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Supply chain lessons from Long Beach

I know I’ve heard a lot about what’s called the “supply chain,” said US President Joe Biden last week. In a speech Explain to Americans why sneakers, toasters, bicycles and bedroom furniture are taking so long to reach them these days.

It is very unusual for free world leaders to spend a lot of time talking to the general public about logistics and the value chain. But this is a rare moment. Supply chain failure Labor pressure has led to port backups in the United States, as well as in the United Kingdom, Europe, and many other parts of the world for weeks or months.

Of course, much of it depends on the Covid-19 pandemic and the asynchronous national recovery cycle that led to supply and demand discrepancies in various products. These cycles should eventually become smoother as the virus weakens. But the port turmoil sheds light on the bigger problems in the global economy, from incompatibilities in skills and work to over-reliance on China as a provider of a number of important commodities.

Backing up ports in Los Angeles and Long Beach quickly became a major political issue in the United States, given that it accounts for 40% of all US freight imports. But many people are taking the wrong lesson. Government stimulus checks can’t find dock workers to discourage work, return to 10-year stagflation, or trade conditions in the Laissez-faire 1990s or neighborhood deprivation 1930s. I don’t think that’s true, but there are some different and better lessons to learn from the current problem.

First, supply chain glitches aren’t just the cause of the problem of finding a workforce in some sectors. Technology turmoil and policy choices have also played a role. For example, jobs such as docking and trucking were scarce in the United States long before Covid. This is because many training programs have been closed in recent years and people have moved away from these positions after long warnings about automation. Self-driving cars take on the job.

Self-driving cars are rolling out slower than expected, but it’s not surprising that technology disrupts work. In recent years, many difficult and physical tasks have been filled with machines and robots, but more will continue to do so. The economic and political collapse of the pandemic only stimulates trends. Witness Italian winemakers unable to find immigrants working in the fields, buying automatic grape pickers, and French farmers investing in agribots to harvest their crops. Other white-collar jobs are also unaffected by automation, as pandemic countries and businesses are looking for ways to save money.

Indeed, except for very high-end knowledge work and low-end close care work, it is difficult to know where the long-term workforce is unless there are major structural changes in the US economy.

Some market watchers are worried about small wage inflation, but a new Cornell University study Insist on itIn the United States, underemployment may continue to raise challenges for the next few years. Its author, Daniel Alpert, believes that it is a new common sense that there are humans at the high and low ends of the market, with software in between, unless more commodities are produced locally for the country. increase.

Of course, if U.S. policy makers and businesses were smarter, they would set up a German-style labor-management council and a furlough system to not only work together with the public and private sectors to share the benefits of recovery, but to deal with it. I could have done it. Faster due to downside risk from Covid-related turmoil. Germany is unaffected by port turmoil, but Kurzarbeit’s short-term work plan has been better than the US model for the last two decades in smoothing recession and recovery ups and downs. The current situation is that the British-American labor model of rapid employment and dismissal requires the president to ease the conflict between businesses and trade unions in order to operate the port 24 hours a day, 7 days a week. This model clearly fails the post-pandemic resilience test.

So is the highly complex global supply chain, which has been pushed to the obvious limits before Covid. A few years before Biden’s “Bai America” ​​or Donald Trump tariff war, many large multinationals shrank their complex global supply chains and focused production more and more on “regions closer to the end markets and local hubs.” It was being rebuilt to “do”. 2016 OECD Report put it. This is due to a number of reasons, from changing cost structures in emerging markets to advances in manufacturing digitalization, the benefits of innovation found in in-factory R & D colocation, and the realization of previous underestimations of globalization costs. It was a thing.

Of course, one of these costs comes from too few countries and companies controlling value too much. One of the best things we can do to avoid port piles in the future is what Barrylin, the antitrust advocate and founder of the Open Markets Institute, calls the “four rules.” Is to enact. Critical supplies must be sourced from one location or placed in one port.

It is an easy-to-understand rule without nationalism. And it may help us get our Christmas gifts on time in the future.

rana.foroohar@ft.com

Supply chain lessons from Long Beach

Source link Supply chain lessons from Long Beach

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