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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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  • Re:Floods (Score:4, Insightful)

    by alphatel (1450715) * on Monday June 25, 2012 @08:13AM (#40437259)

    ... and could possibly happen again this year.

    OR will inevitably happen as long as there is a method for corporations to profit more from disaster than from manufacturing.

  • Re:Floods (Score:3, Insightful)

    by Anonymous Coward on Monday June 25, 2012 @08:13AM (#40437261)

    Yes. Considering the timing and impact that had on storage pricing, it is surprisingly absent from the summary.

  • Globalisation (Score:2, Insightful)

    by Anonymous Coward on Monday June 25, 2012 @08:19AM (#40437297)
    Not just technology, this is more a phenomenon of globalisation if you ask me. The consumer is willing to save 3.2% on something at a macroeconomics level in spite of it's own industries because the apparent value on diversity in the supply chain and having local within-jurisdiction industry is practically zero. I'd love for someone to show me otherwise though as it's depressing.
  • by MickyTheIdiot (1032226) on Monday June 25, 2012 @08:20AM (#40437311) Homepage Journal

    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.

  • by allcoolnameswheretak (1102727) on Monday June 25, 2012 @08:22AM (#40437339)

    The prices for the consumer could stay the same. It would cut Apple's profit margin from "obscene" to "above average" however.

  • Re:Floods (Score:5, Insightful)

    by AngryDeuce (2205124) on Monday June 25, 2012 @08:23AM (#40437343)
    You mean *gasp* it could have just been plain old fashioned greed and profiteering?!?! Well, knock me over with a feather!
  • Willingness to pay (Score:5, Insightful)

    by Jazari (2006634) on Monday June 25, 2012 @08:28AM (#40437373)
    Redundancy costs money. So the real question is: "Are customers (consumers) willing to pay?"
    Or perhaps a better idea is: You will pay either way. Chose: (1) Pay money now for redundancy and a guarantee of supply; or (2) "Pay" later through the unavailability of products.
  • by AngryDeuce (2205124) on Monday June 25, 2012 @08:29AM (#40437387)

    The better question is how much more would they cost if we were paying the true cost of manufacturing [wikipedia.org], regardless of where it is being made...

  • Re:"Disaster" (Score:4, Insightful)

    by betterunixthanunix (980855) on Monday June 25, 2012 @08:31AM (#40437395)

    People not being able to get the latest TV / MP3 / phone / iwhatever isn't a disaster

    This. Right now, tech manufacturing is feeding the demand to do things like upgrade computers and phones every 18 months. We need to get used to the idea that the existence of a faster CPU with more cores does not imply a need to have one.

  • by AngryDeuce (2205124) on Monday June 25, 2012 @08:44AM (#40437501)

    This idea that we can't "afford" to make anything here anymore is ludicrous. For decades we managed to do so just fine, during our boom years of 1945-1980, when most everyone that was willing to work could find a decent paying job that afforded them a living wage. My grandfather drove a truck for a large portion of that period and was able to make enough money to buy a modest house, get a new car every couple years, support himself, his wife, and their four children, pile said kids into the woodie every summer for a road trip/vacation, and put something away for both his retirement and his kid's college educations. He didn't even get a high school diploma until his later life, having dropped out to enlist and do his duty.

    What I want to know is what happens when even China isn't cheap enough to prop up those hyper-inflated executive salaries. What is the next area we're going to be exploiting? Africa, probably. Hell, all they'd have to do is not be murderous blood diamond warlords and the African people will probable weep tears of joy at the opportunity to poison themselves and their environment for 3 cents a day, and the "job creators" will talk up how goddamned benevolent it all is. By that point the US economy should be thoroughly dead and they'll just bring the sweatshops back home, and we will weep our own tears of joy at the opportunity to be slave laborers...

  • by MickyTheIdiot (1032226) on Monday June 25, 2012 @08:44AM (#40437505) Homepage Journal

    I don't agree with everything that Michael Moore says, but on CNN one time he had a very important point.

    When GM was doing well it was making something like $14 billion a year. Yet they were still laying off workers. What is so wrong with making $13 billion a year and keeping the workers, especially those that gave a significant part of their lives to that company.

    There is no incentive for a corporation to treat its workers with respect. The unions gave that incentive but their own decadence has greatly ruined their own power. Couple that with the fact when you put in huge golden parachutes and pay millions of dollars to upper management a year there is no incentive for them to care if the enterprise is even there after they are gone. If a huge cluster-fsck.

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

    by AngryDeuce (2205124) on Monday June 25, 2012 @08:53AM (#40437567)

    No! We must keep buying shit!!! [wikipedia.org] Just put it on the credit card!!! Remember, everyone will make fun of you if you don't keep up with the Joneses. [wikipedia.org] Material goods are how we measure success, after all.

  • by Anonymous Coward on Monday June 25, 2012 @09:12AM (#40437719)

    Not to mention the fact that, oh let's say there was a crash in every consumer-oriented supply chain next year...

    The majority of end-users and consumers won't REALLY be on the hook for about 5 years, at which point in time, we'll all come to realize that we never actually even needed 64GB of RAM, 25TB hard drives, 96 core 233GHz CPUs, 10 exabit network cards, 65536px wide by 36864px high flat panel displays, and that we were able to "limp" along with our crappy, dumpy 16GB of RAM, 2TB hard drives, 4 core 3GHz CPUs, gigabit network cards, 1600px wide by 900px high flat panel displays, all of which are probably lasting well beyond the manufacturers warranties once we start actually caring for them as if we had to buy new ones for $1,000...

    Oh boo-hoo!

  • Re:Floods (Score:5, Insightful)

    by ivoras (455934) <ivoras AT fer DOT hr> on Monday June 25, 2012 @09:21AM (#40437781) Homepage

    HDD prices are now higher providing an incentive for another player to enter the market with manufacturing outside that geographic area (or one of the existing players to bring up some manufacturing there).

    Higher prices make is economically feasible especially considering the payoff bonus of that region gets flooded again.

    ...except if you have external factors such as patents which effectively prohibit anyone truly new entering the industry ever again...

  • Re:Floods (Score:5, Insightful)

    by GameboyRMH (1153867) <gameboyrmh@[ ]il.com ['gma' in gap]> on Monday June 25, 2012 @09:56AM (#40438111) Journal

    If these devastating market crashes and massive wealth disparities are what capitalism does when it's working, then can we try turning it off?

  • by bws111 (1216812) on Monday June 25, 2012 @10:00AM (#40438157)

    The people who invested their money in GM did so because they thought GM would give them the best return on that money, not to give $1B in charity to workers who are not needed.

    The only way you can afford to do what you are suggesting (long term) is to have an unregulated monopoly, so you can get your customers to pay for your inefficiency and still make a good enough profit for your investors. For instance, IBM did not lay off a single employee for the first 80 years of its existence, through good times and bad. However, once they lost their monopoly prices plummeted, profit went with it, and investors fled in droves. When they had to do their first layoff it was extremely painful not just for the company and employees involved, but for whole towns and all of the people and businesses in them. While it certainly sucks for the employees involved in a layoff in a company making profit, it is far better overall to not carry inefficiencies to the point where you are forced to deal with them.

    The same thing happened with steel companies. The unions were successful in making the operation very inefficient, to the benefit of the unions. No layoffs, strict work rules, ridiculous vacation plans (really paid furloughs), etc. Worked great for a while, led to the death of the companies long term.

  • by dbIII (701233) on Monday June 25, 2012 @10:02AM (#40438181)

    If you start government-subsidizing large parts of your industry

    Like sugar, steel and automotive manufacturing for instance? The "start" happened a while ago, and each of those industries I've mentioned have suffered or caused problems that are directly due to them being protected. Uncompetitive steel prices moved manufacturing offshore, a protected car industry produced almost unsellable crap even when overseas branches of the same companies were making quality designs and local sugar priced itself out of the market so the USA got twice as fat on corn syrup as it would have on sugar.
    It's not just about getting others upset. It's about shooting yourself in the foot.

  • by AngryDeuce (2205124) on Monday June 25, 2012 @10:06AM (#40438213)

    Lastly, things like environmental laws (which did not exist until the 1970s) have a huge impact. In the US, when an electronics manufacturer pollutes the groundwater, they are made to clean it up, and a huge cost. No so everywhere else in the world.

    I'm hoping that I'm not picking up criticism of our environmental laws. There are [wikipedia.org] numerous examples [wikipedia.org] of what happens [wikipedia.org] when there are no regulations concerning pollution. The only reason why these consumer goods are so cheap in China and elsewhere is because we've externalized all of these costs to societies where the average citizen has no power whatsoever to do anything about it.

    If the U.S. enforced labor and environmental standards with its imports in the same way it regulated domestic production, we wouldn't be in this mess right now. The only reason any of that offshoring bullshit is possible is because we allow it to occur. The race to the bottom is completely unsustainable. Like I said, what happens when even China isn't cheap enough to manufacture our consumer crap? What happens when oil finally gets so scarce that the cost of bringing the shit here is prohibitive in itself? I refuse to believe that the only answer is "Well, we'll just have to get over this whole "clean air, land, and water thing, and be willing to work like a slave laborer" and that's precisely what I keep hearing needs to happen, especially by people that are financial secure enough that their own existence won't be tainted by that bullshit.

  • Re:Floods (Score:3, Insightful)

    by medcalf (68293) on Monday June 25, 2012 @10:31AM (#40438467) Homepage
    It's been done repeatedly. It's still being done in places like N Korea. The results of "turning capitalism off" have consistently been poverty, immiseration and frequently mass deaths through starvation, murder or both.
  • by Builder (103701) on Monday June 25, 2012 @10:54AM (#40438761)

    why is today any different?

    Because decades ago, the need for computers was limited to a few large companies. Today, it is very hard to live well as an individual in a western democracy without a computer.

    The difference between filing my taxes online and having to do them on paper is about GBP600 per year. Renewing my tax disc on my car and my bike takes 10 minutes on the internet vs 1 hour in the local post office at lunch time. Being able to buy goods online increases where and how I can spend the extra disposable income that the savings give me, thus stimulating the local economy. Maps, communications, the list goes on.

  • Re:Floods (Score:3, Insightful)

    by Anonymous Coward on Monday June 25, 2012 @10:54AM (#40438769)

    Of course not, that's how capitalism is supposed to work (doesn't mean it works in practice al the time of course).

    We are pretty good at knowing when capitalism is going to fail, but that doesn't stop many people from trying to make it work. Free Market is the new religion, barely understood but used as a trumpet to replace understanding.

    If the customer cannot delay purchase indefinitely, no free market is possible. This is why healthcare, electricity, food, and water often fail to react in a free market manner.

    If the customer cannot be fully informed of all the purchasing possibilities, no free market is possible. This is why home electronics, food choices (even amongst grocery stores), automobile selection, furniture selection, and home selection fail to react directly to supply and demand.

    If the product is tied to required infrastructure that has no duplicate, no free market is possible. Transportation is far from a free market,drug manufacture often fails this way. Electricity delivery (not generation) cannot be shopped. Water delivery cannot be shopped.

    If the product is mandated to be necessary, no free market is possible. Car insurance will never feel the sting of a mass exodus of leaving customers based on price, nor will city, state, or federal taxes.

    If the product is subject to price controls, no free market is possible. This is why milk will never drop too low and the price of eggs barely fluctuates. Farms products are often protected by price controls to remove competition which might lead to farms collapsing into a monopoly.

    If the product has no equivalent replacement, no free market is possible. If I need a part to repair a machine, regardless of whether that part is protected by patent or not, if I have one supplier, or a host of suppliers but only one manufacturer, then the choice to use a cheaper supplier doesn't even exist.

    Basically, free market capitalism works best when everything is easily replaceable, which is odd, because is was a simplified model to describe one thing, how fully informed markets react when presented an unlimited amount of producers producing identical items. The rest of Free Market Capitalism is an extrapolation not based on the actual theory, but based on what you would think might happen if you blind yourself to actual market constraints.

  • by GodfatherofSoul (174979) on Monday June 25, 2012 @10:56AM (#40438785)

    Libertarian nonsense. When you remove the trade protections, that is what causes your manufacturing base to move overseas. We can't possibly compete with a company in Asia that's willing to forgo environmental rights, worker rights, and human rights. Now, if you think sweatshop conditions are simply "good business" if you can find some saps desperate enough to endanger their lives and health for peanuts, then you are correct.

  • by TaoPhoenix (980487) <TaoPhoenix@yahoo.com> on Monday June 25, 2012 @12:54PM (#40440383) Journal

    Actually, we're seeing the first stage of Replicator Technology, aka digital copying, and look at the absolutely thundering effect of the affected industries. In a way, Star Trek was sweet, because I actually recall very few lawyers were ever parts of the plots. Today, it would be more dystopian, with a Copyright Infringement SWAT teams. "Someone copied a Justin Bieber song. Alpha Force, Move Out! Go Go Go! GET the Terrorist Sonofabitch!"

  • Re:Floods (Score:5, Insightful)

    by TubeSteak (669689) on Monday June 25, 2012 @01:41PM (#40441085) Journal

    We do not yet have the technology to support an economic system that is better than Capitalism.

    Really!? We have an economic system right now that is better than Capitalism.
    Maybe you've just never heard of a "mixed market economy"?
    A mixed market is what you get when laissez faire capitalism is tempered with regulation and social supports.

    The truth is that naked capitalism signed its own death warrant over a 100 years ago as a result of its excesses.
    The "good old days" of banking panics, raw industrial runoff in your drinking water, monopolies, child labor,
    unsafe working conditions, starvation wages, etc etc etc are thankfully gone. Anyone who wants that back is an idiot.

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