Upcoming shortages

[LCHIEN]

Things we will be seeing prices going up as shortages appear due to recent events:

1. Non volatile Memory sticks and chips for cameras and phones and thumb drives, a large percentage of these are made in Japan.
2. Flat screen displays and monitors
3. RAM memories
4. Japanese autos, at least the models still made in Japan.
5. oil as Libyan supplies are taken off market and stay off
6. Natural Gas as nuke reactors are shut down and kept off-line either for problems or fears.

[Kristofor]

The world running on a just-in-time model may do wonders for return on invested capital numbers, but it's not very fault tolerant.

For every company directly impacted in Japan there are probably over a hundred others impacted downstream around the world. I know several of our supplier were impacted, including a stepper motor company that lost essentially all of their inventory when their warehouse was destroyed (but luckily the production facility was not significantly damaged). If we didn't have a couple months worth of stock on hand, we'd be idling two production lines as a result of an event 7000 miles away.


Oil and gas are fungible and their price is fluid enough to keep supply and demand in check pretty easily so actual shortages aren't likely to be a problem for us. It just means we'll end up paying more. It did sound like there are some refineries in Italy and elsewhere that are only setup to process Lybian oil. I don't know exactly what that means, or how long it takes to re-configure, but I suppose that could mean there may be some actual shortages in certain localities.

Assembly and finished goods manufacturing for autos or general electronics may see some impact, but my guess would be this is driven by shortages at the parts level, and exacerbated by rolling blackouts cutting into production more than by direct damage...

Semiconductor/RAM fabs are pricey but even if you want to throw money at them they simply take a long time to build. I don't know how much damage was done to those facilities though. I've read a few stories that areas hardest hit were significantly less industrialized than points further south. That said, fires and earthquakes in the past have demonstrated that damage to a single plant can be enough to impact markets fairly significantly and for months...

[herb fellows]

The vagaries of supply and demand also creates opportunities.
Might not China jump in here and make inroads into these electronic markets?
I have heard that they now produce a car which is half way decent also. How long before we are all driving shin wa's, or whatever, because they have the cheap labor to produce it at a cost that other world manufacturers can't compete with?

[Pappy]

Anybody think this might be an opportunity for American ingenuity to step forward and retake some of the global market? (Or does that even exist anymore????)

I won't go into my thoughts on oil/gas prices. Suffice to say ANY excuse for the companies to increase the price, and their profit, is going to hit us in the wallet......

[pelligrini]

Natural Gas shouldn't be affected significantly in the US. The shale gas production has really taken off over the last few years. I head a few reports recently that we really have an excess of it right now. Just look at the prices. The US has no export facilities for it either. Our import percentages of it are around 10% from what I can tell. If import prices increase significantly I think our own production can take up the slack.

My boss has several wells in the Barnett shale. Some of them record producers for the area. They actually wanted to stop production on them because gas prices were so low and the returns were minimal. One of the reasons they didn't was that it would have cost them more to shut them down due to an agreement for the pipeline that was put in to the site.

[jackellis]

One of the more interesting side-effects of the 2008 runup in oil prices was a huge increase in the price of shipping goods, especially those that are time-critical and have to move by air freight. High oil prices will reduce the cost gap between producing goods here and producing them in Asia.

While it's true that natural disasters wreak havoc on just-in-time manufacturing, the folks who make and sell us stuff are under tremendous global pressure to keep costs down because if they aren't willing to produce at globally competitive prices, we have more reason to buy from the likes of Harbor Freight.

When the likelihood of a production interruption you can't control is small compared with the likelihood you'll be out of business because your cost structure is too high, the answer is pretty obvious, even if it doesn't make sense in cases like this.

By and large, American manufacturers still do a lot of their most difficult, highest value manufacturing here. Chips, final aircraft assembly, jet engine parts, and machine tools are still made in America. I think we're second only to China in the value of manufactured goods we produce.

Finally, if you're worried about the competitiveness of American manufacturing, make sure your kids become scientists and engineers rather than lawyers and investment bankers.

[woodturner]

Things we will be seeing prices going up as shortages appear due to recent events:

1. Non volatile Memory sticks and chips for cameras and phones and thumb drives, a large percentage of these are made in Japan.
....
3. RAM memories

I expect the impact on electronic parts to be minimal - while many of the parts are made by Japanese companies, most of the fabs are not in Japan but overseas. As with the US, the environmental issues and labor costs have made it more cost-efficient to fab off-shore.

The Phillipines has one of the large packaging industries ( putting the die in the package) and China and Taiwan have most of the fabs.

[sailor55330]

I deal and compete with direct imports from China and other foreign countries on a regular basis. The sad truth is that the US can produce as much or more than probably any other country, BUT, we have grown so used to our lifestyles that we can't do it in a cost effective manner. If you look at labor rates alone, the US does not fair well at all. When you couple all of the regulatory restrictions that our factories must face that foreign countries don't, we are at a serious price disadvantage. There are so many factors that it would be impossible to discuss them all. In addition, we just aren't as flexible as some other countries when it comes to production. Factories in China will re-tool to produce almost anything that keeps them running, which is something I don't think happens to often in the US. I recently bid for business against a company from China and I was 138% above the winning bid and my company is a major player in the domestic market. We could take this down many paths of reasoning and or fault/blame. I'd leave it at this--as a country we don't seem to be as hungry as we once were and therefore, we don't seem to be as willing to make the sacrifices we once did. It's hard to compete against someone who can pay labor $1-3 dollars an hour and in some cases, a day. Personally, I'd love to see the US become more competitive in the world market, but will be an uphill battle.

[MilDoc]

It's hard to compete against someone who can pay labor $1-3 dollars an hour and in some cases, a day. Personally, I'd love to see the US become more competitive in the world market, but will be an uphill battle.

You hit the nail on the head as far as I'm concerned.

[MilDoc]

Things we will be seeing prices going up as shortages appear due to recent events:

4. Japanese autos, at least the models still made in Japan.

Not just those made in Japan. Toyota has already cut back production here for fear of not being able to get parts manufactured in Japan.

[dbhost]

Not just those made in Japan. Toyota has already cut back production here for fear of not being able to get parts manufactured in Japan.

Also General Motors has idled 2 U.S. plants that rely on components from Japan to build their vehicles. Specifically the Chevrolet Colorado / GMC Canyon pickup trucks (In Louisiana) and the engine assembly plant I think in New York.

This "Just In Time" short supply chain thing really is coming back to bite the business world in the backside.

[LCHIEN]

just got a article that says 25% of the large silicon wafer production in the world is idled because of the earthquake and supply chain disruptions. These wafers are used in the production of memories and large logic devices. NVRAMS, DRAM, processors. This may impact deliveries of all semiconductor devices.

[dbhost]

Glad I got my parts on the way already...

[woodturner]

just got a article that says 25% of the large silicon wafer production in the world is idled because of the earthquake and supply chain disruptions. These wafers are used in the production of memories and large logic devices. NVRAMS, DRAM, processors. This may impact deliveries of all semiconductor devices.

Forbes reported that as well:
http://blogs.forbes.com/ericsavitz/2...er-production/

Wafers are the "blank" slices of silicon that are the starting point for making ICs. They look like a big silver tiddly wink with a mirror-like polished surface :-) So even if the chip fabrication facilities are viable, they can't make chips without the blank wafers.

[woodturner]

Latest update from EE times (an industry journal):
The latest news out of Japan includes word that Renesas Electronics has resumed limited production at two front-end semiconductor fabs that had been knocked off line by damage and power outages stemming from the March 11 earthquake. Renesas did not provide detail on the nature or volume of the production in the facilities, but the move to restart limited production at two previously idled fabs is an encouraging sign and should boost Renesas' current wafer production capacity, an estimated 40 percent of which was knocked off line by the quake. Sony also reported restarting operations at a number of sites, but several of both companies' production facilities remain off line.

full article
http://www.eetimes.com/electronics-n...L_EETimesDaily