AI (again), Job Growth, GDP, What is a Halong, Coffee, Newell, and Business Disruption
Sorry, We’re Closed…
No, the economy isn’t closed. Just take a look at the stock market; it seems pretty open with a free park hopper pass. Everybody wants in. Ugh.
It’s just the numbers that are delayed. Which begs the question, if we don’t have any news, does anyone care?
Without any guidance from the Feds, what’s a person to do? Observe what is going on around you.
Some thoughts:
AI (yes, we will be hearing those two little letters for a VERY long time to come) is indeed pushing some of the economy. Not all of it, but certainly a significant part of it.
In separate conversations with various business professionals who serve small businesses and middle-market companies, I learned:
Some companies are indeed ‘onshoring’ their manufacturing.
Companies are integrating AI into their operations to increase efficiency.
As a side effect of the aforementioned onshoring, local machine shops have seen an uptick not only in business, but in larger companies buying their business so their product can be made in the U.S.
In a survey of 64 economists, the Wall Street Journal found:
AI spending is boosting the economy, resulting in stronger-than-expected growth.
Job growth is slowing and expected to drop to 49,000 monthly.
Through May, it was over 139,000 per month.
After May, it has averaged just under 30,000 a month.
Hiring is slowing down.
GDP – Gross Domestic Product - will be higher than expected, coming in at 1.7% for Q4 and 1.9% for the year. Q4 was higher than forecast, and while 1.9% won’t break any records, it’s way better than a recession, which was predicted in April.
What on Earth is a Halong?
As it turns out, it’s the name of a typhoon. And if it’s a typhoon, that means it came out of the Pacific Ocean.
While the Alaska Peninsula has the Gulf of Alaska on one side and the Bering Sea on the other, North Pacific Ocean storms can barge through and over the peninsula and through the Bering Sea to the west coast of the 49th state. And that’s what Typhoon Halong did, displacing over 2000 people last week.
It really impacted the villages of Kipnuk and Kwigillingok, carrying a dozen houses out to sea. To complicate matters, those and other villages are only accessible by water or air at this time of year.
In addition to the American Red Cross and Salvation Army, the Alaska Community Foundation is the local option, if you wish to help.
Thank you.
Fun Fact: Alaska is the state with the most coastline at 33,904 miles.
You can use that in your next trivia contest.
Coffee
I’ve never been a Starbucks kind of person because – boomer alert – I can’t rationalize paying $2 for a cup of coffee.
If only it were $2 now.
I will admit that there is nothing quite as sweet as a caramel macchiato.
An 8-ounce cup at Starbucks is running $3.65, and a 12-ounce cold brew is $5.72.
Well, when 35% of coffee beans come from Brazil and tariffs on Brazilian coffee beans are 50%, and only 1% of coffee beans are produced in the U.S. (Hawaii)…
Classic supply and demand, and boy, do we demand our caffeine.
What does Newell do?
30 Brands: Graco, Coleman, Oster, Rubbermaid, Elmer’s, Sunbeam etc. etc. etc.
And Sharpie.
Each Sharpie pen has six parts. Only the felt tip is made in Japan. The rest of it is made and assembled in Maryville, Tennessee.
This was not the case in 2018 when many Sharpies were made abroad. The company challenged itself to improve its U.S manufacturing.
And they did, with a combination of automation and employee training to support the automation.
Other Newell pen lines are made entirely in the Maryville factory, without cutting employee head count. And they are keeping the costs down to the point where prices for Sharpies have not increased.
They are also making them 3x faster. Orders are fulfilled faster with lower shipping costs.
It’s a win-win for the company and the employees.
Other pen lines will be moving to the Tennessee plant from overseas.
This has all been driven by the CEO, Chris Peterson. He deserves a shout-out.
Under the category of business disruption…
Novelis, an aluminum supplier to Ford Motor, had a fire at one of its plants.
This significantly impacts its ability to ship aluminum to Ford for up to 5 vehicle lines, including their big SUVs.
It won’t be resolved until early 2026, costing more than $500,000,000 in operating profit.
Asahi Group suffered a cyber-attack on September 29.
The company’s order processing, shipment, and dispatch, and call centers in Japan were suspended because of the attack.
Systems are still not completely back online. That’ll impact sales.
As a business owner, you need to assess the risks to your company from many areas. In these situations, one is vendor concentration and the other is cybersecurity.
A fire in a supplier’s plant can be mitigated by having a backup supplier.
Which Ford does, but that involves importing aluminum, which has it’s own set of problems.
A cyber-attack is preventable, but the company needs to have the tools in place to guard against it.
Not to mention the insurance.
Year-end is a good time for many things, like Halloween, Thanksgiving, and Christmas, and celebrating the good cheer that goes along with this time of year. It’s also a good time to go down your checklist of things to either get done or update. I highly encourage you to have a meeting with your insurance agent/rep as well as your CPA to make sure you have your i’s dotted and t’s crossed. That can really prevent a huge headache down the road.
