Global supply chain woes hint paradigm shifts

  • Thread starter Thread starter Dotini
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Yep it's getting pretty sketchy here in places. I fear it will lead to more hoarding which will only exasperate the problem.
 
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I currently work in one of those big-box hardware stores (the blue one, not the orange one), and some of the things we've been unable to get stock for has been kind of absurd. I can understand electrical wire being hard to find just because the demand for copper has been off the scale for the last few years, but the boxes and outlets that go in the walls have been near impossible to find the last few months as well. There's a large apartment complex not far from here that was supposed to be ready to move into by now, but has had construction work stalled since June because they just can't get the electrics installed.

It also doesn't help that the trucking industry as a whole has been having staffing problems for a long while, not just from Covid but because younger people aren't coming in to replace the older experienced guys who are retiring. Surprisingly, raising an entire generation to believe that blue collar jobs are for unskilled losers and tech jobs are where the real money is* has had long term negative effects.

*Ironically, it's been the opposite of this the last few years. A skilled tradesman will easily make twice as much as a skilled programmer, and the tradesman's skillset isn't going to be rendered obsolete after a couple years so there's always demand for them.
 
I work in audiovisual hardware procurement and installation at a large national museum and yeah, some of the stuff I'm struggling to get is crazy. I'm working on a project that opens in 2 weeks which includes a Dante (audio over IP) audio system with 32 endpoints, I've managed to get all the speakers... But the network switch, just a Netgear GS748Tv5 - nothing special at all - hasn't arrived yet, which is making me quite nervous to say the least. I had to call so many suppliers to find someone who could get me six compact subwoofers and a simple 19" rack PDU with a 16A plug on the end took two weeks to ship.

We were going to begin procurement for another project due the middle of next year in March, but after this experience we're expediting the design phase and procuring in December if possible, we're even talking about turning part of our object store (which is legitimately like the archive/warehouse building in Raiders of the Lost Ark) into an AV warehouse so we'll have enough space for stuff if it arrives too early.

It's honestly becoming one of the biggest risks to the exhibitions we've got planned, normally we worry about getting agreements, security and insurance for loaned objects or Brexit/the pandemic preventing object or people from freely travelling to and from our museum, now we've got this to contend with as well.
 
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The weirdest things are out of stock at stores in Dayton. Almost seems like they've got plenty of everything I don't need or want. But Scrubbing Bubbles Shower Foam in the metal can? Doesn't exist.

Fortunately for me I'll soon be able to afford to focus on buying only products made completely or mostly in the US. I know that's not the whole truth, materials are global and its unavoidable, but so many problems with globalism have been exposed recently and I'm really tired of dealing with it. If I can afford it then I will support a company who didn't submit to bottom-dollar global supply chains. Unfortunately that's basically every single product on the shelf unless you buy exclusively boutique startup Instagram-ad-style products.

Edit: @EngieDiesel The lack of respect for skilled trades is so broad it's pretty hard to pinpoint. I grew up in a family of machinists and not only was my millennial generation heavily coaxed into college, but it also seemed to make perfect sense if you had exposure to industrial skilled trades cultures. Just the basic culture within the industries I was exposed to was not a good culture at all. Modern concepts such as equal pay and equal access and gender acceptance into various industries, none of those ideas were respected in the shop or on the construction site. I doubt they still are, due to the lack of fresh young people entering these industries who weren't already groomed by mentors who had been involved for decades already. The culture I experienced was thoroughly anti-progress, which is why I struggled to find a way out of it even though I was a terrible student and failed out of my first college attempts. Eventually I did forge a new path but I learned on the way that we can't blame the death of skilled trades just on college culture. Much of the blame lies with the industries themselves and their lack of progress and acceptance. And it seems self-perpetuating because the only young workers who will accept that culture are the ones who like it and want it to stay that way. I say all the time when talking about what was expected of me vs what I chose to do, that I respect the hell out of these skilled trades, the knowledge, and the technology, etc. But I largely do not respect the people who do it.
 
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I work in HVAC and so far we've been lucky since we have a warehouse guy that seems capable of pulling what we need out of thin air. It's getting harder though as the major wholesalers haven't been able to or receive limited quantities of basic things like flexible ducting or stuff made of sheet metal.

One thing that really concerns me is what it will be like this winter, so far equipment hasn't been too hard to get a hold of, but the way things are going some people may run into serious problems once it drops below freezing.
 
I don't think I've ever mentioned it in detail, but my profession and career for the past 27 years has been an Intentional Logistics specialist. I co-own and run a company (approx 30 employees). We're Customs House Brokers, International Freight Forwarders, NVOCC, and International Trade Consultants. Essentially, part of what we do is similar to what Fedex or DHL does, but on a different scale and scope. If you have a box of widgets you want to move from a factory in China to your door, you call Fedex. If you have 15,000 widgets which you want to move of various classifications and harmonized codes, potentially subject to section 301 punitive tariffs and you need to calculate transportation costs, distribution costs and proper duty rates, that's where we come in.

I don't want to reinforce @Dotini 's rather unfortunate reputation here for doom forecasting, but in this case, if anything, the article he posted, underestimates just how large and serious the problem has become. I've been doing this for a 1/4 of a century now and I've never seen anything like it. Supply chains around the world are stretched pretty thin and the problem, in many cases, is getting worse, not better. If you think back to the problem of finding toilet paper at the beginning of the pandemic, this is similar to what's happening now, but to thousands upon thousands of products all around the world. It's prolific, it's everywhere And in many cases we don't necessarily see it both becuase (a) we haven't quite hit rock bottom yet and we've managed to avoid panic hoarding of many products and (b) it's often affecting supply chains for manufacturers building products that will be integrated into products that will be then be built into other products. The classic example is think of the shortage in the chip market and how it's affecting car production. But it's interconnected in a way much deeper than people realize. And I believe it will be at least another 2-3 years before we're able to get back to pre-pandemic levels. It's difficiult to say what kind of affect these shortages will have on our daily lives, and the economy as a whole, during that process.
 
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jjaisli
I don't think I've ever mentioned it in detail, but my profession and career for the past 27 years has been an Intentional Logistics specialist. I co-own and run a company (approx 30 employees). We're Customs House Brokers, International Freight Forwarders, NVOCC, and International Trade Consultants. Essentially, part of what we do is similar to what Fedex or DHL does, but on a different scale and scope. If you have a box of widgets you want to move from a factory in China to your door, you call Fedex. If you have 15,000 widgets which you want to move of various classifications and harmonized codes, potentially subject to section 301 punitive tariffs and you need to calculate transportation costs, distribution costs and proper duty rates, that's where we come in.

I don't want to reinforce @Dotini 's rather unfortunate reputation here for doom forecasting, but in this case, if anything, the article he posted, underestimates just how large and serious the problem has become. I've been doing this for a 1/4 of a century now and I've never seen anything like it. Supply chains around the world are stretched pretty thin and the problem, in many cases, is getting worse, not better. If you think back to the problem of finding toilet paper at the beginning of the pandemic, this is similar to what's happening now, but to thousands upon thousands of products all around the world. It's prolific, it's everywhere And in many cases we don't necessarily see it both becuase (a) we haven't quite hit rock bottom yet and we've managed to avoid panic hoarding of many products and (b) it's often affecting supply chains for manufacturers building products that will be integrated into products that will be then be built into other products. The classic example is think of the shortage in the chip market and how it's affecting car production. But it's interconnected in a way much deeper than people realize. And I believe it will be at least another 2-3 years before we're able to get back to pre-pandemic levels. It's difficiult to say what kind of affect these shortages will have on our daily lives, and the economy as a whole, during that process.
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When was the last time that the economy was stilted by supply shortages? Was it the 1970s? I wonder if we could see prices continue to rise without corresponding economic growth, aka stagflation, again.

Interesting article pointing to 40 years of deregulation of the entire economy as enabling the kind of hyper efficient yet very vulnerable world economy. It should be noted that this is a very Dotinian article, even concluding with this...which could have been written by the man himself!
Fundamentally, America has to move away from the goal of seeking cheap stuff made abroad for consumers in a low-wage economy. That means rearranging our hierarchies of power so finance, consulting and capital-light tech leaders became less important than people who know how to make things. The problem we have is shortages, so it’s time to put people in charge who value production.
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It's all to be expected is it not? We had an enormous disruption to our workforce and consumption levels. That disruption drove enormous layoffs, bankruptcies, and supply scale-down. It takes time to heat back up, and the workforce restructuring that's going on is a big part of it.
 
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Eunos_Cosmo
...I wonder if we could see prices continue to rise without corresponding economic growth, aka stagflation, again.

Interesting article pointing to 40 years of deregulation of the entire economy as enabling the kind of hyper efficient yet very vulnerable world economy. It should be noted that this is a very Dotinian article, even concluding with this...which could have been written by the man himself!
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Danoff
It's all to be expected is it not? We had an enormous disruption to our workforce and consumption levels. That disruption drove enormous layoffs, bankruptcies, and supply scale-down. It takes time to heat back up, and the workforce restructuring that's going on is a big part of it.
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Indeed, it's possible. We've seen many cases of price increases and price shifts in the last 18 months. Many of them come from the increased shipped costs. Case in point, two years ago, it cost roughly $4,500 to ship a 40' container from Shanghai to Long Beach. At premium rates, it's now up to about $25,000. That's a huge difference. We have one customer that's been sourcing product overseas for years. With increased shipping costs, they began to buy US sourced material for the first time in 12 years. But their US sources simply can't keep up with demand and they're now grabbing product (locally) wherever they can. And those US suppliers also haven't modernized and there are quality control issues.

For most companies, it's impossible to absorb those kind of increases and they have to be passed on with higher product costs. But when these increases come about, they rarely go away or disappear all together. So it has the potential to create a sort of reset. A good example were the increased fuel prices around 2003--many carriers started tacking on a standard fuel surcharge. Regardless of how fuel prices have increased or decreased in the years since, the fuel surcharge never went away.

But it's important to point out that this is not just an American problem. These kind of supply chain issues now exists pretty much everywhere. Shockingly, even within China, where supply chain issues have became a nightmare for producing finished goods.

It's difficult to judge exactly where this is all going because there were so many factors that led into the problem, and all happening at once.
 
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jjaisli
And those US suppliers also haven't modernized and there are quality control issues.
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WhaAaAat, you're saying simple furrin competition isn't the only reason American manufacturing fell on its ass and never got back up? No way.

Something something outdated industrial culture that I mentioned in another thread. A machine shop isn't a damn coal mine...or is it?

Danoff
It takes time to heat back up
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I remember it like it was yesterday - Within just a couple years in the early 1940s America manufactured entire branches of a world-beating military out of thin air, almost single-handedly. It didn't take much time. We would not be able to do that again today if we needed to.
 
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Keef
I remember it like it was yesterday - Within just a couple years in the early 1940s America manufactured entire branches of a world-beating military out of thin air, almost single-handedly. It didn't take much time. We would not be able to do that again today if we needed to.
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Check back in a couple of years then.
 
Keef
WhaAaAat, you're saying simple furrin competition isn't the only reason American manufacturing fell on its ass and never got back up? No way.

Something something outdated industrial culture that I mentioned in another thread. A machine shop isn't a damn coal mine...or is it?


I remember it like it was yesterday - Within just a couple years in the early 1940s America manufactured entire branches of a world-beating military out of thin air, almost single-handedly. It didn't take much time. We would not be able to do that again today if we needed to.
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Well...yes. In the particular case to which I was referring, without going into unnecessarily complex details, it's a product which, probably 25 years ago, could have been made by dozens of different companies in the US who made those or similar items. But it's an industry that was hit by globalization and much of that production moved off shore in the ensuing years. So the manufacturers left in the US, through ever dwindling market share, were loathe to invest in their own factories, and technology, as they saw it as a dying business. And TBH, rightfully so. And those few who are left, and are now being flooded with new orders, were quick to adjust their prices, hoping to capitalize on short term gain, all why offering a product that manufactured elsewhere, has improved significantly due to improved manufacturing techniques during the last decade. People who use the "cheap **** from China" mantra are really stuck in the past.

Granted, I'm talking about one particular customer and one particular semi-manufactured product. But I could be talking about thousands of products across multiple industries. And it's why I laughed at Trump and Peter Navarro's rhetoric during their trade war with China. It's not that simple to just "bring back" manufacturing on a large scale. It would take a decade or more and probably trillions in government aid. We aren't just missing factories. Or people with the skills to work them. We're missing industries that supply products that are manufactured by other industries into products that are then shipped and sold to manufacturers who then integrate those items into other products. From the raw materials to the finished product, a large part of the infrastructure required to make large scale manufacturing a realistic possibility in the US, at least in terms of closing ports and thumbing our nose at "globalization" just simply doesn't exist. The time to stop the bleed was 30 years ago. That war is over. Long ago.

What happened during the 1940s, was a different time, when the factories and skilled or semi-skilled labor were abundant. It was just a matter or retooling and redesigning and finding the money to do it. Easy when the government (and war bonds) are footing the bill for everything.

Anyway, you know all this already. I'm just speaking from my own experience how we're all REALLY in trouble, on a world wide scale. It started with factory closings around the world due to Covid, a massive scaling back in manufacturing due to incorrect forecasting with many businesses predicting an immediate recession from the pandemic, followed by massive spending, fed by a huge workforce, now working from home, that needed new computers and cameras and desks and many an exercise bike and aided by government funding, and a logistics system that had ALSO scaled back with ships initially being pulled from rotation due to expected down time which never materialized, passenger aircraft that typically ALSO carry cargo but were grounded during the early days of the pandemic...at every stage of the way over the last 18 months, an already stretched system was stretched beyond. It's a broken rubber band at this point.
 
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jjaisli
The time to stop the bleed was 30 years ago. That war is over. Long ago.
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And that's a great thing. Globalization is a huge force for peace, lifts emerging nations, and enables specialization and luxury to new heights. It's the start of a collective human society.
 
Danoff
And that's a great thing. Globalization is a huge force for peace, lifts emerging nations, and enables specialization and luxury to new heights. It's the start of a collective human society.
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If those in China, Mexico and Vietnam had the same labour laws as we do I’d consider it a collective human society. While children are in sweat shops, factories have suicide nets and slaves are put in labour camps I find it incredibly hard to see it in a positive light.

It also creates a huge reliance and dependence on powerhouse manufacturing countries which isn’t necessarily a good thing for peace. China is a massive economy, who recently destroyed several Australian industries with tariffs after we wanted to see CV19 investigated. They’re currently flying planes over Taiwan and have been building up militarily for decades. All off the money globalisation, and poor work conditions, has brought them.
 
Hayden
If those in China, Mexico and Vietnam had the same labour laws as we do I’d consider it a collective human society. While children are in sweat shops, factories have suicide nets and slaves are put in labour camps I find it incredibly hard to see it in a positive light.

It also creates a huge reliance and dependence on powerhouse manufacturing countries which isn’t necessarily a good thing for peace. China is a massive economy, who recently destroyed several Australian industries with tariffs after we wanted to see CV19 investigated. They’re currently flying planes over Taiwan and have been building up militarily for decades. All off the money globalisation, and poor work conditions, has brought them.
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So basically your argument is "but China". China is doing some bad things, but so is North Korea. Does a lack of globalization prevent North Korea? It does not. China was much more peaceful internationally before the US spent an administration trying to penalize them economically. It's the push against globalization that has caused China to be more aggressive.

Regardless, yes, China having an influence over the economies of other countries, and those countries having an influence in China does promote peace. And their massive increases in standard of living have also afforded them some luxuries when it comes to "sweat shops".
 
Danoff
So basically your argument is "but China". China is doing some bad things, but so is North Korea. Does a lack of globalization prevent North Korea? It does not. China was much more peaceful internationally before the US spent an administration trying to penalize them economically. It's the push against globalization that has caused China to be more aggressive.

Regardless, yes, China having an influence over the economies of other countries, and those countries having an influence in China does promote peace. And their massive increases in standard of living have also afforded them some luxuries when it comes to "sweat shops".
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All true. But I should point out that doing business with "China" is it's own unique pitfall. Whether it comes to lack of protection for intellectual property rights, currency manipulation, outright skirting of international law (when it's convenient for them), lack of parity, unfair protectionism...I could go on, AND on. Yes, one could say that those are the risks of doing business with China, risks which any business has to weigh. But they're in the position they are today because they never played with an open hand. As a whole, China has been relatively amicable because they've needed the rest of the world more than we needed them. That's slowly changing. Over the next 10-20 years I suspect we're going to see a very different dynamic begin to take shape, where the PRC no longer even feels the need to ask. Eventually they'll have the kind of economic and political power where they can effectively do whatever they want.

So I agree that it's better, more conducive to good relations and safer to have China as an important economic trading partner. But we should all be wary.
 
jjaisli
All true. But I should point out that doing business with "China" is it's own unique pitfall. Whether it comes to lack of protection for intellectual property rights
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This is true regardless of whether or not you do business with them.

jjaisli
currency manipulation
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As the US does as well.
jjaisli
outright skirting of international law (when it's convenient for them)
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True regardless of whether or not you do business with them.

jjaisli
lack of parity
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I have no idea what you mean here.

jjaisli
unfair protectionism...
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As all countries seem to do. The US is absolutely guilty of this as well.

jjaisli
Eventually they'll have the kind of economic and political power where they can effectively do whatever they want.
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Like the US.
jjaisli
So I agree that it's better, more conducive to good relations and safer to have China as an important economic trading partner. But we should all be wary.
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Of course. As other countries should be wary of us as well. Because the US is not exactly a model of stability internationally right now.

I think the US should open up trade with North Korea.
 
It seems one of the basic reasons for global shortages is a shortage of electricity/energy/coal in China. Factories are being shut down. The JIT system is breaking down. India is bordering on a similar crisis, and Europe has energy woes itself.
 
Danoff
This is true regardless of whether or not you do business with them.


As the US does as well.


True regardless of whether or not you do business with them.


I have no idea what you mean here.


As all countries seem to do. The US is absolutely guilty of this as well.


Like the US.

Of course. As other countries should be wary of us as well. Because the US is not exactly a model of stability internationally right now.

I think the US should open up trade with North Korea.
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Lots of fair comparisons in your post. Many countries including the US, UK, EU etc are guilty of many of these things, not just China.

Although, as far as I know, only China has committed genocide out of that list of countries in the last 5 years. Not in any way business related I know, but it sure as hell makes my conscience uncomfortable everytime I see "made in China".

Regarding the specific topic, I think we're actually seeing a price correction which is 20 years in the making. The low inflation from the last 20 years is massively as a result of sourcing cheaper products from China and India and others rather than manufacturing internally. Maintaining that low inflation has been dependent on China etc meeting ongoing world manufacturing demands, using a seemingly endless supply of comparatively cheap labour. Whilst the short term issues may be Covid related, the long term position will in part be dependent on whether China etc can continue to find cheap labour supply to keep prices down.

If not, with the huge increase in standard of living for large numbers of those people (literally 100s of millions of people) (which is a good thing as it lifted them out of poverty), come higher labour rates and higher production costs. And higher prices for goods.

That's also why there are shortages and price increases in things like chocolate and meat. Because demand for these "luxury items" (when compared to e g a bowl of rice at least) has ballooned and outstripped world supply. And SUVs. And so on.

Theoretically, the world will eventually end up running out of cheaper options as all labour will tend towards levelling off in terms of productivity and pay. We haven't got to that point yet though at least.
 
Shipping costs, up by a factor of almost 10, portend very serious inflation just ahead, according to this video.
 
sirjim73
Lots of fair comparisons in your post. Many countries including the US, UK, EU etc are guilty of many of these things, not just China.

Although, as far as I know, only China has committed genocide out of that list of countries in the last 5 years. Not in any way business related I know, but it sure as hell makes my conscience uncomfortable everytime I see "made in China".
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If North Korea did, we wouldn't know. Understand that when you buy something from China you're buying something from somebody in China. A real person, a person who likely did not commit even a little genocide.

sirjim73
Regarding the specific topic, I think we're actually seeing a price correction which is 20 years in the making. The low inflation from the last 20 years is massively as a result of sourcing cheaper products from China and India and others rather than manufacturing internally. Maintaining that low inflation has been dependent on China etc meeting ongoing world manufacturing demands, using a seemingly endless supply of comparatively cheap labour. Whilst the short term issues may be Covid related, the long term position will in part be dependent on whether China etc can continue to find cheap labour supply to keep prices down.
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If that doesn't happen, there are plenty of places in the world that could step into the void and develop.
 
At the hardware stores, paint I usually buy is unavailable. At my grocery store, the mineral water, wine and deli meats I normally get is gone from the shelves.
 
Dotini
At the hardware stores, paint I usually buy is unavailable. At my grocery store, the mineral water, wine and deli meats I normally get is gone from the shelves.
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There's been a pandemic for like the last year and a half. Is this somehow the first time that you've gone to the store and they've been out of stock of something that you wanted to buy? Lack of mineral water, wine, deli meats and paint doesn't sound like a reason to prepare for starvation unless you have an incredibly elitist palate. Buy some rice and use the tap.
 
Not to come off too cold but...
Imari
There's been a pandemic for like the last year and a half. Is this somehow the first time that you've gone to the store and they've been out of stock of something that you wanted to buy? Lack of mineral water, wine, deli meats and paint doesn't sound like a reason to prepare for starvation unless you have an incredibly elitist palate. Buy some rice and use the tap.
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I think in the short term, some patience is indeed needed. Like Imari says, use the tap, and be flexible. Huge sections of the global economic structure are shifting, and it's going to take a while until they get re-settled. This is to be expected. When the mineral water is missing, just pat yourself on the back for making it through the pandemic to get the vaccine.
 
It used to be said that when America sneezes, the world catches a cold. Now its China in driver's seat.

 
Dotini
It used to be said that when America sneezes, the world catches a cold. Now its China in driver's seat.
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No, there is not one driver's seat. It is still true that when America sneezes, the world catches a cold. But there are other nations that have this effect as well.
 
jjaisli
It's difficult to judge exactly where this is all going because there were so many factors that led into the problem, and all happening at once.
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I could tell you all about some of the things people say about where things are going, but it's all religion-fueled nonsense...mostly; there are a few things that align with what is going to actually happen that texts like Revelations and so on describe, though, let me be clear, every single calamity that occurs will be/has been done by mortal hands.

Famine? Yeah, blame it on people being complacent and writing law after law for no real reason other than to mitigate the dumpster fire that they started in the first place.
Civil Wars? You bet.
Governmental Collapse? Yes.
Danoff
And that's a great thing. Globalization is a huge force for peace, lifts emerging nations, and enables specialization and luxury to new heights. It's the start of a collective human society.
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Only if Open Trade is in the mix.
Danoff
I think the US should open up trade with North Korea.
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Hmmm...how many times has that been tried...
Imari
Buy some rice and use the tap. (boil the water if needed)
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Some places though, tap water is not ideal. Actually, there are many places (still) where it is not an option.
 

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