Dependence on China

Try and buy something from Walmart, Target, or Home Depot that isn't made in China. There are some items, but not many. Try buying something from a Dollar Store not made in China.

I bought a pair of cheap throw-away hammers to send to school so the kids could make bird houses. There were "designed and packaged in the USA" but "made in China."

Not a big deal though, since these are all low-end manufacturing jobs that American's won't take the pay for, right? Except it doesn't end there, and there really are no quick easy fixes when there are hiccups in supply chains, especially for technical equipment with hundreds if not thousands of components and dozens if not hundreds of companies involved in making them.

But would could go wrong?

In a Reuters story today:

...AT&T is unable to purchase components from suppliers fast enough, regardless of what it spends. "Money isn't the object on this," he said.

When the world's economies stumbled in 2008-09, a number of smaller component suppliers went belly up. Factories shut down, and in China, where many of the suppliers were located, workers migrated from the cities back to the country.

"Now they are trying to restart factories and they can't get people back to re-staff the factories," he said.

As a result, even basic network repairs or upgrades have sometimes suffered from agonizing delays, Stankey said, pointing to a case in Louisiana.

"We've got service issues in Baton Rouge and it's nothing more than wanting to put a board into a slot that we can't get, can't buy," he said. "We won't have it for 30 more days. It's a person walking out to a rack and sliding it in, and we can't get the board."

Com'on, this is AT&T, who is probably the single biggest telecom purchaser in the world, and they can't get replacement parts fast enough. This isn't just a one-week or even one-month event causing this with Iceland. This is too few suppliers, and folks cutting things way too close and not having enough replacement stock on hand.

If I had to guess, it is that we're so dependent on getting things made 100% the cheapest way and shipped the cheapest route, and keeping the least amount of inventory possible.

Here is a thought: What if China decided to declare economic war on the US? What if they demanded our debts paid, and would not allow anything to be made or shipped to the US? Or what if it wasn't that they wouldn't, but couldn't for some reason (some natural disaster or what have you)? What if revolution struck the poor Chinese workers and they overthrew their government and kicked out all Westerns? What would we do then?

The Amish would be getting the last laugh - not that they'd be laughing at us, but I think you get my point.

I think we should look at our vendor and supply chain dependencies and not let a single geographical or political region be able to stop something as simple as cell towers to get repaired.

What next, car parts, airplane parts, internet router parts, refinery parts, generator parts, computer parts, etc.? What if for the next 2-3 years we could get nothing from China or Asia?

Not that we shouldn't let China be the biggest source all the things we use. We just need to have a way to quickly recover and scale up should economic hiccups cause workers to stop working in China or volcanoes stop air traffic.

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Update, Jun 1, 2010:
Say for instance you're Honda and your 4 major Chinese plants shut down due to Chinese strikers.