General Motors faces President Trump's ire for its globalized supply chain. Yet Trump's "America FirsT" NAFTA renegotiations will only worsen the situation for American jobs.
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A Vachani
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Hearing about the efforts Mars is making via SAGP makes me wonder how they will navigate the inevitable trade-offs that will accompany its implementation. What happens when, to the above comments, short-term profit may suffer as a result of the investments, even if they hopefully will pay off long term? I’m wondering how Mars is supporting suppliers, especially the smaller ones who may be less able to shoulder a new investments, in making these sustainable changes. I’m also wondering how Mars will navigate the situation of realizing via the genome analysis initiative that some crop techniques that may improve yield (one of the stated goals) may simultaneously be harmful to the environment. Another sectionmate’s essay was about coffee, and the author noted that some farmers were turning to less sustainable practices as a result of the rising costs and volatility of climate change in order to increase yield. This will be a tricky situation that Mars will run into numerous times so hopefully they have put thought into how to balance the competing goals of profit and sustainability.
In response to the above comments:
TOM Challenger – to your second point, yes. It turns out a lot of the “NAFTA” content is coming from Asia, especially for the higher-tech components that would be much more costly to produce even in Mexico, let alone the U.S. One nuance, though, is that while the original components may come from Asia, once they arrive in Mexico or Canada, they often cross the border up to 8 times during sub-assembly, so there is certainly part of the supply chain that is inextricably linked to Mexico. However, to your point, this does make it a financially potentially attractive option to go around the NAFTA requirements and just eat the 2.5% tariff cost, so the President could wind up not getting what he is hoping for.
Thomas – while the simple switch from 65% to 80% may not be as alarming in your perspective, there still remains the issue that another key part of the President’s aims with NAFTA is to make the requirements more stringent in terms of what actually qualifies and how. For example, many of the more modern high-tech parts of cars are not under NAFTA content requirements right now since they didn’t exist in ’94, but now they would be covered. So the cumulative impact of the 65% to 80% in addition to the more stringent requirements (and even more extremely, perhaps a 50% US-specific requirement) is what the author is likely worried about.
As someone who listens to music nearly non-stop, I am fascinated by the effect technology and increased digitization are having on the music industry, and loved hearing your perspectives. I wanted to second your unique suggestion that SM focus on television content channels. To your point of imagining people turning on the TV to listen to music – I actually do this today! Every time we have a social gathering at home, whether just my roommates or a larger group, we pull up one of the music providers (Spotify or Pandora in our case, but I could imagine SM being an comparable) and put up a playlist. Not only is the quality high, but it also adds to the social experience where others can see what song is being played, see the album cover, read the lyrics, etc. So, via this approach, SM could thus reach its goal of playing the music in a high quality way, while consumers would perhaps be even more sticky as they start loving the experience. Ideally, consumers might even start being conditioned to high quality music and start demanding it!
It’s interesting to consider the Mexican supplier perspective with relation to the auto industry, as I wrote my essay on the perspective of the US auto industry (GM) reacting to the same issue! While I appreciate Thomas and Seo’s exploration of either direct or indirect lobbying, I think that this could perversely hurt Nemak’s prospects. The underlying push to change NAFTA so dramatically is driven by the President’s desire to save face on his campaign promise to help Americans over Mexicans, rather than a deep economic analysis of the situation. Thus, I could see the fact that a Mexican supplier is opposing this change actually be used as a tool by the President to show that this deal would “hurt” Mexico and “help” America (even though the actual impact would also hurt American consumers and suppliers). I think this soundbite could be used to further his resolve.
Forgot to link to the study! Here it is: http://www.sustainablebrands.com/news_and_views/supply_chain/study-shows-farmers-working-rainforest-alliance-and-nespresso-earn-87-mo
When I first read your description of the Nespresso AAA Sustainability Program, I was wary of the effects the program might have on the farmers participating. I can of course understand the long-term benefits that more sustainable practices can have for producers, via increasing the longevity and durability of their plants, but often these long-term benefits come with short-term sacrifices in terms of profits. This could be devastating for the farmers, even if they desire the long-term benefits. I was heartened to see that a study showed that farmers who participate in the program have a net income 8.7% higher than farmers who are not involved. This is a result of Nestle paying these farmers more as a result of their participation. I wonder if this will be sustainable for Nestle in the long run – are the increased payments reflective of the increased prices Nestle will be able to secure for the sustainably-sourced products, or is this an extra “sign on bonus” to incentive early participation?