We recently did a webinar with approximately 75 manufacturers. And we asked attendees, who mostly came from the procurement, operations and supply chain functions of their companies, what is the most pressing business issue that your company faces with regard to the pandemic. Choices included: supply continuity, price volatility, logistics concerns and cash flow. Among this group, over 50% cited supply continuity as their biggest concern, followed by price volatility at 23%. What does this tell us about the current market, and more important what does it tell us about the future of manufacturing in the aftermath of the pandemic? We can read into it in numerous ways, but for us, what stands out is that manufacturers across different sectors will need to revisit global supply chains. Today, what is closing businesses is not just a … [Read more...] about Should Coronavirus Cause Us to Rethink Globalization?
As Surplus Record goes to press, U.S. manufacturers are once again threatened with the potential of having to manage through a new round of China tariffs. Never mind the fact that in 2018, 12 out of 18 manufacturing industries in the U.S. saw record profits, despite tariffs, according to a recent MetalMiner analysis. Regardless, if you ask a typical procurement manager today about tariffs, he/she will generally have nothing but negative things to say about their impact. A recent ISM (Institute for Supply Management) study that asked procurement managers in manufacturing if they “believe that tariffs have raised the price of the goods that you produce and deliver to your customers,” 59% of survey participants said “yes.” According to the ISM findings, the average price of goods raised to customers was 6.8%. However, only 30% of … [Read more...] about Managing Through Tariffs — the End of the China-to-U.S. ‘Chicken Run’
Over two decades ago, I hired an old friend from prep school to lead the Hong Kong office of a fast-growing sourcing tech company I worked for. A Westerner with strong Chinese language skills and a graduate student in Asian history, he took a somewhat eccentric British pride in riding his old Triumph motorcycle around the streets of Hong Kong, the loud bike harkening back to the old days of British rule every time it backfired, perhaps. There is no rumble of that old motorbike anymore. While the latest tariff waves and currency devaluation rumbles have captured the U.S. and China headlines of late – as the overall situation appears to continue to deteriorate, perhaps for the better, perhaps for the worse – what we find just as fascinating and as important to understand China’s ambitions is its continued crackdown on the last … [Read more...] about The Final Burial of Democracy in Hong Kong?
Summer vacations provide a time for rest and reflection. While relaxing in the sun in August, we could not help but reflect on a critically important piece of business, economic and policy news you won’t often see reported in the mainstream press. What is this headline? China is losing the first salvo of the trade war with the US. While no one – except perhaps President Trump himself – believes that trade wars are “easy” to win, the victor of round 1 appears hard to dispute. Regardless of where you sit – either by industry or manufacturing supply chain tier – it’s clear that on an overall economic basis, China is taking a greater beating than the US. According to Trading Economics, the Caixin China’s Manufacturing PMI (formerly the HSBC PMI), “fell to an eight-month low of 50.8 in July of 2018 from 51.0” and both output and new … [Read more...] about China Takes a Beating in Round 1 of the Trade War
In the past, when CEOs mentioned China in earnings reports in a negative manner, it typically centered on supply chain issues such as delayed shipments, quality concerns, counterfeit or substitute materials, increased pricing or related “procurement” considerations. No longer. Despite the debate around trade deficits, IP transference and market economy considerations, China has become increasingly important from a top line perspective as well. And stagnation in segments of the Chinese economy have now impacted the top line of western manufacturers as well, creating a material impact on revenue and earnings. Consider Apple, a Fortune 5 manufacturer, as a case in point. When Apple’s CEO, Tim Cook, writes a letter to shareholders blaming Apple’s overall revenue/earnings slowdown on China as he did in early January, it is worth paying … [Read more...] about China’s Economic Slump: Yes, It Impacts U.S. Manufacturers