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Why tech unicorns struggle to avoid the glue factory

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Even unicorns grow up — at least, the lucky ones. More than 1,500 private companies have the $1bn-plus valuation that merits that label, first coined by venture capitalist Aileen Lee in 2013, according to data from Crunchbase. OpenAI is one that has outgrown the stable. But it is tougher these days to go from horned foal to winged steed — and what that takes, or who, is in dispute.

Cheap money and boosterism made it easier for founders to hit the fabled milestone. But among US companies founded in the past 20 years, only Meta and Uber have transitioned to what consultancy Bain & Company calls a “scale insurgent”, with $10bn in annual revenue and $1bn of operating cash flow. By contrast, the 1990-2003 vintage produced six such insurgents, including Tesla, Amazon.com and Alphabet.

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Despite the seemingly lower chances of achieving greatness, money pours in. Today’s unicorns have raised $1tn in total — more than one-quarter of which was deployed in 2021, when US interest rates were essentially zero. After notching up a $157bn valuation this week, OpenAI is one of the biggest, behind TikTok owner ByteDance and Elon Musk’s SpaceX.

Most still fall lame. Fewer than 1 per cent of VC-funded start-ups become unicorns. Even those can find themselves in the knacker’s yard. More than 220 listed companies cemented a $1bn-valuation by merging with so-called special purpose acquisition companies in the past five years, ListingTrack data shows, most of them tech groups. Three out of four have slumped below that level.

Bar chart of Years taken to hit $10bn of revenue and $1bn of cash flow showing Some unicorns run faster than others

What most stunts a unicorn’s growth? Bain theorises that overabundant cash has fuelled even founders who lack business acumen. Firms are less likely to be founded by a wunderkinder with prior start-up experience now than when Lee first birthed the unicorn concept, her firm Cowboy Ventures says. By that logic, visionaries need more old-fashioned capitalism.

Many in Silicon Valley draw the opposite conclusion. Venture capitalist Paul Graham last month celebrated the notion of “founder mode”, suggesting innovators who succeed are those who eschew management norms. Brian Chesky of Airbnb was an example. Musk might be another. Think of what Meta Platforms boss Mark Zuckerberg calls the “wartime CEO”, demanding unquestioning obedience.

Every company founder thinks they deserve to run free. And while funding remains ample, investors too easily agree. That’s why OpenAI’s Sam Altman was able to tell backers who provided $6.6bn that they must refrain from funding his rivals.

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Altman is a highly visible experiment in whether power is the key to greatness. Investors in other groups who have been pricked by an ex-unicorn’s horn may feel like “founder mode” is overrated. Those still in for the ride will dearly hope it isn’t.

john.foley@ft.com

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Will Northern Ireland get new electricity link from Scotland?

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Will Northern Ireland get new electricity link from Scotland?
Getty Images A blonde woman adjusts the temperature of her house with a dimmer - stock photoGetty Images

The GB energy regulator, Ofgem, will decide later this month whether or not to support a new electricity link between Scotland and Northern Ireland.

Transmission Investment says its project, known as LirlC, aims to provide up to 700MW of capacity between the Irish Single Electricity Market and the Great Britain wholesale electricity market.

The company says this would improve security of supply at a time when NI’s electricity system is set for major change.

But the project has been complicated by a post-Brexit blind spot in energy regulation.

Getty Images Map of UK and Ireland zoomed in on Northern Ireland and ScotlandGetty Images

A cable of about 80 miles would link two convertor stations between Northern Ireland and Scotland

The scheme would involve building two convertor stations, one in Northern Ireland and one in Scotland, and a cable of about 80 miles linking the two, depending on the final route.

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Normally interconnectors which include a link to GB are developed under Ofgem’s “cap and floor” regime, which provides a guarantee of how much money they will make.

It gives developers a minimum return (floor) and a limit on the potential upside (cap) for a 25-year period.

Earlier this year Ofgem made an initial assessment of eight different interconnector schemes which want to operate under the ‘cap and floor’ regime.

It rejected seven of them, including the LirlC project.

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It concluded that as prices are generally higher in the Single Electricity Market, which covers Northern Ireland and the Republic of Ireland, most of the flow on the interconnector would be from Scotland to NI.

That would lead to an increase in demand for the power being generated in GB, so increasing costs for GB consumers.

On that basis Ofgem said the project fails its social and economic welfare test.

PA Media A phone screen reading 'Your latest energy bill'. A five pound note, two pound coins, and a 50p coin are next to it.PA Media

Transmission Investment has contested Ofgem’s conclusions that it would increase costs to GB customers

‘Complicated’

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The developer, Transmission Investment, contests Ofgem’s conclusions and has submitted its own economic modelling ahead of final determination.

But that interim ruling demonstrates how, as a GB regulator, Ofgem is not in a position to consider whether the project might be good for NI.

“The regulatory environment is complicated,” says Professor David Rooney, the director of the Centre for Advanced Sustainable Energy at Queens University, Belfast.

“While Ofgem are required to support the UK’s wider net zero ambitions they focus on supporting projects in GB to improve the market and ultimately customers.”

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He added that while Northern Ireland does not have an interconnection policy, the Department for the Economy is working on one in partnership with the NI Utility Regulator.

One industry source told the BBC the position has been further complicated by Brexit with no overarching body able to guide projects which cut across different UK regulators.

“That’s the missing piece since we left the EU because that role was provided by ACER (Agency for the Cooperation of Energy Regulators).

“That mechanism doesn’t exist for a UK piece of infrastructure. Nobody is there saying ‘this is good overall for the UK, so how do we spread the burdens and benefits?’,” the source said.

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‘Substantial economic benefits’

In a statement Transmission Investment said: “Credible independent analysis has shown that the LirIC interconnector project will deliver substantial economic benefits for Northern Ireland and GB whilst also enhancing security of supply and enabling net zero.”

It added that the project continues as they await decisions from Ofgem and the Utility Regulator.

“We look forward to moving at pace with governments and regulatory authorities to ensure that the frameworks are in place to enable the UK to achieve its net zero ambitions,” the statement said.

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A spokesperson for Stormont’s Department for the Economy said it is on track to deliver research on interconnectors and storage as detailed in its 2024 Energy Strategy Action Plan.

“We are working to ensure that the North South interconnector is constructed by 2028 and seeking to optimise the capacity of the existing Moyle interconnector through reinforcement work in the Belfast area,” they added.

They said it would be inappropriate to comment on the LirIC project while the work of the independent regulator is ongoing.

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On Freedom — Timothy Snyder’s timely manifesto for our fearful age

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What is freedom and why does it matter? Timothy Snyder’s answer is that “freedom is the absolute among absolutes, the value of values. This is not because freedom is the one good thing to which all others must bow. It is because freedom is the condition in which the good things can flow within us and among us.”

This sounds abstract. But it is not. Snyder knows how precious and fragile freedom is because he has studied and, in Ukraine, even seen what happens to people when brutes take it away.

A professor at Yale, Snyder is one of the foremost historians of central and eastern Europe. Among his many books are Bloodlands: Europe Between Hitler and Stalin — which explains how those monsters fed upon each other — and On Tyranny: Twenty Lessons from the Twentieth Century, which tells us where we might be heading.

Snyder is no ivory tower academic. He seeks to make the world a better place via his books and his Substack, which is notably clear-eyed on the neo-fascism of Donald Trump’s Republican party.

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His knowledge of tyranny is invaluable in analysing freedom. But Snyder’s book goes well beyond history. He discusses the thought of Edith Stein, a German Jewish philosopher who converted to Catholicism and died in Auschwitz. He quotes the French philosopher Simone Weil, the dissidents Václav Havel and Adam Michnik, and the leading critic of Karl Marx, Leszek Kolakowski, He includes his own experiences from his home in Ohio to his studies in central and eastern Europe, teaching in an American prison and being in Ukraine during Russia’s genocidal war. All this makes On Freedom intellectually rich, yet personal.

The book starts from a passionate conviction that freedom is not negative — and so defined by the absence of external constraints — but positive, and so defined by what we are able to do. The latter, in turn, depends on what we get from others. For Snyder, then, the capacity to recognise others as beings like ourselves is the foundation of freedom. Without that, we will treat others as objects, not subjects, and finish up with tyranny.

Thus, he argues, “We enable freedom not by rejecting government, but by affirming freedom as the guide to good government.” Politically, freedom means democracy. A democracy of equal citizens is incompatible with an oligarchy protected by “negative freedom”. If, as in the US today, the law says that money is speech and corporations are people, it creates a plutocracy, “Freedom” then becomes a synonym for privilege.

What do these points mean in practice? Snyder’s answer is that “The connection between freedom as a principle and freedom as a practice are the five forms of freedom”. These are “sovereignty, or the learned capacity to make choices; unpredictability, the power to adapt physical regularities to personal purposes; mobility, the capacity to move through space and time following values; factuality, the grip on the world that allows us to change it; and solidarity, the recognition that freedom is for everyone.”

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Together, these “forms” make those of us lucky enough to live in liberal democracies free members of a free society. As a child of refugees from Hitler who grew up during the cold war, I know what this means, as does Snyder. Notably, all of these forms depend on actions by others. They cannot be achieved by individuals on their own.

As Snyder notes, “Babies who are left alone learn nothing.” Children cannot acquire the personality and knowledge needed to be a free member of a free society on their own. Their achievement of individual sovereignty depends on what others do. But the ability of adults to act freely also depends on the honesty and competence of the judges, policemen, public servants and all those who pay their taxes and do vital jobs.

Unpredictability is evidently a form of freedom. Free people must be able to do and think what they wish, not just what governments want. That is what tyrannies seek to prevent. They want to make people predictable. The digital screen, argues Snyder, seeks to achieve the same outcome.

Mobility is the challenge for mature people, says Snyder. A free society should indeed be a mobile one. But, he emphasises, mobility includes social mobility. A hereditary oligarchy is the opposite of such mobility.

This drives Snyder’s hostility to negative freedom — the idea that one is free once one is liberated from restrictions imposed by governments. This perspective is solipsistic and so “antisocial”. In the US, he argues, the “elevation of negative freedom in the 1980s set a political tone that lasted deep into the twenty-first century”. The purpose of government was “not to create the conditions of freedom for all but to remove barriers in order to help the wealthy consolidate their gains.”

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Moreover, “The more concentrated the wealth became, the more constrained was the discussion — until, in effect, the word freedom in American English came to mean little more than the privilege of wealthy Americans not to pay taxes, the power of a few oligarchs to shape the discourse, and the unequal application of criminal law.”

Snyder condemns the populism offered by Trump as “sadopopulism”. True populism, he argues, “offers some redistribution, something to the people from the state; sadopopulism offers only the spectacle of others being still more deprived.”

Factuality is fundamental: neither an individual nor a collective can make decisions without information. “Truthfulness”, argues Snyder, “is not an archaism or an eccentricity but a necessity for life and a source of freedom.” Deliberate lies of the kind that Trump and JD Vance have been telling about the consumption of pets by Haitian immigrants in Ohio make a mockery of democracy and so of freedom. Vladimir Putin is today’s master of such lies.

Values may differ, but if politics is to work at all, there needs to be some agreement on the facts. Here the difficulty, Snyder notes, is not just manipulative politicians but digital media. The advertising revenue needed to support journalism, especially local journalism, has been swallowed by digital behemoths. Investigative journalism has largely disappeared, and politics drowns in a tidal wave of conspiracies and lies.

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Not least, argues Snyder, there must be solidarity. This follows from his most fundamental proposition that I am free because others are free. This is what makes the bonds of citizenship, on which freedom depends, work. If I am better off than others, I have an obligation to pay the taxes on which the freedom of others depends. This is the argument for sharing of the costs of bringing up children and of maintaining the health of all. At the limits, it means fighting in the defence of one’s country’s freedoms, as Ukrainians are doing. As Snyder insists: “Morally, logically, and politically, there is no freedom without solidarity.”

On Freedom fails fully to recognise that competitive markets are both a form — and a source — of freedom. Yet Snyder is not hostile to markets. On the contrary, he rightly insists that “Markets are indispensable, and they help us to do many things well. But it is up to people to decide which things those are and under which parameters markets best serve freedom.”

Snyder is right about what is most important. He understands that freedom means choosing among competing values and accepting disagreement, while respecting the democratic rules over how it is managed. But freedom does not mean giving the wealthy the right to buy elections or the powerful the right to tear up the votes of people they dislike. Freedom is a precious gift. We have to defend it.

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On Freedom by Timothy Snyder Bodley Head £25, 368 pages

Martin Wolf is the FT’s chief economics commentator

Join our online book group on Facebook at FT Books Café and subscribe to our podcast Life & Art wherever you listen

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Ex-cabinet secretary says £200,000 job is ‘massively underpaid’

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Ex-cabinet secretary says £200,000 job is 'massively underpaid'

Former cabinet secretary Lord O’Donnell has said the position of top civil servant is “massively underpaid”.

He is involved in the recruitment process for the £200,000-a-year role, following Simon Case’s decision to step down on health grounds.

Lord O’Donnell, who held the post between 2005 and 2011, told the BBC the “incredibly demanding job” should have a higher salary.

The cabinet secretary is the UK’s most senior civil servant.

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The job involves advising the prime minister, leading implementation of the government’s policies and managing other high-level civil servants.

Speaking to BBC Radio 4’s The Westminster Hour, Lord O’Donnell described the position as a “huge job”.

He said: “It’s massively underpaid in my view – given I’ve been paid a lot more since, to do a lot less.”

Lord O’Donnell served as cabinet secretary under three prime ministers. He was promoted to the post under Tony Blair in 2005, and he remained in the role for Gordon Brown’s premiership between 2007 and 2010.

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He stepped down in 2011, under the David Cameron-led coalition government.

Recruitment is under way to replace the current cabinet secretary, Simon Case, who has said he will step down by the end of the year.

Announcing his resignation, Mr Case said he had been undergoing medical treatment for a “neurological condition” for the past 18 months.

He stressed that his resignation was “solely to do with health and nothing to do with anything else”.

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Lord O’Donnell said whoever replaces Mr Case will need to have a “good relationship” with the prime minister’s chief of staff, Sue Gray.

“Sue knows the civil service backwards,” he said. “That should be one of the easiest parts of the job, I would say.”

Ms Gray, previously a senior civil servant herself, was at the centre of a row over her own salary in September, after the BBC revealed she is paid £170,000 a year.

This is more than the prime minister, who earns £166,786.

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DWP to pay state pensioners £300 Winter Fuel Payment even if they don’t claim Pension Credit

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DWP to pay state pensioners £300 Winter Fuel Payment even if they don't claim Pension Credit

THOUSANDS of households could still be eligible for the £300 Winter Fuel Payment even if they do not claim Pension Credit.

The Winter Fuel Payment is a state benefit paid once a year to pensioners to help cover the cost of heating during colder months.

Thousands could still be eligible for the Winter Fuel Payment even if they don't claim pension credit.

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Thousands could still be eligible for the Winter Fuel Payment even if they don’t claim pension credit.Credit: Getty

The handout was previously available to everyone aged above 66 and helped with high energy bills.

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But Chancellor Rachel Reeves revealed earlier this year the cash would only be given to retirees on pension credit, or other means-tested benefits.

To meet the criteria for Pension Credit you must have a weekly income which falls below around £218 if you are single.

If you live with a partner and you are both state pension age then your weekly income must fall below around £350.

It is thought around 800,000 pensioners meet the criteria for pension credit and have not applied.

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So it is always worth checking your eligibility to see if you have a chance.

However, the top-up is not the only way to qualify for the Winter Fuel Payment.

For example, older Brtis who are living in a different country can still get the £300 cash boost.

This is because of a loophole in the Brexit Withdrawal Agreement, which sets out the rights of British expats living in European countries.

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Citizens who meet the criteria can claim a Winter Fuel Payment (WFP) if they move to an eligible country before December 31, 2020.

The Sun launches our Winter Fuel SOS campaign

To be eligible, citizens must also:

  • Have been born before September 23, 1958
  • Be receiving a benefit paid by the UK, such as a State Pension
  • Have a genuine and sufficient link to the UK, such as having lived or worked in the UK, or having family in the UK
  • Receive a qualifying means-tested benefit from the country they live in

You will need to claim Winter Fuel Payment even if you have got it before. The payment is not made automatically when you live abroad.

The eligible countries you can live in and claim are:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • Germany
  • Hungary
  • Iceland
  • Ireland
  • Italy
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Netherlands
  • Norway
  • Poland
  • Romania
  • Slovakia
  • Slovenia
  • Sweden
  • Switzerland

If you live abroad and want to apply for the Winter Fuel Payment you can find out more about submitting your application by clicking the link here.

Other ways to meet the criteria

A partner below the state pension age may also be eligible for the £300 payment if they live with a partner who is over state pension age and they jointly claim benefits. These include:

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  • Universal Credit
  • income-related Employment and Support Allowance (ESA)
  • income-based Jobseeker’s Allowance (JSA)
  • Income Support
  • Child Tax Credit
  • Working Tax Credit

So for example, if you are 65 and your partner is 66 and you both claim benefits, your partner will be eligible for the Winter Fuel Payment.

If you do not have a partner and still claim any of the above benefits you could still be entitled to the Winter Fuel Payment.

If you want to check your eligibility then it is worth checking out our article here.

You can also find free-to-use online benefits calculators to work out what you’re entitled to.

For example, Age UK has an online calculator which helps you work out what benefits you could be entitled to including the Winter Fuel Payment and Pension Credit.

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According to the site, it takes 10 minutes to complete and you will need the following information:

  • Your savings
  • Your income, including your partner’s if you have one
  • Any benefits or pensions you’re already claiming, including anyone you’re living with.

The calculator is free to use and confidential.

Help at hand

The Sun has launched a ­Winter Fuel SOS campaign to help thousands of pensioners worried about their energy bills.

We want to hear from you by phone or email — and it’s fine if you are calling or messaging on behalf of a friend or relative.

Our panel includes former ­pensions minister Sir Steve Webb, pensions expert Baroness Ros ­Altmann and consumer champion Martyn James.

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They will be joined by The Sun’s Head of Consumer Tara Evans and Sun Savers Editor Lana ­Clements.

And even if you aren’t eligible for the payment, our team will be ­sharing tips on how to switch energy providers and save money, get help if you’re in debt or simply need to save this winter.

Your cases will be considered by our panel, who will aim to give you advice within one week of your call or email.

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Boeing strikers prepare for long haul

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Boeing production workers last went on strike 16 years ago. But the “Fighting Machinists” still know how to do it.

Three weeks into industrial action sparked by a dispute over pay and benefits, a well-oiled system sustains picket lines outside the Washington state plants where many of the manufacturer’s aircraft are normally built.

At the union hall in Seattle, workers split logs to feed the burn barrels that keep picketers warm at night, while debit cards are distributed that allow them to pick up weekly strike pay of $250, funded by the union. Twelve miles away in Renton, strikers can help themselves to sandwiches, clam chowder and chilli, while a food bank is stocked with canned soup and boxes of macaroni and cheese.

Further north in Everett, where Boeing’s 777 and 767 planes are assembled, union members Sara Beecher and Ken Ogren drive between picket lines to check that people are not going hungry.

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“You guys need anything?” Ogren asked strikers at each stop when the Financial Times visited this week. “Water? Pizza?”

The strike is the latest crisis the company has faced in the past five years. Twin crashes that triggered the worldwide grounding of the 737 Max, the Covid-19 pandemic and then January’s door panel blowout on a commercial flight have left Boeing $53bn in debt, having disgorged $8.3bn in cash this year.

Ken Ogren offers pizza to picketers while riding in a union shuttle as Boeing workers picket outside of the Boeing Everett factory during an ongoing strike in Everett, Washington
Ken Ogren offers pizza to striking workers in Everett © David Ryder/FT
Union members cut wood, which will be burned for warmth at picketing locations, at a temporary union hall as Boeing workers picket outside of the Boeing Everett factory during an ongoing strike in Everett, Washington
Union members prepare logs to keep strikers warm at night © David Ryder/FT

Needing about $10bn in cash on hand to fund its operations, the company faces the prospect of having to sell stock worth at least that amount to raise capital. Delivering aircraft — which is when customers make the bulk of their payments — is critical to the company’s goal of protecting its investment-grade credit rating.

But operations in the Pacific Northwest have ground to a halt after union members, frustrated with meagre pay rises during years of higher inflation, the elimination of their defined benefit pensions after a bruising fight in 2014 and a history of disrespect from top executives, voted 96 per cent last month to go on strike.

The union and Boeing are scheduled to meet on Monday with a federal mediator for further negotiations.

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Bank of America analyst Ron Epstein estimated the strike is costing the company $50mn a day while delaying Boeing’s plans to improve manufacturing quality. Success on that front dictates when aviation regulators will allow the company to build up production of the Max above 38 a month, an increase that is essential to meeting Boeing’s goal of generating $10bn of free cash flow a year in 2026.

“The issues all feed into each other, creating a continuous doom loop while compounding the negative impacts,” Epstein said.

The industrial action has been a long time coming. The International Association of Machinists and Aerospace Workers District 751 told its 33,000 members several years ago to start saving funds to weather a strike.

Long-serving Boeing employees say the company’s culture changed after its merger with McDonnell Douglas in 1997. The leadership of executives such as Jim McNerney, who adhered to the corporate philosophy pioneered by Jack Welch at General Electric of cutting costs to improve Wall Street’s returns, squeezed the jet maker’s workers and suppliers to increase value for investors.

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A Boeing worker walks to a picket site
A Boeing worker walks to a picket site. The company’s latest offer to lift their pay 30% over four years is ‘just offering me a loss’, said Chris Cerovich, a union steward © David Ryder/FT

McNerney sparked worker outrage in 2014 when he boasted his leadership had left employees “cowering”.

Earlier that year, faced with a Boeing threat to move work on the 777 to its non-union plant in South Carolina unless workers’ traditional pensions were scrapped, union members agreed 51 per cent to 49 per cent to accept a contract that included less generous retirement arrangements. Union members said the company’s offer of $10,000 bonuses at the time of ratification swayed many younger workers hired in the run-up to the vote, and that turnout was suppressed because the union’s national leadership scheduled the in-person vote during the Christmas holidays.

The anger has not faded and is one factor powering the strike. Among a collection of labour movement paraphernalia on display at the Seattle union hall, one pin stands out: the machinists’ emblem, printed with the words “We cower to no one!”

“Everybody’s mad because of what they did,” said electrician Richard Clifford. “They’re just mad. That’s pretty much it.”

With wages having risen 4 per cent between 2016 and 2024, Boeing’s latest offer to lift them 30 per cent over four years is “just offering me a loss”, said Chris Cerovich, a union steward and quality assurance lead at Boeing’s spare parts centre in Seattle. “Who wants to accept a loss?”

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Boeing brought in former Rockwell Collins chief executive Kelly Ortberg two months ago with the mission to lead the company to recovery. Ortberg has said he wants to “reset” Boeing’s relationship with its workforce and met in August with District 751 president Jon Holden.

The union started negotiations by asking for a 40 per cent pay rise over four years, which Epstein estimates would add about $1.3bn in costs by 2028, assuming average pay of $100,000.

A Boeing worker pickets outside of the Boeing Everett factory during an ongoing strike in Everett, Washington
A striking worker on the picket line. The machinists are in a position of considerable power, given Boeing’s current woes © David Ryder/FT

Many picketers said Boeing no longer commanded the rarefied status as an employer it once held.

Billy Lorig, a union steward and Boeing veteran of almost three decades who brought younger colleagues out for a 4am shift on the picket lines last month so they could get used to the chill and the quiet, is frustrated by how many of them see Boeing as a job, rather than a career.

“Boeing used to be the elite company to work for in the past, and it’s not any more,” he said. “They’re still good, but they used to be great.”

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Melius Research analyst Robert Spingarn found median pay at Boeing decreased 6 per cent between 2018 and 2023, while rising 12 per cent at 17 other aerospace and defence companies.

Some new hires start on $21-$23 per hour, just north of Seattle’s minimum wage of $19.97, and it takes six years to reach top pay. Older workers may be able to afford to live near Boeing’s facilities, workers say, but that is out of reach of younger hires.

“We’re building airplanes,” said Cristian Preoteasa, who was manning the line in Renton with his eight-year-old son. “A normal family working for a company like Boeing, they should be able to buy a house.”

Pensions and retirement income are critical issues to strikers. Some want to win back the defined benefit pensions they lost. Others want improved wages or funding for “401(k)” defined contribution retirement accounts. Epstein estimated reinstating the pension would cost $300mn-$400mn more a year than Boeing’s offer to fund employees’ 401(k) plans.

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District 751 last week said the company has been “adamant” in negotiations that it would not restore the old pension but, Preoteasa noted, “even if we don’t have a shot, it’s big leverage”.

SPEEA officer Ryan Rule pickets in support of IAM District 751 outside of a Boeing facility near Boeing Field during an ongoing strike in Seattle, Washington
Ryan Rule of the Society of Professional Engineering Employees in Aerospace pickets in support of the District 751 workers © David Ryder/FT

The machinists are in a position of considerable power, given Boeing’s need for cash, airlines’ demand for jets and the wider resurgence of the US labour movement. Some picketers echoed arguments made by leaders in other unionised industries such as cars and airlines about companies that have profited at workers’ expense.

At the picket line in Renton, toolmaker Demetric Jones noted Boeing’s last two chief executives, Dave Calhoun and Dennis Muilenburg, left the company with tens of millions of dollars despite their mistakes. “It’s just all corporate greed,” he said. “And that’s the reason they’re in this position now.”

Mike Sherman, a machine repair mechanic, is confident the strikers will prevail.

“If they think they’re going to wait us out,” he said, “I think they’re going to lose.”

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IFS urges Labour party to make ‘serious reforms’ to capital gains tax

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Capital gains tax needs “serious reform” to make it fairer and more growth-friendly, said an influential think-tank that also proposes increasing rates in the Budget on October 30.

In a report published on Sunday, the Institute for Fiscal Studies called for a string of reforms including ending the forgiveness of CGT at death as this creates “a very big” incentive for people to hold on to assets well past the point at which it is efficient for them to do so.

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The IFS said that ultimately rates should be aligned across all forms of gains and income, saying this could mean significant increases to CGT rates.

“Capital gains tax needs serious reform, not just more tweaks,” the report said. As designed, the CGT “reduces UK productivity and growth” by discouraging saving, investment and risk-taking and leading to a misallocation of capital away from its most productive use, according to the think-tank.

“The government needs to focus on reform and not just on changing rates,” said Helen Miller, deputy director at the IFS and an author of the report.

She pointed to estimates by the UK tax authority that raising the capital gains tax rate by 1 percentage point in April 2025 would result in just £100mn extra revenues in 2027—28. A 10 percentage point increase would actually reduce revenue by about £2bn that year, because people will change their behaviour and hold on to assets to avoid paying the CGT.

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Instead chancellor Rachel Reeves “could raise significant revenue if she did a bigger reform” Miller suggested. If the chancellor “was tempted to just raise rates by 5 or 10 per cent, that’s not going to get big money and it would upset a lot of people politically for not much return,” she said.

Currently, CGT rates vary significantly across assets and are almost always significantly lower than tax rates on income. This creates “undesirable distortions” to what people invest in and how they choose to work, the IFS said.

The think-tank also suggested removing the business asset disposal relief — a preferential CGT rate for business owner-managers — arguing it was not well targeted at entrepreneurship.

Instead, the Labour government should give more generous deductions for investment costs to boost investment, according to the IFS.

To avoid people leaving the UK before realising gains, thus avoiding UK CGT, the IFS suggested one option could be to tax people emigrating from the UK on their accrued gains, the increase in value of an asset or investment that is not sold. The government could also exempt new arrivals from UK CGT on gains they made whilst living abroad.

The report comes ahead of the Budget in which the chancellor has the challenge of boosting economic growth, as promised in the Labour election manifesto, amid high taxes and the highest public debt since the 1960s.

CGT is paid by around 350,000 people each year, corresponding to only 0.65 per cent of the adult population. Two-thirds of CGT revenue comes from just 12,000 people, or 0.02 per cent of the adult population, who have average gains of £4mn.

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