April 27, 2024

Companies See High-Tech Factories as Fonts of Ideas

A growing chorus of economists, engineers and business leaders are warning that the evisceration of the manufacturing work force over the last 30 years might not have scarred just Detroit and the Rust Belt. It might have dimmed the country’s capacity to innovate and stunted the prospects for long-term growth.

“In sector after sector, we’ve lost our innovation edge because we don’t produce goods here anymore,” said Mitzi Montoya, dean of the college of technology and innovation at Arizona State University.

These experts say that in industries that produce complex, high-technology products — things like bioengineered tissues, not light bulbs — companies that keep their research and manufacturing employees close together might be more innovative than businesses that develop a schematic and send it overseas for low-wage workers to make. Moreover, clusters of manufacturers, where workers and ideas can naturally flow between companies, might prove more productive and innovative than the same businesses if they were spread across the country.

A General Electric facility in upstate New York provides a test case. In a custom-built facility the size of four football fields, workers are casting into thin tubes a kind of ceramic that G.E. invented. Those tubes get filled with a secret chemical “brownie mix,” packaged into batteries and shipped across the world.

The plant sits just a few miles down the road from the research campus where G.E. scientists developed the technology. That allows them to work out kinks on the assembly line, and test prototypes of and uses for the battery, the company’s scientists said.

“We’re not thinking about just one generation,” said Glen Merfeld of G.E.’s chemical energy systems laboratory, showing off a test battery his employees had run into exhaustion. “We’re working on the second, the third, the fourth, the fifth.”

The idea is to knit together manufacturing, design, prototyping and production, said Michael Idelchik, vice president for advanced technologies, who holds a dozen patents himself. “We believe that rather than a sequential process where you look at product design and then how to manufacture it, there is a simultaneous process,” Mr. Idelchik said. “We think it is key for sustaining our long-term competitive advantage.”

Economists and policy experts are now researching whether such strategies offer the same benefits for other businesses — and examining how those benefits might show up in national data on innovation, productivity and growth.

At the Massachusetts Institute of Technology, Suzanne Berger has helped to start the Production in the Innovation Economy project to study the subject. “It is something that’s very difficult to establish systematically,” said Professor Berger. “You really have to be willing to look at case-by-case evidence, qualitative evidence. That’s what we’re trying to do.”

Thus far, she said, the anecdotal evidence from about 200 companies has proved striking, with company after company detailing the advantages of keeping makers and thinkers together. That does not mean every business, she stressed. Companies with products early in their life cycle seemed to benefit more than ones with products on the market for years. So did companies making especially complicated or advanced goods, from new medicines to new machines.

“It’s the companies where the challenge of producing on a commercial scale requires levels of scientific activity that are just as complex as the original challenge of developing the technology,” Professor Berger said.

Article source: http://www.nytimes.com/2012/12/14/business/companies-see-high-tech-factories-as-fonts-of-ideas.html?partner=rss&emc=rss

In Greece, Economic Crisis Brings Rage and Paralysis

The shop’s proprietor, Tasos, who preferred not to disclose his last name, said he had not had a sale in more than three months. Because he cannot afford to pay his electricity bills, there was no light to illuminate his storefront display of jewels.

Like most Greeks here, he has, over the past few months, spent more time watching television than conducting commerce, as Greek politicians veered from one political crisis to another. His imagination has been battered with all possibilities of a disaster, not least the prospect that Greece might leave the euro.

The effect on his small business — which he says may have to close — has been devastating. His regular customers, most of whom he rarely sees these days, owe him 14,000 euros, about $19,300. Those that he does see are looking to pawn their family heirlooms to get by.

“The politicians are playing games with the people,” he said, his eyes red with exhaustion and stress. “This city is boiling. I am not a protester, but soon the top on the kettle will pop.”

That the Greek economy is in a downward spiral from a relentless program of austerity is well known. In October, Greek manufacturing had one of its sharpest declines ever, and this year overall production is expected to contract by more than 6 percent. What has not yet shown up in the official figures, though, is the extent to which the crisis atmosphere has brought the economy to a virtual standstill.

Auto sales have essentially stopped and are at their lowest level since 1993. People who do have cars have trouble with the expenses of operating them. In the last three months, the number of uninsured drivers increased by 500,000, bringing the total to 1.5 million.

Small shops, in many ways the lifeblood of the Greek economy, which relies on domestic demand, are closing by the day. And the heightened speculation that Greece might have to return to the drachma has sped up the flood of money leaving Greek banks: money to be deposited abroad, stashed at home or in one’s car, and most certainly not spent.

Since January 2010, Greek banks have lost $63.5 billion in deposits — or about 20 percent of annual economic output. But bankers here say that in September and October the numbers rose substantially, with estimates ranging from $13.8 billion to $20.7 billion for just these two months.

Dimitris, a retired truck driver who also did not want to have his full name revealed, recently sent his life savings, about $69,000, to Sweden because, as he put it, “Greece is going bankrupt.”

He has no doubt where the blame lies. “I am impressed that the people have not yet stormed into Parliament and burned the politicians alive — like a souvlaki,” he said.

The vitriol toward politicians is in many ways more intense than the outrage expressed toward the European Union and the International Monetary Fund. Politicians here rarely venture out in public, and when they do, even the most obscure member of Parliament is accompanied by at least one bodyguard.

All of it is giving rise to talk that, instead of putting forward another coalition of failed parties and leaders, new people with new ideas outside the political establishment should be brought in.

Among the people mentioned are Lucas D. Papademos, a former vice president of the European Central Bank, and Stefanos Manos, a former economy minister for the New Democracy Party who has long argued that any chance of true reform is hopeless until Greece lays off a large chunk of its inefficient public work force.

Mr. Manos’s latest program is even more controversial. He proposes that as much as $415 billion worth of Greek assets be put into a vast “goody bag,” including plots of land, sites of historical significance and even prized islands, as collateral to secure an immediate loan of about $105 billion from Europe that would be used to buy discounted Greek bonds and pay off debtors. In return, Greece would agree to sell most of the assets in the goody bag within the next 10 years or so and pay back the loan — with a bit left over, he hopes.

“Call me a taboo killer if you will,” he said. “Fire Greek workers, sell Greek islands — politicians here have to overcome their taboos.” And, he added, they have little time to do so. “Everything has stopped here,” he continued. “People are taking their money out of the country. The bomb is ticking.”

For many in Athens, it has already gone off. In the upscale neighborhood of Kolonaki, where much of the Athenian elite live and shop, stores selling luxury goods are shutting down left and right, the result of a Greek consumer strike that includes not just the lower and middle tiers of the economy but its highest as well.

In part, this has been driven by the intense pressure the government has been under to meet targets to secure its next round of loans. With tax collection still a challenge, Greece has imposed heavy value-added taxes on consumers and, most controversially, a special real estate tax has been attached to Greeks’ electricity bills.

But making matters worse, shop owners say, has been the political uncertainty and the constant strikes and riots that can shut down their stores for days at a time.

“Our business is in a free fall — down 70 percent since the crisis,” said Maurizio Urcivolo, the owner of Maurizio’s, a high-end women’s clothing boutique. At the end of the day on a Friday, while the street outside bustles with activity, his store was empty of customers — as it has mostly been during the past two months.

He is closing his flagship Kolonaki store in January and he, too, knows who is to blame. “We hate all politicians,” he said. “We think they are responsible for all this.”

Eleni Varvitsioti contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=a0693cad75dc89d6eebf7511b89156e6

DealBook: Lloyds Banking Group Chief Executive António Horta-Osório Takes Medical Leave For Exhaustion

António Horta-Osório, chief executive of Lloyds Banking Group.Chris Ratcliffe/Bloomberg NewsAntónio Horta-Osório, chief executive of Lloyds Banking Group.

9:36 a.m. | Updated LONDON — The Lloyds Banking Group, partly owned by the British government, said on Wednesday that its chief executive would take a leave of absence for several weeks because of exhaustion.

António Horta-Osório, 47, who took over as chief of Lloyds in March, consulted physicians after experiencing “extreme fatigue,” a spokeswoman said.

Mr. Horta-Osório, a Portuguese national who ran the British operations of Banco Santander of Spain before joining Lloyds, is expected to return to his post before the end of the year, the bank said. Tim Tookey, the departing chief financial officer, is taking over as interim chief executive until Mr. Horta-Osório returns, Lloyds said.

“He inherited a very difficult situation and clearly had put everything into it,” Bruce Packard, an analyst at Seymour Pierce, said.“He has taken on quite a lot, and there were quite high expectations which maybe weren’t helpful either.”

Mr. Horta-Osório joined Lloyds with great support from investors, many hoping that the new chief executive would help turn around the struggling bank and wean it off government support. The Lloyds board lured Mr. Horta-Osório from Santander, where he had a good track record of increasing the bank’s presence in Britain, expanding market share and increasing earnings.

Within four months of taking over, Mr. Horta-Osório had toured the country to visit Lloyds branches, talk to employees from bank clerks to managers and announced a plan to achieve £1.5 billion ($2.4 billion) in annual savings by 2014. In June, he said the bank would eliminate 15,000 jobs, or 14 percent of its work force.

Mr. Horta-Osório had also reshuffled the bank’s top management, bringing in some former colleagues from Santander. Recently, he had been working on finding a buyer for about 600 bank branches before the end of the year. Lloyds is selling the branches as part of its merger with the mortgage lender HBOS.

His turnaround efforts have been made more difficult because economic growth in Britain has remained sluggish and financial markets have been turbulent.

Last month, Moody’s Investors Service cut the senior debt ratings of Lloyds and 11 other British lenders, including Santander’s British business. The ratings agency said the government would be less likely to bail out the banks if they ran into troubles.

Lloyds shares fell 5 percent around midday in London on Wednesday after the announcement of Mr. Horta-Osório’s leave.

The Lloyds board met on Wednesday morning to discuss the situation, agreeing that Mr. Tookey would take over as interim chief executive until Mr. Horta-Osório’s return.

Mr. Tookey had been expected to leave Lloyds early next year, having handed in his resignation this year to join Friends Life, another British financial services company.

Lloyds, which has about 30 million customers, is due to report its third-quarter results on Tuesday. In August, the bank reported pretax profit of £1.1 billion in the first half of the year, down 31 percent from £1.6 billion in the period a year earlier. Mr. Horta-Osório said then that the bank was “well positioned” because of the “series of rapid, focused actions we have taken since March.”

Article source: http://feeds.nytimes.com/click.phdo?i=4e3952d185a8846b8a2395d27f15eec2