The daily business briefing: January 12, 2018
Walmart closes 63 Sam's Clubs as it raises minimum wages, Facebook shifts to favor friends' and families' posts over news, and more
Walmart raises minimum wage, closes 10 percent of Sam's Clubs
Walmart announced Thursday that it would raise its minimum wage, citing the recent Republican tax reform bill as the catalyst. The company's U.S. employees will, starting in February, earn a minimum of $11 an hour. They currently get $10 an hour after completing training. The retailer will additionally offer more comprehensive parental leave benefits and disburse a one-time prorated bonus to certain workers. Skeptics noted that retailers are racing to raise wages to keep employees in a tightening job market. Rival retailer Target hiked its minimum to $11 an hour in October. The positive publicity from Walmart's move was muted when shortly after the announcement, the company said it would close 63 of its 650 Sam's Club warehouse stores, potentially eliminating thousands of jobs.
Facebook alters algorithm to favor posts from friends over companies
Facebook said Thursday that it plans to change its algorithm to give its two billion users more content from friends and families, favoring it over news and brands. "We built Facebook to help people stay connected and bring us closer together with the people that matter to us," Facebook co-founder and CEO Mark Zuckerberg wrote. "But recently we've gotten feedback from our community that public content — posts from businesses, brands, and media — is crowding out the personal moments." The change marks a major shift from Facebook's long-held focus on user engagement, which has been credited with pushing its revenue to a record $34 billion last year. The change follows complaints that the old strategy spotlighted too much inflammatory and misleading content.
Dropbox confidentially files for IPO
File-sharing company Dropbox has filed confidentially for an initial public offering of stock, Bloomberg reported Thursday, citing people familiar with the matter. Goldman Sachs Group Inc. and JPMorgan Chase & Co. reportedly will lead the effort. An IPO by Dropbox, which is valued at $10 billion, would be closely watched, following Snap's disappointing debut last March, which has been followed by a 15 percent decline in its share price. Dropbox has an advantage over money-losing Snap, however, as it has more than $1 billion in sales and has been profitable.
Fiat Chrysler announces plan to invest $1 billion in Michigan plant
Fiat Chrysler said Thursday it would invest more than $1 billion in a Michigan plant and move production of its Ram Heavy Duty truck there from Mexico in 2020. The company also said it would give 60,000 U.S. employees $2,000 bonuses with some of its savings from the GOP's recent tax overhaul. CEO Sergio Marchionne said the moves reflect a commitment to manufacturing in the U.S. Fiat Chrysler said this factory move would create 2,500 U.S. jobs in addition to those previously announced. An industry scholar told the Detroit Free Press that shifting production from Mexico to the U.S. reflected fear that President Trump would pull the U.S. out of NAFTA.
Ford confirms another death from defective Takata air-bag inflator
Ford said Thursday that it confirmed in December that a defective Takata air-bag inflator was the cause of a crash death in a 2006 Ford Ranger in West Virginia last July. The second largest U.S. automaker had reported a similar death in South Carolina in late 2015. Ford said the inflators in the cases were manufactured the same day. At least 21 deaths worldwide have been linked to faulty Takata inflators, which can rupture and blast out potentially lethal metal fragments. The defects have sparked the largest automotive recall in history. Ford issued a new recall for 2,900 previously recalled Rangers.