Great article Mr. President! Regarding your second question, I think Brexit will have a massive impact on the supply chains of domestic manufacturers, and while it may require significant upfront costs, the potential for billions of lost dollars to tariffs, alongside potential supply chain disruptions due to border customs could be all the incentive OEMs need to pull much of the manufacturing back to the states. This could also have positive implications in terms of turnaround time and lower inventory costs for these OEMs, furthering the potential benefit. Given the recent advancements in automation, questions do arise as to how much additional labor this will drive – regardless, the answer is certainly non-zero, which could be a boon for Detroit’s labor force.
An additional question I have is – will Brexit be a positive for US car makers in terms of sales to the UK? I am no expert on international trade deals, but if new tariffs between UK and the rest of the EU increase the cost of EU-manufactured vehicles, could this be a potential positive for US-based manufacturers selling into the UK?
Great work Jenny. Very much agree with you that the additional costs of artificial snowmaking driven by global warming seem to be incredibly wasteful. That being said, I do think it is acceptable to use artificial snowmaking at Ski Resorts. As Phil mentioned earlier, the 20% of lost water isn’t lost for good, it is simply lost from the local water supply the same way lakes and streams lose water to evaporation. I worry more about the power consumption to run these artificial snowmakers, rather than the lost water. To this point, ski resorts such as Vail should focus on sustainable energy sources such as wind and solar to power the snowmaking process. For a company as close to the environment as Vail Resorts, 2030 seems like an awfully long time to get to zero net emissions, and I would challenge them to beat this target, as they did for their last environmental goal in 2012.
Great article Sar-Bar! Sounds like JB has gone in a similar direction to Schneider by automating dispatch in order to achieve improved operating efficiency through increased utilization. I agree with both your and Rob’s note above that continued investment in dispatch and routing by JB will be crucial to its continued success. To address future challenges, I would suggest scaling up quickly through the acquisition of small and medium size players in order to stay in level footing with growing customers and consolidating industries. Regarding major technological advancements such as autonomous trucking, I would not make a material investment in this business at the current time. The likelihood that these trucks hit the road in the next 5-10 years seems bleak given the regulatory issues around the topic, as well as the high upfront cost of autonomous vehicles that would squeeze the already tight margins seen across the industry.
In reading your paper, I had become excited about a potential merger with Schneider, given they both seem to be on the cutting edge of technology within the trucking industry. Thinking about it now, a merger of these two businesses sounds increasingly difficult, as each companies’ employees and customers become more and more reliant on their unique operating systems. Given all of the recent changes, it will be very interesting to see how this industry unfolds over the next 5-10 years.
Thank you Gladiator – I am entertained! To your point above, given there is currently no US based supplier of graphite, it seems unlikely that the administration would place a large domestic company at significant risk though a trade war with China. That being said, after doing some google searching, it looks like two US-based companies are exploring graphite projects in the United States – Alabama Graphite Corp. and Graphite One Resources (https://minerals.usgs.gov/minerals/pubs/commodity/graphite/mcs-2016-graph.pdf). If either of these companies were to successfully get off the ground, it could give the administration more comfort that US LIB manufacturers have the necessary supply available and that they may pursue fair trade investigations/tariffs on Chinese suppliers, and consumers may push for a US-based supply of graphite given the relatively high pollution levels of Chinese graphite mines. I do not have advanced knowledge of the cost breakdown per battery for Energizer, but if a marginal increase in graphite costs will drive a material decrease in Energizer’s margins, they should look to partner with these providers early to secure supply and manage costs going forward.
Great article Sophie! As you noted above, it feels as though rail freight transport will be challenged in the increasingly digital world, as other modes (trucking) can deliver on more highly customized routes at faster speeds. Also, new inventions such as 3D printing may decrease the need for transportation altogether, as parts can be printed on-site, rather than ordered and shipped as freight. Perhaps the rise of intermodal freight, with trucking handling more of the first and last mile transportation, will reverse some of these trends and increase demand for rail transportation going forward.
One of the other interesting points here is how Deutsche Bahn is pursuing its digital new product development. The company has recently formed a venture capital arm, DB Digital Ventures, to fund data driven business models in the transportation sector. This seems to be a relatively cost effective way to source both new business ideas as well as high quality talent for the digitally focused business going forward.
Scott – great work on this. It is a very interesting question whether or not the Navy should be taking a stand on climate change, especially given the current administration’s views on global warming. Forest Reinhardt and Michael Toffel made effective points in the HBR interview noted above that the job of the Navy is “all about force readiness” and ensuring the safety of American citizens against long-term, potentially low likelihood events. This allows them to be more fact-based, and avoid the political distractions surrounding the issue.
Another interesting question raised in the interview is how will the Navy handle the additional demand given the expanding available marine traffic near the melting poles, especially at a time when the current administration plans to decrease government spending going forward. Given this point, it may make sense to bury some of this research cost into the Navy’s top line budget, as the administration is likely to be more receptive to an increase to the Navy budget, rather than a “Climate Change Adaptation Budget” that may be harder to stomach given their current stance on the issue.