When the CEO of ExxonMobil advocates what critics call a “socialist agenda,” you know something is seriously amiss in American politics.
In truth, Rex Tillerson is probably the most unreconstructed CEO in the Fortune 100. He is a staunch Republican, an unrelenting critic of government regulation, and hasn’t a politically correct bone in his proud Texan body. (He also dislikes journalists, and makes no secret of it.)
But give him credit for taking a strong lead in the Business Roundtable’s effort to enact Common Core education standards. He believes that fixing the nation’s education problem is a “business imperative,” and he was relentless in his pursuit of Common Core – irritating some of his CEO colleagues in the process.
What he didn’t see coming was the Tea Party. Opponents took his well-intentioned initiative and turned it into a conservative cause célèbre – “Obamacore” – stirring up a hornets’ nest of opposition and forcing GOP presidential candidates including Chris Christie, Mike Huckabee, Jeb Bush, and Carly Fiorina, all to back off their earlier support.
Fortune’s Peter Elkind tells the amazing story of how Tillerson and big business got schooled by the Common Core conflict in the January issue of our magazine. You can read it online this morning, here. I highly recommend it as a case study in America’s broken political system, which has left big business out in the cold.
If reading Elkind’s story doesn’t convince you how far the Grand Old Party has wandered from its business roots, take a look at Donald Trump’s comments in Michigan earlier this week, where he threatened to slap a 35% punitive tax on “every car, bumper and part” produced by Ford at an expanded plant in Mexico.
More news below. We’ll be taking a break from the daily routine for the holidays, but will be back in your email box on January 4. Enjoy the holiday!
• Amazon-UPS relationship is rocky
Rising package volumes and costs have led Amazon to seek alternative delivery routes, shifting the e-commerce giant from key ally to a potentially disruptive competitor. As the WSJ points out, Amazon has held talks with air-cargo companies to lease airplanes and build its own freight operations. And Amazon already uses its own trucks and drivers for the final leg of an order's trip. And drones could be useful in the future. What's at stake? Amazon's account for UPS exceeds $1 billion, a five-fold increase since 2005, a former executive estimates. Wall Street Journal (subscription required)
• Abercrombie CEO race heats up
Teen retailer Abercrombie & Fitch has fired Christos Angelides, the head of its namesake brand, removing an executive thought to be a leading candidate to be the company's next chief executive. Under Angelides' watch, the brand's sales remained weak, while sibling brand Hollister posted some improvement. That helps explain why Hollister President Fran Horowitz was promoted to serve in the newly-created position of chief merchandising officer for the entire company. Her promotion also puts Horowitz in a stronger position in the CEO race. Fortune
• Dominion Diamond explores a sale
The Canadian miner has hired financial advisers to look into a potential sale, a move that comes as the company faces pressure from shareholders about its falling share price. Though a deal might not be achieved, investors were encouraged, sending shares surging on Tuesday. The stock had fallen 45% this year before the potential sale news was reported by Bloomberg. Dominion Diamond has faced several challenges lately, including the medical leave of absence of a CEO and a weak diamond market. Bloomberg
• New process slows home sales
Sales of existing homes fell sharply in November, down 10.5% from the prior month and tumbling to the lowest level in 19 months. Experts blamed a new federal process called Know Before You Owe, which has reportedly lengthened closing times on home purchases. There was some encouragement in another aspect of the housing report: median sales prices for single-family homes, townhouses, condominiums and co-ops rose 6.3% to $220,300. USA Today
Around the Water Cooler
• AB InBev buys third craft brewer in 5 days
Anheuser Busch-InBev announced another notable craft brewer acquisition – the third deal in five days – that shows just how important the fast-growing category is to the world's largest brewer. While analysts have closely watched a pending $100-billion-plus deal for rival SABMiller, AB InBev has been highly acquisitive in the craft beer space. The latest deal was for Colorado-based Breckenridge Brewery, adding a seventh U.S. craft brewer to a portfolio that already includes Goose Island and Blue Point. Fortune
• National Stock Exchange reopens
The National Stock Exchange relaunched on Tuesday, debuting the U.S.'s 12th stock exchange with a plan to focus on a low-cost model that management says could save investors billions if adopted broadly. The exchange, which had shut down for more than a year due to a lack of trading volume, is angling to lure brokers and investors with low access fees. NSX Chief Executive Mark Sulavka said the industry could save over $2 billion a year in exchange fees if the market adopted his firm's fee model. Reuters
• When 'No comment' isn't enough
New York Times' Dealbook has a quirky post on the rising trend of money managers and entrepreneurs charged with a crime of civil securities opting to very publicly proclaim their innocence. Before the age of social media, these executives would often keep their mouth shut and defer all questions to their lawyers. But in recent cases involving former drug company executive Martin Shkreli, private equity executive Lynn Tilton and others, the new script is to tell the world they are innocent – even if their lawyers think doing so is a terrible idea. New York Times (subscription required)