By Paul Page
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Boeing Co. is bringing more of its supply chain in-house in an
effort to cut costs. The new effort follows the aircraft maker's
decision to produce wings for its new 777x jet on its own, and the
WSJ's Doug Cameron reports the self-supply plan will include more
automation and job cuts at factories. The drive will be felt around
the world: Boeing is at the heart of a sprawling global eco-system
of aerospace components manufacturing and distribution, and the
company buys between 60% and 70% of its parts from external
suppliers. Those companies are being pressured to reduce prices and
boost efficiency, often in return for more work, as plane makers
try to speed up production. Boeing is convinced, meantime, that new
automation technology can help the company produce goods without
adding a big labor force while keeping a greater grip on the flow
of components.
Changes in shopping habits are taking a growing toll on big
consumer brands, and the responses of the product makers could
ripple across consumer-goods supply chains. Overall purchases of
consumer packaged goods in the U.S. declined 2.5% in unit terms in
the first quarter, the WSJ's Sharon Terlep, Jennifer Maloney and
Annie Gasparro report, hitting results at companies including
Procter & Gamble Co., PepsiCo Inc. and Nestlé SA. The results
suggest that the sector is undergoing a deep structural shift: The
20 largest consumer packaged goods companies last year had flat
sales while smaller ones posted sales growth of 2.4%, according to
Nielsen. Those smaller companies tend to be nimbler and closer to
their end-customers, allowing them to respond more quickly to
changing consumer trends. At the same time, big retailers like
Wal-Mart Stores Inc. are reducing inventories, leaving the big
brands with few of the benefits of scale and much of the pain.
The rise of the Internet of Things has meant a huge windfall for
the chip makers supplying the "brains" for smart devices.
Semiconductor manufacturers receive enormous orders six months in
advance from buyers looking to install chips in computers, servers,
and, increasingly, cars and appliances. The importance and growing
ubiquity of these largely anonymous pieces of technology has given
rise to an industry bigger than the U.S. fast-food and auto
sectors, and one where consolidation has created high barriers for
new entrants, write Timothy W. Martin and Eun-Young Jeong.
Technology companies will pay a premium to keep the semiconductors
flowing to their device factories, pushing up chip prices steadily
in recent years. That in turn drives up the price of smartphones
and other gadgets for consumers, though experts see those hikes
starting to ease as more manufacturers learn how to produce
high-end chips.
ECONOMY & TRADE
A trade battle may be simmering in the solar-power industry.
Bankrupt U.S. solar panel maker Suniva Inc. is asking the Trump
administration to impose trade tariffs on all foreign-made solar
cells, the WSJ's Cassandra Sweet reports, in a last-ditch effort to
survive. The company is making the case at the U.S. International
Trade Commission to fight off low-cost solar panels that are mostly
manufactured in Asia and have glutted the global market. That's
left prices diving and the entire U.S. solar manufacturing industry
on the ropes. Georgia-based Suniva shut down two U.S. factories in
filing for bankruptcy last week, but the company's fight to restore
manufacturing jobs also carries more complicated signs of
globalization in solar power. Suniva is majority owned by Hong
Kong-based Shunfeng International Clean Energy Ltd., whose biggest
shareholder has built a solar-power supply chain from the remnants
of China's largest solar manufacturers.
QUOTABLE
IN OTHER NEWS
The White House is debating whether to issue a formal threat to
withdraw from the North American Free Trade Agreement. (WSJ)
Mexico's peso posted its biggest loss in three months amid
reports the Trump administration was weighing an executive order to
withdraw from Nafta. (WSJ)
The Trump administration is set to launch a probe of aluminum
imports that could end in tariffs or other trade restrictions on
the metal. (WSJ)
European car makers reported positive first-quarter results,
signaling the region may soon return to its precrisis level for new
vehicle sales. (WSJ)
Mexican state oil company Pemex has taken out oil hedges to
protect income this year from a possible further decline in prices.
(WSJ)
Canadian retail sales fell sharply in February on lower auto
sales. (WSJ)
United States Steel Corp. reported a surprise quarterly loss and
plans to overhaul mills at the expense of profit this year.
(WSJ)
Tyson Foods Inc. plans to raise pay and expand training to boost
retention and reduce injuries in notoriously tough slaughterhouse
jobs. (WSJ)
CBRE Research says global shopping center completions rose 11%
in 2016. (WSJ)
U.K. online fashion retailer Boohoo.com PLC is seeing a sharp
upturn in sales because of the decline in the value of the pound.
(WSJ)
The World Trade Organization ruled Mexico may take retaliatory
measures against the U.S. for labeling rules regarding dolphin-safe
tuna that Mexico says restricts its market access. (NPR)
First-quarter net profit at Norfolk Southern Corp. rose 12% as
coal revenue grew 20% from a year ago. (Virginian-Pilot)
Shipping giant Maersk Line and other A.P. Moller-Maersk
transport operators will use the Microsoft Corp. Azure cloud
computing platform for digital services. (American Shipper)
The Baltic Exchange may establish a container shipping index to
move beyond its role in bulk shipping markets. (Journal of
Commerce)
The Pentagon awarded FedEx Corp. a five-year, $2.35 billion
contract for domestic and international parcel delivery.
(Reuters)
Developer Hines plans a one-million-square-foot warehouse
complex in the burgeoning industrial market south of Dallas.
(Dallas Morning News)
Norway's Frontline made a new, larger offer to take over rival
tanker operator DHT Holdings. (Splash 24/7)
The DB Cargo unit of Deutsche Bahn railroad will cut jobs in the
U.K. and reset work rules under a new pact with unions. (Railway
Gazette)
Vietnamese airline Vietjet plans to launch its first freighter
service in October. (The Loadstar)
Google co-founder Sergey Brin is secretly building an airship.
(Bloomberg)
ABOUT US
Paul Page is deputy editor of WSJ Logistics Report. Follow him
at @PaulPage, and follow the entire WSJ Logistics Report team:
@brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ
Logistics Report on Twitter at @WSJLogistics.
Subscribe to this email newsletter by clicking here:
http://on.wsj.com/Logisticsnewsletter .
Write to Paul Page at paul.page@wsj.com
(END) Dow Jones Newswires
April 27, 2017 06:58 ET (10:58 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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