Nokia Says Committed to India Despite Difficulties

NEW DELHI -- Nokia said Saturday it is in talks with India's government about how to create a better business climate and remains "committed" to its manufacturing plant in the country.

The statement followed an Indian Express newspaper report Friday that said the mobile maker had told New Delhi the country is now its "least favorable market" in which to operate and it made better sense to export its products from China.

"Nokia can confirm that it has been in discussions with the central government and state government over ways to bring greater clarity to the business environment in India," the company said.

"These discussions have been both constructive and productive, and both sides have worked in a true spirit of cooperation," the company added.

Foreign direct investment in India has slowed sharply amid mounting domestic economic woes including a plunging rupee, a huge current account deficit, slowing growth and perceived government policy paralysis.

A string of tax disputes embroiling Nokia and other multinationals including Cadbury Royal Dutch Shell and Vodafone has also deterred investors.

Nokia, fighting a 20-billion rupee (US$311 million) tax demand from Indian authorities, did not elaborate on the contents of its talks with the government.

The Indian Express report Friday said Nokia had urged the government to "act quickly to correct the wrong perception of India as a place for business."

It quoted the phonemaker as saying "the political risk of operating in India" has become "suddenly substantially higher and may inevitably influence future decisions to develop one's operations in India."

But Nokia said it remained "committed" to India which remains a "priority market" and its Chennai plant plays an "integral part in our global manufacturing strategy."

The Chennai plant is one of Nokia's biggest worldwide.

India has stepped up its pursuit of alleged tax delinquents to reduce a hefty budget deficit. Nokia insists software downloaded onto its mobiles in India should to be taxed in Finland under a bilateral treaty between the countries, but India's tax authorities view it differently.

India -- one of the world's fastest-growing mobile phone markets -- is the second largest market for Nokia which began operations in the country in 1995 and employs 8,000 workers directly in Chennai.

Nokia, which had been India's leading handset maker for 14 years, recently ceded its crown to Samsung.

Copyright Agence France-Presse, 2013

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Shifting Sands for Companies Investing in Europe

For more than 20 years now, American companies expanding into Europe has been able to consider a second frontier of Central and Eastern Europe as a viable investment location, in addition to the already well trodden locations of the West.

The attractiveness of countries such as Poland and the Czech Republic was evident with a combination of low cost labor and easy distances to the buyers of products and services in Germany and the UK etc.

While this trend persisted until around the beginning of the global economic downturn, since then a number of forces have been at play to render the site selection decision more complex than it had ever been previously.

This article will examine some of these points and discuss what the future holds for investors considering a first foray into Europe.

Convergence in the Offer

The days of the low cost Eastern Europe solution are numbered, as wage inflation, albeit slowly, does creep up in all but the least developed countries in the East. The leading economic development organizations in the region realized this at an early stage, and at the same time knew they had more to offer than cost. Many of the countries in the region have high standards of education (e.g. Poland ranks higher than the U.S.), a rapidly developing infrastructure, and language capabilities  that make these locations genuinely viable for companies engaged in the same types of investment as in Western Europe.

At the same time, the pressures of the downturn have led many countries to move further down the value chain in their pursuit of companies. Hence, an American company is now typically faced with a new question of ‘where in Europe?’, not where in Western, or where in Eastern Europe, as the two start to become one of the same.

While a global economic recovery may signal a retreat back into high value added activities by the West, the East will nevertheless continue its catch up and increasingly be in a position to support companies expanding in high value industries.

Competiveness vs. Heterogeneity

This is not to say that each country in Europe now presents an equivalent offer to a company, and indeed the quality of offer between for example Poland, and Albania will still be relatively stark. In addition, the key for the American investor is to recognize that the factors that go into site selection are, inevitably, different  from a U.S. expansion. The range of cultures, laws and business regulations make the choice far from straightforward, so that even a European company expanding elsewhere in Europe must navigate new challenges with every new location.

One simple example would be around property rents, where the standard lease terms differ between each country.

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Mistake Proofing: Achieving Perfection Through Simple Changes

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IACET continuing education credits are accepted by the American Society for Quality (ASQ) and hundreds of other organizations and companies.

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After you complete your registration, you will receive a confirmation email with details for joining the training course, as well as your unique password. On the day of the training, use the instructions in this email to log in.

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China Probes Oil Executive for Suspected Graft

SHANGHAI -- Chinese authorities are investigating a top official of the country's largest oil and gas producer for "discipline violations", state media said Monday, using a term that typically refers to corruption.

The Communist Party's graft watchdog was investigating Wang Yongchun, a vice president of state-owned China National Petroleum Corp. (CNPC), the official Xinhua news agency reported.

The brief report gave no details of the allegations against Wang, beyond saying he was suspected of "severe" violations of party discipline.

Wang is also general manager of the Daqing Oilfield Co., which manages China's largest oilfield. He is one of five vice presidents of CNPC.

The announcement came as the trial of disgraced politician Bo Xilai for bribery, embezzlement and abuse of power ended after five days of hearings.

Chinese president Xi Jinping has vowed to crack down on corruption at all levels of the government, calling graft a threat to the future of the ruling Communist party.

But critics say a significant effort to reduce corruption would require increased transparency from the ultra-secretive party, as well as a loosening of controls on the media and courts.

Wang, a senior petroleum engineer, became general manager of the Daqing company in 2009 and a CNPC vice president in 2011.

He has over 30 years experience in the industry, earlier working at another oil field in the northeastern province of Jilin..

Copyright Agence France-Presse, 2013

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Google Buys Virtual Imaging Patents from Foxconn

WASHINGTON - Google has bought virtual imaging patents from Taiwanese supplier Foxconn that could be used in its interactive "Google Glass" devices, according to a document acquired Saturday.

No details were released on the amount of the transaction.

The patents relate to a technology that permits virtual images to be super-imposed over real ones, according to media reports.

They could be used in the interactive voice-activated eyewear being developed by the Internet giant.

Facebook, Twitter and major news organizations have already tailored applications for Glass, which has only been made available to developers and a limited selection of "explorers" who paid $1,500 each for the eyewear.

Envisioned uses range from practical tasks such as shopping or delivering local weather reports to sharing real time video streams or playing augmented reality games in which the world is the board.

Foxconn Technology, whose parent company is Taiwan-based Hon Hai Precision Industry (IW 1000/24), is the main supplier in Asia for Google's biggest rival Apple (IW 500/4), particularly for the manufacture of iPhones.

Copyright Agence France-Presse, 2013

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Biotech Giant Amgen to Buy Rival Onyx for $10.4 Billion

WASHINGTON - The world's top biotech firm, Amgen (IW 500/71), has struck a deal to buy Onyx Pharmaceuticals for $10.4 billion, the two companies announced Sunday, joining a trend toward consolidation in the drugmaking industry.

The deal to purchase cancer drug specialist Onyx was reached after months of negotiations. Thousand Oaks-based Amgen will acquire outstanding shares of Onyx for $125 a share in cash, the statement said.

That's an increase of $4 per share over Amgen's previous bid, rejected as insufficient by the San Francisco drugmaker in June.

The deal will allow Amgen to get its hands on Kyprolis, a promising treatment for blood cancer developed by Onyx and approved by U.S. authorities in 2012.

In the statement, Amgen said it will use its "experience" and "capabilities" in cancer research to support Onyx's clinical development programs and exploit the potential of Kyprolis in the U.S. and the rest of the world.

"We believe that Amgen is ideally suited to realize the full potential of Onyx's portfolio and pipeline for the benefit of physicians and patients," said Amgen chief Robert Bradway.

The transaction is expected to be finalized in the beginning of the fourth quarter, subject to U.S. regulatory approval.

Amgen, whose sales grew 5% in the second quarter to $4.68 billion, said it will finance the acquisition by borrowing $8.1 billion and drawing on its cash reserves for the remaining $2.3 billion.

The deal comes on the heels of several other large mergers that have swept the drug industry in recent months, particularly in North America, including major acquisitions by Perrigo (IW 500/266) and Johnson & Johnson (IW 500/17), as well as by Valeant (IW 1000/959).

Copyright Agence France-Presse, 2013

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Midwest Manufacturing Dips in July

The rallying automotive sector took a breather in July and that was the biggest reason for the Chicago Fed Midwest Manufacturing Index to drop 0.1% to 95.8. The slight decrease followed a 0.4% increase in June.

The auto sector decreased 0.4% in July, while the machinery sector in the region moved down 0.3%. The steel industry in the region saw production rise 1.5% while the resource sector was unchanged for the month.

Compared to July 2012, production in the region was up 1.6% for the month and nationally, output increased 1.5%.

Yesterday, the Federal Reserve Bank of Dallas reported that Texas manufacturing activity was slowing in August. The production index remained positive but fell from 11.4 to 7.3. Also showing continued growth, but at a slower rate, were new orders index (10.8 to 5.4), the shipments indext (17.7 to 11.4) and the capacity utilization index (12.2 to 4.6).

Texas manufacturers increased hiring, as the employment index rose 2 points to 11.2, but the hours worked index fell sharply from 1.3 to -9.9.

Manufacturers in the state remained optimistic as the indexes for both future general business activity and company outlook picked up from July.

Last week, manufacturers in the Philadephia Fed region also reported an expansion of activity in August, though at a slower rate. The diffusion index of current activity, the survey’s broadest measure of manufacturing conditions, was positive for the third consecutive month, but slipped from 19.8 in July to 9.3 for August.

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Mixed Signs for the Housing Market

Recent housing data is currently positive, but a shift may lie ahead.

On the surface, data coming out of the housing market paints a very positive picture.  Annual Existing Home Sales grew to their highest level in five years in July, and similarly, annual Housing Starts are at levels not seen since late 2008 – both trends fueled by stronger overall economic growth.

However, our job is not just to scratch the surface, and when we look a little deeper, we see a key piece of data that tells us that housing’s run-up will soon be ending.  The Housing Affordability Index has now declined for the past five months and is now at its lowest point since July 2010.  This tells us that more potential buyers are getting priced out of the market. 

Affordability will continue to erode in the coming months as the pace of job (and income) growth remains slow, and mortgage rates trend higher.  Prices, as measured by the annual Case-Schiller 20 City Composite Index, are 6.3% higher than last year, while Disposable Personal Income is up only 1.5%.  Slowing affordability and higher prices will eat away at the gains made in the housing market.  Readers tied to residential construction should keep these weak underpinnings in mind when planning for next year.  

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Belarus Arrests Uralkali CEO After Meeting with PM

MINSK - Belarus on Monday arrested the chief executive of Russian potash giant Uralkali (IW 1000/900) for alleged abuse of authority, detaining him at Minsk airport hours after he had held talks with the Belarussian prime minister.

The extraordinary arrest of Vladislav Baumgertner in the capital Minsk came three weeks after Uralkali severed links with its Belarussian partner Belaruskali, triggering a crash in the prices of global manufacturers of the fertilizer.

"He has been accused of abusing authority or power. He has been placed under custody," Belarussian Investigative Committee spokesman Pavel Taraulko said, without giving further details.

Under this charge, Baumgertner could face between three to 10 years in jail.

The Belarussian Investigative Committee said that it was also investigating Suleiman Kerimov, the billionaire owner of Russia premier league team Anzhi Makhachkala and a major Uralkali shareholder, for unlawful activities.

Four other managers at Uralkali have also been put on a wanted list by the Belarussian Investigative Committee in the probe. But they are currently all believed to be in Moscow.

Uralkali spokesman Alexander Babinsky said that Baumgertner had held a meeting with Belarussian Prime Minister Mikhail Myasnikovich and he was then detained at Minsk airport on departure.

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Operations Strategy Checkup: 5 Key Questions to Ask for Maximum Business Performance

Jason Piatt, president, Praestar Technology Corp.

It seems that no time is convenient to pause the action and review strategy. When you’re in the thick of the battle to produce a product on time, under budget, with superior quality, a strategic review may seem like a waste of time or a misuse of resources. That said, failure to review strategy may result in getting to the wrong destination while doing so very efficiently.

By asking five basic questions and considering the answers, you might optimize business performance and not just operations performance.

All too often, optimized operations performance (yielding highest output at lowest cost and lowest scrap output) is the target that is sought by operations managers. This creates an efficient operation but an inefficient business. Operations executives must consider the marketing and sales strategies of the business as well as new product or process development efforts that are being undertaken by the business. This is incredibly important to establish effective processes for new product onboarding as well as identifying necessary tradeoffs for degree of variation from build to build. The tradeoffs that will be made for high mix of product manufacturing will be significantly different from those environments that are high-volume, low-mix production.

When you’ve established a business-complementary operations strategy, you should then consider which aspects of the strategy carry with them the most risk. This can be done similarly to an FMEA or other risk measurement and mitigation tool. Are there aspects of the strategy that, if they were to fail, would completely compromise your strategic outcomes? Are there aspects that may not cause complete failure, but will impact the outcome and are likely to fail? If either question has an answer of yes, then mitigation strategies for those risky elements should be developed immediately. They may result in the need for increased capital investment or further development of staff through training. In some cases, the elements should be rethought and adjusted to reduce risk while avoiding compromise of outcome.

It isn’t enough to have departmental outcomes measured. It’s often argued that this is sufficient, since everyone is then accountable to the same outcomes. While that’s positive, it is insufficient. Individuals ultimately work toward objectives that positively affect them -- or when a negative outcome will affect them negatively as individuals, not departments. Negative departmental outcomes only have impact when those departmental failures also will impact the individuals directly. For successful operations strategy implementation, group and individual accountability is critical. Similarly, group and organizational alignment is also critical.

A strategy with strategic objectives that doesn’t incorporate a timeline for achievement will float. In order to achieve appropriate business results, the timeline should not only be fixed but accommodate the needs of the business and integrate with other business functions. Has the strategy been adapted to account for likely market opportunities and product development timelines? Will a missed process development milestone compromise the operations strategy? If so, a reconsideration of operations strategy risk might be in order.

Changing market and product- or process-development strategies calls for a necessary flexibility in the operations strategy. That said, accountability needs to be maximized in order to ensure success. In order to be completely successful, a good pairing of responsibility and authority must be present. In other words, those who have responsibility to accomplish the key elements of the operations strategy should have matching levels of authority. This includes an ability to line-manage staff as well as budgetary control and access to senior management when needed.

Asking five short questions to gain (or regain) perspective on your operations strategy, especially as it relates to the market, isn’t only beneficial, it is essential to aligning strategy, tactics, and customer-focused outcomes.

Jason Piatt is president of Praestar Technology Corp., a provider of consulting and training services to manufacturers in the Mid-Atlantic region specializing in lean, Six Sigma & strategy formation.

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