Episode 524: Mr Jones' Act

How an almost century-old maritime law is still causing headaches across the country

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Note: This episode originally aired in March, 2014.

There’s an obscure law that governs just about anything that travels by ship from one port in the United States to another U.S.-based port — bananas, hairdryers, gasoline, even people. Economists do not like it. It’s called the Jones Act and it just won’t go away.

If you want to send a bunch of oranges by truck from Florida to Baltimore, no one cares who made the truck. Or if you want to fly computer chips across the country, it’s fine if the plane is made in France. But if you want send cargo by ship, according to the Jones Act, the ship has to be American made.

It’s a 90-year-old law and, among other things, it says that every time you want to send something from one US port to another, the cargo must travel on a ship built in the U.S., staffed by mostly Americans, and flying the American flag.

Today on the show, we look at the all the unexpected places this law pops up from cruise ships, to cattle farms, to New Jersey, where, a few winters ago, we met a guy who really, really needed some salt.

Music: “60’s Quiz Show” and “For the Old Souls.” Find us: Twitter/Facebook.

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In Spain, Catalans Are Divided Over Independence Vote As Referendum Approaches

The main square of Batea, a town of about 2,000 residents in Spain’s northeast region of Catalonia. The mayor opposes Sunday’s independence referendum and has not given permission for voting to take place in municipal buildings.

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Lauren Frayer/ for NPR

For 28 years, Joaquim Paladella has been mayor of his hometown of Batea, a pretty sandstone village of 2,000 people, nestled in vineyards west of Barcelona.

It’s a place with more tractors that cars. There’s so much farm work, Batea has almost full employment. The jobless rate is 3 percent, one of the lowest in Spain.

Whenever there are elections for local, regional and national offices, Paladella sets up ballot boxes in the basement of the town hall. People line up outside.

But not this coming Sunday.

Paladella is one of about 200 mayors — out of more than 900 across Spain’s northeast Catalonia region — who have refused to grant permission to hold an Oct. 1 independence referendum in municipal buildings.

The Spanish central government considers the vote unconstitutional, and has ordered police to block voting. Separatists who rule the regional government vow to go ahead with the vote anyway — and declare independence from Spain within 48 hours, if the “yes” votes win.

Batea’s mayor opposes the vote on different grounds. He says it’s not a wise use of public funds. And he suggests — only half-joking — that if Catalonia becomes independent from Spain, he’ll hold a referendum for Batea to leave Catalonia and join the neighboring Spanish region of Aragon.

“I just don’t see how independence would help my village,” Paladella says in an interview at his town hall office. “When Catalan regional leaders wave the separatist flag and lobby for independence, they’re not doing the real work of government. I am a Catalan, but I’m deeply discontented with the direction my region is taking.”

He takes NPR on a tour of Batea, stopping to visit the local nursing home, which has a long waiting list. The building has been expanded to house 30 more residents, but Paladella is waiting for the regional government to approve funding for people to get off the waiting list and move in. Because the government is preoccupied with the independence push, there’s been no answer, Paladella says.

Joan Vaqué (right) and Andres Luchan (left) work at the La Fou winery in Batea. Vaqué says he’s worried an independent Catalonia could face trade barriers if it’s forced out of the European Union.

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Lauren Frayer/for NPR

“It would be so much better to spend the money here,” says Maria Pilar, a nurse. “Invest in expanding this facility rather than spending millions of euros on silly dreams of independence from Spain.”

While a majority of Catalans say they would like the opportunity to vote on independence, opinion polls show they’re roughly divided over whether to break away and form a new country. Support for staying in Spain had been growing in recent years, despite almost daily independence rallies in the Catalan capital Barcelona.

“I would use the words de-mobilized majority, rather than a silent majority,” says Catalan political scientist Berta Barbet. “Basically, they’re not on the streets because they’re defending the status quo. This referendum won’t be recognized by those who have not voted. If the Catalan government decides to go ahead, even with low turnout, they know they’ll have problems. That’s not the way to properly legitimize your decisions.”

Spain says it’s illegal for Catalans to vote Sunday. Anti-independence parties are telling voters to stay home. For some, it’s a dilemma: Vote in a referendum you don’t believe in or skip it — and you’re not represented.

In Batea’s town hall lobby, there’s an exhibit on local wines, and folk songs about wine play from speakers in the corner. This town has 28 wineries. Wine-making is the biggest local industry, contributing the most local jobs.

But Batea’s wine industry could suffer if Catalonia gets independence from Spain. An independent Catalonia would likely be forced out of the European Union, at least temporarily. Trade barriers would go up.

“We don’t know what will happen to commerce,” says Joan Vaqué, who works at the family-owned La Fou winery. “We hear a lot about Brexit, how that change will affect British business. I don’t want to risk the same thing here. For business owners, independence is a loaded issue.”

As he arranges wine bottles on a shelf, Vaqué points to the label. In big letters, it says “Product of Spain.”

“Evidently, that’s something we’d have to change,” he says, laughing.

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President Hints At Firing HHS Secretary Over Private Jet Use

Health and Human Services Secretary Tom Price speaks at the Mirmont Treatment Center in Media, Pa., on Friday.

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Jacqueline Larma/AP

“We’ll see.”

Those are probably not the words you want to hear from the boss if the future of your job is in doubt. (See: Steve Bannon). But that was President Trump’s response to reporters who asked whether he meant to fire Secretary of Health and Human Services Tom Price.

Earlier this month, Politico reported that Price had used private jets more than two dozen times since May, instead of using commercial flights, which is customary for Cabinet officials not traveling with the president. The alleged cost to taxpayers: more than $400,000 in charter fees, according to Politico.

“I was looking into it, and I will look into it, and I will tell you personally I’m not happy about it,” Trump told reporters as he left the White House on his way to visit Indianapolis. Responding to a shouted question as to whether he’d fire Price: “We’ll see.”

The president’s remarks come on the same day that the House Oversight Committee launched an investigation into the practice by Price and other senior government officials.

Price told Fox News on Saturday that he would stop the practice pending a review by his department’s inspector general.

“We welcome this review,” Price said. “We want to make certain that we have the full confidence of not just this administration, but the American people.”

Earlier this week, White House press secretary Sarah Huckabee Sanders declined to defend Price on his use of private jets at taxpayer expense, saying the instances where he did so were not “White House-approved travel.”

Politico notes:

“That Price has made a habit of chartering aircraft for his travels as a cabinet member is especially notable given his past criticism of House Minority Leader Nancy Pelosi (D-Calif.), whom Price, then a member of Congress, lambasted in 2010 for ‘flying over our country in a luxury jet.'”

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Trump Administration To Drop Refugee Cap To 45,000, Lowest In Years

Religious leaders and activists from the Church World Service hold up a door during a protest Wednesday urging Congress to pressure President Trump to allow more refugees to enter the U.S.

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The Trump administration plans to cap the number of refugees the U.S. will accept next year at 45,000. That’s a dramatic drop from the level set by the Obama administration, and would be the lowest number in years.

The White House formally announced its plans in a report to congressional leaders Wednesday, as required by law.

The number of refugees the U.S. admits has fluctuated over time. But this cap is the lowest that any White House has sought since the president began setting the ceiling on refugee admissions in 1980.

Refugee resettlement agencies are disappointed with the 45,000 cap, which they say falls far short of what’s necessary to meet growing humanitarian needs around the world. They had recommended a limit of at least 75,000.

Last year, the Obama administration set the cap at 110,000 — though only about half that number have been admitted, after the Trump administration put the entire refugee resettlement program on hold under its travel ban executive orders.

“Churches and communities, employers and mayors, are heartsick at the administration’s callous and tragic decision to deny welcome to refugees most in need,” said Linda Hartke, the president and CEO of Lutheran Immigration and Refugee Service, one of largest resettlement agencies in the country.

The debate over refugees is often framed as a clash between humanitarian goals and national security.

But Trump administration also argues that the U.S. spends millions of dollars a year to screen and resettle refugees, and to help them once they arrive.

“For the cost of resettling one refugee in the U.S., we can assist more than 10 in their home region,” President Trump said in a speech to the United Nations earlier this month.

Once they arrive, refugees qualify for many social services, including health care, food stamps and cash assistance. Many of those costs fall on state and local governments and some states are now pushing back.

Earlier this year, Tennessee took the federal government to court over refugee resettlement.

“The bottom line is, the federal government is coercing the state of Tennessee to spend Tennessee taxpayers monies in ways that some individual Tennesseans disagree with,” Republican State Sen. John Stevens told member station WPLN in March.

But many mayors across the country see refugees as an economic boon for their cities.

“These people are paying taxes. They’re buying houses. They’re going into our schools,” said Stephanie Miner, the mayor of Syracuse, N.Y. Miner, a Democrat, says refugees are helping revitalize the city’s north side, which was home to Italian and German immigrants before them.

“They create their own businesses which add economic energy that, but for them, would not be here,” said Miner.

One of those businesses is the Himalayan Store, where you can buy traditional clothing from Nepal, authentic lentils from India, or a plate of fried rice. Owner Jay Subedi arrived in Syracuse eight years ago.

“When I came here, the door was open for all opportunities. And I keep working hard every day,” Subedi said.

Subedi was born in Bhutan, and spent 18 years in a refugee camp in Nepal before coming to the US. He got a job at Subway. Now he owns a store, a gas station and a house, in addition to his job as housing coordinator for InterFaith Works, a local refugee resettlement agency. Subedi says a lot of refugees share his work ethic.

“Even [if] they don’t have any English, even [if] they don’t have any skills, they want to work,” said Subedi. “They come to me ask me for a job. Jay, where I can work? I want to work. I want to buy a car. I want to buy a home.”

Economists who’ve studied the issue say it’s true that refugees can be expensive, especially when they first arrive.

It costs “something like $180,000” to resettle each refugee, estimates William Evans, chair of the economics department at the University of Notre Dame. He says that estimate includes direct and indirect costs like social services.

For the first nine years they’re in the country, Evans said, refugees tend to be net takers. They cost the government more in social services then they pay in taxes. But then, something changes.

“After that ninth year,” Evans said, “they’re actually paying more to the government than they’re taking out.”

Over 20 years, Evans and his colleague found that refugees pay about $20,000 MORE in taxes than they use in social services.

“Refugees tend to work at really high rates after a few years in the country,” said Evans. “They’re paying taxes like everybody else. I think it’s a reasonably positive story.”

That fits with what researchers at the U.S. Department of Health and Human Services found. They prepared an internal report this summer that showed refugees brought in $63 billion more in revenue than they cost between 2005 and 2014. But the White House never released that report, which was leaked to The New York Times.

“There is an investment that you have to make to help them get acculturated to help them learn the language and learn the culture,” said Syracuse Mayor Stephanie Miner. “But once they do, they are really committed to this country.”

What Miner wonders is whether this country is committed to them.

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Trump, 'Not Happy,' Joins Critics Of His Own High-Flying Cabinet Officials

Secretary of Health and Human Services Tom Price, joined by White House press secretary Sarah Huckabee Sanders, speaks to media aboard Air Force One. Secretary Price has reportedly spent more than $400,000 in public money on trips using private aircraft.

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Carolyn Kaster/AP

President Trump joined members of Congress on Wednesday in scrutinizing alleged government travel abuses by the secretary of Health and Human Services and at least two other Cabinet officials.

“I was looking into it, and I will look into it, and I will tell you personally I’m not happy about it. I am not happy about it,” Trump told White House reporters.

HHS Secretary Tom Price has reportedly spent more than $400,000 in public money on trips using private aircraft, including a charter flight to Nashville and back for a six hour visit that included lunch with his son. The story was first reported by Politico.

Asked on Wednesday if he would fire Price, Trump said, “We’ll see.”

On Capitol Hill, Oversight Committee chairman Rep. Trey Gowdy, R-S.C., and ranking Democrat Elijah Cummings, D-Md., sent letters instructing administration officials to supply details and documents from all trips on government-owned or chartered aircraft by non-elected political appointees.

Letters went to the heads of 24 executive departments and independent agencies and to White House chief of staff John Kelly.

Price, a former House member known for criticizing wasteful spending, has reportedly used chartered planes for nearly 30 flights where he could have traveled by airliner, sometimes mixing personal and official business as on his trip to Tennessee.

The HHS inspector general is investigating, and over the weekend Price said he would stop using private planes. Politico reported that he made that announcement after running up charter travel bills of more than $56,000 last week.

Treasury Secretary Steven Mnuchin, a multi-millionaire, took his wife on a government plane to Kentucky, where they watched the solar eclipse. He later reimbursed the Treasury for their travel.

Mnuchin also sought a U.S. Air Force jet for his European honeymoon, saying he needed the plane’s communications links to Washington. The plane cost an estimated $25,000 per hour, and Mnuchin ultimately withdrew his request. The Treasury Department’s inspector general is reviewing both episodes.

And CBS News reported on Tuesday that EPA administrator Scott Pruitt last June flew in a military jet from Cincinnati to New York, at a cost of at least $20,000. Separately, the EPA inspector general is looking into Pruitt’s frequent government-paid trips back to Oklahoma, his home state, where he’s rumored to be considering a run for office.

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Paul Horner, Fake News Purveyor Who Claimed Credit For Trump's Win, Found Dead At 38

In an interview with CNN in December, Paul Horner defended his stories as political satire: “There’s a lot of humor, a lot of comedy in it.”


Though President Trump often derides the mainstream media as “fake news,” we know now that there were people who consciously crafted false news stories during the 2016 election and passed them off as real.

One of those people was Paul Horner, who made his living creating news hoaxes that often went viral. Authorities say Horner was found dead last week near Phoenix; he was 38.

The Maricopa County Sheriff’s Office told NPR that an autopsy found no signs of foul play and that Horner’s family said he had a history of abusing prescription drugs. Evidence at the scene suggests that Horner may have died from an accidental overdose, according to the sheriff’s office.

The county’s Office of the Medical Examiner told NPR that its investigation into Horner’s death is open and pending, and thus foul play has not been ruled out.

In a business now associated with Russia and Macedonia, Horner was a homegrown news fabricator.

He considered himself a political satirist. “There’s a lot of humor, a lot of comedy in it,” he told CNN’s Anderson Cooper in December.

He created fake stories for his website National Report that were likely to find a believing audience. In one fake story, The Washington Postreports, he claimed that President Barack Obama used his own money to keep open a “federally funded” Muslim culture museum during a government shutdown. Horner was delighted that Fox News reported that story as fact before they backtracked.

“Is National Report the fake news site, or Fox News?” he asked the newspaper. “You decide.”

In an interview with the Post after the 2016 election Horner said, “I think Trump is in the White House because of me.”

“His followers don’t fact-check anything — they’ll post everything, believe anything,” he said. “His campaign manager posted my story about a protester getting paid $3,500 as fact. Like, I made that up. I posted a fake ad on Craigslist.”

It’s difficult to gauge whether Horner was as influential as he claimed. But his stories certainly reached wide audiences, often by masquerading as coming from reputable news sources.

His fake story about Obama invalidating November’s election result was shared more than 250,000 times on Facebook, according to the Post. Horner told BuzzFeed that another of his bogus stories, which claimed 20 million Amish people had committed to vote for Trump, turned up in Google News and garnered 750,000 page views in two days.

Horner told the newspaper that he was making $10,000 a month from Google-powered ads on his websites.

“I hate Trump,” he said. But he targeted conservatives with his stories because he found it was more profitable.

When asked why he would write the stories he did, like peddling the idea that there were paid protesters at Trump rallies, Horner said he assumed someone would fact-check it.

“I mean that’s how this always works: Someone posts something I write, then they find out it’s false, then they look like idiots,” he told the Post. “But Trump supporters — they just keep running with it! They never fact-check anything! Now he’s in the White House. Looking back, instead of hurting the campaign, I think I helped it. And that feels [bad].”

“I do it to try to educate people,” Horner claimed in the interview on CNN. “I see certain things wrong in society that I don’t like.”

Facebook announced last week that it would undertake a number of reforms to guard against interference in elections. But CEO Mark Zuckerberg said the social network wouldn’t be able to catch everything.

“We don’t check what people say before they say it,” he said. “And frankly, I don’t think our society should want us to.”

Horner’s brother told The Associated Press that there was “a genius behind a lot of” his brother’s work.

“I think he just wanted people to just think for themselves,” said J.J. Horner. “Read more; get more involved instead of just blindly sharing things.”

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U.S. Slaps Hefty Tariff On Bombardier Jets, Angering Canada, U.K.

The Bombardier CS 300 performs during the Paris Air Show at Le Bourget Airport in June 2015. Delta has ordered 75 of the smaller version, the CS100.

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Francois Mori/AP

The Commerce Department has announced that it is hitting Canadian aircraft maker Bombardier with a hefty 220 percent tariff for its top-end passenger planes. The tariff follows the department’s preliminary finding in favor of U.S. rival Boeing’s complaint that the smaller company received unfair government subsidies.

The trade row is over the Montreal-based Bombardier’s 100- to 150-seat C-Series passenger jets.

Bombardier has seen its stock price drop since Tuesday’s announcement by Commerce and the move has also angered the U.K. because the aircraft maker is one of Northern Ireland’s largest employers. About 1,000 jobs at the Belfast plant that are directly linked to the production of the C-Series wing could be lost, officials say.

The Canadian company has called the ruling “absurd” and promised to fight it. Boeing has said it only wants “a level playing field” in the U.S. market for single-aisle planes. In a statement Tuesday, the Chicago-based manufacturer of the 737 described Bombardier’s “massive illegal subsidies” as a “violation of existing trade law.”

In June, the Commerce Department made an initial finding that Boeing may have been harmed by Bombardier, which it says was able to sell its plane in the U.S. at a substantial discount. Although Commerce says it will “instruct U.S. Customs and Border Protection to collect cash deposits from importers of 100- to 150-seat large civil aircraft based on these preliminary rates,” the decision won’t be final until next year.

In the meantime, Bombardier’s sole U.S. contract for the CS100 is with Delta Airlines and it wasn’t expected to deliver the first of that 75-plane order until next spring. So Tuesday’s ruling has no immediate practical effect other than indicating the direction in which the Commerce Department is likely to move.

The Guardianwrites: “The extra charge would more than triple the cost of a C-Series aircraft sold in the US to about $61 [million] per plane, based on Boeing’s assertion that Delta received the planes for $19 [million] each.”

Tuesday’s finding bolsters Boeing’s claim that a $1 billion bailout from the Quebec regional government and $149 million in development loans and other aid from the U.K. government in 2008 helped give Bombardier an unfair advantage.

The Commerce Department said in a Fact Sheet released Tuesday that it used reported information from the governments of the U.K., Canada and the provincial government of Quebec, to calculate the tariff rate of 219.63 percent.

“The U.S. values its relationships with Canada, but even our closest allies must play by the rules,” Commerce Secretary Wilbur Ross said in a statement.

“The subsidization of goods by foreign governments is something that the Trump Administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination,” he said.

The U.K.’s defense minister, Sir Michael Fallon, warned that the move could “jeopardize our future relationship” with Boeing, which enjoys billions of dollars in military contracts with Britain.

During a visit to Belfast, where Bombardier’s U.K. operations are based, Fallon said: “Boeing stands to gain from British defense spending” but that “this kind of behavior could jeopardize our future relationship” with the firm, according to the BBC.

“We don’t want to do that. Boeing is an important investor in the United Kingdom; an important employer in the United Kingdom,” he said. “We would prefer this kind of dispute to be settled on a negotiated basis and we will be redoubling our efforts with the Canadian government to bring about a negotiated settlement.”

British Prime Minister Theresa May said she was “bitterly disappointed” by the tariff ruling.

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Iraq Threatens To Cut Off Kurdish Region's Airports After Independence Vote

Travelers line up to check in at the Irbil International Airport in Iraq on Wednesday.

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Bram Janssen/AP

Iraq’s government says it will block international flights from the region’s airports, a retaliatory move after the country’s Kurdish region overwhelmingly voted in favor of independence.

More than 92 percent voted to separate from Iraq, according to results released Wednesday by the Kurdish region’s election commission. The referendum results are nonbinding and must be certified by a court, NPR’s Jane Arraf reports from Irbil, the region’s capital.

Iraq’s central government and other regional and international powers — including the United States — strongly opposed the vote, over fears that it could destabilize the region and impact the fight against ISIS militants.

Now, “Iraq has told foreign airlines that starting Friday afternoon they won’t be able to fly in or out of the Kurdistan’s region’s international airports,” Jane reports. “That’s after the Kurdish Ministry of Transport rejected a demand that it hand over control of the airports to Iraqi authorities.”

Iraq controls the Kurdish region’s airspace, and some international airlines have announced they plan to cancel flights into Irbil, site of the region’s largest airport.

Iraqi Kurds wave the Kurdish flag as they celebrate in the streets of the northern city of Irbil on Monday following a referendum on independence.

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Iraqi authorities say they will still allow domestic flights operated by Iraqi Airways and aid flights, Jane reports, and the change is “not expected to affect U.S. and other military flights operating out of the military side of the Irbil airport.”

She says it’s worth noting that the vote did not take place under the supervision of international elections monitors, and the region’s minority Arab and Turkmen residents largely boycotted the referendum.

At a news conference Wednesday, Jane adds, a Sulaimaniyah-based group called “No for Now” described the referendum as a farce and alleged widespread fraud. The group is in favor of independence but believes this was the wrong moment for a vote. It said its monitors were barred from entering polling stations.

Kurdish leaders have said the impetus for holding the vote was that it would provide a mandate for entering into talks with Iraqi officials about secession.

But in a speech to Iraq’s parliament Wednesday, Iraqi Prime Minister Haider al-Abadi said there would “never be a dialogue about the referendum,” according to the BBC. “If they want to start talks, they must cancel the referendum and its outcome.”

Iraq’s Kurdish authorities have control of the region’s land borders and have their own security forces, the Peshmerga, that has played a significant role in the fight against ISIS.

In today’s speech, Abadi called for the Kurdish Regional Government to “hand over control of all border crossings and oil revenues,” the BBC reports.

U.S. State Department spokesperson Heather Nauert told reporters that the U.S. has expressed “deep concern” and “disappointment” that the vote went forward, but said the airport ultimatum “would not be an example of engaging constructively.”

The Kurdish area has different visa policies than the rest of Iraq. If international flights there are cancelled, it will pose challenges for foreign workers who want to leave but don’t have Iraqi visas. Domestic flights will still service Baghdad’s international airport — but Jane says that “without Iraqi visas … foreign workers aren’t normally able to transit through Baghdad so there could be a scramble to leave before Friday.”

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A Tough Week For President Trump And Mitch McConnell

President Trump says he is “not happy” with his Health and Human Services Secretary Tom Price following reports that Price used a private plane for official business.

NPR’s Domenico Montanaro (@DomenicoNPR) talks with Here & Now‘s Robin Young about Trump’s comments to reporters Wednesday prior to departing the White House for Indianapolis, and Roy Moore’s victory in Alabama’s primary runoff.

With reporting from The Associated Press

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Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money

German grocers Aldi and Lidl are aggressively growing their U.S. footprint. Aldi, which aims to have 2,500 stores by 2022, has recently renovated this store in Alexandria, Va. (left) And Lidl’s new location in Manassas, Va., was its 30th in the country.

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Alina Selyukh/NPR

It’s 6:30 a.m. on a Thursday in September, about an hour until the grand opening of a Lidl grocery store in Manassas, Va. A small line is queued along a squat building — at first glance, maybe a car dealership, if it were designed by Ikea. A few people at the front of the line shake their heads when asked whether they’d heard of a Lidl — pronounced”Lee-dle” — before this one arrived. It’s the German newcomer’s 30th U.S. location.

Rose and Roy Spilman camped overnight to be the first customers. Or, rather, Rose sat in line while Roy slept in the car — this is very much Rose’s thing. “She’s professional,” says third-in-line Melissa Johnson. “Her Krispy Kreme story is epic.” Last year, Rose spent three days staking out a spot to win a free year’s supply of doughnuts for her children and grandchildren.

Johnson and Spilman had met before; naturally, in another line to another grocery store: It was the grand re-opening of a local Aldi, Lidl’s compatriot and main rival, and the two women’s favorite place to shop.

Aldi and Lidl, in industry speak, are called deep discounters. They offer a limited assortment at very low prices — think large eggs on sale for 49 cents a dozen — keeping costs down with a mix of tactics for efficiency. If the U.S. grocery industry is in the middle of a price war, Aldi and Lidl are at the frontline.

Roy and Rose Spilman camped overnight to be the first customers at a new Lidl store in Manassas, Va.

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Alina Selyukh/NPR

Growing footprint

Competition has been intense among U.S. grocers. Companies are trying to figure out the role of technology in our shopping habits, and Amazon is ever the elephant in the room, now in possession of Whole Foods. And the pressure to compete on price is always there. In fact, prices have been falling quite a bit. Analysts often cite two major factors: A long period of food deflation, and stepped-up competition from Aldi and Lidl.

Aldi is an old-timer that’s been in the U.S. since the 1970s, approaching 1,700 stores. The company has now pledged $5 billion to renovate existing stores and grow to a total of 2,500 locations by 2022 — which would make it second only to Walmart and Kroger.

Lidl began spreading along the East Coast in June, reached 30 storefronts in mid-September. It aims for a total of 100 by the mid-2018 — presumably expanding further, if at a slower pace, after that.

Both stores are known particularly for private-brand, or store-label, products. Jim Hertel, senior vice president at food retail consultancy Inmar Willard Bishop Analytics, says that allows these grocers to offer customers savings of about 35-40 percent compared with other supermarkets. A limited stock goes into these discount stores, which are very compact and value efficiency above frills.

Some industry watchers predict that over the next few years, the deep-discount grocery business will grow five times faster than traditional stores — in part because Americans are becoming more comfortable with private-brand groceries.

“We have been involved in being a low-price leader since day one,” says Scott Patton, vice president of corporate buying at Aldi. “Because of the way we structure our business … we are comfortable that we will come out as a leader in the price war. The market will ultimately decide how long it can go” down in price.

Aldi, which has been in the U.S. since the 1970s, has been updating its look and product selection, adding more fresh produce, among other things.

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Alina Selyukh/NPR

Pursuit of efficiency

Inside the brand-new Lidl in Virginia, Roy and Rose Spilman slowly fill up their cart: several fresh pineapples at 89-cents a pop, high-pulp orange juice for less than $2. Roy offers up some strawberries for $1.89, but Rose is eagle-eyed: “Aldi’s was $1.77.”

She picks up an unexpected find: a cheap stepping stool from the “Lidl Surprises” section. “It was something I was going to build for her, but haven’t gotten around to it,” Roy says, with a sly thumbs-up.

Meanwhile, Johnson emerges at the checkout with an almost-empty cart. She says she enjoyed being in the Lidl — “Aldi is a bit more factory-esque” — but she wasn’t fully sold on the price comparison to her favorite store. More importantly, she’s got a houseful of kids for whom the Lidl brand is untested. “I’ll be back, though,” she says. “I’ll bring my crew — I’ll let them decide.”

Both German chains feature compact stores — Aldis, for example, are around 12,000 square feet on average — staffed by a few employees at a time.

“Typically, in a grocery store you’d often find 25, 26, 27 aisles. In Lidl, what we do here is just six aisles,” says Lidl spokesman Will Harwood, walking past the fruit and vegetables toward meats, cheeses and dairy. “By the time a customer reaches the end of the first aisle, they’re going to typically be able to do about 80 percent of their shop.”

This design is one of many tactics that keep the store efficient and prices down. Both Aldi and Lidl also display items straight in their pallets or boxes, saving employees the time that would go into unpacking and constantly reshuffling individual items on shelves. Getting a shopping cart at Aldi requires a 25-cent deposit, to be reclaimed when the cart is returned. This spares the store’s workers the effort of chasing down strays.

The appeal of limited selection

But the key factor that lets Aldi and Lidl cut costs is a limited assortment. Where a big supermarket would offer a dozen or more options of, say, pickles, Aldi or Lidl might have one or two varieties, only in the most popular size — but those would turn over in massive quantities. And this huge sales volume of one thing allows the stores to negotiate a good deal with the supplier.

Eggs for sale for 49 cents a dozen at the new Lidl store in Manassas, Va. A newcomer to the U.S., Lidl uses a mix of cost-cutting tactics to keep prices low.

Alina Selyukh/NPR

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Alina Selyukh/NPR

“I think right now, the key for us is, consumers are appreciating more and more private-label,” says Aldi’s Patton. “They’re absolutely recognizing they can get great quality product at a great price.”

Of course, with prices so low, some consumers are bound to be suspicious about the quality of food for sale. Both German chains are working to win over shoppers by expanding their selection of items like fresh produce, black angus beef, and organic choices.

Hertel says there’s a common misconception that Aldi stores are geared toward low-income shoppers on very limited food budgets. “It’s really a combination,” he says. “Certainly, the extreme-value does … appeal to the lower end of the economic scale, but actually the bulk of their sales come from mid- to maybe just above middle-class households.”

And Aldi’s Patton points out that his stores are in all types of markets, urban and suburban.

NPR Business Desk intern Yu-Ning Aileen Chuang contributed to this report.

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