The Saudi who wants to move world trade from politics to process

Mohammad Al-Tuwaijri. (AFP)
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Updated 16 September 2020

The Saudi who wants to move world trade from politics to process

  • The WTO has 164 members representing 98 percent of world trade

LONDON: Saudi Arabia’s candidate to lead the World Trade Organization (WTO) is a big believer in process. He sees the current shortcomings of the organization and the rise of global trade disputes as largely a failure of process. For the 25-year-old body to be effective, it must deliver on its trade negotiation mandate so that countries do not simply circumvent it and opt for more belligerent ways of settling disputes.

Mohammad Al-Tuwaijri, the Kingdom’s former minister of economy and planning, has highlighted the dangers this trend represents to the world order in his vision for the WTO. He sees growing inequality within and between nations as spurring the rise of nationalism worldwide.

The former fighter pilot, banker and minister faces competition from seven other candidates for the Director-General (DG) role, from Egypt, Kenya, Nigeria, Mexico, Moldova, the UK and South Korea.

The successful candidate will be appointed at a most challenging time. The trade war between the world’s two largest economies is just one of the issues the WTO faces as the rise of protectionism and the fallout from the pandemic threatens global growth.

When Al-Tuwaijri gave his initial candidate press conference in July, there was a telling moment when he described the need to stabilize the WTO. As he spoke he gripped his hands together as if pulling back on a joystick.

He never directly referred to his early career as a fighter pilot, but it was clear from the language he used and the analogies he drew that it was a formative experience for him and has informed his thinking in his subsequent career in business and government.

He sees the current crisis in global trade and within the WTO itself as an opportunity for reform. Similarly the backdrop of a global economy desperately trying to right itself in the wake of the coronavirus pandemic is presented as providing the motivation to get things done.

“People perform better under crisis,” he says. “People perform better when they see stress.”

During that press conference he was asked what he thought was the biggest challenge facing the WTO.

“The world has changed and changed significantly in the last decade and particularly in the last few years,” he said. “So I think the biggest issue that the WTO is facing today is around process,” he said.

While Al-Tuwaijri was careful not to get into specific examples, many would see the trade war between the US and China as the biggest example of a failure in trade negotiation process. 

Both economies are estimated to have lost hundreds of billions of dollars and tens of thousands of jobs.

US president Donald Trump, seeking a second term in office, has dismissed the Geneva-based WTO as “broken” while his administration has blocked the appointment of two new members to its appellate body, removing its ability to definitively rule on disputes.

“Why is the appellate body not working? What is the root cause? It is simply that the negotiations are not working,” said Al-Tuwaijri.

He stresses the need to provide members with enough information and data to accurately assess the implications of becoming embroiled in damaging disputes and to ensure that the initial negotiations are effective in getting to grips with the fault lines between warring parties and how to reconcile them. Otherwise a vicious cycle quickly ensues, he believes.

“People get dissatisfied, the process becomes broken, solutions are sought outside, nothing will happen,” he says.

Then the pilot is back in the press conference room.

“Are we in this position today? Yes, we are stalling. The first thing a DG needs to do is stabilize. Stabilize the machine before it goes into further stall and spin.”


The Musk Method: Learn from partners then go it alone

Updated 18 September 2020

The Musk Method: Learn from partners then go it alone

  • Entrepreneur building a digital version of Ford Motor’s iron-ore-to-Model-A production system of the 1920s

Elon Musk is hailed as an innovator and disruptor who went from knowing next to nothing about building cars to running the world’s most valuable automaker in the space of 16 years.

But his record shows he is more of a fast learner who forged alliances with firms that had technology Tesla lacked, hired some of their most talented people, and then powered through the boundaries that limited more risk-averse partners.

Now, Musk and his team are preparing to outline new steps in Tesla’s drive to become a more self-sufficient company less reliant on suppliers at its “Battery Day” event on Sept. 22.

Musk has been dropping hints for months that significant advances in technology will be announced as Tesla strives to produce the low-cost, long-lasting batteries that could put its electric cars on a more equal footing with cheaper gasoline vehicles.

New battery cell designs, chemistries and manufacturing processes are just some of the developments that would allow Tesla to reduce its reliance on its long-time battery partner, Japan’s Panasonic, people familiar with the situation said.

“Elon doesn’t want any part of his business to be dependent on someone else,” said one former senior executive at Tesla who declined to be named. “And for better or worse — sometimes better, sometimes worse — he thinks he can do it better, faster and cheaper.”

Tesla has battery production partnerships with Panasonic, South Korea’s LG Chem and China’s Contemporary Amperex Technology Co. Ltd. (CATL) that are expected to continue.

HIGHLIGHTS

  • Investors awaiting ‘Battery Day’ announcements on Sept. 22.
  • Musk has hinted at significant new battery developments.
  • Partners and acquisitions have helped give Tesla an edge.

But at the same time, Tesla is moving to control production of cells — the basic component of electric vehicle battery packs — at highly automated factories, including one being built near Berlin, Germany and another in Fremont, California where Tesla is hiring dozens of experts in battery cell engineering and manufacturing.

“There has been no change in our relationship with Tesla,” Panasonic said in a statement provided by a company spokeswoman.

“Our relationship, both past and present has been sound. Panasonic is not a supplier to Tesla; we are partners. There’s no doubt our partnership will continue to innovate and contribute to the betterment of society.” Tesla did not respond immediately to a request for comment.

Since he took over the fledgling company in 2004, Musk’s goal has been to learn enough — from partnerships, acquisitions and talent recruitment — to bring key technologies under Tesla’s control, people familiar with Tesla’s
strategy said.

They said the aim was to build a heavily vertically integrated company, or a digital version of Ford Motor Co’s iron-ore-to-Model-A production system of the late 1920s. 

“Elon thought he could improve on everything the suppliers did — everything,” said former Tesla supply chain executive Tom Wessner, who is now head of industry consultancy Imprint Advisers. “He wanted to make everything.”

Batteries, a big chunk of the cost of an electric car, are central to the Musk method. While subordinates have argued for years against developing proprietary Tesla battery cells, Musk continues to drive toward that goal. “Tell him ‘No,’ and then he really wants to do it,” said a third former Tesla veteran.

The changes in battery design, chemistry and production processes Tesla expects to reveal next week are aimed at reworking the math that until now has made electric cars more expensive than carbon-emitting vehicles with combustion engines.

Tesla is planning to unveil low-cost batteries designed to last for a million miles. 

Tesla is also working to secure direct supplies of key battery materials, such as nickel, while developing cell chemistries that would no longer need expensive cobalt as well as highly automated manufacturing processes to speed up production.

Panasonic is partnered with Tesla at the $5 billion Nevada “Gigafactory,” while CATL and LG Chem supply cells to Tesla’s Shanghai factory, where battery modules and packs are assembled for its Model 3 sedan.

Panasonic recently said it is planning to expand its production lines in Nevada, which supply the cells that then go into the battery modules assembled next door by Tesla.

But the Nevada Gigafactory partnership almost didn’t happen, according to two former Tesla executives. Musk ordered a team to study battery manufacturing in 2011, according to one former executive, but eventually partnered with Panasonic in 2013.

Now, Tesla is testing a battery cell pilot manufacturing line in Fremont and is building its own vast automated cell manufacturing facility in Gruenheide in Germany.

The roller-coaster relationship with Panasonic mirrors other Tesla alliances.

During its development alliance with Germany’s Daimler, which was an early investor in Tesla, Musk became interested in sensors that would help to keep cars within traffic lanes.

Until then the Tesla Model S, which Mercedes-Benz engineers helped to refine, lacked cameras or sophisticated driver assistance sensors and software such as those used in the Mercedes S-Class.

“He learned about that and took it a step further. We asked our engineers to shoot for the moon. He went straight for Mars,” said a senior Daimler engineer said.

Meanwhile, an association with Japan’s Toyota, another early investor, taught him about quality management.

Eventually, executives from Daimler and Toyota joined Tesla in key roles, along with talent from Alphabet Inc’s Google, Apple, Amazon, Microsoft, as well as rival carmakers Ford, BMW and Audi.

Some relationships did not end well, however.

Tesla hooked up with Israeli sensor maker Mobileye in 2014, in part to learn how to design a self-driving system that evolved into Tesla’s Autopilot.

“Mobileye was the driving force behind the original Autopilot,” said a former Mobileye executive, who declined to be named.

Mobileye, which is now owned by Intel, also recognized the risk of sharing technology with a fast-moving startup like Tesla, which was on the brink of collapse at the end of 2008 and now has a market value of $420 billion.

US tech firm Nvidia followed Mobileye as a supplier for Autopilot, but it too was ultimately sidelined.

In addition to partnerships, Musk went on an acquisition spree four years ago, buying a handful of little-known companies — Grohmann, Perbix, Riviera, Compass, Hibar Systems — to rapidly advance Tesla’s expertise in automation. Maxwell and SilLion further boosted Tesla’s ability in battery technology.