MIT Nominated for Webby People's Choice Award - Vote Today!

The MIT Geospatial Data Center (GDC) website has been nominated for a prestigious Webby award in the School/University category.

I would appreciate your vote for MIT, which can be cast at

 this link to the Webby Awards Site.

Showergy - A MIT Product Providing Water and Sanitation to Kenya

The Massachusetts Institute of Technology, like other American Technology/Polytechnic Institutes, embody the entrepreneurial spirit of leveraging cutting-edge scientific research towards innovation of revolutionary technologies. The Latin motto of MIT, Mens et Manus (Mind and Hand), expresses MIT's duty to not only extend the boundary of scientific and engineering knowledge, but also ensure that it benefits the greater society.

MIT has many events, such as the famous $100K Entrepreneurship Competition, that bring out the best and brightest of the student body. However, the competition that best embodies the social responsibility aspects of Mens et Manus is perhaps the MIT Global Challenge Competition.

I have had the chance to mentor one of the competing teams in this year's competition. They have chosen to use their engineering skills and diverse insights to address a worthy challenge - increasing the availability of safe water and sanitation in Nairobi, Kenya.

• Learn about Issues and Project below. 
• Visit the the Showergy MIT Global Challenge Project. 
• Follow the project to keep up-to-date. 
• Vote to support their project.

A Global Social Challenge - Safe Water and Sanitation

During the United Nations Millenium Summit in 2000, eight UN Millenium Development Goals were established in order to reduce world poverty by 2015

1. Eradicate Extreme Poverty and Hunger
2. Achieve Universal Primary Education
3. Promote Gender Equality and Empower Women
4. Reduce Child Mortality
5. Improve Maternal Health
6. Combat HIV / AIDS, Malaria, and Other Diseases
7. Ensure Environmental Sustainability
8. Develop a Global Partnership for Development 

Share of Population with No Access to Sanitation (Philippe Rekacewicz - Le Monde Diplomatique)

The availability of sanitation, a key step to achieving several of the millenium goals, is still a global crisis in developing countries:

• 884 million people, about 1 in 8 of the world's population, do not have access to safe water. (WHO/UNICEF)
• 2.6 billion people, almost 2 in 5 of the world's population, do not have access to adequate sanitation. (WHO/UNICEF)
• 1.4 million children die every year from diarrhoea caused by unclean water and poor sanitation. (WHO/WaterAid)
• 4,000 child deaths a day or one child every 20 seconds, equating to 160 infant school classrooms lost every single day to an entirely preventable public health crisis. (WHO/WaterAid)

Share of Population with Access to Safe Drinking Water (Hugo Ahlenius, UNEP/GRID-Arendal)

Another challenge in much of the developing world is not only the increasing scarcity of fresh water, but also the lack of proper civil infrastructure to properly distribute this water throughout the population:

• 8 out of 10 people without safe water live in rural areas. (WHO/UNICEF)
• 7 out of 10 people without sanitation live in rural areas. (WHO/UNICEF)
• The weight of water that women in Africa and Asia carry on their heads is commonly 20kg, the same as the average UK airport luggage allowance. (HDR)
• The average person in the developing world uses 10 litres of water every day for their drinking, washing and cooking. (WSSCC)
• The average European uses 200 litres of water every day for their drinking, washing and cooking while North Americans use 400 litres. (HDR)

Based on current trends, over the next 20 years humans will use 40% more water than they do now. (UNEP)

Showergy - Safe and Portable Sanitation for Developing Countries

The Showergy MIT Global Challenge Project, in collaboration with the MIT Chapter of Engineers without Borders, is focusing on developing an inexpensive portable product that can easily be used in isolated regions of developing countries to help provide clean water and sanitation.

Tiffany Cheng, MIT Showergy Project Team Leader, describes the specific challenges of the rural poor in Kenya and the unique advantages of their Showergy product to overcome them:

Tiffany Cheng
MIT'12 - Course 1
Gordon Engineering Leader

"Showergy's objective is to design and construct a cost-effective, scalable shower system for use in the slums of Nairobi, Kenya.  The project addresses two core issues in the area: sanitation and safety.  Requiring no electricity nor connection to the water grid, Showergy provides the local community, especially women and children, with a safe, closed, and clean environment to shower. Instead of risking assault by bathing in the river or walking to a faraway communal shower, people can shower near where they live.  Its small footprint of 3-by-5 feet allow it to be installed anywhere in the slums, making access to hygiene and sanitation much more prevalent.  Ultimately, the Showery product will augment existing facilities run by Sanergy, a sanitation company that currently focuses on manufacturing and implementing latrines for Kenyan slums."

Showergy Product Development Team

The most successful products addressing global issues are the result of the collaboration of cross-functional teams. Team Showergy is no exception!

Michelle Chen is a freshman studying Electrical Engineering and Computer Science at MIT. She has experience in building robots and other mechanical devices and is enthusiastic about contributing to the team's project.

Tiffany Cheng is a MIT Gordon Engineering Leader (GEL) and junior majoring in Environmental Engineering at MIT. She is the current Project Manager for the Engineers Without Borders (EWB) chapter at MIT, along with Fausto Morales. An aspiring environmental engineer, Tiffany is most interested in water resources and sanitation systems and looks forward to expanding her knowledge in the field by leading the team.

Helen D'Couto is a junior in biology at MIT. She first became interested in international development by working with the EWB-Johnson Space Center chapter in high school. At MIT, she and Rebecca Heywood co-founded EWB-MIT and she served as project manager, getting their first project in Uganda going. Helen hopes to gain an understanding of urban based poverty as well as the cultural nuances surrounding urban sanitation systems through the current project.

Jesika Haria is a freshman at MIT. She is a member of the EWB Water team as well as the organizing committee for both the MIT $100K and MIT Energy Conference.

Jessy Mwarage is a MIT Gordon Engineering Leader (GEL) and junior majoring in Mechanical Engineering at MIT. He has experience in machining, instrumentation, and computing that will be useful in the design and implementation of this project. Because he is a native of Kenya, he is naturally interested in contributing and bringing his expertise to Showergy.

Jie-Yoon Yang is a sophomore double majoring in Biology and Physics at MIT. She has long been interested in international development during her time at MIT and is enthusiastic about applying her skills to developing innovative sanitation solutions for the developing world.

Product Design and Development (PDD)

Imagine not being able to take a shower after a long day's work. Now picture that everyday. Hundreds of millions of people in the developing world lack access to water and facilities where they can cleanse themselves. Even where there is water, many, especially women, avoid going to communal showers in fear of attack or harassment going there and coming back.

To help combat this fear, Showergy delivers all that is needed for the shower experience right to the user's doorstep - literally. Our cost-effective and easily installable shower system units will be implemented on almost every single plot, so that community members do not have to walk more than a stone's throw away. By providing the means to basic hygiene, Showergy helps reduce the probability for disease and ensures a safe, reliable place for women, children, and senior citizens to wash themselves.

As this is a sponsored project in an ongoing competition, the technical details of the product cannot yet be released.

PDD Video 1 - Showergy Pump Prototyping Work Session - 12 February 2011

PDD Video 2 - Showergy Pump Prototyping Work Session - 19 February 2011

PDD Video 3 - Showergy Frame Prototype Construction - 6 March 2011

PDD Video 4 - Team Dynamics - 6 March 2011

José María Aznar, Former Prime Minister of Spain - Relaunching Growth in Europe

José María Aznar, Former Prime Minister of Spain
Relaunching Growth in Europe Through Holistic Government Policy, Empowerment, and Leadership

As discussed in my Introduction to the MIT Social Media Club, the unique fusion of research in science, technology, business, and government policy within Cambridge, MA allows the opportunity to discuss many current global challenges with world leaders.

As the European debt crisis threatens to impact the global economy, we received the timely visit of the former Prime Minister of Spain, Don José María Aznar as a speaker for the MIT Sloan School of Management Dean's Innovative Leader program. His discussion touches upon how effective governance European and world leaders must be consider a broad scope of issues in order to be adaptable to change yet maintain a focus on a common core values.

Many of these topics touch upon some of the inter-dependencies explored in my MIT Master Thesis and Blog Post on Latin American sustainable development that involves government policy, economic development, social equality, and environmental protection.

José María Aznar - Former Prime Minister of Spain (1996-2004)

Reflecting upon recent European Union events, Prime Minister Aznar's discussion was focused on an exploration of what are the root causes of the current economic challenges faced by the European Union.

"This crisis is one of the consequences of something deeper and greater. Acknowledging and acting upon the roots of what is causing social distress is what political leadership should now offer to European citizens. (It is not only an) economic crisis, (but also) a political, cultural, and social crisis." - José María Aznar

Prime Minister Aznar suggests that a "broad historical perspective" is required to properly understand the current crisis.

He explained that after World War II, Europe's security, freedom, and prosperity was based on three fundamental "pillars":

1. The North Atlantic Treaty Organization (NATO) as a foundation of European security.
2. Democracy as foundation of European freedom.
3. A shared welfare model emerging from a broad European social consensus.
4. The European Union as the result of the state's support of the establishment of a European free market.

However, he has expressed reservations about some recent EU government institutions policies

"We find those who see the world and act upon he mistaken belief that Freedom, Security and Progress are... perpetually guaranteed, whatever we do. This is not so. It has never been so. the current crisis has bluntly shown that it is not enough (avoid the) wrong (policies). It is necessary to (enact the) right (policies)..." - José María Aznar

The above comment is very insightful. In my thesis research, I have found that government policies tend to minimizes disadvantages by any stakeholders. This moderate approach of simply avoiding incorrect policies often results in policies of half-measures that are not innovative and do not foster substantial change. Not surprisingly, these lackluster approaches fail to properly address the most challenging problems of today's society.

The following statement, while probably very true for a current world leader, is indicative of the lack of holistic thinking by all current stakeholders in our challenges.

"Those of us who think the key issues to reflect on the causes of freedom, security and progress consider that they rely on our acts. They would not exist if societies do not protect them through the establishment of institutions that respond to a certain set of values and ideas. ... On the contrary, those who think that relevant issues to reflect on are the causes of poverty, war and serious conflict do nothing to prevent them and only look for someone to blame when the (symptoms are) all too obvious." - José María Aznar

As the total sustainability framework used in my thesis outlined (see figure below and Detailed Blog Post), poverty, war, and serious conflicts are the expected result from an imbalance among the key relationships needed for a sustainable society. I would agree with Prime Minister Aznar that freedom, security, and progress are key levers towards sustainable development. However, they do not seem to encompassing of the "three pillars of sustainability". It must be noted that a detailed discussion of these specific issues was beyond the scope of a 60 minute discussion.

Ashford "Three Pillars of Sustainability" Framework

"A clash between two opposite views regarding the political, economic, and social world is becoming clearer and clearer every day in European societies. And I believe the true origin of our European crisis lies here. In order to find a solution, a technocratic economic agenda would not suffice. A strong political leadership is also necessary to find a way of pushing for more reformist policies through distrustful societies." - José María Aznar

He views a root cause of current problems to be focused on four "Post-Modernist Illusions" that have arisen in recent decades:

1. Illusion of Progressivism - The view that society will continue to improve automatically
2. Illusion of Social Cohesion - The view that social harmony can be maintained without effort.
3. Illusion of "Do-Goodism" - The view there are no paths to freedom except through government.
4. Illusion of the Eternal Teenager - The view that the government is a source of an endless source of economic rights without exchange in-kind.

The interconnected political and economic nature of the European Union forces a decisive and multilateral approach to the economic crisis. Prime Minister Aznar suggests that economic and political sanctions must be used by the EU as a coercive measure to enforce financial discipline by member nations. However, government actions should not violate the spirit of the pan-European pillars of Security, Freedom, Social Consensus, and the Free Market.

"Old categories to understand the world are no longer useful. In short it is necessary that Europe take as its most serious task to strengthen the three basic pillars upon which Liberty, Prosperity, and Security rest." - José María Aznar

The goal is to seek a way of simultaneously protecting our peace, of acquiring competitiveness to generate employment and real progress in an increasingly demanding global strategy, of renovating and strengthening European welfare models, and finally of taking care of our security in a responsible and predictable way. ... The solution we are seeking is not only for the economy, but for society as a whole." - José María Aznar

A series of questions followed the initial discussion:


Prime Minister Aznar compares and contrasts the achievements during his term in office with Spain's current economic development.



Prime Minister Aznar comments on the consequences of the IMF or other outside economic bodies assisting and regulating EU member states.



Prime Minister Aznar speaks about the challenges for the European Union in increasing its influence in world affairs through solid governance, transparency, and communication with constituents.

MIT SDM Thesis Cliff Notes - The Impact and Potential Role of Multinational Corporations in Achieving Sustainability in Latin American Countries

It was a pleasure to work on this thesis at MIT while in the System Design and Management (SDM) program. I would be interested in opportunities to study other technology, strategy, and policy issues for a corporation, non-governmental organization, or consulting firm. If interested, feel free to e-mail me or contact me through my Linked-In profile.
http://www.linkedin.com/in/charlesatencio

THE IMPACT AND POTENTIAL ROLE OF MULTINATIONAL CORPORATIONS IN ACHIEVING SUSTAINABILITY IN LATIN AMERICAN COUNTRIES

© 2010 Charles V. Atencio

All tables and diagrams in this blog posting are excerpted from my thesis for the purpose of my blog posting and discussion.

The full thesis is available to be read, but not printed, at DSpace, MIT's Public Online Research Repository at http://hdl.handle.net/1721.1/59219 

 “Those who cannot remember the past are condemned to repeat it.” - George Santayana

A technical, business, or government leader must properly understand the components of a complex system before they can construct a proper model (System Dynamics or otherwise) and propose a theory of behavior, leading to suggested policies for change or improvement.

This foundation for future models of system behavior is laid in the linked thesis and associated "cliff notes" summary below. It starts to unravel the complexities of industrial policy and multinational corporate strategy toward sustainable national competitiveness in developing nations within Latin America.

"Latin America has collectively faced a number of crises since the end of World War II. Social and financial inequality, rampant between social groups and between nations throughout the region, has led to a series of destructive self-perpetuating feedback loops of financial and economic collapses, social unrest, military coup dʼétats, and progressive isolation from many of the benefits of a modern, developed, and increasingly globalized world. How can this vicious cycle be slowed and turned around?" (page 11)

"Most assuredly the “nations of the South” continue to face many of the same difficulties that existed 50 years ago. A continued failing exists in the national development of even the most successful nations in the region. Brazil, now a major exporter of steel throughout Latin America as it still struggles with the prevalence of forced labor in their product value chain. Mexico, now a center of manufacturing and trade as a major participatory member of the North American Free Trade Agreement (NAFTA), still faces most of the basic challenges of a developing nation, the ability to support the livelihood and health for all of its workers. Argentina, whose capital, Buenos Aires, was once known as the Paris of Latin America, has been struggling through a series of economic difficulties in the past 15 years that have removed much of the glamor the nation had for some foreign investors." (page 11)

  

Sustainable development should not be left to future generations.

1. Change begins with awareness of the current failings of the current system.
2. This awareness drives the pursuit of knowledge of how to remedy these issues.
3. Once a strategy has been derived, appropriate policies can be developed.
4. Once formulated, effective policies require the conviction of all stakeholders for proper execution.

Multinational Corporations (MNCs), the Automotive Industry, and Latin America

Background

"An intriguing question that this thesis endeavors to investigate is how does the multi national corporation (MNC) affect the sustainable development of a Latin American country. Ever-present entities in most Latin American countries, MNCs are capable transnational organizations in which:"

“Their ability to tap financial, physical, and human resources around the world and to combine them in economically feasible and commercially profitable activities, their capacity to develop new technology and skills, and their productive and managerial ability to translate resources into specific outputs have proven to be outstanding.” (UN Department of Economic and Social Affairs, Multinational Corporations in World Development, 1974)

"While the MNCs offer a wealth of potential resources that may benefit a developing nation, there is often a potential conflict of interest between the MNC business strategy and a nationʼs development needs:"

“The divergence in objectives ... compounded by social and cultural factors, often creates tensions. Multinational corporations, through the variety of options available to them, can encroach at times upon national sovereignty by undermining the ability of nation-states to pursue their national and international objectives. Moreover, there are conflicts of interest regarding participation in decision making and the equitable division of benefits between multinational corporations and host as well as home countries.” (UN Department of Economic and Social Affairs, Multinational Corporations in World Development, 1974)

"Thus the challenge for the developing nation-state in dealing with MNCs is in addressing the delicate balance between their potential to accelerate national development while mitigating the risk that development would be undermined by the MNC corporate strategy. A systemic approach to this challenge must be undertaken whereby:"

“... a practical ... solution is required in which the political entities, differing widely in endowment, whether by accident or design, can cooperate to reconcile their conflicting interests, harmonize their policies for their mutual benefit, and achieve a greater measure of international distributive justice." (UN Department of Economic and Social Affairs, Multinational Corporations in World Development, 1974)

The automotive industry presents an excellent source of multinational corporations that have a long history of activity in the three Latin American counties studied in the thesis: Argentina, Brazil, and Mexico. This industry also presents a unique combination of physical, financial, technological, and organizational assets that could either be managed towards facilitating sustainable national development or derail an economy into dependence.

Automotive MNC production activity in Latin America can be divided into four general periods:

1. 1930s to early 1960s – Import Substitution Industrialization (ISI) - MNCs were incentivized by import tariffs on assembled vehicles to establish domestic automobile assembly plants in various Latin American nations.
2. Late 1960s to early 1980s – Rapid National Industrialization - Latin American nations pursue various policies by which to balance multinational corporation activity and domestic industrialization, leading to an abandonment of the original ISI model of earlier years in favor of an increasingly open market for domestically produced and imported vehicles.
3. 1980s to 1990s – Economic Debt Crisis and Liberalization - The protectionist market of the previous thirty years of ISI production lead to an economic crisis in which the domestic industry is forced to readjust to the international global market.
4. 1990s and 2000s – Regionalization and Globalization - The formation of the North American Free Trade Agreement (NAFTA) and the MERCOSUR South American common market lead to increased MNC interaction with Latin American nations as part of a region, leading to increased benefits and risks to the developing nations under study.

Sustainability Framework

Background and Summary

Professor Nicholas Ashford (MIT Faculty Homepage) developed a framework that starts to describe the complex interrelationships that must be considered in order to properly evaluate sustainable activity in industrial activity.

The components of this framework consider the varied issues that affect industrial development, environmental and resource protection, the nature and quality of employment, and their linkages. A thorough use of such a holistic perspective on sustainable development presents for policymakers the blueprint for a well-considered industrial policy leading to true long-term national competitiveness. For industry and multinational corporations leaders, this perspective presents a foundation to construct corporate strategy and supply chain operations that would not only present a satisfactory ROI, but also satisfy the impending need for true responsible corporate governance.

Nicholas Ashford's "Three Pillars of Sustainability" Framework

The Ashford framework identifies (3) key foci of impacts towards sustainable development:

• Environment - Environmental Protection
• Economy - Economic Development
• Work - Meaningfulness and Rewards of Employment

However, the value of this framework towards understanding the needs of sustainable national development is fully appreciated when the other three components of the framework, II, IV, and VI are examined. They are resultant processes of the relative influence and level of development in its neighboring components:

• Economy and Environmental Linkages
• Economic and Employment Linkages
• Employment and Environment Linkages

Publishing the quantitative data from the thesis is beyond the scope of this blog post. Readers that are interested are welcome to read the actual thesis through the link at the beginning of this blog post.

However, a summary of qualitative rankings of significant automotive industry activities across the six components are included to allow for a better understanding of the diversity of perspectives that must be considered in the development of effective sustainable industrial policy and business strategy.

The 5-point rating system used for the framework is designed to address quantitative rankings, where applicable, and qualitative relationships:

• - -    Substantial harm or potential for harm, or by nature un-sustainable
• -      Some occurrences of harm or a net negative balance of activity
• 0     Neutral. There is either no net effect or the activity is not relevant
• +     Some sustainable occurrences or a net positive balance of activity
• + +  Substantial benefits or potential for benefits to sustainability

Sustainability Framework Component I

Environmental Impacts

Summary
"In most modern states, the primary influencer of the environment is the government or associated non-governmental agencies. The automotive industry is primarily ineffective in making significant impacts to the measures within this component. While some innovative processes carry the promise of addressing some of these weaknesses, they have not yet reached a level of neither maturity nor industry adoption in Latin America to yet be effective system-wide. The record of ineffective government environmental policy and/or enforcement in Latin America has left this sector largely negatively impacted by industry activity." (page 97)

Pollution Reduction

"There have been few efforts made by the automotive manufacturers in the three countries under study to reduce pollution beyond what may be required by national, state, and local regulations. In fact, the pursuits of localities that are more amenable to the automotive factories have been a driving force behind the locations of new factories. For instance, the increasingly stringency of environmental policy governing automotive plants in the region around Mexico City has led to the establishment of new production plants away from major municipalities." (page 56)

"Ford, in all three countries, has made some of the most notable strides in pollution reduction from the installation of water treatment plants in Mexico, to waste composting to aid in rainforest restoration in Brazil." (page 57)

"Revolutionary efforts in Eco-design, while promising to create an automotive-based supporting 'green' economy for reclaiming recyclable materials, will only help to partially mitigate resource depletion in the supply chain." (page 57)

Climate Change Prevention

"The automotive MNCs, besides development projects on hybrid/electric vehicles, are not involved in any projects that address the very long-term issue of climate change. Their logic is very product-focused. They are concentrated on the concept that if the combustion of fuels based on petrochemicals is a cause of climate change, they will design products that use alternate sources of energy." (page 57)

"Minimal thought has been given to the improvement of their actual processes towards the prevention of climate change. The classic business model of maximization of production of new vehicles still remains unaltered, continuing to foster a consumerist society. Continuing with this framework, the additional production that globalization offers the industry combined with ineffective climate protection clauses in trade agreements and the lack of local governance introduces additional possibilities for long- term contributions to climate change." (page 58)

Ecosystem Disruption Prevention

"There is little evidence that automotive MNCs have mitigated disruptions to the natural ecosystems that surround their factories. It must be noted that most Latin American countries have held environmental preservation as a secondary or tertiary priority behind economic and industrial advancement. ISI policies of the 1950s and 1960s reflected the prevailing views of development policy, focused on economic advancement through industrial production and did not address environmental protection." (page 58)

Resource Preservation

"The level of resource depletion due to the automotive industry is closely related to the nature of industrial activity and associated supply chain dynamics. ... early automotive MNC activity in all three nations focused on final assembly of the motor vehicles from prefabricated components shipped from other countries, minimizing the domestic use of raw materials." (page 58)

"The increasing supply chain interdependencies that characterize globalized manufacturing and distribution leave the current automotive industries in Argentina, Brazil, and Mexico at a crossroads. On one hand, the increasing production volume in these countries, combined with the tightly integrated supplier network requires that raw materials be extracted either domestically or through regional trading blocs, accelerate resource depletion. On the other hand, the increasing concern for maximizing vehicle recyclability in the automotive MNC home nations and regions have led some to adopt innovative eco-design policies which consider the total life of their products, from raw material through recycling and re-use in new products." (page 59)

Qualitative Summary of Findings for Sustainability Component I

Sustainability Framework Component II

Economy and Environment Linkages

Summary
"These processes represent how government environmental and trade policy aligns with industrial/economic policy and industry action. ...the four factors constituting this section indicate a strong imbalance towards industrial policy and economic advancement at the expense of environmental preservation. The factors of trade, investment, and regulation have shown some transition towards more environmental friendly strategies, but these changes are isolated and not yet systemic. Industrial development, a more structural, entrenched relationship, still reflects the traditional Latin American policy for over 50 years of a priority given to industrial advancement at the expense of environment." (page 98)

Industrial Development and the Environment

"There have been some efforts to mitigate a number of the effects on the environment from industrial expansion... These actions fail to address the impacts of industrial development throughout the entire automotive industry supply chain." (page 60-61)

Trade and the Environment

"Membership in globalized free trade imposes pressures and presents economic opportunities for a 'race to the bottom', focusing production in nations that do not yet have well-established environmental regulations... While the above activity provides the potential for great harm to the environment, increased international trade does present the opportunity for enhanced technology transfer from the home nations of automotive MNCs." (Page 61)

Economic Investment and the Environment

"...the focus on investments in production has served to increase traditional business models of production, not in finding new, creative ways of using the unique factor endowments of each developing country." (page 62)

"...a minimum level of development in infrastructure and other supporting services is required to permit more advanced investments in knowledge-based activity, which fosters more sustainable activity... However, there is currently a limited need for knowledge workers in the industrial operations of some of these nations. Argentina has limited participation in this venue due to its proximity to Brazil. Mexico also has limited participation due to it proximity to the United States and its continued focus on manpower-intensive operations." (page 62)

Regulation of Health, Safety, and the Environment

"...the 'race to the bottom' phenomenon is also drawn to developing countries due to their lax regulations or enforcement of environmental of environmental policy. Is this the fault of the MNC? Not in the policy sense, for that is the responsibility of government. However, multinationals have the opportunity to implement processes that have been developed in more environmentally stringent business environments. ... In order to properly address these issues, participating countries and trade regimes must implement revisions to environmental policies and enforcement procedures to harmonize requirements and guarantee compliance throughout the supply chain." (page 63)

Qualitative Summary of Findings for Sustainability Component II

Sustainability Framework Component III

Economic Impacts

Summary
"Industry, when aligned with government industrial policy, is the primary influencer of these measures. This is the single component in which the automotive industry has consistently been the greatest benefit to Latin America. While apparently beneficial, this component of the system, due in part to Latin American industrial policyʼs focus on industrial development, has resulted in an imbalance in the overall system." (page 97)

Improvement in Competitiveness and the Use of Capital 

"Automotive MNCs, due to the scope of their global operations and supplier networks, are an excellent conduit for transferring best practices in the effective use of resources towards increasing efficiency, attaining economies of scale in production, and maximizing profit for the enterprise." (page 64)

Economic Changes from Changes in Labor and Capital

"The introduction of domestic automobile manufacturing, guided by the policies of Import Substitution Industrialization...along with membership in regional trade blocs, has fostered in increased use of domestic resources. This can be seen in these countriesʼ share of total Latin American GDP, which ranks the three highest in the region." (page 67-68)

"However, Latin America still represents a very small share of world GDP, leading to the conclusion that even these “giants” in the region are economically small contributors to total domestic development. ... Like much of Latin America, industrialization has been concentrated in a few key regions of each country, which has posed a restriction on economic growth in these nations." (page 68)

Financing of Growth and Development

"...regional governments have been providing subsidies to MNCs to establish operations in their respective states...for the secondary effect that a production move brings to a region – the establishment of a broad automotive supplier network to support the production plant with its associated contribution to employment." (page 69)

"In reality, the automotive industry does not exist throughout Mexico, Argentina, or Brazil. It exists in a small group of highly industrialized MNC/supplier “communities”. They do not directly interact with the overall national region, but only within their industrial clusters." (page 69)

Qualitative Summary of Findings for Sustainability Component III

Sustainability Framework Component IV

Economic and Employment Linkages

Summary
"These processes reflect the balance between economic advancement and processes that indirectly influence the present and future employment opportunities for workers. While reflecting a legacy of being dominated by the interests of industry and industrial policy, there are promising advancements towards a more balanced process that benefits both parties. The adoption of innovative policies that empower workers and facilitate on the job learning shows that the nature of work, while still focused on industry and economics, is starting to benefit the worker more. The fact that these processes of learning are occurring and that Latin America is becoming a greater focus of global automotive production and design is also starting to up-skill workers and shift the international division of labor slightly towards employment, while still primarily benefiting industry." (page 99)  

International Division of Labor

"Automotive MNCs, by their global scope and pursuit of maximized efficiency in value- added operations, have allowed developing countries to better leverage the current developmental state of their domestic workforce." (page 70)

"Reflecting the state of the industry and complementary businesses and technologies, distinct paths in the automotive industry division of labor has been observed:

• MNCs in Mexico continue to focus on leveraging the quantity of available semi- skilled laborers as opposed to the widespread adoption of state-of-the-art technology.
• MNCs view Brazil as a leader in the Latin American industry. They have begun to expand into new highly automated industrial plants in rural areas. While automation has lowered the number of required operators, the remaining employees are trained more holistically using lean methods, focusing on employment involvement in overall processes, rather than individual tasks.
• MNC expansion in Argentina has focused primarily on support of operations in Brazil. While it is still considered a significant contributor to automotive production, it does not have significant continuous investments in new facilities, additional employment, or innovative processes." (page 71-72)

Nature of Work

"In such a globalized automotive industry, only Brazil and Mexico, as Latin American centers of automotive innovation, have shown signs of crossing the divide between simply being a venue for production capacity/efficiency in assembly and a center for creative design and research into new products." (page 72)

Foreign Direct Investment

"FDI dynamics per capita show that while there is much foreign investment in Brazilian industry as an aggregate, it is still relatively insignificant when viewed on how it impact the single average citizen. By contrast, FDI has a much more significant impact on the average Mexican citizen. The future of FDI for the average Argentinean seems mixed and uncertain." (page 77)

Qualitative Summary of Findings for Sustainability Component IV

Sustainability Framework Component V

Employment Impacts

Summary

"This componentʼs primary influencer tends to be nebulous. In some circumstances, with ineffective union representation and government policy, industry has been dominant. In other cases, strong union representation has led to a retrenchment of industry activity and influence. When compared to the factors in Components I and III, the factors associated with employment are relatively transitory. Accordingly, the assessment the automobile of Employment in Latin America are mixed among its nations and measures." (page 97)

Skills

"Traditional Fordist manufacturing had focused on assigning unskilled workers tasks that were focused, repetitive and simple in nature. There was little to no interest in the development of the abilities of the line worker. It could be asked “Is the factory machinery designed to help the worker or is it rather that the worker is to serve the machinery?” (page 79)

"Globalization has helped to 'level the playing field'...result(ing) in increased automation and a reduction of total employment of labor ... (and) import of technology transfer in the form of best practices from throughout the global reach of the MNC to their subsidiaries in all three countries." (page 80)

Wages

"... recent events have confirmed that global market forces introduced locally through participation by automotive MNCs actually leads to the strong potential for a “race to the bottom” in the commoditization of labor." (page 83)

"The relentless pursuit of economies of scale in production, combined with the flexibility of a global supply chain, lowering of trade barriers, and the resulting transitory commoditization of labor present a serious doubt that the industry can present a significant quantity of secure jobs that provide a competitive wage." (page 84)

Purchasing Power

"there seems to be no direct relationship between automotive MNC activity and the overall purchasing power of the citizenry of each nation under study. It appears that Brazil, while heavily focused of economic expansion in many industries, is dysfunctional in having this advancement be reflected in an advancing standard of living for all its citizens. Certainly, the construction of plants in depressed areas helps local citizens by providing some sort of wage, but is it a “living wage”? The unions in Sao Paulo would argue it is not." (page 84)

Job Security

"This tradeoff does not exist in knowledge-based employment, where technology is normally leveraged directly to advance the capabilities of the worker and of the firm. As more possible tasks are developed, additional need for workers is created. Once design operations are established in an industry, in a healthy economy, it tends to be a reinforcing process resulting in increases in employment." (page 82-83)

Worker Health and Safety

"While Mexico does possess health and safety committees, there is little consequence for violation of safety regulations. The key gap in Mexico exists in the proper enforcement of national policy." (page 86)

"By contrast to Mexico, which has health and safety policy that is simply not enforced, Brazil lacks the policies for union representation that would pressure health and safety in industry. Brazilian policy contains significant gaps with regard to guarantee of labor representation, which potentially could prevent effective accountability of an employer towards its workers." (page 86)

Job Satisfaction

"It is true that an increase in automation in a manufacturing facility does tend to reduce a factoryʼs workforce, as claimed by labor union representatives. However, with proper management, the remaining employees in these factories are engaged in the process in a more meaningful way, leading to enhanced job satisfaction." (page 88)

"Autoworkers in the developing world, in an innovative learning environment, are able to not only earn a better wage, but also able to learn new tasks along the manufacturing line. A key step to be able to achieve this goal includes all stakeholders to not become too entrenched in formulaic views and approaches to these challenges. Industry must realize that the should not only address the enhancement of manufacturing productivity, but empower the worker to more fully use their intellect." (page 89)

Number of Jobs

"The adoption of advanced technology, such as what has occurred in Brazil and Argentina, often leads to increased automation that reduces total employment. The remaining employees, exposed to the new technologies and processes, when given the opportunity to learn, are able to gain new skills." (page 82)

Qualitative Summary of Findings for Sustainability Component V

Sustainability Framework Component VI

Employment and Environment Linkages

Summary

"The lack of effective government environmental policy or industrial policy that considers environmental impacts are serious gaps in implementing equitable processes involving employment and the environment. There is minimal progress made on these issues. The only progress made, on environmental footprints from employment, is primarily due to limited efforts to start to effect design, including eco-design processes, which do not have the environmental impacts that exist with factory production." (page 98-99)

Environmental Footprint Reduction from Employment

"From the perspective of the automotive industry, the only cases of intentional linking of a reduction of environmental footprint and employment is the development in Brazil of alternative fuels, such as ethanol, for use by automobiles and the integration of eco-design in the automotive design process." (page 91)

"A challenge is presented to the balance of industry and agriculture in the expansion of the auto sector from the traditional industrial cities of these nations into rural areas, locations that have previously seen only agricultural development. These new plants, while providing a source of revenue for an economically depressed population, carries the possibility of a toxic environmental footprint if unmanaged by corporate governance, union activity, or enforcement of comprehensive government policy." (page 91-92)

Effect of Environmental Policies on Employment

"There are minor scattered creations of knowledge-focused jobs that are focused on creating and managing eco-designs for recyclability or in the design of alternative fuel vehicles in Brazil and Mexico. However, these positions are not significant in comparison to the quantity of labor engaged in factory production.

In fact, it has been observed in Mexico that the addition of increasingly stringent pollution control policies has not led to the improvement of existing plants, but to either the consolidation of old plants into a more efficient plant, or the relocation of plants to areas that have higher levels of permitted pollution." (page 92)

Qualitative Summary of Findings for Sustainability Component VI

Multinational Automotive Company Systainable Activity in Latin America

General Summary and Recommendations

Recommentations:

Recommendation 1 – Promote Holistic Policies in Government Ministries

"A logical first step in any attempt to gain desirable benefits from a complex system such as the automotive industry is a thorough understanding of the broad system impacts of any policy decision. Starting with this perspective, an attempt can be made to address effective recommendations. ... The application of systems engineering principles requires that all potential stakeholder perspectives be considered when developing national and regional policy. ...the Minister of Development, Industry and Trade would need to closely consult with other ministries, such as the Ministers of Labor, Environment, Science and Technology, Agrarian Development, and National Integration, among others, in order to formulate comprehensive policies to address these complex issues." (page 102)

Recommendation 2 – Establish National Environmental Accounting System

"A developing nation must make the most sustainable use of its existing factor endowments in order to foster development of new, complementary factor endowments. If the developing nation has a surplus of agriculture, this surplus can be traded in a number of ways with developed nations. Capital from trade could be used for development of social and industrial infrastructure, such as agricultural colleges, roads and irrigation, permitting national competitiveness or technological products, such as agricultural machinery, that directly foster enhanced use of factor endowments. ... A consistent weakness across most nations is the lack of a policy mechanism to properly account for the quantity and types of national resources that exist in their ecosystem. Without this accounting, it is impractical to assess the current state of environmental resources and understand the level of its “stocks and flows” and how they dynamically change based on trade and industrial policy." (page 102-103)

Models of this innovative form of accounting are now being used by the government of Costa Rica, described by the United Nations Statistical Environmental and Economic Accounting (SEEA) standard, and outlined by the Rio Declaration on Environment and Development.

Recommendation 3 – Enforce Uniform Environmental Representation & Requirements

"Multinational corporations, due to their global presence, have an ability to transfer capital investments as required to best take advantage of trade agreements, economic incentives, or market opportunities. All too often current treaties that were signed in the spirit of equitable benefits for all signatory parties fail to meet truly sustainable objectives. ... a lack of comprehensive representation of all stakeholders in the preparation and enforcement of the treaty has led to enacted treaties that are de facto neither comprehensive nor executable as initially intended." (page 105)

"A regional authority should be established in each developing geographic region as appropriate to strengthen the bonds among member nations, leverage and share their individual factor endowments, and serve as a collective intermediary with other nations and organizations in the world stage. ...True comprehensive treaties that address sustainability must be developed with representatives of not only signatory governments, but of labor organizations, environmental non-governmental organizations (NGOs), and industrial and scientific groups. ...there should be equal representation from both the developed and developing world. Like the regional committees, the global international committees shall have the autonomy to act independent of any national influence." (page 106-107)

Recommendation 4 – Foster Development of Technology Transfer

"Neo-classical economic theory promotes the continuous expansion of markets, encompassing increasing use of raw materials to support increasing production and inevitably generating an increasing amount of waste. ...it is not a feasible operating practice in todayʼs globalized markets where billions of individuals are engaged in this unsustainable loop either as individuals or through their businesses." (page 107)

"Herman Daly suggests a conceptual solution to this dilemma in his description of Steady State Economics (SSE). In this process, global development is able to occur without growth, focusing on many of the non-monetary measures of progress, such as knowledge and technology. While simplistic in concept, Daly does present an important perspective in formulating and enacting policy that not development is economic growth." (page 108)

"The MNC is a unique and useful conduit to effectively transfer technology, capital, and labor skills from the developed to the developing world. Its intercontinental reach allows the additional transfer of best practices from one part of the world to another. The MNCs drive for profit and market share, if channeled properly, can serve as an effective driver for sustainability." (page 108)

Recommendation 5 – Establish Incentives to Foster Growth of Eco-Activities 

"A grave environmental and ecological danger lies in the callous disregard of the impact of the developed worldʼs consumerist activities and the linear manner by which industry fulfills its needs. The pattern of behavior has traditionally been the harvesting of raw materials, followed by production of products, followed by sales of product to the consumer, and finally ending with disposal of the product by the consumer as waste." (page 108)

"Future policies must consider the entire ecosystem and innovative long term uses of products in order to maximize either the recycling of products or its productive lifespan to consumers. A means to maximize identified recycling/reuse opportunities and identify the most ecologically conscious means of product design and production is to foster trans-disciplinary education in universities. Society would gain great benefits when the chemical engineer and other technical individuals learn about the ecological and societal impacts of their work. Likewise, ecological protection campaigns would be much more effective and relevant if the social worker or policy analyst were to better understand the research, product development and manufacturing process." (page 109)

These solutions for sustainable development should not be left to future generations.

1. Change begins with awareness of the current failings of the current system.
2. This awareness drives the pursuit of knowledge of how to remedy these issues.
3. Once a strategy has been derived, appropriate policies can be developed.
4. Once formulated, effective policies require the conviction of all stakeholders for proper execution.