2009 February |

The Economist on “The Collapse of Manufacturing”

Josh Green | February 24, 2009
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Very interesting piece by The Economist on “The Collapse of Manufacturing.”  It lays out the argument against government intervention to support failing manufacturers.  The core macroeconomic point is right: “sectoral aid does not address the underlying cause of the crisis—a fall in demand, not just for manufactured goods, but for everything.”

However, I think the piece understates the risk that the widespread disappearance of manufacturers will further diminish aggregate demand.  As factories disappear, workers lose their jobs and companies that depend on these factories go out of business — so even more workers lose their jobs.  This growth in unemployment puts a damper on demand, further reinforcing the global economy’s downward spiral.

Nevertheless, there’s only so much recovery money to go around, and The Economist is probably right that there are better ways to spend this money than on failing manufacturers.  That, of course, doesn’t provide much comfort to those who depend on manufacturers for jobs or for supplies.

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Panjiva In The News

Josh Green | February 20, 2009
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It’s been a busy few weeks at Panjiva.  We launched coverage of all industries, released new data showing the effect of the economic downturn on the global supply chain, and began working with a great new customer — The Home Depot®.  Thought I’d share some snippets from the press coverage we’ve received:


Financial Times
“Josh Green, chief executive of Panjiva, said the number of Chinese suppliers shipping to US customers in December was 10 per cent lower than in December 2007.”
http://www.ft.com/cms/s/0/fbc46330-f612-11dd-a9ed-0000779fd2ac.html

CNN Money
“The second dimension of the merchandise problem could affect product availability in stores, said Josh Green, CEO of Panjiva, a firm that advises leading U.S. retailers such as Home Depot on supply chain risks.”
http://money.cnn.com/2009/02/13/news/economy/retail_merchandiseissues/index.htm?postversion=2009021314

Forbes
“[W]e took a look at the suppliers that were still active as of the end of 2008…  [C]ompanies [that] suffered a 50% or greater decline in the volume shipped to their American customers.. are on Panjiva’s Watch List, as they are in the greatest danger of going under.”
http://www.forbes.com/2009/02/12/panjiva-global-trade-opinions-contributors_0212_josh_green.html




Fast Company
“Panjiva is not just innovative, it’s revolutionary.”
http://www.fastcompany.com/magazine/133/a-morningstar-for-manufacturing.html

Supply Chain Management Review Cover Image

Supply Chain Management Review
“However, there’s good news for supply chain managers who are willing to confront risk head-on. While risk can never be eliminated, it can be significantly reduced through the intelligent application of information.”
http://www.scmr.com/article/CA6635446.html

AP Associated Press

AP
“Green said of the firms he tracks, the number of global suppliers shipping to the U.S. dropped 13 percent in December compared with October 2007.”
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090203&id=9575003

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MetalMiner
“And sleuthing for answers has become a whole lot easier. Companies such as Panjiva provide tools which allow companies to identify overseas shippers, products and destinations.”
http://agmetalminer.com/2009/02/17/identifying-supply-risk-in-toxic-stainless-supply-chains/

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Protectionism Without The Protection?

Josh Green | February 16, 2009
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A watered-down “Buy America” provision will be part of the U.S. stimulus package.  Yesterday, on Meet The Press, senior White House adviser David Axelrod took pains to note that the provision respects U.S. treaty obligations.

The text backs up Axelrod’s assertion.  Practically speaking, then, the “Buy America” provision will not have much of an effect on how the stimulus money gets spent.   Because it would be more or less impossible to enforce favoritism for domestic suppliers without violating treaty obligations.

Nevertheless, Chinese authorities are not pleased.  As a Xinhua news agency editorial put it, “[F]acing a global financial crisis, trade protectionism is not a solution, but a poison to the solution.”

So we’ve got measures that don’t provide any protection for American companies — but that are raising fears that America is turning protectionist.  In other words, protectionism without the protection.

One of my colleagues characterized this as the worst of all worlds, but I wouldn’t go that far.  Real protectionism would be worse, and I suspect Chinese authorities are firing a rhetorical shot across the U.S. bow, to ensure that the U.S. understands there will be consuequences if we go any further down the protectionist path.

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Toy Suppliers Disappearing?

Josh Green | February 10, 2009
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On Monday, Bloomberg reported that lots of Chinese toy suppliers went out of business in 2008.  Not surprising, given the various product safety incidents of the last few years, as well as the general economic downturn.  The real question is, what lies ahead  for toy suppliers, and the companies that work with them?

To answer this question, the Panjiva research team took a look at shipments whose commodity description included the word “toys.”

  • From October of 2007 to October of 2008, we saw a 10% decline in the number of companies sending “toys” shipments to American customers.
  • From November of 2007 to November of 2008, we saw a 13% decline in the number of companies sending “toys” shipments to American customers.
  • From December of 2007 to December of 2008, we saw a 25% decline in the number of companies sending “toys” shipments to American customers.

Obviously, this is not an encouraging trend.  In the months ahead, we’ll be keeping an eye on those companies that are still active.

In the meantime, if you want to browse through the 13,000+ companies that have shipped toys to the United States, check out Panjiva’s search results for “toys.”

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Reducing Supply Chain Risk – A Data Driven Approach

Josh Green | February 6, 2009
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These days, we’re receiving lots of questions about risk, how to identify it, and how to manage it.

Over at Supply Chain Management Review, you’ll find some initial thoughts on how to use data to identify and manage risk.  Specifically, I explore the strengths and weaknesses of financial data, operational data, and on-the-ground intelligence.  Not surprisingly, the most innovative companies are finding creative ways to leverage each of these classes of data as they seek to manage risk.  Read more.

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Chinese Factories Have “Deferred Reopening”

Josh Green |
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In today’s New York Times, there’s an interesting article by Keith Bradsher about workers in China that are struggling to find jobs as exports falter.  Citing information from an industry association, Bradsher writes that “many plants have deferred reopening for up to three weeks for lack of orders from the United States and Europe.”

Will “deferred reopenings” turn into permanent closures?  We’ll see in the months ahead.  In the meantime, the Panjiva research team took a look at how Chinese factories fared through the end of 2008.

  • From December of 2007 to December of 2008, we found that there was a 10% decline in the number of Chinese companies (Hong Kong and Mainland) shipping to American customers.
  • From November of 2008 to December of 2008, in just a single month, there was a 6% decline in the number of Chinese companies shipping to American customers.

My hunch is that the worst is yet to come.

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The Downturn Is Going Global

Josh Green | February 3, 2009
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Panjiva’s latest analysis confirms that weakening demand in the U.S. is having economic repercussions around the globe.  Our research team took a look at changes in the number of companies — across all industries — that are shipping goods to U.S. customers.  The numbers are not encouraging:

  • In October of 2007, approximately 179 thousand companies shipped to U.S. customers.
  • In December of 2008, approximately 156 thousand companies shipped to U.S. customers.
  • Thus, in a little over a year, there’s been a 13% drop in the number of companies shipping to U.S. customers.

We also took a look at the companies that are still serving American customers, and, again, the numbers were not encouraging:

  •  12% of the companies that shipped to U.S. customers in December suffered a massive decline in the volume shipped to their customers (50% decline in volume from Q4 of 2007 to Q4 of 2008).

More soon.  In the meantime, here’s a video summarizing our findings:

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Welcome, Home Depot!

Josh Green |
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We are now rolling out — across all industries — Panjiva’s methodology for finding, assessing, and keeping tabs on suppliers. As we do this, we are thrilled to welcome our newest customer, The Home Depot®, to Panjiva.

home-depot.jpg

(The Home Depot and the Home Depot logo are trademarks of Homer TLC, Inc., used under license.)

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