Ford's Laborquake 🪧
Good morning! Happy Friday the 13th, fellow supply chain enthusiasts! While some may associate this day with superstitions and bad luck, here at [Your Newsletter Name], we're determined to dispel any doubts and bring you a dose of good fortune in the world of supply chain and logistics. In this October 13th edition, we're excited to navigate the intricate web of global supply chains, exploring the latest trends, innovations, and strategies that will keep you on the path to success, no matter what the calendar may say.
So, grab your coffee, set aside any superstitions, and let's dive into the world of supply chain excellence on this eerily exciting day! 😱🐈⬛
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Union Strike Expands to Ford's Key Factory, Rattles Auto Industry Supply Chain
The United Auto Workers union has expanded its strike against Detroit's major automakers by involving Ford's largest factory, the Kentucky truck plant in Louisville, where 8,700 members unexpectedly walked off the job. This move is causing significant disruptions to Ford's production, particularly affecting high-profit heavy-duty F-Series pickup trucks and large Ford and Lincoln SUVs, which generate approximately $25 billion in annual revenue. Additionally, the union's President, Shawn Fain, hinted at potential actions targeting Stellantis, the maker of Jeep vehicles, though specifics were not provided. This labor action escalation underscores the growing tension between auto workers and their employers, potentially impacting production and supply chain dynamics in the automotive industry.
The United Auto Workers union has extended its strike to Ford's largest factory, impacting the production of high-profit vehicles. The union's President also suggested potential actions against Stellantis, reflecting increasing tensions between auto workers and employers, with potential ramifications for the automotive industry's production and supply chain dynamics.
Check out today’s featured article from AP News to learn more about what the strike is going to do to some of the largest car manufacturers. Will Stellantis be even more unstable if more strikes happen? How much longer will this go on for?
Featured Article:
“The United Auto Workers union significantly escalated its walkout against Detroit’s Three automakers, shutting down Ford’s largest factory and threatening Jeep maker Stellantis.”
Coal & EV
Kansas EV Battery Factory Raises Concerns Over Energy Demand and Coal Reliance
Kansas is causing concerns due to its substantial energy requirements and the temporary reliance on coal power. The $4 billion Panasonic EV battery facility in De Soto, Kansas, needs 200 to 250 megawatts of electricity, putting stress on the state's energy grid. To address this, Kansas has postponed the retirement of a coal plant to ensure the factory's power needs are met.
The decision to prolong the use of the coal plant until at least 2028 has raised environmental and cost concerns. The factory's energy demands are expected to double that of the state's largest current customer, requiring significant infrastructure upgrades. Evergy, the utility company serving the factory, plans to request a rate hike to fund these enhancements, sparking questions about the financial responsibility for supplying power to the facility. This situation underscores the challenges of meeting the energy demands of rapidly expanding EV manufacturing in the U.S., particularly when renewable energy sources may not offer the consistent base load power required for such facilities.
UAW & Strike
UAW Strike Fallout Has Resulted in Nearly One-Third of Suppliers Being Forced to Lay Off Workers
Automotive suppliers, who employ more than 900,000 workers, have been significantly affected by the United Auto Workers (UAW) strike, which began on September 15th. This number is over six times the total UAW membership (approximately 146,000) across General Motors, Ford Motor Co., and Stellantis. The strike has resulted in about 3,000 layoffs among suppliers, while the Big Three automakers have furloughed approximately 4,000 nonstriking employees. These suppliers, often categorized as Tier 2 or lower, play a crucial role in maintaining the overall supply chain's viability, as highlighted by the Motor & Equipment Manufacturers Association (MEMA).
MEMA is actively collaborating with the White House to formulate a financial assistance plan specifically aimed at supporting suppliers with less than $200 million in revenue, aiming to mitigate the impact of the strike on their operations. The organization has conducted surveys among 500 original equipment suppliers, receiving 80 responses in their latest survey, and plans to continue monitoring the situation on a weekly basis. However, specific details about when the next survey results will be published have not been disclosed.
Let’s Get Global 🌎
Checking out the scoop outside of the United States…
🇮🇱 Israeli Conflict Set to Disrupt Electronics Supply Chain. The Israel-Hamas conflict is causing economic disruptions, particularly in the electronics supply chain. Many multinational tech companies, including Intel, IBM, Apple, and Microsoft, have operations in Israel, and the conflict has led to disruptions due to workers, including top executives, being called up for reserve duty in the Israel Defense Forces (IDF). For example, Intel, with factories near the Gaza border, has faced production challenges, highlighting the economic implications of the ongoing conflict.
🚢 U.S. Container Ports Reach Peak Cargo Volume, But Slowdown Looms Amid Economic Factors. According to the Global Port Tracker report, U.S. container ports have already reached their peak import cargo volume for the year, with a gradual decline expected as the holiday season approaches. This is attributed to retailers stockpiling early amid concerns about supply chain labor issues, but a slowdown in consumer spending growth, driven by factors like rising inflation and high interest rates, has contributed to the decline. Carriers are responding by slowing down their ships to reduce capacity, leading to declining freight rates, and it's anticipated that cargo growth may not rebound until 2024.
iLevel With You 🏡
More topics for the average American household to consider…
🧑🏽⚖️ California Set to Introduce New Climate Reporting Rules for Large Corporations. California Governor Gavin Newsom has signed two bills, SB 253 and SB 261, aimed at enhancing climate reporting rules for large businesses in the state. SB 253 mandates emissions reporting for companies with over $1 billion in revenue, requiring disclosure of scope 1 and 2 emissions by 2026 and scope 3 emissions from 2027 onwards. It also calls for accessible and verified reporting, affecting more than 5,300 California companies. SB 261 focuses on climate-related financial risks, obligating companies with over $500 million in revenue to prepare biennial reports on these risks and risk management strategies beginning in 2026, impacting over 10,000 businesses. Governor Newsom, while supportive of California's climate efforts, expressed concerns about the legislation's deadlines and financial implications, pledging to collaborate with the legislature to address these issues in the future.
📈 US Consumer Price Inflation Soars Beyond Expectations in September. In September, the United States experienced persistently high inflation, as reported by the Bureau of Labor Statistics. The Consumer Price Index (CPI) rose by 3.7% over the past year, slightly surpassing expectations. The increase was primarily driven by elevated gas prices, shelter costs, and higher food and energy expenses. However, the core CPI, which excludes gas and food, saw a sixth consecutive month of cooling, rising by 4.1% annually, aligning with the Federal Reserve's inflation targets.
👍🏽 Enhancing Supply Chain Resilience: Saving Costs and Mitigating Disruptions with Technology. With supply chain disruptions on the rise due to various factors, building resilience has become a top priority for businesses. Darcy MacClaren, CRO of SAP Digital Supply Chain, argues that investing in resiliency measures can save companies money by preventing costly disruptions. She highlights how technology, including data analytics, Industry 4.0 technologies, and AI, is making it easier for companies to assess and manage risks. MacClaren also mentions SAP's integrated business planning approach, which considers various risks, including customer sentiment, climate change, and raw material shortages, to enable more efficient responses to disruptions.
Get Smart 🧠
Ramp up that brain power for these advanced topics…
📉 Class 8 Sales Experience Second Consecutive Monthly Decline in September. In September, Class 8 retail sales in the United States declined by 3.2% year-over-year, marking the second consecutive month of decline. A total of 22,231 units were sold, compared to 22,971 in the same period in 2022. Sequentially, there was also a 4.8% drop from August. However, year-to-date sales showed a 12.9% increase, reaching 202,335 units, compared to 179,247 at the same point in 2022. Daimler Truck North America's Freightliner brand held the largest market share, accounting for 35.4% of all sales, with 7,869 trucks sold. While some manufacturers, like Navistar's International brand, reported year-over-year sales declines, others, like Peterbilt Motors Co., saw sales growth.
👀 Analyzing the Significance of ESG Reporting Laws and Rising Public Awareness. Environmental, Social, and Governance (ESG) factors have gained prominence in the global business landscape, influencing brand development, sourcing decisions, and supplier evaluations. A survey by QIMA reveals that 90% of respondents are aware of the impact of ESG regulations on their sourcing choices, reflecting the growing recognition of ESG's importance in procurement. Neglecting ESG considerations can lead to reputational risks, operational disruptions, and legal compliance issues. These regulations are expanding globally, affecting approximately 50% of businesses worldwide, with larger companies more likely to be impacted. The focus on supplier conduct in sourcing decisions has also increased, driven by regulatory requirements and growing ethical sourcing awareness in both the public and business communities.
✏️ Utilizing Data for Strategic Fleet Planning and Development. Stephan Schablinski of DHL underscores the importance of data in the transition to electric vehicle (EV) fleets within the transportation industry. He notes that EV operations depend on variables like route, payload, driver, and climate, making data collection crucial to assess electrification feasibility and compare running costs with diesel vehicles. DHL utilizes data collection and analysis, including platforms like Samsara's Connected Operations Cloud, to effectively plan for the shift to EVs and alternative fuels, enabling more informed and cost-effective decisions by fleet managers.