Key Insights

With limited time, energy and resources, yet needing and wanting to know all key information to successfully navigate our worlds, EACC Cincy has decided to use AI to help curate "Key Insights" on various topics of relevance to global & Transatlantic business executives.

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This page contains "compact versions" of these articles (scroll down). You may also click on any title of interest in the Table of Contents section to read an intro and access a PDF version of the complete article.

Regulatory & Cultural Insights

GDPR (General Data Protection Regulation)

The EU AI Act

Leadership Differences

Industry Insights

Navigating the Energy Crisis: Challenges, Risks, and Strategies for Manufacturers

Our region is facing a perfect storm of energy supply and demand challenges that will significantly impact businesses across both Ohio and Kentucky. Driven by the retirement of coal plants, delays in adding new generation capacity, and surging energy demand from sectors like data centers and AI technologies, energy prices are set to soar in the coming years. These challenges are further compounded by market rule changes and the evolving dynamics of the PJM Interconnection, the largest grid operator in the U.S., serving Ohio, Kentucky and 12 other states.

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Lessons from the EU Energy Crisis for US Manufacturers

GDPR (General Data Protection Regulation)

US companies doing business with the EU must understand and comply with several critical regulatory requirements to avoid penalties and maintain trust with European partners and customers. Here's a breakdown of the fundamental areas they should focus on:

1. Compliance with the General Data Protection Regulation (GDPR)

Data Protection Principles: Ensure data processing is lawful, fair, transparent, and limited to specific purposes.
Obtain Consent: Collect personal data only with explicit, informed consent, unless another legal basis applies.
Data Subject Rights: Enable EU residents to exercise their rights, such as access, rectification, deletion (right to be forgotten), and data portability.
Appoint a Data Protection Officer (DPO): Required for companies involved in large-scale monitoring or processing of sensitive data.
Data Breach Reporting: Notify EU regulators within 72 hours of discovering a breach involving personal data.
Data Transfers: Use approved mechanisms (e.g., Standard Contractual Clauses, Binding Corporate Rules) to transfer data outside the EU.

2. Adherence to EU Cybersecurity Standards

Secure Systems: Implement robust cybersecurity measures, including encryption, access controls, and incident response plans.
Incident Reporting: Be prepared to report cybersecurity incidents that impact personal data or critical infrastructure.
Partner with ENISA Guidelines: Follow recommendations from the EU Agency for Cybersecurity, especially for sectors covered by the NIS2 Directive.

3. AI Compliance (Upcoming EU AI Act)

Understand Risk Classification: If using AI systems in the EU, assess whether they fall into high-risk categories (e.g., biometric identification, healthcare, employment).
Transparency: Disclose when AI is used, particularly in automated decision-making, and provide explanations of the system's functioning.
Human Oversight: Implement mechanisms to ensure human control over critical AI applications.
Avoid Prohibited Uses: Do not engage in practices like social scoring or manipulative AI systems banned under the EU AI Act.

4. Local Laws and Sector-Specific Requirements

5. Cultural and Ethical Alignment

Implementation Checklist

Conduct a GDPR Audit: Identify gaps in data protection practices and address them.
Develop Compliance Policies: Create privacy and cybersecurity policies aligned with EU standards.
Train Employees: Educate staff on GDPR, cybersecurity, and AI compliance requirements.
Partner with Legal Experts: Work with EU-based legal advisors to stay updated on regulatory changes.
Engage with Technology Providers: Use tools and platforms that are GDPR-compliant and meet EU cybersecurity standards.
Monitor Regulatory Changes: Stay informed about evolving laws like the AI Act and NIS2 Directive.

By proactively addressing these areas, US companies can build trust, avoid legal challenges, and establish long-term success in the European market.

The EU AI Act

The European Union AI Act, was proposed in 2021 and came into force in 2024. It is a landmark regulation designed to govern the development, deployment, and use of artificial intelligence (AI) systems in the EU that aims to balance fostering innovation with protecting fundamental rights and ensuring safety. Here are the key points:

1. Risk-Based Framework

The AI Act categorizes AI systems based on their potential risks to individuals and society:

Prohibited AI Practices: AI systems deemed unacceptable due to significant harm, such as:
- Manipulation or exploitation of vulnerable individuals.
- Social scoring by governments (e.g., ranking citizens).
- Real-time biometric identification in public spaces (with limited exceptions).
High-Risk AI Systems: These are heavily regulated and include AI used in:
- Critical sectors like healthcare, transportation, and law enforcement.
- Employment processes (e.g., hiring decisions).
- Access to public services like education or social benefits. Developers must comply with strict requirements, such as risk management, transparency, and data governance.
Limited-Risk AI Systems: Systems like chatbots or recommendation engines, which require transparency (e.g., disclosing AI usage to users).
Minimal-Risk AI Systems: Most AI systems, such as spam filters, are largely unregulated.

2. Key Requirements for High-Risk AI

3. Governance and Enforcement

4. Implications

Leadership Differences

The key differences between business leaders in Europe and the USA stem from variations in cultural norms, regulatory environments, market structures, and leadership styles. Understanding these differences will allow business leaders to adapt their strategies when operating across these regions, fostering better collaboration and more effective leadership in international contexts.

Here’s a breakdown:

1. Leadership Style and Decision-Making

USA: Leadership tends to be more individualistic and hierarchical. Decision-making is often quicker, with an emphasis on bold moves and risk-taking. Leaders are generally expected to be visionary, decisive, and action-oriented.
Europe: Leadership styles vary by country but are generally more consensus-driven. European leaders often place greater emphasis on collaboration and achieving buy-in from multiple stakeholders, which can lead to slower decision-making processes.

2. Regulatory Environment

USA: The business environment is often seen as less regulated, with more focus on market-driven solutions. Leaders can have more leeway in pursuing aggressive strategies and innovation.
Europe: Heavily regulated industries and a stronger emphasis on compliance, sustainability, and worker rights. Leaders must navigate stricter laws, including GDPR (data privacy), environmental standards, and labor protections.

3. Focus on Sustainability and Ethics

USA: While sustainability is growing in importance, business decisions often prioritize profitability and shareholder value. The ESG (Environmental, Social, Governance) movement is expanding, but its adoption can vary widely across industries.
Europe: Sustainability and social responsibility are deeply embedded in corporate strategies. European business leaders often align closely with the EU’s strong environmental and social mandates, making these issues a priority.

4. Cultural Attitudes Toward Work

USA: There is a strong "work-first" mentality, with long hours and a culture of ambition and competitiveness. Leaders often champion a high-performance, results-oriented culture.
Europe: Work-life balance is more valued, with policies supporting shorter workweeks, more vacation time, and flexible work arrangements. Leaders often emphasize the well-being of employees alongside business objectives.

5. Innovation and Risk-Taking

6. Stakeholder vs. Shareholder Focus

7. Approach to Globalization

8. Education and Professional Background

It is also helpful (and insightful) to consider the styles of leadership with their pros and cons of each style (below).

Ultimately, the choice between the two styles depends on the specific context, industry, and long-term goals of the business. Leaders who can adapt and combine the strengths of both approaches often achieve the best outcomes.

USA Business Leadership - Pros

Agility and Speed
- Decisions are made quickly, allowing companies to adapt rapidly to market changes and seize opportunities.
Innovation and Risk-Taking
- A culture that encourages experimentation, disruptive innovation, and bold moves fosters entrepreneurial success.
Results-Oriented
- A strong focus on measurable outcomes drives high performance and accountability.
Access to Capital
- The U.S. has a well-developed financial system, providing leaders with significant resources for scaling businesses.
Global Influence
- American brands often set global trends, giving leaders leverage in international markets.

USA Business Leadership - Cons

Short-Term Focus
- Prioritizing quarterly results can lead to sacrificing long-term stability and innovation.
Work-Life Balance Challenges
- High-pressure, long-hour cultures can lead to burnout and higher employee turnover.
Less Consensus-Building
- Top-down decision-making can alienate employees or stakeholders, reducing engagement and buy-in.
Regulatory Variability
- While less regulated than Europe, navigating state-by-state legal differences can be complex.

EU Business Leadership - Pros

Focus on Sustainability and Ethics
- Long-term strategies align with environmental and social goals, building goodwill and regulatory compliance.
Work-Life Balance
- Healthier employee well-being leads to more sustainable productivity and loyalty.
Consensus-Driven Approach
- Collaborative decision-making fosters strong relationships with stakeholders and ensures stability.
Adaptability to Diversity
- Leaders are adept at managing cross-cultural and multi-regional challenges, vital for global success.
Long-Term Orientation
- Emphasis on steady growth ensures resilience during economic downturns.

EU Business Leadership - Cons

Slow Decision-Making
- The need for consensus and regulatory compliance can delay actions, reducing competitiveness in fast-moving markets.
Complex Regulations
- Stricter rules and oversight can stifle innovation or increase operational costs.
Risk Aversion
- A cautious approach to change and investment may limit bold, transformative initiatives.
Fragmented Markets
- Diverse regulations, languages, and cultural expectations within Europe add complexity to scaling businesses.

Comparison Table

Aspect	USA	Europe
Speed	Faster decision-making but risks hasty mistakes.	Slower decisions but more deliberate and stable outcomes.
Innovation	Encourages disruptive ideas but tolerates higher failure.	Prefers measured innovation with less tolerance for risk.
Work Culture	High-performance focus but risks burnout.	Balanced work-life priorities but potentially less urgency.
Regulations	Fewer barriers but variable across states.	Unified in some sectors but stricter and more complex.
Global Perspective	Centralized, with American practices dominating abroad.	Adaptive, reflecting local cultures and diverse needs.
Sustainability	Growing focus, still secondary to profits.	Prioritized, integrated into business strategy.

Navigating the Energy Crisis: Challenges, Risks, and Strategies for Manufacturers

Our region is facing a perfect storm of energy supply and demand challenges that will significantly impact businesses across Ohio and Kentucky. Driven by the retirement of coal plants, delays in adding new generation capacity, and surging energy demand from sectors like data centers and AI technologies, energy prices are set to soar in the coming years. These challenges are further compounded by market rule changes and the evolving dynamics of the PJM Interconnection, the largest grid operator in the U.S., serving Ohio, Kentucky and 11 other states.

Starting with Ohio as the baseline:

The Current Situation: Rising Costs and Growing Demand

PJM’s latest capacity auctions reveal an alarming trend: wholesale electricity costs are projected to rise sharply. Auction prices for future energy capacity have surged from $50/MW-day in 2022-2023 to $269.92/MW-day for 2025-2026. As a result, retail electricity bills in Ohio could increase by as much as 29% starting mid-2025.

The situation is exacerbated by 6,600 MW of plant retirements, a backlog of more than 200 GW of stalled generation projects in the PJM interconnection queue, and the ripple effects of rising reliability standards across the region.

For Ohio’s manufacturers—many of whom rely on energy-intensive operations—this creates a critical risk to competitiveness and profitability.

The Risks and Challenges for Businesses

Rising Energy Costs: Businesses face sharp increases in operating expenses as wholesale and retail electricity rates climb. For energy-intensive manufacturers, this could mean millions in added costs annually.
Reliability Concerns: Plant retirements and delays in bringing new capacity online threaten grid stability, increasing the risk of power outages and disruptions during peak demand periods.
Demand Growth Pressure: Data centers, electrification, and AI technologies are driving unprecedented energy demand, tightening the supply-demand balance and further straining the grid.
Regulatory Uncertainty: Federal and PJM market rule changes, along with legal disputes, continue to create uncertainty around future energy costs and reliability standards.
Budget Volatility: Businesses that rely on short-term energy procurement strategies will be exposed to extreme market price volatility.

Short-Term Mitigation Strategies

Short-Term Strategies

Budget and Forecast Planning: Proactively account for expected rate increases in financial planning, including cost projections for mid-2025 and beyond.
Demand Response Programs: Participate in PJM’s demand response initiatives, which compensate businesses for reducing energy use during peak grid stress. These programs offer immediate cost savings and help stabilize the grid.
Energy Procurement Optimization: Work with energy consultants to explore long-term fixed-rate contracts or Power Purchase Agreements (PPAs) to hedge against market volatility and secure favorable rates.
Load Shifting: Adjust operational schedules to minimize energy consumption during peak pricing hours, lowering exposure to high demand charges.

Long-Term Mitigation Strategies

Long-Term Infrastructure and Efficiency Solutions

Energy Efficiency Upgrades
- Install high-efficiency HVAC systems and LED lighting to reduce operational energy use.
- Implement Building Automation Systems (BAS) to optimize energy use across critical systems like HVAC, lighting, and manufacturing processes.
On-Site Energy Generation and Storage
- Develop on-site renewable energy systems (e.g., solar power, geothermal).
- Deploy battery storage or thermal energy storage to reduce reliance on grid electricity during peak hours and enhance resilience.
- Consider Combined Heat and Power (CHP) systems to improve efficiency and provide backup power.
Microgrids for Resilience
- Invest in microgrid solutions to increase energy independence and maintain operations during grid outages. Microgrids integrate on-site renewables, storage, and traditional generation to provide localized, reliable power.

Infrastructure Investment and Advocacy
- Advocate for expedited PJM interconnection processes to support new generation capacity.
- Collaborate with utilities and policymakers to address grid reliability challenges and support infrastructure upgrades.

Conclusion: Preparing for an Uncertain Energy Future

Ohio’s energy landscape is undergoing significant transformation, driven by the retirement of legacy power plants, growing demand, and capacity constraints within the PJM system. For manufacturers, this presents both immediate and long-term risks in the form of rising energy costs, reliability concerns, and increased market volatility.

By implementing short-term strategies such as demand response participation and fixed-rate procurement, businesses can begin to mitigate the near-term impact of rising energy costs. Simultaneously, investing in long-term energy infrastructure like on-site renewables, microgrids, and efficiency upgrades will enable manufacturers to reduce costs, enhance resilience, and maintain competitiveness.

Now is the time for executives to take proactive measures, leveraging both operational and infrastructure-based solutions to prepare for the challenges ahead.

Key Takeaways for Executives

Energy prices in Ohio are projected to rise by as much as 29% by mid-2025 due to PJM auction results and demand growth.
Coal retirements and interconnection delays are tightening supply and impacting grid reliability.
Implement a mix of short-term cost controls (demand response, procurement strategies) and long-term investments (renewables, energy efficiency, microgrids) to counterbalance rising energy costs and enhance resilience.

Taking action now will position your business to navigate Ohio’s evolving energy challenges while safeguarding profitability and operational continuity.

While the state of Kentucky is also served by PJM, there are differences with Ohio as follow:

1. Market Dynamics

2. Utility Presence

3. Economic Drivers

4. Policy and Advocacy

5. Geographic Differences

The link below provides a comprehensive yet simple-to-understand overview of the contexts in the USA:

Electricity markets: what’s the difference between a wholesale energy market and a capacity market?

Lessons from the EU Energy Crisis for US Manufacturers

U.S. manufacturers can draw valuable insights from the EU energy crisis to safeguard their operations and minimize the impact of rising energy costs on their bottom line.

Here's what they can learn and implement:

1. Prioritize Energy Efficiency

Lesson from Europe: Many European manufacturers invested in energy-efficient machinery, lighting, and processes to reduce energy consumption.
U.S. Action Steps:
- Conduct energy audits to identify inefficiencies.
- Upgrade to energy-efficient equipment and adopt practices such as lean manufacturing.
- Optimize heating, cooling, and lighting systems.
Benefit: Reduced energy costs and improved resilience to price fluctuations.

2. Diversify Energy Sources

Lesson from Europe: Overdependence on a single energy source (e.g., natural gas) proved risky for European businesses.
U.S. Action Steps:
- Invest in on-site renewable energy solutions like solar panels or wind turbines.
- Explore alternative energy sources, such as bioenergy or hydrogen.
- Consider energy contracts that hedge against price volatility.
Benefit: Greater energy security and reduced exposure to market volatility.

3. Invest in Energy Storage

4. Leverage Technology for Demand Management

5. Build Supply Chain Resilience

Lesson from Europe: Energy price spikes affected supply chains, raising costs for raw materials and logistics.
U.S. Action Steps:
- Diversify suppliers to reduce dependence on regions prone to energy crises.
- Develop local sourcing strategies to minimize transportation energy costs.
- Stockpile critical materials when energy prices are low.
Benefit: Stable production costs and reduced exposure to supply chain disruptions.

6. Collaborate on Energy Solutions

7. Hedge Against Energy Price Volatility

8. Advocate for Policy Support

9. Embrace Circular Economy Practices

10. Develop Contingency Plans

In Conclusion:

By proactively adopting these strategies, U.S. manufacturers can reduce their energy dependence, improve operational efficiency, and shield their bottom lines from the impacts of energy price volatility. These measures also align with long-term goals of sustainability and competitiveness in a global market.

Key Insights

Table of Contents

Regulatory & Cultural Insights

Industry Insights

GDPR (General Data Protection Regulation)

The EU AI Act

Leadership Differences

Navigating the Energy Crisis: Challenges, Risks, and Strategies for Manufacturers

Lessons from the EU Energy Crisis for US Manufacturers

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