Supply Chain and Manufacturing in the News: May 2022 – Baby Formula, Food Supply Chains, Chinese Lockdowns, and American Semiconductor Production

Baby Formula Shortage Could Persist Until July: FDA Commissioner (ZeroHedge) May 27, 2022

Abbott said the plant is due to resume production on June 4, but previously noted it would take six to eight weeks for the products to arrive in stores. The company said it would prioritize supplying its specialty formula EleCare on or about June 20.

TSMC And Intel Are In A Mad Dash To Hire Semiconductor Technicians For Their New Plants In Arizona (ZeroHedge) May 27, 2022

Over 6,000 workers are currently on site trying to get the facility up and running by its targeted 2024 timeline, the report says. While it was tough to find construction workers, finding the skilled technicians necessary to work at a chip plant is proving even tougher.

Rash of parts thefts is leaving Freightliner trucks inoperable (FreightWaves) May 23, 2022

A Class 8 truck has about 17 chip sets controlling everything from power windows to safety systems.

FDA Chief: COVID, Mail Mix-up Delayed Action on Baby Formula (NewsMax) May 25, 2022

Califf is also facing questions about why his agency didn’t anticipate the shortage, given that Abbott’s plant supplies roughly one-sixth of the U.S. formula supply. FDA regulators did not contact the U.S. Department of Agriculture about impacts to the formula supply until Feb. 11. Califf’s testimony states that his agency does not have the “authority, resources, or dedicated staff” to track supply chain disruptions. He asked lawmakers for new powers and resources to monitor the information.

The China evac – Companies finally want to leave. But can they afford to? (Noah Smith) May 26, 2022

For years, people have been predicting a multinational corporate exodus from China. Rising labor costseroded the country’s advantage as a platform for cheap low-end manufacturing. The Chinese government regularly appropriated foreign companies’ technology and gave it to domestic champions.

Supply Chain Diversification in Asia: Quitting China Is Hard (Macro Polo) March 31, 2022

Short of unpredictable cataclysmic events, supply chain composition in the foreseeable future isn’t likely to deviate from the observed trend, with China remaining by far the “factory of the world” when it comes to consumer electronics production.

The Smile Curve predicts supply chain value and has changed little globally over 20 years

Ideas to boost Japanese growth (Part 1) (Substack) May 25, 2022

A good initial goal would be to raise exports from 15% of GDP to 20% of GDP.

Snap Plunges, And There Goes Social Media’s Online Ad Biz (WSJ) May 25, 2022

Snap’s shares closed down 43% Tuesday following Monday’s disclosures. Facebook parent Meta Platforms sank 7% Tuesday on the news, while shares of Pinterest fell 23%. Shares of Google parent Alphabetand Twitter fell 5%. Even Amazon, which only recently began disclosing the size of an online-ad business that now generates nearly $33 billion in annual revenue, saw its shares slip 3% following Snap’s warning.

Bullwhip Effect Ends With A Bang: Why Prices Are About To Fall Off A Cliff (ZeroHedge)

Templeman’s conclusion was accurate: “As inventory levels have fallen to multi-decade lows at retailers, there are likely many businesses that will not have enough inventory to satisfy customers as economies recover and pent-up demand is unleashed. This is particularly the case as retailers are far more reliant on just-in-time supply chains than they were in decades past.”

Chinese Regime Locks Down Mega Port City of 14 Million Under ‘Zero-COVID’ Policy (Epoch Times) May 23, 2022

Tianjin is one of China’s four cities that are directly controlled by the central government, and a major port city in the north. The authorities announced on May 19 that they would implement a closed “static management” policy for the population of nearly 14 million, restricting the free movement of people and vehicles.

PHOTOS: Mexico’s Shelves are Stocked with Baby Formula amid U.S. Shortage (Breitbart) May 18, 2022

Within the past week, the FDA announced that it would ease regulations to allow for the importation of formula. Experts cautioned that shelves would not be stocked with the imported goods for more weeks to come, however.

1/2 of America Could Experience Blackouts this Sunmer (ZeroHedge)

Across the Western US, power generation capacity has declined 2.3% since last summer, even as demand is expected to increase.

The Coming Food Catastrophe (Economist) May 19

…emerging economies spend 25% of their budgets on food—and in sub-Saharan Africa as much as 40%. In Egypt bread provides 30% of all calories.

Shanghai Ports Reopen (SCMP)

Supply chains are never returning to ‘normal’ (Freightwaves)

There is a conflict between environmental, social and governance (ESG) goals and supply chains optimized for cost and speed. If we prioritize ESG, we will need to contend with supply chain risks

Emergent Hid Evidence of Covid Vaccine Problems at Plant, Report Says (MSN) May 11, 2022

nearly 400 million doses of coronavirus vaccine manufactured by Emergent had to be destroyed “due to poor quality control,” including about 240 million doses in late 2020 and early 2021. Previous estimates of lost vaccine were far lower; no contaminated doses were ever released to the public.

Charlie Munger Is Right: China Is Making The U.S. “Look Foolish” On Bitcoin (QTR) May 11, 2022

China could be making an exceptionally prescient move: sidestepping a coming global economic crash that could happen at the hands of the crypto market, which earlier this year was worth more than $2 trillion.

Rivian Doesn’t Need Cash Like Many Other EV Start-Ups. Why the Stock Is Tanking. (Barron’s) May 9, 2022

One reason Lordstown needs more capital is that sales didn’t come in as fast as expected. The company’s initial projections called for $1.7 billion in 2022 sales. The actual sales figure is likely to be about $25 million, according to Wall Street estimates.

Opinion: The baby formula shortage is an outrage. A sane country would fix it. (WaPo) May 11, 2022

In 2008, three companies made 98 percent of the formula Americans bought; Abbott alone accounted for 43 percent of the market.

The Centers for Disease Control and Prevention reports that 84 percent of babies are breastfed at some point in their lives. But almost three-quarters of U.S. infants will eat some formulaby the time they’re 6 months old.

“The nationwide baby formula shortage is getting worse” (CBS) May 6, 2022

“Anatomy of the American baby formula shortage” (link) May, 2022

Logistics Firm Loses $40 million in Hack (@aaronandml)

Is the Shanghai Shutdown Stopping China’s Property Market? (@ChinaPropFocus)

US supply chain pressures ease as transportation capacity grows (freightwaves)

California’s Population Shrinks by over 100k (link)

California lost 117,552 people in 2021, putting its population to 39,185,605, the California Department of Finance said. That’s still the largest state population in the country ahead of second-place Texas.

But after years of steady population growth for California that put it close to having 40 million residents, the state’s population is back to where it was in 2016.

Long Term Impact of Lockdowns (NBER)

We estimate the size of the COVID-19-related unemployment shock to be between 2 and 5 times larger than the typical unemployment shock, depending on race and gender, resulting in a significant increase in mortality rates and drop in life expectancy. We also predict that the shock will disproportionately affect African-Americans and women, over a short horizon, while the effects for white men will unfold over longer horizons. These figures translate in more than 0.8 million additional deaths over the next 15 years.

May 2, 2022: “US Manufacturing Slows Further in April” (newsmax)

U.S. manufacturing activity slowed for a second straight month in April, but supply bottlenecks appeared to be easing, with the pace of increase in prices for inputs and the backlog of unfinished work at factories moderating.

The Institute for Supply Management (ISM) said on Monday that its index of national factory activity fell to a reading of 55.4 last month from 57.1 in March.

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