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Supply Chain by the Numbers

- March 8, 2019 -

  Supply Chain by the Numbers for March 8, 2019

An Ohio GM Plant Clodes its Doors; China's is Selling on Google; Recylables Prices in Freefall; Economic Forecasts are Coming in Weak




Source: WBNS TV

That's how many workers have just lost their jobs at GM's auto assembly plant at Lordstown, OH, near Youngstown, as the last Chevy Cruze roll led off the line this week. That puts an end to the 52 years the plant has been making cars since it was opened in 1966, as it became the first of four GM factories to shutter, according to plans announced by the company last year. At its peak, more than 5000 employees worked at the Lordstown facility. The plant is actually well-known beyond the local scene, as it has been involved in a number of labor disputes over the years, including a famous strike in 1972 over robotics. In 2007, workers agreed to pay new employees lower wages in order to keep the plant open. But in the end, it wasn't enough. The company announced that 400 of its Lordstown employees have taken offers at other GM locations, and jobs were available for those willing to relocate. President Trump and Ohio's Senators are encouring other companies to move into the facility. The Youngstown area has never really recovered since it lost tens of thousands of jobs to steel industry plant closures in the 1970s, a sad tale indeed.+



That's how many products that Chinese ecommerce platform giant – second largest in its native country behind Alibaba - is now selling in the US through Google's ecommerce service. The products are all from JD's Joybuy in-house brand - including keyboards, headphones and kitchen appliances – and will be sold through Google Express, which also hosts American outlets such as retailer Costco Wholesale. More goods from the JD likely will be added down the road. The move represents the first outgrowth of a capital partnership that began with Google's $550 million investment in last June. Meanwhile, in just the past 12 months, riva Alibaba has teamed up with Kroger and Tiffany & Co, among other American firms, and has brought its payment system, Alipay, to thousands of US stores. Alibaba just announced a new partnership with Office Depot, under which the 10 million small businesses that buy supplies at Office Depot will be able to tap Alibaba to set them up directly with Asian factories and use Office Depot stores to pick up the orders. He come the Chinese ecommerce giants.



That is about the current price per ton for "mixed paper" being sent to US recycling facilities. That, incredibly, is down from around $100 per ton a few years ago. What has happened? Late last year, China announced that it would stop taking in American recycled materials, supposedly to combat pollution. China not only banned 24 foreign materials, including mixed paper and post-consumer plastic, It also put a strict 0.5% contamination thresholds on products it would be willing to accept, such as corrugated cardboard. That left US materials sellers without the giant Chinese market, sending prices in a freefall and bringing the American recycling industry to the point of existential crisis. Recycling has now become so expensive due, given the cost to collect recyclables, sort them, and clean them, that with the rock bottom prices a growing number of cities in the United States are sending recyclables to waste incinerators, where they are burned along with non-recyclable trash to generate electricity, according to Gizmodo. In Philadelphia 2012, for example, the city was selling its recyclables to processors at $67 a ton. Last year, however, it was paying the contractor, Republic Services, $20 a ton to take its recyclables. In September, the city and the contractor began negotiations on a new contract.The contractor asked the city to pay $170 a ton to continue recycling. Wow.



That is the latest – and obviously very weak – forecast for Q1 US GDP growth coming out of the Federal Reserve Bank of Atlanta's GDPNow calculator. Q1 has for reasons still not clear been generally weak for a number of years running now, but this forecast is especially poor. Many Wall Street economists see growth as being better but still just 1-2%. Goldman Sachs cut its estimate of first-quarter growth to 0.9% last week, and Macroeconomic Advisors reduced its call to 1% from 1.1%. However, economists mostly expect better growth in the second quarter. Goldman Sachs, for example, raised its expectations for second-quarter growth to 2.9% from 2.7%. They said their first-quarter forecast includes an expected drag from inventories, sequentially slower consumption growth, a drop in residential investment, and 0.4 percentage point drag from the government shutdown.

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