
Coronavirus has disrupted supply chains for nearly 75% of U.S. companies - hhs
https://www.axios.com/coronavirus-supply-chains-china-46d82a0f-9f52-4229-840a-936822ddef41.html
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dumbfoundded
This has happened to my company and a few others I know. We have about $15K of
packaging stuck in China.

If this is doing anything (to me personally), it's making me reconsider
shifting more of the supply-chain to the US. In many cases, the prices aren't
really that different.

~~~
tome
> it's making me reconsider shifting more of the supply-chain to the US. In
> many cases, the prices aren't really that different.

If the prices weren't really that different then why did those parts of the
supply chain go to China in the first place?

~~~
PeterisP
The price differences were much, much larger 5-10 years ago, but they have
been rapidly shrinking as the wages for China workers have grown.

------
howmayiannoyyou
"It's better to be in a bad deal with good people, then a good deal with bad
people"

China MFG was/is not a deal with the Chinese people. It's a deal with the CCP.
Those of us who always understood this aren't surprised by any of this. We
never expected China to be able to manage domestic risk well and we watched
helplessly as they exported that risk abroad in the form of pollution, SARS,
contaminated products and more. You may not be a citizen of China, but you're
almost as impacted by their decisions. This is worth pondering.

~~~
tanilama
> We never expected China to be able to manage domestic risk well

Well, they have seemingly largely recovered and move their way back to
normalcy, as other countries started catching fire.

I think a lot of people's takeways will be different than yours: China's
ability to control crisis like this scale is going to be valuable assets to
global investors.

~~~
AnthonyMouse
> 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, having a more diversified supply chain makes it easier to
implement these kinds of public health measures in general. Shutting down
production is much less costly when there is another region capable of quickly
picking up the slack. And making it less expensive to implement measures to
contain a contagion makes it more likely they'll be properly implemented,
which helps everybody, investors included.

~~~
tanilama
There is a critical flaw in this thinking.

Other countries will catch the virus at some point too.

Without stringent measures, it will take more time for other countries to come
back from it. In other words, China becomes safer after this.

~~~
AnthonyMouse
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 doesn't.

~~~
tanilama
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 expensive. 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.

So, I think unless it is for megacorp that has that much of money to burn,
diversification on globe scale is just a dream.

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.

~~~
AnthonyMouse
> 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.

------
brink
On the bright side, a disruption in supply may teach us what we really need,
and what we don't need. Maybe after this breakout we'll realize the importance
of slowing down, consuming less, and resting more.

~~~
azinman2
Which will lead to massive layoffs, starting with the most vulnerable (small
businesses, hourly workers, etc)

~~~
core-questions
Which will lead to an explosion of available labour, ready for hiring when
things pick back up.

The issue is whether governments will step in to provide sufficient
unemployment / welfare benefits to bridge the gap.

~~~
azinman2
Ahh yes, the benefits of mass unemployment and businesses shuttering!

Always look on the bright side of life!

[https://youtu.be/SJUhlRoBL8M](https://youtu.be/SJUhlRoBL8M)

~~~
brink
There's the other extreme as well - being a cynic in all circumstances will
leave you consistently feeling burnt out.

~~~
lihaciudaniel
Cynicism is the most authentic character that one can take in these
circumstances

------
bdcravens
I had a phone stolen a couple of weeks ago, and initially I was trying to buy
a new phone outright (ended up filing a claim and having my new one
overnighted, but lack of SMS access would have prevented me from doing my job,
hence the urgency). None of the local Verizon stores had any phones (11 Pro
Max) in stock (they explicitly said it was due to China supply chain), but
Best Buy did.

~~~
throwaway_Bees
>None of the local Verizon stores had any phones (11 Pro Max) in stock (they
explicitly said it was due to China supply chain)

That may be true...but it may be just as likely they are minimizing their own
inventory to keep their own costs down/cash on hand, which is not something
they would freely tell their own employees or customers.

~~~
jedberg
I've heard that new Apple employees aren't getting any equipment because they
don't have any to give.

I ordered an Apple watch on March 3rd and it won't arrive until March 24th.

I'm pretty sure they are having serious supply chain issues.

~~~
hef19898
Everybody has. There is Chinese New Year, always surprising companies
exporting from China every year like Christmas, and than at the same time
Corona. Now there is a huge backlog of produced goods in Chinese ports, a huge
order backlog at Chinese manufacturers amyd not enough shipping and production
capacity. Ultimately things will revert to normal, so. That Corona is now
hitting the destinations of these backlogs doesn't help, obviously.

------
tanilama
I used to be a globalist myself, which I still am, but I think globalization
needs its urgent refactoring.

Not all industries need to be fully globalized, and it is better every country
keep some share of production to itself to account for emergency situation
like this virus.

Globalization had trade off robustness for efficiency, it is time to scale
that back.

~~~
Scoundreller
“Centralize production/operations in China” is the opposite of globalization.

~~~
tanilama
I think globalization doesn't mean equally distribution.

Globalization as how it operates, it means to assign the job to whichever
country that is most cost-efficient for that part of the production.

~~~
lildoggo
I once took a college course based entirely on answering the question 'What is
globalization' Globalization can be just about any interaction between two
entities...

Moving production to China? Globalization

Moving production back to the US? Globalization

...

Anti-globalization movement? Globalization

Or maybe my professor was just nuts, I feel crazy typing this out

------
skissane
Yesterday I had this couple who do pool servicing out to look at some issues
with our swimming pool. They told me their usual salt supplier has run out of
salt. The salt supplier usually imports salt from China (to Australia), but
the supplier has a shipping container full of salt they've ordered stuck in
China and not sure when it will actually make it to Australia.

(They explained domestic Australian-made salt is still available, but it is
30% more expensive than the Chinese import salt.)

------
zkms
This is the cruel and predictable result of a society that has meticulously
and senselessly offshored/outsourced most its industrial capacity. If your
country can't manufacture, _from raw materials_ , all the
electrical/electronic/mechanical components, the tooling, the equipment, and
the chemicals (industrial and pharmaceutical alike) it needs to keep
everything running, you're dependent on these hyper-fragile and convoluted
supply chains that are optimized for cost above everything.

This isn't a "China vs US" thing; i bear zero ill will towards China and their
massive gain of industrial capacity, my ire is _solely_ focused towards those
in power (government and industry alike) who presided over the suicidal
deindustrialization of the United States and Europe.

The net result is that it's China who's able to send medical aid (ventilators,
masks, respirators, test kits, etc) to Italy, and not the US, if only because
the US is incapable of meeting its own needs:
[https://twitter.com/VKJudit/status/1237448125800988675](https://twitter.com/VKJudit/status/1237448125800988675)

~~~
powowowow
The supply chains that you rail against have successfully delivered the
greatest levels of prosperity to the largest number of humans in all of
history.

They were created not by some mysterious force, but by individuals making
rational choices about how they want to allocate their time, their energy and
their resources.

The "suicidal deindustrialization" you refer to is the result of people making
informed choices that you happen to disagree with. They didn't want a $400
locally knitted sweater, made from neighborhood sheep. They wanted a $40
sweater that was made as efficiently as possible, and $360 of change.

Please don't mistake your belief that you could design a better society for an
actual analysis of reality.

~~~
hintymad
And I honestly do want a $400 sweater if we have a prospering manufacturing
business. How many people stuff their house with clothes that they wear only
once? How many people buy toys that their kids play only a few times? How many
people hav a whole closet of shoes? Why do we have twice as large of closet
room compared with people living in the 50s? Why do people just have to buy
clothes every quarter, every month, every week? People around the world seem
have been consumed by modern consumerism.

If people around me can get decent jobs because of local manufacturing, if US
can keep developing talents in mechanical engineering, chemical engineering,
and material engineering, hell yeah, bring me the $400 sweater.

~~~
twblalock
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.

~~~
triceratops
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 correspondingly less.

~~~
twblalock
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 expensive goods
with expensive labor.

~~~
triceratops
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?

------
dghughes
Here in Canada we had nation-wide disruptions for weeks due to rail service
being blocked by First Nations (American Indian) people protesting a pipeline.
The covid-19 virus just compounded that problem. I'm in an isolated rural town
and even Walmart has bare shelves.

------
b34r
I hope it doesn’t screw up our food supply too much. We get a surprising
amount of crops from China and the rest of the world.

~~~
ztratar
The US exports a massive amount of crops to China, not vice versa.

US Agriculture Exports to China = $25B US Agriculture Imports from China = $5B

Source: [https://www.mda.state.mn.us/sites/default/files/inline-
files...](https://www.mda.state.mn.us/sites/default/files/inline-
files/profilechina.pdf)

~~~
Normal_gaussian
5b is a lot.

A large quantity of imports will be used to make US domestic food as well.

The exported good is not the same as the imported one.

~~~
youngprogrammer
Anecdote: Our caterer in silicon valley said there was a supply issue for
tofu.

~~~
barbecue_sauce
So I guess they import the beans, manufacture the tofu, then ship it back to
us? Sounds inefficient, though I'm not sure how much demand there is for a
large-scale domestic tofu manufacturing industry in the US.

~~~
neaden
US Tofu is by and large for animal feed or oil, not tofu.

~~~
barbecue_sauce
Soy, you mean?

------
every
Apparently cheap has a price...

------
jrs95
I can't be the only one that isn't even worried about getting sick, but is
worried the economic damage could be bad enough to impact my job.

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agoodthrowaway
China is back online. It was just a bump in the road.

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lihaciudaniel
Finally we can discuss politics on HN!

