Do the local stores have the products that you always buy or are there gaping holes where the products usually are? Since they are not on the shelf, they are probably sitting on a ship waiting to be unloaded. Recently, we could see over 60 cargo ships waiting off the shores of California. On them, are over 200,000 20-foot containers. Why?
Americans buy over one-half of a trillion dollars’ worth of products from China every year. Thirty years ago, U.S. manufacturers began sourcing products from China for one reason. The costs were lower. Did these manufacturers pass the savings on to the U.S. consumer? Of course not, the money that was saved was passed on to the company’s stockholders and multi-million-dollar corporate officers.
In addition to the lower costs, U.S. companies started to use just in time inventory. Basically, that means replacement inventory would arrive just as a company would run out of inventory in their U.S. warehouses. Even the slightest glitch, would cause a product to sell out without sufficient inventory to replenish a store’s stock. Lately, we have had a lot of glitches.
When the pandemic hit, factory production in China fell at a record rate, as manufacturers shut their operations to contain the spread of the virus. They just did not have sufficient workers to maintain a steady stream of product. Chinese factories were functioning at about 60% of their capacity.
Cargo ships sailing into U.S. west coast ports are carrying more containers than ever before. At the Port of Long Beach, the average ship brings in 7,000 containers — when previously the average was 4,000.
Anyone who knows southern California knows of the massive traffic jams on their freeways. Now, they have a traffic jam in the waters off of the Ports of L.A. and Long Beach. Together these ports move 40% of the container imports. This delay is due to a shortage of trucks and drivers to pick up the containers, plus a tremendous consumer demand in the U.S. Add to this, the holiday season when cargo shipments normally increase and we have what amounts to a “Perfect Storm.”
As container ships clog major ports, oversized and overweight cargo are being rerouted to the east coast, driving up ocean shipping and inland transportation costs. So now we have delayed deliveries and inflation.
The Longshoreman’s union is not helping. With today’s technology, the unloading process can be automated, but the union won’t allow this to happen. No U.S. port places in the top 50 global ports in getting a ship in and out of a port. U.S. ports are open less hours per week than other ports around the world, while many factories are working 24/7. Union labor contracts expressly limit the number of hours that a longshoreman can work and require overtime pay for unscheduled work, as well as any work on weekends and holidays. Union dockworkers are paid an average of $171,000 a year with free healthcare. (I’m in the wrong business)
The unions have fought efforts to automate ports on both the West and East coasts for years. They quashed hopes that some of the East and Gulf coasts’ more expensive ports, such as New York and New Jersey, might utilize automation and technology to cut costs and improve productivity.
This widespread failure to fully automate major U.S. ports has inevitably hurt the ports’ efficiency. Automated cranes in Rotterdam (Netherlands) were almost twice as productive as the outdated ones in Oakland. Automation would make it easier to have multiple shifts per day and to improve the utilization of berths, cranes, and trucks.
Talk about automation. By automating U.S. factories, manufacturers can be very competitive with China and Mexico. Artificial intelligence and the Internet of Things (IoT) are seeing innovations in production and complex decision-making in real-time. Because of this, robotic technologies can operate efficiently in complicated, unstructured environments such as the manufacturing floor, warehouse and distribution networks.
Artificial intelligence involves machine memory and learning, similar to human intelligence. Add to that many devices that are connected over the Internet, collecting and sharing data, that is the IoT. These devices communicate and act together with other devices over the Internet, while being remotely monitored and managed.
Robots interact with one another while working safely side-by-side with humans. The cost of robots is coming down and the robots have a greater range of capabilities. Connecting robots on the production floor to one another, and then to the back-office systems in finance, and purchasing makes the entire manufacturing process more efficient, while reducing costs.
Robots are playing an important role in transforming manufacturing. As an example, the Japanese robotics maker FANUC has been operating a “lights-out” factory since 2001. In their factory, robots are building other robots completely unsupervised. This factory not only operates with no lights, it also runs without air conditioning and heat. This is an efficient and cost savings factory.
Augmented reality-based systems provide for a diversity of services, such as selecting parts in a warehouse or transmitting repair instructions over smartphones. These systems are in their early stage of development but in the future, they will be used to provide workers with real-time information to improve decision making and work procedures.
Supply chain software entails forecasting to stabilize the difference between supply and demand by refining business procedures and using algorithms and consumption analysis to plan for future requirements. This comprises integration technology that lets organizations trade electronically with supply chain partners. This will eliminate many of the logistics problems that we now have.
Part of the delivery problems that we are experiencing is because of the shortage of truck drivers. To solve this problem, we will see autonomous trucks becoming mainstream. The use of self-driving trucks is still fairly new and still primarily in the testing phase. All tests so far have been successful.
It’s time to make America’s manufacturing great again.