With the congestion at the L.A. ports, just about every area of commerce has been experiencing shortages, including the automotive industry. Who's to blame for this fiasco? It's easy to blame the ports, the drivers, the shipping companies, the logistics industry, and more. However, to identify the root cause of the problem we need to go back to the mid-1980s.
American OEMs were much impressed by the Japanese Toyota model and the efficiency of its supply chain. This allowed the Japanese to produce cars in the U.S. at similar costs to those produced in Japan, despite the higher labor costs. Of particular interest was Just in Time (JIT)—no inventory costs , warehousing or tied-up capital.
Rather than embrace the model in its entirety, U.S. automakers chose to cherry-pick the parts they liked, and shun those they didn’t. So JIT was great, but improving relationships with suppliers, not so much.
Then in the early 2000s, the OEMs decided that JIT wasn’t enough; now they wanted JIT with “China prices.” JIT was good for stock prices, but it was bad for American industry.
So, again, who is to blame for the supply chain crisis? Blame Wall Street and the financialization of just about every aspect of American life.
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