After the announcement that Rick Wagoner is being forced out, the Panjiva team decided to take another look at shipments to GM from their global suppliers. About 10 days ago, we described the drop in shipments to GM from September of 2007 to January of 2009. It turns out, from January to February of this year, there was a further 6% drop in shipments to GM. Compared to February of last year, the number of shipments to GM is off 42%.
Methodological note: though this graph looks much the same as the previous GM graph (i.e., massive drop-off), there is an important difference. It turns out that we have data on shipments to GM’s Mexican operations, and this time around, we included these shipments in our analysis… Hence, more shipments across all time periods.
Today, the Wall Street Journal announced that the domestic auto suppliers are getting help. The Panjiva research team is looking into these domestic auto suppliers. In the meantime, take a look at the data on the Big Three’s relationships with their overseas suppliers. Indeed, shipments from overseas suppliers to the Big Three have dropped precipitously:
- In July of 2007, Ford received received 914 shipments from overseas suppliers. By January of 2009, this number had dropped to 514 shipments… a 44% decline from its July 07 peak.
- In September of 2007, GM received received 223 shipments from overseas suppliers. By January of 2009, this number had dropped to 84 shipments… a 62% decline from its September 07 peak.
- In November of 2007, Chrysler received received 342 shipments from overseas suppliers. By January of 2009, this number had dropped to 38 shipments… an 89% decline from its November 07 peak.
(If you compare January 09 to January 08, the declines are 25%, 50%, and 71%, respectively.)
These massive drop-offs in shipments from suppliers are indicative of diminished Big Three expectations about future sales. Not to be underestimated is the impact that these drop-offs will have on suppliers. Many of the Big Three’s overseas suppliers (132) were on Panjiva’s Watch List as of the end of January, as a result of suffering a 50% decline in volume shipped to U.S. customers in the most recent three month period versus the same period a year ago. That’s about 16% of the Big Three’s overseas suppliers.
Those charged with assisting the auto industry are right to worry about the health of suppliers. Even if consumer demand picks up, the Big Three will not survive if their supply chains disappear. However, it’s not just domestic suppliers that are in trouble right now — overseas suppliers are in trouble too.
PDF: Panjiva Analysis of Big Three Imports
Remember when American officials were worried about the safety of Chinese exports? How quickly the tables have turned. Chinese premier Wen Jiabao is “worried” about the “safety” of America’s most dangerous export: U.S. Treasury bonds.
Five months ago, I wrote about the parallels between China’s product safety crisis and America’s financial crisis. Today, there’s not much discussion about the safety of Chinese exports. Wouldn’t it be nice if, five months from now, no one’s worried about the safety of U.S. Treasuries?
Last month, we released data that highlighted the impact of the economic downturn on manufacturers around the world. This month the Panjiva research team focused on U.S. buyers, in order to get a sense of how many are exposed to significant risk by virtue of doing business with troubled manufacturers.
Specifically, we focused on the most active U.S. buyers — those receiving 10 or more shipments in the last year. It turns out that more than 1 in 3 of these buyers maintains an active relationship with an overseas manufacturer that is on Panjiva’s Watch List (as a result of suffering a 50% decline in volume shipped to U.S. customers during the most recent 3 month period, versus the same period a year ago).
- 28% of significant manufacturers (those sending 10 or more shipments to U.S. buyers in the last year) are on Panjiva’s Watch List.
- 38% of significant buyers received a shipment from a Watch List manufacturer within the last three months.
- 47% of significant buyers received a shipment from a Watch List manufacturer within the last six months.
As we look higher up the food chain, the numbers are even scarier:
UPDATE, 9 AM — I just shared these numbers with a supply chain manager at a major retailer; he responded:
“Interesting. Seems reasonable though given the number of suppliers I’ve seen go bankrupt recently…the worst part is they never even tell you they are in trouble or gone…they just disappear…”
Pessimistic, if not terribly surprising, 2009 predictions from the World Bank:
- Global economy will shrink for first time since World War II
- Global trade will shrink for the first time since 1982
If 2009 turns out the way that the World Bank predicts, it will be the year which illustrates both the success and failure of 20th century globalization. The success was in stitching the world’s economies together, so that a rising tide would lift all boats. The failure was either of imagination of or of will. Either we couldn’t conceive that all boats might sink at once — or we couldn’t muster the political will to create a mechanism for effectively responding to a global economic meltdown. Politicians will likely claim it was the former, but I think it was the latter.
Thanks to Cody for flagging this item from Supply Chain Digest. IBM has released a report on the issues that supply chain executives are most worried about. At the top of the list: supply chain visibility. Second on the list: supply chain risk.
Apparently, this is consistent with what the team at Supply Chain Digest has been hearing. And it’s totally consistent with what we’ve been hearing from our customers.
For more from IBM, consider taking a trip to Brussels.