Supply Chain Insights from Major Industry Players

Ever wondered how key players in global supply chains are navigating their most challenging moments yet? This week on Chain Reaction, we promise to uncover the critical moves and strategic decisions shaping industries worldwide. From Boeing's new CEO Kelly Ortberg facing monumental tasks, including mending frayed relationships and resolving production bottlenecks, to Intel's historic share drop and Alphabet's intriguing stake reduction in CrowdStrike, we leave no stone unturned. Plus, hear why Exxon's profits soar while Chevron stumbles, and how the tech sector's latest woes could spell trouble ahead.

But that's not all. Discover the ripple effects of Amazon's profit warnings amidst stiff competition from Temu and Shein, and Tesla's strategic maneuvers in the Chinese market. Volvo's EV sales in Europe are on the rise, painting a promising picture for the electric vehicle industry. Don't miss our special segment on how these shifts are impacting consumer trends and corporate strategies. Tune in to gain a comprehensive understanding of these developments and stay ahead of market dynamics.

Transcript

Tony Hines 0:06

Tony Hines. Here you're listening to the Chain Reaction podcast and this is the News Roundup All things impacting global supply chains this week Chain Reaction. Thanks for joining us today. I'm Tony Hines and you're listening to the Chain Reaction News Roundup. There's been a change of CEO at Boeing. It's been trailered for months, but Dave Calhoun leaves on the 8th of August and hands over to a new CEO, and we'll talk about that. And then there's all kinds of other stuff. So stick around, stay. We'll talk about that, and then there's all kinds of other stuff. So stick around, stay tuned. Find out more.

Tony Hines 0:48

Intel shares set to fall by the highest number in 24 years as it struggles with its turnaround. Alphabet apparently cut its stake in CrowdStrike before the July global outage. What did they know that perhaps others didn't? Exxon's delivered $9.2 billion in second quarter profit. Chevron also reported Q2 earnings, but they were weaker.

Tony Hines 1:17

There's been a fall in tech stocks in the United States and that's because there's concerns over the US economy. Tesla's registered an insurance broker in China. About 1 million Stellantis Dodge SUVs are having a thorough investigation by the NHTSA. Amazon gave a warning on its profitability in the retail sector. All eyes turned to Walmart. Volvo car sales in July rise by 6%, and that's driven by a boost from European EV sales. Amazon shares have tumbled in Frankfurt by 8%. Tesla's China-made EV sales have risen by 15.3% year-on-year in July. Apple pins its hopes on AI for the iPhone upgrades, as its China sales have faltered.

Tony Hines 2:10

Well, a new Boeing CEO takes office next week. Ceo Kelly Ortberg faces a big challenge, and he's taking over from Dave Calhoun, the outgoing CEO, who's overseen all the problems in the past few years. Ortberg's priorities will include rebuilding all the relationships that have been damaged with both the airlines and employees. He'll have to fix Boeing's production and delivery challenges and avoid labour disruptions, which are on the cards, apparently. So no easy challenges when you become CEO are there. You get the job usually because, well, the problems are just too big for the current incumbent or the shareholders investors or the stakeholders have lost trust.

Tony Hines 3:06

All those things are probably contributing factors to the change of Boeing. The good news is that current and former airline executives have said they're optimistic about Ortberg's aerospace and engineering expertise, and his status as an outsider will help. But he's 64 and he's got a big job. Insiders are saying it's not a five-year fix and it'll take time. I think most people think it's going to take 10 years to turn Boeing around to the organization it needs to be. The company's most urgent problems are, of course, to mend the quality issues that have really dragged the 737 MAX into the gutter over the past year or so. So watch this space. There's also been reports of labour disruptions in Seattle. There are 30,000 Seattle area factory workers who are currently in contract talks with the company, factory workers who are currently in contract talks with the company, and the company needs to push output out the door because it's not generating enough cash presently. So big tasks, big jobs, new CEO, hope it goes well.

Tony Hines 4:24

Amazon shares have fallen by more than 12% at the end of this week. There's been reports of slowing online sales growth in the second quarter and consumers are seeking out cheaper options to make purchases. Amazon CEO Andy Jassy said that customers were trading down on prices when they could said that customers were trading down on prices when they could. Company shares were trading at about $165, with the stock among the biggest drags on the NASDAQ. Amazon's set to lose about $188 billion in market value if losses stick. Consumer trending is that people are looking to save and are trying to squeeze out just that bit extra from their income. Amazon's online store sales rose by 5% in the second quarter to US$55.4 billion, compared to the growth of 7% in the first quarter. Competition from Temu and Shien has intensified and is hitting the e-commerce retail business quite hard, and if you want to find out about why this is happening and why Timu and Xi'an are having increasing success, then listen to my special report about these two companies under De Minimus. So Amazon have competitive pressures from those two companies and they also have a bit of consumer resistance, as the cost of living is hitting the pocket or the purse.

Tony Hines 6:02

In the United States, unemployment has risen from 4.1% in June to 4.3% in July and it's putting pressure on the Fed to lower interest rates, so it's full steam ahead. I reckon there's going to be a fall in interest rates sooner than later, probably in September, and that's always been on the cards. So I'm expecting a slight fall in September. Interest rates in the United Kingdom fell this week to 5%. The Bank of England lowered its rate to 5%, so that's expected to stimulate the economy a little more Not too much, but just a little. It won't be inflationary, but it may stimulate growth. There's been some speculation this week about a possible merger between Shell and BP. Is it likely? Well, they could save money, of course, on the merger, because they'd have economies of scale, they'd cut costs and obviously, if oil prices begin to fall, then it could be a useful proposition for both companies. So keep watching the space. So keep watching the space.

Tony Hines 7:19

Well, you know when Warren Buffett is holding cash that not all's well in the market. And that's exactly what's happening this week. Berkshire's halved its Apple stake and it's got cash of $277 billion. It's sold about half its stake in Apple, even as the conglomerate posted record quarterly operating profits. Warren Buffett, of course, has made a lifetime commitment to knowing what's happening in the market and even at 93, well, he's still probably the world's most intelligent investor Concerns about the US economy and stock market valuations, which he thinks probably have gone too high. If you look at Berkshire Hathaway's position, then the safe conclusion is that they're being defensive. That's what commentators are saying. Us stocks have plummeted for the second straight session on a Friday and the NASDAQ, according to some, is in correction territory. When this happens, probably wise to stay out the market till the dust settles, and no one would know that more than Warren Buffett.

Tony Hines 8:38

Intel shares fell by 26% on Friday it's the worst day since 1974, and the chip manufacturer in 74 suspended its dividend and slashed its workforce to fund a costly turnaround. The company lost more than US billion US dollars in the market after it gave a very disappointing forecast and it said it would cut the workforce by 15%, and there are major concerns over the ability of the company to catch up with TSMC, the Taiwanese chip manufacturer. The stock ended the day at 21.48, and that's its lowest since 2013. A number of commentators have said they see the threat as existential. Intel's manufacturing problems are specific to Santa Clara. The California-based company and other chip makers are also having a difficult time, and it all comes at a time when the slowdown in the US economy is causing concern for many. Now, if you're a manufacturing company and you're involved in supply chains, then you may not have given too much thought to how the service sector, and indeed how the creative community, is changing the nature of their supply chains, and there are significant changes that are happening right now. And when we think about these changes, it's all to do with AI artificial intelligence and it's all to do with how that technology is being used, and some think it'll be used for exploitation and could impact copyright, and it could lead to further litigations for musicians, artists and other creatives as the industry shifts to create plays without actors, films without actors and using AI as substitutes in the marketplace. Well, a lot of people are unhappy about it and there's likely to be more regulation as developments go further and until there are court cases, we won't know exactly the impact of those current supply chain changes, but this week there have been some reports of major litigations taking place from major record labels as they lose income to music created by AI and the royalties on the original music that they might have adapted their AI music from are not being paid.

Tony Hines 11:21

Of course, major retailers are often said to be the bellwether of the economy and obviously, with Amazon's situation and the downturn in the results, people have got eyes on others, such as Target and Walmart, to see if they're going to follow a similar pattern as consumers switch towards lower cost products. Well, in the UK that happened already, with people more than ever shopping at Aldi and Lidl, which sell at discounts to other major retail offerings. So Amazon says that customers have turned into bargain hunters. So are people bargain hunters at Target and Walmart? That's the big question, and Walmart's results will be out shortly, so watch this space. Walmart is due to report on August 15th and it's expected to post a rise of around 4% in quarterly revenue. That's the slowest rate growth in nearly two years. And this is revenue, of course, so margins, too could be under pressure because they have an everyday low price offer. They always say it's everyday low prices and so if revenue has only grown slowly, how are the margins holding up? And people are going to take a look at that.

Tony Hines 12:57

The US government filed a lawsuit against TikTok this week and they were accusing the social media company of unlawfully collecting data on children and failing to respond when parents tried to delete their child's accounts. The Department of Justice said that the firm's practices amounted to a massive-scale invasion of child privacy, in defiance of laws that require online companies to obtain parental consent to gather information from those under the age of 13. Officials said that the firm and the parent company, bytedance, were repeat offenders, noting a similar case brought in 2019. Tiktok has disputed the claim and said it was proud of its efforts to protect children. It said it proactively removed underage users and had a voluntary code of practice.

Tony Hines 13:51

Well the lawmakers and many consumers are not convinced. Tiktok is one of the social media platforms that is used by those under 16. About 60% of US teens use the platform, more than half of them on a daily basis. They've got a billion users worldwide and more than 170 million are based in the United States. Well, we'll end on a good news story.

Tony Hines 14:22

Rolls-royce is to give away about £700 worth of shares to every one of its employees, and that follows its revival. This great engineering giant announced in an internal memo it would give 250 shares to each of its 42,000 workers worldwide. The Derby-based company, which makes jet engines, announced profits of 1.1 billion in the first half of the year, and that's almost double what it made in the same period in 2023. It's the first time ever that Rolls-Royce has gifted shares to employees, and they'll be given out in September. So a great bonus. But it's probably a good thing to do, because all those employees have contributed to the success of the organization and that's a great move. I think It'll cost the company about 30 million pounds, that's about 40 million US dollars. They won't be allowed to sell the shares for three years that's a condition of the offer after which they will be taxable unless they're held for five years. So they want them to remain invested in the company. That's fair enough, isn't it so a?

Tony Hines 15:35

great bounce back after COVID and at the close of the week. Brent crude oil is trading at $77.44 per barrel and West Texan crude oil is at $74.69 per barrel. Well, that's it for this week. I hope you've enjoyed the news roundup and I hope you've learned something new by listening. And don't forget.

Tony Hines 16:08

We've got over 250 episodes of the Chain Reaction Podcast and I'm sure there's something there that you won't have listened to, that you may want to go and listen to and we've got new episodes coming out all the time. There's some good episodes coming your way in August and September, so look out for the Chain Reaction Podcast. Or, better still, why don't you subscribe? And if you subscribe, you'll be first to know about the new episodes.

Tony Hines 16:33

You'll get it right to your email. You'll be told right away once you subscribe on your favorite platforms. Well, that's it from me. I'll see you next time in the Chain Reaction Podcast. I'm Tony Hines. I'm signing off. See you next time, stay safe, have a good time. Bye for now. Thank you.

Trudy Peak 17:29

You've been listening to the chain reaction podcast written, presented and produced by tony hines.