Category: Business

Given how quickly Tesla and BYD were built, how could a Honda-Nissan merger ever make sense?

by philg

Honda is in talks to merge with or purchase Nissan. I can’t figure out the rationale. In the old days maybe you’d say that it takes a long time to build factories, establish dealer networks, etc. and, therefore, Nissan’s assets might be valuable. But Tesla and BYD started from nothing and quickly built factories, company-owned stores (better than dealers), engineering, and everything else necessary for being in the car business. In any case, Honda doesn’t have to start from scratch in the car business because it is already well-established in the car business. If Nissan has some good people, Honda could try to hire them away and set them up within their proven-to-be-profitable structure.

What do we see below that Honda doesn’t make or couldn’t make?

The $120,000+ Nissan GT-R is kind of fun, but only about 1,000 are built each year.

More generally, given what Tesla and BYD have accomplished why would a car company ever want to buy another car company?

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Could Costco hire an all-Asian staff in order to make customers happy?

by philg

Today is the Costco shareholder meeting. The Board recommends against studying whether Costco’s race-/gender-/2SLGBTQQIA+-based discrimination programs (“DEI”) are harmful. Here’s their argument for continuing to discriminate, from the annual meeting notice:

And we believe (and member feedback shows) that many of our members like to see themselves reflected in the people in our warehouses with whom they interact.

I’m wondering how much discrimination is permissible based on customer preference in a 21st century American business. Suppose that “many” customers said that Asian cashiers worked faster and more reliably. Could Costco then refuse to hire non-Asians to work as cashiers? Back in the 20th century, companies were told that they couldn’t use the “customer preference” excuse to exclude Black employees. But the Costco Board and its superstar attorneys tell us that the “customer preference” excuse is usable for excluding at least some employees based on race.

Here’s what Grok thinks the employee mix should look like:

ChatGPT seems to have some issues with (1) racism, and (2) counting to four:

(All of ChatGPT’s highly capable and fast-working Costco cashiers appear to identify as white, including in previous answers to prompts.)

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A social justice warrior is out at Intel

by philg

A follow-up to Why wasn’t diversity Intel’s strength? (August)….

Pat Gelsinger, a vigorous Black Lives Matter warrior in 2020 (below), has “retired” at age 63 from the Intel CEO job, 17 years before he would be old enough to run for U.S. President.

Same guy a couple of months later in 2020 (CNBC):

VMware CEO Pat Gelsinger said at a CNBC @Work virtual event on Thursday that for any open position at the technology company, the hiring process will have to include consideration of both a woman and a minority candidate. … Previously, the company had in place a rule that no hiring process could be complete unless a woman or person of color was interviewed. Now the company will require hiring managers to consider at least one candidate from both backgrounds. “We’ve focused lots more on gender than race, and now we need to put emphasis on those areas together,” Gelsinger said at the CNBC event.

A 2021 Fast Company interview:

I am proud of where we’re at right now. My two biggest business units are run by women. My biggest technology leadership role, technology development, is run by a woman. That’s just unheard of in the tech industry. Also, four of my nine board members are females … So right now, overall, we’re pretty good. But I’m still not satisfied. It needs to be better. There are still areas where we have representation gaps. Our African American community, we’re not where we need to be. We have to keep working on those areas.

Part of his 2022 “Corporate Responsibility Letter”:

(there was no responsibility to keep up with AMD and TSMC?)

In 2022, he explained why God wants us to discriminate by skin color and gender ID:

Is Gelsinger a recent convert to the religion of diversity, equity, and inclusion? He shared Bill Gates’s hostility toward white males in 2018:

In retrospect I’m kind of amazed that shareholders couldn’t have sued Intel to force the board to fire this guy back in 2020 or 2021. Gelsinger plainly disclosed that his priorities were on the skin color and gender ID of workers and executives rather than on profits for shareholders or competitive advantage for products in the marketplace.

Separately, how is Intel Arrow Lake doing? The high-end 285K desktop CPU is out of stock everywhere so either they can’t make them or consumer demand is high. Supposedly there is a microcode update coming that will improve performance for gaming addicts. I am surprised that microcode updates are safe if done in the obvious way (written to EEPROM). What if the power is interrupted? Are these “updates” actually patches in which replacement or additional microcode is loaded during the boot process into volatile memory within the CPU chip? So it doesn’t matter if the process doesn’t complete because it will just happen again the next time the computer is booted?

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Why can’t supervisors and replacement workers unload container ships during the longshoremen’s strike?

by philg

When the typical business is hit by a strike it is able to continue operating at a reduced capacity via the use of supervisors and/or replacement workers (airlines are an exception due to FAA regulations; see “Unions and Airlines”). Why are Atlantic and Gulf Coast U.S. ports completely shut down by the International Longshoremen’s Association strike for a 77 percent wage increase to compensate them for the inflation that the Biden-Harris administration says does not exist (CBS; 77 percent is pretty close to the rise in the cost of buying a house during the Biden-Harris years, considering the increase in price and the increase in mortgage rates).

The port operators have offered a 50 percent wage increase to compensate workers for non-existent inflation and the strike relates to the 77 v. 50 number.

Today’s question is why ports are shut down. Managers aren’t part of a union. Why can’t the management/supervisory staff at the ports operate the cranes and unload container ships at a reduced rate compared to if a full staff were available? Continued operations at a reduced capacity is what happened after Ronald Reagan fired America’s striking unionized air traffic controllers (state-sponsored NPR).

Historically, American employers had the right to hire permanent replacement workers for striking union workers, though the Biden-Harris administration is trying to eliminate that right (source (2023)):

The law of the land for the last 60 years has permitted employers to permanently replace employees engaged in an economic strike, providing employers with the right to hire workers to continue business operations in response to a union’s use of its most potent economic weapon. In its decision in Hot Shoppes, Inc., 146 NLRB 802 (1964),the Board held that employers may lawfully hire permanent replacements and that this action is not inherently destructive of the right to strike under the National Labor Relations Act (“Act”), making the employer’s motive for hiring the replacements immaterial. Accordingly, an employer does not need to prove it had a business necessity when hiring permanent replacements or that the employer’s ability to continue operations during a strike required the hiring of the replacements. Rather, the GC has the burden of proving the employer violated the Act by permanently replacing strikers because of an “independent unlawful purpose.”

Even if Biden-Harris makes it illegal for the ports to hire permanent replacements, why can’t the ports operate with temporary replacements? The container cranes are highly automated, which has, in fact, been a big motivation for fighting between unions and management (the “workers” aren’t actually required for the “work” because robots do a better job at running the cranes).

It looks like ports are mostly automated in other parts of the world, e.g., China, Europe, and Central America (source):

But the U.S. does have some ports that you’d think could be operated by managers. From the same article:

Currently, only four out of 360 commercial ports in the U.S. have at least semi-automated terminals: Los Angeles, Long Beach, New York & New Jersey and Virginia.

Why wouldn’t NY/NJ and Virginia be up and running with managers staring at the monitors while the computers do all the real work?

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Follow-up to American Factory, Taiwan edition

by philg

Happy Labor Day to those who celebrate by working!

Back in 2020, I covered Netflix: American Factory, a documentary of what happens when Chinese glass-making experts try to train Americans to be useful and also what happens to foreign investors when Democrat politicians circle the investment. In case you missed it, the New York Times ran an interesting follow-up to this movie: “What Works in Taiwan Doesn’t Always in Arizona, a Chipmaking Giant Learns” (August 8, 2024).

TSMC modeled its facility in Phoenix on one at home. But bringing the company’s complex manufacturing process to America has been a bigger challenge than it expected.

“We keep reminding ourselves that just because we are doing quite well in Taiwan doesn’t mean that we can actually bring the Taiwan practice here,” said Richard Liu, the director of employee communications and relations at the site.

In recent interviews, 12 TSMC employees, including executives, said culture clashes between Taiwanese managers and American workers had led to frustration on both sides. TSMC is known for its rigorous working conditions. It’s not uncommon for people to be called into work for emergencies in the middle of the night. In Phoenix, some American employees quit after disagreements over expectations boiled over, according to the employees, some of whom asked not to be named because they were not authorized to speak publicly.

While it was under construction, the company sent American engineers to Tainan for training and to shadow their Taiwanese counterparts, observing TSMC’s all-hands-on-deck way of working up close.

Jefferson Patz, an engineer fresh off a master’s degree from the University of California, San Diego, went to Tainan in 2021 for 18 months of training shortly after he joined the company.

“Oh, my gosh, people work hard,” Mr. Patz said. He recalled that this initial impression had given him a strong sense of what it took to succeed in the industry.

After returning to Arizona, Mr. Patz said, employees were expected to pitch in with work outside their job descriptions because construction of the facility was behind schedule.

This approach did not sit well with everyone. Workers were required to do whatever was needed to finish the most pressing job, he said. Some of the American workers also found it difficult to spend a long stretch of time in Taiwan.

TSMC should be able to make this work simply by paying $2 million/year to each worker in order to get smart conscientious people from among the U.S. population of 335 million (or maybe 350 million if we count the undocumented more accurately), but that could be a painful hit to profits! Let’s check out the labor pool in Taiwan vs. Arizona. World Population Review:

The same source gives an average IQ for Arizona of 98, substantially lower than Taiwan’s average of 106 (I question the use of 5 digits of precision, but maybe someone with a higher IQ than mine prepared the above table). American average IQ is falling, so the spread between AZ and Taiwan will only get worse.

How about conscientiousness, the willingness to show up to work every day and try to do every step of a procedure correctly? That’s heritable and the Americans with the highest fertility are those who barely work (source; the high fertility of those earning $300,000+/year can be ignored on a population-wide basis because there aren’t a lot of those parents).

Maybe it won’t matter for profits how ill-suited the average American worker is to working in a state-of-the-art fab because TSMC will be so stuffed with U.S. tax dollars that they can pay to get the workers they need.

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What did you do to celebrate Black Business Month?

by philg

A display on August 9, 2024 at our local Bank of America in Jupiter, Florida:

Note that no other ethnic, racial, gender ID, or sexual preference group was explicitly featured by Bank of America in a rotating display. Their only focus for August, apparently, is Black Business Month.

Readers: Now that the month is nearly over, what did you do to celebrate?

American Airlines was running a “Black Film Festival” (no other ethnic or racial group was featured) on August 17, 2024, at least:

(The screen shot shows me trying to catch up on Florida literature with an audiobook of Miami Blues, also made into a movie with Alec Baldwin (holding a gun).)

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Diversity goes to space (but can’t get back home)

by philg

“NASA Decides to Bring [$4.3 billion Boeing] Starliner Spacecraft Back to Earth Without Crew” (nasa.gov):

NASA will return Boeing’s Starliner to Earth without astronauts Butch Wilmore and Suni Williams aboard the spacecraft, the agency announced Saturday. The uncrewed return allows NASA and Boeing to continue gathering testing data on Starliner during its upcoming flight home, while also not accepting more risk than necessary for its crew.

This isn’t unconditionally great news for the astronauts. From The Sky Below (book by an astronaut):

my multiple spaceflights and spacewalks mean the likelihood of spinal trouble is almost as inevitable as an overloaded, rickety Jenga tower toppling over into a ragged heap. In space, the spine straightens and the intervertebral discs swell when not being compressed by gravity,

(the author spent about 8 weeks total in space)

Let’s check in with Boeing…

Each member of our global team brings something uniquely valuable to Boeing, and we grow stronger when everyone has an opportunity to contribute. Boeing remains committed to creating a culture of inclusion that attracts and retains the world’s top talent, and inspires every teammate to do their best work and grow their careers.

It turns out, though, that not all members of the global team are equally valuable. Black team members are apparently more valuable than non-Black ones. Boeing’s “Aspirations and Progress” section sets out “Increase the Black representation rate in the U.S. by 20%.” as the number one goal to achieve by 2025. Lower down on the page: “Fair360, a world leader in using data to assess companies’ commitment to inclusion, ranked Boeing 9th out of more than 160 companies reviewed.”

The “2024 Boeing Sustainability & Social Impact Report”:

We value diverse perspectives and continue to see more women and U.S. racial and ethnic minorities represented at nearly every level of the company compared with a year ago.

The company’s “Allies spreading awareness” page:

Their stories are part of a series celebrating the perspectives and accomplishments from LGBTQIA+ employees and allies across Boeing.

When her oldest child, Asher, recently came out as non-binary and embraced they/them/their pronouns, the family’s main priority was to be supportive and learn as much as they could about gender identity.

Elizabeth also looked into health insurance benefits and was able to connect Asher with Boeing’s Gender Affirmation Team, which provided information and resources to help Asher and family navigate through the transition process.

For Maggie Duckworth, advocacy for the transgender community is also a key component of her life. … The software engineer met her partner more than 20 years ago at an anime convention. The two bonded over the animated art where gender fluid characters were commonly a part of storylines. Later, Maggie’s partner, Ryn, came out as non-binary and now uses the pronouns they/them/theirs. “For a long time they were struggling with defining who they were,” Maggie said. “Then Ryn realized that they were (gender) neutral and we both felt relieved because we had found a definition.”

“I want to be an example for women in aerospace”:

One of [Chantel’s] main objectives in this role is to increase the representation of women in STEM (Science, Technology, Engineering and Mathematics) careers—a goal of personal significance.

If a person who identifies as a “woman” works at Boeing, one of the biggest tasks for which she is paid by Boeing shareholders is getting more “women” to go into STEM careers, regardless of whether those careers are at Boeing?

The most exciting part:

For the first time in her 8-year career, Chantel, a woman of color, reports to a director who is also a woman of color. Chantel believes she can support continued progress by ensuring other women in STEM see fulfilling career paths for themselves.

Her efforts help support our equity, diversity and inclusion commitment. In 2021, women’s representation at Boeing increased to 23.2% in the United States and 24.6% internationally. And representation for women of color at Boeing has increased at executive levels and throughout the company.

So the news isn’t all bad with Boeing. Diversity is up substantially year-over-year both right now and that was also true back in 2021.

The company’s most recent “feature stories” about the product:

Related:

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S.C. Johnson Frank Lloyd Wright tour

by philg

Another installment in the series “Stuff to do on the way to or from Oshkosh.”

Racine, Wisconsin is not just a center of arts and crafts. It’s corporate headquarters for S.C. Johnson, a family-run company that commissioned some of the largest Frank Lloyd Wright projects ever built. As part of the company’s commitment to the community, they’ve been running free public tours since the FLW HQ opened in 1939 (best to go on a weekend because more of the spaces are open; photography isn’t permitted indoors).

Visitors are welcome in a transplanted 1964 World’s Fair pavilion:

The pavilion showed To Be Alive!, which won an Academy Award for short documentary (one of the three screens can be seen on YouTube) and today also shows Carnaúba: A Son’s Memoir, which chronicles a 1998 recreation of a 1935 trip in a Sikorsky S-38 amphib.

After checking in at the pavilion, you walk by a couple of statues of Elizabeth Warren’s family before entering the main building.

You then enter the Research Tower, a 150-foot-high monument to architectural incompetence:

Every part of the Research Tower felt cramped (FLW was short and loved to make tall people uncomfortable) and a single narrow staircase provides the only form of emergency egress. S.C. Johnson limited the usage of the building almost immediately due to concerns about fire risk and the local fire marshal in the 1980s issued an order making the building illegal to occupy. Fortunately, real estate in Racine, Wisconsin is not so valuable that it is imperative to tear down this white (red brick) elephant.

S.C. Johnson apparently wasn’t soured on starchitecture and chose the UK’s Norman Foster to design an employee cafeteria/gym/museum/etc. The replica Sikorsky S-38 hangs in the lobby. In this building you learn more about the company’s five CEOs, all from within the family and all with technical experience or training (the current CEO has a PhD in physics). One inspiring quote from Sam Johnson, CEO N-1, was engraved into the 2010 Norman Foster building and says that every person has a “spirit of adventure”. Fair to say that coronapanic proved that the typical human in his/her/zir/their 20s is precisely adventurous enough to cower indoors for a year or two, leaving his/her/zir/their apartment only to get whatever injections the local public health officials have dreamed up?

The Johnson family loved to fly. Sam, for example, seems to have had a Cessna Citation Jet and was also a big supporter of EAA. Flying down to South America and setting up an American-style research lab in the jungle worked about as well for S.C. Johnson in 1935 as it did for Ford in 1928 (see Book review: Fordlandia). Here’s the current CEO’s pilot certificate from the FAA’s web site:

(Having a Private certificate with a jet type rating is truly the mark of a rich person!)

In the film about the 1998 trip in the Sikorsky replica, Sam Johnson is candid about his struggles with alcoholism. Folks who believe in the power of genetics won’t be surprised to learn that his mother was an alcoholic. The typical alcoholic is soon the target of a divorce lawsuit: “The incidence of marital dissolution from W1 to W2 was 15.5% for those with a past-12-month [alcohol use disorder; “AUD”] at W1, compared to 4.8% among those with no AUD” (source). Either for love of Sam or love of the family fortune that could be accessed only via continued marriage, Sam’s wife got him into treatment at the Mayo Clinic rather than following the well-worn path to the local family court.

Jet pilots should be grateful to S.C. Johnson for all of the cans of Pledge that have been used to clean windows. New Englanders who enjoy the woods should be grateful for all of the cans of OFF! that are required during the mosquito-infested summer and tick-infested fall and spring. Our brothers, sisters, and binary-resisters who shave their beards should be grateful for S.C. Johnson’s invention of Edge shaving cream (something the Followers of Science apparently reject, since they are often seen wearing an N95 mask over a full beard, contrary to the instructions that 3M includes with the mask). All of us can be grateful for Windex!

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Why wasn’t diversity Intel’s strength?

by philg

On the cusp of the release of Intel’s Arrow Lake CPUs, which contain some sort of feeble “AI processor” that might boost performance by 1 percent for anyone who has a graphics card plugged into his/her/zir/their desktop PC, the company will have to fire 15 percent of its workers due to a failure to make as much money as a receptionist in an NVIDIA branch office. Even a $20 billion gift from Joe Biden (March 2024) didn’t help.

How could this have happened to a company with diverse employees and diverse suppliers? Exhibit A:

They promise to discriminate against Asian male and white male suppliers for $1 billion. Intel spent “$300M to support a goal of reaching full workforce representation of women and underrepresented minorities in our U.S. workforce by 2020” (that’s $300 million that shareholders won’t now see, apparently).

Exhibit B:

(The person wearing the Pride shirt is next to the person in Islamic attire. Is this a Queers for Palestine situation?)

Intel says “Diversity, equity, and inclusion have long been Intel’s core values and are instrumental to driving innovation and delivering strong business growth.”

If diversity drives innovation and “strong business growth,” why is Intel being left in the dust by NVIDIA, TSMC, AMD, et al.? Does TSMC have more diversity in Hsinchu than Intel can find here in the U.S.? Is diversity not a strength for Intel or not a strength for a tech company or not a strength for any company?

If Intel’s diverse employees don’t concern themselves with making money every day for the shareholders, what have the employees been focused on? The official state religion:

A long-term perspective:

(Can this be correctly adjusted for splits? Yahoo! Finance says that it is.)

Update: Intel lost 26 percent of its value by the end of the day, falling to $21.48 per share. That results in a price/earnings ratio of 22.5, a bit lower than the average for the S&P 500. Intel is a huge bargain compared to AMD, which has a P/E ratio of 160! Maybe it is time to buy Intel?

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