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News Brief: UAW Strike, Attacks On Saudi Oil, Purdue Pharma Bankruptcy

Sep 16, 2019
Originally published on September 16, 2019 7:14 am
Copyright 2019 NPR. To see more, visit https://www.npr.org.

NOEL KING, HOST:

More than 49,000 auto workers from all across the country won't be going to work this morning.

DAVID GREENE, HOST:

Right. These are employees at General Motors who are part of the United Auto Workers union. And they are walking off the job after contract negotiations fell apart. Their decision is expected to halt production across the United States with 55 facilities across the Midwest and the South impacted here.

Terry Dittes, the vice president of the union, says this decision to head to the picket lines was not easy.

(SOUNDBITE OF ARCHIVED RECORDING)

TERRY DITTES: We do not take this lightly. This is our last resort. It represents great sacrifice and great courage on the part of our members and all of us.

KING: Tracy Samilton covers the auto industry for NPR affiliate Michigan Radio. And she's been watching all this play out very carefully. Good morning, Tracy.

TRACY SAMILTON, BYLINE: Good morning.

KING: So why exactly did the talks between GM and the union break down in the first place?

SAMILTON: Well, I have to say, this impasse really isn't much of a surprise to people who've been watching the industry. Here, you have General Motors making record profits - nearly $11 billion last year. And then on the other hand, you have the automaker responding to market shifts by closing four plants in the U.S. that make smaller vehicles or transmissions for the smaller vehicles. They're not laying off the workers in those plants; they're transferring them. But this is still a really unwelcome move from the union's perspective.

And then the automaker is also trying to reduce its labor costs because of a sales slowdown overall and, you know, a recession possibly starting. And union members are looking at those record profits and saying, you know, what's - what about us?

KING: Yeah. I know you've been talking to workers that are going on strike. What are they telling you, exactly? Are they worried?

SAMILTON: They're worried. But they're mainly feeling like, we helped General Motors survive bankruptcy back in 2009. We gave up a lot to keep this company in existence. And it's time now for us to get those concessions back. So they want - they have a long laundry list of what they would like to see. They want wage increases and keeping their health care benefits intact, reopening the closed plants. And they also want GM's temporary workers to have a chance to become permanent the way that they are.

KING: This strike just started a few hours ago. But what do we know so far about what it'll mean for GM?

SAMILTON: Well, General Motors is in a pretty good position right now for the strike, in terms of they have good, plump inventories. So they're going to weather the strike - if it's a short strike - pretty well. They're going to do whatever they can to make sure that dealerships have vehicles to sell. They will lose money. But they should be able - if it's not a long strike - be able to make that money up later.

KING: All right. So for the moment, this strike only affects General Motors, which is one of the big three automakers. The other two - Ford and Fiat Chrysler - they also negotiate with the UAW, right?

SAMILTON: That's right.

KING: So what happens with them now? Are they getting nervous?

SAMILTON: Well, I think not (laughter). This is not the first time, you know, they have been through this. The companies are in a holding pattern right now. So the workers are going to go to work. Everything's basically going to be normal conditions over at Ford and Chrysler. And it's only when the strike is over, the GM rank and file has approved a deal that, all of a sudden, the attention will go to the contract either at Ford or Fiat Chrysler.

KING: OK. Tracy Samilton with Michigan Radio. Thanks, Tracy.

SAMILTON: Glad to be here.

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KING: This morning, global oil prices are up after an attack that damaged a major Saudi Arabian oil facility.

GREENE: Right. And the Trump administration is blaming Tehran for these strikes. That is, despite a claim of responsibility by Houthi rebels in Yemen. Iran's foreign ministry is now responding saying that the accusations leveled are, quote, "baseless."

KING: NPR's Peter Kenyon has been following this from Istanbul. Hey, Peter.

PETER KENYON, BYLINE: Hi, Noel.

KING: So what exactly happened at this facility? And where is it, exactly?

KENYON: Well, this was at a place in Saudi Arabia called Abqaiq. It's been described as the world's largest oil processing site. A second facility was also hit in the Saturday attacks. The Saudis remain vital to world oil production. Experts say this attack disrupted 5.7 million barrels a day - that's well over half the Saudi daily output. Production, of course, has been on the rise outside the Middle East for some time now. But this kind of attack in this volatile region is still a significant threat to world supplies.

KING: Yeah. You mentioned - you mentioned production outside of Saudi Arabia on the rise. Oil prices, though, way up this morning, so I guess that speaks to the significance of Saudi Arabia in the oil market, yeah?

KENYON: Yes. Absolutely. I mean, this isn't being described as a long-term disruption. But it does highlight worrying vulnerability of some major oil facilities. Saudi Arabia has reserves. It says it can cover some of this shortfall. Washington has also mentioned possibly tapping into reserves if necessary. The Saudis say their damaged facilities are going to take weeks to repair.

And so it's not hard to see how a bigger attack of this nature could cause a major disruption, more long-lasting and a much more serious threat to the world economy, which is still highly dependent on crude oil.

KING: Yeah. There are some real questions at the center of this story. Houthi rebels in Yemen say they did it. They claimed responsibility. The Trump administration says, no. We don't accept that claim. Why is that?

KENYON: Well, these Iran-backed Houthi rebels are fighting a Saudi-led coalition inside Yemen. That's the basic situation. That Saudi coalition is supported by the U.S. The Houthis have launched attacks inside Saudi Arabia before. But Washington says, not this time. This was too big, too sophisticated, unlikely to have been carried out by the Houthis.

They also say - the U.S. - that there's photographic evidence and intelligence estimates that pin the blame on Tehran. President Trump then responded that the U.S. is, quote, "locked and loaded," prepared to hold Iran accountable for what's being called the worst disruption to oil supplies on record. What Trump's waiting for, he says, is word from Riyadh confirming who is behind it and a decision on how to proceed. That's how he put it.

KING: OK. So the Saudis are still investigating. What is Iran saying about this claim by the Trump administration that they did it?

KENYON: Well, Iran's denying any involvement. The Foreign Ministry in Tehran says these accusations from Trump are maximum lies - an apparent reference to Trump's maximum pressure campaign. The Foreign Ministry spokesman also says there's now no chance that President Rouhani will be meeting with Trump later this month at the U.N. General Assembly in New York. That meeting was far from certain anyway. Iran wanted sanctions lifted. But now, Iran's just ruling it out.

So despite the departure of Iran hawk John Bolton, we're seeing tensions on the rise and the room for diplomacy shrinking. And meanwhile, the Houthis in Yemen are saying Saudi facilities are still a target.

KING: And we imagine the Saudis will be scrambling to get those facilities fixed, I would imagine, yeah?

KENYON: Indeed.

KING: NPR's Peter Kenyon in Istanbul. Peter, thanks so much.

KENYON: Thanks, Noel.

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KING: All right. Purdue Pharma, the company that makes OxyContin, has filed for bankruptcy.

GREENE: And this comes just days after the company settled with more than 2,000 local governments over its alleged role in creating the deadly opioid crisis in the country. Purdue Pharma is owned by the controversial Sackler family. They have agreed to relinquish control of the company and provide $3 billion to help communities who've been hit hardest by the epidemic.

KING: Brian Mann is a reporter for North Country Public Radio. He's been covering these opioid-related lawsuits. Good morning, Brian.

BRIAN MANN, BYLINE: Hi, Noel.

KING: All right. So this bankruptcy does not come as a surprise. It was predicted; now it's happened. What could this mean for all of the communities that were hoping to be compensated by Purdue Pharma?

MANN: Well, in theory, this could be huge. I mean, this could funnel billions of dollars to opioid treatment programs and a lot of other social service and law enforcement programs that have been strained across the country by this addiction epidemic. Attorneys for the local governments who negotiated this deal, they say it's the best way to get as much help to these communities as possible fast.

In a statement to NPR, Steve Miller, who's chairman of Purdue Pharma's board of directors, said this will provide critical resources to communities across the country. One caveat, though, Noel, is that there are indications the legal fight over how to distribute this money could be intense. There's not a plan in place for that yet. And so that could delay relief arriving where it's needed.

KING: Oh, that is really interesting. OK. So this needs to spin out a bit more before we know who's going to get the help. Let me ask you about the Sackler family because they own the company outright. These are very, very rich people - billionaires. Will they still be rich after this?

MANN: Really, really rich. They'll...

KING: Yeah?

MANN: ...Still be one of the richest families in the U.S. and in the world. And remember, Noel, the Sacklers played a unique role here - pushing opioid medications into the mainstream while downplaying the risks. More than 218,000 Americans have died from prescription opioid deaths alone.

And one other thing, the settlement agreement doesn't include any admission of wrongdoing by the Sacklers or Purdue Pharma. And that's why about half the state attorneys general in the country have rejected this deal. They say they'll sue the Sackler family directly to claw back more of the profits they made from selling OxyContin.

KING: Oh, this isn't over for the Sacklers, then. They may not be rich at the end of this.

MANN: Well, these lawsuits are continuing. New York's attorney general, Letitia James, filed legal motions just on Friday, saying her team has already found a billion dollars in wire transfers by Purdue Pharma and the Sacklers to offshore bank accounts. So that part of the legal fight continues.

KING: Purdue Pharma was actually a fairly small producer of opioid medications, as you've reported. A lot of other drugmakers and distributors and pharmacies, they are also being sued. How does Purdue's bankruptcy affect that process?

MANN: Yeah. I think, first of all, it establishes the scale of the possible liability for other big companies - like Cardinal Health, Johnson & Johnson, CBS and Walmart. This Purdue Pharma settlement could go as high as $12 billion. So there's a lot of money here on the table. Some of these firms have indicated, though, that they're going to keep fighting this tooth and nail. So other settlements might be harder to reach.

A big federal opioid trial is set to begin next month in Ohio. And so for all of those other companies that sold these medications, that part of the legal battle is just ramping up.

KING: Brian Mann with North Country Public Radio joining us on Skype. Brian, thanks so much for following this for us.

MANN: Thank you.

(SOUNDBITE OF FORT ROMEAU'S "NEW WAVE") Transcript provided by NPR, Copyright NPR.