Not so “just in time” – The Ukiah Daily Journal


Our society suffers from the fundamental flaw in perceiving the world as separate parts, and the economic limits of capitalism are symptomatic of this mistake. These are expressed as: the degradation of any value other than tax, social disruption due to extremes of exclusive gain, destruction of natural resources and increased economic risks associated with the pursuit of short-term profits. The rise of the “just-in-time” supply system, which emerged in Japan in the 1970s, is one example.

Previously, companies had to have an adequate internal supply of parts and materials to keep their own production running smoothly. This inventory, and the warehouses needed for storage, tied up funds. Toyota began to reduce these expenses by coordinating production throughout its supply chain, so parts were produced and delivered as needed: just in time. The savings were large enough that the practice eventually spread globally. This approach depends on good estimates of product flow, a reliable global delivery structure and a stable economic environment, but reduces resilience to unexpected changes: short-term gain with increased long-term risk.

As the “just in time” developed, the manufacturing world focused on fewer and fewer businesses and facilities. In some cases, a single factory would produce an essential item for a multitude of industries around the world, increasing vulnerability to unforeseen events. In 2011, an earthquake in Japan caused a fire at a factory that produced the majority of the world’s supply of an epoxy essential to semiconductor manufacturing. This caused widespread disruption and price hikes as other companies scrambled to increase production.

The COVID pandemic has affected the entire global economy, with business closures and social lockdown occurring everywhere at the same time, with little warning. All levels of business have been affected by a simultaneous loss of workers and customers. Business recovery, as the flare-ups have passed and the vaccine has arrived, has been patchy at best. Just being open for business doesn’t mean customers show up, and not all companies have resumed production at the same rate. The proper functioning of the just-in-time system has not yet returned.

The backlog of ships awaiting unloading at west coast ports is one example. Before COVID, LA would have one or two ships anchored offshore while waiting for one of the 60 berths. Now, there are more than 80, with infrastructure that is underdeveloped for such a scale. The recent southern California oil spill was caused by an anchor snagging on a buried pipeline, causing it to rupture.

Strange shortages are now normal. A friend on the coast, working on a plumbing project, said he couldn’t find PVC elbows anywhere. Glass is scarce, and the lack of bottles has affected many businesses, from small vendors to large ones like McCormick Spices, which have slowed production due to a lack of the glass jars they need.

One of the biggest disruptions is in the automotive industry. When travel was cut off, the car rental industry sold off its inventory to save money. Now that people are starting to travel again, the demand has increased. However, the auto industry has not been able to ramp up production fast enough, so there is a shortage of rental cars and used car prices have jumped. One of the limiting problems is the shortage of semiconductors necessary for these modern vehicles.

The most powerful computer chips are only made in Taiwan, although the technology was developed in the United States. It takes about nine months, from start to finish, for one of these chips to be created. When the economy shut down, so did chipmaking. When the economy began to recover, demand exceeded their ability to meet. Additionally, Taiwan suffers from a climate change-induced drought, creating severe water shortages. The semiconductor industry requires massive amounts of very clean water, which further slows the increase in production.

Our previous economy was based on a stability that is no longer so. Growing resource depletion, accelerating climate change and ongoing geopolitical upheavals threaten to continue and exacerbate the disruptions we are currently experiencing. We will need to relocate our critical systems, produce more of our critical needs in the United States and in our county. We need to economically reward people who render “essential” services, rather than exporting labor abroad, and reduce the economic excesses of exclusive gain, which bankrupt the country and create social unrest. .

Crispin B. Hollinshead lives in Ukiah. This article and previous articles are available at cbhollinshead.blogspot.com.

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