@Risk

Margaret Hamburg, the Commissioner of the US Food and Drug Administration, is visiting China for the first time since she was appointed, and I was pleased to hear that in her remarks last Friday she said that China is working towards improving its oversight of exporters.

According to an AP article, Hamburg said that Chinese officials she spoke with were pursuing a “common agenda” to improve manufacturing practices and regulation of complex supply chains for the food and drug industries. In addition, she reported feeling “very encouraged by the partnership” developing between China and the US. (more…)

In April, the US Government Accountability Office (GAO) published a report on rare earth materials in the supply chain of the Department of Defense. The report, commissioned by Congress, documented that China now dominates the supply of rare earth materials crucial to the nation’s defense, computer and renewable energy sectors.

In fact, the GAO estimates that China now supplies virtually all –or more precisely, a whopping 97 percent –of the world’s rare earth supply, and in the report the agency clearly voices its concerns that China could someday reduce the supply.

“The GAO report is a timely warning that the US needs to ramp up its domestic production of both light and heavy rare earths immediately,” US Rare Earths, Inc. Chief Executive Officer Edward Cowle said at the time.

But, perhaps even “immediately” isn’t soon enough? (more…)

About a year ago, Maersk was named Sustainable Shipping Operator of The Year in recognition of the efforts the company has made to reduce the environmental impact of its business operations. In particular, the award recognized Maersk’s pioneering efforts on the sometimes controversial shipping method known as “slow steaming.”

As the name implies, slow steaming ships travel at reduced speeds, saving fuel and reducing greenhouse gas emissions. The approach is relatively straightforward and quite effective, and in fact, slow steaming has proven so successful that now many major companies have throttled down even more. These days, they’re “super-slow steaming” and traveling at speeds of only 12 knots (about 14mph).

While there’s no doubt that super-slow steaming saves fuel, cuts costs and lowers emissions for shippers, I have to wonder: What is the effect on buyers? How does slow steaming impact order cycle times, inventory management and supply chain efficiency, in general? (more…)

After a string of work stoppages in May and June, it appeared that factory strikes in China were tapering off.

However, last Friday, Shanghai Daily reported that Chinese factory workers at two more suppliers for foreign automakers had walked out, demanding pay increases.

The strikes occurred at Atsumitec Co, which supplies Honda Motor Co.’s China operations, and at Japanese electronics maker Omron Corp, which supplies switches and ignition keys to Honda, Ford and other carmakers. Each was settled after the workers won what the article calls “hefty pay raises.” (more…)

In the wake of walkouts at several Chinese manufacturing facilities over the past few months, I’m starting to wonder about China’s future as a low-cost manufacturing base.

Most recently, the Toyoda Gosei plant, located just north of Beijing, was shut down by a one-day strike last Tuesday. Although short-lived, the work stoppage underscores growing employee discontent at the facility, and a strike resolution came only after managers agreed to discuss wage increases, Reuters reports.

A few days later, Honda Motor Co. was in the middle of a similar dilemma. The company had to re-negotiate wages to prevent a strike at Honda Lock (Guangdong) Co. in the Pearl River Delta  –and that wasn’t the first time Honda has had to respond to employee demands for better pay. According to Bloomberg Businessweek, wage concessions by Honda after walkouts that shut down three parts factories in the past month may erode the company’s net income by as much as five percent. (more…)