Wednesday, April 22, 2015

Brazil Buys Kraft - Heinz

A note on the Kraft Foods - Heinz merger.

Once combined, the Kraft Heinz Company will be one of the largest food and beverage conglomerates in the world, with nearly $28 billion in annual sales, and is expected to have a market value of more than $80 billion (see New York Times for more).

The interesting thing about this is that both Kraft and Heinz are already owned by a Brazilian private investment group.

Contrary to popular view, it's not like two iconic American companies have decided to marry. That ship sailed long ago. These two companies are already owned and operated by entities outside of the U.S. In Brazil.

So who owns Heinz-Kraft?

In 2010, 3G Capital acquired the stock of Burger King for $24.00 per share, or $4.0 billion, including the assumption of Burger King's outstanding debt. The Burger chain was then combined with Tim Hortons. The merger has been good for shareholders.

What the firm does is acquire control of companies then combine them as appropriate. In this case, consider this:
"Combining our two businesses, we’ll create the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world," Alex Behring, the managing partner of 3G, who will be chairman of Kraft Heinz, said on a call with investors. "The company will enjoy significantly enhanced scale in its key North American market, not only at retail but also in the food service channel." - from the New York Times
Fortune Magazine says 3G isn't known for a gentle, indulgent management style. Which should surprise no one.

From a food supply chain perspective, the F&B industry gets more and more interesting. It's less and less "iconic family restaurant" themed and more and more like a game of Monopoly.

Tuesday, April 14, 2015

Don't Try Biocides

Remember the song by Queen, called Don't Try Suicide? Maybe I'm dating myself. Regardless, the song is here and the lyrics are here. The song came to mind this week while reviewing the latest in European regulatory activity regarding biocides. Here's where we are with attempting biocidal behavior in the EU.

Last fall, the European Chemical Agency (ECHA) Biocidal Products Committee adopted 10 opinions and thereby made significant additions to the list of chemicals covered by Europe's biocidal regulation.

The total number of opinions slated to be delivered by ECHA is expected to grow. The forecast by the agency itself is that the list will go from 80 in January 2015 to 300 in 2020, in just five years. The Biocides regulation is getting a lot of focus in the EU and requires attention by any company shipping product into Europe or manufacturing there.

What are biocides?

Biocides are chemicals used to suppress organisms that are harmful to human or animal health, or that cause damage to natural or manufactured materials. These harmful organisms include pests and germs (i.e. moulds and bacteria). Examples of biocidal products are insect repellents, disinfectants and industrial chemicals like anti-fouling paints for ships and material preservatives. However, because of their intrinsic properties biocides can pose risks to humans, animals and the environment.

The new "Biocides Regulation" entered into force on September 1, 2013. (It repealed Directive 98/8/EC.)

Biocides and nanomaterials 

Note that this regulation is the first piece of legislation to build in the new Commission definition on nanomaterials. That definition is as follows:
  •     A natural, incidental or manufactured material containing particles, in an unbound state or as an aggregate or as an agglomerate and where, for 50 % or more of the particles in the number size distribution, one or more external dimensions is in the size range 1 nm - 100 nm
  •     In specific cases and where warranted by concerns for the environment, health, safety or competitiveness the number size distribution threshold of 50 % may be replaced by a threshold between 1 and 50 %
  •     By derogation from the above, fullerenes, graphene flakes and single wall carbon nanotubes with one or more external dimensions below 1 nm should be considered as nanomaterials

More about biocides

The ECHA Guidance on biocides legislation describes how to fulfill the information requirements set by the Biocidal Products Regulation, Regulation (EU) 528/2012) (BPR). (The guidance also describes how to perform the required assessments.) Further, it explains the guiding principles for the evaluation of the applications to be performed by the authorities.

In addition to the BPR guidance, Biocidal Products Directive (BPD) guidance and other related documents are still considered applicable for new submissions under the BPR in the areas where the BPR guidance is under preparation. Furthermore, these documents are still valid in relation to applications for active substances for Annex I inclusion or applications for product authorization under the BPD that may still be under evaluation. Keep in mind that the Commission may have addressed some of the obligations in further detail in the Biocides competent authorities meetings documents. Consultations advised if you want to dive deeper.

We tried to shrink down the essential pieces for you here, For more, explore this page from ECHA.

Friday, April 10, 2015

Top 10 Nations Most Resilient to Supply Chain Disruptions

The 2015 Oxford Metrica FM Global Resilience Index ranks the supply chain resilience of 130 countries and territories around the world. The ranks look at economic factors, risk level and quality of a supply chain itself.

Sometimes this type of report is more marketing document than anything else. The list is compiled to encourage risk management dollars to be routed in a certain direction, or to show the value of dollars spent last year in certain areas, usually in an area where the agency compiling the list happened to be a key consultant. So these rankings are, while not arbitrary, not exactly scientific either.

Keeping that in mind, let's take a look at the rankings, which seem roughly on pace with what global supply chain watchers might expect.

Here are the OM / FM Index 2015 top ten nations in terms of supply chain resiliency:
  1. Norway
  2. Switzerland
  3. Netherlands
  4. Ireland
  5. Luxembourg
  6. Germany
  7. Qatar (?!)
  8. Canada
  9. Finland
Qatar and Finland moved into the top 10 this year, says the report. Maybe. Taiwan has moved up the rankings the most (marketing alert!) due, says the report, "to a substantial improvement in the country’s commitment to risk management." I won't bore you with the details here — definitely read the report yourself if curious. Just allow yourself "marketing alerts!" in how to approach reports of this nature.

Lowest rankings include:
  1. Venezuela (worst, a ranking so unsurprising it's almost a surprise!)
  2. Ukraine (107)
  3. Kazakhstan (102)

Other rankings of interest:
  1. UK ranks 20th (remember, this is a ranking of resiliency, agility, quick-adaption which is presumably not UK's strength)
  2. France is 19th
That all kind of makes sense. The United States is divided up into regions in the report, with region 3, the central area, coming in 10th on the list. The other two regions are in the top 20 (marketing alert!).  All three regions could presumably be higher with the implementation of some corrective risk management programs; that applies to France and the UK too.

Fastest risers in the list, a.k.a. nations showing most improvement in the supply chain resiliency index:
  1. Taiwan
  2. Guyana
  3. Romania
  4. Bolivia
  5. Peru
  6. Armenia
  7. Ecuador
  8. Azerbaijan
  9. Kenya
  10. Uruguay
The entire report can be found here.

A word about Oxford Metrica, the team who produces the report: Oxford Metrica is an independent analytics and advisory firm. So while it's always good to read rankings, it's even better to appreciate the context of their publication. I guess I made the point, huh.

I liked this ranking in particular because it has basis in fact and is an interesting measure, beyond the usual "supply chain rankings." The usual big, vague "supply chain ranking" lists are published by Gartner and the like each year, and Apple is always in first place. Oh, hey, marketing alert!

Tuesday, March 31, 2015

How EU Approaches Chemical Restriction

There are six primary ways that the European Union approaches chemical restriction. This all falls under the header of supply chain material disclosure.

The European Chemicals Agency takes the lead in regulating substances in the EU, but member states (nations) typically have authority when it comes to implementing and establishing penalties for breach. It's important to familiarize ourselves with these six aspects.
  1. Harmonized classification and labeling of chemicals -- The Classification, Labeling and Packaging (CLP) Regulation invites parties concerned to comment on the proposals for harmonized classification and labeling of substances. CLP is becoming GHS, the Globally Harmonized System of classification and labeling of chemicals, now adopted in the United States with a key deadline in May 2015.
  2. Chemical restriction under REACH regulation -- If a chemical poses an unacceptable risk that needs to be addressed on a EU-wide basis, a Member State or ECHA (on request of the Commission) may propose a restriction on the manufacturing, placing on the market or the use of that chemical of concern.
  3. Authorizing chemicals under REACH regulation -- Under the REACH Regulation, authorizing known hazardous chemicals for use (essentially what we would call 'obtaining a variance') has two different steps. The first step is to identify ubstances of very high concern and their prioritization on the Authorisation List (Annex XIV); a process managed by authorities but members of the public can affect change by participating in public consultations. The second step is for a company or companies to request authorization to use or continue to use substances listed on the aforementioned Authorization List. ECHA manages the application for authorization processes and provides information and training to companies.
  4. Registry of substances intended for restriction -- Note that for the restrictions process there is a legal requirement for the Member State to notify its intention to prepare an Annex XV restriction dossier to the Agency (Article 69(5) REACH). The aim of the resulting public Registry of Intentions (RoI) is to make interested parties aware of the substances for which a CLH (harmonized classification and labeling), SVHC (substance of very high concern) or restriction dossier is intended to be submitted by anyone. This provides interested parties time to consider comments down the line. It also avoids duplication of work and encourages cooperation between potential dossier submitters. Through the registry, you can check whether another dossier submitter has worked on an Annex XV or CLH dossier for a specific substance in the past or is currently preparing a dossier on the substance.
  5. Regulating biocidal products -- Under Europe's Biocidal Products Regulation, the appropriate authority may identify an active substance as a potential candidate for substitution. The objective of this provision is to identify substances of particular concern to public health or the environment and to ensure that these substances are phased-out and replaced by more suitable alternatives over time. Following the identification as an active substance as a potential candidate for substitution, a public consultation is launched. Products containing substances so listed then need to undergo a comparative assessment which will be taken into account for their authorization. 
  6. Substances of potential concern -- Substances with certain hazardous properties can be of concern for human health and/or the environment. Such substances can be identified and subsequently regulated to make sure that the risks associated with these substances are properly controlled. To focus the work under different REACH and CLP processes on the substances that matter most, substances of potential concern need to be identified. These include substances for which further information is needed to conclude on the hazards or risks they might pose. These also include substances for which further regulatory action needs to be considered. The goal is to identify the substances that matter most and address their concerns with the appropriate tools. More on that here. There are many aspects to this, and it depends on categories such as endocrine disruptors, PBTs, etc.
Hopefully that's a decent overview. For more, see the ECHA website.

Thursday, March 26, 2015

Lockheed Rockets Up Indices

Lockheed Martin has been named to the Dow Jones Sustainability World Index and two CDP Climate Change Management Indices — representing a significant global benchmark among leading corporations. Ranking in these indices indicates sustainability standards where companies demonstrate economic, environmental and social performance.
New year in aerospace

Lockheed ranked in the top 10% of the 2500 public traded companies eligible for the recognition on the world index. It is one of five aerospace and defense companies worldwide to earn a spot on the highly respected index.

Being named top sustainability company in the RobecoSAM 2015 Sustainability Yearbook (page 42) indicates that Lockheed is a top performing company in the Aerospace & Defense industry. It is notable, sustainability does matter.

Sustainability in aerospace

The RobecoSAM 2015 Yearbook discusses aerospace & defense industry as a "profitable yet challenging business."

The forecast is that global cuts in government spending, especially in the United States, will put significant financial pressure on companies, forcing them to realign their strategies and diversify their business models. The commercial aerospace segment remains lucrative, with a strong demand for fuel-efficient next generation products. (Cooperation with both customers and suppliers remains a key driver of innovation, interestingly).

Product stewardship, life cycle management and operational eco-efficiency have become key requirements for both commercial and military applications, says the report. The call for alternative fuels and propulsion technologies is increasingly becoming a question of not only operating costs and mitigating supply chain risk, but one of national security and public policy.

Governance, compliance and bribery issues remain a threat to companies involved in the manufacture and sale of aerospace and defense products. Numerous scandals in the past years and investigations by authorities have led to a call for increased transparency and accountability by these companies. The sensitive nature of the business and the importance of this industry to national governments increase the public scrutiny around companies operating in this space.

Let's try something new — get the full report using this QR code:

(point your smartphone at it and... close your eyes and hope it works!)

Learn more about Lockheed sustainability efforts on their website, they're not shy about this headline.

As always, we keep an eye on Boeing and Lockheed and the aerospace industry, as all this represents such a titanic supply chain driver.

Thursday, March 19, 2015

Nanomaterials: How Safe Are They?

There are some interesting documents coming from the EU on the subject of nanomaterials.

There is Guidance available on protecting the health and safety of workers from potential risks related to nanomaterials at work, however there is no regulation (yet). Guidance for employers and health and safety practitioners is published by the European Commission in November of 2014. You can download the PDF document here. It's a good idea to get familiar with a copy.

The key thing to know is that under Europe's REACH regulation, the Registration, Evaluation, Authorization of Chemicals, nanomaterials are covered by the definition of a "substance" even though there is no explicit reference in REACH to nanomaterials. The general obligations under REACH — such as registration of substances manufactured at 1 tonne or more and providing information in the supply chain — apply to nanomaterials as they apply for any other substance.

It is clear that many workplace safety professionals right now are thinking about the potential for nanomaterials in a slurry, and exposures to dried slurry materials during maintenance of equipment. So that's getting a lot of attention.

Portrait of a nanomaterial

The US Environmental Protection Agency (EPA) defines a nanomaterial as "an ingredient that contains particles that have been intentionally produced to have at least one dimension that measures between approximately 1 and 100 nanometers."

The EU defines a nanomaterial thusly:

A natural, incidental or manufactured material containing particles, in an unbound state or as an aggregate or as an agglomerate and where, for 50 % or more of the particles in the number size distribution, one or more external dimensions is in the
size range 1 nm - 100 nm.

In specific cases and where warranted by concerns for the environment, health, safety or competitiveness the number size distribution threshold of 50 % may be replaced by a threshold between 1 and 50 %. By derogation [from the above], fullerenes, graphene flakes and single wall carbon nanotubes with one or more external dimensions below 1 nm should be considered as

Within this definition of nanomaterials, the terms "particle," "agglomerate" and "aggregate" are defined as follows:

  • "Particle" means a minute piece of matter with defined physical boundaries;
  • "Agglomerate" means a collection of weakly bound particles or aggregates where the resulting external surface area is similar to the sum of the surface areas of the individual components;
  • "Aggregate" means a particle comprising strongly bound or fused particles.

Where technically feasible and requested in specific legislation, compliance with the definition [of a nanomaterial] may be determined on the basis of the specific surface area by volume. A material should be considered as falling under the definition where the specific surface area by volume of the material is greater than 60 m2/cm3.

However, a material which, based on its number size distribution, is a nanomaterial should be considered as complying with the definition even if the material has a specific surface area lower than 60 m2/cm3.

Source: European Commission, Recommendation 2011/696/EU.

Additional Nano-Safety Resources

The following might help. Here are a couple of the publications relating to exposures during equipment maintenance from the European Agency for Safety and Health At Work, a decentralized agency of the European Union tasked with collecting, analyzing and disseminating relevant information that can serve the needs of people involved in safety and health at work. EU-OSHA is based in Spain. Here are two relevant documents:

Also see Toward Safe and Sustainable Nanomaterials: Chemical Information Call-in to Manufacturers of Nanomaterials by California as a Case Study here.

Special thanks to members of EHS Grapevine for sharing knowledge on this subject.

Thursday, March 12, 2015

New US Toxic Chemical Bill Fails

Environmentalists cry "fail" on the proposed new bill that would overhaul Federal chemical regulation. Environmental Working Group in particular published a press release itemizing the ways the bill falls short. Briefly:
This bill fails to ensure that chemicals are safe, to set meaningful deadlines and to provide the U.S. Environmental Protection Agency with adequate resources to do the job. [The bill] would rob the states of the ability to protect public health. In particular, the industry bill fails to offer a strong safety standard that would require chemical manufacturers to prove their chemicals are safe before they hit the market. Instead, the bill would allow companies to show only that their substances pose “no unreasonable risk of harm.” - EWG
Then again, don't Environmentalists always say TSCA reform bills fall short? I don't mean to nit-pick but one does wonder what a sufficient proposed reform bill would look like.

The New TSCA

The bill submitted Tuesday is co-sponsored by U.S. Sen. Tom Udall, a New Mexico Democrat, and Sen. David Vitter, R-Louisiana. It would require the Environmental Protection Agency (EPA) to make its assessments about chemical safety solely on risk to public health and the environment. It would also increase fines on chemical companies that break the law from $25,000 to $37,500 per violation. (Not too intimidating.) (Maybe EWG is right after all!)

Anyway, here is the official release from Tom Udall's website. These proposals come and go, but we are responsible for knowing their contents regardless.

Among other changes, the new law sets more aggressive and attainable deadlines. For instance it imposes at least 15 deadlines for EPA action, developed with input from the agency.

Also, the new bill creates additional requirements and sets reasonable limits on Confidential Business Information claims, such as:

  1. Requiring that confidentiality claims be substantiated up front and imposes a 10-year, renewable time limit on such claims
  2. Requiring EPA to review claims that protect the identities of chemicals in commerce
It's interesting, of course, so check out the bill in its entirety as soon as you have an opportunity.