May 19, 2020

City Focus: Atlanta

Startups
business growth
City Fcous
Harry Menear
4 min
City Focus: Atlanta

Welcome to Atlanta, a city of rebirth, renewal and growth. This month, Business Chief is exploring the home of Coca-Cola, UPS and the startup hub that’s putting the city’s ecosystem on the map.

Atlanta, Georgia, the capital and economic heart of its state, is a city steeped in the history of the American South. Its sprawling metropolitan area is home to almost 6mn people and its Hartsfield-Jackson International Airport has been the biggest and busiest in the world since the start of the century. Every year, more than 107mn passengers arrive at or depart from its terminals. 

Rebirth, resurgence and modernisation

Originally Creek and Cherokee Native American territory, Atlanta was first established at the end of the 1830s, as the terminus of a Government-built railroad leading to the Midwest. A wooden stake marking the end of the rail was driven into the ground and, over the next decade, homes and storefronts grew around it until, by the 1850s, the town had become the primary rail hub for the entire American South. 

The great seal of Atlanta depicts a phoenix rising from the ashes, tribute to the city’s tumultuous past. During the American Civil War, Union troops leveled Atlanta, burning thousands of buildings to the ground. The city’s story is one of rebirth, resurgence (the city’s motto) and modernisation. Post-Antebellum Atlanta was recreated as the gateway to the modern South. Today, Atlanta is home to some of the country’s most elite universities (including Georgia Tech) as well as more than 150,000 businesses, of which many belong to the Fortune 500 and 1,000. 

Atlanta’s Giants 

Atlanta is home to leading logistics company United Parcel Service (UPS), as well as Home Depot and Delta Airlines (which accounts for around 70% of the flights leaving the Hartsfield-Jackson International Airport). Alongside hundreds more, they are responsible for Atlanta’s GDP exceeding $385bn. However, there is one company perhaps more synonymous with the city than any other. 

Founded in 1892 in response to Georgia’s newfound participation in prohibition by pharmacist John Pemberton, the Coca-Cola Company has been at the heart and soul of the city for more than a century. During the great depression, when the city government was nearing bankruptcy, the Coca-Cola company helped to bail out the city’s deficit. Today, the company employs more than 7,000 people in the city, where it also has its iconic museum, home to the vault where the secret formula is allegedly kept.

There is more to Atlanta, however, than global conglomerates and gargantuan logistics operations. Its startup scene is young, vibrant, and working to change the way the city, the state and the nation does business. 

The Atlanta Tech Village 

When David Cummings, founder of B2B marketing automation company Pardot, came to Atlanta in 2002, the city had next to no startup scene. A decade later, following the sale of Pardot, Cummings took it upon himself to change the face of the city’s entrepreneurial community. In 2012, alongside David Lightburn, Cummings created the Atlanta Tech Village (ATV), the fourth-largest tech space in the US which, within its first year, was host to more than 180 startups. 

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Today, the ATV works to continue creating and supporting a community of innovation, with the goal of generating more than 10,000 jobs in a bid to bring Atlanta’s scene from the 26th best in the world to the top five. 

“When I first moved to Atlanta in 2002, I had a really hard time finding other tech entrepreneurs to connect with,” said Cummings in an interview with Atlanta Magazine last year. “A lot of entrepreneurship is driven by serendipitous interaction with people who are good with one thing helping other people that are good at something else.” 

The methodology seems to be working. In September, the ATV announced that its startups had collectively raised more than $839mn since 2012, and is on track to hit $1b in 2020. “We need more big-time success stories,” said Cummings. “That’s the next phase for Atlanta.” 

The next phase 

Let’s meet some of the companies that currently call ATV home, and are fighting to carve out a place for themselves in the ever-evolving history of the city. 

Farm’d

Is the world’s first B2B farm-to-table marketplace aimed at empowering local farmers and giving local chefs access to the finest ingredients. 

Gimme Vending

Working with leading national brands and local Atlanta firms alike, Gimme Vending delivers a full-service product suite for convenience services and vending machines. 

SalesLoft

Sales engagement platform SalesLoft helps organisations to improve customer experience. Founded in 2011, this ATV occupant also now has offices in New York, London and Guadalajara, as well as being named the 7th Fastest-Growing Technology Company in North America by Deloitte. 

GrantScribe 

GrantScribe is a free service that matches businesses, nonprofits and startups to relevant funding opportunities using a grading system and AI. 

There are hundreds of other startups working at the ATV, on everything from fintech and application design to cybersecurity and crypto, as well as thousands outside its walls, all striving to make themselves and the city they call home a true American success story. 

For more information on business topics in the United States, please take a look at the latest edition of Business Chief USA.

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Jul 5, 2021

What’s Causing the Global Supply Crunch?

Supplychain
Logistics
Supplychainriskmanagement
Procurement
He Jun, Director of China Macr...
6 min
Empty Shelf
Global shortages are affecting everything from copper to coffee - but why are the shortfalls so acute and so widespread?

As the global economy gradually recovers from the impact of COVID-19 pandemic, worldwide supply crunch is intensifying, spreading not only from one country to another, but also from one industry to another.

A year ago, when the pandemic continued to spread, economies around the world were severely hit and there was panic buying among consumers. Today, it is companies that are trying to go on a stockpiling, buying more raw materials than they need to keep up with rapidly recovering demand. The panic buying is fuelling more shortages of raw materials, including copper, iron ore, steel, corn, coffee, wheat, soybeans, wood, semiconductors, plastics, cardboard, etc. As a result, inventories of seemingly every raw material around the world are running low. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said earlier, and he noted that his clients are “trying to get everything they can because they see high demand”.

Supply shortages have driven prices up significantly, with the impact of rising prices for some key raw materials being significant. The prices of various industrial raw materials such as crude oil, plastics, and chemicals are rising. Some of the impacts of higher raw material prices have already begun to be reflected in consumer goods. Reynolds Consumer Products Inc., the maker of the namesake aluminium foil and Hefty trash bags, is planning another round of price hike, and this will be the third for the increase this year alone. Food prices are also climbing. The price of palm oil, the world's most consumed edible oil, has risen more than 135% over the past year to record levels; soybeans have topped USD 16 a bushel for the first time since 2012; corn futures prices have touched an eight-year high, and wheat futures prices have risen to the highest level since 2013.

Changes in factory orders due to the impact of the pandemic have also tightened supply in some markets and pushed up prices for raw materials. Some knitting enterprises in Dongguan, Guangdong, said that affected by the pandemic, about 40% of the orders have come back to China from countries such as India and Southeast Asian countries, while the factory utilisation rate has increased by about 30% to 40%, and now it has reached 100%. In Jiangyin, Jiangsu, a bedsheet enterprise adjusted its production capacity to accommodate a USD 20 million order from Southeast Asia. Increased demand from the textile industry has led to tight supplies of raw materials. In Wujiang, Jiangsu, where polyester filament yarn is the most in demand, the shortage of raw materials this year has been unexpected, especially in the current off-season, when there is not much stock. In Suzhou, also in Jiangsu, the export of polyester filament yarn increased by nearly 60% from January to April, while the price increased by 40% to 60%. Compared with the same period last year, the price of filament yarn increased by RMB 2000-3000/ton.

Remarkably, this hoarding frenzy is pushing global supply chains to the brink of collapse. Inventory shortages, transportation bottlenecks, and price increases are nearing critical levels, raising concerns that strong global growth could fuel inflation. The supply disruptions in the past are simply incomparable compared to the severe inventory crunch of 2021. Industry insiders predict that both large and small enterprises will be affected by this supply shortage.

Why are current supply shortages so acute? 

Researchers at ANBOUND believe that instead of having one single factor, there are multiple reasons for the emergence of complex systemic problems.

First of all, there is the recovery in demand as the pandemic is brought under control. This year, as vaccination rollout efforts have brought the pandemic significantly under control in the United States and some European countries, the economy has begun to show significant momentum for recovery. This trend prompted a near-simultaneous recovery in most markets around the world. The collective recovery of global markets has led to a near-simultaneous increase in demand, exacerbating the mismatch between supply and demand. In the case of commodity futures, the capital was collectively bullish on commodities under such expectations, significantly driving up the prices of commodities (mostly upstream commodities) and spreading to midstream and downstream commodities. It should be noted in particular that the surge in demand for certain specific commodities under the pandemic has also exacerbated the supply-demand mismatch in some industrial chains. For example, the increase in the need of remote, online working and studying has increased the demand for all kinds of electronic products, leading to a surge in global demand for semiconductor chips, which affects several chip-requiring industries.

Another reason is that the pandemic has disrupted the global supply chain system, causing distortions in supply and demand in certain industries, which are transmitted along the supply chain, causing a wider supply crunch. As ANBOUND previously pointed out, the spread of the pandemic has dealt multiple blows to global supply chains. During the pandemic, China, as the "world's factory", was affected by the pandemic and its production side was disrupted. Then, the demand side of developed countries was suppressed by the impact of the pandemic. This is followed by the fact that the malfunctioning of the global supply chain system has exacerbated global supply distortions. To cite an example, the severe shortage of containers due to disruption of the supply chain has exacerbated the global supply distortions.

In addition, enterprises began to collectively increase their inventories, leading to the increase of inventories in the industrial chain and supply chain, amplifying the demand for all kinds of raw materials, intermediate products, and supporting products. In the past, in order to save costs and improve efficiency, many enterprises advocated zero-inventory production and tried to reduce the inventory in the production link, thereby reducing the capital occupation. However, the smooth operation of zero inventory production depends on the efficient global supply chain system. Once a problem occurs in the global supply chain system, it can lead to chaos in the whole supply chain system. The 2011 earthquake in Tōhoku, Japan has caused the shutdown of some key auto parts plants, which once led to the global auto supply chain being affected. Likewise, the global spread of the COVID-19 pandemic since last year has damaged, distorted, and even disrupted global supply chains.

Finally, geopolitical factors have also contributed to the tight supply of global commodities, resulting in the artificial disruption of part of the industrial chain and supply chain. For example, the U.S.-driven crackdown on chip supply to Chinese enterprises and related sanctions have seriously disrupted the global semiconductor industry chain.

How long will the supply crunch last? 

Overall, the global supply crunch is due to a variety of reasons, including increased demand from the post-pandemic economic recovery, distortions in global supply chains caused by the pandemic, collective stockpiling by enterprises around the world, and geopolitical disruptions. However, this does not represent a significant expansion of aggregate global demand, but rather a distortion of the existing system as it is disrupted and broken. Judging from the current situation, this tight supply situation will last for a long time, leading to the price rise of raw materials and components. Therefore, both enterprises and governments need to be prepared for this scenario in the medium- and long-term.

Mr. He Jun is Partner, Director of China Macro-Economic Research Team and Senior Researcher. His research field covers China’s macro-economy, energy industry and public policy.

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