From The Editor

You Talked Supply Chains

Before They Were Cool

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MCN Editor Dan Markham At the March FMA Annual Meeting, two words dominated the conversations over the course of all three days: supply chain. Whether from the lips of steel executives, economists or consultants, supply chains were top of mind for all in attendance. 

Of course, over the past 12 months, it hasn’t just been members of the various distribution networks that have been talking about the subject. The world at large has suddenly become aware of their importance, and fragility. 

The most recent global development has only reinforced that sentiment. Russia’s unprovoked invasion of Ukraine, and the global response to it, is just the latest shock to a wearied system. Russia’s role as a global leader in oil production meant the tight supply of crude oil was dealt a blow, leading to historic gas prices at the pumps in the United States and elsewhere. 

There are some signs of improvement, but nothing dramatic. The automotive chip shortage will remain in play, though there may be some improvement over the course of 2022. More on this can be found on Page 16.

Port congestion is still a problem, as are other transportation bottlenecks. More people coming back into the workforce should alleviate some of those tight spots. 

For the moment, the pandemic seems to be in its lowest threat level in two years, which could limit the number of localized outbreaks that have also strained the system. 

But perhaps the best solution to any of these issues is to reduce the reliance on complex, global systems that are vulnerable to weather, war, politics and other exogenous events. Cleveland-Cliffs Boss Lourenco Goncalves hammered that point at the FMA event. 

For years, American manufacturing leaders such as Goncalves have been championing reshoring, reversing the decision to outsource production to other locales across the globe. 
That’s sometimes easier said than done. The decisions to move manufacturing operations offshore were not made on a whim. Significant investments in time and money were undertaken, and executives may be loath to abandon those projects, even when the weakness of the model may have been so thoroughly exposed. 

There could be a middle ground. Call it new-shoring. In a separate panel, trade lawyer Dan Ujczo noted that as new technologies emerge, and investments take place to build out that capacity, American manufacturers, supported by government leaders, should opt not to make the same mistake. A few extra dollars of profitability isn’t worth sacrificing the security of a steady, reliable supply. That’s done by locating facilities here, or at least with those who are our dependable allies. 

“Let’s work with places like Canada and Mexico that are friendly to us and we have opportunities with rather than getting energy and critical materials from other parts of the world that don’t want us to have it anyway,” he said.