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BUSINESS&FINANCE

FOOD FOR THOUGHT: Makers of plant-based patties say their

products are better for the planet than beef, but debate over

their nutritional merit is growing as production ramps up. B

JANE LANHEE LEE/REUTERS

But after the U.S. corporate

tax cuts in the 2017 law, the

edge is small enough that it

might not be worth reputa-

tional and political costs.

Those changes might deter

new inversions and cause in-

verted companies to retake

U.S. addresses if other busi-

ness reasons warrant such a

move. Inversion deals were

particularly hot from 2012 to

2015, as companies such as

Eaton Corp. and Medtronic

PLC took foreign addresses.

The moves generated politi-

cal blowback as lawmakers

criticized companies as aban-

doning the U.S. The dust-up

led to new regulations and

provided some of the impetus

for the 2017 tax-code rewrite.

“Transactions that histori-

cally would have been struc-

tured as inversions are no lon-

ger being structured that way,

even when the opportunity to

PleaseturntopageB

S&P2953.56g0.90% S&PFINg2.32% S&PITg0.53% DJTRANSg2.51% WSJ$IDXg0.10% LIBOR3M 2.287 NIKKEI (Midday)21031.63g2.36% See more at WSJ.com/Markets

supplier and major buyer of

commercial planes, warned

Wednesday that the grounding

could drain as much as $1.

billion from its cash flow this

year as its factories produce

fewer engines for the aircraft

and cannot get fully paid for

them. The MAX jet is powered

exclusively by LEAP engines

made by GE in partnership

with France’sSafranSA.

“When Boeing delivers the

airframes, we will get paid for

those engines. It’s just a delay

in cash timing,” said Jamie

Miller, GE’s outgoing finance

chief.

For now, that means GE

didn’t take in an expected

$600 million in the first half

of the year and won’t take in

another $400 million per

quarter in the second half if

the plane remains grounded.

“$400 million per quarter is

what is likely to happen if we

do not see a return to service,”

GE Chief Executive Larry Culp

said. GE’s revised financial

forecast for the full year, which

calls for cash flow between $

billion and negative $1 billion,

reflects the MAX delays.

GE has slowed production

this year of the engine model

used in the MAX. The project

is a major driver of growth for

the company’s aviation unit,

which accounted for $3 billion

of GE’s roughly $5 billion in

industrial profit in the first

half of the year. The LEAP,

which is also used on Airbus

SE jets, has attracted more

than 17,000 orders. GE also

makes avionics and other

parts for the MAX.

“GE is heavily tied to Boe-

ing’s narrowbody fortunes,”

said John Inch, an analyst at

Gordon Haskett, an investment

research firm. He said once the

single-aisle MAX is approved

to fly again, Boeing may need

to discount the price of the

plane and that could mean less

money for GE as well.

“You could have emerging

issues in the long-term avia-

tion story that everyone pre-

sumes is rock solid,” he said.

The aviation unit, which is

now GE’s largest by revenue,

has propped up the conglom-

erate’s results in recent years

as GE has struggled with deep

losses in its core power divi-

sion and finance arm. Those

troubles have forced GE to

slash its dividend and pursue

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General ElectricCo. is con-
tending with a fresh strain on
its finances due to the ex-
tended grounding ofBoeing
Co.’s 737 MAX jets, just as the
industrial conglomerate says it
is making progress on some of
its other thorny problems.
GE, a longtime aerospace

BYTHOMASGRYTA

Boeing MAX Is GE’s New Problem

Jet’s grounding is

hurting cash flow for

the company, which

helps make the engines

pressing his contention that

right-leaning employees were

being treated unfairly, accord-

ing to interviews, documents

and copies of posts on

Google’s internal message

boards. In one example from

2017 that he reported to hu-

man resources, a manager

publicly asked on a board

about employees holding

views like Mr. Cernekee’s:

“Can’t we just fire the poison-

ous assholes already?”

In June 2018, Mr. Cernekee

was fired.

Google told Mr. Cernekee in

a termination letter that he

was let go for multiple viola-

tions of company policies, in-

cluding improperly download-

ing company information and

misuse of the remote-access

software system. Mr. Cernekee

denies that. He says he was

fired for being an outspoken

PleaseturntopageB

“Those are very relevant in

tipping the scales,” said Re-

becca Babin, a senior energy

trader at CIBC Private Wealth

Management. “It’s very hard

for people to look at the 2020

supply-demand imbalances

and want to get long,” refer-

ring to bullish positions.

The projections for over-

supply explain in part why oil

PleaseturntopageB

Analysts estimate output

from offshore projects in Bra-

zil, a Norwegian oil field in the

North Sea and easing produc-

tion curtailments in Canada

could produce several hundred

thousand barrels a day of

crude next year. That figure is

still relatively small, but

growth from those projects is

bolstering bets output will ex-

ceed consumption.

production to continue as new

pipelines from the prolific

Permian Basin of Texas and

New Mexico ease bottlenecks

in the region. Yet analysts said

the addition of barrels from

ancillary producers threatens

to make the expected sur-

pluses bigger, particularly as

concern about a slowing world

economy triggers fears about

crumbling demand.

ago and continue to drive eco-

nomic growth even as busi-

ness investment slows. Trans-

portation companies including

Union PacificCorp. have cited

lower fuel costs as a positive

for second-quarter profits,

though there is still concern

about economic uncertainty

and demand.

Many investors have long

expected a surge in U.S. shale

Growth in oil supply is ex-
pected to accelerate next year
as global production increases,
keeping crude mired in a bear
market and possibly lowering
fuel prices for consumers.
At the same time, anxiety
about trade tensions crimping
global growth and weakening
demand has bolstered concern
about a supply glut in recent
months, investors say.
The U.S. benchmark for
crude fell 7.9% to $53.95 a bar-
rel Thursday, logging its larg-
est one-day percentage drop
since February 2015, after
President Trump said on Twit-
ter that tariffs of 10% would
be applied to an additional
$300 billion of Chinese goods
and products starting Sept. 1.
Before Mr. Trump’s tweet,
oil prices were down as the
dollar strengthened after the
Federal Reserve refrained
Wednesday from explicitly
confirming more stimulus.
The U.S. is forecast to con-
tinue driving much of the
surge in output, and increases
by smaller producers such as
Brazil and Norway are ex-
pected to contribute to excess
supply, according to investors.
Citigroup and JPMorgan Chase
analysts project supply will
grow roughly one million bar-
rels a day more than demand
in 2020, resulting in a surplus
each quarter of next year.
The expected oversupply is
the latest threat to the Organi-
zation of the Petroleum Ex-
porting Countries and other
producers, many of which are
curbing output to try to bal-
ance the market.
Investors will be monitor-
ing quarterly results from
Exxon MobilCorp. andChev-
ronCorp. on Friday after most
of the large energy companies
reported underwhelming fig-
ures for the first three months
of the year.
Royal Dutch ShellPLC be-
came Thursday the latest ma-
jor energy company to report
a drop in second-quarter
profit from a year earlier.
Plentiful supply has been a
boon for U.S. consumers, who
are on average paying less for
gasoline at the pump this
summer than they were a year

BYAMRITHRAMKUMAR

Surge in Oil Supply Expected as Prices Sink

Lowe’sCos. told thousands

of store workers this week

their jobs were being elimi-

nated as the company out-

sourced tasks such as assem-

bling barbecue grills and

janitorial services.

The home-improvement

chain notified maintenance

staff and assemblers that put

together grills, wheelbarrows

and other products that they

were being laid off, according

to the company and employ-

ees. Those roles will be taken

over by third-party companies.

Each of Lowe’s roughly 1,

U.S. stores has several staff

members doing these jobs.

Laid-off employees, including

full-time staff with years of

service, aren’t being paid sev-

erance. Instead they are being

offered “transition pay” total-

ing up to about two weeks for

full-time workers, one em-

ployee said. They are able to

reapply for open positions, em-

ployees said, but aren’t guaran-

teed the same pay.

Lowe’s employed 190,

full-time and 110,000 part-

time workers as of Feb. 1.

“We are moving to third-

party assemblers and facility

services to allow Lowe’s store

associates to spend more time

on the sales floor serving cus-

tomers,” said a spokeswoman

for Lowe’s.

The move indicates new

CEO Marvin Ellison is continu-

ing to cut costs aggressively.

Traditional retailers are

scrutinizing their labor costs

as they face increasing compe-

tition and adapt to consumers

purchasing more online. Re-

tailers from Walmart Inc. to

the smallest shops are under

pressure as they increase

starting hourly wages to at-

tract workers in a tight U.S.

job market. Walmart is testing

a new store management

structure that will thin mid-

dle-manager ranks. Lowe’s and

rival Home Depot Inc. have

added self-checkout counters

to free workers for other roles.

Mr. Ellison—previously a

senior executive for Home De-

pot and most recently CEO of

struggling department store

J.C. Penney Co.—moved

quickly after taking over last

summer. He closed 47 less

profitable U.S. and Canadian

stores last year and shut down

Orchard Supply Hardware

stores, a small regional hard-

ware chain that Lowe’s ac-

quired five years previously.

In recent years, Lowe’s

sales growth has lagged be-

hind Home Depot. But in the

most recent quarter, Lowe’s

sales growth outpaced its rival

for the first time since 2016.

However, profit margins de-

clined more than expected and

Lowe’s cut its profit expecta-

tions for the year.

BYSARAHNASSAUER

Lowe’s to

Outsource,

Lay Off

Thousands

MOUNTAIN VIEW, Calif.—

Kevin Cernekee was still a

“Noogler”—Google’s term for

a new employee—when his

conservative take on political

and social issues raised hack-

les within the search giant.

After several posts on the

company’s freewheeling inter-

nal message boards in early

2015 rankled some colleagues,

he was given an official warn-

ing from human resources

about conduct deemed disre-

spectful and insubordinate.

Around that time, a senior

manager wrote on the boards

that he added Mr. Cernekee to

a “written blacklist” of em-

ployees he wouldn’t work

with.

Mr. Cernekee, 41 years old,

spent much of the next three

years battling Google over his

perceived violations and

BYROBCOPELAND

Google Faces More

Political Bias Claims

Meatless Burgers Get Grilled

Inversions are starting to
revert.
WhenMylanmoved its cor-
porate address to the Nether-
lands in 2015, the pharmaceu-
tical company joined a wave of
corporate inversion deals
aided by tax advantages of a
non-U.S. address. Now, Mylan’s
address is coming back to the
U.S. through a merger deal
this week with part ofPfizer
Inc., a sign the 2017 tax law is
rendering these moves less at-
tractive than they once were.
The deal comes a month af-
terAllerganPLC—an inverted
pharmaceutical company
based in Dublin—announced
its return to a U.S. parent
through a sale toAbbVieInc.
On balance, say tax lawyers
and analysts, foreign ad-
dresses still confer a slight tax
advantage.

BYRICHARDRUBIN
ANDJAREDS.HOPKINS

Tax Cuts Help Keep

U.S. Companies Home

Theoilmarkethastumbled,trailingstocksonworriesovereconomicgrowthandexcesssupply.

PerformancesincetheendofJune

OPECagreestocurboutput

U.S.blamesIranforattackson

tankersintheGulfofOman

IranseizesBritish-flaggedoiltanker

Crudeoil

–27.2%

S&P

+8.7%

Energy

stocks*

–19.5%

*Energy stocks measured by S&P 500 energy sector †For stockpiles in Organization for Economic Cooperation and Development countries. Figures for May and June 2019 are estimates;

data includes crude and crude condensate‡Includes crude, condensate and natural-gas liquids

Sources: FactSet (performance); International Energy Agency (oil inventories); JPMorgan Chase (supply and demand); Commodity Futures Trading Commission (ratio)

Hedgefundsandotherspeculative

investorsremaincautiousonoil.

Ratioofbullishoilwagersto

bearishbetsbyspeculators

30

0

5

10

15

20

25

times

2018 ’

Inventoriesinindustrialized

nationshaverisenthisyear.†

ChangeinOECDstockpiles

sinceendof

20

• 
  


• 
  


• 
  

0

million barrels

2018 ’

Analystsprojectglobaloilproductionto

exceedconsumptionthroughoutnextyear.

Differencebetweensupply

anddemand,quarterly‡

2.

–1.

–0.

00

0.

1.

1.

million barrels a day

2018 ’19 ’

10

• 
  


• 
  


• 
  


• 
  

0

%

July 2018 ’