Modular Nuclear Reactors and attaining carbon footprint reduction

Posted on February 13, 2011 by aviyer2010

The New York Times (13 February 2011) has an article describing a plan to subsidize design of modular nuclear reactors that can be manufactured in a factory and transported, like modular homes, to replace coal fired power plants at their exiting sites.  Given the high design cost, the Obama administration proposes to spend $ 500 million to subsidize the design costs.  The driver for use of nuclear reactors is a requirement that Federal agencies should reduce their carbon footprint by 28 % by 2020.   The smaller modular reactors will potentially permit faster deployment and with capacities that match local requirements.  Utilities could contract with military bases and Federal research labs to buy power to comply with carbon footprint guidelines in order to finance the reactors.  But security and control considerations for nuclear plants will have to be adjusted  to make the costs affordable.  Is this approach to driving carbon footprint reduction over an aggressive time frame a desirable supply chain strategy ? Should the Federal government subsidize specific technological approaches to attain sustainability metrics ? Will these subsidies enable US exports of these reactors and thus control of the possible collateral global impact (diversion) of nuclear fuel ?

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Dredging the Missisisippi, transport costs and global competitiveness

Posted on February 12, 2011 by aviyer2010

An article in the Wall Street Journal (February 12, 2011) describes the US Army Corps of Engineers claim that they are running short of dredging funds to dredge to the preferred widths and depths.  The impact is that pilots of barges claim loads have to be lighter and travel mainly during daylight, thus increasing river transport costs. Since about 60 % of US agricultural products are shipped through the Mississippi river, the increased transport costs may hurt US competitiveness, thus impacting the US economy.  Is the dredging budget the bottleneck resource for US agricultural competitiveness ? Or would it be cheaper for the Federal government subsidize exports to compensate for this higher transport cost ?

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US Exports and Manufacturing Sector Significance

Posted on February 12, 2011 by aviyer2010

A New York Times article by Floyd Norris (February 12, 2011, B3) describes the composition of US exports in 2010 – with around $ 1 trillion in exports by the manufacturing sector and around $ 0.55 trillion in exports by the services sector.  The US export performance in manufacturing makes the country the second largest manufacturing exporter after China. With President Obama’s goal of doubling US exports by 2013 and the growth in US exports by 16.6 % since 2009 suggesting the country is on track to achieve this goal, the results suggest that US manufacturing will have to be a key ingredient of export growth.    What specific steps will need to be taken to make US manufacturing more globally competitive beyond a weak US currency ? Can the complex global supply chains of OEMs enable quick export growth in response to adjustments in the US regulations ? Will worries about intellectual property leakage hasten the “return Manufacturing to the US” phenomenon ?

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Michigan’s Unit Labeling Retail Law and Supply Chain Impact

Posted on February 12, 2011 by aviyer2010

A Wall Street Journal article (February 11,2011) describes a move to repeal the law in Michigan that requires every unit of product (“every jar of baby food, box of Jell-O and bag of spinach”  according to the article) to have a price label. Only Michigan and Massachusetts have such a law, other states permit prices to be displayed for the SKU.  Retailers complain that compliance costs them $ 2.2 billion a year and that bar codes permit accurate price to be reflected at checkout.   In addition, when prices change several times, labels have to be placed over each other and managed so they do not stick to other items.  But labor groups worry that eliminating this law will cause job loss in stores for pricers.   Does protection of the consumers interests justify these retail level costs ?  Would such price change costs, which might justify fewer price changes, help or hurt average customer retail prices ? Would pricing in states with item level pricing laws hurt customers with lower purchasing power more than others ?

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US Medical Device Approval Delays and Global SUpply Chain Impact

Posted on February 10, 2011 by aviyer2010

A New York Times article (February 10, 2011, B1) describes delays in FDA approval of medical devices and their impact on consumers, manufacturers and jobs.  A few key issues (a) FDA approval requires the manufacturer to show the device is safe and effective in treatment while in Europe the device only has to be shown to be safe, (b) Given the long approval times, some companies may prefer to target markets in Europe and Asia and forgo the US market, (c) Device manufacturing and jobs may shift to demand locations, (d) US patients have the option to travel abroad to get treated. But the FDA claims that the European approach may result in failures and thus patient impact as well as costs in the future.   Should the FDA be required to take into account competitive issues as part of its approval process ? Is the slower but more methodical a better approach for FDA or should the standards be changed to be in sync with regulatory approaches in the rest of the world ? Will loss of cutting edge device manufacturing impact the ability to innovate ?

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“Right to repair” pits independent mechanics against auto manufacturers

Posted on February 10, 2011 by aviyer2010

A Wall Street Journal article (February 10,2011, B6) describes auto manufacturers programming their cars so that when parts are repaired, the software has to be “initialized” – these codes are only available at dealers.  The impact is to require customers to go to dealers rather than independent mechanics for repairs.  Auto manufacturers claim that they are reluctant to provide access to the software to prevent their designs from being used by generic parts makers.  Lawmakers in the Senate and House have been unsuccessful in pushing through “Right to Repair” laws demanding that auto manufacturers share codes. The question for all supply chain is: Is it the customers right to get repairs done anywhere ? Should auto (or other) manufacturers be required to offer codes to all repair personnel ? Does the auto manufacturer have the right to design products so as to protect aftermarket parts ?

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Growing India China Trade Flows

Posted on February 10, 2011 by aviyer2010

An article in the International Herald Tribune (February 9, 2011) describes the growing trade flows between China and India, projected to grow by 62 % by 2015, after growing by a factor of 20 in the last 10 years.  Air cargo takes 6.5 hours from Guanghzou to Mumbai, container ships take 2 weeks, with land routes almost nonexistent.  The growing air cargo traffic has caused FedEx and DHL to add new flights.  But trade flow from China to India seems to be twice the flows in the return trip.  Will these trade links revive a 2000 year history of trade along the Silk Road ? How sustainable will these flows be and how ill they be affected by China’s desire to move further up the global supply chain ? How will India’s weak infrastructure improve to cope with these north-south flows ? Will new supply chains spread north-south enable companies to leverage the service skills in India and the manufacturing prowess of China ?

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Pentagon Procurement opposes mergers

Posted on February 10, 2011 by aviyer2010

A Wall Street Journal article (February 9, 2011) reports that the procurement officials at the Pentagon will oppose mergers of defense suppliers. The belief is that competition has to be maintained to increase the US government’s buying power.  The Pentagon is reported to spend $ 400 billion a year on contracts, this new approach runs counter to the consolidation that was encouraged for many years. Imposition of these antitrust rules will require coordination with the Justice Department and FTC.  With defense spending expected to be flat, an interesting question is – Are more competitors better for component purchases compared to system purchases ? How will future spinoffs and mergers be evaluated to maintain supply chain competitiveness at all levels ?

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GM’s approach to meeting the 35.5 mpg fleet average

Posted on February 8, 2011 by aviyer2010

A Wall Street journal article (February 7,2011) describes a plan by General Motors to offer eAssist – a system consisting of a lithium battery pack and a motor – across all models. This system is expected to increase mpg by 20-25 %.  The main drive to increase mileage efficiency is the upcoming Federal standard of 35.5 mpg across a automakers fleet by 2016.  Unlike GM, Toyota’s approach and that of other automakers seems to be to focus on offering hybrids or plug-ins that boost mileage of specific models to levels higher than 40-45mpg.  While GMs approach would take out the uncertainty of forecasting customer demand for the hybrid models, it may leave sustainability sensitive customers pining for better performance. On the other hand, the approach of other automakers may permit a greener moniker while requiring the flexibility to cater to their uncertain market size.  Which one of these approaches is appropriate ? Would the larger volumes implied by GMs approach enable faster learning and thus cost reduction ? Will cars specifically designed to be hybrids offer much better performance than a bolt on solution ?

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China to Stockpile Rare Earth Metals, should the US do so too ?

Posted on February 8, 2011 by aviyer2010

A Wall Street Journal article (February 7,2011) describes plans by the Chinese Ministry of Land and Resources to build reserves of rare earth metals in order to protect their industries, impact pollution and manage the supply and demand relationship for these commodities.  In response, the article cites Rep Mike Coffman as the author of a bill mandating the US military to build stockpiles and thus ensure US supply chain competitiveness.  Such calls have also appeared in other reports published recently. But another school claims that such efforts will further impact prices in the short run and thus argues against it.  Other countries such as Japan and South  Korea have planned stockpiles.  Should the US government start building up rare earth stockpiles to assist US industry ? Can coordinated stockpiles across countries be counted in to solve the global supply problem ? Or will industrial innovation resolve the problem ?

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