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Archive for the ‘global operations’ Category

Check out this spiffy graphic from Automotive News on the evolution of auto assembly in Mexico (Japanese automakers march into Mexico, set up export base, Mar 10).

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That expansion has to a large extent come at the expense of the rest of the North American industry as this graph from the Chicago Federal Reserve demonstrates.

AOS-Chart-1

Note that overall assembly capacity has declined. That’s not too surprising. The industry was generally seen as being overcapacitated, and the Big Three took the never-let-a-crisis-go-to-waste route to reduce the number of factories and resize their business. But Mexico clearly gained and it is forecasted to gain even more. Here’s another graph from the Chicago Fed.

AOS-Chart-2

It should be noted that this growth is driven by Japanese brands. GM is the only US or European firm to open a new plant following NAFTA. All the action lately has been due to the likes of Honda, Mazda and Nissan. Given this growth in capacity, it is not too surprising that Mexico is expected to pass Japan this year and Canada next year to become the top source of imported cars in the US. But why has there been such a rush invest there? (more…)

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Have you finished your Christmas shopping yet? You apparently are not alone in procrastinating.  Shoppers are buying later and that is causing problems for firms trying to make sure they can get the right items to the right markets. Take, for example, toy maker Lego (Predicting Holiday Sales Poses Issues for Lego, Dec 13, Wall Street Journal).

The Christmas shopping season is getting trickier to navigate as buyers are waiting longer to purchase holiday gifts, Lego’s chief financial officer said Friday, and the trend is creating a need to get more immediate buying data from retailers, particularly in the U.S. …

In a telephone interview, John Goodwin said “this year is going to be the greatest stress test we have ever had.” While a late Thanksgiving contributes to the stress, “people are pushing off their gift buying later and later into their calendars.” …

[A]ccurately tracking buying patterns during the December shopping rush is of critical importance to a company such as Lego, which holds out as long as possible to package its bricks for shipping to individual markets. Many of Lego’s basic bricks are the same, but buyer tastes rapidly change, Mr. Goodwin said. So the company waits to decide what volumes of specific play sets to assemble.

“It increases the importance of getting very good data, so we can supply the retailers with the right products at the right time. We have to be as close to the ultimate purchase as possible in order to respond…nobody wants a disappointed child on Christmas.”

(more…)

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So how much does it cost to make a hamburger — in Nigeria? Turns out, it costs more than you might realize (Burgers Face a Tough Slog in Africa, Dec 10, Wall Street Journal).

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This is the breakdown for a Johnny Rockets burger and some of the numbers might seem out of whack — Why should iceberg (!) lettuce costly nearly five times as much in Africa as New Jersey? The answer is simple: It’s imported. Why import lettuce? Because the local supply chains are simply not sophisticated enough to support the quick service business.

But that quest is straining a supply chain that is short on the refrigerated trucks and warehouses needed to keep patties and vegetable toppings fresh. And in many places, Africans are consuming beef at a faster clip than cattle ranchers can deliver new cows, meaning beef prices keep climbing. That is testing the limits of what the continent’s young urbanites can afford.

And this is not just about Africa. (more…)

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“Where does that come from?” sounds like an easy question to answer and at a high level it is. Which car models are produced at which plants is public knowledge so whether your Toyota was built in Kentucky or Alabama is easiest enough to figure out. But if you want to take it to another level — to know where different components came from and where the stuff that goes into the components comes from — is a lot harder. That is the conclusion reached in a blog post on Nautilus (The Secret Life of Everything: Where Your Stuff Comes From, Oct 29). Modern, global supply chains are so far reaching and support so much complexity that transparency (at least to the outside world) is lost.

I’d thought of [supply chains] mostly in terms of delivering Amazon orders and keeping Staples stocked. Those are just endpoints, the final few steps of a waiter carrying a meal on a tray. And what I really didn’t get was that supply chains don’t just carry components and ingredients, but synchronize their movements. Shipping a box of pens to Staples is the obvious part. Coordinating the arrival of barrels, caps, boxes, ink cartridges, and nibs (through which ink flows) at the pen factory—and also metal to the nib factory, oil to the plastics-maker, and so on—is the bulk of what supply chains do, and in the most efficient manner possible, with algorithms optimizing everything from shipping networks to the path of pallets through warehouses, with an eye to what happens when one of these many moving parts goes invariably astray.

The problem then is that unless you pick a real simple product — like a T-shirt — it is pretty much impossible to know where all the components come from and where all the various production steps are executed. NPR’s Planet Money took on this challenge of tracking a T-shirt from cotton field through production and shipping to the disposition of used American clothes in Africa. It’s an eye-opening  picture of global supply chains.

(more…)

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Three weeks ago, I had the pleasure to visit one branch of my extended family and BMW Welt (BMW World), the “multi-functional customer experience and exhibition facility of the BMW AG, located in Munich, Germany.” Supposedly, BMW Welt is the second most popular tourist destination around Munich, after Neuschwanstein Castle which inspired Disneylands’ Sleeping Beauty Castle. If you like architecture or cars, you should visit BMW Welt.

OK, but this is the Operations Room, so what else is worth knowing? It turns out that this month, BMW starts selling in Germany its long-awaited i3 (the USA will have to wait until 2014) and here’s some personal pictures to highlight three aspects:

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Continuing our blogs on offshoring, here is some interesting data from the European Manufacturing Survey conducted in 2009 as studied by Bernhard Dachs, Marcin Borowiecki, Steffen Kinkel and Thomas Christian Schmall (December 2012).  Their survey quantifies the extent, trends, and reasons why European manufacturing firms offshore or re-shore production.  Here is some of their key findings:

(more…)

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So far, our blogs on offshoring have considered its domestic impact in terms of jobs and competitiveness. Today, I report on the first data I have seen to shed light on the link between production offshoring and domestic innovation.  The question is: Do firms that offshore production innovate more or less than firms that do not offshore?  This question has led to national debate on competitiveness. Here is some key data and a data-driven answer:… (more…)

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This blog entry is a direct continuation of Marty’s post on Textiles in America and part of our ongoing posts on reshoring of work.  The New York Times Replica Edition is an exact electronic version of the in-print newspaper where I first saw these two nice pieces of data.  (I LOVE data.  Recall: “In God we trust, all others bring data”–according to quality guru Edward Demming.)

jobs evolution since 1990. (Source: Bureau of Labor Statistics, as reported in New York Times of Sep 20, 2013)

Jobs evolution since 1990.
(Source: Bureau of Labor Statistics, as reported in New York Times of Sep 20, 2013)

This chart provides hard data of the stories often told about job losses.  The huge transformation of textiles and apparel is striking–mind you, the data spans the relative recent 18 years!  I can only imagine the devastating impact to families working in that sector…  From an economic perspective, two key explanatory changes are: 1) offshoring to low cost countries after deregulation and 2) innovation leading to increased automation, and the substitution of capital for labor.  (I purposely use the “big” innovation word; later I shall also write about recent data linking innovation to offshoring.)

(more…)

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I grew up just outside of Manchester, NH, home of the Amoskeag Manufacturing Company. The Amoskeag was once the biggest cotton textile plant in the world. A couple of my grandparents worked there, but by the time I was growing up, the cotton mills were gone as the textile industry bailed out of New England for the South. The old building on the river were beautiful but also a reminder of what had once been.

Of course, the southern textile industry isn’t what it once was. Many of the mills of the Carolinas closed as liberalized trade allowed the work to go overseas. But, as the New York Times tells it, parts of the industry are hanging on — even expanding (U.S. Textile Plants Return, With Floors Largely Empty of People, Sep 19). It’s just that it has required investing in new technology to reduce the number of hands involved.

This is in many ways in keeping with themes we have discussed before: Manufacturing in high wage countries requires a willingness to substitute capital for labor.

But there is another part as well. There have to be customers that value what the American manufacturer brings to the table. (more…)

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Today, a bit of eye candy from International Business Times (China Manufacturing: 10 Things The Chinese Make More Of Than Anyone Else In The World , Aug 2).

things-china-makes (more…)

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