Maximus Decimus Meridius's Profile
Maximus Decimus Meridius
My cynical side would like to raise an additional challenge with common to ‘local content’ requirements for resource projects. Often these requirements serve as a de facto means of ensuring that connected actors within a nation-state are able to capture a share of the value created by resource production, often resulting in decreased efficiency and higher cost. Local content requirements are only truly effective as a hedge if they can induce a true local ecosystem of suppliers, talent and technical expertise to serve the resource sector.
Amazon and Alibaba offer an interesting contrast in the trade-offs associated with scale vs. control. Amazon takes consignment of a large proportion of the goods offered on its platform and owns most of its distribution infrastructure. It seems that with Cainiao Alibaba has extended its ownership light strategy to distribution. This will undoubtedly come with trade-offs. Positively it will allow Alibaba to scale its effectively leverageable distribution infrastructure by harnessing the capacity of partners rather than throwing obscene amounts of capital into warehouses. Negatively Alibaba will only be able to ensure service quality and control through the network to the extent that it can direct the actions of its partners.
The clearest opportunity for new hospitals to serve as a role model of sustainability is to integrate energy efficient best practices into their operations in a way that aligns with their operating incentives. Energy saving initiatives, such as smartly managing heating and cooling systems must be attached to a clear business case in order to ensure their sustainability. Likewise initiatives to introduce alternative sources of energy, such as solar arrays and battery packs. to hospital complexes need to directly serve the ‘always-on’ operating requirements of a medical facility. Without these business linkages, the environmental implications alone will not be enough.
I would argue that an important resource that Intel needs to provide to its suppliers is the ability to gain visibility into their own Tier 1 and Tier 2. When Thailand suffered massive floods in 2011 what most delayed the resumption of production was the lack of OEM visibility into where they had exposure through Tier 2,3 and sometimes 4 suppliers. Without this visibility corrective measures could not be taken and production ground to a halt. In order to reduce this aggregate supply chain fragility, all members require visibility into the participants that they are indirectly exposed to. As a large player in the ecosystem, Intel is well positioned to induce this needed change.
It seems like the global precedent is yes, be afraid, be very afraid. My completely outside-in perspective of the generation space is that it is driven by politics first and sound utility management decisions second. Wind and solar initiatives are pursued and subsidized for political reasons that obscure the potentially debilitating effect that the variability in supply that they introduce can have on grids. The variability of these sources means that much of the original baseload power generation capacity is still needed and must be funded from a reduced revenue base. So if I were a utility and I had to look forward to a future where I had to keep most of my big gas turbines running with fewer customers paying me for the privilege, yeah I’d be worried.
I am not surprised by Mackenzie’s position although I am less convinced that it stems from his love of and belief in free markets as he claims. China’s stubborn, or perhaps politically necessitated, unwillingness to rationalize steel production acts as a de facto subsidy of the industry and by extension iron ore suppliers such as BHP. The interesting questions is whether these short-term incentives to keep Chinese excess production online directly hurt the long-term incentives of iron ore producers to see the commodity cycle turn the corner?