Why California’s shipping bottleneck reflects a threat to U.S. security
This is Naked Capitalism Fundraising Week. 599 donors have invested in our efforts to fight corruption and predatory behavior, especially in the financial sector.Please join us and participate through our Donation page, Which shows how to donate via check, credit card, debit card, or PayPal.read Why we do this fundraising event,, What we achieved last year,, And our current goals, Support expanded news coverage.
Yves came with articles, especially articles from individuals with important public roles, and there were usually more articles than expected. This article from Tom Conway, the international director of the American Iron and Steel Workers Federation, uses the deadlock in the California ports to call for more American consumer products to be produced at home for domestic security.
The “safe” dog whistle happened to be true. If China takes a hard line and stops sending Americans such things as medicines, ascorbic acid (a necessary food preservative), and potato chips, the United States will stop abruptly within a few months at most. But another reason for invoking “security” is that the federal government has considered powers under various national defense emergency regulations. Strangely, these powers were not invoked when Covid was severe in 2020.
However, despite a variety of reasons, it clearly makes sense to reshape the United States into a more self-sufficient state, as they said in Maine, “You can’t get there from here.”
As we explained in our response to a post by a hedge fund manager and sometimes author Doomberg, he strongly urged the extensive and fragile supply chain in the United States to relax significantly, even before you solve small problems, too much incentives The measures are all operating in the wrong way “It’s really hard”, and our assumed leader doesn’t like this kind of thing. From our post, Will the supply chain crisis lead to more outsourcing?
…It took 40 years to create a tightly coupled supply chain, which included a large number of foreign purchases, including raw materials, intermediate products, and usually a large number of sub-assemblies.
There is no benefit in getting more raw materials or inventory, even if you have a place to put them, if you don’t have equipment and direct labor and systems (machinery and IT) and skilled supervisors and plant managers to keep everything running and prevent equipment and safety disasters. How long does it take to design and build a new factory or expand an existing factory? You have to get approval, sign a contract to build the structure, purchase equipment and deliver it (oh, again maybe from overseas, letting you become a crosshair of port/shipping chaos again), hire and train workers, adjust operations… even assuming you can find Experienced operations managers who can manage startups (more difficult than overseeing an established business)…
Let us look at other practical issues. Will we mine rare earths in the United States soon? We let China have these not because rare earths are actually very scarce, but because the mining and processing are really bad. But there is also professional knowledge, we also give up…
But let us go back to the biggest reason why there is no way. No matter how severe the supply chain collapse, we will not see a large-scale wave of localization: management incentives and financialization.
Take a look at some of the steps I listed above. Even if a very brave company believes in religion and decides to follow this path, what will it bring? A large amount of upfront costs, not all of which can be capitalized. This means that before the new repositioning company buzzes, earnings will be destroyed, which will take years. Are retained earnings sufficient to cover all investments? If not, it means borrowing or issuing shares. Oops, do you think investors will be keen on this?
Most importantly, the current leadership will almost certainly not be able to execute a change plan of this magnitude. Think they are ready to sign a work death order?
More generally, giving up dependence on the supply chain has a huge negative impact on the compensation of executives and managers. In many cases, if not in most cases, the real purpose is to shift income from lower-level workers to senior and middle managers by reducing the content of hourly labor and increasing risks. (Usually illusory after appropriate risk adjustments) Both savings and increased corporate complexity justify higher salaries.
And people seem to be unable to expect political support for this transformation. Shifting production to shore will increase costs, and if there is no other reason, considerable business restructuring and investment costs will need to be recovered. Asking voters to pay more for something, or worse, asking them to sacrifice for any reason other than war is not a popular proposal.
Therefore, although I appreciate Conway’s problem statement, bringing mass production back to the United States will require a fundamental restructuring of the US economy. Too many senior executives are very good about the current situation.
Workers at the Sibanye-Stillwater complex in Montana used to mine minerals Anti-cancer, Production life-savingSurgical instruments, and manufacture wind turbines and solar panels that are vital to a clean economy.
They touch every aspect of American life, so much so that Ed Lorash, president of the United States Steel Workers’ Federation (USW) Local 11-0001, believes that their work is vital to national security.
Lorash knows that if there is no strong supply chain from mining to manufacturing, the United States will be vulnerable. It will not only face a shortage of consumer goods, but also face various crises from epidemics to natural disasters that may undermine American security. Only by reviving the industrial base that has been hit hard by poor trade can the country’s dangerous dependence on foreign products be eliminated and the freedom of the United States can be protected.
“It discourages your enemies,” Lorash said of strong manufacturing. He pointed out that foreign producers can cut off supply for economic or political reasons, or raise prices on a whim.
“I just think we really need to think about making things here,” he said. “Then, if we have excess, we can sell it.”
In the past 25 years, greedy companies have closed hundreds of American manufacturing plants, Offshore Provided more than 1 million jobs in countries with low wages, weak labor laws and poor environmental standards.
But this is not the only blow to American security.China and other competing countries intensified the damage Dumping unfair traded goods Millions of jobs have been created, and the domestic manufacturing base has been further destroyed.
COVID-19 has drastically reduced the damage.Hollowed supply chain left the country Unable to produce Masks, ventilators and other medical equipment that are necessary to fight the epidemic.
America Once made 37% of the world’s computer chips are used not only in automobiles, but also in electronic products and countless other high-tech products. The United States now accounts for only 12% of global production and purchases most of the products it needs from overseas.
Dozens of huge cargo ships floating on the west coast are once again a clear reminder of Americans’ over-reliance on overseas products.
So many ships-loaded with billions of dollars of foreign manufacturing Clothing, electronics, furniture and other goods——As California ports converge, they have caused unprecedented traffic congestion.
As ships dock and unload in turns, millions of Americans continue to wait for the goods and supplies they need to run businesses, run their families, and take care of their families.
The engine of the Jeep-like vehicle that Sibanye-Stillwater needed to transport miners underground was stuck somewhere in the supply chain. Without a motor, the machine would be idle.
“They are small,” Lorash explained when talking about these vehicles. “They are durable. They emit very low emissions,” he said, which is essential for responsible mining.
Port has Switch to 24/7 operation Other measures have been taken to alleviate congestion, but this does not help solve the fundamental factors that cause congestion.
President Joe Biden has taken initial steps to rebuild the US manufacturing base and repair the supply chain, such as directing New investment In the manufacture of essential medicines, batteries and minerals.
Upcoming National Infrastructure Plan It will also help revitalize manufacturing by generating demand for steel, aluminum, glass, paint and other products.
But only long-term investment and continuous management can provide the necessary industrial foundation and supply lines to fight disease, restore vitality after natural disasters, and respond to the daily challenges of the global economy.
This means locking down every link in the supply chain and ensuring that the U.S. can not only produce platinum and palladium, but also produce surgical instruments, wind turbines, solar panels, automobiles, electronics, and electronic products that require steel, aluminum, Fiberglass and other parts. Other finished products.
“It’s all so interdependent,” points out Matthew Bashaw, president of USW Local 01-01494, which represents approximately 65 people producing at the Tate & Lyle plant in Dayton, Ohio. Citric acid workers.
The problem is not only to ensure the supply of goods. As Basha pointed out, end-to-end control of the supply line also means maintaining the quality and purity of the goods that Americans use and consume.
He and his colleagues adhere to strict on-the-job safety standards and meticulously ensure product quality, including food-grade citric acid used in products such as soft drinks, macaroni and cheese.
But Basha pointed out that other countries have tried to weaken domestic producers for years, and asked: “What are their regulations? Do they meet the standards consumers look for in their products?”
As the United States produces more electric vehicles and develops a clean energy economy, the platinum, palladium, copper, silver and nickel produced by USW members in Sibanye-Stillwater will become more and more important.
Lorash knows that his colleagues are preparing to meet the challenge of meeting the needs of the country. He hopes to see the revitalization of the manufacturing industry so that union workers in other companies have their own opportunities to help build a stronger and safer America.
“Keep it at home,” he said.