The Impact of New Emission rules for power plants

Posted on March 28, 2012 by aviyer2010

An article in the New York Times (March 28, 2012) describes new EPA rules that limit the CO2 emissions of power plants to 1,000 lbs per KWh. The new rules are easy to meet for new natural gas fired plants. They do not apply to old coal fired plants. But new coal fired plants will have 30 years to get their annual average emissions to the new standard. Given that complying with the new standard will involve use of expensive current technology, does the bias of the regulation in favor of the current cheap natural gas source increase the long term risk for this industry ? Should some of the addiitional costs for the new coal fired plants be subsidized by the efficiencies of the new natural gas plants to enable a energy source posrtfolio of power generating facilities ?

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Increased recycling by manufacturers to help themselves and municipalities

Posted on March 28, 2012 by aviyer2010

An article in the New York Times (March 23, 2012) describes plans by Coca Cola to recycle 100 % of its cans by 2015 and by Starbucks to enable paper cup recycling at 100 % of its outlets by 2015. Similarly, Stonyfield Yoghurt offers recycling collection for its plastic yoghurt containers at Whole Foods – these cups are then converted into toothbrushes or razors. The article claims that manufacturers offering their own product recycling choices decreases the load on local municipalities and helps sustain local government during the current economic stress. Will this shift to individual manufacturer collection increase the level of recycling due to competitive benefits ? Will the absence of a common pooled collection put smaller manufacturers at a disadvantage ?

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The impact of natural gas extraction on steel mills

Posted on March 28, 2012 by aviyer2010

An article in the Wall Street Journal (March 26, 2012) describes the doubling of steel tubes, pipes etc in the last two years – thanks to the demand from natural gas extraction facilities across the US. But the abundant supply of natural gas has, in turn, dropped prices for gas by 35 %, thus making it an alternate to coal as a source, and dropping steel production costs. This makes the US steel production competitive and drives demand. At the same time, lower gas prices drives other industrial expansion, from chemical to fertilizer, and can potentially increase steel demand. Given that natural gas competitiveness decreases the incentive for further investments in even less environmental impact sources, should taxes for natural gas be increased ? Should regulations for natural gas extraction be eased knowing that the gas will replace coal and thus generate an overall supply chain benefit ?

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The global supply chain for outsourced services

Posted on March 28, 2012 by aviyer2010

An article in Bloombergbusinessweek (March 19,2012) describes new locations for higher level outsourced work – accounting, research, marketing etc. New locations in Argentina, Guatemala, Poland and Brazil, enable these tasks to be performed closer to the customer, despite being more expensive than India. Knowledge of US business, accents similar to the US, large pools of educated young employees – are described as the reason. Once these outsourced processes are standardized, will work travel once again to locations like India to realize even more savings ? Are the desired skills teachable or do they have to be ingrained ? Will higher speed data networks and video transmission diminish physical distance as the metric ?

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Nike’s knit shoe design and global supply chain impact

Posted on March 28, 2012 by aviyer2010

An article in Bloombergbusinessweek (March 19,2012) describe the flyknit shoe design by Nike – whose upper is knit from thread as one piece, thus saving 35 parts and 66 % less waste. The reduced labor intensive assembly also makes US production more competitive, once transport costs and lead time a accounted for. In addition, shoes can be custom fit easily by being knit to fit like a sock. Will Nike’s new technology bring manufacturing profitably back to the US ? As consumers move to demanding custom fit at close to current prices, will domestic manufacturing lead times provide a competitive advantage ? How will current labor intensive production capacity in China and Vietnam be redeployed ?

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Green jobs in the US Economy

Posted on March 28, 2012 by aviyer2010

The New York Times (March 22, 2012) describes a US government report that claims that there were 3.1 million green jobs in the US economy. Green jobs were defined as those involved in activities that either decrease energy consumption or benefit the environment. These jobs include alternate energy products (e.g., batteries, wind turbines), energy efficient appliances etc. But should any energy efficient product be treated as a green job even if it occurs as part of an industry’s learning curve? Is the generous use of the label an attempt to justify government investments in the environmental sector ? Should employees who produce software to optimize routes and save energy be classified as having green jobs ? Is the growth of such green jobs stimulated by the high gas prices ?

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The forest food chain and noise pollution

Posted on March 28, 2012 by aviyer2010

An article in the New York Times (March 26, 2012) describes the impact of noise pollution on the forest food chain consisting of pinyon pine trees and their pinyon nuts, scrub jays, mice and hummingbirds. Noise pollution seems to drive away scrub jays, that help propagation of pinyon pine by storing their nuts for future consumption. The uneaten hidden nuts provide the seeds for new trees. But, in the absence of jays, mice eat up all the pinyon nuts thus hurting the pinyon tree propagation. But his causes hummingbirds to flourish. Should the impact of noise pollution consider the consequent population imbalance ? Since any choice of acceptable noise pollution impacts the balance of plants and animals, should the current mix be regarded as the desirable standard ? How should companies be incented to endogenize the impact of the noise they generate ?

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The impact of post office cost and rule changes

Posted on March 28, 2012 by aviyer2010

An article in the New York Times (March 26,2012) describes how different industry sectors might be impacted by decisions made by the post office. Greeting card manufacturers and drug distributors claim that increased post office rates will decrease their demand and make them less competitive. But beer and wine distributors want to permit delivery by the post office, thus decreasing their delivery costs. How should the post office adjust its rates while anticipating the possible demand impact on different sectors ? Should current industries who get a break in delivery costs be provided assistance from the Federal government ? Should the post office decision just be based on covering post office costs ?

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“Pay for response” model for drug payment and consequences

Posted on March 18, 2012 by aviyer2010

An Op-Ed by Sam Waksal in the New York Times (March 7,2012) suggests a pay for response model for drug payments, where the measurable impact of drugs would trigger payments. The author claims that such payment schemes would incent drug companies to invest in understanding when drugs do not work and incentivize targeting drugs to specific patient characteristics. But will such schemes decrease overall drug costs or increase payments from patients who experience successful outcomes ? Who should decide on which measurements determine success, the drug company, the health insurer or the FDA ? Given such payment schemes, will patients not assured of good outcomes be denied the probability of cure ?

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How many US jobs did Apple create ?

Posted on March 18, 2012 by aviyer2010

An article in the New York Times (March 7,2012) describes a report by Apple claiming go have created 517,000 US jobs. While the number includes jobs created at glass panel and chip manufacturing plants at Corning and Samsung, it also counts the package delivery jobs created at FedEx and UPS. The study estimates that 40 package deliveries a day require one person to be hired. Is it reasonable for Apple to count delivery jobs created by its packages as part of its supply chain job creation impact ? How about retail or repair or apps created for its products, are those reasonably attributable to Apple ? Should one identify the marginal jobs created, net of those replaced by Apple’s technology ?

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