INDUSTRY INSIDER:

Events in Japan and Libya Present Challenges and Opportunities for US Industries
James Bryant, First Research Industry Specialist

The aftermath of the earthquake in Japan and the ongoing conflict in Libya are doubly impacting US industries. Headlines have focused on increases in the prices of cars and gasoline, but the crises in Asia and the Middle East are also affecting US timber operators, construction machinery manufacturers, and computer chip makers, as well as companies from a host of other industries. Consider:

• Automobile Manufacturing: Inventories of Japanese auto parts are already dwindling in the US, calling into question the just-in-time supply chain strategy adopted by most auto assembly plants a decade ago. US-based assembly plants owned by Japanese carmakers aren’t the only ones affected; US carmakers also purchase Japanese parts. Some US assembly plants are being idled by parts shortages.
  
  
• Automobile Dealerships: Auto dealers that sell Japanese brands may have trouble keeping enough vehicles in inventory. Demand for smaller, gas-sipping models has grown as fuel prices creep higher amid unrest in the Middle East. Dealers that sell US brands such as Ford and GM could benefit if car shoppers have trouble finding a new Japanese auto.
  
  
• Timber Operations: The US timber industry, still struggling from sluggish demand for housing in North America, could get a much-needed shot in the arm by exporting timber to Japan. Rebuilding Japanese cities devastated by the earthquake and subsequent tsunami will be a massive undertaking – the biggest there since the end of World War II.
  
  
• Construction Machinery Manufacturing: Production capacity in Japan’s construction machinery industry could be impacted for months. The magnitude of Japan’s rebuilding efforts may require importing machinery from US manufacturers such as Caterpillar, Deere, and Terex. US companies could use their new Chinese assembly plants to serve any spike in Japanese demand for heavy machinery.
  
  
• Semiconductor Manufacturing: Some fabrication plants sustained damage from the earthquake in Japan, but the semiconductor industry fared relatively well overall. Power outages will likely be the biggest challenge faced by electronics manufacturers, and damage to the country’s transportation infrastructure could delay shipments further. The US imports more semiconductors from Japan than any other country.
  
  
• Electric Power Generation: The crisis at the Fukushima nuclear power plant in Japan has renewed concerns about the safety of nuclear power in the US. As the US seeks to reduce dependence on oil from the Middle East and elsewhere, the nuclear disaster in Japan will likely heighten debate among US policy makers of all political stripes on what role nuclear power should play in future energy policy.

For more information about industries impacted by events in Japan and Libya, please see our full profiles on these industries and on Industrial Machinery Manufacturing, Machine Tool Manufacture, Oil and Gas Exploration and Production, Oil and Gas Field Equipment Manufacturing, Oil and Gas Field Services, Paint and Coating Manufacturing, Plastic and Rubber Products Manufacturing, Plastic Resins and Synthetic Fibers, and Tire Manufacturers.

First Research Sees Green
Josh Lower, First Research Industry Specialist

With spring in full swing and Earth Day approaching, the editors at First Research thought it would be appropriate to examine the impact of “green technology” on our industry coverage. (No slight intended toward traditional spring topics, but business comes before flowers and baseball around here.) We’ve made it our mission to identify the challenges and opportunities faced by companies in the industries we cover, and these days few trends arise more consistently than “green technology.”

Green technology covers a wide range of products and practices, not all of which are high-tech. Photovoltaic solar panels and light emitting diodes (LEDs) are green technologies, but so are low-phosphate soaps and recycling. The common thread all green technologies share is the potential to help preserve the Earth’s natural environment.

Ideological and political debates about environmentalism aside, it’s fair to say businesses have multiple reasons for investing in green technology. Consumer demand for green building has provided architects and real estate developers with new markets to grow sales. The development of alternative energy sources such as wind and solar are is still largely driven by government subsidies. Motivated by legislative forces of a different sort, many manufacturers are being forced by environmental laws to reduce carbon emissions.

Green technology and environmentalism are also creating opportunities and challenges in less obvious places. What do janitorial, dry cleaning, erosion control, and spa services have in common? Hopefully very little, but business owners in all of those industries can expect to feel more pressure to use environmentally-friendly products. You may have switched to CFL or LED lighting in your home or office, but the benefits of those technologies are just as crucial for parking garage operators. Express delivery services are using hybrid vehicles and optimizing delivery routes to reduce fuel consumption, and as environmental issues come to the forefront, public relations firms are helping companies develop “green” marketing strategies. Growing demand for organic, locally sourced foods presents a challenge for fast food restaurants, while the funeral industry has to contend with “green burials” that forego caskets and chemicals.

To complicate matters further, the impact of environmentalism on a given industry can rarely be categorized as purely a challenge or an opportunity. While one executive in the chemical industry might realize the potential of lightweight plastics to boost automotive fuel efficiency, another may be losing sleep over an environmental impact report that could result in a pesticide ban. Our sections devoted to business challenges, trends and opportunities, and quarterly industry updates can help you identify both the benefits and the pain points that issues such as environmentalism create.

Whether companies are lured by opportunity, obligated by law, or motivated by altruism, green technology initiatives are here to stay. Tracking those and other trends is crucial to understanding your customers and prospects. In all seasons, we’ll keep you posted.

For more detailed information about the industries mentioned above, please see our full profiles on Architects Offices, Chemicals, Cement, Concrete and Construction Material, Commercial Construction Contractors, Dry Cleaning and Laundry Facilities, Erosion Control Services, Express Delivery Services, Fast-Food & Quick-Service Restaurants, Funeral Operations, Janitorial Services and Carpet Cleaning, Parking Facility Management, Residential Real Estate Construction, Solar Power Generation, Spa Services, and Wind Power Generation.

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