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Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

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Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#261

Post by AnthonyMouse »

beaunative wrote: post #242
AnthonyMouse wrote: post #224

Earlier quoted context omitted.

> China's ability to control crisis like this scale is going to be valuable assets to global investors. Their ability to control the crisis is useful from a public health perspective, but they're doing it by shutting down production. Look at how the markets have responded. Are you claiming investors wouldn't have been better off if these companies had invested in a more diversified supply chain? For that matter, havi…

Is there really a point towards economic production when a massive number (2~4%) of people would die? I can see how the Wall Street would respond, it's understandable, but whoever says that somehow makes it a bad governmental response has already missed the point about what's really the end goal for the development of our society.

You're thinking about this backwards. If undiversified capitalists are going to lose a lot of money then they're going to lean on governments to prevent it, and sometimes the governments will cave. If all they have to do is run two shifts in one factory instead of one shift in two factories, they barely even care and you reduce the perverse incentive to do something stupid.

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#262

Post by Marsymars »

triceratops wrote: post #214
twblalock wrote: post #113

Earlier quoted context omitted.

A lot of people can't afford a $400 sweater. What are they supposed to do? Local manufacturing is for rich people who can afford it.

A lot of now-developed countries had 100% domestic textile production 60-70 years ago and yet nobody went naked (OK not 0% obviously but very few). People owned fewer pieces of clothing overall, but everyone could still afford to be clothed. If textile manufacturing became 100% local again, local wages would also rise by a similar amount. $400 wouldn't seem unaffordable for a sweater. Or the sweater would cost corres…

> People owned fewer pieces of clothing overall, but everyone could still afford to be clothed.

Note that owning fewer pieces of clothing overall doesn't significantly affect your yearly cost of clothing, it just affects your initial cost to fill out your wardrobe.

What drives up yearly costs is that most new low-cost clothing doesn't last for many wears - it either wears out quickly due to being of relatively low quality, or is eventually donated/thrown out after languishing in a closet for years.

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#263

Post by Marsymars »

glofish wrote: post #171
mech1234 wrote: post #141

Earlier quoted context omitted.

If you think the median american had more disposable income in 1940 than today, you are hilariously uninformed. https://fred.stlouisfed.org/series/DSPIC96 (only goes back to ~1960, and the I think this is mean, not median, but also a huge enough trend that it is impossible to deny).

I am trying to understand that graph, it is not so easy actually. What does it mean that 2020 shows 15K average disposable income in the US? That the average person has 15K left once they pay absolutely necessary to subsist? I find it hard to believe. I think most people using the word "disposable income" would use the term the way I stated. Also the post you reply to uses it in that sense, not as a relative value to…

> I think most people using the word "disposable income" would use the term the way I stated.

That's "discretionary income" you're thinking of.

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#264

Post by AnthonyMouse »

tanilama wrote: post #257
AnthonyMouse wrote: post #238

Earlier quoted context omitted.

But that's exactly why diversification works. If you have manufacturing only in China and China shuts down, you lose. If you have manufacturing in both China and Mexico and China shuts down, you manufacture in Mexico. If six months later China is back online and Mexico is in quarantine, you manufacture in China. Having presence in multiple regions lets you keep going the whole time. Having presence in only one region…

Diversification looks great, but is not easy. It is not like software where it can be easily replicated across continent. Manufacturing requires logistics, capability of water/electricity and skilled labour. Those are not easily scalable across the globe. And manufactures do concentrate, it is easy to source parts to make stuff from the same region. So in a way, expanding physical manufacturing is very hard and expen…

> Manufacturing requires logistics, capability of water/electricity and skilled labour. Those are not easily scalable across the globe.

You don't need fully-distributed manufacturing where everything is literally made everywhere. Go ahead and cross off every place without water, electricity and skilled labor, you're still left with dozens of countries. Now pick one in Asia, one in Europe and one in America. You're now on three continents. There are three more available if you ever feel like expanding.

> And manufactures do concentrate, it is easy to source parts to make stuff from the same region.

Which is fine, so do that, somewhere on each continent. Not in only one place in the world. Obvious strong candidates are China, the US and Germany.

> And in case of COVID-19, it is not the answer even, since, the disruption is almost simultaneously happening globe wise, capacity planning and shifting can't be that agile to adjust, let alone the demand will be hampered too.

It isn't really happening everywhere at once, though. It's happening everywhere at different times. We may get to the point where some countries have to use the same measures as China, but by then China may have succeeded in containing it and be ready to reopen. Even if it hasn't, you've still reduced the period you've been offline by the several months in between, and in the meantime have had notice allowing you to run 24 hour shifts in every other facility to build up a surplus in preparation for what may come there soon.

There are also implications to the countermeasures. The US just suspended travel with Europe. If you had a factory in Germany and one in the US, you're still in business in both places, making products for US customers in the US factory and for European customers in the European factory.

> But for key industry, like medical supplies, I think that is where the state should come and play, to incentivize a domestic capacity that could chime in handily when disruption happens.

The problem is, nearly everything is in that category. Nobody cares about where toilet paper comes from until you can't get any for six months.

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#265

Post by triceratops »

twblalock wrote: post #252
triceratops wrote: post #214

Earlier quoted context omitted.

A lot of now-developed countries had 100% domestic textile production 60-70 years ago and yet nobody went naked (OK not 0% obviously but very few). People owned fewer pieces of clothing overall, but everyone could still afford to be clothed. If textile manufacturing became 100% local again, local wages would also rise by a similar amount. $400 wouldn't seem unaffordable for a sweater. Or the sweater would cost corres…

If local wages rise, wouldn't that include the wages of the people who work at the local cotton producers, textile workers, and clothing retailers? Thereby making the manufactured goods more expensive, rather than less? If we could have cheap manufactured goods and also pay living wages to the workers who produce them, we would not have outsourced. You can produce cheap goods with cheap labor (or robots), or expensiv…

I think there will be an equilibrium. Again refer to the argument in my previous post: production used to be 100% local and everyone could afford clothes. Not as many as now, but enough. The only thing that's changed is we now have more automation, so domestic production should be even more efficient than before.

Maybe sweaters will be $200 and wages will rise enough to be able to afford one every year. But we won't have $3 sweaters on Alibaba. From an environmental perspective, having more clothes than we need at dirt-cheap prices isn't all that great.

Some people may call this a reduced standard of living, and they are right from a reductive viewpoint where less stuff = lower standards. But isn't there more to quality of life than filling your closets with cheap shit you don't really need?

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#266

Post by thewileyone »

baq wrote: post #61
hardtokill wrote: post #25

We really need to get our factories out of China. This is a country that hid the coronavirus case for 2-3 weeks, let 5 million Wuhan residents leave the city, doctored numbers, then most recently had government press try to spin the disease as if it didn’t come out of Wuhan, but rather somewhere other countries!! And they are actively Forcing uigher population into crippled factories in eastern China to replace migra…

The US on a federal level 'has done nothing and is all out of ideas' as the memes go, except perhaps suppressing states to do their own testing. This is in a way inverse of what happened in China and arguably worse because in China when the federal-level authority caught wind of the scale of the problem they dropped the hammer so hard the whole world is still ringing. The US on the other hand knows there's an epidemi…

Because awareness and testing has been poor, who's to say that some deaths attributed to pulmonary fibrosis in the last quarter of 2019, was actually due to Covid-19?

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#268

Post by handedness »

hnick wrote: post #256
tanilama wrote: post #254

Earlier quoted context omitted.

Which I don't disagree. However, such virus already exists in the wild, though the chances are there, it can jump to human anytime in the future regardless of national boundaries.

We should all be prepared but developed nations have a much smaller interface with the natural world meaning this kind of crossover is less likely, and many developing nations have a smaller global role meaning it won't spread as easily (see Africa & Ebola). I think China is somewhat unique here.

This is an excellent point.

I've experienced living in a small, developing nation for years, and while they have the same dangerous mixture as China of live animals (and the associated excretions), dead animals, produce (unwashed, washed, and already skinned for consumption all available from the same table), fertilizer of human origins, farming supplies, pesticides, medical products, hygiene products, clothing, food transport, food storage, food preparation surfaces, cutlery, dish ware and dining surfaces all overlapping to alarming degrees (often sharing the same surfaces at different times), they don't have the potential global role, both based on their size, relative lack of population, lack of foreign travel and foreign entanglements, and so on.

Inadvertent power projection from a biological perspective is an interesting concept.

Edit to add: I can't judge the people working in these markets and offering products under horrendous conditions. They're trying to feed their families. But China needs to get serious about public health if it hopes to improve its reputation, which is roughly the same from Tehran to Toledo with some justification.

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#269

Post by handedness »

tanilama wrote: post #254
handedness wrote: post #244

Earlier quoted context omitted.

If one completely ignores their dangerous obsession with secrecy and its major role in the spread of said fire to the rest of the globe, yes.

Which I don't disagree. However, such virus already exists in the wild, though the chances are there, it can jump to human anytime in the future regardless of national boundaries.

Regardless of where lines are draws on maps, yes. Regardless of a whole host of other factors, not at all.

This particular pandemic was entirely avoidable in the first place. Food markets in developing nations frequently cause local health problems, and have all the ingredients to make a global one (as it seems to have in this case).

Re: Coronavirus has disrupted supply chains for nearly 75% of U.S. companies

#270

Post by blackoil »

handedness wrote: post #269
tanilama wrote: post #254

Earlier quoted context omitted.

Which I don't disagree. However, such virus already exists in the wild, though the chances are there, it can jump to human anytime in the future regardless of national boundaries.

Regardless of where lines are draws on maps, yes. Regardless of a whole host of other factors, not at all. This particular pandemic was entirely avoidable in the first place. Food markets in developing nations frequently cause local health problems, and have all the ingredients to make a global one (as it seems to have in this case).

https://en.wikipedia.org/wiki/2009_flu_pandemic -- North America, .7 - 1.4 billion affected, 150,000–575,000 died.

COVID-19 may be from China, but a pandemic can come from anywhere and will come again. You can taking chance on its virality/mortality.

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