Sunday, May 15, 2022

Mom's Law of Supply Chain

Several decades ago, my mom told me that there were very few imported cars in the US because of serious concerns over getting parts if a breakdown happened.  ("Getting parts" is the equivalent of "supply chain" for those of you who don't understand reality.)  That was the result of WWII, of course.

That decades-old wisdom illustrated Law One of Supply ChainsNEVER endanger your supply of critical parts or whole goods.  Pat Buchanan raised the issue back in '92.  Trump brought it up again.  It's not just about your microwave, either:  it's about weapons, supplies, and materials for war.

Denninger reminds us that supply chain laws have not changed a bit since WWII, no matter the propaganda from such as Club for Growth or the US Chamber of Commerce.

If the US gets into a shooting war with any country which counts Red China as an ally....or a country which (regardless of allies) has the capacity to sink cargo ships.......

...You immediately will have no semi-conductor anything, zero lithium batteries for anything at all from electric cars to cellphones, 75% or better of the pharmaceuticals in common use will disappear instantly, finding tires will be nearly impossible, automotive and machine parts, specifically wear parts such as bearings will all become unobtanium and more. Even something as simple as a circuit breaker for your house will not be able to be sourced. ALL of the large transformers used to distribute electrical power in the United States, never mind nearly all of the switchgear, are made overseas in whole or part and thus if they fail, whether due to natural or man-made cause they cannot be replaced in such an event either. Within a few months spares for critical parts that are considered wear items and thus must be replaced on a schedule will run out in our energy generation and distribution system and failures will begin to occur with impact from local areas to entire regions.

Your local gas station and supermarket cash register (never mind most modern refrigerators, HVAC systems and similar) all have chips in them that are only made overseas; there is no replacement available made in the United States. Your much-vaunted heat pump that is so "green" has a defrost control board in it without which it will not function -- if you bypass it (which you can in some cases) once the temperatures get below about 40 degrees outside the unit will fail or be destroyed without it, and there won't be a replacement available at any cost. Even the contactor (relay) in that outdoor unit has no US supply and without it the unit doesn't work. Your gas furnace has an ignitor and control board without which you have no heat, they do fail and, again, there is no US supply. We did this to ourselves with our decades-long stupidity offshoring everything and by doing so made it possible for any nation that can sink even a single container ship to break the United States economy and perhaps even a few million people's survival within minutes....

Denninger didn't mention car and truck chips, but he could have.  On the other hand, who's going to drive anyplace when there's nothing to purchase anywhere?

YOUR Assignment:  in 1000 words or less, tell us whether Red China's sudden lockdown of Shanghai and other industrial-production cities is (or is not) war against the US.  Be sure to document your response.

No comments: