Cycle Time's Profile

Interesting read. I would opt for ceding the manufacturing industry in favor of installations. Per SEIA (Solar Energy Industry Association), over 88,000 American solar jobs are at stake due to Suniva’s trade case and given the current administration’s stance on job creation, I cannot imagine that will sit well, despite the Chinese import element. [1] That being said, I am cognizant of the fact that there are industries where it makes sense to retain at least some domestic element for national security reasons (e.g., food production, telecomm, etc.); however, I do not think that applies in this case.

Guggenheim’s research regarding the decrease in the addressable residential solar market (58-69%) due to the tariff requested by Suniva was startling. I think that highlights just how price sensitive the residential market has become and with diminishing net metering regimes, as FRenergy alluded to, it is easy to see how tariffs could potentially price out the entire residential market.

[1] Stephen Lacey, “88,000 American Solar Jobs Are Under Threat From Suniva’s Trade Case, Says SEIA,” https://www.greentechmedia.com/articles/read/88000-solar-jobs-are-under-threat-from-sunivas-trade-case-says-sei, accessed December 2017.

The above comments highlight how disruptive the emergence of isolationist policies have been for corporate investment. While I agree with the approach of not overreacting, it begs the question of when is the appropriate time to make changes? And, once that time becomes apparent, is it too late? Thus, I agree with the approach of actively lobbying the government. Toyota needs to be a part of the conversation, advocating for itself. Additionally, Toyota should work with the larger business community to push for expedient change as it relates to NAFTA.

Regarding additional disclosure on profitability, I think there is a fine line between providing too much detail and too little. If I were Toyota, I would be very careful about establishing a precedent on providing model specific revenues or profitability.

Very interesting read. I did some further research on the topic and found that Toyota took a very different approach to Brexit versus Nissan. While Nissan met with Theresa May, ultimately leading to the “no-detriment” guarantee mentioned, Toyota was very private in its negotiations with UK government officials. [1] And, while this alternative approach did not ultimately garner a similar “no-detriment” guarantee, Toyota did receive a commitment from the government to invest up to £21.3mm in Toyota’s larger £240mm investment in its Burnaston site in Derbyshire. [1]

In my mind, this begs the question of which approach was better in terms of interacting with the government? Was now the appropriate time to play a more aggressive hand when there is little detail on how the exit will play out? To Reed’s point, what value does the “no-detriment” guarantee ultimately have and is this preferred to actual side-by-side investment on behalf of the UK government?

[1] Peter Campbell and Kana Inagaki, “Toyota and Nissan take different roads to Brexit,” https://www.ft.com/content/fe6e3660-0a68-11e7-ac5a-903b21361b43, accessed December 2017.

Very interesting article. Regarding whether or not Amazon has set its eyes on the logistics industry, Bloomberg Technology’s article “Amazon Building Global Delivery Business to Take on Alibaba” mentions an internal document that was shared with the Amazon leadership team in 2013 called Project Dragon Boat, which details a path towards entering the global shipping business (even beyond servicing its own existing customers). [1] Thus, a strategy towards entering the market has at least been outlined before.

From a competitive perspective, it makes sense for Amazon to enter the fray. Amazon has a history of upending traditional business models and even if it doesn’t attain critical mass versus the existing competitors, at least the portion of business it does retain will keep UPS and others honest in terms of price increases on a go-forward basis (historically have been around 5% p.a.). [2] Interestingly, Amazon’s approach to upending last mile logistics thus far has used the gig economy – “Amazon Flex” allows people to contract with Amazon to deliver packages at an hourly rate of $18-$25 using Amazon’s routing technology. [2]

[1] Spencer Soper, “Amazon Building Global Delivery Business to Take On Alibaba,” https://www.bloomberg.com/news/articles/2016-02-09/amazon-is-building-global-delivery-business-to-take-on-alibaba-ikfhpyes, accessed December 2017.
[2] Wolf Richter, “Amazon is encroaching on an industry that’s key to its success,” http://www.businessinsider.com/amazon-stock-price-logistics-companies-couriers-ups-2017-6, accessed December 2017.

Interesting read!

Regarding managing consumer perceptions around the sustainability of its product offerings, I think Walmart is in a tough spot. With stats like “…80% of the greenhouse emissions associated with the U.S retail and consumer goods sector…” linked to its supply chain, it’s hard to imagine a message that will resonate with consumers that doesn’t come across as hypocritical. Thus, I think they are on the right path by simply announcing these programs and allowing the media to opine rather than pursuing any consumer facing brand strategies.

In terms of incentivizing suppliers, I was a bit surprised at the cadence of the scorecard initiative. Based on the text, the initiative was introduced in 2009 and the only penalty mentioned is mandating that 70% of its products be purchased from suppliers using the scorecard by 2017. Walmart’s purchasing power should allow it to push its suppliers for quicker adoption.

Your last question highlights the importance of not taking a broad stroke approach when it comes to reducing greenhouse gas emissions. Overall, consumers are demanding more from companies so incentives are naturally aligned to adopt the program from a PR perspective; however, Walmart should keep the reduction targets in context, otherwise it may end up penalizing a key supplier for lower participation despite an overall cleaner footprint.

Thanks for pulling this together – was an interesting read.

Regarding your question around SPEEDFACTORY and its future prospects, I think this technology will likely supplant the traditional factory model over the long-term; however, I would be curious to see what the actual costs and forecasted vs. current returns are for developing these factories. Thus far, it would appear Adidas is not disclosing those exact figures, but the financials do indicate a fairly large increase in both capex and research and development spend (capex growth of 26.9% and 29% for FY16 and YTD17, respectively). [1] [2] [3] Assuming Adidas is able to generate an appropriate return on capital for the large fixed costs associated with these automated factories, we’ll likely see more and more capital go into the ground.

[1] Marc Bain, “Adidas can now make specialized shoes for runners in different cities, thanks to robots,” https://qz.com/1081511/adidas-can-now-make-specialized-shoes-for-runners-in-different-cities-thanks-to-robots/, accessed November 2017.
[2] Adidas AG, Adidas Annual Report 2016, https://www.adidas-group.com/media/filer_public/a3/fb/a3fb7068-c556-4a24-8eea-cc00951a1061/2016_eng_gb.pdf, accessed November 2017.
[3] Adidas AG, Adidas Nine Months Report 2017, accessed November 2017.

Thanks for pulling this together.

If you’re Ford, I think you continue to invest in fleet fuel-efficiency. I would argue that the trend for the foreseeable future, outside of the current administration, is likely to be more of the same (i.e., more strict emission standards) and the risks associated with reducing investment (e.g., falling behind versus competition, etc.) likely outweigh the temporary cash flow benefit Ford could realize.

With respect to gasoline price impact on demand for more fuel-efficient vehicles, consumer data would support the thesis that current prices aren’t high enough to cause a substantial shift. [1] That being said, I think Ford, amongst other automakers, should still strive to deliver both fuel efficiency and performance for the larger vehicles in their fleet. Policymakers can always evaluate using tax breaks or other mechanisms to incentivize a change in consumer behavior with respect to overall fleet mix.

[1] Jon LeSage, “Fuel economy: This key data points at strong U.S. oil demand, ” https://www.usatoday.com/story/money/2017/10/13/fuel-economy-key-data-points-strong-u-s-oil-demand/752601001/, accessed November 2017.