by Gary Mintchell | Dec 10, 2024 | Business, Commentary, News
One of my trusted news sources is News Items from John Ellis. Today’s email contained an item—revolution in global manufacturing—that grabbed my immediate attention.
This regards China’s long term investment in electric vehicles that is now paying off. I remain convinced that one of the many reasons Elon Musk decided to throw whole-hearted support to Donald Trump was Trump’s belief in using tariffs to protect American industry. A significant one could be Tesla—the EV company under threat from China’s BYD.
Beyond Tesla lie many other American car companies that have been the foundation of our manufacturing health for a century. The other American car companies, bowing to short-term financial pressure, are scaling back on EV manufacturing just at the time China is poised to dominate the market.
Ellis quotes (requires subscription):
As (a) New York Times story makes clear, China now has an incredible—and I would argue unprecedented—capacity to supply over half the global market for cars, which is typically around 90 million cars a year.
China’s internal market is around 25 million cars, and not really growing—so rising domestic EV sales progressively frees up internal combustion engine capacity for export. Domestic demand for traditional cars is likely to be well under 10 million cars next year given the enormous shift toward EVs now underway inside China.
Put differently, China currently has the capacity to produce over two times its own domestic demand and is adding to that capacity quickly thanks to the rapid expansion of its electric vehicle sector. It thus has almost unlimited potential capacity to export.*
That sets the scale for a potential revolution in global manufacturing.
The story is partially derived from an article in The New York Times:
China is a leader in the transition to electric vehicles and it exports more of them than any other country. Chinese brands like BYD are becoming known worldwide for offering advanced electric cars at the most competitive prices. And as Chinese drivers have shifted rapidly to electric vehicles, demand for gasoline-powered cars in China has plunged and many are being exported instead.
Interesting that while waiting for the critical mass for the EV market, China is using its manufacturing capacity for internal combustion cars to export these.
But China’s trading partners say that China’s exports of both electric and gasoline-powered cars imperil millions of jobs and threaten major companies. Earlier this year, the United States and the European Union put significant new tariffs on electric cars from China. Governments are concerned because the auto industry plays a big role in national security, producing tanks, armored personnel carriers, freight trucks and other vehicles.
Two years of my undergraduate work was dominated by the study of international politics—how nations relate and interact with each other. I’m consistently amazed by the lack of understanding by US politicians elected to high office who do not seem to grasp the basics. For example, Trump seemed to think that the US could employ tariffs to bend other countries to our will. But other countries can employ the same tools back to us.
What’s more, China has used steep tariffs and other taxes as a barrier to car imports, so that practically all of the cars sold in China are made in China.
Relationships are complicated—both country-to-country as well as person-to-person.
by Gary Mintchell | Dec 3, 2024 | Commentary, News
I devoured newspapers from about age 12 until early middle age. I quit watching any TV news by 1990. It wasn’t a liberal/conservative thing. It was a reporting/hype thing. Too much idle speculation and opinion. Too little reporting.
My news for the past many years has been carefully curated RSS feeds plus two relatively new email sources—Axios and Morning Brew.
Last night, my evening edition of Axios entered my inbox. In it, Axios co-founder and publisher Jim VandeHei expanded upon remarks he had earlier made to the National Press Club. I support his point of view. I’ve occasionally written to him about a rare click-bait headline.
Read his entire essay here. I’ve included a snip to give you the flavor.
Trust in journalism fell far and fast. Elon Musk and millions more argue it is — and should be — buried forever, Jim writes.
They say anyone with unrestrained speech — anyone on X — can easily replace a discredited media. “You are the media now,” Musk repeatedly tells his 206 million followers.
Why it matters: My response, in a speech at the National Press Club that went shockingly viral, was: “Bullshit!” I argued that an America without clinical, fair, deep and fearless reporting will perish.
Absent reporting, which I define as the pursuit of fact-based truth without fear or favoritism, you’d have: more opioid deaths … more kids sexually abused in churches … more welfare fraud in Mississippi … more lawlessness in rural Alaska … more Harvey Weinsteins preying on young women … more corruption … more misinformation.
Reality check: You’re right to dunk on biased, sloppy, lazy coverage. I hate it, too: It undercuts the hard work of every on-the-level reporter working their beats — whether at the White House or in my hometown of Oshkosh, Wisconsin.
But we need to distinguish between “the media” and honest reporting. I try to avoid junk food — not all food. I’d starve.
📖 The backstory: Angry emails I received after the speech show how many lump all parts of “the media” together, sweeping in anyone who’s paid to talk or type or report. I read every one. To say a lot of people on X hate “the media” is a gross understatement. My inbox confirms this emphatically.
Axios is very much not the legacy media, which has done plenty to undermine its own credibility. I have helped build two media companies — Politico and Axios — based on my own frustrations with legacy media. Journalists too often write for each other or awards committees. They’re too slow to own up to mistakes, and too quick to pop off on social media in ways that betray bias or righteousness.
So 18 years ago, I left The Washington Post to help start Politico — aiming to build a more direct, authentic relationship between readers and reporters. Eight years ago, I left Politico to help start Axios, grounded in an “audience first” mentality. We’ll never have an opinion section. And our audience “Bill of Rights” promises: “We will go the extra mile to earn your trust. All employees are asked to refrain from taking/advocating for public positions on political topics.”
by Gary Mintchell | Nov 22, 2024 | Commentary, News
I wrote this article for an Italian automation magazine—Automazione Oggi (Automation Today). I’ve written a monthly column called News from America for 12 or 13 years. After a change in Presidents, they are curious about the new administration’s impact on manufacturing and international trade.
I studied electronics and engineering and worked in engineering for most of my career. But I also did a year of graduate school in political science. This allows me to explore both sides of my brain.
Americans use a descriptive phrase for people, especially men—the “alpha male.” This person needs to assert dominance. After asserting dominance, he values loyalty above all else. We know from his first presidency that Trump needs to feel that he is the alpha male.
We also know from his first presidency that he says many things, most of which he made up at the moment. What he’ll actually follow up on is anybody’s guess. We can see from his first Cabinet appointments that he is rewarding those who have been loyal to him.
Then we have the “dance of the billionaires.” Beginning with Elon Musk. To a lesser degree Jeff Bezos. Following the election, we’ve seen a trail of billionaires and corporate CEOs kissing the ring. All assume that Trump is easily manipulated through flattery. All have an agenda. All could possibly be fooled.
Trump favors tariffs. He does not seem to understand all the ramifications of tariffs. It appears that he thinks they are an alpha male tool to “make America great again” by stopping the flow of money to other countries, especially China. Tariffs have, however, a double edge. (See below.)
Musk hopes to sell Trump on tariffs for electric vehicles. Such tariffs would reduce competition for his Tesla manufacturing company allowing him to raise prices. This would generate more profits.
Musk also sells rockets to the government. He wants to increase that business. Enter Jeff Bezos who also wants to sell more rockets to the US government. Therefore, he quashed his newspaper’s endorsement of Harris. He also hurried to congratulate Trump and kiss his ring.
Tech CEOs such as Apple’s Tim Cook, Alphabet’s (Google) Sundar Pinchai, and Meta’s (Facebook) Mark Zuckerberg hope that Trump will fight for them against the European Union. That is a complicated dance worth watching.
Meanwhile, some of Trump’s early appointees have voiced opinions favorable to breaking up these large companies. Since that attitude does not reflect Trump’s outlook, this will be another dance worth watching. Trump does tire of people easily.
Since tariffs seem to be Trump’s favorite stick, I looked at the effects from his first term. The tariffs implemented during 2017-2021 had mixed and complex effects on U.S. manufacturing:
Positive Effects:
- Some U.S. steel and aluminum producers benefited from reduced foreign competition
- Created some jobs in specific protected industries
- Led to some companies relocating production to the U.S. to avoid tariffs
Negative Effects:
1. Higher input costs for manufacturers using steel/aluminum, particularly affecting:
- Auto manufacturing
- Construction equipment
- Appliance makers
2. Retaliatory tariffs from other countries hurt U.S. exports, especially:
- Agricultural products
- Industrial machinery
- Consumer goods
3. Supply chain disruptions as companies scrambled to find new suppliers
Economic Impact:
- Studies found the tariffs cost U.S. companies and consumers billions through higher prices
- The Federal Reserve estimated the tariffs led to a net loss of manufacturing jobs due to higher input costs
- Some manufacturers absorbed the higher costs, reducing their profit margins
- Others passed costs to consumers through higher prices
The first Trump presidency was marked by daily chaos. Media had to love him, since there was always a daily hot news item to draw people’s attention. I expect more of the same. And I expect that in manufacturing some will win and some will lose—pretty much like always.
by Gary Mintchell | Nov 21, 2024 | Business, Commentary, News
Each year for perhaps 20 years, Control magazine along with the ARC Advisory Group publishes a list of the top 50 automation suppliers globally and in North America in terms of revenue. This year’s list is introduced this way.
The largest global and North American automation suppliers report artificial intelligence (AI), sustainability, advanced computing and services drive growth.
The technologies have advanced along with the general advance in compute power, standardized networking (including fieldbuses), and visualization.
What I notice is the stability of the top 50. The leaders are mostly still the leaders with the exceptions only of a couple companies that have been on acquisition paths. You still have Siemens, ABB, Rockwell, Honeywell, Emerson, and Schneider Electric.
The market has matured. Some technologies have, also. Profinet, Ethernet/IP, HART are all stable and ubiquitous. There are also CCLink and EtherCat in certain areas.
I am writing this while collecting thoughts and observations at Rockwell Automation’s Automation Fair. This opportunity affords conversations with companies other than Rockwell Automation to assess the state of the industry.
One point stands out—the state of the market in North America. I notice that while Emerson and Rockwell Automation still rock, Siemens, ABB, and even Honeywell show small sales while Yokogawa is barely a blip. This coincides with the undertone talk amongst people at the various non-Rockwell stands here in Anaheim about the past year being slow.
All this is merely interesting. I’m sure that when you make automation procurement decisions, it will be based on far more than industry rank.
by Gary Mintchell | Nov 18, 2024 | Business, Commentary, News
A publicist I know well sent me this news from the Association for Advancing Automation (A3). I studied politics academically during a dark period of my early life. I rate this sentiment as excellent. I rate its political expediency at nearly zero. Open letters will not a president of any stripe influence.
Perhaps all Americans who read my thoughts might send something like this to your Congresspeople wherever you live. There may be some influence on industrial policy. The problem is that they each have their own agendas, and many clash with these sentiments. (I once witnessed a meeting of Congressperson Jim Jordan with constituents hurt by the tariff policy. No one left that meeting happy. Oh, well…)
We know from Trump’s first term manufacturing industry received mixed blessings from Washington’s policies. I expect more of the same. But we’re a democracy. Give it a shot.
To: President-Elect Donald Trump
From: Association for Advancing Automation (A3)
We congratulate you on your election as the 47th President of the United States of America. As an association dedicated to leadership in automation, we very much appreciate your emphasis on strengthening American manufacturing.
We call on you as the president-elect to keep the U.S. competitive in automation and robotics and to sustain our people in well-paid employment opportunities. The U.S. lags behind many countries in automation, contributing to the loss of 46,000 manufacturing jobs in October alone. While much emphasis has been placed on American leadership in AI, the fact is we are falling behind our adversaries and competitors in the real, physical world applications of AI, such as robotics. Without leadership in the physical manifestation of AI – robotics – the US will not only lose the robotics race, but also the AI race.
To reclaim US leadership in automation and robotics, we believe our country needs a national strategy, one that not only supports automation technology innovation but clearly addresses the serious supply chain problem of providing a sufficient workforce of technicians and engineers for the robotics and automation industries.
We call on the U.S. government to partner with the robotics and automation industry to share how these technologies are used to bring back jobs to the U.S. and to increase worker productivity and safety. We also need the government to boost workforce training, robotics education and career inspiration.
Robotics and other forms of automation will ultimately enable countries to be more competitive economically and in national security and hire more people in specialized capacities. We urge you to recognize the benefits automation brings to the U.S. workforce, manufacturing and overall prosperity.
We look forward to working together, as industry and government, to help our businesses and citizens succeed in today’s competitive and increasingly automated workforce.
Sincerely,
Jeff Burnstein
President
Association for Advancing Automation
by Gary Mintchell | Oct 8, 2024 | Commentary, News, Podcast
I’ve been swamped with a project for the past 10 weeks. It ends next Tuesday (supposed to end Saturday, but you know how projects go).
The travails of Google with the US DOJ and Apple with the European Union focusing on the issues of monopolistic mature market and openness spurred some thoughts on similarities with the control and automation market. Those thoughts coalesced around the podcast.
Gary on Manufacturing.
Gary on YouTube.
