I struggled with writing this post a good deal of yesterday, ultimately discarding what I had done, reaching the conclusion that it would take a lot more than a blog post to express what needed to be said.
Let me give a quick summary. Reducing the amount of stuff we’re producing along with consolidation in the defense sectors is leaving us vulnerable. Imagine the situation where some commodity critical to defense is only produced by a single supplier in a single facility and an accident takes that facility offline. That’s exactly what happened when an accident in a blackpowder facility in Louisiana shut down production there. We haven’t produced the material which is still used in bullets, etc. for more than two years. We’ve been burning through stockpiles and relying on imports from Germany, Poland, etc.
The problem is that measures to mitigate the risks of accidents or deliberate sabotage are unappealing, too. Stockpiles large enough are expensive. Intellectual property may be involved. The DoD is tough to do business with. Preventing consolidation outright is impractical.
I’ve made my view clear many times. I think we need to be producing a lot more of what we consume. It’s hard to make that happen but that’s what we need to do.
Hate to tell you but I have been living with this for years and this is for stuff made in the US. We are constantly running short on off patent meds and devices. We were short on bags of normal saline for a while ie salt water. Lots os stuff is just in time delivery. Stuff that we keep in inventory is always being looked at to keep numbers down since costs money to maintain. Almost everything is bought through buying consortiums to get the most leverage and the lowest prices.
The result is that for many, many products (probably most but I haven’t seen anyone total it up) there is only one or two manufacturers. If a company has problems there either is no other company or the other(s) cant make up the deficit.
For national defense items you are looking mostly at highly specialized products without wide markets. The products may be used sporadically. Using basic gun ammunition as an example there is constant low level usage for training but when we are at war usage skyrockets. So we need to maintain manufacturing for these items in the US but we also need to be willing to pay to be able to manufacture at need.
Steve
While I agree, I do not think it is possible. Manufacturing is dirty and dangerous, and there is no way to change that. High tech gadgets are even worse. They require petroleum. (Plastic can be produced using organic material (plants), but it is energy intensive.)
Nobody wants a refinery or chemical plants built near them, but nobody wants drive hours everyday. So, neighborhoods and schools get built next to them. Then those dirty and dangerous chemicals must be transported, and even “safe” communities are not safe from transportation accidents.
Building large isolated facilities, with a large buffer zone, is an idea, but workers would need to be housed on-site (or transported daily).
Making all of it it safe is cost prohibitive. It can be safer, but to be totally safe is not possible. This is one of the major reasons manufacturing was off-shored, and a college education was promoted.
I do not like it, but the most workable solution might be re-location to Mexico and Central America. Unfortunately, US meddling would start. Instead of sending the Marines for Dole, they would be sent for Dow.
Once, I was a free-trader. Then, I became a re-shorer. Now, I have become a realist. I think we are at about 420 AD, but we could be at about 33 BC.
The supply problems are a consequence of our current Ruling Caste’s choices, choices that benefitted them directly and personally. They are compounded by the appalling incompetence of our regulatory personnel, viz. the ongoing baby formula crisis created at least in part by the sloth of the FDA staff. You cannot change off-shoring or leveraged buy-outs, et al., unless you implement regime change here in the US.
Regime change entails the suppression of the Wall Street financiers and their willing accomplices in Congress and the Executive and a large scale purge of the upper and middle civil service.
Of course it will not happen, so our drift ever downwards will continue. The movement to de-dollarize the world economy is accelerating. The combined economies of BRICS is already larger than the G7’s, and at least 20 countries (according to Lavrov) are seeking to join it and the SCO. They include Turkey, Iran and most (all?) Persian Gulf states, Egypt, Algeria, Argentina, and several African states. The Chinese-Russian pole is growing evermore powerful and influential.
PS The utterly inane crusade to eliminate fossil fuels is a major obstacle to expanding manufacturing. In fact, it can only result in large scale de-industrialization and the immiseration of the great majority of Americans. No middle class. No working class. Only patrons and clients.
Gnon laughs. Xi laughs. Putin laughs. We weep.
I think we as a country, and I believe Bobs comments reflect, a deep misunderstanding of finance, manufacturing realities and consumer preference.
Consumers want low price, despite their assertions. Manufacturing can be icky. Our current environmental posture and US manufacturing are not congruent. And no financier ever decided where to build a steel mill, or to stop mining rare earths. The closest to that is BlackRock and their leftist friends.
It a complicated subject. But we are not a serious people anymore. It won’t be dealt with.
Refineries are different. Just about everywhere I have seen refineries they are somewhat isolated. Not 20 miles isolated but half a mile to a mile. For most other factories they are built within or adjacent to communities where workers live but still sometimes with a couple of blocks of buffer. I think these are largely non issues. I guess you can make a big deal of a few rich neighborhoods not wanting factories in their backyards but that has always been true and companies dont usually build where the real estate is costly.
This issue is cost. You cant have everything at the lowest cost possible and also maintain the ability to produce extra at need or maintain huge stockpiles.
I was unaware Blackrock was building steel mills. (If you dont like Blackrock dont give them money. Their investing strategy is clearly nonsense and is why they are losing so much money.)
Steve
Losing a Great Power war would not be fun and that’s the risk we’re taking.