Lion of the Blogosphere

Economic disruption to the furniture industry

I saw the following on Reddit. Of course, any bozo or hoaxster can post on Reddit, but it seems legit, because our economy is based on “just-in-time supply chain management.”

I worked in the furniture business. My company has full furniture imported from China and for the made in the USA stuff the fabric is imported from China (China makes over 40% of the worlds textiles). For a few weeks we haven’t even been able to reach our Chinese vendors much less get in contact with them. We finally reached our biggest vendor who supplies all of our fabrics, the PO dates are insane. For our popular fabrics we are looking at PO dates to mid JUNE as of right now, less popular stuff it’s early august. That’s just to get the fabric to the US factory. We are told if factories even open up they are going to be producing a fraction of the product due to employees being locked down in their home cities.

We are already running low on our warehouse stock because income tax return is the busiest time of the year. Once we run out we can’t even put in further purchase orders. Since we’ve already ran out of lighter stocked merchandise it’s been calculated we already lost over a million dollars in potential sales. My company has close to 100k employees and our jobs are seriously at risk right now.

People are so focused on the virus that they aren’t even realizing that hundreds of thousands of people will be out of work if this continues any longer. It’s not as simple as sourcing from another country, it’s extremely expensive to relocate production to another country, it’s also a very slow process.

Even if this ended tomorrow there’s a good chance our company can tank from this situation. I’ve already been told by a friend in corporate to get my resume ready to go.

The economic fallout from this is going to be life changing.

Proves my point from yesterday that even stuff that’s allegedly made in the USA is dependent on materials from China. Who knows what else they could run out of besides fabric? Where are the screws and stuff like that made? I bet they’re made in China.

* * *

According to this article at a supply chain website, hardly anything is shipping out of China right now.

The coronavirus outbreak in China continues to severely disrupt supply chains, the few export sailings this week not cancelled by carriers departed barely 10% full.

With reported deaths now in excess of 1,300 and confirmed cases at over 63,000, some provinces and cities in China have extended movement restrictions until 1 March.

“The network has almost ground to a halt,” one carrier source told The Loadstar this week.

“We sailed a 23,000 teu ship this week from China to North Europe with less than 2,000 teu – we can’t carry on much longer like this.

“It’s no good discounting rates if the cargo is not there, so we might have to ask for a premium for customers that do manage to get their containers on the quayside,” he warned.

A UK forwarder told The Loadstar this week one carrier told them that it might anchor its biggest ships and deploy smaller vessels on a very limited service until demand picked up.

Here’s a tip to sound educated: the word “quayside” is pronounced “key-side.”

Written by Lion of the Blogosphere

February 16, 2020 at 1:40 PM

Posted in Economics

26 Responses

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  1. This is alarmist nonsense. All of what he wrote could eventually happen, but I don’t believe it is happening yet. All of the factories started closing down the week of January 20th in preparation for the Chinese New Year. Any textile or furniture shipments would have been shipped out in January. Every year there is a mass rush of exports before the Chinese New Year because the factories all shut down for at least 1 week and it can take a couple of weeks to get back up to speed after the holiday. Often workers don’t come back or change jobs during this time. The items that shipped out before the Chinese New Year are only just starting to reach the United States. West Coast shipments take around 2 weeks and east coast shipments take 4 weeks. If this company is out of supply already, the problem in their supply chain happened before the virus.

    It is true that the factories are taking longer to start up. The delay as of now is about 2 weeks and in a worst case scenario, the delay will continue longer. I don’t expect supply chain shortages to happen for bulk goods shipped by the ocean to start yet because businesses are still receiving their pre-virus shipments. Also, this is normally a slow manufacturing time anyway because the factories do not get back to full production right after the holiday.

    Stilicho

    February 16, 2020 at 2:03 PM

    • “This is alarmist nonsense.”

      Indeed. American stores selling less cheap, foreign crap is not going to wreck the economy. In fact, I’m in favor of anything that results in people buying less cheap, foreign crap.

      destructure

      February 16, 2020 at 6:18 PM

  2. I can vouch for that. I have a relative who owns a furniture store, and his source is in China. His business is hurting badly because of the situation.

    jewamongyou

    February 16, 2020 at 2:06 PM

  3. What an opportunity for a massive expansion in domestic production!!!

    Besides, what furniture company within the United States actually has 100k employees if all they are doing is importing fully-assembled furniture?

    Looks like it’s time to source textiles from Indonesia and India, while building out capacity in the United States. After all, better to take a hit on margins than to take a hit on revenue.

    map

    February 16, 2020 at 2:33 PM

    • Good question that. Ashley Furniture Industries only has 23,000 employees. Perhaps the guy who posted that is just not too bright and is exaggerating. Kind of like Donald Trump.

      Lion of the Blogosphere

      February 16, 2020 at 3:03 PM

      • Proles are constantly worried about not getting the next fix of frivolous consumption in turn they worry about not paying bills as a result.

        Ok, what, who's this again?

        February 16, 2020 at 7:24 PM

      • Chinese furniture is likely not very good. Or maybe they’ve improved or at least started offering some better quality stuff too.

        Frau Katze

        February 16, 2020 at 10:13 PM

  4. Maybe we will start making stuff again, that’s a good thing, right?

    Joe

    February 16, 2020 at 2:35 PM

  5. I bet you can find fabric manufacturers also from India/Mexico/other Latin American countries. Also screws are probably manufactured also elsewhere. Maybe there will be small delay, but finding new suppliers won’t take months.

    tmmm

    February 16, 2020 at 2:37 PM

    • “Also screws are probably manufactured also elsewhere.”

      Plenty of fasteners are manufactured in America. I built some machines for a company that produces them.

      destructure

      February 16, 2020 at 6:31 PM

  6. 100% Coronavirus will reduce economic growth. I hope it doesn’t tip us into a recession.

    There is a slow movement away from to Vietnam, Bangladesh and other countries for low-value manufacturing. Coronavirus may accelerate the process.

    Jimi

    February 16, 2020 at 2:48 PM

    • A bigger problem would be precision machinery, chemicals and high-tech – that stuff you cannot move as easily. Interesting times, should there be real shortages of everyday stuff the inflation will really pick up. It is already on the rise.

      Goodstuff

      February 16, 2020 at 3:27 PM

    • Coronavirus looks set to spread. I’m watching carefully to see if it will reach Wuhan proportions anywhere outside China.

      I exclude cruise ships, they’re a special case. There was an article about them at WSJ. Bookings are down, a company rep said. I’m surprised they get ANY bookings.

      Frau Katze

      February 16, 2020 at 10:18 PM

      • Unless we make major changes to our daily lives (like work from home, call off school for a while) to lower the R0, it will indeed reach Wuhan proportions.

        Lion of the Blogosphere

        February 16, 2020 at 11:13 PM

  7. Re: Sounding educated…

    Tyler Cowan has remarked that when someone mispronounces a word, his respect for them grows because it indicates they learned it from reading in isolation rather than absorbing it from a social circle.

    Vince

    February 16, 2020 at 5:54 PM

    • That is a very interesting point.

      Lion of the Blogosphere

      February 16, 2020 at 6:00 PM

      • Yes it is. And learning things like this is one reason why this blog is so wonderful.

        Maryk (the g-loaded guidette)

        February 16, 2020 at 6:26 PM

      • My experience with the proles in the Hudson Valley is that they are more affable than any biped walking on the streets or in any borough of NYC. Middle class folks are the nicest people around along with old money TOOs (whatever happened to them, Lion has stopped talking about them).

        Ok, what, who's this again?

        February 16, 2020 at 8:59 PM

      • Tyler Cowan is stupid.

        You can look any word up on m-w.com and it will teach you how to pronounce it.

        map

        February 17, 2020 at 3:35 PM

    • Cowen is also known for “reading” and reviewing books by just skimming or even just reading a couple pages in a book. His idea of reading is quite different from how most people understand it.

      Tom

      February 16, 2020 at 6:16 PM

    • Counterpoint – Belonging to prole social circles where you don’t learn to pronounce college level words properly.

      jjbees

      February 16, 2020 at 7:06 PM

      • Proles don’t use words that are hard to spell.

        Joe

        February 16, 2020 at 10:31 PM

  8. Trump’s had tariffs on China for over a year. Any company that didn’t start reducing its dependence on China last year is run by morons.

    David Pinsen

    February 17, 2020 at 12:57 AM

  9. MEH 0910

    February 18, 2020 at 1:05 AM


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