Tag Archives: Bloomberg Businessweek

Suburbanizing Survivalism

AP Photo/The Idaho Statesman, Katherine Jones

As the disaster preparedness phenomenon spreads from the rich and eccentric into mainstream America, survivalism is becoming big business. One leader in this sector is Wise Co., a manufacturer of shelf-stable food packed in Mylar pouches. In Bloomberg Businessweek, Amanda Little examines how Wise Co. CEO Aaron Jackson is steadily growing the business by targeting who he calls Mr. and Mrs. Smith in everyday America.

Rather than focusing on niche survivalists and evangelicals who believe in end times, Jackson is focusing on Target, Home Depot and Walmart, where survival foods are positioned as purchases just as practical as fire extinguishers and bottled water, and consumer habits are shaped by mounting global paranoia about natural disasters, terrorism and climate change. So far only 2% of Americans buy survival foods. He intends to change that. The whole approach seems a bit strange, though, since as a CEO who wants what he calls “stable customers” and “predictability,” his success has everything to do with global instability. Also, he doesn’t really believe the world will end, because if he did, why would he work so hard to make money he won’t be able to spend?

Then again, it’s the fear behind the idea that you should be prepared, just in case, that nags at you as a potential consumer. It can’t hurt, right? Because what if you’re wrong? Maybe it won’t matter. When the world has been devastated by warlords and ecological disaster, and you’re hiding in a bunker in the burned out woods, eating shelf-stable beef stroganoff mixed with radioactive rainwater, the flavor will probably make you feel like the rest of the world can’t end fast enough.

Jackson first connected with Wise in 2012, when a headhunter tried to recruit him from Post to run the fast-growing startup. He declined the offer, but commenced some research. “My aha! came in mid-2012 when I read that more than half of American homes have first-aid kits on hand, along with fire extinguishers and flashlights. I realized then they haven’t added the food component. I saw incredible growth potential.” When the headhunter extended the offer again a few months later, Jackson accepted the job of CEO and cautiously started to shift the marketing focus to his ideal customer, one who looks less like Ted Kaczynski and more like himself, his wife, who’s an attorney, and their two tweens: someone who isn’t entirely convinced that humanity is hurtling toward annihilation but who’s willing to stock the pantry with a Mylar-fortified food supply just in case. “This is the food equivalent of life insurance—staples that every American household in this age of uncertainty should have,” he says.

Jackson hired a young designer who’d been at the surf company Quiksilver to revamp the packaging. “We’d been selling our products in large, black plastic tubs. We needed something that doesn’t scream doomsday, so we moved to clean white boxes, contemporary fonts, high-quality food images—packaging that makes sense on a Target shelf,” Jackson says. As orders came in from big-box stores, he added a manufacturing facility a 15-minute drive from the office (production had previously been outsourced) that can produce 25 million pouches a year.

In the past four months, the spate of natural disasters combined with the specter of nuclear war with North Korea has pushed up Wise’s total sales 40 percent from the previous four-month period. Concerned suburbanites as well as disaster responders have contributed to the increase. The factory has made it possible for Jackson to meet both sudden surges and steady growth in demand. He ultimately managed to ship the 2 million servings to FEMA in a matter of weeks, with only a brief disruption to his regular customers’ supply.

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Mexico’s Manufacturing Sector Will Survive With or Without America

AP Photo/Ivan Pierre Aguirre

In the late 1960s, Jaime Bermúdez Cuarón, an engineer from a wealthy family, decided to build factories on his cotton fields in northern Mexico. Over time, he, low wages and trade agreements helped turn Juárez into a city of 400 factories that employ 300,000 people, and gave rise to similar industrial areas along the border. People call Cuarón the godfather of Mexico’s manufacturing sector.

At Bloomberg Businessweek, Lauren Etter tells Cuarón’s story and the way American manufacturers came to rely so heavily on Mexico’s factories, called maquiladoras, to build everything from medical devices to car parts. Trump called NAFTA “the worst trade deal ever made,” but Juárez’s industries are starting to rely less on America as they used to, so Cuarón believes Mexico will fare well despite president Trump’s loco rhetoric about border walls and NAFTA.

Martinez says the city is undergoing perhaps one of the most uncertain periods in its history. And that largely has to do with a man to the north.

Maquiladoras haven’t been a direct topic of the recent Nafta negotiations, but the industry is in the crosshairs of the administration, whose trade delegation argues that Mexico’s low wages and poor working conditions create unfair competition for American business. Even the slightest upward adjustment to wages in the maquiladoras or tweak in labor laws could threaten the industry’s advantages. But Juárez has strengths it lacked even a few years ago. Companies around the world are constantly prowling for lower production costs, and it’s now cheaper to hire a worker in Mexico than in China. In 2000, Chinese workers earned half of what Mexican workers did, adjusted for productivity. By 2014, Mexico’s adjusted labor costs were 9 percent lower than China’s, according to an analysis by the Boston Consulting Group.

For decades almost every maquiladora in Juárez was owned by a U.S. company. Today the figure is 63 percent. Japanese companies own 8 percent, German companies 7 percent. Other owners are from China, France, South Korea, Malaysia, Sweden, and Taiwan, according to María Teresa Delgado, president of Index Ciudad Juárez, a trade group that represents the maquiladora industry. “The Trump experience, it really opened our eyes,” she says. “At first we were all kind of nervous because we thought the world would come to an end. But there is a bright side to every dark side, and that’s what we found out. … We’re more global than we were a few years ago.”

 

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Nestlé Is Sucking the World’s Aquifers Dry

Nestle takes about 25 million gallons of water a year from the San Bernardino National Forest under a permit that expired decades ago. (Jay Calderon/The Desert Sun via AP)

At Bloomberg Businesweek, Caroline Winter visits Nestlé’s bottling plant in Mecosta County, Michigan to analyze how the multinational corporations targets small communities with promises of jobs, and buys up public land to gain control of water resources. Nestle sold $7.7 billion dollars worth of bottled water last year, making it the world’s largest bottled water company. It made that money partly by paying a pittance for its product. Nestlé pays the U.S. Forest Service only $524 a year to draw 30 million gallons of public water in San Bernardino, California, and Nestlé pays the city of Evart, Michigan just $250,000 a year for its water. Consumers drink bottled water because they assume it’s safer than tap, but that makes us complicit in what many analysts and activists warn is the gradual privatization of water. These multinational corporations don’t have the public’s best interests in mind, activists warn. If anybody should own water, it’s the public.

Nestlé has been preparing for shortages for decades. The company’s former chief executive officer, Helmut Maucher, said in a 1994 interview with the New York Times: “Springs are like petroleum. You can always build a chocolate factory. But springs you have or you don’t have.” His successor, Peter Brabeck-Letmathe, who retired recently after 21 years in charge, drew criticism for encouraging the commodification of water in a 2005 documentary, saying: “One perspective held by various NGOs—which I would call extreme—is that water should be declared a human right. … The other view is that water is a grocery product. And just as every other product, it should have a market value.” Public outrage ensued. Brabeck-Letmathe says his comments were taken out of context and that water is a human right. He later proposed that people should have free access to 30 liters per day, paying only for additional use.

Compared with the water needs of agriculture and energy production, the bottled water business is barely responsible for a trickle; in Michigan, it accounts for less than 1 percent of total water usage, according to Michigan’s Department of Environmental Quality (DEQ). But it rankles many because the natural resource gets hauled out of local watersheds for private profit, not used in the service of feeding people or keeping their lights on. There’s also, of course, the issue of plastic pollution.

In the U.S., Nestlé tends to set up shop in areas with weak water regulations or lobbies to enfeeble laws. States such as Maine and Texas operate under a remarkably lax rule from the 1800s called “absolute capture,” which lets landowners take all the groundwater they want. Michigan, New York, and other states have stricter laws, allowing “reasonable use,” which means property owners can extract water as long as it doesn’t unreasonably affect other wells or the aquifer system. Laws vary even within states. New Hampshire is a reasonable-use state, but in 2006, the municipality of Barnstead became the first nationwide to ban the pumping of its water for sale elsewhere.

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The Top 5 Longreads of the Week

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This week, we’re sharing stories from Bee Wilson, Seyward Darby, Wil S. Hylton, Greg Milner, and Annie Dillard.

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New York City’s Final Frontier: Underground

Stuart McAlpine via Flickr (CC BY 2.0)

Doing construction in New York City is dangerous and expensive. Cut the pavement in the wrong place and crews can rupture gas lines. Hit a water main, short a backup generator. These sorts of mistakes cost the city $300 million each year. Worse yet are natural disasters like Hurricane Sandy — where floods caused a three-day blackout and left two hospitals without power — and threats like buried chemical tanks and national security issues. In Bloomberg Businessweek, Greg Milner follows the people who are creating the city’s first three-dimensional subsurface infrastructure map to create a safer city that can self-regulate and grow more efficiently, and where agencies and private utilities can coordinate. In a very real sense they are pioneers, of a frontier that lays below our feet. Detailing pipes, cables, sewers, wires and electric lines, even soil types, the map will be the first of its kind, and if it works, it could make New York a model for the world’s future smart cities.

Because of data from satellites, we can now map the world down to about 6 inches. We’ve almost reached the point Jorge Luis Borges describes in his short story “On Exactitude in Science,” in which cartographers built “a Map of the Empire whose size was that of the Empire, and which coincided point for point with it.” But the world beneath our feet remains shrouded in darkness. “Light and radio waves don’t go through dirt like they do air,” says George Percivall, chief technical officer for the Open Geospatial Consortium, which is helping to develop global standards for underground mapping. “The next frontier, in both a literal and figurative sense, is underground.”

New York City’s daunting infrastructural labyrinth is like the “Here be dragons” decorating ancient maps. Underneath the 6,000 miles of asphalt and concrete road lie thousands of miles of water, sewer, gas, telecommunications, and electrical infrastructure. And let’s not forget the 500 miles of underground subway tracks or Con Edison’s 100-mile steam delivery system. In its entirety, it’s known to no one. The individual details of the vast underground are hoarded and guarded by the various stakeholders. Con Edison has its electrical map; the Department of Environmental Protection (DEP) keeps track of water and sewer pipes; the Metropolitan Transportation Authority (MTA) could tell you where the transit tunnels are; and so on.

Imagine the city as a living organism, a body consisting of various systems—respiratory, nervous, skeletal—that share the same space and even intertwine. Now imagine surgery performed on that body by a surgeon who knows the location of only one system, who looks at the body and sees only blood vessels or bones. This is the odd condition of New York—a body subject to what, viewed through a wide lens, looks like perpetual triage. Each year, for repairs or to facilitate construction, the streets are sliced open 200,000 times—an average of almost 550 cuts per day, or 30 per street mile every year.

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“Beef and cheese are the most important ingredients… But really, cheese.”

Photo by Matthew Bellemare via Flickr (CC BY-SA 2.0)

The U.S.’s reputation in the world might be in a state of… flux, let’s say. But there’s one thing we can still boast about: the 1.3 billion pounds of surplus cheese we have in cold storage. In Bloomberg Businessweek, Clint Rainey introduces us to government-sponsored Dairy Management Inc., which is charged with packing as much dairy into food as is possible, sometimes by embedding food scientists like Lisa McClintock into companies like Pizza Hut and Taco Bell to help engineer maximum cheese delivery. You can thank them for Pizza Hut’s cheese-stuffed crust and for Taco Bell’s latest hit, the Quesalupa.

“If you tried using something like cheddar, you’d get too much oiling off,” McClintock says. “It’s a fattier cheese—it’s not going to hold up well in terms of cheese pull.” She also quickly nixed mozzarella. “Great stretch, but you expect something bold from Taco Bell,” she says. “Pepper jack gave us the extra kick from the jalapeños.” Crucially, it’s also a high-moisture cheese, which means fewer casein connections and therefore a more reliable melt. She toyed with the idea of inserting a cheese “puck” into the tortilla pocket to see if that melted more uniformly, but grated cheese proved the most even. McClintock and Gomez recall intense competitions in the lab where they’d fry up a bunch of Quesalupas and tear them apart to see who could get the longest cheese pull. Winners sometimes stretched theirs a full arm span.

(More exciting advances in cheese science are on the horizon, as Taco Bell’s R&D department is hard at work on Quesalupa 2.0 which, rumor has is, will come in “Volcano and Bacon Club” flavors. If you’re wondering where the Doritos Quesalupa Crunch is, don’t worry: they started testing it this spring.)

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The Top 5 Longreads of the Week

44 Magnum. (AP Photo/Kai-Uwe Knoth)

This week we’re sharing stories by Jason Fagone, Betty Ann Adam, Christian H. Cooper, Clarissa Wei, and Robert Kolker.

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“It’s like, how much more black could this be? And the answer is none. None more black.”

Photo by Kainet via Flickr (CC BY-SA 2.0)

At Bloomberg Businessweek, Robert Kolker walks us through the confusing, byzantine, and downright shady world of Hollywood profits and payouts, as part of an exploration of the $400 billion lawsuit brought by the creators of the ancestor of all mockumentaries, This Is Spinal Tap. The lawsuit details are interesting enough (according to the film’s current owner Vivendi, the creative partners’ share of worldwide merchandising over a 32 year period was… $81), but Spinal Tap fans will also love the insider tidbits about the creation of the film, which started with a 20-minute demo version.

“I was amazed when I last looked at it,” says Shearer, who plays Derek Smalls, the band’s bare-chested, mutton-chopped, pipe-smoking bassist. “We had this little pittance”—a $60,000 screenplay fee from a company that eventually rejected the idea—“to shoot characters and performances.” He remembers his long black wig costing about $5, and that it took an hour and a half to remove once the shoot was over (the costumer had used super glue). Shearer, Reiner (who plays Marty DiBergi, the fake documentarian), Guest (as lead guitarist Nigel Tufnel), and McKean (as vocalist David St. Hubbins) had been nursing and developing the idea since 1978. They first performed as the band in a 1979 variety show called The T.V. Show. Then they wrote seven new songs, played a few gigs in costume in Los Angeles, and worked out a complete band history to ensure that their improvisations had a narrative spine they all could rely on. “Michael McKean, I believe, still has the napkin on which the possible names and the possible misspellings were outlined,” Shearer recalls, “because I think at one point we thought maybe S-p-y-n-a-l?”

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When Innovation Fails: Doing Hard Time in the Offender-Monitoring Business

In Bloomberg Businessweek, Lauren Etter explores another problem with the privatization of law enforcement: technology. From scrambled signals and dead batteries to false violations, the electronic ankle bracelets 3M created failed to protect wearers’ civil liberties even though the process used to design them reflected the company’s way of thinking about innovation and experimentation. Unfortunately, creating monitors for human beings involves higher stakes than yellow stickies.

The sheer amount of data generated by GPS-tracking devices creates problems across the industry and in every state, but the number of alerts in Massachusetts has far exceeded the norm, experts say. Documents reviewed by Bloomberg show that in the 12 months ended in October 2015, 3M bracelets produced 612,492 violation alerts in Massachusetts—more than 50,000 per month, from about 2,800 individuals wearing the devices. Almost 40 percent of the alerts were due to a device not being able to connect to the network or the GPS not being detected. Roughly 1 percent of alerts resulted in an arrest warrant being issued. Tom Pasquarello, former director of the electronic monitoring program for Massachusetts, estimates that half those warrants were potentially based on faulty or incomplete data. That would be roughly 3,000 warrants. “There were people that were pulled from their house in the middle of the night, that lost their kids, people that lost their job,” he says.

The problem of glitchy ankle monitors became so pronounced that the Massachusetts probation department set up an after-hours office in the lobby of a Boston police station so offenders could bring in their bracelets when problems occurred or batteries died. In August 2015, Massachusetts Superior Court Judge Heidi Brieger became so frustrated with the devices that she vowed to stop sentencing anybody to them. “It is simply administratively improper to run a system in this fashion,” she said, according to a court transcript. “We don’t lose liberty in this country because somebody’s software is not working. It just isn’t right.”

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The Top 5 Longreads of the Week

This week, we’re sharing stories from Peter Waldman, Garrett M. Graff, Rachel Aviv, Catrin Einhorn, Jodi Kantor, andd Eric Boodman.

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