Tesla's Battery Magic

Tesla and its CEO Elon Musk are on a roll. The Silicon Valley start-up’s stock price has nearly doubled in recent months after rising 400% last year. Consumer Reports named Tesla’s luxury Model S the best overall car of the year. And the company is unveiling plans for a $5 billion ‘gigafactory’ to produce lithium ion batteries in the desert southwest.

Under consideration for a year, the battery plant will be built by Tesla and possibly two other partners. It is a huge prize being contested by four states—Nevada, Arizona, New Mexico, and Texas.  It will encompass 500 to 1,000 acres and employ 6,000 workers. Bidding is fierce but the early favorite is a location near Reno, relatively close to Tesla’s auto production plant in San Francisco’s East Bay.

Analysts say however that if sales continue to surge Tesla may want a second assembly plant to produce its third-generation, more affordable electric cars that are due by 2020 when battery output is expected to reach half a million packs per year.  The plant requires abundant sunshine for solar power.  One prospective partner, Japan’s Panasonic, is currently Tesla’s sole battery supplier.

Musk, the engineering genius behind Tesla, Space X and SolarCity, says at full capacity output from the gigafactory will equal all lithium ion batteries currently produced worldwide.  The Model S uses 7,000 of the small AA-size batteries pictured above.  They are arrayed in a rectangular pan housed under the floorboard. Musk believes future cells will be lighter weight and that economies of scale will drive down battery prices by 30%.

A shortage of batteries has limited Model S production and may do so again this year as Tesla wants to boost car production 50% to 35,000 vehicles.

The battery plant sweepstakes and the promise of thousands of well paying jobs builds the Tesla brand and the favorable publicity to boost future sales. Morgan Stanley analyst Adam Jonas expects Tesla could double its share of the global car market to nearly 1% by 2028. Must says Tesla hopes to produce half a million electric vehicles annually by the end of the decade, half of them in the US. The gigaplant could supply cells to other EV producers.

Tesla supercharger locations

As part of Tesla’s brand-building strategy, Musk will soon out on a cross country journey that will showcase the company’s network of superchargers. The charging stations are cost free to Tesla owners.  They have been built at 200-mile intervals from LA across the country’s midsection to the east coast.

Zimbabwe's Transition to What?

Zimbabwe is entering an unsteady transition politically and economically.  Robert Mugabe, its sole leader since independence in 1980, turns 90 on February 21^st.  He can’t live forever.  Who will follow Mugabe and what course will his successors steer?

After four years of gradual improvement, the economy is again deteriorating.  Money is in short supply. Workers are losing jobs.  Government is starved of tax revenue because exports are falling and business activity has slowed. The country remains cut off from official lenders like the World Bank and the International Monetary Fund.

Six months after Mugabe’s flawed electoral victory, uncertainty reigns. Zanu PF is in complete charge.  There’s a new finance minister and central bank governor. Acting central bank chief Charity Dhliwayo says the economy faces a severe liquidity crunch and that local industry can’t obtain credit.

Because of the cash shortage Dhliwayo is allowing four additional currencies—principally the Chinese yuan and Indian rupee—to freely circulate. They join the US dollar and the South African rand, the euro, British pound, and Botswana pula as legal tender.  Pity the poor clerks who have to calculate prices.

In the aftermath of the July election Tendai Biti, finance minister in the coalition government, is out, replaced by Mugabe loyalist Patrick Chinamasa. The new finance minister recently went to China where he hoped to obtain money for the government’s ambitious development plan.  Rebuffed, he returned empty handed.

Ex-minister Biti worries that without meaningful exports and domestic production, “the liquidity crisis is so bad that echoes of 2008 are beckoning.”  He says if the cash squeeze persists the government may resort to printing money, i.e. bringing back the discredited Zim dollar that he discarded upon taking office in 2009.

50 billion dollar Zim bank note from 2008

Deterred by the government’s indigenization program, foreign investors are staying away. Corruption has reached exorbitant levels even by Zimbabwe diminished standards. People are outraged by revelations of obscenely inflated salaries and theft within state owned enterprises.

But amid all this distress there are hopeful signs for Zimbabwe’s long-suffering people. The European Union is poised to lift most remaining sanctions, an action likely to boost aid flows.  To their credit, Chinamasa and Mugabe are sticking with the IMF’s staff monitored program designed to impose financial discipline, boost confidence and lay a foundation for sustained growth. That program, promulgated by Biti, is still in place and runs until June.  An IMF team will visit Harare in late March to assess progress.  If the government holds to the program there could be a rapprochement with multi-lateral lenders and eventual action to clear the arrears that have long blocked Zimbabwe’s access to official financing.

During the relative stability that followed the taming of hyperinflation, Zimbabwe’s economy grew rapidly, albeit from an horrendously depressed level.  From 2009 to 2012, Zimbabwe registered 11% annual growth, the fastest in sub-Saharan Africa. Last year growth slowed to 3%, in large part because of the decline in commodity prices and depreciation of the rand against the US dollar. South Africa is Zimbabwe’s biggest trading partner and domestic producers are finding it increasingly difficult to compete with South Africa products. Growth for 2014 is unlikely to exceed 3%.

Since Zimbabwe is a virtual treasure chest of raw materials, foreign companies are eager to join Chinese firms in regaining a foothold in the country.  Over the next six months they’ll be watching policy pronouncements and economic conditions in Zimbabwe very carefully.

Potholes Ahead for Tesla

WASHINGTON, DC: Tesla Motors is on a roll. Last year its share price quadrupled and it sold over 20,000 cars. There’s a waiting list for every four-door sedan that rolls out of the Fremont, California plant.

But with a single factory and a more complicated SUV expected down the line later this year, can Tesla nearly double production as planned? Other potholes include batteries, dealer protection laws, and an organizing drive from the auto workers union.

The $100,000 Model S rules the luxury electric vehicle market. For the rich, famous and green, the quick-accelerating Model S is the vehicle to own. Aggressively expanding, Teslas are now on sale in China, the world’s biggest auto market.

 Model S at Tesla Washington, DC showroom 

The Model S is taking off in Europe where it’s been available less than a year. In environmentally conscious Norway Tesla was the best-selling car in December. Tesla sales get a huge boost in Norway because they’re exempt from taxes that can double the cost of gasoline-powered car.

The ten-year-old Silicon Valley start-up is on its way to becoming a viable 4th US-based car company. Detroit is paying attention. Mark Reuss, G.M.’s chief of product development, is extravagant in his praise, telling the Detroit Free Press he spends a lot of time in a Model S. “It’s highly creative and fun to drive,” he says. Referring to 42-year-old billionaire and Tesla CEO Elon Musk, Reuss says, “he’s basically created a brand, which is very hard to do in a mature industry.”

Tesla lithium-ion battery

Musk, the South African-born genius behind Space X, SolarCity, and Tesla, runs the car company much like Steve Jobs ran Apple. Technology and design are paramount. There’s a keen eye on media and like Jobs Musk was on stage near LA in June to introduce the automated battery swap stations that will be placed across the country. Replacing an entire panel of 7,000 reusable lithium ion batteries is meant to take only 90 seconds.

Tesla super-chargers, as of February 1, 2014 

Determined to prove that the Model S can perform well on highways, Tesla has constructed a network of free supercharging stations situated at 200-mile intervals on a transcontinental route linking Los Angeles with New York.

A half-charge, enough to zoom on to the next station takes about 30-minutes. Typically six charging posts are in the unmanned facilities situated in shopping mall parking lots near on-off ramps. Tesla says supercharging will be free forever, meaning that Tesla vehicles can scoot across the country paying nothing for fuel.

The Tesla business plan is simple, ambitious and on track. First establish the brand with a luxury car. Create a buzz. Widen the product line and boost production. Then produce a smaller sedan priced at about $35,000, within reach of the upper middle class.

Even if Tesla can produce 35,000 vehicles this year, that’s a tiny number equal to half the Ford F series pickups manufactured each month. Tesla’s gull-wing crossover is expected by the end of the year, but the much-touted generation three family car isn’t due until 2017. Musk speaks of eventual production of 500,000 cars per year.

Musk concedes that getting enough batteries is a problem. His sole supplier is Panasonic in Japan. To overcome the bottleneck Tesla contemplates making its own cells. In November Musk speculated that it would be a giant facility. “We’re talking about something that is comparable to all of the lithium-ion battery production in the world — in one factory.”

Tesla currently has four-dozen showrooms with more on the way. But all sales are online. Tesla’s direct to the consumer approach collides with a maze of state laws that essentially require all new cars to be sold through dealers. Jack Fitzgerald, an electric car advocate and president of Fitzgerald Auto Malls in Maryland, says as long as Tesla remains a bit player, the dealership rules may not be a problem. But complaints are already coming in and dealers don’t want the precedent of buying on line to take hold. 

Tesla’s manufacturing facility is in Fremont, California in San Francisco’s East Bay. Originally built by General Motors the Fremont plant in the 1980s housed Nummi, a cooperative venture between GM and Toyota. GM later withdrew and Tesla purchased the sprawling plant for a mere $50 million.

At its peak Nummi employed nearly 5,000 workers who were represented by the United Auto Workers. Tesla’s current workforce of nearly 2,000 is non-union but with decent pay and benefits. The UAW has already set up an organizing committee. While Musk says he’s neutral on the union, Tesla’s headquarters are nearby in Palo Alto in the Silicon Valley where unions have been neither popular nor successful.

Finally, what about sales and service? Will American customers be willing to wait months to get a car they ordered online? And things go wrong with cars, even those without engines. How fast will customers get a replacement mirror or fender? For now Tesla is employing mobile service vans, an operation that would be overwhelmed by increased volume.

If its success continues to build, Tesla will encounter competition with established car companies. The game then could become brutal. In short, Tesla’s viability is not assured.

Michigan State Women's Basketball and Title IX

EAST LANSING, MI: On a snowy Sunday in mid-Michigan, 9,000 people came out to watch the Michigan State women’s basketball team play Big Ten rival Penn State. Admittedly, the crowd was somewhat swollen by 2,000 free tickets handed out to local Girl Scouts. But typically over 6,000 spectators show up for each of the 15 or so home games that the MSU women play from November to March.

 Girl Scouts and others at the Michigan State women’s basketball game, January 19, 2014 

 Amazingly, the extraordinary nationwide boom in female athletics is the result of a landmark 1972 law that banned federal money from institutions failing to promote gender equity. Prior to passage of Title IX of the Equal Opportunity in Education Act, a mere 310,000 girls played high school or inter-collegiate sports. Today that number has exploded by 1,000% to 3.4 million.

College sport is big business and men’s football and basketball are the money-spinners. At many universities, profits from basketball and football finance non-revenue sports like rowing, wrestling, tennis, and track. Michigan State fields 25 sporting teams, slightly more for women than men.

With a university budget that exceeds $1 billion, MSU derives about $90 million from ticket sales and broadcasting. That’s about $2 million more than it spends on athletics. Experts say overall women’s sport is a long way from being profitable. Only 43 of 340 women’s basketball programs break even. And of those profits don’t exceed $500,000. While only four women’s basketball programs generated income of $4 million in 2011, 86 men’s basketball teams did.

But profitability was never the goal of Title IX. Its real benefit is widening athletic excellence and opening opportunity to girls. A ticket taker at the MSU Penn State game recalls the sorry days of the late 1970s when only a few hundred attended women’s basketball even though the price of admission was only $2 or less. “The caliber of play was pretty bad,” he says, adding “but look at it now. It’s come way, way up.”

And with every improvement in quality, attendance has grown. While significantly trailing the men’s game in attendance, MSU women’s basketball is broadcast live to an expanding audience.

 Michigan State women’s basketball team at left, as Girl Scouts present colors 

Of course attendance is linked to winning. On this wintery Sunday Michigan State came up short, losing the game 66 to 54. Disappointing yes, but the fans didn’t seem too worried. Many will be back next week, helping MSU maintain its position in the top ten nationally for attendance in women’s basketball.

Optimism in Detroit as Autos Lead Recovery

For the first time in a decade there is optimism in Detroit. Not only is the blighted city slowly beginning a turn around, the industry that gave it life is restructured and fit, having climbed back from near collapse in 2009. In 2013 US brands accounted for 46% of domestic sales, outselling their Japanese, Korean and German competitors.

Light vehicle sales climbed to 15.6 million, the highest level in six years. A resurgent General Motors held top place with an 18% market share. Ford followed with 16% and Chrysler had 12%. Toyota and Honda led the Asians with 14% and 10% shares respectively. The Detroit 3 outpaced the competition with sales gains of over 9%.

For the Detroit Three the watchwords in 2014 are change and transition. From January 15,th General Motors will be headed by an engineer, Mary Barra, who will be the first female CEO of a global car company. She has spent over 30 years moving through the ranks at GM.

Mary Barra 

With the Treasury having sold its remaining shares in GM in December, the chapter on the $80 billion bailout of GM and Chrysler is closed. GM is no longer ‘government motors.’ Ford, which sold assets and mortgaged its future to avoid bankruptcy, is keeping its management team in place.

Alan Mulally, 68, the former CEO of Boeing Commercial Airplanes, has led Ford since 2006 and presided over its revival. On Tuesday Mulally ended months of speculation that he would take the top job at Microsoft and said he would remain at Ford until the end of 2014.

 

Alan Mulally                                                          Sergio Marchionne 

 Big news came to Chrysler on New Year’s Day when Sergio Marchionne sealed a deal that gives Fiat outright ownership of the US firm. Marchionne, who grew up in Canada, heads both companies. He is credited with bringing the struggling US company back from near death. Fiat is paying $4.3 billion for the Chrysler shares owned by the healthcare trust of the United Auto Workers that the union received at the time of the bankruptcy. Incredibly, with newly profitable Chrysler providing much of the cash, Fiat’s payment is a mere 10% of the $38 billion Germany’s Daimler paid for Chrysler in 1998.

Analysts expect the auto industry recovery to persist as the market is benefiting from low interest rates, longer-term loans, and rebounding consumer confidence. Edmunds consultancy predicts 2014 sales of over 16 million, only one million units below the year 2000 sales record. Kristin Dziczek, a specialist at the Center for Automotive Research in Ann Arbor, says the post-great recession US auto industry is now highly competitive versus all global rivals.

It is also much smaller. The US based auto industry is 35% smaller than ten years ago. Where it used to employ 1 million people today it is 650,000. In Michigan auto industry employment is down 50% in ten years even as over 100,000 jobs have been added since 2009.

Wages are also lower as new hires earn about $15 per hour, half the level of a decade earlier. However, the booming sales of 2013 have set the table for record profit sharing. In the next few months an estimated 130,000 unionized workers are likely to receive per person bonuses of up to $12,000.

Birdman of Europe's Curonian Spit

RYBACHY (Kaliningrad), Russia: The 80-kilometer long finger of sand that curls along the Baltic Sea coast in Lithuania and Russia is wild and undeveloped. A closed military zone during 50 years of communism, the Curonian Spit and its shallow lagoon are key navigation points for hundreds of thousands of migrating birds who each year move through this great north European flyway. 

The Russian scientists at Bio Station Rybachy, midway along the spit, in November marked the 150^th birthday of Johann Thienemann, the bird observatory’s German founder. Thienemann was the first ornithologist to ring birds as a means of studying their migration patterns. 

 

Thienemann, age 70, in field gear

A preacher’s son from Thuringia, Thienemann came to the remote stretch of East Prussia in 1896.  During his visit he observed more migrating birds than he ever imagined.  Returning home, he obtained high-level approval and funding. He came back to the Curonian Spit and in 1901 established the world’s first bird watching station. 

Thienemann headed the research center for 30 years, living the rest of his life on the spit, where he died in 1938. He was born November 12, 1863. 

When the illustrious scientist Alexander von Humboldt visited the dune in the mid-19^th century he called it,  “one of the world’s most remarkable natural attractions.”  Others described it as Europe’s Sahara. The shifting dunes, blown by sea winds, are in places five-kilometers wide. The Curonian Spit was declared a World Heritage Site in 2000. 

             Curonian Spit and lagoon (Landsat/NASA image)

What Thienemann had discovered was the principal route for migrating birds traveling from as far away as the Black Sea and Africa. Bird migration routes hug coastlines and the spit’s wide, peaceful lagoon is a bountiful way station.  During peak spring and autumn migration times as many as one thousand birds fly along the spit each day.

The first birds Thienemann banded were black-headed sea gulls. Ringing had been devised sometime earlier by a Danish ornithologist, but it was Thienemann who put it into practice.  An estimated one million mostly small birds were banded at his station prior to the Second World War.

The epic battles in 1945 between the German and Soviet armies in East Prussia halted work at the research station and marked the end of seven centuries of German sovereignty. The Soviet Union obtained much of East Prussia as war booty. After two and a half million Germans fled or were expelled, Stalin systematically sought to expunge all evidence of German presence and the territory was repopulated with Russians. 

In the mid-1950s, Arctic ornithologist Lev Belopolsky from Leningrad was allowed reestablish the bird observatory. It remains today the biological station of the Zoological Institute of the Russian Academy of Science. The PhD researchers at the site carry on the work started by Thienemann.

My host at the station was Dr. Andrey Mukhin who shares his time between Rybachy and Kaliningrad University. He showed me the fine, almost invisible mist nets placed in the reeds close to the water. We retrieved for banding a male goldcrest, typical of the small migrating birds that fly by night and feed during the day.  Mukhin and his colleagues’ research is focused on magnetic fields, seeking an explanation to the still unanswered question of how birds navigate.

One study conducted at the station found that young storks held back two months from the departure of their flock still managed to find their way to rejoin others near the Black Sea more than 1,000 miles to the south.

Like most German graves in the territory, Thienemann’s was desecrated in the savage aftermath of war. The Russian scientists located his burial place in the wooded German cemetery and a new tombstone matching the original was placed over the grave.

 The village of Rybachy (formerly Rositten) is neglected and forlorn. Thienemann’s home is still lived in but in need of renovation. 

Thienemann’s home

Despite its rundown condition and shortage of funding, the bird watching station that Thienemann created still functions and welcomes international collaboration. The scientific work continues.  

If anything the natural beauty and wildlife of the Curonian Spit are even more spectacular now than during Thienemann’s time.   Fifty years of isolation works wonders.  The moose and elk herds have expanded.  There are large populations of foxes and wild boars.  And of course the birds still come in vast numbers, flying north and south with the seasons. #  

Icy Wind from Toronto: Washington's Fresh and Green Closing

The Faces of Grocery Workers Losing Their Jobs

Barrington Marsh	Bill Fitzpatrick
Caleve Bright-Davies	Don Looney
Donald Andrews	Carol Holliday
Tony Brox	James Truesdale
Jenny Yliquin	Sally Nwabikwu
Shirley Middleton	Sally Crabbe
Mike Havey	Kwaku Kyeremateng
Tim Macleod

WASHINGTON: The cold wind from Toronto swept into Washington December 2d with the announcement by Natural Markets Food Group CEO Robin Michel that the Spring Valley store would close by the end of the month, perhaps as soon as December 15^th. The unwanted Christmas present was a shock to the store’s 40 plus employees, several of whom have worked at the location for 25 years.

Michel, who came to the Natural Markets parent of Fresh and Green’s a year ago, was previously a top executive at Sears Holdings, run by billionaire investor Eddie Lampert, and before that at Giant Foods.

She said the closing of the six Fresh and Green’s stores in Maryland and DC acquired in the 2011 Super Fresh bankruptcy auction was “a very difficult business decision.” Despite the company’s best efforts, she said, the stores “remained unprofitable.”

Several Spring Valley store employees dispute the assertion that their store is unprofitable. Some suspect that the closure is an attempt by the Toronto-based hedge fund that owns Natural Markets to destroy the union, Local 400 of the United Food and Commercial Workers Union (UFCW). Cashier Sally Crabbe, a 27-year veteran at Spring Valley, predicts the site will eventually reopen as a non-union Mrs. Green’s, one of five brands in the Natural Markets portfolio.

In November, Natural Markets announced that company is in the midst of expansion and “taking the Mrs. Green’s concept” to several US and Canadian locations. The company has reportedly acquired a DC location near Dupont Circle. The Mrs. Green’s franchise emphasizes nutritious and organic foods, combining grocery shopping with take-away nutritious meals. Catalyst Capital, the company’s private equity owner in Toronto, says an initial private offering of Natural Markets shares is planned.

Catalyst Capital, the Toronto private equity shop headed by Gabriel de Alba, declares on its website that it is “a leader in active, distressed investing.” Its holdings include YRC trucking, a casino, and manufacturers. Catalyst Capital has been involved in food service since 2006 when it acquired in bankruptcy Richtree Market, the company that was the buyer of Super Fresh stores in 2011.

When Richtree/Natural Markets came to Washington, DC store employees agreed to a 10% wage reduction, the price for retaining the union as a bargaining agent. The current contract expires in June. Termination packages—if any-- have not yet been revealed.

Cashier Sally Crabbe is thankful that her health insurance continues until the end of the month as she is scheduled for cancer surgery before Christmas. Health plans for most employees termination January 1. Employees with long tenure include carry out assistants Donald Andrews, 27 years, and

Tim McLeod 22 years, and butcher Don Looney who has been with A & P and its successors for 50 years. The Spring Valley supermarket opened its doors in 1964.

The owners of the property, Robert and Paul Burka, attempted in a court filing to stop the Richtree/Natural Markets purchase. They argued that the Toronto firm had neither the experience nor the money to operate profitably.

Jeff Metzger, the publisher of Food World in Columbia, MD, wrote in 2011 that the Canadians had overpaid for the Super Fresh stores and that the operation “was doomed from the start.”

Matt Williams, then chief executive of Richtree/Natural Markets, assured employees and customers that the Spring Valley store would be extensively renovated, including the addition of a café and coffee bar. The promised renovations never occurred. #