The butterfly effect in the time of Covid works like this: in the port of Los Angeles a ship floats idle waiting to be loaded. Blame the quarantine, which affected the workers at the docks. But this delay spills over into containers filled with soybeans being loaded in Iowa and routed to customers in Indonesia, resulting in major bottlenecks in animal feed supplies across Southeast Asia. It is the example, one of many, that the New York Times uses to describe the effects of the various imbalances and bottlenecks that are jeopardizing the recovery of economies at all latitudes.
The most sensational case concerns the shortage of chips, which, far from returning as many operators predicted (or rather, hoped), has now infected all producers. After the alarm raised by Toyota, which has announced cuts in production in the order of 40%, and the big USA, the emergency has hit in full force stellantis: Sevel of Atessa and Pomigliano extend their holidays, Melfi, which in the first half of the year churned out 46% of the cars produced in Italy (113 vehicles), will only work 5 days in September. But the lack of components has also affected the production of the French plants of Rennes and Sochaux and the German one of Eisenach. Finally, famine struck the former Dodge Chrysler: Ram, Voyages and Jeep lines stop in Michigan and Canada. In short, worse than in the first part of the year, when the lack of components cost the group the loss of production of 700 machines; a drain in line with the rest of the sector, from South Korea to Brazil and Germany.
Even with the China, the economy that probably first and most deeply suffered the damages of the bottlenecks. Not just as regards the car or, more generally, the chips. The sharp fall in activity in the services sector in August (the PMI index compiled by the Beijing Central Bureau of Statistics fell to 47,5 points, the sharpest drop since February 2020, the month of the outbreak of the epidemic in Wuhan) is the symptom of a profound malaise that emerged with the gigantic traffic jam it experienced in May paralyzed the port of Shenzhen for weeks. Not even time to breathe and it was the turn of the Ningbo airport, the third largest container-handling port in the world, blocked in mid-August due to a single case of Covid-19. The blackout subsided after a week, but even so it risks creating major disruptions to supplies of goods sent to the United States in view of Black Friday, the day of discount sales before Thanksgiving.
In short, the problems are not limited to the shortage of a product, but involve the entire chain of the world organization of work, as it has matured in recent decades under the banner of just in time, or the reduction of stock in the warehouse thanks to global logistics. The apparently so efficient system, writes the Financial Times, risks proving to be fragile, as happened during the subprime crisis, “when Arkansas mortgages were transferred to the treasuries of the cities of Norway”. We know how it ended then, when increasingly opaque titles ended up, thanks to the speed of the system, in the most disparate and unsuspecting portfolios. Today, writes Peter Atwater, the pandemic risks generating an equally uncomfortable situation; first the shortage of chip, then the Suez incident, finally the troubles of the Chinese ports. Here too, as in the bank in 2008/09, the effect of the "search for value" is paid for at any cost, minimizing the use of capital and reducing time to the extreme.
Now the system is revolting like a boomerang, even on the wave of consumer behavior. In fact, economists are already talking about thetoilet paper effect. During the lockdown, many families, in the West and in the East, created stocks of toilet paper, which were not justified by the shortage in the supermarket, thus contributing to the feared scarcity and the increase in inflation induced by the lack of supply. All that remains is to be patient, in short. And adapting to the emergency as did Eric Poses, an American board game manufacturer who, faced with the boom in prices (a load of toys from China costs more than four times as much as a year ago), has put on the market a sort of Monopoly updated. The title? “The worst possible scenario”.
