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On December 1, 2017, Tabatha commented on Constellation Brands: does Corona have to be Made in Mexico? :

Excellent read! I agree with JJFG that the economics make it difficult for CB to relocate production to the US. And the threat of Trump’s NAFTA dissolution has passed (for the moment). Still, I believe there is another reason why relocation of operations would be difficult and costly for CB: raw materials. I presume that another benefit CB claims from having Corona beers, for example, produced in Mexico is the proximity to its suppliers. Wheat, hops, barley and other raw materials sell for cheaper in Mexico and are probably nearer to the CB facilities than they would be if in the U.S. We do not know the details of CB’s raw material intake from suppliers but considering the efficiency we have seen in other cases where the manufacturer is near to the supplier, I imagine there are preferable synergies present that further incentivize CB to maintain its operations in Mexico and not move them to the US.

I agree with you that it is unlikely that EH will lose its graphite suppliers on account of protectionist policies because there are currently no domestic alternatives who can supply the same scale. Two thoughts on this:

1. Would it be more advantageous for EH to integrate vertically and acquire one of the domestic graphic producers Matt (@mattasperheim) mentions? Surely, batteries are not the only consumer good that relies on graphite. If EH can produce graphite in-house, it may very well become a distributor of graphite itself to other companies. This change in business model would make EH also a B2B company. Is this an opportunity to grow?

2. You have explored protectionism from the US perspective. What if the DRC and China were to implement protectionist policies? I believe EH’s supply chain would be complicated just the same. Given tensions with the US and China, it is possible that China may restrict or cap exports to the US on its own accord. This is also threat.

On December 1, 2017, Tabatha commented on China Goes Green :

Tim, great read! CDT is interesting because they are in fact a state-owned enterprise and so there is more than competition and more than just regulation driving their decisions. It seems like they are taking proper action to decrease CO2 emissions, particularly in using locally sourced wind and solar energy. This alternative appears sustainable. Importing liquified natural gas from Russia and Australia does not seem like a sustainable, long-term solution, because of the very nature of imports. Essentially, CDT is far from a key component used in its supply chain and this key component endures many processes before it is received by CDT; these many processes implies increased chance of inefficiency and process fail. It seems that CDT is exposing itself to non-local risk by using LNG as an alternative. I wonder what other long-term solutions there may be besides locally sourced wind and solar energy.

On December 1, 2017, Tabatha commented on The Mining Industry in Chile and its Solar Bet :

Just a thought: Are these new regulations and changing industry standards enough to push Antofagasta Minerals towards using clean energy? While I see that the external as well as internal incentives exist, it worries me that the company has no timeline. These regulatory goals are scheduled for 2050 and 2035, meaning that these governments probably won’t transfer some of the clean energy responsibility down to corporations for many years to come. I worry that the rate of initiatives Antogasta Minerals has implemented to date will decrease throughout the next decades, until the government decides to hold them liable in preparation for its clear energy goals.

On December 1, 2017, Tabatha commented on Digitalization of Zara and Fast Fashion :


Your hypothesis that Zara is eventually moving towards just-in-time delivery is very insightful! I agree that it seems ideal for any company attempting to optimize its supply chain and reduce (holding inventory) costs. I urge you to consider in what ways just-in-time delivery may or may not create risks for Zara. For example, what does just-in-time delivery look like for a consumer-facing operation (I.e. storefronts)? If the delivery is a few days late, will inventory remain on the shelves or will they have sold out at that point? I believe it would be difficult for Zara to figure out the timing of just-in-time delivery of new inventory and the removal of old inventory. In a way, Zara storefronts are sort of a job shop – customers bundle/customize their product themselves – and how helpful is JITD for job shop operations as compared to continuous flow operations?

Nick, it seems like Walmart has a good idea on how to make itself competitive with a growing Amazon. This initiative you’ve explained addresses mostly the demand side, that if implemented correctly, customers may eventually prefer to receive Walmart products via delivery than to receive Amazon products. However, I wonder how suppliers would respond. Presumably, Walmart and Amazon have the same suppliers. If they max out their ability to compete on the demand side, I bet they will eventually compete on the supply side. What would supply side competition look like? I have a feeling Amazon will still win because Amazon can afford to offer both the low-end quality goods and the high-end, higher priced goods. Walmart, in order to keep its margins so high, can only source from low-end, low priced suppliers.