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Another shutdown? Let our experts explain if there's a reason to worry about the economy

It lasted longer than a month, and for now we’re on a three-week reprieve – but the federal government shutdown that saw Democrats and Republican dueling at a safe 20 paces while 800,000 federal employees were watching unpaid from the sidelines is over.  But from the financial side, the big picture for America was hardly touched. Will that still be true this time around? But with the shutdown over and employees back to work, for three weeks while politicians negotiate a final deal – there are still a lot of questions outstanding? What industries are most vulnerable to another government stoppage? Is there anything that can be done politically to stop federal government employees from being used as pawns in future negotiations? Despite the economy carrying on – are investors dissuaded by these shutdowns? David M. Primo is the Ani and Mark Gabrellian Professor and an associate professor of political science and business administration at the University of Rochester. He is the author of three books and is a go-to for media in New York and nationally for his expertise on topics like this. David is available to speak with media regarding the economic effects of the shutdown – simply click on his icon to arrange an interview.

A new year with new changes for how small businesses are taxed.

The only thing surer than death and taxes, might be the annual changes and adjustments to the way small businesses are taxed in Canada. New restrictions, and rates can have positive and negative impact on business owners and their companies. This coming year, changes to Employment Insurance and the Canada Pension Plan could make the bottom line of some small businesses tighter. However, the overall corporate tax rate applicable to many small businesses in Ontario has fallen to 12.5%. We may see more money going back in the pocket of owners or their growing companies. “We know that the average small business owner doesn’t know a lot about these changes.” Bill Moreau, Minister of Finance There are a lot of changes to the current system this year; as small business owners prepare to file, it is in their best interest to contact an expert. The government itself has even admitted that some businesses might not be fully up to speed, that’s where our team can help! Cleo Melanson, Tax Partner at Freelandt Caldwell Reilly LLP practices in the areas of tax and owner-managed businesses. To contact Cleo, simply click here to arrange an appointment regarding this topic. Article: https://globalnews.ca/news/4804039/tax-changes-canada-cpp-ei-small-business/

Empowered Storytelling Geared Toward Women Is a Winning Combo for Super Bowl Ads, Baylor Expert Says

Television advertisers who have chosen to appeal to women fans and viewers during this weekend’s Super Bowl have committed their millions of dollars to a wise strategy, according to a Baylor University marketing and advertising expert. Tyrha Lindsey-Warren, Ph.D., clinical assistant professor of marketing in Baylor’s Hankamer School of Business, studies consumer behavior and attitudes, multicultural media and advertising, and movies and entertainment. Each year, she and her students analyze the Super Bowl ads. And each year, she said, she sees more ads geared toward women. In fact, AdAge reports that brands like Bumble, Toyota and Procter & Gamble's Olay are featuring women in lead roles in their Super Bowl commercials this year. “That’s smart,” Lindsey-Warren said. “The current and future market power of women – as a whole and by segments – is undeniable and truly cannot be ignored by marketers.” To make her point, she cited research showing that women influence more than 80 percent of all consumer spending; 89 percent of the financial decisions are made by women; and globally, women control more than $20 trillion in world-wide spending. In addition, nearly 24.3 million African American women are brand loyalists and cultural trendsetters who have influence over the $1.2 trillion dollars in black spending power. Forbes reported in 2018 that “women constituted about 49 percent of the 108 million-plus people who watched” that year’s Super Bowl – and paid closer attention to the ads. “Nowadays, whatever brands plan to do during the Super Bowl must be extremely strategic and well planned when commercials go for over $5 million dollars,” Lindsey-Warren said. “With the #metoo and #times up movements as well as the diversity and gender issues in advertising industry and more, I think brands struggle as to how they approach targeting women on such a global stage.” She said brands that use “empowered storytelling” – storytelling that exudes the emotion of empowerment – make a difference. Good examples, she said, are Always’ “Like a Girl” commercial in 2015 and Audi’s “Daughter” commercial in 2017. “In my research, especially among Millennials and Gen Z, this approach is a powerful combination for brands who want to increase purchase intentions for their products or services,” Lindsey-Warren said. “The emotion of empowerment is multidimensional and promotes encouragement and can be extremely motivational,” she said. “When one is empowered, it can be an ‘aha’ moment and very transformational in a positive manner. In addition, empowered storytelling is a proactive approach to storytelling that demands you keep the receiver of the story in mind at every stage of the process because, at the end of the day, you want the receiver of the story to be better in some way for having received the empowered narrative they just viewed or experienced.” And when consumers are empowered, they tend to tell others. In the digital space, this looks like sharing videos, posts, quotes and more on social media channels. “Essentially, empowered storytelling gives brands the opportunity to achieve the right balance of entertaining and encouraging and, ultimately, healing by showing that they care for their consumers through the motivational messages and narratives they are producing,” Lindsey-Warren said. ABOUT TYRHA LINDSEY-WARREN, Ph.D. Tyrha Lindsey-Warren, Ph.D., is a marketing scholar, business executive, artist and entrepreneur. As a consumer behavior scholar, her research is rooted in narrative transportation theory (i.e., storytelling) that exudes the emotion of empowerment and its impact on consumer attitudes, behaviors, purchase intention and message recall. She also studies health edutainment, multicultural media and advertising, as well as movies and entertainment. Lindsey-Warren is an expert in effective communications strategies for leaders, multicultural communications and marketing. Her latest research, “An Examination of Television Consumption By Racial and Ethnic Audiences in the U.S.,” was published in the Journal of Advertising Research. She will be discussing this study during panel discussions in New York City and Los Angeles for the Geena Davis Institute on Gender in Media. ABOUT BAYLOR UNIVERSITY Baylor University is a private Christian University and a nationally ranked research institution. The University provides a vibrant campus community for more than 17,000 students by blending interdisciplinary research with an international reputation for educational excellence and a faculty commitment to teaching and scholarship. Chartered in 1845 by the Republic of Texas through the efforts of Baptist pioneers, Baylor is the oldest continually operating University in Texas. Located in Waco, Baylor welcomes students from all 50 states and more than 80 countries to study a broad range of degrees among its 12 nationally recognized academic divisions. ABOUT HANKAMER SCHOOL OF BUSINESS AT BAYLOR UNIVERSITY Baylor University’s Hankamer School of Business provides a rigorous academic experience, consisting of classroom and hands-on learning, guided by Christian commitment and a global perspective. Recognized nationally for several programs, including Entrepreneurship and Accounting, the school offers 24 undergraduate and 13 graduate areas of study. Visit www.baylor.edu/business and follow on Twitter at twitter.com/Baylor_Business.

The hidden treasure of digital piracy? It can boost bottom line for manufacturers, retailers

HBO's popular television series "Game of Thrones" returns in April, but millions of fans continue to illegally download the program, giving it the dubious distinction of being the most pirated program. Many may wonder why the TV network hasn't taken a more aggressive approach to combating illegal streaming services and downloaders. Perhaps it is because the benefits to the company outweigh the consequences. Research analysis by faculty in Indiana University's Kelley School of Business and two other schools found that a moderate level of piracy can have a positive impact on the bottom line for both the manufacturer and the retailer -- and not at the expense of consumers. "When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprisingly positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare," wrote Antino Kim, assistant professor of operations and decision technologies at Kelley, and his co-authors. "Such a win-win-win situation is not only good for the supply chain but is also beneficial for the overall economy." While not condoning piracy, Kim and his colleagues were surprised to find that it can actually reduce, or completely eliminate at times, the adverse effect of double marginalization, an economic concept where both manufacturers and retailers in the same supply chain add to the price of a product, passing these markups along to consumers. The professors found that, because piracy can affect the pricing power of both the manufacturer and the retailer, it injects "shadow" competition into an otherwise monopolistic market. "From the manufacturer's point of view, the retailer getting squeezed is a good thing," Kim said. "It can't mark up the product as before, and the issue of double marginalization diminishes. Vice versa, if the manufacturer gets squeezed, the retailer is better off. "What we found is, by both of them being squeezed together -- both at the upstream and the downstream levels -- they are able to get closer to the optimal retail price that a single, vertically integrated entity would charge." In the example of "Game of Thrones," HBO is the upstream "manufacturer" in the supply chain, and cable and satellite TV operators are the downstream "retailers." Kim and his co-authors -- Atanu Lahiri, associate professor of information systems at the University of Texas-Dallas, and Debabrata Dey, professor of information systems at the University of Washington -- presented their findings in the article, "The 'Invisible Hand' of Piracy: An Economic Analysis of the Information-Goods Supply Chain," published in the latest issue of MIS Quarterly. They suggest that businesses, government and consumers rethink the value of anti-piracy enforcement, which can be quite costly, and consider taking a moderate approach. Australia, for instance, due to prohibitive costs, scrapped its three-strikes scheme to track down illegal downloaders and send them warning notices. Though the Australian Parliament passed a new anti-piracy law last year, its effectiveness remains unclear until after it is reviewed in two years. As with other studies, Kim and his colleagues found that when enforcement is low and piracy is rampant, both manufacturers and retailers suffer. But they caution against becoming overzealous in prosecuting illegal downloaders or in lobbying for more enforcement. "Our results do not imply that the legal channel should, all of a sudden, start actively encouraging piracy," they said. "The implication is simply that, situated in a real-world context, our manufacturer and retailer should recognize that a certain level of piracy or its threat might actually be beneficial and should, therefore, exercise some moderation in their anti-piracy efforts. "This could manifest itself in them tolerating piracy to a certain level, perhaps by turning a blind eye to it," they add. "Such a strategy would indeed be consistent with how others have described HBO's attitude toward piracy of its products."

Is Washington playing Russian roulette with airline safety?

The government shutdown that is finally over had some worrying near the end and for good reason. Air traffic controllers, the very professionals who keep planes in the air and at a safe distance from each other had gone for more than four weeks without getting paid. Exhausted, demoralized and depleting ranks were probably the near-perfect storm for an imminent accident or disaster.   Luckily, and thankfully, these dedicated professionals rose to the occasion and ensured safety was still the priority. Often, working even while the very equipment and technology they rely on was not being serviced. But as the shutdown takes a break for three weeks and everyone is made whole with back-wages and paychecks – does America need to rethink the potential risks and consequences to having the staff who are essential to safety across the entire country go without pay and benefits during a political dispute? The consequences of a major airline crash are huge economically and in terms of lives lost. So, can the nation’s air traffic controllers be exempt form the impacts of a government shutdown? Who would have been liable if an accident did occur? Are aviation, customs and our nation’s airports not considered essential and therefore worthy of being paid during a shutdown? And how close did we come to a disaster? While we wait and watch for a solution in Washington over the coming weeks, there are still a lot of questions to be answered, and that’s where the experts from the University of Rochester can help. David M. Primo is the Ani and Mark Gabrellian Professor and an associate professor of political science and business administration at the University of Rochester. He is an expert in airport safety and security and a professor at the University of Rochester in Rochester, New York, and can comment on airline safety and passenger impacts amid airports such as Laguardia International restricting air travel due to the government shutdown. David is available to speak with media regarding the economic effects of the shutdown – simply click on his icon to arrange an interview.

How Technology is Changing Work as We Know It? Let Industry Experts Answer that Question

Are you interested in what the Future of Work is and how technology will impact your business and industry? Hear how the future of work will impact organizations’ culture, required skills, the way talent will be sourced and how the workspace and makeup of the workforce itself will change. Join IDC Canada and ITAC on January 30th for our annual Tech Trends Breakfast Series event to learn how technology is and will continue changing work as we know it. At this Tech Trends Breakfast event, IDC analysts, partners and industry experts from Tata Consultancy Services, Zoom.AI and ServiceNow will examine how enterprises can adapt to rapidly changing technologies and workforce ecosystems to build a competitive edge. The interactive panel will be moderated by Tony Olvet, Group Vice President of the research analyst team at IDC Canada. While there will be opportunities throughout the panel discussion to ask questions, attendees will have the opportunity to submit questions in advance to help us shape the discussion. Attendees will also have access to presentation materials following the event. The Future of Work Tech Trend Breakfast event will be on January 30th at Twenty Street, Toronto. To see full event details or to register click here. If you have any questions about this event, please contact Cristina Santander at csantander@idc.com.

Declaring a New Year's Resolution for 2019? Baylor Experts Can Help

WACO, Texas (Dec. 17, 2018) – As 2019 approaches, many Americans are considering ways to improve themselves via New Year’s resolutions. Whether it’s personal, like losing weight or clearing clutter, or it’s professional, such as being a better manager or breaking away from smartphones, the options are wide-ranging. Here is a listing of Baylor University research that might help advise those seeking positive change in the coming year. First and Foremost, Resolve not to Over-resolve Only 10 to 20 percent of people keep their resolutions, says Sara Dolan, Ph.D., associate professor and graduate program director of clinical psychology. She advises setting “bite-sized goals instead of a massive behavior change.” Rather than giving up sugar completely or going all out at the gym, she advises achieving small successes before moving on. Ask Yourself: “Do I really want to work from home?” Many U.S. employees believe working from home – or at least away from the office – can bring freedom and stress-free job satisfaction. A 2018 Baylor University study says, “Not so fast.” The research, led by Sara Perry, Ph.D., assistant professor of management in Baylor University’s Hankamer School of Business, found that: Autonomy is critical to protecting remote employees’ well-being and helping them avoid strain. Employees reporting high levels of autonomy and emotional stability appear to be the most able to thrive in remote-work positions. Employees reporting high levels of job autonomy with lower levels of emotional stability appear to be more susceptible to strain. “Any organization, regardless of the extent to which people work remotely, needs to consider well-being of their employees as they implement more flexible working practices,” the researchers wrote. Read more here. Save Money by being a Better Negotiator In today’s retail climate, where stores struggle to keep up with online competition and customers can compare prices with the ease of their smartphones, the price tag is just a starting point for negotiations, said negotiation expert Emily Hunter, Ph.D., associate professor of management in Baylor’s Hankamer School of Business. “No longer do you need to pay sticker price for everything you buy. The customer is now empowered to have a say in pricing, and even hourly retail workers are often empowered to give price discounts when requested,” Hunter said. Hunter said negotiations – whether in a retail setting or in the workplace – require confidence. “Many people are hesitant to negotiate because they don’t know how or they are worried about the other person’s reaction (Will they think I’m greedy?),” she said. “But practice can increase your confidence in your ability to negotiate. Rejection is less common than you fear, and retail stores especially are often willing to work with you.” She offered the following tips to increase the chances of greater deals at the check-out counter. Resolving to Be More Generous in the New Year Many Americans already have enough “stuff,” and the gift-giving season sometimes adds to that collection of things we really don’t need. Instead of always receiving, how can we resolve to be more generous in the New Year? “Whatever our station, however much money or resources we have, we all have something to share and something to give,” says Andy Hogue, Ph.D., senior lecturer in Baylor’s Honors College who teaches a course on philanthropy and the public good. “I like the idea of thinking in terms of a New Year’s resolution, sort of resolving to be more generous and helping people to think in those ways.” Hogue offers individuals and families four ways to develop a spirit of generosity in the New Year. Home Cooking Saves Money, Encourages Better Diet The more home-prepared foods used, the less risk there is of eating too many calories and fat calories, says Baylor University nutrition expert Janelle Walter, Ph.D., professor of family and consumer sciences and Nutrition Sciences Program coordinator. Home cooking also saves money and allows for more fruits, vegetables and dairy products — which often are missing when pre-prepared products are used — as well as less fat, sugar and salt. Some tips for prepping at home are making a precise list, lining up recipes and lists of ingredients, shopping when you aren’t hungry and preparing five main dishes at a time to see you through a few days. Involve your family in choosing foods, shopping and preparing foods, Walter says. Many simple and quick recipes are on online sites, she said, referencing these from Southern Living. Consider a New Approach to Dieting Meredith David, Ph.D., assistant professor of marketing in Baylor’s Hankamer School of Business, researched successful dieters and how they were different from others. Her research results have received national attention. “Our research shows that instead of creating rules to avoid one’s favorite treats, dieters should focus on eating healthy foods that they enjoy,” David said. “Dieters who restrict themselves from consuming the foods they love most may be setting themselves up for failure. Instead, they may be better off by allowing occasional ‘treats’ and focusing attention on healthy foods that they enjoy and making it a point to include those tasty but healthy foods in their diet.” Read the full article. Be Humble and Helpful In hard times, you know how much a helping hand means — and how humbling those times can be. So it might be good to resolve to look for opportunities to assist in 2019, while remembering not to pat yourself on the back for doing so. A decision to help someone else is influenced by time pressure, number of bystanders, empathy or a person's own distress — but that’s not all, says Baylor researcher Wade Rowatt, Ph.D., professor of psychology and neuroscience. “While several factors influence whether people will volunteer to help, it appears that humble people, on average, are more helpful than individuals who are egotistical or conceited.” Cultivate Patience — and Better Mental Health People who are more patient toward others also tend to be more hopeful, grateful and satisfied with life, says Sara Schnitker, Ph.D., associate professor of psychology and neuroscience. And there is more than one type of patience, including interpersonal patience — dealing with annoying people without losing your cool; handling life hardships — such as illness or unemployment — without frustration or despair; and coping with such daily hassles as traffic jams, computer woes and long lines. In her research, Schnitker invited undergraduates to two weeks of patience training, where they learned to identify feelings and their triggers, regulate their emotions, empathize and meditate. If you want to build your own patience, she recommends following three steps: identify, imagine and sync. First, take a moment to slow down an identify how you are feeling and why you might be feeling that way. Second, try to imagine or reappraise the situation from a different perspective or in a new way that helps you to be calm. Finally, sync with your purpose. Try to connect how what you are doing or enduring helps you pursue larger goals or your life purpose. When Ailing, Talk to A Doctor Instead of Searching the Internet for Answers Rather than heading to the doctor — or even the medicine cabinet — some people turn first to the Internet when they are ailing , according to a Baylor University researcher. Especially for folks who have trouble handling uncertainty, "cyberchondria" — the online counterpart to hypochondria — worsens as they seek answers, says Thomas Fergus, Ph.D., an associate professor of psychology and neuroscience in Baylor's College of Arts & Sciences. “They may become more anxious. And the more they search, the more they consider the possibilities,” he says. Doubts about health also can trigger worries about medical bills, disability and job loss, he said. And that can lead to a Catch-22 of more Googling (sometimes of questionable sources). Rather than giving in to cyberchondria, resolve to call your doctor — and take what you read with a grain of salt. In Conflicts with your Significant Other, Relinquish Power During spats with your spouse or significant other, the most common thing people want is not an apology, but a willingness to relinquish power, says Keith Sanford, Ph.D., professor of psychology and neuroscience in Baylor University's College of Arts & Sciences. That comes in many forms, among them giving a partner more independence, admitting faults, showing respect and being willing to compromise. Following closely behind the desire for shared control was the wish for the partner to show more of an investment in the relationship by such ways as sharing intimate thoughts or feelings, listening and sharing chores and activities, Sanford said. Sleep Better in the New Year Writing a “to-do” list at bedtime may aid in falling asleep, according to a Baylor University study by Michael K. Scullin, Ph.D., director of Baylor’s Sleep Neuroscience and Cognition Laboratory and assistant professor of psychology and neuroscience. Scullin's 2018 research compared sleep patterns of participants who took five minutes to write down upcoming duties versus participants who chronicled completed activities. Scullin suggests that writing a list may allow the brain to “offload” them instead of cycling through them repeatedly. Other hints: Use the bed for sleep rather than studying or entertainment; keep a regular sleep schedule; avoid electronics near bedtime; don’t take long day naps; and stay away from stimulants at least six hours before bedtime. Clear Out Clutter Without Getting Frazzled “Don’t try to organize the entire house in one weekend,” said Elise King, assistant professor in the department of family and consumer sciences. “You are much more likely to complete a task, especially one that you’ve probably been avoiding, if you break it into small goals. Don’t try to clean out an entire room over a weekend; instead, focus on the desk one week, the closet the next, and so forth.” Finally, involve your family, strive to make organization a routine — and reward yourself for your efforts. Break Away from the Smartphone Baylor marketing researchers James Roberts and Meredith David, Ph.D. have conducted numerous studies on the effects of smartphone technology on relationships. Their studies on “phubbing” – phone snubbing – have garnered national and international interest, given the pervasiveness of smartphone technology and its impact on relationships. Their studies have found: Bosses Who “Phone Snub” Their Employees Risk Losing Trust and Engagement “Phubbing” can damage romantic relationships and lead to higher levels of depression People who are phone snubbed by others are, themselves, often turning to their smartphones and social media to find acceptance “Although the stated purpose of technology like smartphones is to help us connect with others, in this particular instance, it does not,” David said. “Ironically, the very technology that was designed to bring humans closer together has isolated us from these very same people.”

Cybersecurity expert offers holiday shopping tips for protecting identity

Amid the many warnings this holiday season about protecting your identity while shopping online comes advice from Scott Shackelford, associate professor of business law and ethics in the Indiana University Kelley School of Businessand one of the nation's leading cybersecurity experts. "In some ways shopping online is getting safer," said Shackelford, also chair of the Kelley School's Cybersecurity Program in Risk Management and director of the Ostrom Workshop Program on Cybersecurity and Internet Governance. "For example, a few years ago it was relatively uncommon for many sites to use encrypted https technology, but that's become the norm. However, as may be seen by a quick scan of the news, data breaches continue. "The good news is that the cost of those breaches is going up with Federal Trade Commission and European Commission investigations ongoing into firms like Equifax and Facebook, and consumer patience is also wearing thin," he added. "One recent survey, for example, found that 20 percent of consumers would not shop again at a firm that experienced a data breach." Shackelford offers practical advice for holiday shoppers. In essence, there's a lot you can do to become harder targets for cyber criminals, including: Consider freezing your credit. You don't need it open unless you open a new credit card or loan, and even then you can unfreeze it for a short window to allow for the credit check. Install antivirus and antispyware software, use auto-update, and always enable multifactor authentication on all of your accounts. When using public Wi-Fi, use browsers like Tor to make it more difficult for hackers to spy on you. Keep all software up to date -- especially Windows, but also programs like Adobe Reader, Flash and Java, which are often convenient backdoors that can be closed through frequent updates. Use strong passwords of at least 14 characters, keep them secret, and change them often. Consider starting with a favorite sentence, and then just take the first letter of each word. Add numbers, punctuation or symbols for complexity. And be sure to change any default passwords on your new smart devices. Never turn off your firewall; it's an important software program that helps stop viruses and worms. Use flash drives cautiously; they are easily infected. In fact, one of the biggest breaches of U.S. military systems to date was due to a flash drive. Encrypt sensitive information on your computer. Be conscious of what you click on, both in emails and on the web. When in doubt, double check before accessing new files. Look for sites with "https" in the URL. Do not use banks or other sensitive websites that do not have the "s."

Overhaul of FDA's approval process for medical devices overdue, but balanced approached needed

The Food and Drug Administration has announced plans to overhaul its system for approving a certain category of medical devices, which critics have said fails to protect consumers from risky implants and medical instruments.   George Ball, assistant professor of operations and decision technologies and the ArcelorMittal Supply Chain Faculty Fellow, at the Indiana University Kelley School of Business, studies the medical device industry, in particular medical device recalls.   There are two primary approval pathways for medical devices. “510(k)” clearances are reserved for products that demonstrate substantial equivalence to a previously approved device. Clinical trials are normally not required and this method is much faster and cheaper than the other pathway, a “Pre-Market Approval (PMA).”   PMA new product submissions are reserved for those products that are new or substantially modified from previously approved devices. Clinical trials in humans and laboratory study data are normally required to demonstrate safety and efficacy. In comparison to 510(k) clearances, PMA approval pathways are time-consuming and expensive.   “The FDA’s announcement regarding an overhaul of the 510(k) approval process seems to be warranted, as medical device product approvals are currently on two ends of an extreme spectrum,” Ball said. “New PMA products can require years and millions of dollars to successfully obtain approval by the FDA. Conversely, 510(k) clearances are significantly faster and cheaper, as the manufacturer has to simply demonstrate equivalence with similar, already approved products.   “As 510(k) products represent the bulk of new product approvals, they also represent the bulk of medical device recalls, unsurprisingly,” Ball said. “In the last decade, 510(k) products were recalled at a ratio of 17-to-1, compared to PMA products.”   “However, the method of approval currently practiced for 510(k) products has many benefits for manufacturers as well,” he said. “Demonstrating equivalence with prior approved similar devices makes the development time exponentially faster compared to PMA product approval times.   “A middle-ground here seems logical and advisable. For example, the FDA approves products using a two-pronged approach: safety and efficacy. While efficacy may be easily established by demonstrating similarity to prior products, evidence of safety for 510(k) products may require additional verifications and tests. Doing so may help ensure that new 510(k) products, which are often much more technologically advanced than the ones they are compared against for approval purposes, are also safe for patients.”   Ball can be reached at 812-856-0625 or gpball@indiana.edu

Kelley School expert explains changing market conditions leading up to GM announcement

General Motors on Nov. 26 announced plans to close five manufacturing sites and consolidate production in North America and eliminate an estimated 14,000 white collar and blue-collar jobs. Rodney Parker, associate professor of operations management at Indiana University’s Kelley School of Business, said the announcement reflects several new realities for GM.   “First, it reflects the ongoing shift of consumers preferences from cars to SUVS and pickups. The announcement to discontinue several cars models and focus more on trucks mirrors Ford’s announcement in April 2018 to drop all car models other than the Mustang and Focus to concentrate on trucks. SUVs and pickups are more profitable and they are what consumers want.    “Consequently, GM has numerous plants which are under-utilized but still incur substantial fixed costs, resulting in losses. The plant closures are necessary for the whole company to remain profitable and competitive with rivals which are making similar moves.   “Second, despite 2017 being a very good year for GM (record operating profit, sold over 10 million vehicles), sales in China can be credited for much of that success. The recent growth in the Chinese vehicle market has benefitted GM greatly and compensates for slower growth in the US domestic market. But the sales in China will necessarily be serviced by plants in China or nearby, rather than plants in the US. Also, the shift in production to more SUVs and pickups in the US plants caters to domestic tastes, not those in China.   “Third, the substantial savings accrued from these closures will be necessary for future investments in autonomous vehicles (AVs) and electric vehicles (EVs) and hybrids. In 2016, GM wisely bought Cruise Automation, an AV startup in San Francisco, and has leapfrogged a number of auto rivals in this critical area. However, further development in AVs will require considerable investment by GM in order to keep pace with Google’s Waymo unit, with the possibility of launching their own ride-sharing service in the future.    “Predictions for the automobile industry frequently suggest a shift from exclusively selling vehicles to also ‘selling miles,’ where the manufacturers are providing transportation services, through a combination of per usage fee or subscription. The economic argument for the usage of AVs in ride-sharing services is compelling and GM wants a part of this. At least part of the current plant closures are being done with an eye to the future and the big down payment GM needs to make in AVs.”   Parker, who also is the Fettig/Whirlpool Faculty Fellow at Kelley, can be reached at 812-855-3329 or rodp@indiana.edu.