The major news headline tonight about the supply chain problem seems dire enough:
GM temporarily shuts down North American factories because of chip shortage
How bad is it? From the article above via The Verge:
Four of GM’s US-based plants will be affected: Fort Wayne, Indiana; Wentzville, Missouri; Spring Hill, Tennessee; and Lansing, Michigan. Four other factories in Mexico and Canada will also go dark for several weeks as GM works to shore up its supply of chips. The halt in production will affect GM’s most profitable vehicles, including pickup trucks and SUVs.
If one is to believe this is just a short term problem, then this is not a big deal. However the dominoes which fall after the shutdowns get louder as the economy moves into the third quarter. Ford is in the same situation (from AutoIndustrya.com):
Ford hits pause on new F-150 production
And of course, Ford is having to extend the one week shutdown due to supply chain issues, not just semiconductor shortages. The entire auto industry has been hit and while most middle class beer guzzling football watching soul are saying “so what, I don’t work in the auto industry” a lot of people do still. As do other suppliers who are being delayed from shipping and being paid. As do a lot of diners and restaurants which service the areas around the auto industry. And it goes on and on.
Until you see signs like this in the grocery store:
If anyone thinks this is coming to an end anytime soon, let me share some news with my readers:
This is the beginning of the worst part of it.
The Just-in-Time Inventory System is Broken
A Forbes column on June 17, 2020 provided a hint:
Post-COVID Supply Chain Changes Probably Won’t Be What You Think
In the article the author states the following:
“As a starting point, we need to have an understanding that JIT is a broken model,” said Christian Lanng, co-founder and CEO of Tradeshift, a supply chain marketplace platform used by 1.5 million companies across 190 countries.
The JIT model is broken domestically also not just because of the dependency on imports thought. The situation at the Port of Long Beach, CA is still experiencing massive congestion delays along with gridlock at East Coast ports, and that’s just the tip of the iceberg with the JIT issue.
During my era in the logistics industry at the beginning of the JIT era being implemented as action instead of theory, the same issue that dogged the program from running to perfection in the early 1990’s has returned in this era. Sadly it is even worse though with trade wars, the China Virus, and a moral decline in the United States which has finally hit the economy in the wallet.
The Morality of Work
Working hard isn’t a virtue in itself. It could be a virtue if you work towards something good, that helps others. It is not a signal of morality to work hard for your own benefit, especially when it is at the expense of others.
–Hard Work Isn’t a Virtue, Julia Bauer, July 13, 2018 via The Medium
I read this article the other night and it hit me like a bug whacking a semi-truck’s windshield. An entire generation, possibly two, have been educated by the public schools and many parents that they are “deserving” of a high quality of life instead of working hard on their own to attain it.
As I travel throughout the state of Florida on business talking to clients, it has become obvious as the majority of many employees are trending towards older rather than younger workers. The reason being is that young applicants with no experience apparently think that by hiring them they are to be given an office, a car, and a VP title at a pay rate commensurate with the position. Most have little work experience and even fewer worked summer jobs while in high school or interning while in college. This trend has been exacerbated in the last decade with no end in sight.
The Shortage Causing More Shortages
The headlines speak for themselves:
Tank Truck Driver Shortage Could Hit Hard During Independence Day Break
American Airlines warns about jet fuel shortages around the U.S., asks pilots to conserve
Issues with trucker shortage lingering
Trucker shortage persists as economy speeds ahead
Poor retention rates lead to truck driver shortage in the Ozarks
National truck driver shortage climbs, SLCC program recruiting to fill gaps
Trucking Recruitment Firms See Business Surge Amid Driver Shortage
I could post hundreds of links to articles about this, but the driver shortage is causing problems across the board in every industry. It’s hard work, it’s dirty work at times, and most of America’s princesses think that gaming is a profession which they are entitled to be paid for (Hint: No). The reality is that this is not only a morality problem now with many under the age of 30 not wishing to work hard, but it’s a demographic crisis as the older truckers are now retiring in droves with no replacements forthcoming:
Aging workforce, booming industry create “perfect storm” for truck driver supply and demand crisis
Excerpt:
“(Drivers) are retiring at a rate that’s higher than people coming into the industry,” said Tom Balzer, president and CEO of the Ohio Trucking Association. “The available workforce is taxed. You’ve got this almost perfect storm, where you have increasing demand and not enough people who are interested in getting into truck driving.”
-Cleveland.com, July 23 2021
When this crisis hit the boom of the early 1990’s economy, our company and later on others I consulted with, resorted to hiring drivers from Eastern Europe as many young to middle aged men from behind the old Iron Curtain were eager to come to the states and get a green card. With the China Virus pandemic however, overseas recruiting is now a dead industry forcing a return to trying to persuade high school students and young ex-military to consider a career in trucking.
This is no a problem unique to the U.S. however as this posting from Jalopnik indicates:
The Driver Shortage Is Only Getting Worse In Covid
This crisis is only accelerating as to find a quality individual and train the to operate as a safe, efficient driver can take anywhere from 3 to 6 months to do the job right.
The Other Shortages Which Impact Everything
Let’s try to put this all together and see how the driver shortage in transportation is part of a bigger problem with these headlines:
National Survey Finds Severe And Desperate School Bus Driver Shortage
McDonald’s Is Out Of Milkshakes In The U.K. And A Truck Driver Shortage Is To Blame
Waste pickup interruptions continue on Sunshine Coast
Garbage Collection Changes Extended Due To Driver Shortage
As volume rises, CSX feels pinch from crew attrition, tight job market
Railroad worker shortage threatens recovery
Help Wanted: Can You Fly A Plane?
Acute container shortage could have ‘devastating’ impact on business
Coca-Cola’s supply chain under pressure due to shortage of cans
From this sampling of the literally hundreds of logistics news issues hitting my inbox every morning and evening in addition to personal interaction with some friends still in the industry, this disaster was of our own design. JIT works only in the world of theory; in reality it worked until it did not and 2020 was the linchpin which when pulled collapsed the entire system.
How desperate has it gotten?
Amazon’s Answer to Delivery Driver Shortage: Recruit Pot Smokers
There used to be some Department of Transportation regulations regarding this, but I guess when a company gets as big as Amazon, they write their own rules.
If parents can not get their kids into school via a bus, they have to drive their kid to school and pick them up, thus leaving one parent working at home or not at all. The garbage has been piling up and the risk of other diseases from rodents spreading illness increases nationwide. Add in the piles of freight cars and containers backing up at ports throughout North America and the manufacturers have to lay people off due to a lack of supply. After that, the loudest sounds in America will be the rest of the dominoes falling throughout the economy.
It’s turning into a nightmare. The signs that I posted in this article are real and were taken in several Publix supermarkets across the state of Florida from the East Coast to the West Coast. I have seen other grocers, including WalMart, with the same issues. If this persists, which it will and will worsen, the truckload of supply chain problems will hit home this winter in a colossal collapse occurring during the Christmas retail season.
If America experiences a harsh winter with energy shortages, power outages, and food shortages combined with massive inflation, I expect this to be the darkest times since The Great Depression of the early 1930s.
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