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On December 12, 2015, NTH commented on Fastenal: Focusing on Nuts and Bolts :

McMaster-Carr is a very similar company with a very different operating model. Instead of relying on brick-and-mortar stores to facilitate better customer service and engagement, McMaster-Carr focused on the development of an industry leading website to streamline direct customer ordering and leverages existing third-party distribution systems (e.g., UPS) to deliver its product to the customer on the next business. It is interesting to see how Fastenal has embraced technology to facilitate its internal parts transfers, but it is not clear how much of their digital infrastructure development has been focused on customer facing initiatives. Perhaps Fastenal is largely catering to a clientele that values face-to-face transactions?

Interestingly, neither company seems particularly well suited to address small or medium sized customers that need specialized fasteners or other construction components on the same day without requiring them to leave the job site.

On December 12, 2015, NTH commented on Nucor Revolutionizes the Steel Industry :

I am surprised that the EAF technology provided a defensible point of differentiation for Nucor compared to other domestic steel manufacturers. Perhaps incumbent players in the market were unable to stomach the investment in new capital equipment or the process itself required a different work flow configuration? Or perhaps they able to secure an exclusive license to the technology? Either way, it is fascinating that they were able to successfully mount a race for the bottom business strategy that still allowed them to maintain high gross margins. I liked the way that Iverson used his gross margin advantage to offer large production volume incentives to his employees that supported his business strategy of saturating the market with low cost steel.

I also get the impression from the video that Iverson is using his compensation and organization strategies to ward off unionization of his labor. As long as he can keep his employees employees well compensated and provide them with the sense that their concerns can be easily voiced to top management then there is little incentive to unionize. Given that these jobs seem relatively dangerous it seems like this is a good place for machines to take over many manual tasks. I wonder what the fate of manual labor is for this industry. It seems like they will need to pursue increasing levels of mechanization and process control to achieve their low cost production strategy.

On December 12, 2015, NTH commented on Amtrak: What Do You Want Me to Be? :

Thanks for the analysis on this important aspect of American transportation infrastructure. It was interesting to learn about the efforts that Amtrak appears to be taking to mask the unprofitable operations in its trans-continental routes through the Midwest from the broader public. As a semi-private for-profit company that relies on government funding I guess it is not surprising that they are using an explicit social mission to defend their continued operation of these routes.

I wonder if any operating model synergies are being realized or are under appreciated between Amtrek and CSX (publicly traded U.S. industrial rail cargo transport company)? Also, it will be fascinating to see what increasing levels of and reliance on automation do to the industry in the coming decade.