Banks are often accused of being nit-picky and overzealous when they examine documents against a letter of credit. It seems they want every “t” crossed and every “i” dotted. Would you believe one exporter did not get paid because of a simple apostrophe?
The United States remains one of the few countries that employs the imperial measurement system. As if that doesn’t generate enough confusion, it becomes even worse when Americans use abbreviations, which make no logical sense to the rest of the world.
HOW BIG WAS THAT T.V.?
The merchandise description in one letter of credit stated, “Shipment of TV sets with 24” screens.” The description on the invoice presented stated, “Shipment of TV sets with 24’ screens,” and the bank rejected the documents because of this discrepancy. In the United States an apostrophe and quotation marks have different meanings when used to signify a unit of measure. An apostrophe designates feet. Quotation marks designate inches.
In an earlier blog, we related the story of Holstein cows, 24 months pregnant. The use of a dash makes a significant difference between 24 months and 2-4 months.
IMPLICATIONS OF "DISCREPANCIES"
Is a bank too nick-picky to note these discrepancies? Probably not, because of the implications. The burden of accuracy falls on the preparer of the documents. Before they are sent to the bank for examination, the preparer must understand and follow the requirements of the letter of credit as well as the rules stipulated in the UCP 600.
Mary Meeker, a partner at the prestigious venture capital firm Kleiner Perkins Caufield & Byers, has just released her annual Internet Trends report.
Meeker is uniquely qualified as she's been an internet analyst for a rather long time. In fact, this week's 2015 Internet Trend Report is her 20th edition. Such experience and the consistent high quality must be why audiences at this week's Code Conference (and millions of others) were so eager to see what she had to present this year.
As the internet itself is a broad topic, Meeker covers a wider variety of issues in her reports. Some are clearly obvious, while many have not been presented so clearly. To start off, it's important to realize there are now 2.8 billion internet users around the world -- which is up 8% from last year.
There are now 2.1 billion smartphone users -- growing 23% in 2014
In short, mobile growth has exploded and it's increasingly how people access the internet.
From the Advertising perspective, mobile is under-indexed and poised to grow the most.
It will be interesting to see what happens in the ~$25B+ mobile marketing arena. I'm sure we'll see the obvious contenders such as Facebook, Google and Snapchat, though something new could always come out of left field and dominate this space.
The report goes on to cover much more, such as a view from the enterprise data perspective:
Ten Years from Now, When We Look Back at How This Era of Big Data Evolved... We Will Be Stunned at How Uninformed We Used to Be When We Made Decisions – Billy Bosworth, DataStax CEO (2015)
Check out the full presentation here on SlideShare.
After years of resistance, oil executives are raising global-warming issue ahead of summit
By BILL SPINDLE and FRANCIS X. ROCCA, of the Wall Street Journal.
Oil companies are ratcheting up their involvement in the debate over climate change as governments, activists, churches and some big investors gear up for a global summit on the issue at the end of the year in Paris.
The stated goal of the summit is to keep manmade warming limited to two degrees Celsius above preindustrial levels, but governments remain far apart on how to achieve it.
Meeting such a goal will require far-reaching changes in energy-consumption patterns and likely efforts to put a cost on carbon use, many experts say. Activists have long focused much of their effort on trying to rein in the use of resource companies’ bread and butter: carbon-emitting fossil fuels.
RELATED Interview -- Mining Interest on C&C
Pope Francis is planning to weigh in on the environment in an encyclical—a letter intended to develop and explain Catholic teaching—due within the next few weeks, which has made Rome one of the focal points in the global-warming debate. Exxon Mobil Corp.recently dispatched one of its senior lobbyists and a planning executive to Rome in an attempt to brief the Vatican on its outlook for energy markets.
For years, shareholder activists have urged resource companies to curb emissions. More recently, some big investors are taking global warming into consideration in their portfolio building. The Church of England and Norway’s sovereign-wealth fund, one of the world’s biggest institutional investors, have sold off shares in pure-play coal companies.
‘We have to stop being defensive.’
—Total CEO Patrick Pouyanné
At the same time, some of the resource companies’ own shareholders are pushing them to scale back their dependence on carbon-based fuels, worried about the future financial impact of heightened global-warming regulation. Oil, mining and coal companies also are anticipating rules to limit emissions that would make oil and natural gas more costly, potentially reducing demand for the fuels.
This has led to a change in behavior. Where in the past executives could be dismissive of the climate-change debate or leap to defend their companies, industry officials are now raising the issue themselves and proposing remedies such as the imposition of a carbon tax.
“We have to stop being defensive,” Total SA Chief Executive Patrick Pouyanné told a major industry conference in Houston last month. “In the end, it won’t be solved by diplomacy only, but by private players, economic players like us.”
Total, Saudi Aramco, Eni SpA, BG PLC, Royal Dutch Shell PLC and others have formed an industry group specifically to add their collective voice to the climate debate, and they are trying to bring other leading international oil-and-gas companies into the group.
“Business is engaged in a way I’ve never seen before,” said Rachel Kyte, head of the climate-change division of the World Bank.
Similarly, the mining industry’s “approach to sustainable development has evolved,” said Gary Goldberg, chief executive of Newmont Mining Corp., one of the world’s biggest gold-mining companies. “It still needs to be addressed globally, and you still need to come up with a global solution.”
In February, Shell Chief Executive Ben van Beurden told a group of executives decked out in tuxedos and formal gowns at an oil-and-gas conference in London that they could no longer keep a “low profile on the issue” of climate change ahead of United Nations-sponsored talks in Paris this year that could result in new global carbon-emissions limits.
“We have to make sure that our voice is heard by members of government, by civil society and the general public,” he said.
The Vatican is another important constituency. In an unusually explicit mix of the political and pastoral, Pope Francis has said he wants his encyclical about the environment to come out before the Paris climate meeting, so that it can “make a contribution” to deliberations there.
“The minute the word got out that the pope was working on this, we had a lot of people contributing,” said Cardinal Peter Turkson of Ghana, who heads the Vatican office in charge of drafting the encyclical. “We listened to everybody who had something to say: physicians, academicians, students; people in all walks of life, including people from the oil industry.”
The Exxon briefing took place over a small private lunch at the home of a U.S. diplomat in the U.S. Embassy to the Holy See. A second Exxon lobbyist who is based in Italy attended the meeting, Exxon said.
The meeting also was attended by Curtis McKenzie, a Canadian national with experience in finance and the oil-and-gas industry. Mr. McKenzie has had several duties in Cardinal Turkson’s office, including administrative and research tasks and media relations, all on a voluntary basis. Such arrangements happen occasionally in Vatican offices, some of which serve much like mini-think tanks.
Vatican officials weren’t present, Mr. McKenzie said. He said he isn’t directly involved in work related to the encyclical. A lay member of the Franciscan religious order and a university professor also attended the meeting, but neither has connections to the Vatican, he said.
The encyclical pointedly wasn’t discussed at the meeting, Exxon and Mr. McKenzie said. The Exxon planning official gave a 16-slide PowerPoint presentation covering the company’s broad outlook for the global industry and energy use—a talk Exxon spokesman Alan Jeffers said its executives have delivered hundreds of times this year, including to another group of legislators and government officials, on the same trip to Rome.
Exxon said that interacting with the Vatican isn’t unusual for the company. “Exxon Mobil has a long-standing relationship with the Vatican and our people have had numerous interactions with Vatican officials over the years,” Mr. Jeffers said in an emailed comment.
Exxon and others are increasingly engaged with shareholders voicing concerns about the impact of carbon regulations on the value of their assets. Their argument: If governments rein in carbon emissions, companies may not be able to extract all the oil or metal they claim as reserves.
In response, Exxon published two reports a year ago arguing that governments are unlikely to impose restrictions that will slow economic growth. That virtually assures that fossil fuels will remain valuable, Exxon says.
Rex Tillerson, Exxon’s chairman and chief executive, told thousands of executives and industry officials at a recent industry conference that “everyone agrees” that even three decades from now about 80% of the world’s energy supply will come from fossil fuels.
“We think we’re in a business the world needs,” he said. “What we have to do is deliver in a way that is acceptable to the public.”
—Daniel Gilbert and John W. Miller contributed to this article.
An importer requested a bank to issue a letter of credit for ladies fashion dresses from Italy. When the importer completed the application for the letter of credit, he indicated the tenor of the drafts at 180 days sight with discount charges for the applicant.
Additionally, the letter of credit was issued as a revolving letter of credit with the balance reinstated on the first day of each month until the letter of credit expired six months later. This allowed the beneficiary to make shipments each month equal to the amount of the letter of credit.
BANKERS' ACCEPTANCES INCREASED THE RISK
This arrangement permitted the bank to make payment to the supplier in Italy upon receipt of the required shipping documents. The bank would then delay payment to the buyer for 180 days and the buyer agreed to pay for the cost of interest during the 180 days period.
Initially, everything went as planned. The bank received documents and found them in compliance with the terms of letter of credit. They remitted the payment to Italy, created a “Banker's Acceptance” for 180 days, and charged the cost of financing to the buyer. The bank released the documents so the buyer could clear the goods through customs, sell the dresses and collect the money before the due date of the draft.
WHERE IS THE PAYMENT?
The bank waited for the clock to wind down to the payment date, 180 days later. And wait they did. On the 180th day, when the bank requested payment from the buyer, they learned the buyer could not pay.
The buyer informed the bank that he was preparing to file for bankruptcy and the unsold dresses were in a warehouse. Since the bank had a lien on the assets of the company, the bank’s lending officer began arrangements to seize them. Unfortunately, the only assets available were the ladies fashion dresses, now 180 days old and no longer in season.
The bank’s loss increased exponentially because by the time they realized they had a problem with the shipment made in the first month, they had already obligated themselves for shipments made the subsequent five months.
HOW REAL IS "SELF-LIQUIDATING?"
The bank ultimately sold the dresses. The recovery of funds amounted to less than 50% of the bank’s loan and they took a loss for the balance of the unpaid loan.
While letters of credit seem self-liquidating and self-securing because of the underlying transactions, banks need to cautiously ascertain the value of goods and determine if they can be readily liquidated, or face the resulting consequences as illustrated in this lesson. Once it becomes known that a bank has distressed merchandise, the value of the merchandise drops significantly. Bankers, who do not have expertise in selling merchandise, eagerly find a buyer as quickly as possible even if it results in a loss.
This lesson illustrates why banks should be very cautious when issuing letters of credit; It carries the same risk as when a customer applies for a loan. Usually banks prefer not to rely on the underlying transaction as collateral. They typically will want some other collateral as well and often will require the applicant to secure the letter of credit with cash in an account at the bank.
The most common ways we refer to people at work are possibly the most destructive business terms ever devised. It's time to purge them from our terminology.
A few years ago, Bob Chapman, CEO of Barry Wehmiller, asked a military general,"How do you train or condition people to kill other people?" His answer was, "We don't. We teach them to take out targets that make bad decisions." Chapman went on to rightly observe, "The military uses language to dehumanize the taking of lives. We do the same thing in business." When we refer to people as "head count", "human capital", and a "human resource" we unintentionally dehumanize them as well.
The very concept of an employee came from the Factory System period of 1850-1970, which not so subtly turned employees into "stuff". The factory system needed people to run the machines, but the less human they acted and the more they resembled machines, the better the system worked. We've left the machines behind, but it's still convenient to see people as "stuff", as extensions of machines. When you search the thesaurus for synonyms for"employee", some of the more disturbing synonyms listed are things like "slave", "cog", "hand", "hired gun", "desk jockey", "hireling", and "working stiff." What we call people at work doesn't have a respectable history. With that legacy in hand, it's very easy to see how we got here.
Things That Dehumanize
Acommon definition of racismis, "prejudice, discrimination, or antagonism directed against someone on the belief that one's own race is superior." When we refer to people at work as "head count", "cogs", "work force", "capital", or as a "resource", we conveniently reduce them to something inferior and less human. We did this to people for centuries to enslave them. Doing it to people to dehumanize them at work is nowhere near as egregious, but it is built on the same principles of false superiority and inferiority. If we don't have to see people as fully human, it makes it easier to make decisions that negatively impact them.
There are a number of ways we refer to people at work that are deconstructive. All of them should be as off-limits as any racial slur, not because they are on the same level, but because both are dehumanizing. Here are some of the worst:
...And the most subtle and insidious of all, "human resources", which reduces people to the level of a chair, computer, forklift, or other business resource.
All of these terms make it easier to see people as "cogs in a wheel", allowing us to make decisions without as much regard for the individual human beings involved.
As with most legacy terminology, we don't think about the roots of such terms and usually don't mean to use them pejoratively. But words are powerful and communicate; or with repetition, actually determine what we really believe. So let's ban terms like these that make people seem less human, and that are worn out in exhaustion in our time. We can do better.
If you have a Human Resources department, it's time to change the name to something that emphasizes humanity and deemphasizes people as a resource. The very existence of such a department might be a related problem we can talk about in another post.
I'm not humancapital, or a humanresource. I'm a humanbeing. Going forward, please refer to me that way at work.
By Scott Gurvey
The Keystone XL Oil Pipeline has been one of the most controversial of energy issues since it was first commissioned in 2010. The new pipeline, actually the final phase of a four phase project of Calgary based TransCanada Corp., would double existing capacity to move oil extracted from Canadian tar sands in Alberta to refineries in Texas. Critics like Friends of the Earthcomplain the pipeline would “carry one of the world’s dirtiest fuels”. Environmentalists say production of tar sands oil means increased carbon dioxide emissions, water use and chemical contamination when compared to other oil sources and to date the U.S. government has not approved construction.
Pipeline safety is also an issue in the Keystone debate. Even though moving oil through pipelines is generally considered safer than the alternatives of rail or truck transport, the number of pipeline accidents reported each year remains “unacceptable” according to James Stafford, the editor of Oilprice.com. The U.S. Department of Transportation reports more than 62,000 barrels of oil were spilled in 703 incidents in 2014 alone.
Preventing spills has traditionally been a question of frequent, costly inspections. Inspections which have often failed to detect small amounts of corrosion, metal loss or tiny cracks which later result of major breaks. That is changing now in great part because of new technologies being developed for the Internet of Things.
These remote monitoring solutions, often called Supervisory Control and Data Acquisition (SCADA) systems, can provide operators with the ability to detect problems and intervene, taking action before a major fault event occurs.
The latest IoT technologies permit the low cost placement of sensors and other monitoring equipment along the pipeline, capable of transmitting status information in real time. Stafford says “there seems to be a sea change in the pipeline industry…. Pipeline companies will see dollars saved by using cost-effective monitoring systems to reduce pipeline leaks.”
Enter the Smart Pig
Robotic instruments, known as intelligent or “Smart Pigs” (The original pigs were made from straw wrapped in wire and used for cleaning. They made a squealing noise while traveling through the pipe, sounding to some like a pig squealing, which gave pigs their name) can now be deployed to both clean and inspect the pipeline from the inside, reporting its progress and findings contemporaneously often without stopping the flow of product. The result is more frequent inspections and the ability to dispatch repair crews to a location when needed, rather than tying them up making labor intensive inspections.
The U.S. DoT maintains a fact sheet designed to guide the industry on the use of smart pigs to make in-line inspections of pipeline systems.
The smart pigs collect great volumes of information, and IoT technologies allow oil companies to both retrieve and analyze that data in a timely manner. The Canadian communications company Telus provides oil pipeline monitoring and management services using wireless network connectivity to collect information on pipeline pressures and temperatures and pump station status. These stations are often located in remote locations and physical surroundings where manual “meter reading” is difficult.
Toronto based Fox-Tek offers an alternative, “pig-less” approach, placing a series of sensors on the outside of the pipeline. Fiber optic sensors are also employed to detect bends, strains and stress. These sensors may be able to detect small cracks that the smart pigs miss. Another innovation harnesses the “cloud” to bring computing power in the form of a data analytics package. The smart pig scans generate such massive amounts of data that it often takes months to analyze. Cloud based analytic software can reduce the massive amounts of raw data to graphs charts and diagrams summarizing what a pipeline operator most needs to know about temperature, pressure, rates of corrosion and even geological events which can effect pipeline safety.
The scaling ability of cloud computing allows the data analysis to proceed rapidly without incurring unacceptable cost. The effect is to use smart software to detect small problems before they grow into big ones.
Enter the Drones
Aerial observations have long been an element of pipeline safety inspections. Helicopters have been equipped with laser spectroscopic systems to detect leaks of both product and methane gas; infrared sensors to detect potential structural failures and to record pictures for visual inspections.
Now the development of intelligent drone vehicles, connected using IoT technologies, promises to provide additional utility for visual pipeline inspection at a lower cost. At the 2014 Intel Developer Forum, the company’s Kevin Williams demonstrated a drone with infrared sensors and gateway communications capability for pipeline monitoring.
The drone not only gathers data from its onboard sensors, it is also capable of operating autonomously when positioned over sectors of the pipeline where network connectivity is not possible. In these circumstances, the drone records the data and continues its inspection. When it reaches a section of the pipeline where connectivity is possible it establishes a connection for transmits the data it has previously acquired.
Transporting oil is always going to be a business requiring considerable care with an emphasis on safety. But the new technologies promise to have a positive impact on both the economics of pipeline operations and their environmental impact as they allow the industry to move from a position of reacting to problems after they arise to one of proactive prediction of impending problems in time to take remedial steps to prevent them from occurring.
Scott Gurvey - For more than 20 years, Scott Gurvey was the New York bureau chief and senior correspondent of the PBS broadcast Nightly Business Report. Gurvey conducted interviews with the CEOs of the world's leading corporations, and wrote a Web column, Public Offerings, for the PBS website.
By Bill Tucker, contributor at Forbes.
Vortex Bladeless is a radical company. It wants to completely change the way we get energy from the wind. Think wind stick instead of a massive tower with blades that capture blowing winds.
Wind stick. Really. Lest you think I’m mad, I’ve included a picture of this bladeless generator that helps with the visualization and explains the company name.
See? There are no blades. What that “stick” (the company prefers, mast) does is capitalize on an effect of the wind which has been a very serious problem for architects and engineers for decades.
When wind hits a structure and flows over its surfaces the flow changes and generates a cyclical pattern of vortices at the tail end of the flow. This is known as the vortex shedding effect which creates something known as vorticity and that is what Vortex Bladeless uses to generate energy. For those who need a explanation that exceeds my ability to fully explain, check out this link from Columbia University on the subject and then come back and join the rest of us who won’t wait for you. (you’re clearly ahead of us anyway)
If you are still here with me, the company likes to give a classic example of vorticity that is immediately understandable; the collapse of the Tacoma Narrows Bridge that came apart three months after it opened in 1940. This clip posted on YouTube from a film made as the bridge undulated, wavered and ultimately shows the very dramatic effect of vortex shedding. Powerful stuff. Engineers immediately changed the way they designed and built bridges as a result of this incident.
What the engineers at Vortex Bladeless are doing is embracing this effect instead of avoiding the aerodynamic instabilities to capitalize on the oscillation and therefore capture the energy. The mast is designed to oscillate in the wind (which is very different from Blowing in the Wind). As you can see in the picture above, this is not your usual wind turbine. It consists of a fixed mast, a power generator that has no moving parts which come into contact with each other and a semi-rigid fiberglass cylinder. The power generator is a system of magnetic coupling devices which means there are no gears needing lubrication and an overall system needing less maintenance.
According to David Suriol Puigvert, one of the company’s co-founders (there are 3), the costs of a Votex system are dramatically lower than traditional wind turbines. The company publically claims maintenance costs that are 80% below a traditional wind turbine with manufacturing costs that are 53% lower. The lower maintenance & manufacturing costs add up an estimated lower cost per kilowatt.
In addition to the lower carbon footprint of a wind turbine, Vortex claims even further reductions. Because there are no spinning blades, no birds are caught up and sent to their deaths in the name of greener energy. And the lack of blades means something else; much lower noise. Did you know there is a bi-annual conference for the purpose of resolving noise complaints from the large utility-scale turbines? I didn’t. Having driven by large wind farms in the mid-west I can say that I never noticed a problem yet it’s good to know a lot of attention is being given to the issue.
The fly in this very cool ointment is that the technology is a proven concept and is currently is being tested and fine tuned in the field. This means we are about a year away from the reality of Vortex generated electricity. Initially, the co-founders were looking at large generating devices. That remains a longer-term goal but a much shorter range goal is a device of 4kW Vortex that would be about 13 meters tall (40’) and weigh about 220lbs. The company sees this generator being used in conjunction with solar generation for homes that are either off the grid or want to be off the grid. They are also developing a 100W device that will stand about 3 meters (9’) tall weighing about 22lbs. It is named the Vortex Atlantis and the company believes it can be used in off-grid areas to bring power to third world/developing villages where power could be a matter of life and again, used with solar generation. Those devices are forecast to be on the market in roughly a year.A 1MW generator is currently forecast to be about 3 years from market.
Just a quick word about the company before wrapping up. Vortex is a Spanish tech start-up. Its funding, so far, has come from a Repsol Foundation Grant, a loan from the Spanish Government and venture capitalists in Spain (Spanish Angels). In February of this year, Vortex Bladeless relocated to Boston. Here it is working with Harvard University, SunEdison, IDEO and is working with venture capitalists for its next round of Series A funding. Due to public interest in investing in the company, they will launch a crowdfunding campaign on June 1. As always, look before you leap. This is very exciting technology but let your brain guide your investing not your excitement.
As we have discussed in various other blogs, letters of credit contain precise requirements that the beneficiary must meet in order to receive payment. The letter of credit must also state the specific documents needed to meet the requirements.
Then, other conditions may exist such as whether partial shipments are allowed or not. If allowed, the beneficiary may make a partial shipment, present documents and get paid for the value of the goods shipped. Later he may make another shipment, present documents and receive payment, etc.
One beneficiary enjoys telling the story of the letter of credit he received for the shipment of “one live cow.” The letter of credit contained the condition that partial shipments were not allowed.
He thought this condition rather humorous since a partial shipment would be, well, utterly impossible!
OK, so you're building the business of your dreams. But do you have any reference point for how your business actually affects you personally? If you don't, you just might be building a trap for yourself, not the business of your dreams.
If you don't have a handle on the Seven Stages of Business Ownership, you're likely to flame out personally, even if your business is successful.
Will You Be Owned By Your Business?
Just about every business founder/owner makes the mistake of assuming that if they build a great business, they'll automatically get a life, too. Big mistake. If you're building a business, you need to be as intentional about eventually getting a life as you are about building the business. Building the business always comes first, but if you don't intend to USE your business to build your ideal lifestyle, you won't own the business; the business will own you.
There are plenty of tools to grade what stage your business is in, but none for measuring how your business is impacting you. Here's one from our book, Making Money is Killing Your Business that focuses on what the business is doing for (or to) you personally.
As you read through the Seven Stages of Business Ownership, ask yourself,
1) What stage am I in personally, and
2) What stage is my goal? You can stop anywhere from Stage Five through Seven. But if you stop at Stage Four, which most business owners do, you will always be a hostage to your business. Stages One through Four are about generating money. Stages Five through Seven are about ensuring your business generates both time and money for you.
Get to at least Stage Five so you can have both.
Stage One--Start Up
Pouring time and ideas into creating the business & getting it off the ground. This is fun!
Survival is everything; funding is drying up. Urgently driving sales. We burn a lot of fuel on takeoff. I didn't think it would be this hard."
Regularly breaking even--woo hoo! But the business is totally dependent on me. Tension..."If I stop, the business stops. Must keep going...
Stage Four--Stability (& Growth)Regularly profitable, finally. The "American Dream!", followed in a few years by quiet desperation. Outwardly successful, inwardly deflated. My business owns me."
Now others can "make the chairs." The business makes money when I'm not around and I don't have to stitch it back together when I return. Only 5%-ish of business owners ever get to Stage Five. You can make millions and be stuck in Stage Four for decades because you have no time to enjoy the money. The reason only 5% make it? The Big Mindset Shift. They decide to demand that their business give them BOTH time and money, not just money. It's that simple. "I'm off the treadmill!"
Stage Six--SignificanceLeadership inplaceThe owner is about vision and guidance, not production. "I'm focused on making a difference, not making a chair."
Stage Seven--SuccessionLeadership incharge. The owner delegates guidance and focuses on vision, passing the day2day torch of leadership to others. They become "the myth"--when they walk in, people whisper, "Hey, that's the person who started it all." Leadership--"I used to solve and decide. Now I ask questions."
Beware Stages Four and Six
Stage four is the most dangerous stage. The urge to escape any future risk to get to the next stage keeps us on the treadmill for years, if not decades. But stopping at this stage ensures you bought a job, not a company, and will ensure you regularly fall back into Stages Two and Three.
Stage Six is the second most dangerous stage. If you go off and "play" too quickly at this stage, you will come back to a disaster. Focus for just a little bit longer, and make sure someone else is giving day-to-day guidance, and reporting transparently to you.
Which Stage is Your Objective?
Where are you? What's the one thingyou need to donowto get to the next stage? There's a hundred things you could do; just do the next one. If you can't get past Stage Four, it's head trash. Nobody is as good, competent, experienced, committed, etc. You made that come true. Stop it.
If you're in Stage Five or greater--congratulations--take the next month off with pay. They won't miss you!
Daimler Trucks North America is the first to get approval for self-driving commercial vehicles in the United States. The Freightliner Inspiration Truck, and other trucks like it, could have massive implications for the future of transportation.
The Inspiration truck features a system called Highway Pilot, which uses stereoscopic cameras and radar sensors to give it an autonomous autopilot mode when cruising on the highway. The truck can steer to stay between lane markers and adjust its speed and braking to maintain a safe following distance behind other cars on the road all while the driver is free to do other things.
It’s considered a “level 3” autonomous vehicle, meaning it enables hands-off highway driving under certain circumstances, but requires a driver to be present, ready to take the helm in an emergency or to pass other vehicles in the truck’s path. The driver is likewise required to assume control of the vehicle when exiting the highway, driving over local roads and pulling up to the loading dock for making or taking deliveries.
For the record, a “level 4″ vehicle would be able to perform all driving functions and monitor roadway conditions for an entire trip, truly freeing up the valuable resource of human time.
Daimler executives are being careful to allay fears of human employment disruption. “We don’t want to get rid of drivers,” says Sven Ennerst, head of Daimler Trucks’ development department. Daimler continues by repeatedly saying the technology won’t can’t change lanes on its own, it won’t be market-ready for a decade, and could never fully replace human drivers.
The reality remains that that it is a big step towards addressing a massive market need: safe and reliable transportation.
Some large freight carriers have already started incorporating innovative new safety features like blind spot monitoring, adaptive cruise control, and lane departure warnings. The economic case for these technologies is clear.
“Commercial vehicles are a safety issue,” says Xavier Mosquet, head of Boston Consulting Group’s North America automotive division. “And therefore anything that can get commercial vehicles out of trouble has a lot of value.”
With America's driver shortage continuing to worsen, good truck drivers cost more these days. Costs are also rising for companies that cut corners and hire unsafe drivers. Liability in a commercial truck accident is increasingly falling on the shipper.
HWP - Highway Pilot
In order to get the autonomous vehicle license plate from the state of Nevada, Daimler needed to prove the system could safely cover 10,000 miles on its own. This was done on test tracks in Germany and on quiet roads in Nevada.
Daimler ran a small study (16 drivers on a test track) to see how this autonomous system affects drivers. EEG readings showed they were 25 percent less tired than they were when they had to steer themselves.
Customers are very much interested in this system, according to Daimler. That’s no surprise: Making driving a job for the computer can reduce accidents, improve fuel efficiency, and maybe keep trucks on the road for longer, says Noël Perry, an economist who specializes in transportation and logistics. “They all love this.”
OIL AND GAS INDUSTRY UPDATE
The lower energy price environment is affecting new production and may be dampening broader economic growth in Colorado. Our contention remains that lower energy prices are a net negative to the Colorado economy since the state is a top 10 producer of both oil and gas. The severity of the dampening depends on the duration of the low price environment. Counties with significant industry production and employment will experience the greatest impact, but economies that participate in the supply chain will also be impacted. The energy economy of 2014 and 2015 looks vastly different than even three years ago. A lag is observed between prices and economic activity.
Oil and gas prices recorded a precipitous decline in 2014 that has extended into early spring 2015. As of mid-April, the West Texas Intermediate (WTI) spot price was 49% below the June 20, 2014, peak. Prices are 38% below the five-year average. Price volatility has stabilized compared to three months ago. The WTI has now recorded 10 months of yearover-year declines. Drilling permits and starts are down for the first three months of 2015 year-over-year in Colorado, and the rig count is down more than 40% year-over-year.
Natural gas prices are also off peak from 2014, down 44% in April. The average monthly price topped out at $6.00 per million BTUs in February before falling, to $2.63, in April (as of April 15).
The impact of gasoline prices is readily observable to consumers. Prices topped $3.71 per gallon on August 18, 2014, before falling 48%, to $1.93, in Colorado on January 19, 2015, according to the Energy Information Administration (EIA). Despite prices rebounding 25%, the average in Colorado of $2.41 on April 20, 2015, remains 34% below the same period a year ago, and 30% below the five-year average.
The Mining and Logging industry lagged the state entering the recession and led the state in its recovery. Employment in the Mining and Logging industry in Colorado is made up of mostly oil and gas workers (~80%). The industry continued to add jobs in 2008, a full eight months after the recession took hold on total employment in Colorado. However, the Mining and Logging industry quickly shed jobs as well, losing one-quarter of total employment in 12 months. As of March 2015, the industry was 18% above 2008 peak employment compared to 6% for total employment in the state.
Colorado’s oil and gas industry has changed dramatically over the past 10 years. In 2004, the value of natural gas production eclipsed oil production nearly 7 to 1, and the epicenter of Colorado energy production was in the gas-rich fields of La Plata, Montezuma, and Garfield counties. Garfield and Weld counties jockeyed for the top position in the number of drilling permits each year. The DenverJulesberg Basin quickly rivaled new drilling in the Piceance and San Juan basins. In 2014, oil production in Colorado totaled an estimated 93 million barrels, growing by 28 million barrels from 2013 (which is more than the total production in 2007). Natural gas production in 2014 was 9.2% below the 2011 peak.
During the last major price event in 2009, extraction jobs remained stable and pipeline transportation jobs increased (13%), but drilling (-49%), support activities (-19%), and pipeline construction (-27%) jobs decreased sharply. Industry wages declined by $604 million in a single year. However, employment rebounded strongly and led the state in the employment recovery following the recession.
While lower prices are a boost to the consumer (income effect), the downside risk of these lower prices is that Colorado’s energy economy slows, dragging down some of the strong growth that the state has benefited from postrecession. The energy industry pays above-average wages ($104,626 in 2013) and employs almost 34,000 workers upstream and midstream (30,000 employees, 4,000 sole proprietors). While many of these workers may not be affected by falling prices, the exploration and drilling jobs are among the first to be impacted. Monthly data through March show seasonally adjusted Mining and Logging employment decreasing month-over-month for the last two months, and the pace of growth slowing to 8.9% year-over– year, the slowest pace since February 2014.
Modeling the impact of lower oil and gas prices on the state economy, state GDP grows at a slower rate, but the impact of the lower prices is not recessionary. Total employment grows 1.1 percentage points slower in the state due to the oil price decline in 2015, but employment grows faster in 2016 and 2017 as oil prices rebound above $80 per barrel.
Richard Wobbekind Executive Director| Business Research Division Richard.Wobbekind@Colorado.EDU | 303-492-1147
Brian Lewandowski Associate Director | Business Research Division Brian.Lewandowski@Colorado.EDU | 303-492-3307
Leeds School of Business University of Colorado Boulder Direct: 303-492-3307 | http://leeds.colorado.edu/brd 420 UCB | Boulder, CO 80309
Seth Godin is the author of 17 books that have been best-sellers around the world and have been translated into more than 35 languages. In addition to his writing and speaking, Seth Godin was founder of Squidoo.com, a leading site recently sold to HubPages. His blog is one of the most popular in the world. Before his work as a writer and blogger, Godin was Vice President of Direct Marketing at Yahoo!, a job he got after selling them his pioneering 1990s online startup, Yoyodyne. In 2013, Godin was inducted into the Direct Marketing Hall of Fame, one of three chosen for this honor.
Any business idea is only as good as the subsequent marketing idea that helps it get noticed. Seth Godin has developed into one of the foremost authorities on ideas of marketing, innovation, and creativity. He’s sold millions of books, 17 of which have been bestsellers around the world. He’s launched multiple companies, and has turned the publishing industry on its head by launching his latest book series via Kickstarter. Godin knows that the best leadership, and the best marketing ideas come from ordinary people who put in the work required to discover the greatness inside of them.
Tesla Motors is expected to announce a new product later this week: Residential and Commercial Battery Systems.
It's clear Tesla is expanding its close partnership with Panasonic, the world's largest manufacturer of Lithium Ion Batteries, through the upcoming Gigafactory plant in Sparks, Nevada. Investors and Tesla advocates immediately speculated that the new product line would be a battery system.
The new product and business model were originally alluded to by founder Elon Musk on his twitter account.
Major new Tesla product line -- not a car -- will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30
While formally being announced on April 30th, Tesla seems to have confirmed this reasoning through a letter to investors. The letter confirmed a "home battery" and a "very large utility scale battery."
There is intriguing business genius with this move. The company is planning on scaling up battery production with the aim to achieve massive economies of scale. Designing a high potential battery product for homes and businesses could help create demand and expand its market position into the electric utility world.
For the customers, it makes economic sense to buy and store electricity at night when the price is low. The system could even sell unneeded electricity back to the grid when prices are high.
Widely implemented, systems like these could help the expansion of renewable energy sources that provide power intermittently when the sun shines or the wind blows.
Around 300 customers have already installed Tesla's batteries in their homes, reports The Guardian. "It’s clean, it’s quiet and it looks good in the garage," investment analyst Trip Chowdhry told the newspaper, adding that the system appeals to customers who want a constant connection to the internet. "If you are a gadget person living a digital life — you have iPhones and computers and you always want to be connected — the storage battery is a dream come true."
Continued business growth anticipated for Colorado in upcoming quarters, says CU-Boulder report.
With an increase in business filings in Colorado through the first quarter of 2015 -- including new and renewing entities and trade names -- employment in the state is expected to keep growing during the second and third quarters of the year, according to a University of Colorado Boulder report released today by Colorado Secretary of State Wayne Williams.
The quarterly indicators report, prepared by CU-Boulder’s Business Research Division at the Leeds School of Business, uses data from the secretary of state’s central business registry.
During the first quarter of 2015 a total of 28,115 new businesses formed, up from 26,523 during the same period in 2014.
“Coloradans continue to drive our economy upward by adding their ideas to the marketplace,” said Williams. “Our small businesses are the lifeblood of our communities and their growth is encouraging.”
Colorado recorded 103,719 new entities during the 12-month period ending in March, up from 102,127 new entities recorded in the 12-month period ending in December 2014.
“Despite a drop in employment in Colorado from February to March, other indicators continue to point to a very healthy economy,” said economist Richard Wobbekind, executive director of CU-Boulder’s Business Research Division.
“While new business filings remain impressive, the employment outlook is dampening slightly for 2015.”
Existing entity renewals spiked in the first quarter of 2015 at a record 126,282, up from 107,848 in the fourth quarter of last year. Domestic limited liability companies represented the greatest increase in renewals among existing entities.
The number of Colorado entities in good standing went up in the first quarter to 571,386, a 7 percent increase compared with the same time in 2014.
For more publications by the Business Research Division of the Leeds School of Business at CU Boulder, click here.
By Brian Lewandowski, Associate Director, Business Research Division, Leeds School of Business
The March jobs report was released for Colorado today, with the preliminary numbers showing a month-over-month decline in employment (-3,900 jobs, -0.2%), and a downward revision to the February estimates. According to data from the Bureau of Labor Statistics, March recorded 67,700 more jobs than the same month in 2013, increasing 2.8% year-over-year. The pace of growth slowed, according to the preliminary March numbers, after growing in excess of 3% for 16 consecutive months. Year-over-year growth in March ranked Colorado 11th nationally, and monthly growth ranked the state 32nd. Average weekly wages increased year over year for the first three quarters of 2014 (4.2%, 2.9%, and 3%, respectively). State per capita personal income increased 3.9% in 2014 to rank 14th nationally, and quarterly personal income rose 5.9% year-over-year in Q4 2014.
Colorado employment grew year-over-year in all of Colorado’s metropolitan statistical areas
(MSAs), while monthly growth decreased in three MSAs. Industry growth was recorded in 10 of the 11 industries in the state year-over-year, but growth was only recorded in four industries month-over-month. The velocity of growth slowed in 8 industries.
The greatest year-over-year percentage gains were in Construction (10.4%), Mining and Logging (8.9%), and Education and Health Services (4.9%). The weakest sectors for growth included Information (-2.3%), Other Services (0.7%), and Professional and Business Services (1%). Compared to February, the strongest growth came from Financial Activities, Government, and Education and Health Services; the weakest being Mining and Logging, Professional and Business Services, and Other Services.
Growth in Colorado’s Manufacturing Sector ranked 3rd nationally, with 3.3% year-over-year
growth, but employment slipped 0.2% from February to March. Employment in the Mining and
Logging sector, which is dominated by oil and gas activity, was up 8.9% year-over-year in
March, but the employment estimates were revised down in February, and continued to lose jobs in March (1.1% month-over-month).
The construction industry increased by the greatest pace and absolute number of jobs year-over- year in Colorado, and home prices increased 9% year-over-year in Q4 2014 according to the FHFA home price index.
While WTI oil spot prices began to fall in June 2014, the economic indicators remained fairly
strong until early 2015, subsequently declining. As of mid-April, the WTI spot price was down
52% from June 20, 2014. Average weekly natural gas (Henry Hub) prices were down 43% year- over-year in mid-April, and gasoline prices down 36%. The falling oil and gas prices have placed a drag on the oil and gas industry nationally and in Colorado. The Baker-Hughes rig count in Colorado was down 42% in April compared to the same period in 2014, and was down 48% nationally. Evidence of the slowing industry also shows in the employment numbers—the Mining and Logging Sector as a whole lost jobs nationally in January, February, and March, down 29,000 jobs from December (-3.2%). Colorado has recorded two consecutive months of Business Research Division Leeds School of Business University of Colorado Boulder modest employment declines in the sector, as has the Greeley MSA. Monthly drilling permits—a metric that tends to be volatile—decreased year-over-year in March. Of the 42 states with published Mining and Logging employment, only 5 states marked monthly employment growth in March, and 12 recorded year-over-year growth.
The March unemployment rate stood at 4.2% for the fourth consecutive month, ranking
Colorado 14th nationally. At the low end, Nebraska and North Dakota are ranked 1st and 2nd, at 2.6% and 3.1%, respectively. At the high end, Nevada and Mississippi were ranked 50th and 49th with 7.1% and 6.8% unemployment, respectively. Year-over-year growth (1%) in the Colorado labor force ranked 28th in percentage terms and 22nd in absolute growth.
Comparing Colorado job growth to other states, Colorado still remains one of the best recovery states in the nation in terms of employment, ranking 4th nationally for growth above the previous peak, behind only North Dakota, Texas, and Utah. Colorado now measures 6% above 2008 peak employment compared to 2% for the nation. National job growth weakened in March, with the United States adding 126,000 jobs compared to 264,000 in February. The three-month moving average ending in March was 197,000, compared to 193,000 a year ago.
March State Employment Growth, Month-over-Month
Data Source: Bureau of Labor Statistics, CES (Seasonally Adjusted).
Despite growth across the state, wide variations persist, with the year-over-year growth recorded in the Greeley (7.2%), Denver-Aurora-Broomfield (3.6%), Pueblo (2.9%), Fort Collins-Loveland (2.8%), Colorado Springs (2%), Boulder (1.7%), and Grand Junction (1.3%) MSAs. Month-over-month growth was recorded in the Fort Collins (0.5%), Colorado Springs (0.3%), Grand Junction (0.2%), and Boulder (0.1%) MSAs. Month-over-month, employment decreased slightly in the Denver-Aurora-Broomfield (-0.2%), Greeley (-0.5%), and Pueblo (-0.7%) MSAs.
The April national jobs report will be released May 8, 2015. The April state jobs report will be released May 27, 2015.
For more publications by the Business Research Division of the Leeds School of Business at CU Boulder, click here.
TPG, which is the world's largest casino owner will hold the majority stake in Cirque du Soleil. As it turn out Cirque has seen a decline in show success, not in all shows, but a few since 2012.
Ian Austen of the Wall Street Journal wrote the following.
OTTAWA — Like many a Vegas act, Cirque du Soleil had become a bit flabby and passé. But a group of investors is betting that China — and more important, its growing demand for Western entertainment — may be an answer to the circus troupe’s midlife ennui.
On Monday, a consortium of private equity investors led by TPG agreed to buy Cirque du Soleil for 1.5 billion Canadian dollars, a purchase that will pave the way for the company to expand into China.
One of the buyers, Fosun of China, is heavily invested in entertainment and travel businesses, including the recent purchase of Club Med. The plan is to open a Cirque office in China.
Investors and companies around the globe are trying to capitalize on the swelling leisure spending by China’s growing middle class. The Walt Disney Company is building a $5.5 billion theme park resort in Shanghai. Several American movie studies, including Lionsgate, Studio 8 at Sony Pictures and STX Entertainment, have formed joint ventures with Chinese players. On Sunday, Dick Cook, a former chairman of Walt Disney Studios, announced the formation of a movie company in partnership with the Chinese conglomerate Citic Guoan Group.
“We’re looking at an entertainment boom in China,” said Robert Cain, a film producer from Los Angeles who has done business there for about 25 years. “It’s really underdeveloped.”
Cirque — which merges elements of dance, performance art and high-technology stagecraft with traditional circus acrobatics — has struggled to break into the fast-growing Chinese market.
In 2012, a lavish Cirque production in Macau closed prematurely because of poor attendance. Chinese gamblers, unlike their counterparts in Las Vegas, where Cirque has eight permanent shows running, don’t have much interest in entertainment.
L. Patrick Leroux, a professor at Concordia University in Montreal who founded an academic group that researches circuses, said that shorter-run Cirque shows presented in other Chinese cities have also struggled. Part of the problem, he said, is that the Cirque’s traditional formula is just not to Chinese tastes.
He says that Cirque usually focuses heavily on New Age narratives, often about the plight of a common man or woman. Instead, the Chinese tend to prefer shows that feature large numbers of performers, where the acrobatics “are choreographed and very precise.” Several Chinese circuses, Mr. Leroux said, have combined those elements with Cirque’s style to create successful shows.
The investors did not offer many specifics about their plans in China, instead speaking to their global ambitions. “We are excited about the opportunity to bring our global platform of resources and know-how to propel the growth of Cirque’s unique brand, content and capabilities around the world,” David Trujillo, a partner at TPG, said in a statement.
Joshua B. Grode, a lawyer with Irell & Manella in Los Angeles who has been involved in movie deals in China, said that TPG and Fosun were most likely attracted by both Cirque’s high brand recognition in the West as well as the prospect of a China expansion. “You have a growing middle class and that middle class starts to have the beginnings of disposable income, how do you capture that?” he said. “One approach is to bring in recognized brands and have them do what they do without having to learn it.”
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The sale will be politically sensitive in Quebec, where Cirque is based and where it is a major employer. In a less prominent case in 2012, the province effectively blocked a deal for Lowe’s to buy a Quebec-based home repair company.
By including Caisse de dépôt et placement du Québec, the provincial pension and investment fund, as a minority partner, the new owners hope to block that kind of problem. The founder, Guy Laliberté, will also maintain a stake. The deal will include guarantees that the business headquarters and “center for creative and artistic services” remain in Montreal.
Mr. Laliberté, who started in the business as a busker and fire breather, opened Cirque three decades ago with a grant from the provincial government. The company now has 17 elaborate productions playing in North and South America as well as Europe. And in recent years it has become as closely associated with Las Vegas as Dean Martin and Sammy Davis Jr. once were.
Last year, Cirque established a theatrical division to develop shows for Broadway. That division is now teaming with NBC on a live musical broadcast of “The Wiz,” and hopes that broadcast will transfer to the stage.
The path to a sale started more than eight years ago as the global economy started to stumble.
In 2008, Cirque sold a stake to a group of Dubai investors. The investors, the real estate company Nakheel and Istithmar World Capital, would provide the funds to further Cirque’s international expansion.
At the same time, Mr. Laliberté stepped back from daily management of Cirque to spend time with his family and focus on personal endeavors including a spaceflight aboard a Russian Soyuz capsule.
When the global financial crisis hit, and the Dubai investors failed to come up with the necessary funds, Mr. Laliberté bought back their 20 percent stake.
Cirque struggled, as some new shows failed. “For the first time, after 25 years of constant growth, we went through a crisis,” Mr. Laliberté said.
A closing forced by the 2011 tsunami in Japan eventually led to the shutdown of a major production there. Other shows around the world did not attract sufficient audiences, or were so costly that profits were minimal. Its New York efforts have largely faltered; the 2010 production of “Banana Shpeel” at the Beacon Theater was a flop, and then a production of “Zarkana,” at Radio City Music Hall, ran only two summers, instead of the anticipated five.
In 2012, Mr. Laliberté returned to active management, and ordered a strategic review. The company cut roughly $100 million in annual costs, including laying off 400 employees.
During the news conference, Cirque’s new chairman, Mitch Garber, a Quebec businessman with close ties to TPG and Mr. Laliberté, described the company as “very profitable.” Last year, Mr. Laliberté said Cirque had annual revenues of 850 million Canadian dollars.
“This is by no means a rebuilding acquisition,” Mr. Garber said.
Correction: April 21, 2015
An earlier version of this article misstated the surname of a lawyer who has been involved in movie deals in China. He is Joshua B. Grode, not Grod.
Brooks Barnes contributed reporting from Los Angeles and Michael Paulson from New York.
Leadership Communicator & Author
Communicator, author, and pastor, ANDY STANLEY founded Atlanta-based North Point Ministries in 1995.
Today, NPM is comprised of six churches in the Atlanta area, serving more than 36,000 people weekly, as well as a network of 30 churches around the globe. As host of NBC’s Your Move with Andy Stanley, reaching over 36 million viewers in less than two years on the air, and author of 20-plus books including Ask It, How to Be Rich, Deep & Wide, Visioneering, and Next Generation Leader, he is considered one of the most influential living pastors in America.
Andy Stanley and his wife, Sandra, have three grown children and live near Atlanta.
A growing number of great companies are dumping hiring managers altogether, and putting hiring in the hands of peer teams. It turns out eight to ten brains are better than one.Harvard Business Review says 80 percent of employee turnover is due to bad hiring decisions, and that those decisions can cost more than five times the annual salary of the bad hire. The problem is largely with who is doing the hiring: managers.
Easily the most broken part of the recruiting process is that hiring and ops managers are the ones doing it. That's an archaic Industrial Age factory system approach that was a bad idea back then, and a much worse idea in the Participation Age we're in today. When managers do the hiring, it's just one more thing that makes Dilbert funny, and Dilbert should no longer be funny.
Managerless Hiring Works Better
Managers may be the start of the process, but at a growing number of great companies, they not only don't do the hiring, they no longer exist, having been replaced with self-managed teams. In many companies with very high retention, hiring is done by peers of the person who is being hired. W. L. Gore (10,000 Stakeholders), Semco (3,000), Barry Wehmiller (7,000), and hundreds more with some of the highest retention in the world, all push hiring to the peer team level.
At Semco, a manufacturing company, with 3,000 people--there isn't a single manager in the whole place; all hiring is done by the 8-10 person team on which that new hire will work. How does it work to have peers do the hiring? Semco's employee turnover for the last 20+ years has consistently hovered in the incredibly low 1-2% range.
Barry-Wehmiller, a $1.7billion company, never does a "head count" of retention, they count hearts. How does this culture help them? The data is dramatic. While 88% of employees in traditionally managed companies feel they work for an organization that doesn't care for them, at Barry-Wehmiller, where peers do the hiring and managers don't exist, it's 180 degrees the other way--79 percent surveyed by an outside organization said they believe BW cares about them. Culture matters, and having peers hire peers is a core cultural distinction for BW.
Managerless Cultures See People Very Differently
It's important to understand why this works. Gore, Semco, Wehmiller and other managerless cultures share a common, simple but very profound belief; that EVERYONE is smart and motivated. Because that belief is deeply held, they have all set up a company business culture where that can be a self-fulfilling prophecy. They attract and retain nothing but smart and motivated people who don't need to be managed.
In contrast, companies who rely on managers to do the hiring have a culture that believes the manager is at least a little bit smarter and more motivated, more experienced, more committed, etc. And too often, the assumption is the manager is a lot more of all those things. That is also a cultural distinction, but a very negative one.
Such a common but insidious mindset is a self-fulfilling prophecy as well. Those companies have trouble finding or retaining good people. Why wouldn't they? Who wants to work in an environment where it's clear I'm not going to be allowed to be as smart and/or motivated as the people up the hierarchy from me?
Can You, Or Can't You?
If your culture is set on believing people are smart and motivated, you can take managers out of the picture and put the hiring process in the hands of those most affected by the decision--the new hire's peers. If you think only certain rare people have the skill, experience, smarts or motivation to hire, you're communicating the worst possible message to those you are hiring, as well as those who are already there.
As Henry Ford said, "Whether you think you can, or you think you can't, you're right. Believe that everyone is smart and motivated, and wants to participate in the building of a great company. Don't just hope it will work out, but intend for them to take the ball and run with it, because you get what you intend, not what you hope for.
America’s Business Leaders Urge Swift Congressional Approval of TPA Legislation to Advance U.S. Trade Agreements
Washington – Business Roundtable, representing CEOs of U.S. companies from every sector of the economy, today commended Senators Orrin Hatch (R-UT) and Ron Wyden (D-OR) and Representative Paul Ryan (R-WI) for their introduction of a bipartisan bill to update and renew Trade Promotion Authority (TPA). Approval of legislation to modernize TPA is a top priority for Business Roundtable.
“The United States is currently pursuing one of the most robust and diverse trade agendas in many years, so we urge Congress and the President to work together to enact TPA legislation as soon as possible,” said Tom Linebarger, Chairman and Chief Executive Officer, Cummins Inc., and Chair, Business Roundtable International Engagement Committee.
“Trade Promotion Authority strengthens the hands of U.S. negotiators and will help ensure the best possible outcome in the Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, Trade in Services Agreement and future trade deals. These trade agreements provide enormous benefits to the United States by increasing the number of consumers for the products made in our country.”
Updating the 2002 TPA law also provides an important opportunity for Congress and the President to work together to shape a strategic vision and goals for U.S. trade policy.
“Creating opportunities for American companies to reach customers through 21st century trade agreements can help fuel our economy and keep the United States globally competitive,” Linebarger said. “Passing TPA as soon as possible is critical to helping create new trade and growth opportunities for the U.S. economy, supporting jobs for American workers and farmers and strengthening communities across the United States.”
As part of its TPA advocacy efforts, Business Roundtable leads theTrade Benefits America Coalition, a broad-based alliance of more than 250 business and agricultural associations and companies dedicated to the pursuit of U.S. trade agreements and passage of modernized TPA. To learn more, visit www.tradebenefitsamerica.org.
Business Roundtable released an economic growth agenda earlier this year that includes tax reform, expanded trade opportunities, immigration reform, fiscal stability and infrastructure investment. Learn more about the Business Roundtable position on Trade Promotion Authority here and our 2015 growth agenda here.
Changing the U.S. income tax system to a consumption tax system is appealing. The Senate Finance Committee is considering the consumption-tax idea. It's thought that this method of taxing would boost economic growth. Consumption tax would tax money spent instead of income earned. John D. McKinnon further explains consumption tax in his article, "Tax Proposals Would Move U.S. Closer to Global Norm." Below is that article.
As lawmakers have examined a tax overhaul, “it becomes extremely difficult to see a political path to accomplish it” within the confines of the current income-tax system, said Sen. Ben Cardin (D., Md.), co-chairman of a Finance Committee working group negotiating a possible overhaul of business taxes.
As a result, the idea of a consumption tax “is getting a great deal more respect, and it is in the discussions,” he said.
Mr. Cardin introduced legislation last year to create a type of consumption tax known as a value-added tax and at the same time lower business taxes and scrap income taxes completely for lower-income Americans.
Republicans on the working group also are interested in the concept, including a proposal put forward recently by GOP Sens. Marco Rubio of Florida and Mike Lee of Utah. That plan would make several changes to the tax code that would move the nation closer to a consumption-based system.
Many GOP members “believe that there are economic benefits to moving away from taxation of income and toward taxation of consumption,” a Senate aide said. That includes Republican John Thune of South Dakota, co-chairman of the working group along with Mr. Cardin, the aide said.
As the name implies, consumption-style taxes hit the money taxpayers spend, rather than income they receive. One prominent feature of consumption systems is that they generally tax savings and investment lightly or not at all. That, in turn, encourages more investment and innovation, and ultimately more growth, many economists contend.
The U.S. tax system already has some features of a consumption system, such as tax-advantaged retirement-savings accounts and lower rates for investment income. In general, though, the consumption-tax proposals being floated would go much further.
The plans vary widely in their details. They include European-style value-added taxes, a type of sales tax that is collected along each stage of the production process; traditional sales taxes; and taxes on carbon-based pollution.
Some of these proposals would have consumers pay another tax in addition to existing state and local sales taxes, while others would merely reshape the current system to tilt it more toward consumption.
The discussions are in early stages. The likelihood that senators will agree on a consumption tax—or any major overhaul—in current negotiations remains slim. Introducing such a different tax system also brings the fear of the unknown.
Still, the talks open up a possible new direction in slow-moving discussions about rewriting the U.S. tax system. Enactment of a broad-based federal consumption tax would align the U.S. with a global trend. In the U.S., most of those taxes now are in the form of state and local sales taxes.
Until now, efforts in Congress to revamp the tax system largely have focused on rewriting the income-tax rules. The most prominent was a plan put forward last year by then-Ways and Means Chairman Dave Camp (R., Mich.) that would have lowered rates for businesses and individuals while paring back deductions.
But that approach, some lawmakers contend, faced a basic mathematical problem, particularly on the business side: The U.S. corporate tax rate is the highest in the developed world, and lowering it substantially would require eliminating a large number of tax breaks to avoid adding to budget deficits. That could offset any economic benefit of lower rates.
Many experts believe moving to a consumption tax would ease the difficult policy task, at least on paper. While there is still lively debate about the relative merits of income and consumption taxes, some economists believe consumption taxes encourage more savings and lead to faster economic growth.
Some liberals are concerned that consumption taxes affect poor people disproportionately, while unduly benefiting the rich, unless adjustments are made. For their part, conservatives fear that some types of consumption tax—particularly value-added taxes—would make it too easy to dial up government revenue collection.
Some lawmakers also worry about the potential impact on the federal deficit, particularly if Congress relies too much on estimates of a future economic boost.
Both of the leaders of the tax-writing committees in Congress, Rep. Paul Ryan (R., Wis.) and Sen. Orrin Hatch (R., Utah), say they are intrigued by the consumption-tax approach, while acknowledging some potential drawbacks.
“There’s a lot of merit” to a consumption-tax system, said Ryan spokesman Brendan Buck. As the House Ways and Means Committee thinks long-term about a tax overhaul, the consumption-tax approach is one that will be considered, he added.
The Obama administration declined to comment. President Barack Obama’s aides have been critical of some consumption-tax proposals, particularly sales-tax ideas that they view as unfair to lower- and middle-income households.
“I would not count on consumption-tax regimes to replace the income tax, given the need for [more] revenue,” said Harry Stein of the liberal Center for American Progress.