Tag Archive: trade

The New NAFTA & What It Means

December 27th, 2018

 

 

 

 

 

 

Recently, the USMCA (new NAFTA) agreement was signed by the U.S., Canada and Mexico.  It still needs to be ratified by lawmakers but several immediate protections went into effect.  Since I am surrounded by manufacturing and supply chain organizations and professionals in terms of clients, colleagues, trade associations and more, I can say that there is largely positive commentary about this partnership in N.A. and the improvements to the old agreement.  Of course, there was a lot of negative commentary and debate about the particulars and the impact on trade (you’d have to live under a rock not to hear them!), but it is a noteworthy step forward from our current position!

What does this mean for your business?  Are you “ready” to leverage the opportunities and minimize any risks?

What Should We Consider and/or What Impacts Could Arise?
Although most clients and colleagues expected something to work out in terms of NAFTA, many were still in a bit of a waiting pattern.  No matter the final details, it shows that collaboration will take place. I think it is noteworthy that collaboration is an integral part of the business success equation. Many years ago, collaboration was seen as a fluffy topic but it has become key to success. Perhaps we should all think further about how well we communicate and whether we can collaborate with those who don’t see eye-to-eye with us.

From a technical point-of-view, there are bound to be many implications on our businesses,  whether we source materials or products from Mexico or Canada or not. And if you are in another country, there will be an entirely different set of impacts. Think about your extended supply chain, from your suppliers’ suppliers to your customers’ customers and everyone in-between.  Are there opportunities? Risks? Be proactive, and I bet you’ll find at least one opportunity. This is another example of the need for a resilient supply chain.

Check out our new video and article series as well as our soon-to-be offered Rapid Resilient Supply Chain Assessment service:

 



Trans-Pacific Trade Delays – Are You Prepared?

September 16th, 2018

Thanks to Dave Porter for recently sharing: Vessel operations and capacity in the last 10 days have been severely impacted by two typhoons in Asia (Central & North China).  Major ports such as Shanghai have been shut down for 2-3 days which has caused a ripple effect such as roll overs and cargo backlog.

 

In essence, it is creating havoc – vessels are leaving before the entire operation is concluded (leaving many containers behind); port calls are being omitted and/or cancelled; and, heavy congestion and berthing delays are occurring.  If that wasn’t enough, rates are going up again 15-20% as of September 1st!  How resilient is your supply chain?

What Should We Consider and/or What Impacts Could Arise?
Recently, we decided to start a new series of interviews, articles and conversations about “The Resilient Supply Chain”.  This just highlights the critical importance of the topic! Our first video interview will debut in September, so stay tuned.

There is a LOT of conversation about trade wars, tariffs and politics yet what has created havoc this past week is an act of mother nature.  Our clients are telling us they are already experiencing transportation delays and rate increases, and demand is NOT slowing down.  These additional issues are bound to add stress to an already challenged system.  Leaving it to luck and hope that nothing will impact your global supply chain clearly is not the best laid plan…

This reminds me of a situation that occurred when I was VP of Operations at PaperPak.  The city where our largest facility was located went ‘under water’ due to a hurricane.  Even though our facility was built on higher land (thanks to P&G), no one could get in or out and everything came to a stand still.  Materials couldn’t arrive.  Shipments couldn’t leave.  Employees couldn’t get to work.  If we didn’t have backup suppliers and resiliency plans, we would have been down FAR longer even when the facility did start up because our suppliers were impacted.

Have you thought through “what if” scenarios?  Are you willing to invest in them?

 



Keeping an Eye on Global Markets

September 1st, 2018

If there ever was a strategic topic of critical importance no matter your position in the supply chain, it is keeping an eye on global markets.  We’ve worked with clients who ONLY source materials, components and products from U.S.-based suppliers.  Yet, even they must pay attention to global markets to thrive.  Are you making this a priority?

There are countless reasons to stay informed of global markets.  First and foremost, we live in a global society. It isn’t practical to go through a day without coming into contact with products, services, people, currencies and more from around the world.

A few additional reasons to keep an eye on global markets:

  • Interconnected world – We live in an interconnected world.  A political risk in Asia can impact the price of your materials.  Or, a shortage of oil or gas (as an example) in one country can impact the price and availability elsewhere.
  • Economy & currencies – Currency exchange rates will have an impact somewhere in your supply chain whether or not it touches your product or service.
  • Tariffs & trade – Tariffs certainly can have an impact.  The impact can be far reaching and can be from areas that don’t directly touch your organization. In this case, you might have short-term pricing impacts or long-term strategic impacts of where to locate manufacturing or which countries and markets to pursue.  Hopefully, you are considering both.
  • Global customers – There might be unique opportunities in one part of the world to utilize your product or service with a greater benefit realized than in another part of the world.  Are you considering your options and expanding your mind to the possibilities?
  • Risk – There’s no doubt that mitigating risk alone is reason to keep track of global markets.  For example, earlier in my career when there were issues getting materials out of Brazil, we wouldn’t have been able to service customers if we hadn’t planned for a backup supply elsewhere in the world.  Similarly, we would have gone out of business if we relied on only local suppliers when a major hurricane hit our manufacturing plant.  Every local business was under water except us and even with a plan we were affected – were shut down for a short period of time because our employees could not get in or out of our facility.

Keeping an eye on global markets can become a full-time job. Clearly, few, if any, clients can afford that.  Thus, pursue ways to collaborate with customers, suppliers, trade associations and more to leverage insights. Minimally, put aside some time on a daily basis to watch for key trends.

 



Manufacturing Gains

February 8th, 2017

As one of the panelists at the Manufacturers’ Summit last week said, “Have you ever seen manufacturing in the news more than it has been lately?” Quite an intriguing point….

The Summit had an expert panel on the future of manufacturing — and what the Trump era was likely to bring to manufacturing.  The panel was specifically non-partisan and included several heavy hitters including the president of the CMTA (California Manufacturers & Technology Assoc), the president of a local manufacturing company who also sat on the president’s export council for many years, the president of the Inland Empire Economic Partnership (IEEP), a manufacturing leader at a global company and the COO of the National Association of Manufacturers (NAM). I definitely took notes.

The bottom line is that manufacturing has much to gain. This ties in with the sentiment of the manufacturers in attendance. How might you gain?

manufacturing trendsWhat Should We Consider and/or What Impacts Could Arise?

Let’s start with a few highlights and a mixed bag: Exports won’t change. Trade isn’t dead although costs will likely rise on imports. The use of technology is on the rise. Industry 4.0 is becoming “the thing to watch”. California has some steep disadvantages to overcome. For example, our energy costs are 15% higher than the next most expensive state, according to one of the large local companies in the Inland Empire, and investment in manufacturing is weak at best!

Now on to some positive news:

  • Tax reform – it is likely to benefit manufacturers
  • Infrastructure – definitely likely to benefit manufacturers and specifically California (roads, bridges, ports, digital, energy); however, we need to make sure it happens!
  • Regulatory reform – permitting will definitely improve, and regulatory reform will benefit manufacturers overall.
  • Healthcare – somewhat unknown; however, if Pence does what he has said he’d like to do, the states will have a significant say in how money is allocated. Certainly, most manufacturers have struggled with healthcare the last several years and so the hope is for improvement.

There is plenty to think about in these expert predictions. What can you do to start the ball rolling so you are ahead of the curve?

 



Trump and Trade

January 31st, 2017

Well, you’d have to be living under a rock to have not heard all the controversy about Trump and trade. Tariffs, restrictions and general chaos….

Currently, the U.S. trades significant volumes with China, Mexico and a whole host of other countries as we live in a global economy. For example, in looking up trade balances with China for 2016, the U.S. exported $104,149 (in millions) and imported $423,431 (in millions). Thus, what is all this hoopla about and what should supply chain leaders be thinking?

global trade

What Should We Consider and/or What Impacts Could Arise?

Although it is easy to get caught up in all the emotion and politics, the bottom line is that we aren’t going to flip the import/export numbers with China (as an example). Will it change in some respect? Of course; it would regardless. Will the trade figures change substantially this year? No. Will companies re-evaluate their insourcing, near-sourcing and outsourcing decisions as costs change with tariff adjustments? Yes.

We are headed into volatile times; however, this is not abnormal in supply chain circles. Who can predict hurricanes? No one. Yet hurricanes and natural disasters affect the supply chain every day. Those who are successful will find a way to adjust with changing times and will become more agile in their responsiveness to changing circumstances. And they will figure out what is most important to their business and focus solely on those factors while building agility into the rest.

What is most likely to occur is that Trump will re-evaluate trade deals and re-negotiate. If we took a step back and looked at our trade agreements, what makes sense? How can we keep businesses flowing yet improve the deal? If you are interested in getting in front of the curve, consider these factors for just those areas most critical to your success.