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Retailers Prepare for Possible Port Strikes

by APICS staff |   2014 | 14 | 14

As port laborers and terminal operators continue contract talks on the US West Coast, retailers are preparing for potential disruptions by bringing in more holiday merchandise, Forbes reports. Data from the National Retail Federation indicates monthly container volumes are at their highest levels in about five years, with about 1.5 million boxes flowing through US ports last month.

“We’re still hoping to get through this without any significant disruptions, but retailers aren’t taking any chances,” says Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation. “Retailers … will do what it takes to make sure shelves are stocked for their customers regardless of what happens during the negotiations.”

Even though there is a general consensus that the negotiations between port workers and leaders won’t result in a strike, shippers are preparing contingency plans such as shifting imports from West to East Coast ports.

A strike could reduce US gross domestic product by $1.9 billion per day and disrupt 73,000 jobs. Ports on the West Coast handle more than two-thirds of all container cargo in the United States, says Jay Timmons, president of the National Association of Manufacturers.

White House Plan Supports Quicker Payments to Small Suppliers

For owners of small manufacturing businesses, getting paid on time by the companies they supply can be vital. Now, an Obama administration initiative is helping to ease that burden, the Washington Post reports. Dozens of some of the largest US companies have agreed to take part in SupplierPay, which ensures these companies make prompt payments or deliver financing for the parts and services they need to operate.

“Prompt payment is absolutely critical for us,” says Jason Roys, president of SDV International, a technology and consulting services firm that supports the defense industry and companies such as IBM. “We’re small and cash flow is a major constraint. If we’re paid sooner, that would allow us to more quickly reinvest our earnings.”

Small suppliers have to wait around two months on average to be paid for their goods and services, and wait times are increasing. The White House hopes to cut these times down, which could translate into increased capital to invest in equipment and employees.

The 26 corporations that have signed on to the agreement include Apple, IBM, Coca-Cola, FedEx, Honda, CVS, and Walgreens.

Japanese Supplier Price-Fixing Scandal Ushers in Culture Shift of Compliance

Japanese auto suppliers are finding it difficult to adjust to a new era of compliance after 27 companies have been found complicit in a price-fixing scandal, Automotive News reports. At least 36 individuals have been targeted by US antitrust authorities, with similar investigations ongoing in Europe and Canada. Japanese companies thus far have agreed to pay $2.3 billion in fines.

Combatting the price-fixing mentality, which many say is just how business is done in Japan, requires internal education and changing attitudes. Japanese parts makers are scrambling to educate employees on prohibited actions. “It's much stricter,” says Tadashi Arashima, president of Toyoda Gosei, an affiliate supplier of Toyota. “Training is so important. We train not only salespeople, but all other people.”

Activities as simple as eating lunch with a former coworker who moved to a rival firm are strongly frowned upon. Violators face not only the fear of incurring large fines but potentially prison time—a prospect practically unheard of a few years ago.

US Energy Boom Cripples Road Infrastructure

As the United States looks to become self-sufficient in providing energy by 2030, it lacks the road infrastructure to deal with the increased demand for transportation of oil and shale-gas-related equipment and resources, Bloomberg News reports. As more hydraulic fracturing (fracking) wells are drilled, there’s more need for water, sand, chemicals, and steel structures, heavy loads that begin to tear up roadways.

Meanwhile, increases in truck traffic due to well construction are resulting in higher levels of road accidents. In La Salle County, Texas, the number-two oil producer in the state, accidents more than doubled in the past decade. “Everybody is concerned about the number of fatalities,” says Joel Rodriguez, a local judge.

Alongside the hazards of well construction come new jobs and increased road budgets. Officials say they’re not looking to hamper the energy boom, but they wish to decrease the negative side effects and keep roads safe.

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