Month: June 2021

By Vince Bielski, RealClearInvestigations

President Biden repeatedly insists that his infrastructure plan will create millions of jobs and labor unions will be the big winners. But interviews with economists, union leaders, government officials and trade groups as well as basic math suggest otherwise.

The once dominant trade and construction unions no longer have enough members outside of their strongholds on both coasts and in the Midwest to claim most of the projected infrastructure jobs. By some estimates, two-thirds of these jobs will go to nonunion workers who dominate the construction markets in most states.

Biden, in short, appears to be harking back nostalgically to an era of union strength in the private sector that is decades gone. “It’s going to be really hard for unions,” says David Macpherson, an economist at Trinity University who specializes in organized labor. “I expect they would get far less than half of the infrastructure jobs.”

In addition, the overall number of jobs that the $2 trillion American Jobs Plan will generate is a matter of debate. The proposal is so sprawling — covering roads, bridges, water and transit systems, broadband, the power grid, clean energy, housing and more – and the labor market is so unpredictable because of the pandemic that economists are making wildly divergent forecasts. One group says it will create a few million jobs; another says it won’t create any jobs.

“The challenge for economists is particularly difficult in this situation,” says Bill Dupor, an economist at the Federal Reserve Bank of St. Louis. “There is a wide range of estimates of the jobs effect of infrastructure spending.”

In response to these challenges, the Biden administration is trying to put its thumb on the scale to give unions an advantage in securing the jobs that are created – and in some projects force nonunion workers to pay union dues to get a piece of the action.  North America’s Building Trades Unions and other labor groups involved in cement, iron, electrical and other construction work are in line to benefit from the strategy.

Biden’s Union Jobs Strategy

The administration is pushing “prevailing wage” requirements on federally backed projects that make it easier for unions to win bids. Democrats say these laws, which often set wages at higher union rates, prevent a “race to the bottom” by nonunion contractors who pay about 13% less. Nonunion companies that don’t like the higher labor costs and compliance headache shun these projects — to the benefit of unions.

Biden’s second lever of federal power – government-mandated project labor agreements (PLAs) – packs more union clout. The PLAs hand unions control over big and complex developments to provide an ample and skilled workforce and prevent delays. PLAs, which were used on the Hoover Dam and Cape Canaveral, also keep nonunion contractors such as Mohawk Northeast away by imposing union work rules and extra costs.

“PLAs hurt nonunion contractors and are not fair because the competitive advantage we have is lost,” says David Schill, a vice president at Mohawk, which operates in New England.

Associated Builders and Contractors, a trade group of mostly nonunion members, and Republican lawmakers aim to undercut Biden’s union strategy. They deride it as a Democrat payback to unions that punishes nonunion blue-collar workers and taxpayers.

“President Biden will receive pushback from the vast majority of the construction workforce and industry as well as some state and local governments,” says Ben Brubeck, vice president of regulatory affairs at ABC in Washington. “Taxpayers lose when small businesses can’t access these jobs.”

The PRO Act Withers

The pressure on the administration to deliver union jobs is rising as one of its major pro-union efforts, the Protecting the Right to Organize Act, languishes in the Senate without enough votes. Sens. Mark Kelly and   Sinema of Arizona and Mark Warner of Virginia have been the Democratic holdouts. A top priority of organized labor, the PRO Act would change the rules to make it far easier for unions to win collective bargaining rights. More controversially, it would void the right-to-work laws passed by 27 states that give workers a choice of whether to join a union.

The legislation, which union leaders see as key to reversing the steady decline in membership, would mostly effect workers in manufacturing plants and warehouses like those run by Amazon. But when given the chance, employees at some companies have voted down unions. Workers at an Amazon facility in Alabama, for example, defeated a union drive in April.

With the PRO Act all but dead, trade unions are not in the mood for an infrastructure compromise with Republicans that significantly slashes the plan. While the president has trimmed his proposal from $2.3 trillion to $1.7 trillion in a nod to bipartisanship, it’s still several times bigger than the offer from Republicans. They also reject Biden’s call to raise corporate taxes to pay for it.

“A big infrastructure package will mean an enormous growth in employment and it’s going to build roads, bridges and tunnels that the country desperately needs,” says David Mallino, legislative director of the Laborers’ International Union of North America in Washington. “The current Republican offer falls short.”

Clashing Job Forecasts

In the face of the obstacles, the administration has offered questionable and misleading estimates of the jobs the plan would produce. Although predictions from economists are all over the map, the administration’s go-to estimate is from Moody’s Analytics, a Wall Street research firm. Its chief economist, Mark Zandi, said in April that the infrastructure plan would generate about 2.6 million jobs over a decade after calculating the impact of federal spending on economic growth. Zandi wrote that spending on infrastructure when unemployment is high produces more bang for the federal buck, making the next few years “an especially propitious time” to increase investment.

Administration officials then pumped up Zandi’s estimate for public consumption. Transportation Secretary Pete Buttigieg told ABC News in early April that the infrastructure plan “will lead to 19 million jobs” – a number that added the Moody’s estimate to the 16 million jobs that the firm said will be created regardless of the plan. Confronted with this fuzzy math, Buttigieg later walked back his overstatement. But a month later Biden stated in a speech in Louisiana that “we’ll create up to 16 million good-paying jobs,” overstating Moody’s forecast six-fold.

In fact, the overall effect of the infrastructure plan on jobs may be nil. That’s the conclusion of researchers at the University of Pennsylvania. By the time most of the infrastructure spending rolls out in the mid-to-late-2020s, the researchers predict, the economy will have already returned to full employment, eliminating the benefit to jobless workers at the center of Moody’s analysis. Improvements to roads and broadband Internet will make the American workforce more productive, but that will be largely offset by the reduction in business investment from higher corporate taxes to pay for Biden’s plan.

“We project that the net effects on employment will be very small,” says Alex Arnon, associate director of policy analysis for the Penn Wharton Budget Model.

America’s last major infrastructure push, which was part of the Obama administration’s Recovery Act, didn’t go according to plan. Overall the legislation did provide a needed boost to the collapsing economy. But Dupor of the St. Louis Fed says the $28 billion given to states to fix highways didn’t significantly improve them and created only a limited number of construction jobs.

How could that be? As President Obama put it in 2010, “There’s no such thing as shovel-ready projects,” which made it hard for states to quickly spend the money within the allowed two years. In addition, as federal dollars poured into states, Dupor says, they slashed their own highway funding, freeing it for other uses during the recession. Biden’s buildout, which is set to occur over a decade, is designed to avoid these pitfalls.

Prevailing Wage Violators 

How many infrastructure jobs go to unions will partly depend on a legal relic of the Great Depression called the Davis-Bacon Act. Congress expanded this prevailing wage law over the years to cover federally backed roads, bridges, airports, dams, schools, housing and community development projects as well as federal buildings like Veteran Affairs hospitals and courthouses. The giant construction union LIUNA, with the support of the Biden administration, is lobbying Congress to expand Davis-Bacon again as part of the infrastructure plan.

They want prevailing wage to apply to Biden’s ramp-up of wind and solar farm construction, which will be heavily backed by federal tax credits. If developers get a tax break, LIUNA officials say, workers should benefit too with better wages.

But prevailing wage has never been tied to tax credits before, making the proposal a tough sell amid moves by Republicans to repeal Davis-Bacon. An unlikely repeal would save taxpayers $12 billion in construction costs over the decade, according to the Congressional Budget Office.

The bigger problem for unions is the widespread noncompliance with Davis-Bacon. The Labor Department found 7,000 to 16,000 violations a year by companies over the last decade, according to department data. “To say the violations are common is an understatement,” says Irv Miljoner, who enforced prevailing wage laws for decades at the department before recently retiring.

Many complaints target nonunion contractors who win bids for prevailing wage projects but then pay workers less – undercutting the advantage that the law bestows on unions. In a rare crackdown, S.A. Taylor, a nonunion construction company in Virginia, agreed to a big $560,000 settlement in March after federal prosecutors said the company paid workers significantly less than the prevailing wage on two VA projects and falsified records to try to hide it.

The Biden administration is making Davis-Bacon enforcement a priority in preparation for the infrastructure buildout. The enforcement division is hiring investigators after its ranks were depleted during the Trump administration. It now has more than 700 investigators spread across the country, a few hundred shy of Obama’s crew.

“Our goal is to continue to try to put more boots on the ground to make sure we are pursuing the laws,” says Jessica Looman, the division’s principal deputy administrator and former building trades official.

The administration is also promoting controversial project labor agreements, which convert big developments like the Woodrow Wilson Bridge that spans the Potomac River into union work sites. PLAs are negotiated with unions before ground is broken. They set the rules of the road on wages, benefits, training programs and more to keep the many contractors on a big project in line and on time.

But nonunion contractors like Mohawk Northeast avoid such agreements because they can jack up labor costs. Under these agreements in Connecticut, for instance, Mohawk must hire 70% of its workers from union halls, carry extra insurance to cover them and pay union fees for its nonunion workers who will never enjoy the benefits, says Schill of Mohawk. “Already this year there have been four major projects with PLAs that we haven’t bid,” he says.

The administration’s ability to mandate PLAs on federal projects is limited by laws protecting free competition. In a 2009 executive order, Obama went as far as encouraging federal agencies to consider mandating PLAs on projects on a case-by-case basis after surveying the views of contractors.

Obama’s order spurred a counter-offensive by PLA opponents. Nonunion companies with Associated Builders and Contractors attacked the proposed agreements in hundreds of surveys, arguing they were anti-competitive. As a result, agencies required them on only about dozen federal projects out of almost 1,900 over the last decade.

The order also lifted a ban by the prior Bush administration on the power of states to require PLAs on their own federally backed projects. In response, more than 20 states in the South, Midwest and West passed laws restricting government-mandated PLAs, shielding hundreds of billions of dollars in construction spending from the union-friendly agreements. A handful of states like New York moved in the opposite direction to encourage their use.

Construction on the Governor Mario M. Cuomo Bridge just north of New York City shows how the agreements can backfire. When there was a shortage of experienced local union welders, ABC’s Brubeck says, nonunion welders in the area declined to work on the bridge because of the PLA. Contractors ended up importing robotic welders from the South to do some of the work and made their handlers join a union.

Union leaders, frustrated with the slow PLA rollout under Obama, are now pressing the Biden administration for better results. In May, the Treasury Department encouraged state and local officials to use PLAs on projects funded with $350 billion in pandemic recovery money. The administration is also urging Congress to attach them to upcoming infrastructure construction.

Whether the president who calls himself a union man can deliver a huge infrastructure package with a bonanza of union jobs is the test he’s yet to pass.

“I’ve worked in the labor movement for 20 years and I’m always ready for disappointment,” says LIUNA’s Mallino. “But I have never felt more optimistic in my life about achieving real gains for members with this administration.”

Since its inception in March of 2016, the Babylon Bee has made a name for itself as the most hilarious satire website in the known universe – spitting out headlines that would fool only the most abject of morons with no inner monologue, while making the rest of us spit coffee all over our screens.

As the site has risen in popularity (with an estimated 5 million visits per month), liberal ‘fact checkers’ began smearing the Bee by fact checking obvious satire.

Editor in Chief Kyle Mann responded to one example of this malarkey in an August 2019 Wall Street Journal Op-Ed, after ‘fact checking’ website Snopes (founded by an alleged embezzler who left his wife for an actual whore) ‘debunked‘ an satirical take on a false claim by Georgia state Rep. Erica Thomas, who claimed that a white man in a supermarket told her to “go back to where you came from,” only to have a witness later say that never happened.

Here’s the Bee’s headline:

And here’s the galaxy brains at Snopes ‘debunking’ it:

According to Mann, “Snopes knew this was a joke but questioned our “brand” of satire. The website called us “junk news” and a “ruse.” It accused us of intentionally “muddying the details” of a current event to “fool” people.” After some legal pressure, “The scolds at Snopes seemed to comply and removed the worst bits from their piece. But they then rolled out a new rating, “Labeled Satire,” which is meant to suggest that we are somehow making jokes in bad faith.”

The left’s war on Babylon Bee has continued. In April, Facebook penalized the site for “coordinating harm and promoting crime” after they published a clearly satirical “Guide To Being Prepared For Rioting.”

Facebook is penalizing @TheBabylonBee for “coordinating harm and promoting crime” for our satirical post MAKING FUN OF THOSE WHO RIOT. We appealed the decision but were told it was unlikely we’d receive a response. pic.twitter.com/yITSX2h4Va

— Kyle Mann, boop/bop/beep (@The_Kyle_Mann) April 23, 2021

And now, the New York Times –  which actively reported Russia collusion conspiracy theories for three years – has joined the fray called the Bee a “far-right misinformation site” that “sometimes trafficked in misinformation under the guise of satire.”

Bee owner Seth Dillon responded to the incident in a lengthy Twitter thread that makes clear that for the Bee, defamation is no joking matter (please clap).

I commented on the original version of the article in this thread. https://t.co/lv0eYo6NzK

— Seth Dillon (@SethDillon) June 3, 2021

The update was no better than the original. We have not, in fact, feuded with Snopes as to whether we publish satire or misinformation. Snopes retracted that insinuation with an editors’ note saying it was never their intent to call our motives into question. pic.twitter.com/3s5lw9HyCw

— Seth Dillon (@SethDillon) June 3, 2021

These mischaracterizations from the Times are nothing new. Previously, Times reporter Kevin Roose wrote a defamatory piece that claimed we “capitalize on confusion” and that we have a “habit of skirting the line between misinformation and satire,” whatever that means.

— Seth Dillon (@SethDillon) June 3, 2021

For better or worse, the NY Times is considered a “reliable source.” We cannot stand idly by as they act with malice to misrepresent us in ways that jeopardize our business.

— Seth Dillon (@SethDillon) June 3, 2021

If the Times refuses to correct their reporting, the Babylon Bee and their lawyers may entertain even more us by kicking their ass in court.

Pouring more fuel on what was already today’s dumpster fire of a market, Bloomberg reported that according to a memo it had seen, Jefferies told clients its prime brokerage arm will no longer allow the execution of short sells in meme stocks such as AMC, GameStop and MicroVision.

“Until further notice, Jefferies Prime Brokerage will no longer offer custody on naked options in GME, AMC and MVIS,” the memo noted. The firm will no longer allow the execution of short sells of those securities, the memo continued, noting that other stocks may be added to that list.

The news comes in a rollercoaster session for AMC which after plunging as much as 30% on news it was selling 11.55MM shares in an At The Market offering, reversed all losses after announcing it had completed the offering, gaining as much as 10% before again reversing the move and last seen down about 9% at $57. Expect much more drama here.

By Greg Miller of American Shipper,

In a sign of just how frenzied the container market has become, a freight forwarder is reportedly paying $135,000 per day for a short-term charter of the S Santiago, a 15-year-old container ship with a capacity of 5,060 twenty-foot equivalent units (TEUs).

“Charter rates for short employment … have gone out of control,” said Alphaliner in its new weekly report.

“Depending on the sources, the ship would have obtained anything between $100,000 and $145,000 per day, an absolute historic high. The name of the charterer has not been fully confirmed, although it is believed to be a forwarder.”

An industry source speaking to American Shipper on condition of anonymity said the rate was $135,000 per day, the duration was 45-90 days (one round voyage with an option for a second) and the charterer was Chinese freight forwarder 3 Seas.

The source said that there is “more and more enquiry every day” with “people panicking now” amid “unprecedented times.”

Alphaliner said that “this colossal rate is substantially higher than the already whopping $70,000-$90,000 per day — depending on the final duration — agreed recently by Hapag-Lloyd for a two- to three-month employment of the 4,308-TEU CMA CGM Opal.”

The industry source told American Shipper that the S Santiago deal was concluded last week and that he wouldn’t be surprised if a new record were reached this week.

According to U.K.-based valuation and data provider VesselsValue, the 2006-built S Santiago is owned by Cyprus Sea Lines and is currently valued at $38.48 million.

To put the enormity of the charter deal in perspective, the shipowner will earn back one-sixth of the ship’s value in a single voyage — and one-third of the vessel’s value if the charterer takes the option for the second voyage.

What this means for cargo shippers

The historic S Santiago transaction is yet another big red flag for cargo shippers. Charter rates like this only make sense if freight rates are high enough for the charterer to turn a profit.  

It also underscores just how tight vessel supply is.

Alphaliner reported that only 2.7% of the global container fleet was inactive as of May 24, totaling 660,662 TEUs. Of that, 70% (461,779 TEUs) was inactive due to ships being in the yards for repairs or maintenance.

And cargo shippers will not be getting any relief in the near or medium term from newbuild deliveries.

There has been a surge of orders recently, but those are for 2023-2024 deliveries. Clarksons Research Services estimates that fleet growth in 2022 will fall to 2.5% from 4.6% this year.

What this means for ship lessors

The S Santiago rate was so high because ship lessors, otherwise known as non-operating owners (NOOs), much prefer to put their tonnage on multiyear charters and lock in long-term profits.

“Those electing to accept short-term charters are likely doing so to capture fantasy rates near term,” said Fearnley Securities, referring to the “off the charts” S Santiago transaction.

According to Alphaliner, “The market has become one of long-term charters, with 43 of the 51 fixtures reported in the past two weeks concluded for durations of 24 months or over.” Of that total, three charters were for five years’ duration, nine were for four years, 10 for three years and the remainder for two years.

“The medium-term prospects remain bright for NOOs,” affirmed Alphaliner. Listed NOOs include Costamare, Danaos Corp., Seaspan owner Atlas Corp., Global Ship Lease, Navios Partners, Euroseas, Capital Product Partners and MPC Containers.

What this means for liners

The record-setting charter market implies medium-term downside risk for liner companies.

Today’s unprecedented freight income more than offsets stratospheric charter costs, but NOOs are forcing liner operators to accept longer durations to get the ships. If freight rates were to fall significantly by 2023-24, charter rates negotiated in 2021 will be much more painful to liners’ bottom lines.

ZIM offers the most extreme example, because unlike other liners, it charters its entire fleet and does not own vessels. As of Sept. 30, 2020, 71% of its capacity was chartered for a year or less. The company touted the advantage in its IPO prospectus, stating, “Short-term charter arrangements allow us to adjust our capacity quickly in anticipation of, or in response to, changing market conditions.”

But as ZIM has rapidly increased its fleet size to capture freight-rate upside, charter durations have ballooned. Its fleet size nearly doubled from 59 vessels in mid-May 2020 to 110 as of mid-May 2021.

According to Alphaliner, charters by ZIM over the past month include the 6,648-TEU Kobe for 44-48 months at $45,000 per day; an extension of its charter of the 9,784-TEU Santa Linea for 40 months at $42,500 per day starting in Q1 2022; and an extension of its charter of the 3,534-TEU Bach for 36-38 months at $31,250 per day.

During the latest quarterly conference call, ZIM CFO Xavier Destriau conceded a shift to longer durations out of necessity.

“We will continue to bring in vessels in order to capture [revenue] from new lines we are opening and to renew existing charters,” said Destriau. “We are not changing our strategy, which is to continue to rely on the charter market. What is changing is the allocation of short-term charters versus long-term charters due to the current market conditions, obviously.”

Now that Fauci’s released emails (which still contain far too many redactions and should be released in their entirety) confirm countless “conspiracy theories” about what Fauci knew about masks, covid and its origins, which as Rand Paul tweeted confirm that Fauci was a “fraud” not to mention that Trump appears to have been right  yet again, moments ago Trump issued a statement on the Fauci emails, which while generally self-congratulatory, contained an important question:

“The funding of Wuhan by the U.S. was foolishly started by the Obama Administration in 2014 but ended under the Trump Administration. When I heard about it, I said “no way.” What did Dr. Fauci know about “gain of function” research, and when did he know it?”

We are confident that the Democratic majority in Congress will get right on it.

Trump’s full statement below:

Statement by Donald J. Trump, 45th President of the United States of America

After seeing the emails, our Country is fortunate I didn’t do what Dr. Fauci wanted me to do. For instance, I closed our Borders to China very early despite his not wanting them closed. The Democrats and the Fake News Media even called me a “xenophobe.” In the end, we saw this was a life-saving decision, and likewise with closing our borders to Europe, specifically to certain heavily infected countries. I was later given credit, even by “Tony,’ for saving hundreds of thousands of lives. Dr. Fauci also didn’t put an emphasis on speed of vaccine production because he thought it would take 3, 4, or maybe even 5 years to create. I got it done in less than 9 months with Operation Warp Speed. In retrospect, the vaccine is saving the world.

Then, I placed the greatest bet in history. We ordered billions of dollars’ worth of vaccines before we knew it even worked. Had that not been done, our wonderful vaccines would not have been administered until October of this year. No one would’ve had the shot that has now saved the world and millions of lives!

Also, Dr. Fauci was totally against masks when even I thought they would at least be helpful. He then changed his mind completely and became a radical masker!

There are a lot of questions that must be answered by Dr. Fauci. The funding of Wuhan by the U.S. was foolishly started by the Obama Administration in 2014 but ended under the Trump Administration. When I heard about it, I said “no way.” What did Dr. Fauci know about “gain of function” research, and when did he know it?

Via SchiffGold.com,

If you’ve been to the grocery store, or the gas station, or the building supply store, you know we have an inflation problem. Last month’s hotter than expected CPI confirmed what we already intuitively know. But the folks over at the Federal Reserve continue to tell us there’s nothing to worry about. They insist inflation is transitory.

Their reassurances notwithstanding, people are worried. Searches for the word “inflation” hit an all-time high on Google trends in May. In this clip from a recent podcast, Peter Schiff talked about the growing public worry about inflation and why the Fed’s response is bogus.

According to Google Trends, searches for the word “inflation” hit the highest level since 2004 between May 9 and May 15. That’s as far back as the data goes. Google charts trends numerically and during that time period interest in “inflation” went all the way up to 100.

If you look all the way from 2004 until the end of 2020, pretty much all the searches were pretty consistent at about 50. And now, in the beginning of 2021, is where we shot up from 50 all the way up to 100. So, something changed in 2021 that resulted in all these people all over the United States deciding independently that they were going to search inflation.”

So, why are they doing that?

Well, because they’re worried about it! If it was transitory, would they care? They care because it doesn’t seem like it’s transitory.”

On the other hand, the Federal Reserve continues to ignore the signs that inflation is here to stay and pretends it’s transitory.

We can’t just pretend and play make-believe and hope the problem goes away. Because they tried that with the mortgage problem. Even though it was obvious that subprime was the tip of a huge iceberg, the Fed kept saying, ‘Don’t worry. It’s contained,’ because they were hoping that if they denied the problem, maybe it would go away. Well, they’re doing the same thing again with inflation. They’re telling all the people who are so worried about inflation, ‘Hey, don’t worry about it because it’s just transitory.’ Well, it’s as transitory as subprime was contained.”

In fact, the Fed is driving inflation through its monetary policy and debt monetization.

Through the first 7 months of fiscal 2021, the US government collected about $2.1 trillion in taxes but spent about $4.1 trillion.

That means $2 trillion was borrowed and basically funded by the Federal Reserve. And these are the official numbers. The unofficial numbers are even worse.”

And consider this: the deficit through the first 7 months of 2021 is higher than the first 7 months of 2020, which included the depth of the COVID recession.

The government is spending even more money and running even bigger deficits now, when the economy is supposedly in recovery, than it was when it was still in recession, which again proves that there isn’t a recovery at all. It’s phony. The only reason the economy looks like it’s recovering is because the Fed is printing all this money to artificially stimulate it. But the way you see the truth is to look at the increase in prices that the Fed is still denying exist. They don’t want to acknowledge that inflation is not transitory because then they have to acknowledge that it’s the recovery that’s transitory because it doesn’t actually exist and inflation is going to kill it.”

This puts the Fed in an awkward position. Typically, the cure for a recession is inflation. But how can the Fed cure a recession caused by inflation by creating more inflation?

The hair of the dog that bit you isn’t going to work. It’s just going to make the economy sicker.”

Last week we detailed the rocky road between Tesla and the Chinese Communist Party looks like it is continuing.

Specifically, we noted that the automaker is facing “further fallout” in China as some local governments are reviewing Tesla vehicle ownership among their staff, citing the vehicles posing potential security risks, according to Bloomberg. 

Government bodies have been asked to check and report on employees who own Teslas in Zhejiang and Guangxi. Employees are being “forbidden” from driving into certain official areas, due to supposed security risks, the report notes. 

Other official Chinese bodies are following suit. The China Meteorological Administration, for example, has already told its employees not to buy Tesla EVs and, if they have already, to transfer ownership of the vehicles. The Propaganda Department of the Chinese Communist Party (yes, this is actually what it is called) is also “checking whether any employees or their family own Teslas.”

Any continued major hiccups in Tesla’s relationship with China could be devastating for the automaker, who relies on the world’s largest auto market to help it redline production to meet Wall Street’s increasingly optimistic expectations. 

Recall, we noted in mid May that Teslas had been banned from some Chinese government compounds due to concerns about their cameras. 

Staff at some Chinese government officers were told not to park their Tesla cars inside of government compounds “because of security concerns over cameras installed on the vehicles,” Reuters reported in May.

“At least two government agencies” in Beijing and Shanghai have been told the same, according to the same report. It’s unclear how many employees and vehicles this had a direct impact on. 

Despite the fact that cameras and sensors are found in many vehicles, the restriction “only applies to Tesla cars”, the report noted. 

This isn’t the first time China has cited security concerns as a reason to ban Tesla vehicles. Back in March, China banned Tesla vehicles from military bases over similar concerns about the vehicles’ cameras.

The ban was due to “concerns about sensitive data being collected by cameras built into the vehicles.”

Recall, before making somewhat of an about face on their recent attitude on Tesla (after Musk’s odd rebuke of bitcoin), Chinese state media had been anything but friendly to the U.S. auto manufacturer. 

And now, confirming those concerns, The Information reports that Tesla’s China orders down by 50% in May, we are told based on internal data…

Scoop: Tesla’s China orders down by 50% in May, we are told based on internal data. The company’s China crisis continues. $tsla @JuroOsawahttps://t.co/sx67ACv8un

— Jessica Lessin (@Jessicalessin) June 3, 2021

Traders dumped the shares on the news, pushing ot back below the $600 level…

Interestingly,on the heels of this collapse in sales, we reported yesterday that Tesla has established a data center in China, the company said last week, and data generated by all cars sold in the country will be stored domestically.

A May 25 post on the Weibo social media site said that the data center has already been built and the company plans on expanding its data network in China.

Tesla also said they want to start a platform where Tesla owners can make inquiries regarding their cars, and focus their efforts on ensuring the smooth operation of their databases as well as safeguarding customer data.

We have been documenting the ongoing spat between Tesla and the CCP over the last few months, apparently (at least publicly) catalyzed by a protestor at the Shanghai Auto Show alleging faulty breaks on Tesla vehicles. This led to intense shaming by Chinese media, who called Tesla’s handling of the situation a “blunder” and suggested it could “inflict serious damage” on Tesla with the Chinese market. 

Get back to work, Elon!