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Supply Chain by the Numbers

- January 26, 2017 -

  Supply Chain by the Numbers for Week of January 26, 2017

Is a Giant Foxconn Factory Coming to the US? Other Retailers have Far More Employees Per Sales Dollar than Does Amazon; Alibaba Sees Very Rapid Sales Growth Last Quarter, US DC Space Almost Completely Taken in Q4


30,000- 50,000

That is the number of US jobs that could be created from a new factory to make flatscreen displays, as is reportedly being considered by contract manufacturing giant Foxconn and its Sharp subsidiary.The Nikkei Asian Review reported this week that a new US plant may result from a joint investment between Apple and Foxconn, which remains the largest contract manufacturer of iPhones and iPads. President Donald Trump said he had a post-election phone call with Apple CEO Tim Cook in which he told Cook, "Tim, you know one of the things that will be a real achievement for me is when I get Apple to build a big plant in the United States, or many big plants in the United States." Trump added "I think we'll create the incentives for you, and I think you're going to do it." However, Foxconn CEO Terry Gou said on the news reports that "There is such a plan, but it is not a promise. It is a wish." The factory might cost as much as $7 billion to build, Foxconn says.




Amazingly, that was the occupancy rate at warehouse and distribution facilities owned by real estate company Prologis in Q4, an all-time record, as demand for distribution space continues to roll on. With that high demand, rents in the US jumped by more than 23%, with global rates increasing by 16%, the company said in its Q4 earnings release this week. Meanwhile, CRBE Group reports that in urban areas such as Los Angeles and Seattle, less than 5% of total warehouse capacity is available for leasing. But demand for space may at last be slacking. "We are getting into the more mature part of the cycle. It's more of a balanced market, with modest rental growth," Prologis CEO Hamid Moghadam said in an interview this week. Meanwhile, CBRE said it expects US industrial real-estate completions to consistently top 50 million square feet per quarter this year, a key threshold that usually signals stable availability rates. The great times for real estatecompanies and high rates for shippers may at last be moderating.


That is roughly the percent of workers that department store chain JCPenney has versus Amazon - even though JCPenney sales are just about one-tenth those of the on-line giant. The same story could be found in comparing Amazon to many other brick and mortar retail competitors, leading academic Panos Mourdoukoutas to ask how these retailers can hope to compete with Amazon, in a very interesting column on As an example, Macy's has about 20% of Amazon's sales and 71% of Amazon's employees. Wow. The story will likely repeat itself eventually in the grocery sector, we predict. Mourdoukoutas notes Amazon's experimental Go convenience store, which opened last month in Seattle, allows customers to literally "grab and go" without needing to go through a clerk and a point of sale counter - though Amazon claims customer will see some workers that help to stocks shelves and prepare fresh food offerings. Mourdoukoutas says movements to significantly increase the minimum wage will just put traditional retailers at even more disadvantage and cause layoffs.



That was the incredible growth that China's Alibaba - the Amazon of Asia - saw in its third quarter, which ended in December. That took quarterly revenue to about $5.75 billion, much lower than Amazon's Q4 revenue also ending in December will be when reported, but keep in mind that Alibaba doesn't really sell products, it instead offers an ecommerce platform that other thousands of other etailers use to sell their goods. The so-called "gross merchandise value" - meaning the retail sales numbers running through Alibaba's - are likely higher than Amazon's sales numbers, but Alibaba has stopped reporting its GMV. The commission the company earns from the sales through its platform grew a much lower 25% in the quarter. And just like Amazon, Alibaba is betting big on growth outside of ecommerce through provision of web services, Cloud computing and other technology services Tto business. Alibaba also said It has submitted a $2.6 billion bid this month to acquire Chinese department store operator Intime Retail Group, saying it intended to use data to digitize offline shopping, though why it needs a brick and mortar store to do that is not clear.

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