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I wonder what the relative importance of i) environmental events; ii) all-in production costs given the decreased wage disparity vis-a-vis China that you mention; and iii) protectionism is in GM’s calculus. Supply chains become more fragile in a world with more natural disasters, and automation in the US plus rising labor costs in China work to narrow the cost disparity as Dennis and Chris touched on.

So after accounting for those two factors, and the fact that cars have more and more embedded technology that may require closer, high-skilled supervision, how much of GM’s decision is really driven by protectionism? That is, do you think protectionism is the driving force or the icing on the cake as it relates to the industrial logic of sourcing labor in the US?

As you point out with Table 2, it is certainly notable that GM has been hiring in the US for some time (since the financial crisis) – over the same period that G-20 trade protections have been increasing. But how closely do you think that a growing quantity of trade restrictions in a general sense specifically affect automotive OEMs? Mexico is an interesting specific counter-example, where foreign auto OEMs have actually consistently increased investment in the past several years [1]. I get the sense that automotives may be a fairly stable good from the standpoint of protectionism, or even going the other way, i.e. India has and likely will continue to heavily tax imports [2], and China is actually considering relaxing foreign ownership restrictions on automotive subsidiaries [3], etc.


On November 29, 2017, rsi commented on ExxonMobil(ize) on Climate Change? :

I think Exxon’s responsibility to consumers and the environment is actually quite aligned with its own fiduciary duty to shareholders: sustainability and efficiency. As oil prices have fluctuated around or even below the level that would allow for breakeven drilling economics, Exxon owes it to itself to continue to invest heavily to improve its upstream technology and downstream efficiency. As Danny noted, the demand for oil has weakened as Chinese and Indian growth has tempered and electric vehicles and renewables have grown, and shale development has led to a glut of supply in the US.

Against these secular headwinds on both sides of its market, Exxon must aggressively try to disrupt itself, and it can perhaps do so by setting ambitious targets to meet emissions standards. While “clean fossil fuels” are something of a fantasy, companies like Exxon are the only ones who can either make them a reality or devise a credible alternative. As one of the largest incumbents in both upstream and downstream operations, Exxon will also have the ability to influence the development of new infrastructure that is better suited towards cleaner energy production.

On November 29, 2017, rsi commented on Good Tariffs Make Good Neighbors? :

It’s interesting that a British firm like ArcelorMittal would see protectionism as potentially favorable for its US subsidiaries. The nature of a global supply chain for something like steel is that multinational corporations will have domestic operations in many countries, especially the US; while Arcelor may employ US citizens, I am not sure a company whose beneficial owner is a foreign entity will escape Trump’s populist wrath. Protecting the American operations of a British firm doesn’t seem to pass the smell test for the goal of “Made in America”, and I would be concerned if I were ArcelorMittal that the sweep of the investigation is over-broad. For example, it is conceivably a matter of national defense to prevent foreign-owned companies from having access to domestic supply chains for certain critical industrial goods which underpin American infrastructure. In an extreme case, a populist could certainly argue that using “foreign-designed” steel in a bridge, even if produced in America, is a security threat.

I would also restrain my optimism if I were ArcelorMittal because the auto industries you mention as being opposed to protectionism have some of the highest iconic value in the American psyche. The renewed decline of Ford and GM would cast a long shadow over any notion of Trump having achieved a victory with protectionist policies.

On November 29, 2017, rsi commented on The End of Consulting as We Know It? :

IDEO at the forefront again! I wonder if digitalization presents new tools which can actually be co-opted as another part of the kit that consulting firms bring to bear. For example, if a company is trying to devise a new algorithm for pricing, McKinsey may actually offer a crowdsourced solution as one alternative to consider, alongside the surveys and customer calls and market mapping it already does. This crowdsourced answer has the benefit of emerging from first-principles thinking – the originator is unencumbered by the legacy thinking of the operators – and by passing through McKinsey, it gains validation from a firm that is *generally* perceived to be credible.

This type of outcome seems more likely to me than wholesale disruption; as Curtis and Chris noted, one value proposition of consulting firms seems to be about validating decisions that are already largely made and are often incremental, rather than introducing truly blank-sheet optimal solutions which may not gel with a company’s culture, current capabilities, or market reality.

However, I am concerned that the pace of digitalization actually poses a different challenge for consulting: as the rate of technological change and business model innovation increases (thanks to new communications technologies and things like VR/AR), how applicable will the timeless frameworks and 5 forces analyses of consulting firms be? Can they adapt their structured thinking to an increasingly unstructured world?

On November 29, 2017, rsi commented on Cerner and Interoperability :

It’s interesting that interoperability has been treated as ‘neutral ground’ or as a vendor-agnostic information highway as Marla mentions. My sense is that EMR vendors now see interoperability requirements as creating a regulatory impetus for a new market – to extend the metaphor, who will own the toll roads on that highway?

In this vein, I was interested by Epic’s decision to release their Share Everywhere product, which is available to providers at no cost as an add-on to their patient portal module [1]. With Share Everywhere, providers who do not use Epic can both access (at the patient’s request) patient records and send back progress notes, which presumably will be integrated into the Epic EMR. Over time, one can imagine that consolidating even the records of non-Epic providers will drive more control of the data overall to Epic. Their strategy seems to be to start with core EMR data and graft additional care notes and outside sources onto that record over time, which will centralize the EMR data as THE patient record.

For Cerner, these types of moves only seem to heighten the requirement to act quickly on interoperability.


On November 29, 2017, rsi commented on Fighting Malthus’s Prediction in the New Millennium :

Important issue as others have noted. It’s worth noting that emissions present a bit of a paradox: on the one hand, higher levels of CO2 have been shown to cause plants to grow faster and increase yields – helpful in feeding the world’s hungry – but it may also be the case that emissions are stripping plants of critical nutrients – sometimes to the tune of a 10% reduction in things like iron and protein [1]. And of course, as you note, excessive emissions can cause warmer temperatures that in turn reduce yields.

In terms of the FAO’s actions, do you think there is scope to help make the agricultural supply chain more efficient? It’s my understanding that in some emerging markets, the transportation of crops to market and prices paid to farmers are both controlled by powerful middlemen, ultimately leading to wastage and less sustainable revenues for the farmers [2]. Does technology have a role to play – perhaps in providing farmers with remote education around things like crop rotation, and data around crop prices and seasonal trends, so they can better adjust their planting patterns to maximize revenue and sustainability?