The Globalization Gap

The Fly-over Zone

“The fly-over zone” is David Stockman’s term for the middle portion of the United States; the vast expanse roughly bounded by the Appalachian and the Sierra Nevada mountains. Stockman holds that people in the fly-over zone think differently from those on the coasts.[1] The election results from last November tend to agree.

In my view, Globalization, with its economic and social repercussions, provide insight as to why the fly-over folks think so differently from those on the coasts. In essence, Globalization has benefited Americans whose income relies on professional services and intangibles over the last several decades. Those who depend on tangibles, again speaking generally, have done considerably less than well.

 International trade, especially in consumer goods, and large-scale migration from less economically developed nations to more developed countries are two primary factors driving polarization of opinion about Globalization here in America, as well as in the European Union.

Free Trade

Global free trade is fundamental to increased and increasing global standards of living. Since the end of World War II, international economic history records a succession of moves to facilitate multinational trade by removing tariffs and other barriers to trade. One result is truly multinational companies, like GE or Nestle. Another is globalized value chains, even for small companies. Companies and consumers everywhere benefit from the lowest prices available anywhere in the world.

But it isn’t all good. Employees in some nations suffer as lower cost competitors abroad take business and jobs. Some nations import much more than they export, resulting in escalating debt. Some nations use access to resources as an economic means to political ends, like the recent Russian cuts in natural gas supplies to Europe or the OPEC oil embargo in the 1970s.

So, the benefits of free trade are widely spread, but difficult to recognize or quantify. The negatives, on the other hand, are localized and specific – those who have lost their livelihoods to free trade are not happy. And that unhappiness has resulted in political resistance to new trade pacts and movements in several countries to revise or rescind existing agreements.[2]


In 2013, author and investment banker Dan Alpert[3] wrote:

“The past twenty years have seen a transformation of the global economy unlike any ever witnessed. In the time it takes to raise a child and pack her off to college, the world order that existed in the early 1990s has disappeared. Some three billion people who once lived in sleepy or sclerotic statist economies are now part of the global economy. Many compete directly with workers in the United States, Europe and Japan in a world bound together by lightning – fast communications. Countries that were once poor now find themselves with huge large surpluses of wealth. And the rich countries of the world, while still rich, struggle with monumental levels of debt – both private and public – and unsettling questions about whether they can compete globally”

Alpert’s thesis is that the world suffers from gross over-supply of labor, capital and productive capacity. Capital moves readily across national borders seeking higher returns – meaning productive investment opportunities. When excess productive capacity exists, businesses don’t invest in more. Excess labor, looking for work and stimulated by numerous local wars and conflicts, continues to migrate from developing world countries toward developed countries.

The circumstances that Alpert describes do exist and significantly define world economies and the businesses that drive those economies. These conditions will continue until fundamental global imbalances change. That change may be gradual, spanning years, or quite rapidly, like the economic equivalent of an earthquake.

Chguck - Juneau AKThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Container ship graphic licensed via

[1] David Stockman was former President Reagan’s budget director. He now writes extensively, especially on political / economic affairs.

[2] For more on this, see “Trade, at what price?” in The Economist, April 2nd – 8th 2016 edition, page 27

[3] Dan Alpert’s The Age of Oversupply, Penguin Group (USA) LLC (2014) is offers much more on this.


Knowledge Workers and Tomorrow’s Jobs

President Obama, in his 2015 State of the Union address, proposed that America’s community colleges be made tuition free.[1]  With advancing technology, including on-line instruction, that seems to me to be a sensible step. But only a step. America’s education system needs a comprehensive overhaul in order to educate enough people rapidly enough to meet the rapidly changing demands of the 21st century, rather than those of the 20th.

Peter Drucker discussed this need for what he termed “knowledge workers” and provides his usual profound insight to the matter. Here is a post from a year ago that discusses Drucker’s ideas. It is well worth repeating.    — C.H.

Peter Drucker and the Knowledge Worker (from 10 January 2016)

Peter Drucker is arguably the most widely respected of the 20th century management consultants. Drucker wrote over 30 books on management, which are largely focused on human behavior. His 1999 book, Management Challenges for the 21st Century, offers a forward looking assessment of what demographics suggested would be the key problems facing manager in the early decades of the 21st century. Drucker’s concept of a knowledge worker – those whose work is focused on knowledge and its applications – is central to this book. He contrasts knowledge workers with manual workers – those whose work is essentially focused on things and the manipulation of things.

The Knowledge Worker

With his characteristic bluntness and surety, Drucker states:

“Knowledge-worker productivity is the biggest of the 21st century management challenges. In the developed countries it is their first survival requirement. In no other way can the developed countries can the developed countries hope to maintain themselves, let alone to maintain their leadership and their standards of living.”

Drucker credits Fredrick Taylor’s “scientific management” for the awesome improvements in manual worker productivity that characterizes 19th and 20th century industry and agriculture in the developed countries. According to Drucker, those increases in productivity have been the primary source of incremental wealth in the developed world.

The industrial engineering concepts that constitute “scientific management” are quite portable, so they can be quickly applied anywhere, using workers with little education or training. Developing countries have lots of people, many with rudimentary educations at best, who are willing to work for close to pre-industrial wages. Developed countries have aging populations and declining birthrates, hence much higher wage expectations.  

The bottom line is that labor intensive, repetitive manufacturing in the developed countries simply isn’t competitive in this globalized world, a few special cases excepted (at least for a while). Developed countries need sophisticated work based in knowledge, rather than in method. Economies in developed countries need knowledge workers. As Drucker puts it:

“The only possible advantage developed countries can hope to have is in the supply of people prepared, educated and trained for knowledge work. There, for another fifty years, the developed countries can expect to have substantial advantages, both in quality and quantity”.

What To Do?

There have always been knowledge workers, so much is known about knowledge work. Much can be learned about knowledge worker productivity from professional firms such as surgical practices, legal firms, architectural firms and accountancy firms. Today’s medical practices, for example, have several types of knowledge workers – specialized nurses, radiological technicians, physician’s assistants and such – that enhance the productivity of physicians, the practices’ key resource..

For manufacturing firms that intend to become and remain Sustainable, significant changes in organizational practices and organizational structure will be needed. This means new and innovative business models. Obviously, doing all of this will require study, careful thought and even more careful implementation. There isn’t any real alternative to embracing the change. Start by reading (or re-reading) Peter Drucker’s Management Challenges for the 21st Century !

Chuck - Austrian AlpsThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are always welcome.

[1] For more on my thoughts on President Obama’s proposal, see:


Idiocy Squared?

15 January 2017

Yesterday (14 January 2017), I watched SpaceX launch a cluster of ten communications satellites into precise orbits, while returning the launch vehicle to an autonomous barge in the Pacific Ocean. I’ve been following rocket launches since I saw the first Vanguard rocket self destruct on its launch pad in December, 1957, to the chagrin of the entire nation.[1] Yep, I’m a technology buff. Technology fascinates, amazes and delights me. Maybe that’s why I became an engineer.  — C.H.

Elon Musk and the Vision Thing

Elon Musk is an interesting man. He envisions the future. Then he acts on that vision in a systematic (and courageous) manner. Actually, he goes beyond “systematic” – he insists on thinking from first principles,[2] rather than on starting with the present art. At the same time, he remains focused on his vision, to the consternation of many.

This post focuses on two of Musk’s businesses – SpaceX and Tesla — and examines the visions they embody, with examples of initiatives in place to realize those visions.

SpaceX’s Vision:

SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.

That’s right – Musk’s vision for SpaceX is nothing less than colonizing Mars.[3] The purpose of SpaceX’s commercial launch program is to fund the development of the technology necessary to do so. That technology is complex and its development will be enormously expensive. Keep in mind that SpaceX is already doing things that only governments have done before (and some that nobody has done before). Also remember that the Apollo program that sent astronauts to visit moon – but not live on the moon – was, at its peak, consuming about 4% of the entire federal budget!

Here is some of the technology currently under development:

>> Advanced rockets and spacecraft: The Falcon rocket and the Dragon spacecraft are both original designs, developed from first principles as steps on the way to Mars.[4]

>> Reusable launch vehicles: Yesterday’s SpaceX launch vehicle was safely landed, joining launch vehicles from about a half dozen earlier SpaceX launches. The objective is to reuse them. Reusable launch vehicles are the key to sharply reduced costs. Imagine the cost of an airline ticket if the airplane could only be used once. Look for a SpaceX launch using a previously used rocket within this year.

>> The Falcon Heavy: With three times the lift capacity of the current Falcon 9, the Falcon Heavy is scheduled to test launch this year. Trips to Mars will require massive lifts into orbit.

>> The Raptor engine: SpaceX has test – fired a new rocket engine that will burn liquid methane instead of kerosene. Liquid methane will provide considerably more thrust per unit of mass than does kerosene. Methane is also available on Mars, so methane refueling on Mars could facilitate return trips!

Tesla’s Vision:[5]

The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing — it matters for everyone.

So, Tesla is about accelerating the advent of sustainable energy. Wind energy, solar energy and hydroelectric energy are all potentially Sustainable, but none of these are directly applicable to vehicles. However, if the vehicle is powered by electricity, all of them are applicable. So, Tesla makes electric vehicles. Tesla also recognizes that it cannot, of itself, make enough electric vehicles to make electric vehicles the world’s standard. There are many constraints to doing that.

Here are a few of them:

>> Vehicle performance: Drivers expect electric vehicles to perform at least as well as petroleum fueled vehicles. Hence Tesla’s emphasis on acceleration, comfort, handling, safety and related matters.

>> Style: Drivers like cool, classy, functional cars. Tesla vehicles turn heads.

>> Range: Drivers expect electric cars not to strand them. That requires that vehicles have a range between fueling that compares their current vehicles, and that refueling be available almost anyplace. That’s why Tesla cars have 250 – 300 mile range between recharging, and why Tesla is so intent on building recharging facilities worldwide. Tesla is not waiting for somebody else to do it for them.

>> Batteries: Over 15 million new cars were sold in the U.S. in 2016, and several times that many worldwide. For electric vehicles to become a substantial portion of those numbers, a ready, reliable source for suitable batteries is necessary. That’s why Tesla is building a giga-factory – the largest factory in the world – to produce the batteries. Again, Tesla isn’t waiting for somebody else to do it for them.

>> Update 1/19/2017 : Tesla just announced that it will increase its investment in the giga-factory by $350 million in order to manufacture electric motors and drive trains for Tesla automobiles. Yet again, it appears that Tesla sees a need to produces hundreds of thousands of 200 – 400 horsepower motors that meet their requirements, rather than wait for somebody else to do it for them.

>> Price: In order to sell enough vehicles to even begin to make a difference, Tesla has to produce vehicles that sell at mass market price points. Hence the coming Tesla Model 3.

>> Production Technology: In order to meet drivers’ expectations at a mass market price while generating a reasonable profit, Tesla is re-inventing vehicle production technology from first principles. It will be interesting to see just how the Model 3 is produced.

>> Marketing and sales: Tesla regards the existing authorized dealer model of vehicle sales as inefficient. Instead, Tesla wants to use Amazon – style sales methods. Not surprisingly, existing dealerships are resisting fiercely.

>> Self-driving vehicles: In 2015, there were 35,092 people killed in traffic accidents in the U.S. alone.[6] Tesla believes that self driving technology can reduce that figure by at least a factor of ten. Accordingly, all Tesla vehicles produced right now come equipped with the necessary equipment to do this. As self driving technology becomes more commonplace (and traffic regulations change), insurance costs most drop sharply, not to mention the reduction in human suffering. This technology addresses the human side of triple bottom line Sustainability, as electric power addresses the environmental side.

>> Critical mass of vehicles: To make a real difference, electric vehicles have to become a significant fraction of the world’s fleet of vehicles. Tesla cannot even hope to produce anything close to the number of vehicles needed to do that. That’s why Tesla made its large body of patents available without charge to all manufacturers that want to produce electric vehicles.

Elon Musk says that starting an automobile company in the U.S. is “idiotic”, and that starting an electric vehicle company is “idiocy squared”. Chuck says that if Tesla is idiocy squared, then SpaceX is exponentially so. But I like the way Elon Musk thinks. He reminds me of Henry Ford. The world needs people like them — people whose vision and actions transcend accepted bounds. Musk may be idiotic, but I do own some Tesla stock.

Chuck - Red RocksThoughtful comments and experience reports are invited and appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

[1] For those who were not around in 1957, the U.S. and the U.S.S.R. were heavily engaged in the Cold War. The U.S.S.R. shocked the U.S. by launching the Sputnik 1 satellite in October 1957. The clear implication was that the U.S.S.R. was ahead of the U.S. in rocket technology, hence had an important military advantage. Catching up with the Soviets was so important that the Vanguard launch attempt was televised live.

[2] Nobel Prize winner Daniel Kahneman explains thinking from first principles and why it is so uncommon in his bestselling book, Thinking, Fast and Slow, Farriar, Straus and Giroux, New York (2011)

[3] For more and SpaceX and for a presentation on the Mars project, see SpaceX’s website at

[4] In contrast, the Atlas V launch vehicle, which is used to compete with SpaceX for commercial launch business, is the latest in a series of Atlas rockets that began in 1957. The original Atlas was, in turn, a descendent of the German V-2 rocket from World War Two.

[5] For more on Tesla and on Elon Musk’s vision for Tesla, see:

[6] Traffic fatalities figure from:

The UN Sustainable Development Goals

One year ago, “The Age of Sustainable Development”, a series of three posts to this blog, sought an operational definition of “Sustainable Development” as that term applies to smaller manufacturers. That is, a definition that answers the question: “what characteristics and actions can be expected to enable smaller manufacturing firms to grow and prosper indefinitely, within context of a sustainable world?” (A sustainable world does not self-destruct ecologically, socially or economically.)

UN FlagThe third of those posts explores the United Nations’ 17 Sustainable Development Goals. The United Nations’ Goals serve to remind us of just how broad the scope of doing business is today. Finding a way to keep in meaningful contact with the multitude of changes occurring in globalized commerce is a major management challenge for smaller manufacturers. The following is extracted from that post:

U.N. Sustainable Development Goals

Earlier posts in this series of posts looked at two routes to an actionable definition of “Sustainable Development”. The first was the original (1987) Bruntland Commission single sentence definition: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The second approach was to take the entire contents of Dr. Jeffrey Sachs’ “The Age of Sustainable Development” – the on-line university level course (a “MOOC”), along with the 500+ page textbook – as an operational definition.

Clearly, a single sentence definition isn’t specific enough, while a book plus a MOOC is a bit much. A third route involves the United Nations’ Sustainable Development Goals. By examining these global goals, smaller manufacturers can identify specific, actionable areas that fit with their business and those it serves. From those specifics, each firm can construct their own operational definition – a definition that reflects and contributes to global initiatives.

The U.N. adopted an Official Agenda for Sustainable Development in September of this year (2015). The Official Agenda includes 17 Sustainable Development Goals, to be achieved by 2030. The Goals are sweeping, general statements, each reinforced by a number of more specific Targets. Sustainable Development Goal #1, along with its associated Targets provides an example:

Goal #1: End poverty in all of its forms everywhere

Target 1.1: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

 Target 1a: Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

Target 1b: Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions

Before you throw up your hands and blow this off, consider that Goal #1 and its targets affect about 2 billion people. Any real global effort toward achieving this will involve huge opportunities in agricultural products, distribution methods, irrigation and other water related products, along with a multitude of other areas. Somebody will supply each piece of all that is required. Some will participate directly, others as suppliers to other manufacturers. So, many firms will do some business and help make the world a better place by doing so.

The remaining 16 Goals and the 162 Targets associated with them are just as ambitious as Goal #1. Rather than list them here, you can visit original list on the United Nations’ Sustainable Development website:

For Smaller Manufacturers

>> Each of these Goals and Targets deserve careful thought as to how they fit with your firm’s business model and web of relationships. The 17 Goals, taken together, are so broad that there has to be opportunities for just about anybody who can make anything. Personally, I don’t believe that world poverty will be eliminated within the coming 15 years. But there may well be significant action toward that end. China’s progress over the last few decades demonstrates that major improvement is possible. Helping even a fraction of 2 billion people out of abject poverty is a very good thing.

>> The U.N. Goals signify that the U.N. has decided to combine its (human) economic development efforts with Sustainable Development. That means the U.N.’s current idea of Sustainable Development has a much different focus from the original Bruntland Commission definition. Bruntland emphasized the longer term (inter-generational) relationship between economic development (meaning industrial development) and environmental impact. The new U.N. focus is shorter term and emphasizes human and fairness matters. The U.N. hasn’t forgotten the environment – just much more emphasis on people issues.

Chuck - VancouverThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

U.N. Flag image licensed via

Links to the three posts comprising the “Age of Sustainable Development” series:


The Triple Bottom Line in Context

The Triple Bottom Line

Sustainability guru John Elkington’s concept of a Triple Bottom Line provides the most used framework for discussing Sustainability. Elkington proposed that businesses should measure and report Return on Assets Deployed information for natural (ecological) assets deployed and for social assets deployed, as well as the usual financial assets (capital) deployed figures. The three “bottom lines” represent the business’s net effects on planet, people and profit. This is obviously a more comprehensive view. Perhaps more significant is the implication that the business should show positive results which indicate enhancement to the environment and society, beyond doing no harm.

Triple Bottom LineAndrew Savitz and Karl Weber’s book, The Triple Bottom Line, extends Elkington’s idea by representing the three “bottom lines” as intersecting circles. The areas of intersection are termed “sweet spots”, meaning synergistic opportunities. For example, when power utilization efficiency is improved, profits are improved due to lower power cost, while the environment and humanity benefit through reduced carbon dioxide emissions. So, improvements in the planet and people “bottom lines” are not necessarily at the expense of the profit “bottom line”. [1]

A Systematic Approach

Approaching the Triple Bottom Line through systematic business planning appears to me to be a clearer, more pragmatic approach. By “systematic business planning” I mean integrating all three aspects of the Triple Bottom Line: in definition of the business (mission statement, vision statement, values statement), in formulating goals and objectives, and in establishing and executing the business processes necessary to successfully pursue those goals and objectives. The sequence is clear enough:

Values to Results

In this sense, Triple Bottom Line involves an increased scope of management awareness that includes attention to the natural world and humanity, in lock step with attention to financial realities.

The rub lies in setting (and achieving) sufficiently aggressive goals and objectives that express timely progress toward achievement of the mission, vision and values that define your business. Those goals and objectives are unique to each organization, in context of the organization and the business climate that exists as they are set and pursued. Accordingly, there is no ready package of goals and objectives – you have to figure them out for yourself. However, you can look at the efforts of others to help you find your own way.

Here are a few starting places:

Fetzer Winery – Fetzer is a medium sized California winery that has Triple Bottom Line Sustainability in its DNA. Start with Fetzer’s website.[2]

Ben & Jerry’s – Yep. The Vermont – based premium ice cream company founded by two hippies. Try Ben & Jerry’s website [3], especially the tabs on values.  Also, Ben & Jerry’s – A Case Study in Sustainability [4],an earlier post to this blog, may be useful.

Hershey Company – The maker of Hershey Bars began as a fair example of an early 20th century mill town, and then morphed into an extraordinary example of what a successful business can do for its employees and their neighbors. Today, more than 70 years after the death of Hershey’s extraordinary founder, Hershey’s continues as a successful multi-billion dollar company that still focuses on its roots. Start with the Wikipedia wiki on The Hershey Company.

Interface Corporation – Interface makes carpets, primarily for commercial buildings. Interface provides an example of what can happen when a manufacturing company thoroughly embraces Sustainability, from its expressed mission and vision all the way through business results. Start with Whither Sustainability? [5], a recent post to this blog.

Waste Management – Waste Management changed its business model from a business based on collecting refuse and carrying it to landfill, to one based on profiting from the refuse it collects. Both Waste Management and Interface are examples of firms that fundamentally changed the basis of their business to embrace Sustainability. See Waste Management Corporation – A Case Study in Sustainability,[6] this blog.

The United Nations Sustainable Development Goals – The UN recently established a set of 17 goals for the world to achieve by 2030. The UN’s set of goals provides insight as to just how broad Sustainability is. Aligning your Triple Bottom Line goals and objectives with the UN goals may be a good idea. Start with The Age of Sustainable Development – Part 3 [7] this blog . Alternatively, just google “UN Sustainable Development Goals”.

Again, your goals and objectives are unique to your business and the business context within which it exists. The examples cited above are extreme cases which may be useful to stimulate your thinking.

Chuck in FranceThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Triple Bottom Line graphic credit – creative commons via Wikipedia

[1] The preceding two paragraphs are borrowed from Double Take on the Triple Bottom Line, an earlier post to this blog.








On Exponential Growth

When Technology Goes Viral, a post to this blog from May 2015, is reprised below. That post describes technologies that grow at such rates that they disrupt, or at least redefine, entire industries – or create new industries. When Technology Goes Viral, however, didn’t mention the element of surprise that so frequently accompanies viral growth. Take LEDs for example, which are currently disrupting the lighting industry. Or Facebook and other on-line media which just this month redefined American elections process. Take a fresh look at When Technology Goes Viral, this time with the element of surprise in mind.

 When Technology Goes Viralfrom 23 May 2015

Going Viral

Most of us have heard of a Facebook post or a YouTube video that “went viral” on the internet. Like a virus multiplying, one person sees the Facebook post or watches the video, then sends it on to several friends, who see the post or video, then … exponential growth. [1] Contrast that with the incremental way we normally expect growth to occur.exponential Growth Graph

This graph shows just how dramatic exponential growth can be. >>>

It’s not just videos. It is not uncommon for entire technologies to grow in an exponential manner for years or even decades. Here are some examples:

20th Century Examples

>> Electrification: In the United States, the first public electric generation and distribution facility began operating in New York City in 1882. By 1950, electrification was essentially complete across this country, serving a population of about 150 million people. Electric lighting was the original application, followed by a multitude of manufacturing opportunities like toasters and vacuum cleaners. Factories switched from prime movers and leather belts to electric motors.

>> Automobiles: Only a few hundred true automobiles existed in the entire world at the beginning of the 20th century. A century later, about 226 million were registered in the U.S. alone. [2] Ubiquitous personal rapid transportation redefined lifestyles and spawned more business models and value chains than I can count.

>> Cell Phones: The first cellular telephone was invented in 1973. Less than four decades later, in 2012, the number of cell phones in the U.S. alone was about 310 million, [3] a figure which approximated the total U.S. population.

>> Moore’s Law: In 1965, Gordon Moore, one of the founders of Intel, observed that the number of transistors on an integrated circuit every year. Ten years later, he raised that to doubling every two years. That amounts to 50 years of exponential growth – 50 years of relentlessly increasing computing power and 50 years of plummeting cost. Good-by IBM 1620. Hello iPhone 6.

Current Prospects

Abundance: The Future Is Better Than You Think, a recent book that one reviewer called “a godsend for those who suffer from Armageddon fatigue”, [4] describes eight technologies that may be on exponential growth paths just now. I’ve chosen a few of those technologies as examples that appear to be especially relevant to manufacturers:

>> Biotechnology: The current issue of Fast Company magazine named their choices for the 100 most creative people in business. Fast Company chose Charles Arntzen as the #1 most creative. Arntzen is a professor at Arizona State University. Using DNA structuring technology, he “engineered” a variety of tobacco plant to produce the medicine that successfully fought the Ebola outbreak in Africa in 2014. [5] Bio-based technology promises new and innovative routes to new fuels, industrial feedstocks, and agricultural products, not to mention medicines. The Department of Chemical Engineering where I trained has been renamed The Department of Chemical and Biomolecular Engineering. Biotech and its potential is that important.

>> Networks and Sensors: The internet of things is really coming. In manufacturing, that means real time information on all equipment and all work in process. Then, connect across the entire value chain so that everybody (man and machine) has actionable information on the current status of everything. Defect rates vanish. Efficiency soars. Inventories shrink.

>> Digital Manufacturing: I have heard 3-D printing described as “neat, but not really useful”. Hmmm. 3-D printing allows products to be manufactured “hands off”, directly from AutoCAD drawings, with no materials waste. Today, cycle times are too long and equipment costs are too high for most routine production – although that is changing fast. For prototypes and complex special orders, not so; especially when exotic materials are involved.

SpaceX Dragon

This photo shows the Space-X Dragon manned space flight vehicle and two of its Super Draco rocket motors. The rocket motors are produced by 3-D printing. >>>

So What?

Exponential technologies offer untold opportunities to create new products, new efficiencies and new markets. At the same time, exponential technologies disrupt. Case in point: cell phones have exploded, while hardwired telephone services are wondering what happened to their market. These opportunities and threats of disruption apply all along your value chain. That’s one more reason why today’s manufacturers need to maintain a fully zoomed out assessment of the entire globalized context within which your business operates.

Chinese character - Crisis


<<< The Chinese character for “crisis” combines the characters for “opportunity” and for “danger”.


Chuck at the PacificThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Image credits: Exponential growth graph – creative commons via Wikipedia, Dragon spacecraft photo – SpaceX (creative commons), Chinese character – creative commons via Wikipedia


[1] For more on exponential growth, see

[2] Automotive stats from

[3] Cell phone stats from

[4] Diamandis, Peter and Steven Kotler, Abundance: The Future Is Better Than You Think, Simon & Schuster (2012), especially Part 2, page 49f

[5] “The 100 Most Creative People in Business in 2015: #1 – Charles Arntzen, For Fighting Ebola With Tobacco”, Fast Company, June 2015 issue, page 47f

Energy Utilization Efficiency and LEDs

Energy Utilization Efficiency

AEO 2015 Figure 19The graph labeled “Figure 19” [1] projects energy use in the U.S. per person (blue line) and per dollar of GDP (green line). The right hand portion of the graph (2013 – 2040) projects that annual energy consumption per American will remain rather constant, although well below consumption in 2005. Annual energy consumption per dollar of GDP, on the other hand, is projected to continue to decline. If this projection holds, only half as many watts of energy will be required to produce a constant dollar’s worth of GDP in 2040, as compared to 2005. Said another way, American energy utilization efficiency is projected to double over the period 2005 – 2040!

This improvement is a global phenomenon. The International Energy Agency (IEA) states its importance this way: [2]

“Energy efficiency in IEA member countries improved, on the average, by 14% between 2000 and 2015. This generated energy savings of 450 million metric tons of oil in 2015, enough to power Japan for a full year. These savings also reduced total energy expenditure by 540 billion United States Dollars in 2015, mostly in buildings and industry.”

$540 billion in efficiency savings sounds pretty good to me. But that’s for the whole world. Here is a more up close and personal example of what energy utilization efficiency can mean:

Lighting Industry Disruption

I have recessed lighting in the kitchen of my home. There are three ~ 5” diameter (BR-30) recessed fixtures and ten ~ 2.5” diameter (GU-10) recessed fixtures. I replaced the three 75 watt halogen bulbs from the larger fixtures and the ten 50 watt halogen bulbs from the smaller fixtures with size – equivalent LED bulbs. The larger LED bulbs each draw 9 watts, while the smaller bulbs each draw 5 watts. Right: a total of 77 watts of power draw replaces a total of 775 watts – nearly a 10 to 1 improvement.

LED Lighting DisplayActually, there is a lot more to LEDs beyond reducing your electric bill, welcome as that is. The LED value proposition offers at least these features:

  • Bulb prices are now competitive with older technology. [3]
  • Bulb service life expectancy is several times longer than older technology.
  • Significantly lower power requirements.
  • Much less heat generation.
  • Bulbs are readily available in many form factors.
  • Available in several color spectra.
  • Available with an increasing number of intelligent control alternatives – bulbs and fixtures.

The case for LEDs is so strong that Greentech Media, [4] referencing a report from Goldman Sachs, says:

“The financial institution calls LEDs one of the fastest technology shifts in human history. While wind and solar are challenging the traditional electric generation sector, they have not upended it yet the way LEDs have overtaken the lighting industry. By 2020, LEDs will make up 69% of (lighting) sales and close to 100% by 2025, up from nearly nothing in 2010.”

Best of all, LEDs are an emerging technology, which will continue to evolve. Expect continuing improvements in energy utilization efficiency (it can, and will, get considerably better than the 10 to 1 improvement in my kitchen lighting). Even more importantly, expect completely new ideas as LEDs evolve from replacements in existing sizes and forms to become the creative media of the lighting industry.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

[1] “Figure 19” is from the 2015 Annual Energy Outlook, published by the Energy Information Agency, a service of the U.S. Government.

[2] Energy Efficiency Market Report 2016, International Energy Agency, page13.

[3] As the snapshot of an LED retail display at my local Home Depot indicates, common residential replacement bulbs are readily available for a few dollars.

[4] See , which refers to a Goldman Sachs report at

On Globalization Immigration and Pragmatism

Globalization and its effects are simply facts of 21st century life. The pragmatist looks first at those effects that most urgently affect the pragmatist’s life and business, then seeks a pragmatic solution – a solution that can actually work for all involved.

Viewed from here in the southwestern United States, illegal immigration is one such issue needing resolution. The following, reprised from two earlier post to this blog, proposes an approach that offers a real chance for a lasting solution. The pragmatist also knows that band-aids and stop-gap measures may be necessary as a lasting solution is implemented. But the pragmatist does not confuse the temporary with the lasting.    — C.H.

A Tale of Two Borders

Benito Juarez, a five term president of Mexico in the mid-19th century, famously lamented “Poor Mexico, so far from God, so close to the United States”. Today, many in the U.S., especially here in the southwest, complain about illegal immigration from Mexico.

Finger pointing didn’t work in the 19th century, and it will not work now – in either direction. Canada is just as close to the United States as Mexico is. There are no significant immigration issues between the U.S. and Canada. The difference is the approximate economic parity between the U.S. and Canada. The solution to the illegal immigration issue lies in addressing the cause of that issue — the economic disparity between the U.S. and our neighbor to the south.

Those demographics and trends suggest that reducing the economic gap between Mexico and the U.S. / Canada is possible over the coming two or three decades. With the active support of its neighbors to the north, Mexico could build a large, globally competitive economy that exports worldwide and builds big new markets within Mexico. With a cooperative arrangement that catches the demographic tide, Mexico’s economic growth need not be at its northern neighbors’ expense.

The prize is a U.S. – Mexican border that works like the U.S. – Canadian border.

Lose the Sombrero

serape and cactusLose the sombrero, the serape and the siesta. Those old stereotypes hardly fit the modern country that Mexico is rapidly becoming. Two recent news items put this into focus:

(1) The World Business Council for Sustainable Development’s Vision 2050 report [i] projects that, in 2050 — 37 years from now — Mexico will have the fifth largest economy in the world, as measured by GDP. That’s right, #5 — behind China, the U.S., India and Brazil; but ahead of Germany, Japan and everybody else. That may shock the stereotype. However, Mexico is already #12 and growing at about 4% annually, while most of the larger economies are currently growing at considerably slower rates.[ii]

(2) Fifty years ago, the fertility rate — the number of children per woman — here in the U.S. was about 3.2, while the rate in Mexico was a whopping 6.8. That’s right, on the average, each Mexican woman had about 6.8 children. Today, the rate in the U.S. is about 2.0, while the rate for Mexican women is about 2.2. And, the projection for 2020 for the U.S. is closer to 2.1, while the Mexican rate is projected to drop below 2.0. [iii] As Mexico’s population growth rate drops, conditions exist for economic growth per person to increase sharply.

The Giant Sucking Sound

Ross Perot received 18.9% of the vote as an Independent candidate in the 1992 U.S. presidential election, a huge percentage for an Independent candidate. Perot was strongly opposed to the North American Free Trade Agreement (NAFTA). He famously warned of a “giant sucking sound” as manufacturing jobs in the U.S. went south, into Mexico. [iv] Perot lost the election and the manufacturing jobs went. But they went to China, not to Mexico. Why? Labor costs in Mexico were lower than those in the U.S., but labor costs in China were much lower yet:


But that Was Then

As you can see, the difference between labor rates is shrinking because rates in China are increasing much faster than those in Mexico. Add to that the costs of transporting goods from China to the U.S., the logistic costs associated with long lead times from China, currency fluctuations, and the hassles involved with doing business in China. Mexico is becoming more competitive every day.

But wait… there’s more: [v]

>> Mexico graduates more engineers every year than Germany.

>> Mexico has free trade deals with 44 countries, more than any other nation.

>> Minimum wage in Shanghai and Qingdao is now higher than in Mexico City and Monterrey.

>> Mexico produces substantially more petroleum than it consumes, and Mexico’s petroleum reserves are sufficient to allow Mexico to remain energy independent for a long time. 

As a consequence of all this, five years from now, Mexico is projected to have passed China as a supplier of manufactured goods to the U.S.:

Mexico exports to the US


Certainly, Mexico has problems, big internal problems, that must be resolved if Mexico is to take advantage of these opportunities for economic development. The Economist referred to Mexico as “Latin American’s perennial underachiever” — if the political will to manage those problems comes to pass, as appears increasingly possible, Mexico may well lose the “perennial underachiever” tag, along with the sombrero.

What This Means for Smaller Manufacturers

Mexico is a big country, 11th largest in the world by population, with an average age 27.4 years (as compared to 37.1 years in the U.S. and 41.2 years in Canada). [vi] And, Mexico is right next door to the U.S. American manufacturers should remain aware of Mexico and its potential across their entire Value Chain:

>> As a Competitor: As discussed above, Mexico enjoys several competitive advantages over many other nations. Expect Mexican manufacturers to become increasingly strong competitors.

>> As a Market: Economic development requires capital goods and infrastructure – related products and services. As Mexico’s per capita GDP grows, demand for consumer products will also grow. U.S. manufacturers are just as close to Mexican markets as Mexican suppliers are to U.S. markets.

>> As a Supplier: The competitive advantages that Mexico enjoys as a competitor also apply to Mexico as a supplier, especially in comparison to Asian suppliers.

Chuck - SedonaThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome

Photo credit: Man with Sombrero and Serape licensed through

[i] Here, the Vision 2050 report cites data from Goldman Sachs. Learn about Vision 2050 at the WBCSD website, The entire Vision 2050 document and/or a summary are available for free download in about 10 languages. There are also PowerPoint presentations and visual aids available.

[ii] Statistics from the World Fact Book,

[iii] These figures, and many others in this post, are from The Economist, 24 November 2012 issue, Special Report on Mexico. Reprints of the Special Report are available at In instances where figures are not footnoted in this post, refer to the Special Report.

[iv] Information on Ross Perot are from Wikipedia,

[v] Information from The Economist, ibid

[vi] Statistics from the World Fact Book,



On Trucks, Fuels and Cost

Transport and Your Value Chain

Value Chain Diagram

A manufacturer’s value chain usually begins in the natural world, where ultimate raw materials like iron ore, pulp wood or petroleum originate. The value chain then proceeds through some number of processing steps (often with branching steps and recycling loops) all the way through the final disposition of the finished product at the end of its useful life. Between each processing step, there is a transfer — usually a physical transport – of the work in process or finished product.

Heavy TruckThis post examines transfers between facilities, especially transfers using highway trucking. It is useful — and sobering – to construct a rough diagram of your Value Chain, starting with the origin of your ultimate raw materials and passing through the many steps through ultimate disposition. The distances involved can be mind boggling, and even a rough guess at the rolled costs of all of the transports involved even more so. Those costs are directly or indirectly reflected in your costs, and the ultimate customer’s cost. Clearly, the costs of trucking matter.

Transport Costs – Fuel Consumption and CO2 Emissions

Transportation represents about 27% of America’s primary energy consumption. The overwhelming majority of that energy comes from petroleum. Access to petroleum (crude oil) has been a major constraint to the American economy and a key determinant of American foreign policy for over four decades. Carbon dioxide (CO2) emissions to the atmosphere from the combustion of fuels derived from petroleum are believed to be a primary driver of climate change.

CO2 Emissions - Transportation

The chart labeled “Carbon Dioxide: Transportation” projects CO2 emissions from transportation sources through 2040. To good approximation, CO2 emissions can be taken to be proportional to petroleum–based fuels consumed.

The blue line indicates that light-duty vehicles (automobiles and small trucks) are the largest source of emissions (hence petroleum consumed). As you can see, the blue line crests around 2018, then declines rather smoothly. This projected decline is primarily attributed to improvements in vehicle fuel utilization efficiency.

The green line represents emissions (hence fuel consumption) by freight trucks – the vehicles primarily used in schlepping your raw materials and finished goods across your Value Chain. Unlike the blue line, the green line projects rather uniform annual increases into the future. This increase is largely attributed to increasing freight volumes.

Accordingly, for 2016, emissions from light vehicles are about 2½ times those from freight trucks. By 2040, that ratio drops to 1½ times. So, the relative importance of emissions (and petroleum consumption) by freight trucks increases rapidly.

Then What?

The projections behind the chart just discussed represent the U.S. Energy Information Agency’s “Reference Case”. The “Reference Case” is based on demographic, economic and technical projections. These projections assume timely compliance with applicable laws and regulations, such as the CAFE fuel consumption requirements for light vehicles. On the other hand, the projections do not include compliance with laws and regulations not yet finalized by the time the projections were made. Nor do the projections anticipate future technical developments, apart from those incorporated into existing laws or regulations.

So, there is a lot of good news here for manufacturers:

>> The U.S. government is projecting sustained increases in freight shipment volumes in the years to 2040, entailing increasing manufacturing activity.

>> The Government has recently finalized a second phase of its CAFE regulations on fuel consumption efficiency that will reduce fuel consumption in freight trucks by about 45% by 2027, compared to 2010 figures.

>> Possible future technical innovations, such as the use of natural gas as truck fuel, hydrogen fuel cell powered vehicles or electric (or hybrid) vehicles may prove to be practical.

All in all, manufacturers may look forward to increasing freight volumes and falling per ton-mile fuel costs (with corresponding CO2 emissions reductions) in the coming years.

Chuck & Joan in ParisThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington


This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Truck image licensed through

The Triple Bottom Line – Up Close and Personal

3P GraphicThe Triple Bottom Line model for Sustainability emphasizes the interdependence of the natural world, productive industry (which includes manufacturing, mining and agriculture) and human society. “Triple Bottom Line” sounds almost trite when read or said. However, when I look out my bedroom window, I have a vivid example of that interdependence literally right in front of me — the Verde River Green Zone.

The Edge of the Wild, a post to this blog from nearly two years ago, takes an up close and personal look at the Triple Bottom Line. – C.H.

The Edge of the Wild (from 9 December 2014)

The Verde River and Its Green Zone

My house is on a bluff, above and overlooking the upper reaches of the Verde River in the high desert of central Arizona. The Verde isn’t very big. However, its source is on the Mogollon Rim (a long stretch of stark cliffs marking the edge of the Colorado Plateau), fed from the 12,600’+ heights of the San Francisco Peaks. So, unlike many rivers and streams in Arizona, it rather reliably has water in it. (About 90% of all streams in Arizona are “ephemeral”, meaning they are dry except after heavy rains – which are rare.) Not surprisingly, the Verde is Arizona’s only federally designated Wild and Scenic River.

Sycamore Canyon RailwayThe Verde supports a narrow riparian green zone, typically spanning a hundred yards or so. The green zone, with its trees and foliage, stands in sharp contrast to the rocks and scrub of the adjacent desert. Riparian zones are quite rare in Arizona, constituting only about 0.4% of the land. Development within the riparian zone is hindered, since almost all of the land within the zone is subject to flash floods. Also, much of the land adjoining the river is within national forests, or is otherwise public property.

In Arizona, a few, thin riparian zones support an abundance of wildlife – coyote, javelin, waterfowl, eagles, hawks, hummingbirds and much more, including a significant number of endangered species. Riparian zones, to beg the obvious, are critical to biodiversity in arid Arizona.[1]

Little Daisy

Arizona is nicknamed “The Copper State”. The Little Daisy mine, extensively developed just in time to supply copper for the First World War, had a lot to do with that. The Little Daisy is on the slope of Mingus Mountain. Copper ore was moved down the mountain to be processed and smelted near Clarkdale, on the banks of the Verde. Mine tailings went along with the ore.[2]

There are a fair number of photographs of copper mining and refining operations here, many from a century ago. Suffice it to say that early 20th century copper mining was an environmental calamity.


Tuzigoot National MonumentTuzigoot National Monument stands near the Verde, about two miles downriver from Clarkdale. Tuzigoot is an archeological site where ruins from the Sinaguan Native American culture have been unearthed and partially reconstructed. The Sinaguan culture dates from about 550 C.E. – 1425 C.E. There are several more unexcavated sites like Tuzigoot along the Verde, including one about a quarter of a mile downriver from my house.[3]

The Sinaguan sites along the Verde were likely abandoned around 1200 C.E. The reason the sites were vacated is not clear. A period of severe drought is a reasonable guess.

Getting to the Point

This blog is about Sustainability. This post offers three examples, all within a few miles of my home that help clarify what Sustainability, in the Triple Bottom Line sense, is all about.

The Verde and its riparian zone >> I like to think of Common Wealth, that is, of worth held mutually by the inhabitants of some place or nation – or by humanity in general. This is a form of mutual inheritance that the current generation holds in trust for future generations. Each generation is entitled to the fruits of the Common Wealth, in return for protecting and extending the orchard.

Mining operations >> Early 20th century mining operations placed enormous stress on the environment, including waters like the Verde. The photographs are really striking. And the Verde, then as now, is a major water source for Phoenix, over a hundred miles downstream. Containing the effects of mining and industrial operations is a primary management responsibility, ethically as well as legally.

The Sinaguan people >> Apparently, the Sinaguan people lived along the Verde for several centuries. Then they left. The reason for their departure may well have been a collapse of the natural environment they depended on due to a prolonged drought.

This is a rather vivid illustration of the dependence of peoples and cultures on the natural environment. It applies to everybody. And it applies to human – generated pressures on the environment, as well as natural cyclic phenomena. The natural environment is your business – and your business’s business.

Chuck - Red RocksThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (

This blog and associated website ( are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

[1] For more on riparian green zones, see

[2] For more on the Little daisy mine and early 20th century copper mining, see

[3] “Sinagua” means “without water”. For more on the Sinaguan culture, see