Saturday, April 23, 2005

Toyota and the environment article

Toyota is Serious About the Environment

by Sam Wardle

Toyota's streamlined plants aim for zero waste.

Until recently, the automotive industry was not closely associated with environmental responsibility. After all, cars can guzzle gas and release harmful emissions; not to mention the process of manufacturing a car can be costly and wasteful. But with the advent of gas/electric hybrids, the idea that automobiles can have less of an impact on the environment has become a reality. And Toyota Motor Manufacturing isn’t stopping there. They are streamlining their factories worldwide into landfill-free, low emissions plants.

Carl Kurz, Assistant General Manager of Facilities Control for Toyota of Georgetown, Kentucky, has no illusions about why his factory is working to become completely landfill-free by December of this year. “There are no government regulations whatsoever for the disposal of non-hazardous solid waste,” he says. “Technically, we could put as much into the landfill as we want.” And citing the fact that landfills are the central, thus least expensive way to dispose of industrial waste, he adds “Economically, it’s really the easiest thing to do.”

But the folks at Toyota believe that direct profits are not the only thing that drives an industry. Over recent years, good environmental stewardship for its own sake has become an integral aspect of their corporate philosophy. Exhibit A: the commitment to become landfill-free world wide, evidenced at the Georgetown plant where Kurz works.

Americans generate 11.7 billion tons of non-hazardous waste a year, 6.5 billion tons of that comes from manufacturing. In fact, only 2 percent of all trash comes from consumers, largely becomes for every ton of waste you throw out, there are twenty tons created in the manufacturing process of whatever it is that is being disposed of. For most factories, this enormous propagation of garbage is an accepted modus operandi, but not at Toyota, whose entire workforce is striving to see opportunities even in the stuff they toss out.

Toyota uses a philosophy called ‘kaizen,’ meaning ‘continuous improvement,’ with its employees in order to increase efficiency and productivity at its plants. Basically, it amounts to one giant suggestion box. All employees are encouraged to make these suggestions; the Georgetown plant received over a thousand last year, and they have been integrated into many waste saving procedures.

For example, some technicians in the paint shop suggested a new technology called a ‘cartridge reduction system.’ Now in use, it reduces the amount of paint thinner needed by 30%. And in the cafeteria, wasted food and paper cups and plates are now recycled into mulch for the plant’s outdoor landscaping and flowerbeds. There are future plans to build a greenhouse in the factory, and to use the cafeteria mulch to grow flowers, rather than purchasing them from an outside source. Advances coming from suggestions like these have, in many cases, reduced the plant’s overall output of waste, and in some cases, eliminated it altogether. Paradoxically, these methods are helping Toyota save money, which adds to the bottom line.

Other ways the plant has found to eliminate landfill waste are as simple as recycling plastic caps that come on premanufactured parts or selling their trash to other plants who have a use for it. Now, instead of just shipping it to the dump, plant managers sell the scrap metal generated in automobile production to nearby companies. Kurz explains that this is sometimes difficult to do in a cost-effective fashion, since the success of projects like this depends on finding someone nearby who has a use for the scrap. In one case, he mentions, they found a scrap yard interested in buying from them, but it was located in California. The cost of shipping was far too much for it to be feasible, so they had to keep looking. “But we’re always finding new ways to do this,” he says. But as more people start thinking this way, the transaction costs will go down.

Toyota’s environmental commitment extends beyond finding creative solutions for industrial waste. In central Kentucky, where Toyota’s Georgetown plant is located, city water reserves often drop dangerously low during the frequent summer droughts or in even some cases during short dry spells. Naturally, a plant like Toyota uses a large amount of water, but, Kurz explains, “We don’t want to get into the habit of just using and disposing.” He adds, “We have a system online to clean and recycle our wastewater. Right now, 10% of last month’s wastewater is being used in the plant. Our final goal is 50%.”

Another utility-saving advance the plant has made was to retrofit all of their more than 10,000 lighting fixtures with a new ‘pulse start’ lighting system that saves a megawatt of electricity a month. “It costs us some money to do things like this,” Kurz says, “But it’s worth it. That’s our corporate culture, that’s the way we want to do business. We want to be the greenest auto manufacturer in the world.” And, in the end, no one is likely to complain about the smaller utility bills.

Toyota is also interested in being a good resident of its local community. Kurz mentions that they are looking into going below EPA emissions standards, which would give back emissions credits to the state of Kentucky. The state is only allowed so many pounds of emissions per year, and the freeing up of those credits might allow another manufacturer to set up shop in the state, thus stimulating local economic growth.

Kurz claims that Toyota is not making these advances as a PR strategy, in fact the so called ‘greenness’ of the company has been largely ignored. A search of a national magazine and newspaper database revealed only two positive articles on the Georgetown plant’s environmentally friendly posture, both printed in the Lexington Herald Leader, the only large paper in Central Kentucky. Another mention was made by a minor environmental organization, which criticized the plant for the amount of pollution generated during their manufacturing process, in comparison with other plants. Toyota defended itself by pointing out that their engines are made on sight, whereas most other plants import them already made, thus reducing the perceived amount of pollution. Obviously, the government is not forcing them to adopt an environmentally friendly philosophy, since they have already gone beyond many regulations. They are doing it, Kurz asserts, to be what he calls ‘a good corporate citizen.’ “We always want the focus of what we produce and how we produce it to be environmentally friendly,” he says, “because people are becoming more aware of the resources of the world being finite.”

All of this fits under the company’s ‘2010 Vision,’ which Kurz says entails “0 environmental violations, 0 complaints and total environmental protection and assurance that we’re building the highest quality product without degradation to the environment.” It seems somewhat unbelievable that the world’s third largest auto manufacturer, and tenth largest company overall, would take the initiative to actually spend money to go beyond government ecological regulations. For now, Toyota stands alone in the respect, but the more Toyota gets press like this, the more other companies will begin to follow suit.

“It’s wonderful,” Kurz says, “to see the environment get better.”

Friday, April 22, 2005

risk descriptions

risk descriptions

delta..describes your net long/short position

gamma is rate of change of delta

vega is exposure to underlying volitility

theta is time decay of option

Options Trading/Hedge Fund Make up

Option Trading:
Software guys - write programs
Hardware guys
Computer maintenaince guys
Communicatiion specialists


Hedge Fund Trading:
Traders
Marketing
Financial engineers (math genius)

Trade

Stocks

Bonds

Commodities

Currencies

Recommended books for Trading

Options as a Strategic investment by Macmillian
Fooled by Randomness by Nassim Taleb
Reminiscence of a Stock Operator by Lefevre
Market Wizards by Schwager

John's finds:

The 332 section - british council library - chennai

Strategic invextment decision - Oldcom
capital ideas and market realties - Jacobs
options, futures and other derivatives - Hall

Sunday, April 17, 2005

The Ecology of Commerce

THE ECOLOGY OF COMMERCE
A Declaration of Sustainability
By Paul Hawken
HarperCollins, 1993, 250 pages

The fact that the title of this book, The Ecology of Commerce, reads like an oxymoron illustrates how wide the gap has become between the natural world and our commercial lives, says Paul Hawken. Business believes that if it doesn't continue to grow and instead cuts back and retreats, it will destroy itself. Ecologists believe that if business continues its unabated expansion it will destroy the world around it. In this eloquent and visionary book, Hawken describes a third way, a path that is inherently sustainable and restorative but which uses many of the historically effective organizational and market techniques of free enterprise.
Central to Hawken's argument are two basic facts: the age of industrialism, as we know it, has come to an end; and we are confronting a global ecological crisis that is considerably more acute than most of us realize. These facts both mean that businesspeople must dedicate themselves to transforming commerce to a restorative undertaking. They simply have no other choice as we are exceeding the carrying capacity of the planet -- the maximum level of life an ecosystem can sustain.
Creating a restorative economy means rethinking the fundamental purpose of business, according to Hawken. It is not simply a means of making money or a system of making and selling things. "The promise of business," he writes, "is to increase the general well-being of humankind through service, a creative invention and ethical philosophy. Making money is, on its own terms, totally meaningless, an insufficient pursuit for the complex and decaying world we live it." We have the capacity to create a very different kind of economy, one that can restore ecosystems and protect the environment while bringing forth innovation, prosperity, meaningful work, and true security, Hawken says. "If this scenario sounds dreamy and Arcadian it is because we assume that economic forces only exploit and destroy." But this behavior is not "the inherent nature of business, nor the inevitable outcome of a free-market system. It is merely the result of the present commercial system's design and use."
Business has three basic issues to face, Hawken says: what it takes, what it makes, and what it wastes. That is, the harmful way it exploits natural resources; the excessive amounts of toxins and pollutants it produces and the excessive energy it consumes in the process; and the extraordinary wastes it leaves behind. We must develop a system of commerce that is patterned according to basic ecological principles. In nature, waste equals food, all growth is driven by solar energy, and the overall well-being of the system depends on diversity and thrives of difference. An ecological model of commerce would imply that all waste has value to other modes of production so that everything is either reclaimed, reused, or recycled. It would depend not on carbon but chiefly on hydrogen and the sun for its energy. And it would be highly varied and specific to time and place.
Because the restorative economy, as Hawken envisions it, inverts ingrained beliefs about how business functions, it may produce unusual changes in the economy. As he shows with numerous examples and practical recommendations, the restorative economy will be one in which some businesses get smaller but hire more people, where money can be made by selling the absence of a product or service (for instance, where public utilities sell efficiency rather than additional power), and where profits increase when productivity is lowered.
The drive to develop a restorative economy must come from businesses themselves, Hawken insists, for "no other institution in the modern world is powerful enough to foster the necessary changes." The key is to inspire a willing, uncoerced, and even joyous redesign of the way we conduct business. What is needed are not new government bureaucracies or legislative mandates but incentives that will redefine the basis on which companies make decisions -- from short-sighted commercial gain to long-view ecological and commercial sustainability.

Discussion of Investment of Money with Mitch

i would like to donate some of the winnings to a favorite charity
the donation is tax deduction anyway
nathanstravels@hotmail.com says:
interesting that you would not invest in US treasury bonds -
mitch says:
10 yr bond yield is like 4.25%
that's bad
nathanstravels@hotmail.com says:
but you CANNOT lose
mitch says:
yes
nathanstravels@hotmail.com says:
and with that much money 4.5% is a lot of money
mitch says:
but i would stay shorter term...because i feel rates won't go lower
mitch says:
i can get 2.5% on 1 year t bill...same security and not tied up for 10 years
mitch says:
your biggest enemy is inflation
mitch says:
what will your dollars buy in 10 years with 2%/yr inflation?
mitch says:
times like these ...low interest rates..uncertainty...you wanna keep liquid
nathanstravels@hotmail.com says:
and treasury bond is not liquid
mitch says:
if you put your money in 10 yr treasury...you have committed to that for 10 years
you can sell early..but there are penalties
there are TIPS
nathanstravels@hotmail.com says:
how will inflation go if another recession hits
nathanstravels@hotmail.com says:
what are TIPS
mitch says:
those are inflation adjusted treasuries
nathanstravels@hotmail.com says:
how do they predict the inflation rates for 10 years in advance
mitch says:
they just adjust their yield to the known inflation change..year by year
mitch says:
but every country is different
nathanstravels@hotmail.com says:
they sound like a smart option at least for some money
mitch says:
india might still be ripe for real estate speculation
nathanstravels@hotmail.com says:
yes but if you get that kind of money you invest in American treasury bonds
mitch says:
well
nathanstravels@hotmail.com says:
india is too corrupt
mitch says:
not necessarily
mitch says:
for example
nathanstravels@hotmail.com says:
at least some of it
mitch says:
australia is pretty stable
nathanstravels@hotmail.com says:
invest some of it
mitch says:
their yields are higher on treasuries
mitch says:
but then you have currency risk
nathanstravels@hotmail.com says:
they have TIPS too
mitch says:
probably us investments (dollar denominated) are not the way to go
mitch says:
dollar has been in freefall or some time
mitch says:
so much so that foreign govts are getting hurt investing in us dollar denominated treasuries
this problem means that foreign buyers of us treas might dry up...and bond prices will fall and yields go up