Are the supply chains crumbling? The cases of Toyota, Honda and Samsung
What happens to Toyota, Honda and Samsung according to the Wall Street Journal
“Supply problems for global production”. So the Wall Street Journal headlined yesterday on the front page, reflecting the level of alarm worldwide. The economic crisis and the epidemic containment measures have profoundly disrupted almost all the international supply chains, causing significant variations in volumes and prices. We do not know if it will return to the pre-Covid state, but it is reasonable to predict that nothing will be the same again. Too much confidence had been placed in a development model based on the uninterrupted growth of international trade. This model has proved vulnerable and, at best, no one will more blindly trust its infallibility.
Below is a summary of the article.
“Along supply chains around the world, there are more and more cases of raw material shortages and bottlenecks. No sector is an exception, from auto-motive, clothing to medical equipment.
Toyota, Honda and Samsung were the latest cases of multinationals to encounter problems. In particular, the two companies in the auto-motive sector even stated on Wednesday that they want to stop their production at their North American plants. Toyota complained about a shortage of petrochemicals, production of which was affected by the Texas freeze last month.
Honda, on the other hand, justified itself by affirming the joint presence of problems such as delays in shipments, shortages of semiconductor materials, inconveniences related to the pandemic and the harsh weather of recent weeks in the United States.
Samsung, the world's largest smartphone maker, said the severe shortage of components, especially chips, could have serious repercussions on next quarter revenue.
The aforementioned are just three peculiar cases, but procurement issues are generating continuous delays and cost increases for numerous sectors and companies globally, say market analysts and top management.
All of this is having an impact on margins and final prices for consumers.
"We are experiencing a lot of strain in sourcing raw materials," says the CEO of Summit Plastics, a Mississippi company that manufactures plastic components for, among others, hospitals and industrial packaging.
These bottlenecks in supply chains, which come, among other things, just as the US and world economy is trying to return to pre-pandemic levels, shows however how long and tortuous the path is still, and making people understand especially the high degree of vulnerability of global supply chains.
But the long-term impact of these phenomena is still unclear. The FED governor said in a press conference on Wednesday that he expects these issues to be resolved entirely in parallel with the reboot and economic growth.
The freeze that hit Texas last month helped hand in hand, having been a major blow to the US economy and beyond. In fact, it is precisely there that the largest petrochemical plant in the world is located, which transforms oil, gas and their respective by-products into plastic. The frost in February forced these factories to close completely.
“The adverse weather events in Texas happened at the worst possible time,” reports Michael McKim, purchasing manager for Anchor Industries, a manufacturer of outdoor event products. The Indiana-based company is experiencing difficulties in sourcing polypropylene belts, a product usually available quickly and cheaply. “Here someone risks finding themselves last in line, and empty-handed. We are just praying that we are not that someone ”.
Even Samsung, one of the world's largest chip makers, was forced to shut down two of its largest chip factories in Austin, Texas last month.
In the meantime, however, the Californian ports of Los Angeles and Long Beach, which collectively control more than a third of the entire U.S. import container traffic, continue to remain clogged with inventory following a refueling campaign that began towards the end. last year. "
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/le-filiere-si-stanno-frantumando-i-casi-di-toyota-honda-e-samsung/ on Fri, 19 Mar 2021 19:47:13 +0000.