Interdependencies & supply chain failures in the News

Preface. Joseph Tainter, explains in his famous book “The collapse of complex societies” how complexity causes civilizations to collapse. Fossil fuels have created the most complex society that has ever, or will ever exist, using fossil energy that can’t be replaced (as I explain in “Life After Fossil Fuels”). This is starting to happen. The most complex product we make are microchips, and I predict they will be the first to fail. Their supply chains are so long that just one missing component or one natural disaster in one country can stop production (see posts in microchips and computers, critical elements, and rare earth elements). These are the most complex products we make, with precision engineering to almost the atomic scale, and so will be the first to fail as energy declines and supply chains break for many reasons. Microchips, sometimes dozens or more, are in every car, computer, phone, car, laptop, toaster, TV, and other electronic devices.

Plastics are also used across many industries, and are made out of mainly oil and invented only recently. Thwaites tried to build a toaster from scratch for a Masters degree, and plastics were beyond him for many reasons.

Plastics, refineries, and many other chemicals have to be produced around the clock or the pipes clog up. On a Power Hungry podcast, Oxer explained if the power goes down while making styrene plastic precursor (used in many plastics) it takes 6 hours to get plastic out of pipes, and if not done in that time frame, then it will take 6 weeks. Because of this, many factories have their own power plant. But in the Texas power outage, the natural gas stopped flowing to factories and power plants because some of the compressors that keep gas flowing in the pipes were electric (to lower emissions) rather than the gas itself, which is the usual way to do it. Doh!

Oxer further explained that 85 power plants were close to damaging the entire transmission, interconnect transformers, substations, power plants, and if this had happened, it could have taken 3 months, until May, to get it the electric grid back running if it had crashed. You Texans can expect this to happen again: many other storms in the past were a problem as well, such as the Panhandle blizzard 1957, Houston snowstorm 1960, San Antonio snowstorm 1985, winter storm goliath of 2015, North American Ice storm 2017. Also below freezing 1899 and 1933. But ERCOT was created to avoid FERC regulation and so reliability is a low priority for ERCOT.

Alice Friedemann  www.energyskeptic.com Women in ecology  author of 2021 Life After Fossil Fuels: A Reality Check on Alternative Energy best price here; 2015 When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”.  Podcasts: Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity

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2022 Lessons From Henry Ford About Today’s Supply Chain Mess. NYT.

Ford’s Rouge auto-making plant is bedeviled by a shortage of a crucial component that would have horrified Mr. Ford, who vertically integrated his company to control all manufacturing supplies to prevent shortages disrupting the production of cars. Today, Ford cannot buy enough semiconductors, the computer chips that are the brains of the modern-day car. Ford is heavily dependent on a single supplier of chips located more than 7,000 miles away, in Taiwan. With chips scarce throughout the global economy, Ford and other automakers have been forced to intermittently halt production. Yet given the high cost of a chip fabrication plant and expertise, Ford and other companies are not likely to every try to make chips themselves.

The F-150 pickup produced at the Rouge uses more than 800 types of chips, requiring dependence on specialists. And chips have limited shelf lives, making them difficult to stockpile. And chip companies have catered heavily to their investors by limiting their capacity — a strategy to maintain high prices.

2021 Texas Freeze Creates Global Plastics Shortage

First the demand for electronics caused a shortage of microchips, which hit the automotive industry particularly hard. Now, the Texas Freeze has caused a global shortage of plastics. The Wall Street Journal reported this week that the cold spell that shut down oil fields and refineries in Texas is still affecting operations, with several petrochemical plants on the Gulf Coast remaining closed a month after the end of the crisis. This creates a shortage of essential raw materials for a range of industries, from carmaking to medical consumables and even house building.

The WSJ report mentions carmakers Honda and Toyota as two companies that would need to start cutting output because of the plastics shortage, which came on top of an already pressing shortage of microchips. Ford, meanwhile, is cutting shifts because of the chip shortage and building some models only partially. 

Another victim is the construction industry. Builders are bracing for shortages of everything from siding to insulation.

More than 60 percent of polyvinyl chloride (PVC) production capacity in the United States is still out of operation a month after the Texas Freeze, affecting businesses that use piping, roofing, flooring, cable insulation, siding, car windshields, car seat foam, car interiors, adhesives, bread bags, dry cleaner bags, paper towel wrapping, shipping sacks, plastic wrap, pouches, toys, covers, lids, pipes, buckets, containers, cables, geomembranes, flexible tubing, and the lumber and steel industries. Hospitals are experiencing shortages of plastic medical equipment, such as disposable containers for needles and other sharp items (“Going To Get Ugly” – Global Plastic Shortage Triggered By Texas Deep Freeze).

This has made clear how complex and vulnerable global supply chains are, the other is how dependent we are on plastics. Various kinds of plastic are used in every single industry and there is no way we can wean ourselves off it.

Seeing the energy transition ahead, Big Oil has shifted big time into plastics, but “Big Plastic” plans could lead to $400 billion in stranded assets as oil companies overestimated plastic demand growth. Yet, the current shortage seems to prove the bet on petrochemicals is safe. There are no economically viable alternatives to plastic cable insulation—or a car interior, or a smartphone casing, or a laptop, or a thousand other things from everyday life—has yet to make an appearance.

2021 Microchip shortages

A chip shortage that started in a surge in demand for personal computers and other electronics for work or school from home during the covid-19 pandemic now threatens to snarl car production around the world. Semiconductors are in short supply because of big demand for electronics, shifting business models which include outsourcing production, and effects from former President Donald Trump’s trade war with China. Chips are likely to remain in short supply in coming months.

Car makers production due to lack of microchips is going down at GM, Ford, Honda, Toyota, Subaru, Volkswagen, Audi, and Fiat Chrysler.

Cars can have thousands of tiny semiconductors, many of which perform functions like power management. Cars also use a lot of micro-controllers, which can control traditional automotive tasks like power steering, or are the brain at the heart of an infotainment system. They’re used for in-car dials and automatic braking as well. Car makers also usually use “just-in-time” production, which means they avoid having extra parts in storage. The problem is even if that 10-cent chip is missing, you can’t sell your $30,000 car.

 

 

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