Continuous flow production is an exciting innovation for pharmaceutical companies. To the extent that this can lower cost, I hope that these cost savings can be passed along to the end consumer; especially for high volume drugs, like Lipitor, that are a relatively low cost ($10,000 for a course of treatment).
Localization of General Motors’ supply chain may be driven by factors other than isolationism. For example, as the quality of living and labor expenses in emerging economies rise, one could expect the historical savings generated from offshoring production to dissipate. This impact is likely compounded by the labor surplus generated by automation that will drive down labor expense in the developed world as well. Thus, the benefits of localized production (such as JIT delivery) may be driving the decision to shift production rather than geopolitical dynamics.
Although a serious threat, I believe coffee growers will be able to whether the climate change storm. Given the introduction of CRISPR gene editing technology and further advancements in genomics, I believe coffee growers will be able to modify the DNA of coffee plants to thrive and produce high yields in more extreme climates. I believe Starbucks’s initial investments in new strains for hotter climates, like Centroamerico, are a good start, but much more innovation is to come.
DC – How would your analysis change if you believed the protectionist trend was going to be short-lived? Given the volatility in the US political framework and potentially damaging impact of making abrupt changes to operations strategy, I would encourage ArcelorMittal to take a wait and see approach to addressing international trade barriers. Especially given the capital-intensive nature of manufacturing businesses, I think the risk of overreacting is too great.
Given Chevron is a publicly traded company, I believe it is in their fiduciary responsibility to invest in carbon disclosures. Long-term owners of Chevron will want the management team to pay close attention to climate change, carbon impact and resulting changes in operations because it will have a long-term impact on the profitability profile of Chevron’s energy operations going forward. Thus, I believe focusing on the environment and shareholder value can be congruent.