Quote:
Originally Posted by DETRoadster
So what happens to our consumer driven economy when people just say "F it" and dont want to tie their cash up for a year waiting for that sectional, bicycle, or computer. They decide instead to just live with what they have for another year while this mess sorts itself out. it's only a matter of time before the companies that have these insane lead times find their customer base drying up and sitting this out. Then we are in for the real economic crisis. This shit here, now, this is just act 2. First was plants all over the world shut down for COVID, leading to the shortages in raw materials and components. Now that global inventory of those raw materials and components are dried up, we see extended lead times in the consumer facing finished products. We are in some serious shit here. Not sure folks are seeing that yet.
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I somewhat agree though I don't think we're going to see some massive collapse. I work in M&A and supply chain issues are an issue with the deals I've worked on over the last 6 months, but not at the levels to be significantly impacting most businesses. Most business seem to say we're probably in this from another 3 to 6 months. Some areas worse off than others.
The biggest hurdles I see over the next 6 months are:
- Present day supply chain design. Meaning, the practice of maintaining slim inventory to manage costs/overhead/warehousing/transport/etc. It doesn't work well at all during these type of catastrophic events like pandemics and other natural disasters.
- China's Zero COVID strategy. It's not reasonable or sustainable. Either China knows something more about COVID they're not telling the world (somewhat joking here) or they need to dump the Zero COVID strategy like every other country. Shutting down ports, manufacturing plants, etc. for one COVID case will be the economic death of China and will continue to create havoc across the global economy.