Levent Sarioglu's Profile
I understand from your essay that the US natural gas industry has been one of the most significant beneficiaries of the NAFTA. This is especially interesting, because when people hear current government’s opinions about this trade agreement, they mostly see Mexican and Canadian companies as benefiting. Therefore thank you fro bringing up this example. I have though two points to add to your essay regarding the negotiation dynamics with Mexico and my concerns about ETP’s expansion to other geographies in pipeline business.
Firstly, I also think that the outcome of the renegotiation is extremely important to ETP and ETP’s significant dependency on Mexico business might show the company vulnerable. However, I also want to add that ETP (and the US natural gas industry) has also a great leverage in these negotiations. Mexico’s import volume of the US natural gas increases each year and has a significant portion in its energy mix. For Mexico it will not be so easy to replace such a source, which flows economically through a pipeline from a neighboring politically stable country – a rare combination around the planet.
Secondly, ETP might face with many challenges in finding new geographies outside of North America to expand their pipeline business. As you also mentioned in your essay nativist sentiments are rising in the world and such politically valuable pipelines are mostly owned and operated by government subsidized or owned companies. Gazprom from Russia, BOTAS from Turkey, Petrobras from Brazil, and OMV from Austria are some examples of such companies from different continents; ETP would need to compete with those regional holdings to build pipelines.
Climate change articles always make a more significant effect on us when they are about impacts on the food supply. Therefore it is great that you chose this industry as a topic. I agree with you on the fact that the company Mondelez, as one of the largest cocoa consumers in the world, has a responsibility to contribute to the race against the climate change. However, as we recently saw in the IKEA case, in order to have a considerable impact, there are much more to do and many other authorities to include into this movement. This is not easy as governments, NGOs, labor unions, standardization organizations, and local farmers need to work with companies, like Mondelez, in order to achieve a sustainable supply chain. Therefore Mondelez is currently limited only with local measures to reduce emissions of its own manufacturing plants, which are only a portion of the supply chain. This also explains the company’s rationally chosen goals based on 2 degrees temperature rise limit parallel to the global efforts, rather than unrealistically higher goals that they would not be able to achieve. The 15% carbon emissions reduction initiative that the company introduced is, in my opinion, a valuable first step with a strong signal of company’s goals for sustainability. The next step should be working with corresponding African authorities, in order to educate suppliers and create standards. Then the company also needs to invest on training and auditing programs in order to assure a certain quality. Certain is that such a fundamental change will take time and Mondelez needs to take higher cocoa costs into account.
Dry docks’ becoming inoperabble due to rising sea levels and causing supply chain problems in ship maintenance, especially in the US Navy, is a climate change consequence that I have never thought of until I read this essay. Thank you for this very interesting perspective. As you also mentioned, the US Navy is probably working on various measures and plans to modify its infrastructure (like roads and buildings on the shores) in order to prepare them for a certain amount of change in sea levels. I can also understand that necessary financial investments for preparing old dry docks or building new ones might be significant. Therefore I agree with you on the importance of conducting studies to identify those problems and develop solutions as early as possible.
You also touch on a great point with your essay by mentioning the preventive solutions. I think that the US Navy, as world’s largest vessels, aircrafts, and land vehicles operator and with its significantly high share in greenhouse gases (GHG) emissions, could do much more in terms of renewable energy sources and preventive solutions. By doing so, it could reduce GHG emissions and thus contribute to slowing the climate change down, not only earning more time for planned preparations but also reducing the amount of necessary investments. To your last question regarding other naval infrastructures, I can only think of the sinking of some tiny islands in some regions of the world, changing the local geopolitical borders and causing new challenges for the US Navy.
Henri, I find the challenges that Tesla has regarding their ambitious battery production plans also very interesting. I agree with you on the importance of the cost of batteries for the success of electric vehicles (EVs). Being the most expensive part of an EV – typically around 60% of the production costs comes from battery – battery plays a significant role in market penetration. However, reading your essay, I was struggling to understand how digitization would exactly help Elon Musk reduce battery production costs. You emphasize in your text the automation (not digitization) of the manufacturing process in the planned Gigafactory; I agree. But, an automated manufacturing process will not help Tesla in “transforming the auto manufacturing industry”, which has already one of the highest utilization rate of robots in production lines.
I think there are more important problems that Tesla needs to focus on in designing its battery supply chain. Currently, almost all car manufacturers in the world are trying to secure a long-term access to metals, like cobalt or lithium, which are needed in the production of batteries. There is an extremely high competition to secure these precious metals and bottlenecks are common. With the extremely high demand, limited number of mines, mostly in Asian countries, have the absolute power to decide on which car manufacturer they want to work with and at what price, driving the costs higher. In my essay “Volkswagen’s New Electric Strategy”, I also tried to explain these similar problems in the battery supply chain and the challenges for the electric mobility. I would be happy if you could read it and put also your thoughts in the comments section.
I agree that Amazon has a great advantage in the USA with its highly digitized and monitored supply chain. This enables them to keep the pole position in this market by continuously improving supply chain and reducing costs.
However, I have some doubts about Amazon’s ability to become a significant rival to Alibaba in China. Alibaba knows the market very well, invests in digitization, and has a very sophisticated supply chain as Amazon does. I also don’t think that using the existing logistics network in the opposite direction, as you proposed in your article, would be as cost efficient as it is today. It is a completely new logistics case to optimize how to bring goods to China; routes are different and goods are not same. Therefore I am not sure about to what extend Amazon can leverage its existing network, which is designed from world to USA. Finally, there is also the tendency of Chinese people to use their own brands, especially in web services. Amazon will have to face with all these challenges in order to build a strong presence in China.