Network of production; Copper production in the north of Chile

This assignment is all about identifying a regional network of production and analysing this network using at least two of the concepts presented with particular attention to the linkages of the regional with the non-local actors. Another point of attention is to make clear how the network constrains and/or enables actors to work towards closing material loops. First of all I will however introduce the case so that afterwards we can apply theory and analyse it in depth. I chose this case as my wife is Chilean and part of her family used to work and live near the mine and in the period they used to work there we’ve visited the site. An experience that truly leaves you in aw in terms of scale, but also makes you think about the tremendous environmental impact of the mining industry. It really felt like a visit to Mordor from the Lord of the Rings.

If you are not in the mining industry most likely you might have

never heard of the company, but there is a very high chance that you have used products that contain something from Codelco as it is the largest copper mining company in the world that produced 1/3rd of the world mined copper. Codelco, Corporación Nacional del Cobre de Chile, is a state owned copper mining company that was formed in 1976 after the foreign owned copper companies were nationalized in 1971. Codelco sits on the world’s biggest copper reserves and therefore will remain of importance in the future. Codelco was born out of many different copper mines that were forced together by nationalisation and therefor forms its own network. In country that is 4200 km long, similar to from Lisbon to Moscow, it is almost difficult to call it a regional network, but it is all within one country and one company. Recently they have been developing some activities outside Chile in Ecuador, but that so far has been the only venture they had abroad. However in this assignment I will mainly focus on the copper production from the Chuquicamata mine near Calama in the north of Chile.

Codelco is not a footloose company and is highly dependent on where its minerals can be found in the earhts crust, they locate where the resource is located creating a whole economy around itself and even whole cities. A good example of such a city is Calama or its predecessor Chuquicamata. Chuquicamata, shortened as Chuqui, was where it all started. Iin 2008 they gave the now abandoned, or better said evacuated city, a facelift as a final goodbye leaving written parting messages on the homes, as it has by now disappeared below the mountains of rubble (detritus) that come out of the mine. As it is too costly to transport the waste rubble over long distances, the shortest distance is preferred and that unfortunately is where the old city that once was home to over 20.000 inhabitants used to be marking the end of over 90 years of its existence. All people left, around 4000 as already years before Codelco started shutting down the town, moving to Calama. Here housing was no longer provided by Codelco, but the employees had to find their own houses.  Calama currently houses around 150.000 inhabitants in the middle of the dessert that are completely directly or indirectly dependent on the vicinity of the biggest copper mine in the world. 

With a brief explanation of the case let’s now move towards the application of theory. Focussing on the mining of copper only and mainly near Calama, the company of Codelco formed a whole industrial complex with a highly asymmetric dependency. Codelco is the party with control over the resource, Copper, whereas all the surrounding industries and service economy depends on it. As for instance working conditions are extreme, incomes are very high. Dump truck drivers for instance belong to the highest paid trucking jobs as their job requires a lot of precision, patience and concentration and is key to the operation of a mine. As miners usually work in shifts of 1 week up and 1 week down they do have plenty of time to spend all their freshly earned money creating a whole industry of consumption around it. There is not much to do in the desert so LAN Chile, Chileans national airline company, in guaranteed plenty of flights to handle from and to Calama. Furthermore the main form of entertainment in town is the main mall where they more than happily receive a percentage of those high salaries, etc. Furthermore there are many other services that are related to the mining industry such as human resources companies, or environmental impact companies that are contracted by Codelco to work for them. In this sector my family in law worked, in capacitating humar resources and trying to minimize environmental impact of the mine. Many things however where still missing as for instance the protected animal called Vicuña are frequently run over by trucks and left to die in the desert, while a simple animal ambulance could save many of them. Another area where big investments are made by Codelco is in going underground as the open pit is about to run out of copper. Acquiring all sorts of knowledge and machinery needed to go underground as a consequence is another industry thriving in the area. As one can see Codelco Chuquicamata creates all sorts of jobs and directly and indirectly related industries and services around it.  Applying the theory of Burt on the different types of networks I would argue that the network I described would be a one with a high centrality as all interaction takes place through one central actor (Codelco).

The theory of Gordon and McCann on the types of regional network would classify the regional network as an industrial complex as there is one central firm that decides. They are the cause that their suppliers and customers co-locate. Of course many of the big copper processing customers of copper are located worldwide and they won’t co-locate as they also are not footloose in terms of knowledge, cheap labour, etc., The high tech industry in China for instance is a big buyer of Copper for all their products as only copper provides such high conductivity that is highly sought after. So far no real alternative has been found yet in this sense, but in construction for instance (another big user of copper), plumbing has often been replaced by PVC so there they did manage to replace it with other materials in some cases.  However the smaller industries that have to do with the mining technology itself, or the wheeling and dealing of Codelco as such will co-locate and be contracted by Codelco. The same goes for companies that provide and maintain all the big machinery needed in the mine. The closing of material and energy loops in the mining industry is mainly focussing on using less energy and on efforts to generate renewable energy. In terms of closing material loops in the mining industry that is sort of a contradiction in terminus as mining as such only takes resources and pumps it into our society. However they do focus on doing so in a less environmentally damaging way by for instance investing in bio-leaching contrary to current more heavily chemically and energy intensive ways. The government, which in some way is internal actor as Codelco is a state company, but also can be seen as external, wants to unhook the mining companies from the cheap energy they have been receiving from the government and make them responsible to generate 20% of its energy in a sustainable way. Currently Chile imports 70% of its energy and this with the ups and downs in energy prices is an unwanted situation leading to miners in Chile to build “independent solar, solar thermal, wind and geothermal power plants that produce power at costs competitive with or lower than conventional fuel supplies or grid-connected electric power”(http://www.renewableenergyworld.com/rea/news/article/2014/12/chiles-mines-set-hot-pace-on-renewables-australia-take-note). The actual main driver that makes this all possible is the massive investment in renewables by China, driving down the costs of these technologies and thus making them available at a lower cost worldwide. Because of this currently the costs of energy generated by renewables is lower than the costs of black electricity thus providing a competitive advantage over other copper producing countries like Australia for example that is lagging behind in terms of renewables.

Source: Paper written for the System Earth course entitled “Copper at the foundation of our society” and conversations with family in law, own experience, visit

 

Name of the game

I was in group 4 and during class we had to develop a new type of game that had the learning goal to experiences the process of social evolution. This was not an easy task especially as we are not used to developing games, but overall we had good discussions and ideas until we ran out of time. We used changing conditions, limited information and imitation as our main guidelines to design the game.

So what does the game comprise of? First of all, all players are a firm that produces products with three different symbolic (neutral) characteristics with three values each, see table 1. Behind these abstract shapes lies a secret meaning as can be seen in table 2. The goal of the firms is to maximize profit.

Shape	Feel	Colour
square	soft	red
cirkel	medium	blue
triangle	hard	yellow

Table 1: characteristics

Characteristic	Secret meaning
square	SUV
circle	MPV
triangle	Urban Car
red	Diesel
blue	Electric
yellow	Gasoline
soft	Steel
medium	Organic
hard	Carbon

Table 2: Secret meanings

Each round the different firms choose a combination that goes to market and the bank gives back a final value based on consumer preference. So throughout the rounds the firms will get to know the consumer preference, however the tricky aspect is that they only get to know the final outcome and do not know how much of the value is allocated to which characteristic. In order to become successful they could for instance imitate a sequence of a competitor or learn from them by comparing their sequence to their own.

In the beginning a certain sequence is set as the optimal sequence that is most sustainable, but due to market demand, policy (cards, more on that later) and other developments (technology) the money which can be made by this varies. The optimum set of characteristics is not static and therefore could change over the course of the game. For instance one scenario could be that urban electric organic cars would be the optimal set in the end of the game, but that in the beginning due to the premature battery techniques or dirty electricity diesel actually is the more environmental friendly option. Another scenario could be that SUVs all of the sudden become very popular until policy appears that favors urban cars. Urban cars however bring smaller profits, but when done in big numbers could become more profitable than the SUVs that had a big profit margin. 

After each round a random policy card will be placed central on the table for all players to see and adjust their strategy too. This policy is geared towards the most sustainable option and therefore players can learn from it. As the optimum outcome is said the game plays a bit like mastermind and in the end when the game is over the secret meaning of the abstract characteristics will be revealed and things will make more sense.

We choose to go for abstract characteristics in order to not have any relation with more earthly things that lead to a more predictable behaviour, as we all know instinctively that a small car is probably more sustainable than a big one. 

Let the games begin!

Feedback given on Laura Lucas in the Nokia Case

Dear Laura Lucas,

I just read your blog which provided an easy read. There are some  minor errors that have to do with English “other companies depend in their collaboration” should be depend ON. Etc. But they are just minor errors so if take the time to read your post again you will pick them out easily.

Furthermore the blog is incomplete as you also mention. Point three on how other coordination mechanisms could improve this is not yet dealt with. In answering the second question on diffusing sustainability criteria I would elaborate more on the diffusion part as now it is only mentioned in the question, but does not come back in the actual answer. Here you could talk on how measures etc. get spread throughout the supplier and how they trickle down from the top management to the work floor.

You wrote that it didn’t became clear to you how Nokia can check if their suggestions were taken into consideration, but as audits are recurring events for sure the supplier will try to, before each audit, implement several of their clients suggestions. If this is done right or sufficiently is another question, but therefor we have audits to check upon this progress. Moreover Nokia also discussed in the end that it is a long process that needs time.

Overall my impression of the blog is that it could all be formulated a bit more sharp and concise and that of course it should be finished. In the first part all elements are already in place so that should not be too much work, in the second and third part there are things missing still.

Good luck!

Jody Milder

Feedback given on Zinzi Wits in the Nokia Case

Hi there Zinzi,

First of all it was nice to read a flawless post in terms in written English! In terms of style it was pleasant to read and I think it contained all elements. It always works very well to start off with a clear theoretic definition of the key concept like coercive isomorphism like you did, so well done.

When I saw the video I at first also had similar thoughts that the role play theatre was rather distracting and disturbing from what they both wanted to achieve, however on second thought I changed my mind as the women who did the audit were not phased about it at all. They just did their job anyway in a very smart way by giving the right reactions that satisfied both ends. I could start a whole discussion here on culture and that in France for instance you need to first have elaborate dinners, talking about art etc, without any mentioning of business before you actually can get deals done, etc., but for now I think you took on an interesting point of view. Just be aware that there are more than one ways to reach a goal. I also think we have to see this movie in the light of Nokia being one of the pioneers in auditing these sort of things, so there were very few previous experiences to learn from. Currently there is much more attention for these sustainable matters and industry can jointly guide their suppliers towards a more sustainable production so I agree with this suggestions. 

Certification is the way forward and I think we saw Nokia take the first steps in this long term effort. However as I said before I do think that human communication will always play an important role that cannot be put aside because of the fact that the communication is inefficient. I think that communication should be judged on its effectiveness in reaching their goals.

Well, as you can see I only discussed things, but have no actual feedback in terms of things that are missing. So overall I would like to say keep up the good work.

Jody Milder

Harvest game 2.0

The original harvest game was made up by a simple set of rules. The sea contains 50 fish that if no fish is caught will reproduce to be 100 fish in the next round. If 25 fish are caught, the next time the sea will have 50 fish again. Each team writes their demand on a paper and sticks this in a "boat"  and there is no communication allowed between groups. The sea randomly picks the boats and fulfills their demand as long as there is fish. If a group receives 2 fish instead of the demanded 4 fish, it means that the sea is depleted of fish as the sea will always provide the maximum amount of fish possible. 

After playing the harvest game with the initial set of rules during class we all saw that even with a group of environmentally aware people we still emptied the seas. So something needs to be changed in order to prevent this from happening so that we all can keep our business alive and thus not empty the sea. I was in one of the groups that just did the math and always asked for 4 fishes and got 4 fishes 3 times, until the 4^th time we didn’t get any fish and therefore had to conclude (although we didn’t as we were busy accusing other groups of greed) that the sea was empty.

So what can be changed based on opening up communication?

I would suggest a wide range of tweaks that ultimately lead to more fish being caught in the end as in theory the game could go on for ever. Ultimately you want to achieve that all 6 teams catch at least 4 fish and one of the teams can catch 1 extra fish. However another approach could be to first under-fish and therefore increase the amount of fish that can be caught in the future. The latter however would only work if the game could last for more rounds than we played the game therefor perhaps this option should be discarded.

You can go two ways. First of all you could have all cards on the table and therefor really demand openness on catch figures by the individual teams. This would be most effective, but at the same time would be most controversial as well, so for that reason it will be discarded as well.

Secondly you could also control the total amount of fish being caught without going into the details of how much each individual team caught. By having all fish collected by one new governing body that consist of a new team of representatives of all teams that stay on shore. Their task is to make sure that a maximum of 25 fish are to be sold. By applying the same randomness as the sea applies to picking the order of boats to receive fish, the game element would still be present. If the maximum of 25 fish is achieved the rest of the fish that still is landed after this would be sold without the money going to the boat who supplied them, but to invest in creating a sustainable fishing label. This label would then be handed out to the teams that never ask more than 4.17 fish. If the maximum amount of fish being caught reaches 25 before all teams have landed their fish, the teams that already landed their fish get punished by not being allowed to go out fishing in the next round. I am not sure if this would lead to the seas not being emptied, but at least it would provide an interesting dynamic that could lead to more conservative demands to the sea.

If this turns out not to lead to more sustainable fishing then I would go back to total openness so that naming and shaming could do its job. If this still does not work then a punishing factor should be introduced together with a reward system. Being forced to skip a year, or with a very low catch limit could be used as a punishment, whilst the division of the extra fish capacity (4 fishes per team + 5 fishes for 1 team) could be used as a reward. 

There are many ways to try to solve this puzzle and it would be interesting to keep on playing the game with different tweaks to see what the effects would be.

Feedback given week 4

Feedback given week 4

Review of Thodoris Spathas

Hi there,

I really enjoyed reading your post as I had no idea that they are experiencing a similar situation as in Berlin with the Tempelhof. Interesting to see also that where in Berlin basically they seem to continue the status quo whereas in Athens they try to move forward. The way in which this happens in terms of process can be debated of course.

Some very practical comments are that it is recommendable to read your blog once more you would pick out several type-o’s where the’s became they’s and those sort of things. Furthermore I would recommend shortening a few very large sentences in order to make these easier to read.

In terms of content I would suggest you to take the Ostrom framework and use it to structure the text. I can now see the different elements, but it nonetheless could be sharper cut out so the reader gets less confused. I think all the information is there, it just needs some shuffling up into the shape of the framework provided by Ostrom.

Well that was it, sorry I was late with providing feedback, but better late than never I hope.

Keep blogging,

                 

Review of Chloë Lejeune

There was not post yet for this week

Feedback given week 3

Feedback given week 3

Review of Jeroen Huisman

Hi there,

I think you chose an excellent subject to apply theory to. I do miss a link to a news article to introduce the case (however I myself also didn’t do that yet in my blog), but I think it would be helpful to link to an article. I got a bit confused myself with the use of –[[ as sometimes it referred to a source, whilst in other cases a comment on the side was made. There didn’t seem to be a standard convention on the use of these symbols. Sometimes they also had a great deal of text within them so it sort of distracted or confused me somehow. Also there are some small, but confusing type errors “how me make choice” (WE), “between different decision makers in taken into account” (IS), etc.

Please do connect “emotions don’t necessarily play a role” with the previous section as now I first thought it was the start of the bounded rational explanation, but it seems to below to the RAM model.

For the rest the article is nice. First theory is explained and then applied to the case. It is a textbook example of how to write the blog. You could perhaps use the same terms again in the text as you have used in the graph. Most optimal way in the RAM model and not only emotion as you now used well, but also interaction, information and lack of time (although the latter you do mention specifically).

All in all you have done a pretty good job. 

Review of
Imme Groet
Unfortunately the link didn't work

Connecting people; East meets West

Connecting People

Legitimacy

In the video A Decent Factory Nokia is trying to achieve legitimacy by sending a team to do an audit of their suppliers. They do so in order to try to get a better picture of the working conditions of their suppliers in order to get a better grip on how they do things by setting minimum requirements that they have to fulfil. By regular visits for new audits they slowly can work towards the desired situation.

The supplier tries to be a legitimate operation by complying to the rules set by the Chinese government, however in some areas they apply creative administration skills. For instance in terms of minimum wage they do not pay the minimum wage, but by letting their employers work overtime structurally they do reach the minimum wage. On top of this all employers live on the complex and because of this have to pay 1/3 rd of their total wage, which puts them well below the minimum wage level.

Diffusing criteria

The way in which Nokia tries to diffuse their sustainability criteria shows that they take their responsibility, be it risk driven, as they do not want their image of a correct Nordic company to be stained by working with suppliers that do not meet legal standards. As Nokia says, you cannot change the world in one day, and with time things will improve if you just keep pushing them in the right direction. As an audience of the documentary a judgemental feeling can easily overcome you, thinking that it is inhuman to live with 8 people in one room, or to be cutting cables for the whole day 6 days a week, but it is important to keep these considerations in perspective. Once I was in China for instance on a University where the dorm rooms were very similar. When asked if they didn't miss privacy, they didn't understand my question as they just did not have that concept. Similar puzzled faces were seen when asking people in a factory if they liked their jobs, what was there to like? It provided them with food, a house and money to take care of the son or daughter. Local laws are in place that supposed to fit local circumstances. It is Nokia's job to check if they comply to these laws or not.

Other mechamisms to improve

However as they also noted within the factory they also make products for their competitors for which different rules apply. For instance Nokia increased the wages on their product line, but when they are producing for say Samsung they get paid less again. Therefore it is necessary to organize a collective industry wide platform which coordinates and sets these minimum standards so that they all operate as one actor that has one and the same legal demands. This would for one be a positive development that could diffuse sustainability criteria within the Chinese high tech industries.

Fishy business

As a consumer of various products you are automatically part of many Social Ecological Systems. We all buy food, drinks, furniture, etc. and therefore all can be linked to these SESs. In this blog I will focus on fish as it is a subject that worries me. Furthermore during the course Sustainable Innovation and Social Change me and my team took The Blackfish as the main actor of our study and from there on studied illegal fishing practices in the Mediterranean. This really gave me some valuable insights into the seriousness and complexity of the problem at hand.

Ostrom developed a framework which helps to identify relevant variable of an individual SES. Below one can see the different aspects of which the framework consists; resource units, resource systems, governance systems and the users and they are all linked through interactions back and forth.  

Applying this framework to fish the following picture can be drawn up.

First of all the resource units, or fish, are mobile and therefore can swim in and out of the Mediterranean sea, or in and outside EU borders (towards the African countries). This creates a problem later on when we come to the resource system and governance system. But coming back to the RU, the Med is one of the most overfished seas and due to the influence of Calabrian Mafia a lot of illegal fishing is going on by deploying forbidden drift nets. Drift nets were forbidden in the nineties as they indiscriminately catch everything that swims in it, from turtles to shark, from small fish to baby fish, and therefore is a huge threat to marine life and in particular the endangered species. 

When we move on to the Resource system, the Mediterranean Sea, as stated before the fish do not necessarily stay in it. Tuna for instance is a very mobile fish and swims to the Americas. So perhaps the RS should be bigger and extend to all the oceans and seas in the world? But how can you govern that? As the EU through their Common Fisheries Policies try to guard the European waters, they can do little to things that happen outside their borders. For instance tuna is protected in Europe, but not outside of Europe and therefor fisherman were moving out alive tuna in huge enclosures and reporting their catch outside Europe. 

When moving further into the area of Governance Systems a big obstacle is that individual member states are responsible for keeping check of their quota. However due to outdated paper monitoring systems and corruption (catch that is not reported, etc.) official figures are highly unreliable on the actual catch. Also reporting more catch than was actually caught was a popular way to falsify data in order to guarantee a higher quota for the next year as high catch seems to indicate a healthy fish stock. Another issue is that member states do not want to or have no money to spend on patrol boats etc. in order to spot violations of regulation. So all in all one of the biggest problems lies in the GS as a central organisation is missing that monitors everything digitally. 

Finally the users, like myself, want to buy fish in a sustainable way, but sometimes get lost in all sorts of labels. Also for instance when going to a market where fish is freshest it often is unclear how a fish is caught, where it is caught, etc. so how can you then make an informed choice?

In my opinion more has to be done to keep fish stocks healthy and we all have our responsibilities. A global governing body should be set up that sets fishing quota, monitors everything, gathers further scientific insights, etc. to which all nations commit in the same way as the United Nations.

When we come back to our “friend” Friedman and his principles and how these could be put to good use here I am a bit puzzled. As he propagates a free market where the government sets the rules, but preferably not too many of them, I think in the current situation he would be a happy man. However this does not lead to a solution of the current problems we are facing, but a continuation of business as usual. The thing I was proposing of the global governing body would be a nightmare for Friedman as he states that concentrated power threatens individual freedom and that is exactly what we want to achieve in a way. I would like that there is no more choice for sustainably caught fish and unsustainable caught fish and the only way to achieve this is by binding everybody by the same set of rules and quota to revive the fish stocks. In the short term this will lead to unemployment in the fishing industries and higher fish prices as demand will continue to rise, whilst there will be less fish on sale. On the long term however this will secure the future of the fishing industry as otherwise they will behave like lemmings and will all commit economic suicide by depleting the seas and ending their business.

Feedback given week 2

Review of Marco Meloni
First of all I really like the way you made the parallel between neighborhood problems of broken windows to a variety of different bigger scale problems, from river pollution to the ozone layer depletion. Of course as you also stated there are some key differences that complicate applying similar mechanisms on more complex concepts.
This part “One could think of many reasons why this correlation occurs, for example that people who break windows tend to live in the same places whereas window preservers live in other places” could be better formulated as currently it sounds a bit funny, like there are groups of people that is continuously occupying themselves with breaker or preserving windows like a profession. Of course I do get the point as you mean that it has to do with social class etc.
I personally would have preferred to first have a very short summary of the theory of Kelling and Wilson without practice as now the theory is explained by using an example immediately. Also in the last section your reasoning is correct, but rather brief as it is supposed to be the climax or learning point and I have the feeling that it is a bit rushed. More elaboration would be welcome here explaining the differences separately instead of mixing them all in one sentence.
When coming to the second part of the assignment on making profit it is bound to lead to some interesting discussions. However I found it difficult to judge as it is all rather personal and subjective. I personally find it a bit too easy to put the responsibility in governments’ hands as in my opinion we all have responsibilities and should co-create laws etc. on the subject. So not just top down measures, but also bottom up. Besides due to the global nature of many businesses, western companies relocate their production facilities to low wage countries, due to the wages, but also due to limited regulations. Basically those companies measure with two different standards in my view and they can’t place responsibility at local governments. But then again, this is all rather personal and subjective on which there is no wrong or right.
Overall I would say it is a very interesting first blogpost that with some tweaking here and there could be even better.

Review of Laurens Boelens 

First of all it is all very enthusiastically written so that is nice and gets you involved easily, however this also leads to many unnecessary type-o’s such as i (I), continues use (continued use), explination (explanation), etc., it would be nice to get them all out.

The last section on your bachelor thesis is rather technical and I miss the necessary background to understand the first part, I do however the overall picture that GMO could save lives on the short term whereas conventional methods would mean decades or work for something that might in the end not even lead to the desired outcome. However this explains your personal connection, but does not relate to food as it is more in line with penicillin, etc. to which people do not object as you have stated earlier on.

Currently the blog is slightly unbalanced as it focusses a lot on the mechanisms, which is explains very nicely, but does little justice to why GMO’s should be embraced as there is only one sentence that says we rely heavily on it. Here you could elaborate a bit more I would say in terms of yield increase, population growth, climate change, etc.

Overall nice work, very passionately penned down, which for sure, also due to the topic, will lead to interesting internal discussions in the readers mind. Your style makes sure to keep this discussion going.

You did the blog already last year, but the assignment is a bit different this year. For this one I miss the part on your position relating the statement “the business of business is to create profit”.