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    Published on: May 27, 2016

    by Kevin Coupe

    It may be the most accurate reflection of the new economy in which we all must survive.

    The BBC reports that Foxconn Technology Group - which supplies components to companies like Apple and Samsung - recently replaced 60,000 factory workers in China - with robots. And according to the story, this is just the beginning of an evolution that is occurring because "China is investing heavily in a robot workforce."

    Foxconn released a statement to the BBC saying, "We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees, and through training, also enable our employees to focus on higher value-added elements in the manufacturing process, such as research and development, process control and quality control."

    The spin that Foxconn is offering is that employees are not being laid off, but rather just moved into different jobs: "We will continue to harness automation and manpower in our manufacturing operations, and we expect to maintain our significant workforce in China."

    The story notes that robotics are often held up as a solution to various problems, such as calls in the US for a higher minimum wage. Former McDonald's CEO Ed Rensi recently was quoted as saying that an increase in the minimum wage could force the fast feeder to move in this direction, saying that "it's cheaper to buy a $35,000 robotic arm than it is to hire an employee who is inefficient, making $15 an hour bagging French fries."

    I have several reactions to the Eye-Opening development of robotic technology.

    First, regarding the McDonald's scenario ... I suspect that it also is cheaper to buy a $35,000 robotic arm than it is to pay an "inefficient" person $12 an hour, or $10 an hour, or $8 an hour. I also think it could be argued that a better motivated and invested workforce might be more efficient, and actually could be good for business; it might come as a surprise to the folks at McDonald's, but an invested workforce actually can be a differential advantage. For the moment, it is more efficient for them to hold out robotics as a kind of "bogeyman" that allows them to justify paying people lower wages. (Robotics will seem preferable only up until the point where they develop a robot who can replace highly paid but inefficient human CEOs ... and then, suddenly, attitudes will change.)

    Second, I can't help but think that while the major political parties in the Us have debates about how to save the coal industry, Chinese companies - and the government - are investing in advanced robotics. I'm not sure how this gives us an advantage on the global business stage, or keeps us relevant. (I'm not saying that people employed in the coal industry are unimportant ... just that the debate is about the wrong thing.)

    Finally, I don't believe that the advanced robotics technology won't replace workers. Advanced business cultures will have to find ways to employ these people in different kinds of jobs. After all, for the moment, at least, we need people to conceptualize, build and program the robots.

    Until Skynet achieves independent, sentient consciousness, that is. Then we're all screwed.
    KC's View:

    Published on: May 27, 2016

    The US Food and Drug Administration (FDA) said this week that it has finalized a new rule under the dictates of the Food Safety Modernization Act (FSMA) that requires both domestic and foreign food facilities "to complete and maintain a written food defense plan that assesses their potential vulnerabilities to deliberate contamination where the intent is to cause wide-scale public health harm."

    According to FDA, "Facilities now have to identify and implement mitigation strategies to address these vulnerabilities, establish food defense monitoring procedures and corrective actions, verify that the system is working, ensure that personnel assigned to these areas receive appropriate training and maintain certain records."

    It is the first time such a mandate has been imposed by FDA, which says that it "will help to prevent wide-scale public health harm by requiring companies in the United States and abroad to take steps to prevent intentional adulteration of the food supply. While such acts are unlikely to occur, the new rule advances mitigation strategies to further protect the food supply."

    Food manufacturers are required to comply with the new regulation within three to five years after publication of the final rule, depending on the size of the business.
    KC's View:
    One of the most important components of all new new FSMA rules is the notion of preventive controls. Companies can no longer just be reactive to problems ... they have to be ahead of the wave, with detailed plans for how to deal with issues and extensive, accessible records that can be provided to FDA almost on a moment's notice.

    And yet, there is considerable evidence that a lot of companies aren't ready, aren't convinced that FSMA regulations will make the food system safer, and are ignorant to the possibility that senior executives can be held personally culpable if things go south. In this case, ignorance ain't bliss ... and, to coin a phrase, resistance is futile.

    Full disclosure: In the interest of transparency, I need to point out here that ReposiTrak - which has created automated information management technology that allows companies to do the things necessary to comply with evolving FSMA regulations - is a longtime MNB sponsor, and I've produced a number of videos for them on the subject. Those videos - largely with senior food industry executives with a great deal of objectivity and knowledge - have convinced me about the seriousness of the situation and the need for retailers to get with the program.

    Published on: May 27, 2016

    The Seattle Times reports that Starbucks announced plans to open yet another of its Roastery and Reserve Tasting Rooms - this one in Shanghai, China, sometime next year.

    The Shanghai version, which will be twice the size of the 15,000 square foot original in Seattle, will actually open before a New York City version, which is on track to open in Manhattan's Meat Packing District in 2018.

    The story notes that "China represents a huge market for Starbucks, and it currently has 2,100 stores in 102 cities ... It is adding 500 stores a year in China and plans to have 3,400 by the end of 2019."
    KC's View:
    I visited the Seattle original recently, and liked it a lot. You can read/see the story here.

    Published on: May 27, 2016

    The Wall Street Journal reports that "the growing demand for disclosure about chemicals, hormones and food formulation is changing how finance chiefs in the food industry direct investment in new technology, product development and sourcing of ingredients."

    Essentially, the story says that companies are having to spend money on changing how they handle ingredients as well as how they handle the record-keeping function, so they can satisfy "the consumer-led push for transparency about food formulation."

    However, at the same time, the story notes that there is "a need to balance higher production costs against the willingness of consumers to pay for certain agricultural practices or ingredients."
    KC's View:
    It may not be realistic, but my sense is that consumers don't want to hear from retailers and suppliers that transparency is going to cost them more money. They believe that transparency ought to be a core value, and that it is something that food companies should have been doing all along ... and that to try to charge people more is akin to airlines charging customers for baggage, pillows, and blankets. They may get away with it, but that's because of lack of choice ... something that does not exist in the food world.

    Published on: May 27, 2016

    Bloomberg has a story suggesting that Walmart has one advantage in its ongoing battle with Amazon. Food stamps.

    According to the story, "Recently, sky-high food-stamp spending in the U.S. has been like a moat surrounding Walmart that even Amazon can’t traverse. Though Amazon commands a fifth of the U.S. online grocery business, food stamps can’t be redeemed on its website, at least for the time being.

    "Nearly 46 million people used food stamps in 2015, near record highs, despite coming down slightly in the past couple of years as some recession-era benefits expired."
    KC's View:
    The irony here is that Donald Trump may actually be helpful to Amazon and Jeff Bezos on this issue, since he's decried the increased reliance on food stamps by Americans in places like New Mexico. If Trump gets elected and cuts back on food stamp usage, that would help Amazon (a company's he's already threatened with antitrust actions) and hurt Walmart.

    Published on: May 27, 2016

    Reuters reports that local news reports are saying that Amazon plans to expand its Amazon Fresh delivery service to Berlin and "plans to work with 15 partners to start delivery of fresh food in the German capital in the fall ... Germany is already Amazon's second-biggest market outside the United States, but grocery e-commerce has been slow to take off as the country has a high density of food stores and the dominant discounters Aldi and Lidl have been slow to go online."

    Amazon is not officially commenting on the report.

    It was just this week that it was reported that Amazon plans to begin rolling out Fresh to new markets, including Boston and the UK, after 18 months during which it did not enter any new markets - but apparently was working to get the service ready for major expansion.

    The Reuters story notes that "management consulting firm A.T. Kearney expects e-commerce will account for 3 percent of Germany's grocery market by 2020 - up from just 1 percent now."
    KC's View:

    Published on: May 27, 2016

    ...with brief, occasional, italicized and sometimes gratuitous commentary…

    CNN reports that Sears Holdings - which owns both Sears and Kmart, which is the equivalent of owning both the Titanic and the Lusitania - greeted the news that Q1 sales were down more than eight percent, resulting in a loss of $471 million with the revelation that it may sell its iconic Kenmore, Craftsman and DieHard brands.

    The company also said that it "is looking at strategic alternatives for its Home Services installation and repair businesses."

    Turn out the lights. The party's over. They say that all good things must end...


    • The Cincinnati Business Journal reports that Kroger "has reached a tentative agreement with the United Food and Commercial Workers Local 400 union that has about 3,000 members. The tentative deal is for a new collectively bargained employment contract that covers about 5,000 employees including non-union workers at 41 Kroger stores in Virginia, Eastern Tennessee and Bluefield, W. Va."

    Employees will vote June 8 on the contract terms, which were not disclosed.
    KC's View:

    Published on: May 27, 2016

    • Buehler’s Fresh Foods has hired Michael Davidson, most recently a senior executive at Price Chopper Supermarkets, where he was involved in the company's ongoing transition to the Market 32 format, to be its new vice president of store operations.
    KC's View:

    Published on: May 27, 2016

    I proposed a couple of weeks ago that foods ought to be labeled with both "best by" and "expires on" labels, so that consumers have enough information with which to make buying and consumption decisions. This prompted MNB user Joan Cooper to write:

    Love the idea – “best by” and “expires on.”  I also hope any such legislation would call for some sort of uniformity in legibility of fond so the shoppers can actually read the date.




    Regarding the sale of Mars stores to Weis this week, and the closure of the stores that could not be sold, MNB user Richard Raudabaugh wrote:

    I remember calling on Tony at Mars back in the mid-80’s, tough tough buyer.   At that time they had about 8 or so stores and were supplying them out of the old Pantry Pride warehouse that use to supply about 100 stores.

    Before you met with the buyer, you had to go to each store, take inventory, then go to the warehouse and take inventory and then on to your monthly standing appointment.

    Tony would usually rip you about price or something to the point all the reps would call each other after their appointments just to hear what happened.

    This is also in the days when if Tony had a question after your appointment that day, he would call you in the evening so you better be sure to be waiting for that call.

    The good old days!!  I really miss them, now you rarely see your buyer face to face, it’s all e-mail.  Seems like all your T&E is spent going to your own office with little left over to go to the customer.





    Chiming in on the discussion about millennials, one MNB user wrote:

    Every time I hear about the next generation, I think about a quote:  “The children now love luxury. They have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise.”
     
    Sounds like what my parents were saying about my generation and what my grandparents were saying about my parents’ generation.  Actually, this is a quote from Socrates who lived over 2400 years ago.  The younger generation can’t be any worse than the last.  In fact, I think each generation may be getting a little better.  After all, we’re still here after all that time.


    Amen.




    Responding to yesterday's video "FaceTime" about Walter's Hot Dogs and its brand resonance over generations, MNB reader Dave Deacon wrote:

    I grew up in Rye NY, just up the road from Walters, but never heard about them until many years later when I moved back into the area into an apartment ½ block away from Walters as a newlywed with my new wife.

    Out of curiosity seeing the long line, we stopped by Walters one day, and our hot dog eating lives were forever changed at the moment of first bite.  There is NO WAY to describe how good these dogs are, and I am disappointed that I spent so many years in my youth never having the pleasure to experience a Walters hot dog.

    Unfortunately for me, I have lived away from the NY suburbs for the past 26 years, and until Walters decides to open a Chicagoland location, I only have my memories.  Please Walters, come west!

     
    MNB reader David Shellie wrote:

    I have a similar experience with brand resonance.  My parent are from the Canton, Ohio area but all their children were born and raised in Michigan.  When we visit family in Ohio, we were always treated to Troyer’s Trail Bologna.  This treat has transcended generations now and all my nieces, nephews and friends always look forward to the times when someone ventures down to Amish country near Canton and brings back rolls of trail bologna.

    Cheers for those unique brands that continue to thrive because they are good, different and special.


    MNB reader Larry Owens wrote:

    Loved your Face Time today with your take on Walter’s Hot Dogs.  The best part of the whole segment, though, was definitely Allison.  Congratulations to her on her graduation – I hope she goes into acting, she’s a natural!

    And from MNB reader John McGuire:

    Your daughter was great in the clip!

    Thanks.

    More on Allison in "OffBeat," below...
    KC's View:

    Published on: May 27, 2016

    Been a busy week around here, dominated by the graduation of our youngest from Quinnipiac University with a BA in Criminal Justice. (Dean's List, Magna Cum Laude, apple of her father's eye.)

    I appreciate all the nice email I've gotten about Ali's aspirations, especially the folks who wrote in when I mentioned her a few weeks ago, offering to help her make connections. We all know that networking is one of the most important components of career development ... and I'm enormously grateful for members of the MNB community who have stepped up in unanticipated ways.

    Allison turns 22 in about two weeks ... and like a lot of parents with grown children, I find myself wondering where the time went. (I also find myself wondering how I could possibly have sons who are about to turn 30 and 27 ... since I keep thinking of myself as 35.)




    If you have not watched "The Night Manager," the AMC six-part series based on the John le Carré novel of the same name, I'd urge you to do so - it is available on iTunes and likely on whatever on-demand service you happen to have. I found it to be of motion picture quality, shot on a wide variety of locations, but with room to breathe over some six hours. (It concluded this week ... I thought it was not too long and not too short ... it was just right.)

    The story is about how a British hotel manager (played by Tom Hiddleston in what sometimes seems to be a six-hour audition to be the next James Bond, and I'm totally cool with that) end sup helping the British secret service (as personified by Olivia Colman - and she's wonderful) infiltrate the arms dealing enterprise run by Richard Roper (played with nefarious glee by Hugh Laurie). There's sex and violence, to be sure, but there's also a ton of suspense ... I found myself on the edge of my seat at numerous times, wondering what would happen next and who would die and how. This is one of my favorite genres, and I was happy to have the experience of "The Night Manager."

    KC's View:

    Published on: May 27, 2016

    Monday, May 30, is the annual Memorial Day national holiday here in the US, a day upon which we remember the sacrifices of our Armed Forces, as well as celebrate the unofficial beginning of summer.

    MNB will be taking the day off, and will return on Tuesday morning.

    Have a great weekend.

    Slàinte!
    KC's View: