Pune - India

Paris In the Rain #laVilleLumière

Paris In the Rain (Photo: R. Wottrich)

Atlanta USA, 24 June 2017

Recent market sentiment is trending optimistic about the French economy, but there is scant evidence to support this view. Much of this jingoism is generated by the election of France’s new President Emmanuel Macron. However, Macron faces the same intransigent bureaucracy that every French president has faced for decades.

Meanwhile the EU is jumping with glee at the prospect of driving the UK down in economic misery for its Brexit effrontery. We have not seen this level of ‘piling on’ since Europe subjugated Germany after World War I. But such venom is misdirected. The EU has lost an important partner and euro zone problems have not improved a wit.

With Germany the runaway economic leader in the EU [German GDP: $3.4 trillion], and with the UK leaving the euro zone [UK GDP: $2.8 trillion], France remains the only other economic powerhouse in Europe [France GDP: $2.4 trillion]. But France is the weakest of the big three. Prior to the big crash of 2008, France’s growth rate was in step with the rest of the EU.  But now France trails the EU trend GDP growth rate of 1.6 percent.

It has taken longer for French productivity to return to pre-2008 levels. France’s per capita income finally recovered to those levels in 2016; compared to UK recovering in 2015, the U.S. in 2014, Japan in 2013, and Germany in 2010. French debt is now close to 100 percent of GDP, while its government spending as a percentage of GDP is among the highest in the EU at 31.5 percent. France’s 10 percent unemployment rate reveals a skills gap that runs deeply across all industries. Unemployment is even worse for French youth, with nearly twenty-five percent of those between 15 and 24 unemployed.

The odds are against growth in France for myriad reasons. Only sixty-eight percent of France’s GDP is in the private sector, meaning that the baseline for economic growth is just $1.65 trillion. Germany’s exports alone total nearly 80 percent of France’s entire private sector GDP! Of France’s 67 million citizens, perhaps 12 percent are associated with North African countries. A significant percentage of these North Africans have not assimilated into the social and economic fabric of France and many are supported by government social spending.

Both Macron and the EU focus on the wrong problems – prioritizing tight money and low inflation, rather than job creation throughout the euro zone. The bureaucrats in Brussels are of course jubilant that Macron won, as is Germany. Things are working just fine for the elites and the mighty German export machine, but significant economic growth in France, when and if it comes, will be infinitesimal and glacial.

“The spectacle of this lovely nation, with its great agricultural wealth and its cultural riches, continually stepping on its own toes, made me wonder if France suffered a kind of national neurosis” ― Julia Child

Richard Wottrich, blog author


Amazon’s Rounding Error

Paris Market [Photo: R. Wottrich]

Amazon announced the acquisition of Whole Foods this week, the organic grocery food chain, for $13.7 billion. In Amazon’s world, with a market capitalization of $460 billion and a P/E ratio of 185, this amounts to a rounding error. But Amazon’s annual revenues of $136 billion pale beside Walmart’s $486 billion in global sales. Walmart accounts for 25 percent of total U.S. grocery sales. Average sales per U.S. Walmart store, of which there are 4,692, are $66.7 million.

Whole Foods by contrast had 2016 annual sales of roughly $15.72 billion, just 2.3 percent U.S. grocery sales. Whole Foods’s average sales per store, of which there are 430, are $36.6 million. Amazon already has roughly $15 billion in on-line food and beverage sales, so the purchase of Whole Foods could take Amazon grocery revenues over $30 billion, which puts them in the top five of the fragmented U.S. grocery market. But at what cost?

Amazon’s primary focus is the Whole Foods chain of 430 stores, which brings an established grocery distribution network to the Amazon on-line juggernaut. Whole Foods stores are in upscale demographics that match many of Amazon’s targeted demographics. From this perspective, Amazon is plugging the Whole Foods bricks and mortar stores, plus its database of customer preferences, into Amazon’s well-established on-line empire to gain market share in the grocery industry. Using the Whole Foods distribution network in conjunction with Amazon’s on-line scale should drive costs and price points down and capture market share.

Is this a smart Amazon acquisition from that vantage point? The average cost to open a new Whole Foods store is roughly $7.5 million. Amazon’s purchase price works out to about $32 million per store; a premium of $24.5 million per location. Amazon could open its own store/distribution centers of course and they probably could build them for far less than $7.5 million each.

If Amazon’s main premise in acquiring Whole Foods is to expand its distribution network to drive its online grocery business, the $25 million premium per store would appear to be much more than a rounding error.

A recent report by Food Marketing Institute and Nielsen Online projects that American consumers could spend $100 billion on food-at-home items by 2025. Just how much of this $100 billion can Amazon capture? And how much of this captured revenue will be cannibalized out of its own Whole Foods chain?

Conclusion: Amazon overpaid for Whole Foods. But then, they can.

Blog author: Richard Wottrich


What is Reality?

Paris (or is it?), [Photo: R. Wottrich]

“Animus in consulendo liber,” Free spirit to decide, Cato the Elder (234-149 BC), Motto of NATO

What is reality? Is the photo above a photo? The elephant is a plastic 3D printed figure. The gladiator is video streaming via Netflix. The backdrop is projected. The manikins are positioned to emulate a crowd. Or is it a smart phone image processed by an Intel chip?

The Technological Singularity is usually espoused as the supposed triumph of artificial intelligence (AI) over humans. In this definition AI ‘evolves’ via repetitive self-improvement. AI becomes capable of replicating ever superior iterations of ‘itself’ and coordinating that ability with other machines and robots. But is the Technological Singularity that point in time when humans perceive and believe that they can no longer control AI ‘evolution’ and indeed are subservient to AI?

The Cloud = humans aggregating demand = point-to-point distribution = the surrender of individual autonomy to a collective technology matrix = equals less human control. Ergo the Technological Singularity and our fear thereof.

Technology is accelerating vis-à-vis Moore’s Law headlong directly at humanity racing from the opposite direction to remove risk from everyday life. The point of impact is the Singularity.

As technology advances rapidly the entire concept of data centers will change, as Cloud systems leap into satellite networks, electricity transmitted by air, use of light instead of electricity in computers, and into quantum bio-computing systems emulating the human brain. The iterations are unknown unknowns. To think we can control this evolution is a particular conceit of humans.

Benjamin Franklin wrote the following singular observation for the Pennsylvania Assembly in its Reply to the Governor (November 11, 1755), “They that can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”

A Moveable Feast #DSIGlobal

Musée Picasso Banner, Paris, 2003 [Photo: R. Wottrich]

“I do not know what I thought Paris would be like, but it was not that way. It rained nearly every day.” Hemingway, from private papers in the collection of the John F. Kennedy Library

The result of the May 7 presidential election in France was the victory of the centrist liberal Emmanuel Macron. He was employed from 2008 to 2012, by the Rothschild & Co. investment bank, which is the equivalent of Goldman Sachs in elitist circles absent a family heritage stretching back centuries. Macron was known there as a rainmaker – nicknamed a “Mozart of finance.” His primary skill lay in reaching out to potential clients within his own elevated circle.  Which is to say that absolutely nothing will change in France over the next five years that threatens that elite circle in any fundamental way. Which is to say that the European Union will continue on its present track, enabling Germany to dominate the entirety of Europe.

“If you are lucky enough to have lived in [the French elite] as a young man, then wherever you go for the rest of your life, it stays with you, for [the French elite are] a moveable feast.” Ernest Hemingway 



Connor Manufacturing Services Honors Bob Sloss, CEO and Chairman of the Board

Immediate past CFO Maxine Harmatta, CEO and Chairman of the Board Bob Sloss, and President Dennis Kweicinski

President Dennis Kweicinski and immediate past CFO Maxine Harmatta present CEO and Chairman of the Board Bob Sloss with a plaque commemorating 45 years with Connor Manufacturing Services in Portland, Oregon this past May 24th.

Headquartered in California’s Silicon Valley, with wholly-owned manufacturing facilities in North America, SE Asia and China, Connor Manufacturing has a unique global footprint that is positioned to employ any or all of its resources toward the client’s project, resulting in maximum efficiency through pre-project planning and design, engineering, material management and quality control stages. With the disciplined mindset of safety, quality and service, Connor creates a “value proposition” within the market place for each client.

This “value proposition” relates to innovative rapid response and speed to market, product price sensitivity, and ease of doing business that Connor clients have come to expect. This dynamic results from Connor’s internal philosophy, which was founded on the importance of the employee and how they are treated. Creating a better work place attracts better employees. Creating an environment where convictions of a strong work ethic and fairness carries from employees, to suppliers, and to the client; promoting an atmosphere of success for all. These are the principles upon which Connor’s success was founded upon over 100 years ago.

Richard Wottrich, Board of Directors, Connor Manufacturing – CEO and Senior Consultant, International Services, DSI Global View, Atlanta, USA

The Road Not Taken

Mars Rover, NASA

Mars Rover, NASA



Wikipedia – NASA’s Mars Exploration Rover (MER) mission is an ongoing robotic space mission involving two Mars rovers, Spirit and Opportunity, exploring the planet Mars. It began in 2003 with the sending of the two rovers: MER-A Spirit and MER-B Opportunity—to explore the Martian surface and geology. Both rovers outlived their planned missions of 90 Martian solar days by far. MER-A Spirit was active until 2010. MER-B Opportunity is still active. The success of the two MERs led to another mission, sending a bigger rover Curiosity in 2012. #NASA

Is taking the road less traveled strategy or a tactic?