The “Job Creation vs Environmental Regulation” debate in the US

Posted on September 5, 2011 by aviyer2010

A New York Times article (Sept 5, 2011) describes the current debate in Washington between the Federal government’s planned pollution reduction regulation and purported industry impact. Some E.P.A. studies show that regulations such as the Clean Air Act have been a modest job creator as a result of technology spending for compliance. But three factors seem to be a cause for worry for industry – (a) Even if the long term gains to health and housing are significant, is the timing of the regulation, during a recession, correct ? (b) given competing possible regulatory choices, the uncertainty of the final regulation creates incentives for industry to put off capital investments that might spur growth and (c) Once a regulation is on the books, it remains unexamined for its net impact.  Should US environmental laws be examined for their role in maintaining US Industry competitiveness ? Should pollution regulation be justified on the basis of impact across the US society i.e., counting health and housing benefits against possible industry costs ? Is there a correct timing for pollution regulation enactment ?

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Changing the mix of China’s automobile production

Posted on September 4, 2011 by aviyer2010

A New York Times article (Sept 4, 2011) describes a shift in emphasis in China from increasing manufacturing volume to higher mileage cars.  Car sales increased by 5 % in 2011 compared to a 33 % increase in 2010. Officials in Beijing cut the number of new car registrations by 30 % in an attempt to reduce congestion.  Recent discussions by authorities suggest that such trends may be adopted in other cities.  But there are moves to focus on increased mileage and pollution controls, as China attempts to prepare its auto industry to compete globally.  But a slowdown in growth in China will affect not just Chinese automakers but all of the world’s top brands that depend on China for growth. Is China’s abrupt proposal to cut volumes and incent a shift to battery or other powered high mileage vehicles a credible way to change the auto supply chain ? How will the flexibility to limit vehicle registrations by cities impact industry sales volume and product mix across the country ? Do you forsee that such a policy will speed up China’s auto industry’s global competitiveness ?

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Posted on September 4, 2011 by aviyer2010

Amazon.com Widgets

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A new report on Apple’s China Supply Chain and associated pollution

Posted on September 3, 2011 by aviyer2010

A recent report (http://www.ipe.org.cn/Upload/Report-IT-V-Apple-II.pdf, published August 31, 2011) questions whether decisions made by Apple’s suppliers continue to have a negative environmental impact.  The report identifies suppliers who release hazardous chemicals into the river or environment, the speed of ramp up (76 days to set up a plant to make Ipad2’s) and associated construction disasters, short training times of 2 to 3 days, explosions at the Ipad2 plant that claimed lives etc.  The report suggests that Appel’s attempts to audit suppliers do not seem to reveal the kind of violations that this report found.  A key claim int he report is that Apple has changed its reported role in monitoring its supply chain by shifting from the word “ensure’ to the word “require” in its decription of appropriate environmental stewardship by its suppliers. Should Apple be held responsible for actions by all suppliers across its entire supply chain ? Should the local Chinese auhtorities be responsible for monitoring compliance to their laws or should Apple be responsible for such compliance ? Should speed of ramp up be considered a proxy for risk of environmental endangerment ?

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The logic of producing more HP Touchpads at a loss

Posted on September 3, 2011 by aviyer2010

An article in CNN Money (August 31, 2011)  describes a possible reason HP would produce Touchpads and sell them at a loss (for $ 99, from a list price of $ 499) even though the division is being shut down.  Upstream suppliers were claimed to have components to build over 100,000 HP Touchpads.   Rather than leave suppliers out in the cold based on pre-committed orders,  producing and satisfying demand may well be the profitable option that repairs relations with suppliers and permits customers to feel loved.  Does this logic explain the decision by HP to continue to produce and sell at a loss ? Should suppliers have been paid instead to find alternate channels for their components ? Given that the Touchpads will probably have to be jailbroken to install another operating system such as Android, will HP’s decision hurt other Android based tablet manufacturers ?

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Importing Indian rosewood to Gibson guitar plants, and customs office reaction

Posted on September 2, 2011 by aviyer2010

A New York Times article (August 31, 2011) describes a raid on factories owned by the Gibson Guitar Corporation that disrupted the company’s supply chain. The focus is on rosewood and ebony fingerboards imported from India. While Indian laws prevent exports of fingerboard lanks that are more than a centimeter thick to protect woorworking jobs, Gibson maintains that the Indian trade officials permitted these exports.   Should the US customs department interpret Indian laws and shut down US manufacturers ? Should Gibson have been given an opportunity to adjust their supply chain impact or is the cost of the disruption justified ? Given the adhoc reason for the Indian protectionist laws, is enforcement in the US appropriate ?

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Plan to tighten Clean Air Rules abandoned

Posted on September 2, 2011 by aviyer2010

A New York Times article (Sept 2, 2011) desctibes a plan to abandon improving air quality rules to reduce smog causing chemicals, thus moving to a relaxed standard set in 2008.  Worries about the impact of this new legislation on industry costs, and thus job creation, were presumed to be a driver of this decision. but a planned study of the regulation in 2013, after the presidential election, may also be areason.  Should the regulatory impact of improved air quality legislation be acceptable as a reason to roll back legislation ? If poorer environmental standards made US manufacturing competitive while increasing health risks, is the tradeoff worth it ? If European manufacturers survive in a more regulated environment, will they be ultimaltely more competitive ?

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Advancing US Manufacturing Future

Posted on August 30, 2011 by aviyer2010

An Op-Ed piece in the New York Times (August 29, 2011) by Susan Hockfield, President of MIT, suggests the need for federal investments in advanced manufacturing, similar to past US govt investments to create innovation in electronics, computing, the Internet and aviation.  Given the statistic that the 70 % of private industry research employs 64 % of US scientists and engineers, the article suggests that investments in basic research and development can be an engine for advanced manufacturing sector growth.   Examples from lithium ion battery materials using nanotechnology, high energy butane cartridges for hand held chargers and DNA analysis to detect diseases suggest the potential. Should federal funds be focused on the high risk upstream research to assist in job creation ? Or should the federal govt focus on downstream commercialization of already completed research ?  What can the federal govt do that the private markets do not do ? Should this be considered an ideal outcome or a competitive reaction of other govts and their choices ?

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Should the US Government assist battery manufacturers ?

Posted on August 30, 2011 by aviyer2010

A New York Times article (‘Does America need manufacturing”, August 24, 2011) described the supply chain impact of federal govt investment in battery manufacturing – the potential impact on scientific research, mining, building contractors, designers, engineers and shop floor employees. The article estimates that manufacturing employs 65 5 of US scientits and engineers.  Should the federal government consider its role as the nurturer of the supply chain and make investments that are an externality to the supply chain ? Would such govt investments be considered as competitive responses, since other govts such as the Korean or Japanese govt do so regularly ? Should we include the “jobs not created” in the calculation of the benefit of such Federal investments ?

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Steve Jobs, Apple’s product demand and Asian supplier network impact

Posted on August 27, 2011 by aviyer2010

An article in the Wall Street Journal (August 26, 2011) describes the potential impact of Steve Jobs resignation as CEO of Apple on the company’s possible new products and demand. Given that many of Apple’s suppliers are in Asia and include Samsung, Toshiba and LG, a drop in Apple’s product demand will immediately impact their component demand. But the same companies also participate in products competing with Apple, thus permitting them to increase demand for their own end products. Given the rapid ramp up of Apple’s products the past few years, will Apple’s new leadership result in an overall negative impact on Asian suppliers ? Will a possibly weakened Apple product development enable more competition in the tablet and smartphone market ? Will these changes increase or decrease costs for customers to get innovative products ?

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