Exports

Exports are still just over 20 percent of U.S. GDP, much smaller than export driven economies such as Germany and Korea. We all want to export, but someone has to import--unless we just dump stuff in the ocean. We depend upon the banks to lubricate trade, and the current crisis in Europe (and around the world, for that matter) is gumming up the works.

The Greek Bailout

I have been in Germany for three weeks, and there is a lot of tension about Greece and the euro situation. Germany is doing well economically, but they worry that their progress will be derailed. My students are ambivalent about Greece leaving the euro zone, but are generally in agreement that Germany should stay in. Getting out would leave them with a strong currency which would hurt their exports. And, Germany lives on exports. The macro statistics say that the Germans don't buy much, but stores selling expensive clothing and jewelry are everywhere and are opening every day. I wonder how some of them stay in business.

Technology Generation Skipping

The WSJ of 12 September has an article on Chinese telecoms in Africa. The real story is the rapid growth of smart phones in Africa. This is the telecoms 'generation skipping' I mention in the book. From May 2010 to May 2011, smartphone growth was 1280% in Nigeria, 189% in South Africa, 97% in Kenya, and 133% overall in Africa. Smart phones free them from the maze of bureaucracy and mismanagement in state owned land systems. They are incredibly innovative with their mobile phones.

currency gyrations

The Swiss are intervening to keep the franc from getting stronger. In my book, I have a graph of market rates (euro vs. US$) and ppp rates. The ppp stays steady, while the market rate gyrates. Pity the poor purchasing or sales manager who is trying to set prices. One's whole supply chain can be disrupted by the Greeks, even if one does no business with them.

Solar Industry

Solar power company Solyndra has filed for bankruptcy despite government help. As I mention in Chapter 8, the industry depends heavily upon government help, but help does not guarantee survival. And, government help means taxpayer dollars which are in short supply these days. First Solar still looks good, but their stock continues to go up and down like a yo-yo reflecting skepticism about the industry.

Role of Women

The last 2 Economists (20 & 27 August) have articles about the changing role of women abroad. Don't let your ideas about women in other countries let you be caught unawares. More women are serving in managerial and executive positions. This is not just in the developed world, but, for example, in the BRIC countries. At the same time, women are not having enough babies to replace the population. In a bit of whimsy, they predict the last female baby in Hong Kong will be born in this millennium. Linear forecasts are always a leap of faith, of course, but it points out the demographic issues one should be aware of when doing business abroad. In addition to aging rapidly, the populations of countries like Japan and Germany are shrinking. The population in Russia is virtually imploding with female life expectancy 12.2 years longer than male.

The 27 August Boston Globe reviews Eichstaedt's book "Consuming the Congo." It deals with the whole issue of minerals in the Congo and similar countries which are in high demand for use in electronic gear being used to finance violence. U.S. law requires companies to report any materials they use from the Congo and surrounding countries. This is no mean feat; it requires being able to track down through the supply chain to the source of the ore. The law also implies that all minerals from the Congo are financing violence. As Eichstaedt points out, some are just a way for ordinary people to make a living. The issue is a bit more complex that we tend to see it.

Flying at last

The Boeing 787 has finally been cleared for commercial flight--three years late! Boeing's strategy of relying upon a series of global supply chains for design and fabrication of parts and subassemblies caused them some problems. It spread the financial risk, but increased the SCM risk. Will this plane establish itself in the market before the A350 comes out?

Economic crisis

What is the current economic crisis doing for supply chain survival. Short answer--not much. With so many firms needing business, those who are buying may get good deals, but it is definitely a buyers market. The currency movement make it difficult to even hedge intelligently. Is the euro teetering on the brink of collapse or not? Is gold at the peak or just getting started? Why is the yen so strong when the Japanese economy is so weak? Will the Chinese try to make the yuan a reserve currency? Will the dollar continue its decline as a reserve currency? How high will the Canadian dollar rise? We are sailing in uncharted waters. But, as I emphasize and reemphasize in my book, to do nothing is speculation, and with the current volatility, that can mean big gains, or business destroying losses.

Sugar and globalization

The Economist review of Parker's book, "The Sugar Barons," claims that modern globalization began with the sugar trade in the West Indies. A lot of people got very rich, but a lot died, too. In Kingston, Jamaica, 20 percent of the white population died each year from disease, mostly yellow fever. All this led to the triangle--sugar, rum and slaves. It was not a time in our history to make us proud.

empty containers to China

19 Aug WSJ reports that it is cheaper to ship recycled plastic (PET) to China than across the U.S. This is because the U.S. trade imbalance with China is so great that we must ship empty containers to China. The marginal cost of putting something like PET in those containers is virtually zero. This has led to the price of recycled PET in the U.S. being higher than the price of new!

Japan and rare earths

The Chinese have been restricting the exports of rare earths for the past 6 months or so, apparently to retaliate against Japanese naval action. These are critical materials in many electronic devices. Japanese high-end magnet manufacturers are starting to move to China to evade the export controls. They are, however, putting their intellectual property at risk. According to the APICS 16 August e-news, an unnamed Japanese trading company official said that China is examining the expertise foreign companies would bring to the country and that “Japan’s technology to produce high-end magnets is a target.” Was this really the original motivation behind the Chinese export controls?

Common currencies

The Boston Globe in its 14 August Sunday edition had an article on the euro. It seems the Europeans tried to form a 'Latin Monetary Union' in 1865, but that failed because of national interests. Will the euro face the same fate? My book describes the many difficulties caused by multiple currencies, but people love their money.