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Wednesday, June 18, 2008

Ever wonder how natural disasters may affect manufacturing?

First there were the blizzards in February that prevented workers from getting home in time for the most important holiday of the year - Chinese New Year - thus lowering worker moral and causing many to not return to their base factories. Labor forces had already been in a critically low state, this added to the stress.

Last month was the horrible earthquake in Sichuan; an area we were thinking of building a factory but hadn't started yet. It's excruciatingly painful to read the stories of school buildings crushed because they were built so badly. What kind of asshat builds a school without any metal support rods in the concrete in an earthquake zone??? The same jerk who has no concern for shipping lead paint to a toy factory. See most American's assumed - broadly - that Chinese factories didn't care about the kids in other countries - no it's simply an acrid lack of appreciation for life in certain corrupt individuals. I've seen how parents hold their babies in China, and cry in painful shock over the death of their children - with the same passion and intense love westerners do.

And now the flooding in Guangdong - China's factory floor. I've traveled this region many times and have trouble imagining it under water until I see the photos. We have a few factories affected - but fortunately not to the extent I was expecting. There are some damaged sound boxes, potentially a week delay on Christmas shipments, some damaged equipment and the laminated box maker for our Jack in a Coffin said the papers got damp but no loss of life which is the most important factor.

Poor Boo!

Early estimates put the damage in the 1.5 billion range. Expect this to impact product prices over the next year. If you thought oil was causing a leap in cost, wait until you see the cost impact of 3 major natural disasters in the worlds biggest manufacturing base.

Edited to add - this written around midnight, not knowing that 5 hours later I would be in labor!

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