From Brazilian canes to American cars

“WE’VE been waiting for this news for more than 30 years,” crows Marcos Jank, the president of UNICA, the Brazilian sugarcane-growers’ trade association. The cause of his excitement is the demise on December 31st of import tariffs and tax credits that have long sheltered ethanol distilled from corn in the United States from the same stuff made from sugarcane in Brazil. Now, for the first time, the two countries that produce more than 80% of the world’s ethanol can sell in each other’s backyard at market prices.Distilling ethanol from tropical sugarcane takes less land and uses less fossil fuel than starting with corn grown in temperate climes. That makes Brazilian ethanol, unlike the pampered and grotesquely wasteful American version, competitive with hydrocarbons and genuinely good for the environment. Most of Brazil’s cars run on a mix of the two fuels. The standard blend contains 18-25% ethanol. Poor weather, and cash-strapped growers delaying their replanting after the 2008 credit crunch, have recently squeezed production—and led to…

HE likes to do things differently. Yvon Chouinard changed his favourite sport, mountaineering, by introducing reusable pitons (the metal spikes you bang into the rock face and attach a rope to). Climbers often used to leave pitons in the cliff, which is environmentally messy, another of Mr Chouinard’s peeves.In business, Mr Chouinard, the founder of Patagonia, an outdoor-clothing firm, says he believes that well-treated employees perform better. (He wrote a book called: “Let My People Go Surfing”.) Before it was fashionable, Mr Chouinard preached a philosophy of sustainability and long-term profitability that he calls “the slow company”.On January 3rd Patagonia was anything but slow in becoming the first firm to take advantage of a new California law designed to give businesses greater freedom to pursue strategies which they believe benefit society as a whole rather than having to concentrate on maximising profits for the next financial quarter.According to Mr Chouinard, the new “benefit corporation”—usually referred to as a B Corp—creates the legal framework for firms like his to remain true to their social goals. To qualify as a B Corp, a firm must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders. It must also publish…

AS OF January 1st, American, Chinese and all the world’s airlines are being billed for the carbon emissions of their flights into and out of the European Union. About time, too: airlines contribute 2-3% of global emissions, yet they were hitherto free to pollute. The European initiative, which brings airlines into the EU’s existing cap-and-trade regime, the Emissions Trading Scheme (ETS), is a modest corrective. The hope is that it will speed the creation of a long-promised, more ambitious successor, governing all the world’s airspace.Foreign airlines, needless to say, are unhappy. So are their governments. Because flights into the EU have been included in their entirety, not just the portion within European airspace, they detect an infringement of their sovereignty. Last month, in response to a suit from an American industry body, Airlines for America (A4A), the European Court of Justice dismissed that concern. A4A, which claims, improbably, that the scheme will cost its members more than $3 billion by 2020, may file a fresh suit in the High Court in London.Offended governments might also complain to the UN’s International Civil Aviation Organisation. Having threatened “appropriate action” if the EU went ahead with its plan, America may even be considering a retaliatory measure, such as a tariff on European carriers. But that is unlikely. And with all carriers now quietly…

If I don’t have it, they don’t make it

AMERICANS looking for a new car nowadays often use online price-comparison sites such as AutoTrader, Edmunds and eBay to find the best deal. Most such sites charge dealers a small fee for passing on sales leads from shoppers who have submitted their details. TrueCar, a relative newcomer, does things differently. It charges dealers $300, but only when its introduction of a customer results in a sale, and it makes its dealers guarantee to honour their quotes, no excuses.TrueCar taps into data from state vehicle-registration offices, car-loan providers and other sources to compile what it says are the most accurate figures available for what motorists pay for the same car locally. This can be several hundred dollars less than the sticker price, and is often below “invoice”—the price that, according to the paperwork sent by the carmaker, represents the wholesale price the dealer paid. In fact dealers receive various rebates from carmakers, and make money from such things as loans and service contracts, so a modest profit is still possible.But such…

The no-child policy

WHEN choosing a product once called “an armour against pleasure, and a cobweb against infection”, people tend to go for trusted brands. That is why well-known condoms such as Durex and America’s Trojan have such huge market shares. And it is why Safedom, a start-up condom-maker from Beijing, met such scepticism when it visited Europe to look for a partner. How could the Chinese firm overcome doubts that its products were reliably up to the job?Its answer is a demonstration, witnessed by your correspondent. Dangled in a solution containing a virus, Safedom’s condoms kept the dangerous liquid out. Condoms from prominent Western brands appeared to let in a small quantity. After performing the test in meetings, says a Safedom executive, “the atmosphere changed completely”.Even with its claim to produce the first entirely virus-proof condom—yet to be verified by international bodies—Safedom reckons it needs a European brand for success outside China. Joining a list of Chinese companies recently striking deals in Europe, it will shortly announce a partnership with…

ONE recent evening in Mumbai a tangerine Lamborghini could be seen taxiing past a sign prohibiting bullock carts, wheeling left and then letting rip on the Sea Link toll-bridge, one of the city’s few bits of decent infrastructure. For three miles all the driver’s Michael Schumacher fantasies must have came true. But by the fourth he drove off the bridge back into reality: roads whose surfaces often wash away during the monsoon and whose repair is said to be in the hands of mafias. The supercar returned to rickshaw speed.For the past half decade India’s infrastructure industry has enjoyed a Sea Link moment; a blast of growth when one could imagine that the private sector could deliver all the new roads, bridges, power stations and airports that the country needs so badly. The government says the boom will continue. Over the next five years it predicts that infrastructure investment will reach a new high relative to GDP, with some $1 trillion spent, half of it by the private sector. The trouble with this rosy prediction is that the balance-sheets of many Indian infrastructure firms are as potholed as the roads they…

Oh for a co-worker

NINE hours of isolation or 30 minutes trapped by the office bore? The attentions of the boss or the distractions of daytime TV? The choice between slogging to the office and working from home can be pretty unappealing. For increasing numbers of people, the answer is “co-working”.The concept of co-working is elastic but at its broadest means working alongside, and often collaborating with, people you wouldn’t normally. Users book a space in a co-working office, plonk themselves down where they can and start beavering away. (Opening the laptop in a Starbucks is not quite the same thing: enough stick-in-the-muds go to coffee shops to drink coffee that it is not a proper working environment.)The idea first surfaced a few years back, but according to Steve King of Emergent Research, a California-based outfit, it reached an inflection-point about 18 months ago. The absolute numbers are still small: Mr King reckons there are now around 760 office-based co-working facilities in America, up from 405 in 2010.Their rise is fuelled by several things, including technologies such…

IN THE television series “Mad Men”, a 1960s adman makes a pitch to a television-maker whose sales are flat. “Among Negroes sales are actually growing,” he chirps. He proposes making “integrated” ads that appeal to both black and white consumers. His idea bombs. This being the era of segregation, one of his listeners wonders if mixed-race ads are even legal.Such days are long gone. America’s minorities will eventually be a majority of the population: by 2045, according to the most recent census. Advertisers have noticed. Many now favour cross-cultural ads that emphasise what black, Hispanic and Asian-American consumers have in common. This approach is thought to work well with the young, who often listen to the same music, eat the same food and wear similar clothes regardless of their ethnic background.Ogilvy & Mather, a big ad agency, formed OgilvyCulture in 2010 as a unit specialising in cross-cultural marketing. “The ethnic ad model has not changed since the 1960s,” says Jeffrey Bowman, head of OgilvyCulture. It was the census data that made Ogilvy change its model. In 2010 Burger King stopped employing ethnic agencies such as LatinWorks, which specialised in the Hispanic market, to address its consumers as a whole rather than taking a segmented approach.Yet some admen feel ethnicity remains relevant. “Every ten years we go through a rethink of targeted versus one…

No longer kosher

THE Israeli government recently raised an interesting question for advertisers: whom can you safely insult? “American Jews” is the wrong answer. An ad campaign urging Jews to return to Israel showed a boy calling his father “daddy” instead of “abba”. Diaspora Jews were outraged at the implication that they are not properly Jewish.Companies don’t usually make such elementary errors. The list of people or groups an advertiser can be rude about is very short, reckons Bob Jeffrey, the boss of JWT, a big ad agency. He recalls adverts from the 1960s such as “You don’t have to be Jewish to love Levy’s”, which depicted people of various ethnicities munching on a Brooklyn baker’s rye bread sandwich. Such slogans would not be kosher today. But “if you say you’re not going to annoy anyone, you might as well give up,” adds Mr Jeffrey.Insulting dictators ought to be safe, so long as you do not operate in the same country. Nando’s, a South African restaurant chain, forgot that with an ad showing a Robert Mugabe lookalike glumly alone at dinner (after many of his fellow…

Robots sparking

EVERYONE complains that corporate America is reluctant to hire additional workers. Far less attention has been paid to the flip side of the jobless recovery: the remarkable improvement in American productivity. How long can this continue? “I see no limit,” says William Hickey, the boss of Sealed Air, a packaging-maker. Is he right to be so optimistic?American firms were slow to react to the downturn at the beginning of the century, and paid the price. They learned their lesson. When the economy slumped in 2008, they were much quicker to adjust. There was little of the fall in labour productivity that normally accompanies a recession, and this was not just a one-off “batting average” effect (in which average productivity rises because the worst performers are fired). Rather, it was a productivity boost that has continued in defiance of expert predictions that workers can only be squeezed so hard for a short while.After falling in the first half of the year, American labour productivity (output per hour) was 2.3% higher in the third quarter of 2011 than in the…

THE only area of business that seems to be recession-proof is social media. Industrial firms are battening down the hatches. Banks are tossing thousands of workers overboard. But Facebook is looking to raise $10 billion for a small fraction of its shares when it goes public in 2012.A recent conference in Madrid, put on by the Bankinter Foundation of Innovation, captured the enthusiasm. The assembled cyber-gurus argued that “social technologies” that allow people to broadcast their ideas (eg, Twitter), or form connections (eg, LinkedIn), are some of the most powerful ever devised. They can be supersized quickly, linked together easily and spread by customers. And they can be accessed from almost anywhere. Two billion people are already online. E-commerce sales are $8 trillion a year. So, the argument goes, this more “social” element to the internet is the next great revolution. Over-caffeinated cyber-champions talk of “empowerment” and “transparency”. But is all this as wonderful as it sounds? Or is it a new bubble in the making?The great virtue of social technologies, say their boosters, is that they break down…

Oh dear. Look at the share price

“YOU have got to go home tonight, Friday evening, and you have got to fire yourself,” a management coach once told Andrea Jung, the boss of Avon, an American beauty firm. The idea was for her to come back to work the following Monday as if starting her job anew. Alas, this brilliant tip was not enough. As Avon’s share price has wilted like mascara under a sunlamp, Ms Jung is being pushed out for real. On December 13th the firm announced that she will be replaced as chief executive.

The makeover will be gradual. Ms Jung, who has run Avon since 1999, will stay on as chairman and help the board find a new boss. It will be a tough job for anyone. Avon is the world’s biggest direct-seller: an army of cheery salesfolk hawk its products door-to-door. The 125-year-old New York-based company has…

Oh dear. Look at the share price

“YOU have got to go home tonight, Friday evening, and you have got to fire yourself,” a management coach once told Andrea Jung, the boss of Avon, an American beauty firm. The idea was for her to come back to work the following Monday as if starting her job anew. Alas, this brilliant tip was not enough. As Avon’s share price has wilted like mascara under a sunlamp, Ms Jung is being pushed out for real. On December 13th the firm announced that she will be replaced as chief executive.

The makeover will be gradual. Ms Jung, who has run Avon since 1999, will stay on as chairman and help the board find a new boss. It will be a tough job for anyone. Avon is the world’s biggest direct-seller: an army of cheery salesfolk hawk its products door-to-door. The 125-year-old New York-based company has…

MR TICKLE and Mr Bump are leaping into bed with Hello Kitty. Sanrio, the owner of the bow-adorned feline, said on December 6th that it had acquired the “Mr Men” franchise from Chorion of Britain. The deal, for an estimated ¥3 billion ($40m), brings the Japanese design and licensing firm 86 playful characters who have delighted toddlers in 30 countries and shifted 100m books.

Corporate Japan is on an overseas shopping spree. Japanese firms spent a record $80 billion on some 620 foreign companies in 2011, according to Dealogic, a firm that measures such things (see chart), exceeding the previous record of 466 deals worth $75 billion in 2008. When Japan Inc went shopping abroad in the 1980s, it was a sign of strength. Japanese companies were spreading their wings because they were growing. This time, it is a symptom of weakness.The past year in Japan…

FOR France, nuclear power has long been a source of national pride. Its European Pressurised Reactor (EPR) is the world’s most advanced nuclear reactor and some consider it the safest. But since the nuclear accident at Fukushima in Japan, potential buyers have been having second thoughts (although the plant in question was not French.)On December 12th Areva, France’s state-owned nuclear champion, said it would take a €2.4 billion ($3.1 billion) charge against profits. This will give the firm its first ever operating loss, of perhaps €1.6 billion for 2011. That hurts.

Areva is the world’s only one-stop nuclear shop, selling everything from uranium to fuel recycling. Much of the charge came from a slump in the value of UraMin, a uranium-mining firm bought for a giddy price in 2007, when nuclear power was surging. The price of uranium, which fuels…

AFTER several disruptive and costly strikes in a part of the country where unions are strong, a company opens a new plant in a region where they are weak. The union complains to a government agency, which accuses the company of illegal “retaliation” against the union. It seeks to force the company to relocate its new plant back in the heavily unionised region. Is this France, or Venezuela? Neither; it is America.The firm in question is Boeing, an aircraft maker. The strikes occurred in Washington state, where closed-shop rules mean that if a workforce opts to unionise, all employees must join the union as a condition of employment. The new plant that America’s National Labour Relations Board (NLRB) saw as grounds to charge the firm with “retaliation” is in South Carolina, where “right-to-work” rules mean that no worker can be forced to join a union. The case has often been cited as evidence that President Barack Obama is hostile to business.So businessfolk should have cheered when, on December 9th, the NLRB decided to drop its case against Boeing. But few did. For the NLRB’s decision reflects a victory not for common sense, but for strong-arm tactics.It seems that the NLRB, a legacy of President Franklin Roosevelt’s New Deal, chose to drop the case only after it was asked to by representatives of the International Association of Machinists, the main Boeing union. The union…

AFTER several disruptive and costly strikes in a part of the country where unions are strong, a company opens a new plant in a region where they are weak. The union complains to a government agency, which accuses the company of illegal “retaliation” against the union. It seeks to force the company to relocate its new plant back in the heavily unionised region. Is this France, or Venezuela? Neither; it is America.The firm in question is Boeing, an aircraft maker. The strikes occurred in Washington state, where closed-shop rules mean that if a workforce opts to unionise, all employees must join the union as a condition of employment. The new plant that America’s National Labour Relations Board (NLRB) saw as grounds to charge the firm with “retaliation” is in South Carolina, where “right-to-work” rules mean that no worker can be forced to join a union. The case has often been cited as evidence that President Barack Obama is hostile to business.So businessfolk should have cheered when, on December 9th, the NLRB decided to drop its case against Boeing. But few did. For the NLRB’s decision reflects a victory not for common sense, but for strong-arm tactics.It seems that the NLRB, a legacy of President Franklin Roosevelt’s New Deal, chose to drop the case only after it was asked to by representatives of the International Association of Machinists, the main Boeing union. The union…

SOME people say it is neither big nor clever to drink. Viz, a British comic, settled that debate with a letter from a reader who said: “I drink 15 pints a day, I’m 6 foot 3 inches tall and a professor of theoretical physics.” However, another question about size and cleverness has yet to be resolved. Are big companies the best catalysts of innovation, or are small ones better?Joseph Schumpeter, after whom this column is named, argued both sides of the case. In 1909 he said that small companies were more inventive. In 1942 he reversed himself. Big firms have more incentive to invest in new products, he decided, because they can sell them to more people and reap greater rewards more quickly. In a competitive market, inventions are quickly imitated, so a small inventor’s investment often fails to pay off.These days the second Schumpeter is out of fashion: people assume that little start-ups are creative and big firms are slow and bureaucratic. But that is a gross oversimplification, says Michael Mandel of the Progressive Policy Institute, a think-tank. In a new report on “scale and innovation”, he concludes that…

SOME people say it is neither big nor clever to drink. Viz, a British comic, settled that debate with a letter from a reader who said: “I drink 15 pints a day, I’m 6 foot 3 inches tall and a professor of theoretical physics.” However, another question about size and cleverness has yet to be resolved. Are big companies the best catalysts of innovation, or are small ones better?Joseph Schumpeter, after whom this column is named, argued both sides of the case. In 1909 he said that small companies were more inventive. In 1942 he reversed himself. Big firms have more incentive to invest in new products, he decided, because they can sell them to more people and reap greater rewards more quickly. In a competitive market, inventions are quickly imitated, so a small inventor’s investment often fails to pay off.These days the second Schumpeter is out of fashion: people assume that little start-ups are creative and big firms are slow and bureaucratic. But that is a gross oversimplification, says Michael Mandel of the Progressive Policy Institute, a think-tank. In a new report on “scale and innovation”, he concludes that…

Practising Lévytation

Correction to this article“MAURICE is immortal,” says the chief executive of a French multinational. When told of his friend’s comment, Maurice Lévy, boss of Publicis, one of the world’s biggest advertising firms, is visibly flattered. But he demurs. “When you think you are immortal, you will make the biggest errors of your life,” he says. “I know that if I fail to find the right successor, my entire career will be a failure.”Mr Lévy’s longevity at the top is unusual in a business known for short attention spans. But Publicis is unusual, too. Since the Paris-based firm was founded by Marcel Bleustein-Blanchet in 1926, it has had only two bosses: the founder and Mr Lévy, who took over in 1987. Mr Lévy, who turns 70 in February, had planned to retire at the end of this year, but the board recently raised the age limit for its members to 75. On November 29th Publicis said that all of them had been reappointed for four years.The board wants him to stay, says Mr Lévy, because the economic crisis could last, so they want a…