S.N.A.F.U. Thailand: crisis in supply chains for computers, cars, cameras, etc
Posted by Charles II on November 4, 2011
One of the really, really bad things about capitalism in the present, cancerous monopoly form is that the incentives on where to locate things are perverse. For example, your customers for autos are in the US, but you locate production in China where labor is cheap and ship the iron ore in from Brazil; this is only possible because transportation is so cheap, which in turn is only possible because you have installed dictatorships in oil-producing regions and run China like a prison.
Ben Bland and Robin Kwong have a fascinating article in the FT on how the floods in Thailand are threatening to rattle the world economy. Since FT asks that one not quote directly, here’s a paraphrase (but go read the article):
1. A bunch of companies are clustered on the (now-flooded) Thai plains.
2. Japanese production is limping because of the earthquake/tsunami.
3. Almost one-quarter of the two thousand Japanese factories in Thailand are underwater.
4. Factories in central Thailand were producing critical computer components, electronics, cars and automotive parts.
5. Ford and Western Digital are among the companies who put a lot of critical eggs in the Thai basket. Sony and Seagate are also suffering. Less well-known, but just as vital companies such as Min Aik and DKSH are also hit.
6. Companies clustered in the region because of “efficiencies,” which I suspect mostly means that the big corporations could make suppliers compete against one another in the most brutal fashion, as well as leverage their (the big corporations’) power to muscle the government whenever necessary.
To save on manufacturing costs, we have closed down American factories and located them in the most geologically unstable part of the world, an area that is dangerously vulnerable to the effects of global warming, and which, just by the way, is ripe for political upheaval because of rampant corruption and wealth concentration.
Behold the invisible hand of the market, with its thumb up its… you take my meaning.
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