Supply chain problems explained

Its On A Slab

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Expect a long haul on this one.

It's not that we don't have widgets, it's that they are stuck on container ships off-shore. There is a shortage of trucks on land, a shortage of stevedores to unload the containers, there is a shortage of parts for machines that make other machines - which also have parts that are in short supply.

But we can blame it all on the socialists and Joe Biden. Because Murca.

 

PaulD

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Our supply chains stretch overseas because it's cheaper to make things that way. When I was with the DoD (until 2016), we were having problems with defense equipment, including weapon systems, having critical parts from foreign countries, including China. We can fix that, but it will take time, money, and will. We don't want to cut off all foreign suppliers as their countries do buy our stuff too, but we may have to have the government fund domestic production of critical items, even to the point of having the government build plants. That takes money and will and would be subject to cries of "socialism" (which it would be much closer to than what people call socialism these days).

Of course this is all Biden's fault.

Seriously, he knows he'll be blamed for it anyway, so why not try to solve it?
 

Its On A Slab

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Apr 18, 2018
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Pyongyang, Democratic Republic of Korea
Our supply chains stretch overseas because it's cheaper to make things that way. When I was with the DoD (until 2016), we were having problems with defense equipment, including weapon systems, having critical parts from foreign countries, including China. We can fix that, but it will take time, money, and will. We don't want to cut off all foreign suppliers as their countries do buy our stuff too, but we may have to have the government fund domestic production of critical items, even to the point of having the government build plants. That takes money and will and would be subject to cries of "socialism" (which it would be much closer to than what people call socialism these days).

Of course this is all Biden's fault.

Seriously, he knows he'll be blamed for it anyway, so why not try to solve it?
I always wondered about this when supply-chain became the big idea in manufacturing and distribution. What happens when one cog in the machinery breaks? Especially when everything is predicated on JIT(just-in-time). You can maximize profits by going very lean, but at what cost/exposure to risk?
 

92tide

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I always wondered about this when supply-chain became the big idea in manufacturing and distribution. What happens when one cog in the machinery breaks? Especially when everything is predicated on JIT(just-in-time). You can maximize profits by going very lean, but at what cost/exposure to risk?
sadly, at least some of the corporations that caused a lot of this are making money hand over fist right now
 

selmaborntidefan

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Expect a long haul on this one.

It's not that we don't have widgets, it's that they are stuck on container ships off-shore. There is a shortage of trucks on land, a shortage of stevedores to unload the containers, there is a shortage of parts for machines that make other machines - which also have parts that are in short supply.

But we can blame it all on the socialists and Joe Biden. Because Murca.

Is it Biden's fault? No.

Will he get blamed for it? Absolutely, it's how politics has always worked. It's not like Hoover personally was to blame for the Great Depression happening or Carter caused 70s stagflation, either, but it's how it has always worked.

I mean, Trump largely lost last year because of the pandemic, and I'll concede he had a much larger role both in perception and reality there than Biden can possibly have here. But Presidents, like football coaches, get the credit when they don't deserve it (insert Jon Gruden reference here) and same with the blame.
 
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92tide

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on our side, we have seen a few chinks in the armor of the supply chain problems. the last few weeks we have been able to ship containers out of seattle with relatively short notice and no delays. i don't know yet if this was an anomaly or if it is a sign of some things easing up.

the major shipping lines - msc, maersk, one, cosco, oocl, etc. have been absolutely awful during this past couple of years. some of the crap they are pulling would make comcast envious
 

Bamabuzzard

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Granted, I'm not well versed in all the job sectors, but I have no idea how so many people (aside from retiring and having that income) are able to make it this long without a job. I get people leaving one job sector and entering another one. But it seems like every sector of business is short of people, so are these people not working? And if they're not, how are they making it? Serious question. 🤷‍♂️

Can't find truck drivers
Can't find warehouse workers
Can't find restaurant/food industry workers
Can't find retail workers
etc.
????

From the article
1634225095543.png
 
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92tide

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Granted, I'm not well versed in all the job sectors, but I have no idea how so many people (aside from retiring and having that income) are able to make it this long without a job. I get people leaving one job sector and entering another one. But it seems like every sector of business is short of people, so are these people not working? And if they're not, how are they making it? Serious question. 🤷‍♂️

Can't find truck drivers
Can't find warehouse workers
Can't find restaurant/food industry workers
Can't find retail workers
etc.
????

From the article
View attachment 19752
i don't know about the rest, but based on our industry, the trucker shortage (at least the truckers who handle intermodal, drayage, etc.) was going on a few years before our most recent troubles and has gotten a lot worse since covid.
 

Bamabuzzard

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i don't know about the rest, but based on our industry, the trucker shortage (at least the truckers who handle intermodal, drayage, etc.) was going on a few years before our most recent troubles and has gotten a lot worse since covid.
Yeah, I know a lifetime truck driver and he told me several years ago he'd been wanting to retire but his company keeps talking him into staying with pay raises.
 
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UAH

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Our supply chains stretch overseas because it's cheaper to make things that way. When I was with the DoD (until 2016), we were having problems with defense equipment, including weapon systems, having critical parts from foreign countries, including China. We can fix that, but it will take time, money, and will. We don't want to cut off all foreign suppliers as their countries do buy our stuff too, but we may have to have the government fund domestic production of critical items, even to the point of having the government build plants. That takes money and will and would be subject to cries of "socialism" (which it would be much closer to than what people call socialism these days).

Of course this is all Biden's fault.

Seriously, he knows he'll be blamed for it anyway, so why not try to solve it?
I find it interesting that Taiwan Semiconductor is building a $12 bn. semi-conductor plant in Arizona. I would not be surprised to see them begin to pick up their existing equipment and begin transitioning to the US due to militancy toward Taiwan from mainland China.
 

UAH

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I always wondered about this when supply-chain became the big idea in manufacturing and distribution. What happens when one cog in the machinery breaks? Especially when everything is predicated on JIT(just-in-time). You can maximize profits by going very lean, but at what cost/exposure to risk?
Overhead applied to any type of manufactured widget is a far larger cost component than labor itself. You likely have heard about the fall of International Harvester, held in awe by the business schools of the time. They were hugely vertically integrated and when difficult economic times hit it was impossible for them to reduce cost rapidly enough to survive and their various business units were sold off in bankruptcy. These type of enormous failures and the Japanese invasion led to an outsourcing boom to smaller US manufacturers, Japan and Mexico. Exchange rate fluctuations has made off shoring a hazardous enterprise at best. Then along came China with a managed currency, government subsidized equipment and materials to create an artificial cost structure that no American company could compete with. So here we are with a hollowed out manufacturing base and lack of skilled labor with unknown lead times to get our parts from China. Likely to get worse before it gets better.
 

PaulD

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I find it interesting that Taiwan Semiconductor is building a $12 bn. semi-conductor plant in Arizona. I would not be surprised to see them begin to pick up their existing equipment and begin transitioning to the US due to militancy toward Taiwan from mainland China.
We have long had the ability to direct federal contracts to companies to support having facilities within the US for industrial mobilization, so we can help create domestic sources, even though it will cost money. We need to drop the cant about "the government picking winners and losers." The private sector will try to do things as cheaply as possible to maximize profit. When maximizing profit isn't the best idea, you need the government to step in.
 

UAH

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One comment I heard from Cathie Wood when we saw such strong economic growth numbers and inflation picking up in the 2nd Qtr. was that their analysis at Ark Investment indicated that there is very likely quite a lot of double ordering by retailers and manufacturers who were concerned with Covid related shutdowns. We only have to look at the round trip taken by lumber prices in 2021 from a high of 1700 per 1000 board ft. in the 2nd qtr. back to a low of $431 per 1000 board ft. in the 3rd. qtr. We could well have a large lump needing to work its way through the snake now with excess supply and a major slowdown out the other side of this.
 

TexasBama

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One comment I heard from Cathie Wood when we saw such strong economic growth numbers and inflation picking up in the 2nd Qtr. was that their analysis at Ark Investment indicated that there is very likely quite a lot of double ordering by retailers and manufacturers who were concerned with Covid related shutdowns.
Prices were moving up in 2Q, too, which I'd guess abetted the extra ordering.
 
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twofbyc

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sadly, at least some of the corporations that caused a lot of this are making money hand over fist right now
Sure they did and sure they are; the only thing that’s difficult for some of us to grasp is why they have been allowed to get away with it.
Back in the mid teens, I worked for a company that bought product components from China. Quality was poor, you either shipped FedEx (triple shipping cost) or suffered losses from dock theft. Our Chinese supplier eventually bought the company; if product components had been sourced stateside I have no doubt company would still be in business. They didn’t sell the company because they wanted to; this is the way China operates, and they are blinding those corporations you speak of to their end game with blizzards of cash.
Same as it ever was.
 
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