Supply Chain by the Numbers

- Aug. 19, 2016 -

  Supply Chain by the Numbers for Week of Aug. 19, 2016

Best of Breed Leader JDA Makes its Decision; Warehouse Space in Inland Ports is Smoking Hot; Patagonia Finds Sourcing is Wooly; It's Not Offshoring that is Killing US Manufacturing Jobs


$3 Billion

That's how much industrial giant Honeywell is said to be offering private equity firm New Mountain Capital to acquire the industry's largest best of breed supply chain software company JDA, in news broken by Reuters late last week. Reports then were that the deal could be announced as soon as this past Monday – but Monday came and went without any news. Then Tuesday, news that giant private equity firm Blackstone had stepped in and was offering a deal to restructure JDA's some $2 billion debt, nearly twice its annual sales, by in effect swapping debt for equity. And just this morning, JDA announced that it is indeed going to do a deal with Blackstone, and will not be acquired by Honeywell after all. The deal brings $570 million into JDA, which will be used to payoff existing debt and reduce annual interest expense by $70 million a year, the company says. This move will have far less impact on JDA and its customers than a Honeywell acquisition would have had, so good news for some there.




That's how many years outdoor sports apparel brand Patagonia had been developing a promising new line of wool long underwear when the planned launch had to be delayed – due to a lack of wool suppliers. That according to a story in the Wall Street Journal this week that detailed how Patagonia, an acknowledged and early leader in supply chain transparency and social responsibility, nevertheless got burned when in 2015 when the People for the Ethical Treatment of Animals (PETA) released a video showing significant abuse of sheep at a South American ranch that provided wool to Patagonia. That led Patagonia to stop buying wool from the network of farms on the continent that provided the majority of wool for the company, and ultimately then canceled the product launch. Patagonia soon rewrote its rules for sourcing wool and had to find suppliers which met the new criteria. Sourcing team members travelled to remote farms across the globe to see ranches, animal treatment and shearing processes first hand.


That is the percent of US manufacturing job losses that can be accounted for by increased productivity, according to a new study from Ball State University. The researchers there estimate that just 13% of manufacturing jobs have disappeared due to trade, meaning offshoring. US manufacturing labor peaked in 1979 at about 19.4 million workers. Today only around 12 million people work in manufacturing operations, a decline of roughly one third over the past 35 years. Given that, it may be surprising to know that US manufacturing sector has never been larger by one measure: value added by the US factories reached an all-time high of $2.4 trillion in 2015. (However, US manufacturing output is actually still below 2007 peak levels, according to Federal Reserve data. Manufacturing represents about 13% of US GDP, but the figure is much higher if you factor in support services for manufacturing operations.



That's about the share of the 77 million square feet of US industrial space absorbed in the second quarter that was connected to a so-called "inland port." That according to an article this week at the web site of National Real Estate Investor magazine. What is an inland port? There are two main criteria: direct connection to a major seaport via Class I rail, and major transportation infrastructure, in the form of rail (usually), interstate highway or inland waterway. The top five inland ports in the country in terms of size are Dallas/Ft. Worth, Atlanta, Houston, the Inland Empire near Los Angeles and the giant of them all, Chicago. US inland ports have been quietly tearing up records for expansion and growing at nearly twice the national rate for industrial space. "It's absolutely astonishing, the amount of space being leased in the inland port markets," says David Egan of real estate firm CBRE. In Chicago, inbound truck and rail shipments are projected to grow by more than 50% in the next 24 years, and outbound rail shipments are expected to increase by almost 150%