Pradissagul | Dreamstime
Dreamstime125378005 800

Who's in Control?

Aug. 26, 2020
Manufacturers' March and April 2020 shutdowns were self-sacrificing, not self-serving. It was a concession of power to governments now prepared to aggrandize authority to pursue ill-defined goals.

Manufacturers across the U.S. are anxiously seeking to solve the problem of our age and get back to the work they do, the operations they have established and refined, and the customers they have labored to serve for years or even decades. The problem for manufacturers, and other businesses too  – one they voluntarily undertook as a public service and humanitarian duty – was to help stop the spread of the coronavirus pandemic. That was five months ago, but the problem for manufacturers now is to reclaim their former autonomy, or something close to it.

As detailed in the pages of this issue of FORGING, manufacturers now identify their problem with the disruption to supply chains, meaning the arrangements and patterns that ensure the reliable sourcing of materials and parts, and the timely delivery of materials and parts to the operations that process or finish them into saleable products. Surely, they are correct in this assessment, but there’s more to it.

Supply chains are not natural developments; they emerge from millions of individual decisions and responses happening dynamically as suppliers and customers match their capabilities and terms to each other’s needs and expectations. It is a complex process made sensible by the informed decisions that individual parties make, primarily in their own interests. Proceeding in their individual interests promotes the success of the supply chain. It achieves a type of efficiency that serves both parties and a third party: the next link in the supply chain, i.e., the customer. It is market economics on a grand scale, even a global scale. And it is for the general good.

Shutting down their operations in mid-March was against the individual interests of thousands of manufacturers, and against the interests of their suppliers and customers. It was the most striking example of anti-market activity we’re likely to see.

Anti-market activity is typically a self-serving action: stealing information from a competitor or denying necessary resources or service to a particular customer. Some anti-market activity is imposed by regulators or governments — to punish past violations of trade terms, or to shape desired results for political objectives. Regulation is definitionally anti-market, but we accept it as a way to ensure “better results,” to promote the stability and comity of life for individual citizens.

Regulation is proof that there is a power outside the market to determine what is right and wrong, fair and unfair. Markets make clearer and quicker choices, but markets’ decisions are always in favor of value and efficiency. If the market alone were to decide what is right or fair, there would be no survival for individuals who are less efficient, less thrifty, less timely, etc. Regulations, while averring the power of markets to effect improvements in individual lives, demonstrate that some powers remain separate from markets.

Regulators and commercial interests have more cooperative in the past two decades, as regulators have chosen to stand clear of many changes that have altered the relationship between suppliers and customers. There is greater tolerance for monopolies, greater allowance for accessing and exchanging data, and less restriction on sources of products and services. Supply chains have grown more effective and extensive in the process.

But U.S. manufacturers’ and other businesses’ March and April 2020 shutdowns were self-sacrificing, not self-serving. It was a concession of power over their own enterprises to governments now prepared to aggrandize authority to pursue ill-defined goals. Now the clarity needed to make decisions in their own interests is lost to manufacturers and others, and thus lost to the supply chain partners and customers they would serve and support. The power over their own operations may be lost forever, and not for good.