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March 21, 2019 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Will there Really be Good US Manufacturing Jobs Again? bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest/Green Supply Chain
bullet Cartoon Caption Contest Extended bullet Trivia      bullet Feedback
bullet New Expert Column bullet New Videocast and On Demand Videocasts


Zebra Scanners Put Unstoppable Performance in Your Hands

first thought


Supply Chain Graphic of the Week
Who will be the Power Retailers in 15 Years?


Business is Next Growth Driver for Amazon

XPO Says Innacurate Report Killed Acquistion Strategy
US Manufacturing Growth Slows Again
US Truckload Still Headed Much Higher


February 14, 2019 Contest

See The Full Cartoon and Send in Your Entry Today!



Feature Story: Leading Analysts are Bullish on Use of Mobile Robots in Distribution Part 2


pic GSC Feature Story: The Recycling Sector Is Broken

Weekly On-Target Newsletter:
March 20, 2019 Edition

Cartoon, RFID Roundup, DHL and XPO aren't Buying, Globalization, More

From "Rules of Thumb" to Non-Linear Algorithmic Optimization
by Henry Canitz
Product Marketing & Business Development Director

The Chainmail Effect: How Globalization Impacts the Supply Chain
by Daniel Smith
Product Marketing Specialist
Amber Road



What is the key difference between a GSN-14 and a GSN-128 bar code?

Answer Found at the
Bottom of the Page

Will there Really be Good US Manufacturing Jobs Again?

One of the most important and frankly interesting issues in supply chain in recent years has been the possibility of a resurgence of US manufacturing.

That prospect had started gain some currency before Donald Trump was elected president under promises of making US manufacturing great again - SCDigest and MIT's David Simchi-Levi conducted a major survey back in 2012 looking at the prospects for what had recently been called "reshoring."

That of course referred to bringing manufacturing back largely from China and other low cost Asian countries after so much production had moved offshore in the first decade of the 2000s.


I think the Wabec Erie plant will be another in what has been a series of important inflection points in labor's position in the USA in recent years.


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The survey in 2012 found a lot of interest in reshoring, but not much action yet. And while there have been a number of companies that have indicated that they have or may bring some production back from China due to the new tariffs on hundreds of billions of Chinese imports, here is the reality: the US trade deficit in goods with China easily set a new record in 2018, at an incredible $419 billion, up hugely from a mere $375 billion in 2017.

Meanwhile, another reality is that US manufacturing output, as measured by the monthly Federal Reserve index, is still below peak 2007 levels, and is up less than 1% annually versus the current baseline year of 2012. (Another measure, tracking US manufacturing "value add," is more positive, showing the US at last surpassing 2007 levels in 2018.)

I offer those thoughts and data in the context of two news items that caught my eye in recent weeks.

First involved the closing of the GM plant in Lordstown, OH, near Youngstown. Some 1500 workers lost their jobs, but that was down from the more than 5000 the factory employed at its peak. The plant been the scene of several widely publicized labor related issues since it first opened in 1966. More recently, it kept itself open by agreeing to some wage concessions - largely involving a so-called "two-tier" system, where new workers start at a much low wage than current autoworkers make.

But in the end, that wasn't enough, as demand for the smaller sedan type cars made in Lordstown continues to fall, and the automakers say they simply can't possibly make smaller cars in the US.

My mother grew up in the Youngstown area. It's where my grandparents lived until their death. The region was beyond decimated by the closer of steel mills in the 1970s, in which literally tens of thousands of jobs were lost almost overnight. The city is a sad shell of its former self.

Now the Lordstown plant is gone too.

So let's move not all that far away to the Erie, Pennsylvania area. As we reported earlier this week, the sale of GE's locomotive business to a company called Wabtec caused almost instant labor conflict.

Within a couple of days of the acquisition, Wabtec demanded significant concessions from the workers at an Erie factory, where most workers are represented by the United Electrical, Radio and Machine Workers of America and make locomotives.

Management said it is willing to keep the existing workers at the current average of about $35 per hour - not a bad living.

But in return, as with GM and other automakers and many other US manufacturers, Wabtec wants to create a second pay tier for new workers and even current workers if they come back from a layoff, with wages of $16.75 to $25 per hour. I say not too bad at the top of that range, not so good at the bottom.

The union went on a brief strike over the issue, before a deal was struck to keep working under the current contract through June 6. Talks are proceeding as the 1700 workers are back on the job for now.

This is happening in interesting times, when there are certainly movements afoot that say corporations are getting too great a share of the rewards, CEO pay is out of control, etc. It will be a key issue in the 2020 election.

As an example of that line of thought, Moshe Zvi Marvit and Andrew Stettner, both fellows at the Century Foundation, recently wrote an opinion piece in the New York Times that said "The fight between the Erie workers and Wabtec shows that despite our collective popular imagination about American manufacturing jobs, the current reality and the future of a promise of good-paying work are quite different."

That column notes that upon the completion of the Wabtec acquisition of the GE business, the company's CEO received a bonus of about $16 million - then promptly asked for the wage concessions.

That, it seems to me, is indeed rather unseemly.

In line with the some of the recent thinking by Democratic politicians, Marvit and Stettner argue that "Workers are now in a position to demand a greater share of a company's success."

Are they? Wabtec has stated that its wage proposals in Erie are in line with its other plants and necessary to compete with "low cost" plants in China and Mexico.

All this in time of what might even be called an acute shortage of manufacturing workers, in the hundreds of thousands by most counts currently, and expected to rise to millions of unfilled openings over the next ten years.

But as with shortages of truck drivers and distribution center workers, employers have largely avoided the logical step of raising wages to attract new workers. For a long period, manufacturing wages were rising on average just 1.4% per year - less than inflation, so workers were falling even further behind.

That may be changing at last. In February, the Federal Reserve Bank of Atlanta said its wage growth tracker showed a 12-month running average of wage gains in manufacturing of 3.9% - the highest such level since May 2008.

I hope we can all agree that is a good thing.

I think the Wabec Erie plant will be another in what has been a series of important inflection points in labor's position in the USA in recent years. Most of those have recent touch points have gone against labor, such as workers turning down unionization at foreign automakers at Tennessee and Mississippi factories, an organizing effort at Boeing in South Carolina also failing, and a 2012 strike at a Caterpillar plant in Joliet, IL that some called "labor's last stand," which ended with a contract largely in Cat's favor.

In the end, Wabtec will probably largely get its way with the Erie workers too. The plant probably is uncompetitive with Mexican factories. Likely there are foolish work rules that hamper productivity and flexibility, which were a big source of US automaker woes in the 1990s.

And the threats of robotics is increasingly there as an alternative to expensive human workers. So it may be better to concede than lose the jobs altogether, though even that approach couldn't save Lordstown.

It just seems unlikely, except in heavily automated, new age factories with a small number of workers, that manufacturing jobs will even again be a real conduit to the middle class.

I understand the economics and the market dynamics, and have been accused of being anti-union in the past with some justification, but Lordstown and Erie have led me to ponder our manufacturing future yet again?

Any reaction to Gilmore's thoughts on US manufacturing jobs? Let us know your thought at the Feedback section below.


New Videocast:

A Blueprint for WMS Implementation Success

If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast

This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.

Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.

Thursday, March 28, 2019

New On Demand Videocast:

How Supply Chain Companies Can Achieve Decision-Centric Optimization

The Most Important Outcome of Implementing an Algorithm-Based Supply Chain Optimization Solution

Featuring Dan Gilmore, Editor along with along with Dr. Z. Caner Taskin - ICRON's Chief Technology Officer and a Professor in the Department of Industrial Engineering at Bogaziçi University.

Now Available On Demand

On Demand Videocast:

Digital Transformation's Value to the Supply Chain

The Future of Order Management

This videocast breaks down what digital transformation is and how automated order management solutions equate to supply chain benefits.

Featuring Dan Gilmore, Editor along with Esker's Dan Reeve.

Now Available On Demand


Received a decent number of emails on our various supply chain guru predictions for 2019. Here is a selection below:

Feedback on Guru Predictions 2019:


Thank you so much for running these "guru" predictions each year.

I like all of them - and appreciate Mike Watson's "courage" to say the blockchain emperor has no clothes.

We'll see on that one, but in general I agree with his thinking.

As you said, "all good stuff."

Ron Alban
Troy, MI





I agree with Gartner about blockchain. We have examined a number of possible use case scenarios for blockchain (including detailed discussions with some blockchain startups) and have had a difficult time finding business value to fund the conversion from current processes to a blockchain-based process.

While the blockchain shows promise as a data storage/sharing technique for future applications, converting existing applications to use blockchain reminds me of the conversion from client/sever apps to web-based apps (which is still going on). Early web-based apps were largely inferior to client/server apps, especially the user interface.

The conversion to web-based did not really gain momentum until most business users were on the Internet every day for other business purposes. Blockchain is likely to see similar adoption as companies find that most of the data they need to run their businesses is coming from external networks rather that high secure internal databases.

John Bermudez
Vice President Supply Chain Strategy






This is always fun to read, and I appreciate that you get this gang together each year to offer their predictions.

I liked that Gene Tyndall started out with a review of his predictions from the previous year - nice touch.

Mike Watson always seems to have something interesting to say.

Also think Chris Gopal's thoughts are spot on in terms of talent as a supply chain constraint.

Alex Volz
Racine, WI



Q: What is the key difference between a GSN-14 and a GSN-128 bar code?

A: The GSN-14 indentifies the SKU at various pack levels, while the GS1-128 uniquely identifies a specific pallet or carton.

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