SXSW 2016 Economic Benefit to City of Austin Totals $325.3 Million

Austin, TX - September 7, 2016 – South by Southwest® (SXSW) is proud to present the comprehensive economic impact of the 2016 South by Southwest (SXSW) Conference and Festivals to the City of Austin. This analysis represents the tenth consecutive study to fully assess the unique nature of SXSW and its beneficial economic impact to the city. The impact of SXSW’s 30th official event totaled $325.3 million.

SXSW attracts the world’s leading creative professionals to Austin, Texas for an unparalleled event that includes a conference, trade shows, and festivals. For the past 30 years, SXSW has successfully helped creative people achieve their goals while catapulting Austin onto the world stage each March by transforming the city into a global mecca for creative professionals. 

“SXSW is an invaluable brand that has helped define Austin as the center of creativity and commerce, a community that is innovative, entrepreneurial and cool. The continued growth of SXSW has resulted in significant benefits for all Austinites,” said Michael W. Rollins, CCE, president of the Austin Chamber of Commerce. “It supports local employment, attracts innovative companies across a broad range of industries who can create much needed middle and high skilled jobs, and pumps hundreds of millions of dollars into our local economy.”

The continued growth of SXSW reflects its singular ability to bring together creative disciplines across a multitude of industries. With keynote addresses from President Barack Obama, First Lady Michelle Obama, producer Tony Visconti and presentations by Twitter co-founder Biz Stone and director J.J. Abrams, SXSW 2016 provided unprecedented opportunities for creative cross-pollination. In addition to the core SXSW events—Interactive, Film, and Music—SXSWedu also experienced a banner year in 2016. 

SXSW continues to be the single most profitable event for the City of Austin’s hospitality industry:

 - SXSW 2016 included 13 days of industry conferences, a 4-day trade show, 8 exhibitions, a 6-night music festival featuring more than 2,200 bands, and a 9-day film festival with more than 460 screenings.

 - In 2016, SXSW directly booked 14,415 individual hotel reservations totaling over 59,000 room nights for SXSW registrants. Direct bookings by SXSW alone generated  $1.8 million in hotel occupancy tax revenues for the City of Austin.

 - The openings of the Hotel Van Zandt and Holiday Inn Express, as well as the continued increases in Registrants and short-term rental bookings, helped expand Austin’s lodging capacity and contributed to longer SXSW visits. In 2016, the SXSW registrant hotel stay averaged 5.2 nights each, an increase from 4.9 nights in 2015.

 - SXSW Conference and Festivals participants, which includes Registrants and Single Admission Ticket Holders, totaled nearly 140,000.

 - SXSW Guest Pass and Consumer Attendees attracted an additional 203,800 participants. These popular free-to-the-public events included the 3-night Outdoor Stage concerts at Lady Bird Lake, the 2-day Digital Creative Job Market, 3-day Flatstock poster art show and Music Gear Expo, 1-day Education Expo, the 3-day SXSW Gaming Expo, SXSW Create, and SXSW MedTech Expo. In 2016, SXSW distributed 119,500 Guest Passes.

“SXSW continues to position Austin in the national spotlight and as a result, the Kimpton Hotel Van Zandt reaches an expanded customer base for the greater part of March,” said General Manager, Joe Pagone. “By embracing the creativity surrounding the conference, we are able to hit the affluent, tech-savvy target audience for our hospitality brand.”

In 2016 the value of SXSW print, broadcast and online publications coverage totaled $223 million. The increase in SXSW’s media valuation reflects a more comprehensive assessment of international media coverage. Keynote addresses by both President Barak Obama and First Lady Michelle Obama saw an upsurge in national and international coverage of SXSW 2016. Media coverage contributes to the Austin’s core identity, elevates the city’s global profile and represents a substantial return on the City of Austin’s relatively modest investment in SXSW.

With the recent unification of the SXSW Conference, expanding badge access, and streamlined programming, SXSW promises to propel the event’s convergence of entertainment, culture, and technology to new heights in 2017.

To read and download the full study, please visit South by Southwest 2016 Economic Impact report or www.sxsw.com/facts-figures-quotes.

  # # # 

About Greyhill Advisors:  Greyhill Advisors is an economic analysis, economic development and site selection consulting firm with offices in Austin, TX and New York, NY. Greyhill represents a team of seasoned professionals with hands on experience performing economic analysis, assisting leading companies in their location decisions and working with communities to expand their economic potential. For more information, visit www.greyhill.com.

About SXSW: SXSW dedicates itself to helping creative people achieve their goals. Founded in 1987 in Austin, TX, SXSW is best known for its conference and festivals that celebrate the convergence of the interactive, film and music industries. The event, an essential destination for global professionals, features conference programming, showcases, screenings, exhibitions, and a variety of networking opportunities. SXSW proves that the most unexpected discoveries happen when diverse topics and people come together. SXSW 2017 will take place March 10-19, 2017.

CONTACT:

Ben Loftsgaarden, Greyhill Advisors                                 Elizabeth Derczo, SXSW

ben@greyhill.com or 512.786.6100                                  elizabeth@sxsw.com or 512.467.7979      

SXSW 2015 Economic Benefit to Austin reaches $317.2 million

PRESS RELEASE

 CONTACT:

Ben Loftsgaarden, Greyhill Advisors                                           Elizabeth Derczo, SXSW

ben@greyhill.com or 512.786.6100                                            elizabeth@sxsw.com or 512.467.7979                                   

 SXSW 2015 Economic Benefit to City of Austin Totals $317.2 Million

Austin, TX - September 15, 2015 – South by Southwest (SXSW) is proud to present the comprehensive economic impact of the 2015 South by Southwest (SXSW) Conferences and Festivals to the City of Austin. This analysis represents the ninth consecutive study to fully assess the unique nature of SXSW and its beneficial economic impact to the city. The impact of SXSW’s  29th official event totaled $317.2 million for 2015. 

The Report may be downloaded here: South by Southwest 2015 Economic Impact report.

During SXSW, the influx of international talent each year transforms Austin into the global epicenter for creative professionals. Even as it approaches its 30th annual event, SXSW grows in relevance and continues to provide an unparalleled depth and breadth of opportunities for creative cross-pollination. 

“SXSW is a testament to the creative and collaborative culture that has become synonymous with Austin,” said Michael W. Rollins, CCE, President of the Austin Chamber of Commerce.  “It remains a key economic driver that supports our local economy and innovation community well after the main event concludes.”   

Although SXSWeek is rightly perceived as a single event made of many diverse elements, it engages three distinct types of participants—official Registrants, single admission Ticket Holders and Guest Pass Holders. SXSW Registrants include conference and festival badge and wristband holders from five industries: Music, Film, Interactive, Sustainability (Eco), and Education (Edu). Lured by SXSW’s unrivaled ability to bring together industry leaders from across the globe (85 foreign countries were represented), official Registrants are overwhelmingly working professionals from outside Austin. 

"SXSW's goal is to gather the world's creative community under one tent, but as a result over 30 years we helped spark a hospitality industry boom that created countless Austin jobs from construction to transportation to dining and more. The lodging industry alone currently employs more than 75,000 people,” noted Mike Shea, SXSW Executive Director.

SXSW continues to be the single most profitable event for the City of Austin’s hospitality industry:

• SXSW 2015 included 13 days of industry conferences, a 4-day trade show, 8 exhibitions, a 6-night music festival featuring more than 2,275 bands, and a 9-day film festival with more than 400 screenings. 

• In 2015, SXSW directly booked 13,300 individual hotel reservations totaling 60,254 room nights.  The average length of hotel bookings made directly by SXSW reached 5 nights, an all-time high.

• SXSW Conference and Festival participants, which includes Registrants and Single Admission Ticket Holders, totaled 139,525.

• SXSW Consumer Event participants defined primarily as Guest Pass Holders attracted an additional 171,200 participants. These popular free-to-the-public events included the 3-night Outdoor Stage concerts at Lady Bird Lake, the 2-day Digital Creative Job Market, 3-day Flatstock poster art show and Music Gear Expo, 1-day Education Expo, the 3-day SXSW Gaming Expo, SXSW Create, and SX Health & MedTech Expo. In 2015, SXSW distributed 110,000 Guest Passes.

The economic impact of SXSW on the Austin economy is calculated using Operational Output, SXSW Conference & Festival Impact and SXSW Guest Pass Holders. The impact of SXSW Operational Output was $116.6 million, SXSW Conference & Festival Impact was $140.6 million, and SXSW Guest Pass Holders impact exceeded $60.0 million. 

“SXSW's success and purposeful expansion over the last few decades has undoubtedly served as an inspiration for us to continue investing and expanding in Austin,” stated Deno Yiankes, President/CEO Investments & Development, White Lodging.

In addition to injecting hundreds of millions of dollars into the local economy, SXSW 2015 also provided Austin with extraordinarily valuable media coverage. In 2015 the value of SXSW print, broadcast and online publications coverage totaled more than $90.6 million. SXSW’s global coverage, championing Austin’s idiosyncratic image, reaches millions of creative professionals worldwide. In 2015 alone, SXSW—and by extension, Austin, Texas—achieved over 80.1 billion broadcast, print, and online impressions. 

“The Austin Convention Center greatly enjoys our partnership with SXSW, the largest event our facility holds annually,” said Mark Tester, Director of the Austin Convention Center.  “We are excited each year to see the innovation and growth that the event brings. This is reflected in the consistent increase of SXSW’s economic impact to the City of Austin.”

SXSW continues to look forward and to build upon its successes in cementing Austin's status as a leading cultural destination. 2016 will mark the 30th year of the event’s storied history, ushering in another exciting chapter for both SXSW and Austin.

To read and download the full study, please visit www.greyhill.com/blog or www.sxsw.com/press.

 # # # 

About Greyhill Advisors:  Greyhill Advisors is an economic analysis, economic development and site selection consulting firm with offices in Austin, TX and New York, NY. Greyhill represents a team of seasoned professionals with hands on experience performing economic analysis, assisting leading companies in their location decisions and working with communities to expand their economic potential. For more information, visit www.greyhill.com.

About SXSW: The South by Southwest® (SXSW®) Conferences & Festivals offer the unique industry convergence of music, film, and emerging technologies. Fostering creative and professional growth, SXSW is the premier destination for discovery. The event is a launch pad for innovative content with new media presentations, music showcases and film screenings providing exposure for creators and compelling entertainment for attendees. Music, Film, and Interactive conference sessions present a forum for inspiration and learning, while business and networking opportunities thrive at the SXSW Trade Show and beyond. Austin serves as the perfect backdrop for SXSW, where career development flourishes amid the relaxed atmosphere, and new ideas and revelations resonate long after the event’s conclusion. SXSW 2016 takes place March 11 – 20, 2016. 

SXSW 2014 Economic Benefit to City of Austin Totals $315 Million

FOR IMMEDIATE RELEASE

CONTACT:

Ben Loftsgaarden, Greyhill Advisors                                                 Elizabeth Derczo, SXSW

ben@greyhill.com or 512.786.6100                                                  elizabeth@sxsw.com or 512.467.7979

 SXSW 2014 Economic Benefit to City of Austin Totals $315 Million

Austin, TX - September 11, 2014 – South by Southwest (SXSW) is proud to present the comprehensive economic impact of the 2014 South by Southwest (SXSW) Music, Film, Interactive, Edu and Eco Conferences and Festivals to the City of Austin. This analysis represents the eighth consecutive study to fully assess the unique nature of SXSW and its beneficial economic impact to the city. The impact of SXSW’s official events totaled $315 million for 2014.

The Report may be downloaded here: South by Southwest 2014 Economic Impact report

SXSW 2014 marked the 28^th year of this annual conference, trade show, and festival in Austin, Texas. The event reinforced SXSW’s reputation as the world’s premier gathering of creative professionals. In addition to its thriving legacy components — Music, Film, and Interactive — SXSW also encompasses newer, burgeoning conferences dedicated to Sustainability (SXSW Eco) and Education (SXSWedu).

Convergence remains the core value proposition of SXSW and the 2014 event was no exception. SXSW remains singular in its ability to facilitate the exchange of ideas from such a wide a variety of disciplines and cultures. The event brings together an impressive agglomeration of Music, Film, and Interactive industry leaders. Geographically, SXSW draws participants from around the world. The infusion of international talent each year during SXSW transforms Austin into a global epicenter for creative professionals.

“SXSW continues to be an extraordinary celebration of the cultural fabric of Austin and all that Austinites value,” said Michael W. Rollins, CCE, and President of the Austin Chamber of Commerce. “Besides focusing the eyes of the world on our city in March, SXSW brings employment to many thousands of our citizens and allows them to provide for their families. From entertainment venues that employ local bands to hotels to retail establishments and all the support industry that provides services that visitors require to the many innovative businesses that have relocated or started up here because of exposure Austin gained during SXSW, this event has helped drive the thriving economy in Central Texas. The fact is that all Austinites benefit from SXSW as the City of Austin has collected millions of dollars in taxes through the years that can be directly attributable to SXSW. Thank you SXSW.”

In 2014, SXSW’s core events attracted 44,500 registrants. SXSWedu set a new mark with 5,900 participants. Since 2012, SXSWedu attendance has tripled. More than 25 years after its inception, SXSW’s unmatched depth and breadth of content and activities continues to provide unparalleled opportunities for creative cross-pollination.

SXSW continues to be the single most profitable event for the City of Austin’s hospitality industry:

• SXSW 2014 (including the Music, Interactive, Film and SXSWedu events) featured 13 days of industry conferences, a 4-day trade show, a 6-night music festival featuring more than 2,100 bands, and a 9-day film festival with more than 400 screenings.

• In 2014, SXSW directly booked 13,990 individual hotel reservations totaling 60,450 room nights. The average hotel booking was 4.32 nights.

• Limited hotel inventory helped push the average nightly hotel rate up 12 percent to more than $287.

• SXSW Conference and Festival participation, including official registrants, artists and support crew, and single admission film and music attendees totaled 134,000 (defined as any individual who attended at least one SXSW activity).

• In 2014, SXSW attracted registrants from 87 countries and bands from 57 countries.

• SXSW’s popular free-to-the-public consumer events such as the 3-night Outdoor Stage concert series at Butler Park, the 2-day Digital Creative Job Market, 3-day SXSW Create, 4-day Flatstock poster art show and Music Gear Expo, 1-day Education Expo, the 3-day SXSW Gaming Expo and the 3-day Renegade Craft Fair attracted an additional 239,700 participants.

• In 2014, SXSW distributed 150,000 SXSWeek Guest Passes. These SXSW credentials permitted the wearer to attend free-to-the public events such as the Outdoor Concert at Butler Park, Flatstock poster art show, Music Gear Expo, Flatstock poster art show and Music Gear Expo, SXSW Gaming Expo and the Renegade Craft Fair.

• Every March innumerable patrons with no official credentials travel to Austin to experience the Spring Festival Season that has evolved around SXSWeek. This report does not attempt to account for this significant demographic estimated to exceed 100,000 or more individuals.

SXSW Executive Director Mike Shea notes that “an extremely diverse cross-section of Austinites share in the annual economic windfall.” He continues, “These dollars flow to thousands of Austin businesses, big and small, as well as to tens of thousands of individuals. The money is spent everywhere from hotels and nightclubs to hair salons and retailers and everywhere in between. And when the counting’s all done the City and State coffers realize a nice tax bounty, too.”

In 2014, SXSWeek was responsible for injecting more than $315.3 million into the Austin economy through Operational Output, SXSW Registrant Attendance Expenditures and SXSWeek Participant Expenditures. Operational Output is a measurement of the direct, indirect, and induced local economic benefit of the year-round operations of SXSW as well as expenditures by SXSW and official sponsors. The impact of SXSW operations on the Austin economy was $121.9 million in 2014. SXSW Registrant Attendance Expenditures are the direct, indirect, and induced local economic benefit of all attendees of the conference and festival. Attendees include official SXSW badge-holders, industry professionals, wristband  holders, festival exhibitors, and single visitors of events such as film screenings and music concerts. The economic impact of SXSW attendance expenditures was $136.5 million in 2014. SXSWeek Participant Expenditures are the estimated impact of direct, indirect, and induced spending by SXSW Guest Pass Holders and parties affiliated, both directly and indirectly, with SXSW. 2014 marks the first year the majority of SXSWeek Participant Expenditures have been measured for the economic impact. In 2014, the economic impact of SXSW Participants Expenditures exceeded $56.9 million.

In addition to injecting hundreds of millions of dollars into the local economy, SXSW 2014 also provided Austin with extraordinarily valuable media coverage. Since its inception, SXSW has played a critical role in helping position Austin as a place where creativity and commerce are mutually valued, nurtured, and networked. In 2014 alone, SXSW — and by extension, Austin, Texas — achieved over 86.7 billion broadcast, print, and online impressions. Although the city’s investment in SXSW is relatively modest, the media exposure enjoyed by SXSW and Austin has enormous value. The positive impact of SXSW is compounded because it strengthens the city’s core identity. In 2014 the value of SXSW print, broadcast and online publications coverage totaled more than $78.7 million. The large increase in the 2014 SXSW media valuation is the result of on-site, nationally broadcast programs and international streaming platforms and includes only media coverage of scheduled programming and events.

To read and download the full study, please visit www.greyhill.com/blog or www.sxsw.com/press.

 # # #

 About Greyhill Advisors:

Greyhill Advisors is an economic analysis, economic development and site selection consulting firm with offices in Austin, TX and New York, NY. Greyhill represents a team of seasoned professionals with hands on experience performing economic analysis, assisting leading companies in their location decisions and working with communities to expand their economic potential. For more information, visit www.greyhill.com.

SXSW Conferences and Festivals

P.O. Box 685289 | Austin, Texas | 78768

T: 512.467.7979 | F: 512.451.0754 | sxsw.com

China's US Treasury Invesments

China has Stopped Buying U.S. Government Debt

The U.S. Treasury Department surveys banks, companies, and governments who own U.S. federal debt on a monthly basis and produces a public report. The detail and accuracy of the report have increased over the years and we now have a decent understanding of who owns U.S. debt and how those positions change over time. The most recent report available, with data through September 2011, highlights an interesting shift in foreign holdings of U.S. debt – China is no longer adding to its position in treasuries, and hasn’t in over a year.

The most consistent trend in the treasury market over the last decade, other than the increasing size of the market, is China’s appetite for treasuries. The U.S. trade deficit with China leaves the Chinese government in possession of large quantities of U.S. dollars. China must then invest these dollars into interest bearing assets, and treasuries have been one of their favorite destinations. China’s treasury holdings increased from $61 billion in 2001 to $1.15 trillion this year. The country became the largest foreign holder of U.S. debt and by the end of 2010 owned 13% of outstanding federal debt held by the public. But over the last 12 months, for the first time in a decade, China stopped adding to its position. While they continue to roll over some maturing positions, overall holdings are flat.

What has changed? This doesn’t appear structural, as the China-US economic relationship is substantially the same, with increasing US deficits offering ample buying opportunities and the large trade deficit still sending US dollars to China every month. It’s also not a diversification strategy, as China’s sovereign investments are well diversified with treasuries accounting for one third of assets. Rather, it appears China has reached its appetite for U.S. government debt, at least in the short run. This raises key concerns for the U.S. as the country needs to sell large amounts of additional debt over the next decade. While the current economic crisis has increased global demand for treasuries, losing one of the largest buyers of new debt will have an impact. 

Thai Floods are Serious Risk to Economy

Most articles about the economic impact of the recent flooding in Thailand focused on quantifying the cost of repairing damage. While certainly meaningful short term cleanup costs are much less important than the damage to the country’s reputation amongst multinational manufacturing firms.

Thailand’s economy is heavily dependent on exports of manufactured goods, primarily by foreign multinational firms. Manufacturing contributes 34% of Thai GDP, much higher than peer countries. Most of this manufacturing base is export oriented, with exports of manufactured goods equaling 71% of GDP, compared to 27% in China and less than 15% in Japan, Brazil, or the United States. Export oriented manufacturing is even more important to Thai economic growth and is easily the largest contributor to growth over the last five years. Manufacturing exports are both the economic base and the main economic driver.  

Any slowdown in foreign investment will directly impact GDP growth. In the near-term through less construction activity, and medium-term though fewer jobs and exports. You can see from the chart below the majority of foreign investment in Thailand is goods for export to other countries. The percentage designated for foreign markets increases as the products move up the value chain with 95% of electronics investment being export oriented.

Plenty of these companies feel wronged by the actions of the Thai government, and they have a point. The Industrial Estate Authority of Thailand (IEAT), a division of the Ministry of Industry, created all 38 of the country’s industrial estates and manages or co-manages all 38. The IEAT and private investors both own industrial estate assets. The government chose the location of the industrial estates, created federal incentives not applicable outside the estates, and provided inadequate flood preparation. Some companies negatively impacted by the floods will be upset and blame the government. Existing firms are not likely to leave, as the relocation costs outweigh the benefits, but they may decide to expand outside Thailand in the future. Companies and site selection consultants are certainly less likely to consider the country when shopping site selection projects among countries in Southeast Asia.

Reputational risk is even more pronounced for the Ayutthaya Province and its large industrial estates. The historic province, once the seat of the Ayutthaya Kingdom, is one of Thailand’s economic drivers with four large industrial parks popular with multinational manufacturing firms. Manufacturing accounts for 85% of the province’s GDP and 11% of the country’s total manufacturing output.  

The government needs to develop a credible plan convincing investors this won’t happen again. Any plan must address improvements in country wide flood management systems and in specific industrial estate defenses. Any plan needs to convince an uninvolved third party the industrial estates will be better prepared next time. 

Flooding in Thailand and Site Selection Due Diligence

Thailand provides a compelling value proposition for manufacturing firms, particularly as an alternative to China, India, and Malaysia. The country offers a strong workforce, solid infrastructure, and foreign firms may own 100% of their local operations, which is typically not possible in many competing locations. Thailand is politically stable (as it relates to foreign manufacturing firms) and has a long history of friendly relations with the West. Of course recent widespread flooding highlights one of the less appealing aspects of central Thailand. Which begs the question, why did so many sophisticated companies locate important facilities in the flood prone Chao Phraya River basin?

Disasters happen, and one can’t mitigate every risk, but the majority of are predictable and can either be avoided or properly planned for. The flooding Thailand appears to be an example of poor site selection and poor disaster planning and preparation. Thailand and greater Bangkok are prone to flooding. Much of the country is low lying land with large volumes of rain concentrated in a handful of months of the year. The Ayutthaya Province, home to over 11% of Thailand’s manufacturing, is particularly disposed to flooding. The Chao Phraya River bifurcates the province and the Province’s average elevation is only 20’ above sea level. According to a 2009 World Bank study, “In the Chao Phraya River Basin, there were exceptional large floods in 1942, 1978, 1980, 1983, 1995, 1996, 2002 and 2006.”

The 1995 floods were quite severe, with most of the Ayutthaya Province inundated. Existing industrial parks were threatened during these floods but escaped without significant damage.  The attached map shows the extent of flooding in 1995, with areas surrounding the industrial parks under between six feet and 10 feet of water.

The current floods impacted thousands of firms including large multinational manufacturers, including Honda, Nikon, and Sony. These firms are a microcosm of Japanese manufacturing, companies that face rising costs and a strong Yen at home and have aggressively expanded production to other nations. Interestingly most of the firms impacted are Japanese, while many of the South Korean and American firms were located in other areas of Thailand.

Large organizations, government of private sector, disincentivize risk. The adage, “you don’t get fired for hiring IBM” is still pretty true today. In site selection, many companies follow their peers when siting new projects, particularly in foreign markets. This manifests itself in Thailand with most foreign corporations locating in state-sponsored industrial estates (as industrial parks are commonly called) located in 3-4 central provinces. The Thai government further drove this consolidation with incentives tied to locating in these industrial parks. Good reasons exist to locate near suppliers and competitors, but it shouldn’t take the place of proper due diligence. 

Market Access in China

The famous auto executive Bob Lutz was on Charlie rose last night and he made an excellent point about China’s development strategy. Mr. Lutz said;  

“China, when they developed their auto industry, they welcomed partnerships with western companies, especially American ones. The Japanese and the Koreans were absolutely mercantilistic and kept everybody out until their industry was big and powerful.

Everybody says, well aren’t you afraid of the Chinese? I’m not afraid of the Chinese because as the Chinese automobile industry develops General Motors is one of the biggest players.”

It’s an excellent counter point to the criticism many raise about market access in China. Opening large sectors of the Chinese economy to foreign firms, even with local partnership requirements, is better for the U.S. than the closed development model favored by Japan and South Korea.

Japan and South Korea closed their domestic markets to foreign competition, built up a competitive domestic industry, and then slowly opened their markets. Imports blocked with punitive tariffs and foreign companies were not allowed to build local manufacturing plants. Those restrictions were relaxed over time but foreign firms hold very little market share in either country.

China encourages foreign investment in the auto sector but requires a partnership with a local firm. They are using foreign expertise to build the domestic industry. Foreign firms maintain strong market share that Mr. Lutz believes is long-term sustainable as Chinese auto companies become more competitive. The Chinese model seems better for the U.S.

Interview with Mr. Lutz below.

Flooding in Thailand - Ayutthaya Province

The Ayutthaya Province is the backbone of the Thai economy and accounts for greater than 10% of the country's manufacturing output. The province is home to large concentrations of electronics and automotive manufacturers with Honda, Sony, Nikon and Western Digital among the hundreds of multinationals operating in the province. The two images above use "false color" to help accentuate the extent of the flooding, green is land and dark blue is water. As you can see, the significant majority of the province is inundated, including four of the largest industrial parks in the country. The disaster provides a real world case study on the importance of natural disaster risk mitigation in site selection. We'll discuss in more detail tomorrow.  

Red Cross of Thailand - http://english.redcross.or.th/home

Photo Source: NASA Advanced Land Imager - http://goo.gl/M4uYG 

Why Greece Should Default and Devalue - in Three Charts

The headline is superfluous, as Greece defaulting on its debt is a mathematical certainty. The only alternative is for another country to pay the debt, which is more likely than Greece paying the debt off, but not much. While default is a certainty, the Eurozone seems to be avoiding the issue entirely. More importantly, after default Greece will leave the Euro, adopt the New Drachma, and rebuild its economy. I believe this is not only likely to happen, but the only sensible choice. Greece leaving the Euro allows Greece to survive and the Euro member states to allocate limited resources to shoring up countries more likely to avoid default. 

Most important for Greece is that leaving the Euro and adopting a devalued local currency is a strategy than can work. Argentina defaulted on its debt and devalued the local currency in 2002 and here are the results. 

Unemployment Rate

 

GDP per Capita (PPP)

Industrial Production 

Default is not an ideal situation, but history shows a country can survive it. I'm not sure Greece can survive another decade of 20+% unemployment.