Adidas has labeled 2023 a “transition year” for the company. 

Yeezy Surplus 

Adidas’ split with musician Kanye West has left the company with financial problems due to surplus Yeezy products, putting the sportswear giant in the position to potentially suffer its first annual loss in over 30 years. 

Adidas dropped West last year after he made a series of antisemitic remarks on social media and other broadcasts. His Yeezy line was a staple for Adidas, and the surplus product is due, in part, to the brand’s own decision to continue production during the split.

According to CEO Bjorn Gulden, Adidas continued production of only the items already in the pipeline to prevent thousands of people from losing their jobs. However, that has led to the unfortunate overabundance of Yeezy sneakers and clothes. 

On Wednesday, Gulden said that selling the shoes and donating the proceeds makes more sense than giving them away due to the Yeezy resale market — which has reportedly shot up 30% since October.

“If we sell it, I promise that the people who have been hurt by this will also get something good out of this,” Gulden said in a statement to the press. 

However, Gulden also said that West is entitled to a portion of the proceeds of the sale of Yeezys per his royalty agreement.

The Numbers 

Adidas announced in February that, following its divergence from West, it is facing potential sales losses totaling around $1.2 billion and profit losses of around $500 million. 

If it decides to not sell any more Yeezy products, Adidas is facing a projected annual loss of over $700 million.

Outside of West, Adidas has taken several heavy profit blows recently. Its operating profit reportedly fell by 66% last year, a total of more than $700 million. It also pulled out of Russia after the country’s invasion of Ukraine last year, which cost Adidas nearly $60 million dollars. Additionally, China’s “Zero Covid” lockdowns last year caused in part a 36% drop in revenue for Adidas compared to years prior.

As a step towards a solution, Gulden announced that the company is slashing its dividends from 3.30 euros to 0.70 euro cents per share pending shareholder approval. 

Adidas has labeled 2023 a “transition year” for the company. 

“Adidas has all the ingredients to be successful. But we need to put our focus back on our core: product, consumers, retail partners, and athletes,” Gulden said. “I am convinced that over time we will make Adidas shine again. But we need some time.”

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98% of nursing homes in the United States are experiencing difficulty hiring staff. 

The Labor Crisis 

A recent National Bureau of Economic Research paper has offered up a solution to the nursing home labor shortage: immigration. 

According to a 2022 American Health Care Association survey, six in ten nursing homes are limiting new patients due to staffing issues. The survey also says that 87% of nursing homes have staffing shortages and 98% are experiencing difficulty hiring. 

The National Bureau of Economic Research (NBER) outlined in their paper that increased immigration could help solve the labor shortage in nursing homes. Immigrants make up 19% of nursing home workers.

With every 10% increase in female immigration, nursing assistant hours go up by 0.7% and registered nursing hours go up by 1.1% And with that same immigration increase, short-term hospitalizations of nursing home residents go down by 0.6%.

The Solution 

Additionally, the State Department issued 145% more EB-3 documents, which are employment-based visas, for healthcare workers in the 2022 fiscal year than in 2019, suggesting that more people are coming to the U.S. to work in health care. 

However, according to Skilled Nursing News, in August of 2022, the approval process from beginning to end for an RN can take between seven to nine months. 

Displeasure about immigration has exploded since Pres. Joe Biden took office in 2021. According to a Gallup study published in February, around 40% of American adults want to see immigration decrease. That is a steep jump from 19% in 2021, and it is the highest the figure has been since 2016.

However, more than half of Democrats still are satisfied with immigration and want to see it increased. But with a divided Congress, the likelihood of any substantial immigration change happening is pretty slim. 

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While authorities have said the train was not carrying toxic materials and did not present a risk to the public, the incident has still heightened scrutiny of Norfolk Southern’s safety practices.

Springfield, Ohio Derailment

A Northfolk Southern train derailed in Ohio Sunday, just weeks after another train operated by the carrier carrying hazardous materials ran off the tracks along the state’s border with Pennsylvania, prompting officials to do a controlled burn to prevent an explosion.

The latest derailment occurred in Springfield, about 40 miles west of Columbus. Around 20 train cars ran off the tracks, but multiple state and local officials have said that the train was not carrying hazardous chemicals and posed no public risk.

Out of extra precaution, authorities did impose a shelter-in-place order for residents who lived within 1,000 feet of the derailment. Springfield Fire Chief Dave Nagel said only four or five residential homes were impacted, and the order was lifted ten hours later.

Nagel also told reporters that 1,500 residents were without power because of downed power lines that slowed assessments of the scene. State Route 41 was reportedly closed on Monday morning because its asphalt was cracked in the incident.

Authorities said that among the derailed train cars were four almost empty tankers carrying residual levels of diesel exhaust fluid and a polyacrylamide water solution.

County officials, however, described those materials as “common industrial products shipped via railroad.” They also noted that the area does not have a protected water source, so “there is no risk to public water systems or private wells at this time.”

Both the Clark County emergency management agency and the Ohio Environmental Protection Agency said they had swept and examined the site before declaring it safe.

In a tweet Sunday, a spokesperson for Norfolk Southern said there was “NO hazmat involved. NO injuries reported.” 

“Our crews and contractors are responding,” the representative added. “Authorities are helping with impacted crossing closures. There is NO risk to the public.”

As of Monday, the cause of the derailment is still unknown, though the National Transportation Safety Board (NTSB) has said it will investigate.

Increased Safety Concerns

The Springfield incident has further increased the scrutiny over railroad safety practices — specifically Norfolk Southern’s.

On Monday, the company released a “six-point safety plan” in response to the NTSB’s findings following the February derailment of the train that had been carrying toxic materials, which took place in the town of East Palestine.

Four of the six points outlined pertained to bearing detectors, which are sensors installed on rail tracks to give real-time warnings to train crews. The NTSB found that the East Palestine train had derailed after Norfolk Southern’s sensors failed to detect an overheated wheel bearing that eventually gave out.

Specifically, the carrier says it will enhance its hot bearing detector network, work with manufacturers to test and develop new detectors, collaborate within the industry to establish best practices, and deploy more acoustic bearing detectors that analyze axle vibrations to “identify potential problems that a visual inspection could not.”

Beyond that, Norfolk Southern vowed to “support a strong safety culture” by joining the Federal Railroad Administration’s Confidential Close Call Reporting System (C3RS). 

The company also aims to “accelerate” its Digital Train Inspection program, which “uses machine vision and algorithms powered by artificial intelligence to identify defects and needed repairs much more effectively than traditional human inspection.”

The new safety initiatives come just a few days before Norfolk Southern’s CEO is set to testify in front of a Senate committee about the East Palestine derailment.

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