West Michigan, Nevada, Utah discussed on Trumpcast



So as you can imagine. There was a lot of issues. Can you give an example of something. Where like is there an individual example. We can give. Just how complex is yes so for example like the shell of the hot tub the actual thing that you sit on it basically starts as a flat acrylic sheet in kentucky and this flat sheet then gets driven a truck to nevada in nevada. A second sheet of a different type of plastic is added so now you have the acrylic and a different type of plastic that are bind bonded together and then from nevada that all gets driven to their facility in utah at this company's facility in utah a different chemical urethane which which comes from their fact a factory. Georgia is an added to this. So now you have the acrylic another plastic in your thing and then all of that gets basically using pressure and heat that gets basically turned into the shape of the hot tub in these giant industrial presses. And so that's just one basic example of how this is a fully. us supply chain for this one component. The of the hot tub but it takes. That's just three steps and one of those steps takes multiple steps for that to get there so if you remember in february of twenty twenty one there were these winter. Storms at basically came out of nowhere and shut down a massive chunk of the country's oil and chemical production in texas in parts of louisiana the entire state for the first time in whether history under that winter storm warning we also had portions in west texas that were under a blizzard warning. We reported early this morning. Seven degrees in parts of dallas and other parts of the state. Now i don't think people realize at the time but it took months for the country's chemical production to fully recover. They basically clearly decided to press the burden. See buttons into stop production immediately to turn production back on in these giant chemical. Plants isn't easy and he basically to inspect essentially every inch the plans to ensure that there's not going to be an industrial accident. And what that meant. Is that if you were a user of chemicals that were produced and then these things go everywhere. Right go into mattresses go into Tabletops any product you have. It's probably produced by some chemicals. Probably made somewhere around texas in meant that that these companies were stopped that without the products. They need it. If this hot tub company had known somehow that the pandemic was coming if they had a hot tub time. Machine for instance. What do you think they would have done differently to prepare. I think they probably would have or had had invested more in having larger inventories of the raw materials because that is another part of this whole story for the last thirty years manufacturers in the us and around the world how focused on becoming lean manufacturers have focused on reducing the quantity of materials that they store their plants and in good times that works out really well because instead of of having a million dollars worth of spare parts in your warehouse. You're able to take that million dollars and invest it in a machine or by another company but during the current buyers and endemic people have realized that there are real dangers to focusing so much on reducing inventories. It's not just materials that have been a problem. It's labor also how much how much of a role has labor shortage played in this for several years. The so-called manufacturing labor shortage has been a problem but in now seems like. It's the worst that has been really ever. Why is that. Why is it so hard to hire right now. I think in some ways it's it's it's a bit of a mystery to people you. Everyone has different opinions. Some people say oh. It's because of the extra unemployment benefits but i have another theory. Though in certain parts of the country manufacturing wages are no longer a giant premium. Compared to other entry level type jobs i kinda profiled several companies in west michigan. They have furniture manufacturers. They have car part manufacturers and insert towns west michigan. Wendy's is offering forty dollars per hour starting jobs but so is the factory that makes furniture and so in that kind of environments. Why would someone come to your factory which may not be air conditioned which might mean to start at five. Am and so. I think in some ways. Also question of compensation manufacturers no are increasingly no longer paying excess wages compared to other industries in the economy. Could that change. As a result of this whole situation could change in the long term it might but what some manufacturers have told me though is that they are competing globally that if you raise wages too much you'll basically become non-competitive with your products right because if i'm buying office furniture i don't i don't only have companies west michigan. I have companies in atlanta georgia. I have companies making it. In china i companies making it in south america and compare that to a restaurant. You know if. I'm looking for dinner in west michigan. I'm not going to be driving to chicago to get dinner or let's talk about what happens in the future. What happens next. How do you see this resolving or will this ever resolve. Yeah i mean. It's funny because i speak to manufacturers. I think a lot of people are really surprised that here. We are in september of twenty twenty one right. Eighteen months into this and things haven't really been resolved. You'll it makes sense okay. In the first three months the for six months okay this this is a global pandemic. it makes sense. It's going to be some hiccups but eighteen months. That isn't a hiccup that that that feels like. It's a more fundamental reckoning. It's possible to imagine the pandemic subsiding and people wanting to get back out in the world to travel into have experiences in being sick of doing home improvement projects and sick of sitting in their hot tub in their backyard. If that happens. Because there'd be a whole new disaster that results from that demand shift on. What would that disaster look like. I think that is the fear and that is part of the reason why we are still in this position. Each month sin is that there's been a hesitancy from some manufacturers to fully invest in new operations you know. Why would you invest in the second factory if the new demands made evaporate in three months austin hovered. Thanks so much for being with us. Thank you austin. Hovered is a reporter for the wall street journal. That's the show. What next is produced by davis. Land lena schwartz. Mary wilson danielle hewitt and carmel. Dell shop special. Thanks to ethan brooks. Who helped out this week. We're led by alison benedict and alicia. Montgomery i'm seth stevenson filling in for mary harris while she's on vacation thanks for listening. We'll catch you back here tomorrow..

Coming up next