from the lecture answer rhe questios below . tumps up if you dont recycle old answers from this page

Solutions to Supply Chain Disruptions

In the inter-connected global economy, many firms are reliant on foreign locations as production sites for critical components. However, many geopolitical and other factors have the potential to disrupt production in foreign locations. The simmering trade tensions between the US and its trading partners that lead to renegotiation of the NAFTA treaty and imposition of trade sanctions on China in the past few years are some of the examples of global issues that may disrupt foreign production sites. More recently, the COVID pandemic has severely disrupted the global supply chains of many multinational companies.

Trade Disruption is Bad for Auto Industry

I'm not sure the correlation between global growth about possible trump protectionism and the impact of automobile sales but the link seems pretty strong well the auto industry is at the right center of global trade so anything that's disrupting global trade and the US is of course a core element of that would be bad news for the auto industry it would be bad news for shareholders and I think it would be bad news for job the US as well right can you differentiate for example the Asian automakers in you know in Asia compared to the European ones who's strong and who's not well Toyota's you could say on the premium side market huge manufacturer of cars in the US BMW for instance is the biggest German manufacturer in the States and 70% of their production is actually being exported so they are all you know hugely mattered in the US market the US consumer likes these brands and you know we all hope they will continue to be successful there wonderful to have you with us with your work with Credit Suisse for years and now at Evercore let me bring up the Toyota chart which shows that persistency of cash flow generation it's a gorgeous city here as they move up up and away what I want you to help me with art is what is the decision tree for Toyota or you mentioned BMW what's the decision tree between Spartanburg Mexico and Mexico Mexico I mean we can make jokes that Saturday Night Live but what is the decision tree for these companies on choosing Mexico versus the United states well it's very simple these guys look at where will we sell cars in the very long future these guys take you know investment decisions for the next 1015 years if not longer when they set up a plant and the normal condition the plan you know needs they need to produce at least two 300,000 units a year labor cost is hugely important it's about 10 to 15% of revenues in the auto industry supply chain hugely important material cost roughly you know 6070% of revenues so well functioning supply chain well trained labour and competitive labour costs that's it and the market right that's supply chain is new and original it's part of the new globalization how will BMW and Mr. zeches Daimler how will they adapt to the new supply chain of North America well there isn't a new supply chain yet these guys will all start negotiations now with the US partners and then they would take a decision and it will probably take them a year or two to figure out what they're gonna do next I don't think that anyone will change the current CapEx plan anytime soon we'll be far too early because we don't have any concrete facts yet and kit how do these automakers actually navigate currencies so we're going to see quite a lot of volatility a lot of fluctuation how much will the winners and losers depend actually on currencies instead of just the models well I mean most of them I mean firstly they hedge currencies secondly you know the biggest number you see on the earnings is is just how they announced their profits in in domestic currency terms so Toyota makes currencies all around the world they're not they're not making they're not making their cars in Japan and selling the rest of the world and bringing the money back they're just they're making X amount of dollars which is worth more or more or fewer yen on a given day so so they've they've done a great job of moving around to a global manufacturing base that yeah sort of protects them from fluctuations what they can't do is if they have a shareholder base at home they can't get away from the fact that at the end you've got to translate it back into domestic currencies and and you take a hit when it moves a lot or or you get a benefit aren't will we see less of an appetite for environmentally friendly cars if the trump administration actually shies away from it unfortunately yes we don't see that globally the consumer is really paying for improved fuel economy or fewer emissions the consumer generally pays for things like connectivity or sound system so it's very hard for car makers to price say a plug in hybrid we just discussed it or even an electric vehicle you know with the absence of Tesla we hardly sell any electric vehicles globally simply because the consumers are not paying for it yet alright help here we'd ask Ken said of this question so we're gonna we're gonna oppress you with it as well what's your single Best Buy now in automotives where's the best value to acquire shares this morning well we're big buyers of folks wagon we still think it's the biggest turnaround story in global autos with the most significant earnings upside which you need for an auto stock to work and I think Vallejo is the most interesting supplier out there Vallejo is most exposed to electrification and least exposed to conventional powertrains.

How Chinas novel coronavirus outbreak is disrupting the global supply chain

Most of the attention on the outbreak of this new coronavirus is appropriately focused on public health concerns in China and around the world here in this country 66% of US adults said that the virus poses a real threat to public health that's according to the latest PBS news hour NPR Marist poll as quarantines and travel restrictions multiply many companies that rely on China are also hurting from this outbreak William brangham is back tonight with a look at the early economic fallout you've heard about major airlines suspending flights into and out of China but you may not know that many large companies have also shut down stores and offices in the country others are halting work at factories within China which can deal a serious blow to the global supply chain of parts and merchandise today Hyundai Motor company bounced it will suspend vehicle production at most of its South Korean factories in three days because it can't get needed parts from China it's the first car maker outside of China to make this announcement David lynch covers global economics for the Washington Post and he joins me now welcome thank you sticking with this Hyundai announcement they're basically saying we can't keep making cars if we can't get these parts coming out of China is it your sense that this is a harbinger of what's to come well that's the worry that this is the Canary in the coal mine because Hyundai is not alone in the auto industry or in the global industries across the board in depending upon Chinese factories for key parts the auto industry in the US it depends on Chinese suppliers for something like 15% of its components consumer electronics is even more dependent up to 50% of what's needed for consumer game consoles smartphones laptops computers and the like so if China goes offline for any appreciable length of time that's a big problem one of your most recent pieces in the post really touched on and I think for for people who don't appreciate the role that China does play in the global economy and the supply chain can you just explain a little bit more about its centrality sure and this is one of the big changes since 2003 which was the last time during the SARS epidemic that we saw this kind of runaway medical scare China is now four times as large as it was then an economic four times in 17 years correct $14 trillion economy and it's also become the center of global production networks in any number of key industries as we said electronics autos medical equipment industrial machinery pharmaceuticals 80% of the raw materials used by American drug companies to make generic drugs come from China so again if there's any sort of lengthy interruption there and we don't we should say we don't know how long this problem will last if things come back online in a week or two this will be a hiccup it'll be a bump in the road it'll be forgotten pretty quickly but the concern is as this virus continues to spread and the Chinese authorities continue to struggle to contain it how long is this going to last and I guess we're not epidemiologists that's really the mystery and that's the thing that they're trying to get to the bottom of the other thing that you and others have reported that I didn't quite appreciate is how much of A domestic market I mean trying to guess exports to the world but but they themselves have a booming domestic market that we sell to absolutely and this is another big change we we've gotten used to thinking of China as a low cost factory export platform for the world but it's now the Chinese domestic market is the largest market for movies for autos for all sorts of consumer products like this and American companies are there to sell into this apple for instance sold $44 billion worth of product in China to Chinese consumers last year all the stores in that country are now closed we understand that some of the quarantines for certain regions might be coming off with the idea being that those factories could theoretically open again but you were telling us before about the the end of the the Chinese lunar new year enormous number of people coming back into the cities but it's not clear if they're going to be able to go back to work and if that's going to be safe for them to do so correct at at the moment the theory is that most of the factories will come back online on February 10th but in hubei province which is where Wuhan is the center of the epidemic it's February 13th and that's the current planning as you say typically the Chinese lunar new year this is the big annual holiday so everybody floods out of the cities goes home to their ancestral villages coming back at a time when domestic transport has been interrupted because they're trying in the home market to use the same sort of isolation that is being applied globally to cut off that transmission it may make it much harder than is normally the case for workers to get back to their jobs responding to the economic fears about this virus the trump administration has been downplaying it saying we don't think it's going to be a big impact here and the stock market thus far seems to have not viewed this with too much alarm does that reaction surprise you or or or make you sanguine it it surprises me a bit just because I think the downside risks here are obvious the White House Larry kudlow the national economic director said last week that he didn't anticipate any material impact on the US economy that was early days I think today he's said that they do anticipate an impact on the recently signed US China trade deal China is supposed to be making enormous new purchases of American products farm goods energy manufactured goods these were ambitious targets 200 billion dollars extra over two years an ambitious target before this crisis kudlow said today it's gonna take longer than expected to get those export orders because of the illness alright David lynch of the Washington Post.

In view of these developments, please read the before text and answer the following QUESTIONS:

1. In view of the supply chain disruptions due to trade tensions and other events (e.g., COVID pandemic), how should automakers reconfigure their supply chains?

2. Do you anticipate that major MNCs in industries such as electronics and automobile would be making a shift to more decentralized production in places where they sell their products so that they can avoid the supply chain disruptions? Please explain the reasons behind your answer.