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Tech Manufacturing Is a Disaster Waiting To Happen 224

Posted by timothy
from the to-be-fair-so-is-everything-else dept.
Hugh Pickens writes "Peter Cochrane writes that since globalization took hold, geographic diversity has become distorted along with the resilience of supply so we now have a concentration of limited sourcing and manufacture in the supply chain in just one geographic region, south-east Asia, amounting to a major disaster just waiting to happen. 'Examples of a growing supply-chain brittleness include manufacturers temporarily denuded of LCD screens, memory chips and batteries by fires, a tsunami, and industrial problems,' writes Cochrane. 'With only a few plants located in south-east Asia, we are running the gauntlet of man-made and natural disasters.' Today, PCs, laptops, tablets and smartphones are produced by just 10 dominant contract manufacturers, spearheaded by Foxconn of Taiwan — which manufactures for Apple, Dell, HP, Acer, Sony, Nokia, Intel, Cisco, Nintendo and Amazon among others. The bad news is that many of the 10 big players in the IT field are not making good profits, so economic pressure could result in the 10 becoming seven."
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Tech Manufacturing Is a Disaster Waiting To Happen

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  • by SJHillman (1966756) on Monday June 25, 2012 @08:31AM (#40437401)

    Apple's profit margin: 29.66%
    Exxon's profit margin: 7.62%

    Oil and Pharmaceuticals might have larger profits in absolute terms, but that's because that have a much larger customer base. When it comes to profit per unit sold, Apple blows just about everyone else away.

  • Re:Floods (Score:5, Informative)

    by Zero__Kelvin (151819) on Monday June 25, 2012 @09:18AM (#40437751) Homepage
    Floods were not forgotten. You simply didn't follow the link [slashdot.org]. In fact you could have just hovered over it, and you would have seen that the word flooding is the first word in the article the link points to.
  • by aisnota (98420) on Monday June 25, 2012 @09:29AM (#40437865) Homepage

    The Marianas Trench [wikipedia.org] is just east of Shanghai along with Taiwan plus even Japan.

    Pacific Rim countries are going to be continuously in the threat corridor of Tsunami risk [wikipedia.org] area because of that trench and many others from Chile [wikipedia.org] to the Aleutians [wikipedia.org] at the northern edge near Alaska and Siberia.

    Walmart actually though is the first company that such a Tsunami hit reaches the stock price. More than high technology, the trade curtailment from the one port most likely to sustain or protected is Hong Kong. But that port alone cannot handle the volume of China. Nor can we assume that it will be totally protected by such an event despite the natural level or protection being higher than most world ports.

    The port of New York is also another one of concern with La Palma [wikipedia.org] off the west African coast potentially creating a 30 meter wave that would inundate the United States east coast is a geologically proven. [wikipedia.org]

  • by RabidReindeer (2625839) on Monday June 25, 2012 @09:35AM (#40437909)

    It's almost an irrelevant question as the real reasoning behind it means that a CEO can put more money in his/her pocket. The entire decision process is about how much money they can get their fat greedy paws on RIGHT NOW. The fact that it could all fall down tomorrow doesn't come into the equation. This is yet another corporate culture problem.

    I won't dispute that. But it's not the only factor involved, and it's as much a symptom as it is a disease.

    Throughout the 20th Century the emphasis was on efficiency. First we replaced individual start-to-finish craftsmen with stations on an assembly line. Then we focussed on Economies of Scale, amagamating and merging. Then we added automation. Then went back and replaced people on the assembly line with robots. Finally, we wrapped up the century by developing an ever-expanding suite of business analytics tools. It wasn't quite as tidy and sequential as this, of course, but that was the general trend.

    The end results were very efficient indeed. Instead of many factories and offices clanking and banging along, you end up with a few hyper-efficient factories and offices, all running at high speed and in precise tune. Leaving lots of profits for the executives and shareholders and Lower Prices Everyday for customers.

    Until they don't.

    The downside of efficiency is that it has no "wiggle room". The only direction you can go is down, and the more finely-tuned your processes are, the bigger the chance that a relatively small kink in the tracks can derail the whole high-speed train.

    Floods are bad enough, but they're only one possibility. If you concentrate your resources enough, even a really low-probability limited-scope event like a chunk of space debris coming through the roof can have a major impact. No pun intended.

    Sometimes being too efficient isn't so good.

  • Re:"Disaster" (Score:3, Informative)

    by Coward Anonymous (110649) on Monday June 25, 2012 @10:35AM (#40438517)

    That's right, 640KB RAM should be enough for everyone.

  • by MickyTheIdiot (1032226) on Monday June 25, 2012 @10:40AM (#40438575) Homepage Journal

    And it really bothers *ME* how certain pro-corporate slashdotters are CEO worshipers and act like the "shareholder value" meme dropped from the sky from God and never even question if it is real. So let's just call it even, shall we?

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