Why is it taking so long for production to come back?

[4WD]

Oil is traded on the open world market.

Only by certain nations … China does oil for infrastructure deals … brings in dirt cheap labor … and leaves buildings behind that nobody will occupy … Leaves with the oil … Soon there is no cash and folks really are struggling …
Russia does something similar with real estate to get a passport in the right place … then launder oil money …

 

[Jack Watts]

I think the thing to learn here is that there has to be some sort of balance. We work with our far east factories as much as we can as a partner vs. a customer, and the result is that we've weathered it better than some. A big part of this is their willingness to float orders for key parts so we're just a little less "just in time". For the companies who are constantly factory shopping for the absolute lowest price? They are in a bad position right now.

I think after the last year, any company dealing with a world-wide supply chain is taking a really hard look at how it does business to see how it can do better.

 

[PandaBear]

I think you are confusing a few things. Always easy to blame the leader in charge, but I don't think either did anything regarding the current situation. Fracking only makes sense at a certain price per barrel, once demand dried up, prices collapsed and those companies went under. Now that prices are high again, those companies are gone and it takes a while to bring supply back online. I suppose you could blame the government for not bailing out the oil companies that were going under, but that would be much harder than just letting them go under.

They made a bad deal based on prices from the peak (i.e. started at $120 / barrel but realistically expect $80 / barrel back in the days), borrowed too much, overbid too much, drill too much, and drove the price into $40 / barrel and then last year to negative oil price.

 

[JeffKeryk]

Good points on JIT! W. Edwards Deming would be proud!
JIT's main benefit is to minimize inventory carrying costs throughout the supply chain.
Proper vendor relationship management is critical to keep production lines moving.
There are other benefits, such as avoiding obsolescense, minimizing waste, etc.

As @Jack Watts points out, some finished goods are better suited to JIT than others.

My point is, a part shortage is a part shortage anywhere in the supply chain.
Manufacturing inventory levels, managed by MRP programs, include safety stock in reorder point calculations.
Companies do have more than one supplier for critical parts, for several reasons including outages and cost competition.

I have been working on MRP, MRP II, Cost Analysis and associated manufacturing process programs for close to 30 years.
By the way, I hate SAP and Oracle ERP packages. Filthy expensive and return garbage.

 

[Dave Hess]

Everything is manipulated.

As a consumer what could you do ???

 

[PandaBear]

Not just behind the certain, there was also the cancellation of the Keystone pipeline which started the price upswing...

The shale frackers don't want competition from tar sand.

 

[BlueOvalFitter]

I could understand products and supplies being in short supply during the pandemic, but we're far enough along now that we should not still be seeing these shortages. Why is it taking so long for things to get back to full production?

Where I live in La. the grass grows faster than a building can go up.
In town, they started on a SUBWAY sammich shop about 6-8 months ago. You can believe this or not, but I saw it with my own 2 eyes. The plumbing contractor installed the underground piping in the wrong areas! When they came to do the 2nd rough, some of the pipes were sticking up in the middle of the restaurant! But, it was nothing a street saw and a 90 lb. jackhammer couldn't fix!
I think it's set to open in August or September.

 

[grampi]

Everything is manipulated.

As a consumer what could you do ???

True, and I think many, if not most businesses are taking advantage of the virus excuse to raise prices on almost everything...

 

[Wolf359]

True, and I think many, if not most businesses are taking advantage of the virus excuse to raise prices on almost everything...

Isn't that just capitalism and the free market economy which our entire economy is based on? Whatever the market will bear. If you find it cheaper somewhere else, go get it there.

 

[Snowflake White]

Isn't that just capitalism and the free market economy which our entire economy is based on? Whatever the market will bear. If you find it cheaper somewhere else, go get it there.

Does the US actually have a true "free market" economy? I don't think so.

 

[Wolf359]

Does the US actually have a true "free market" economy? I don't think so.

Not in the purest form but I don't think any country really has that. After all there are laws about price gouging which shouldn't exist in a true free market economy.

 

[JeffKeryk]

People like capitalism when it works in their favor; otherwise they don't.
Ditto socialism.

And no, the US is not a free market economy. It is a regulated market. We have laws.

 

[Astro14]

A lot of great points and discussion.

Too many of them contain political content. Lock time.