Supply Chain by the Numbers for Week of April 13, 2017

Supply Chain by the Numbers

- April 13, 2017 -

Tiny Columbus, IN is an Export Titan; Layoffs Continue at Walmart, Says Funds Needed for eCommerce; Boeing Could See Major Savings from 3D Printing; Parcel Carriers Hiking Rates Big Time in Japan



50.6%
That amazingly is the share of exports in the total economic output of Columbus, IN - hometown of Vice President Mike Pence - making it the city with the highest such ratio in all of the United States. How did that happen? Local company Cummins, a leading producer of truck engines, is certainly part of the story, but far from all. Starting in the 1980s, the city initiated outreach efforts to foreign manufacturers, long before such efforts were "cool." The result? There are now 36 foreign-owned companies making products in the small city of just 40,000 people, 26 of those companies from Japan, most in the auto parts sector. Those companies employ about 9000 workers, according to an article this week in the Wall Street Journal. The area has a current unemployment rate of just 3.5%, well below the national and Indiana state levels. Cummins has played an important role, but local leaders were also very forward-thinking and bent over backward to accommodate companies looking to set up shop or expand here, offering generous tax abatements and training grants and helping smooth over issues as small as a misplaced stop sign near a factory, the WSJ says. But the area could be about maxed out in terms of labor resources, the article said, perhaps limiting additional manufacturing growth.

18,000

That's how many jobs Walmart has cut since early 2016, the result of layoffs at its headquarters, store closings and reduced staffs at some stores. About 11,000 of the affected workers, mostly store associates, found other jobs at the company. That number came after news this week that Walmart was going to eliminate hundreds of jobs at its headquarters location of Bentonville, AR, after it chopped about 1000 jobs there earlier this year. The cuts are said to be concentrated the international side of Walmart's business, its IT group and at its warehouse chain Sam's Club. The company said it is using the resulting cost savings to invest in - what else - its ecommerce operations, as well as for revamping its existing US stores. Walmart CEO Doug McMillon told analysts that the company's efforts to compete with Amazon.com mean it must refocus on low-cost operations, resulting in the layoffs.



50%
That's by how much one Japanese last mile delivery company recently proposed increasing its rates to one major customer, according to an interesting article this week in the Nikkei Asian Review. While the shipper was for now able to hold off most of the increase, the delivery company's approach is indicative of broader trends in the Japanese parcel and last mile delivery market - and could portend similar changes in the US. Fukuyama Transporting, for exanple, is enforcing a no-discount policy on basic rates. "Although our handling volume may decrease, there is a constant level of demand," said a person at the company. "We need to secure a level of profitability that matches our operational burdens and as well as redelivery and other costs." Yamato Transport, whose clients include Amazon.com, plans to raise its basic shipping rates by the end of September. The Yamato Holdings unit is also negotiating higher prices with corporate customers, as is rival Sagawa Express. Some parcel delivery companies are even telling shippers they need to change the packaging of some items to create better handling efficiencies, such as putting rice in a box instead of a bag. A lack of delivery drivers in Japan is helping the logistics companies push through the rate hikes, the article says. If it happens there, you can bet sharp rate hikes will follow here.



$3 Million
That's how much Boeing could save per plane if it were to create as many of its parts as possible out of titanium using advanced 3D printing technologies. So estimates Norwegian company Norsk Titanium, which just inked a deal with the aerospace giant. To begin with, Norsk will only print four different parts, after long negotiations and cooperation with both Boeing and the FAA. By 2018, the hope is that the variety of parts printed for use in the roughly 144 Dreamliners Boeing produces each year will expand significantly. 3D printing is by no means new to aviation. Last year, we reported how GE Aviation opened an entire research facility dedicated to developing printed metal parts, including plans for a 3D-printed turboprop for the new Cessna Denali aircraft. It turns out that what Norsk is doing is not exactly 3D printing as is commonly understood, for which the material is put down in layers and built up additively, for a finished product that is a single part. But in Norsk's case, it's a little bit more like welding layers of titanium metal dust very carefully. The end result, Popular Mechanics says, are components that are more robust because they involve fewer separated parts than traditionally-machined components, and potentially cheaper because they're built in a single process.