output cuts by major producers. The renewed oil slump dragged prices to seven-month lows. U.S. stock futures also dropped early Wednesday as the turmoil in the oil market dampened investor confidence. Dow Jones Industrial Average futures were down by 0.1 percent, S&P 500 futures fell by 0.2 percent, and Nasdaq-100 index futures were down by 0.4 percent. The S&P and Dow lost 0.7 percent and 0.3 percent on Tuesday, edging back from recent record highs.

5

Uber to let drivers receive tips through app in policy reversal

Uber announced Tuesday that it would reverse a longstanding policy and let drivers receive tips through the ride-sharing service's smartphone app. The shift came on the same day that CEO Travis Kalanick announced he was resigning under shareholder pressure as the ride-hailing service implements a series of outside recommendations to improve its corporate culture. The company has faced complaints of sexual harassment and tensions between management and drivers, who are contractors, not employees. Drivers have argued that they need a tipping feature on the app to boost sinking income. Drivers in Houston, Minneapolis, and Seattle were able to start collecting tips through the app on Tuesday, and their counterparts across the U.S. will have the feature by the end of July, Uber said.

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