In this Supply Chain Matters Covid-19 News Capsule follow-up, we update readers on ongoing global product demand supply network developments that are of special interest to our readers.


China Wide COVID Restrictions Continue Resulting in Added Logistics Disruptions

The COVID 19 restrictions impacting areas of China’s largest cities and manufacturing regions continue and have extended into their fifth week.

According to the latest reporting from The Wall Street Journal, local authorities are increasingly focused on having both manufacturers and the country’s logistical infrastructure focused on restoring a semblance of ongoing operations. At one-point last week, forty-five cities accounting for upwards of 40 percent of China’s economic output had implemented full or partial population lockdowns.

Logistics services in the industrial regions continue to encounter severe disruptions. Reportedly, logistics managers expect weeks or possibly months before shipment levels return to some normalcy. Trucking costs are noted as increasing significantly as requirements for virus testing or quarantine remain inconsistent from region to region. On Friday, Shanghai authorities had identified over 600 companies among key industries for added efforts in clearing virus restrictions and ensuring supplies of inbound materials reach their destinations.

Electric vehicle automaker Tesla indicated on Friday, that upwards of 8,000 workers began to return to the company’s Shanghai based auto assembly facility but are required to undergo two COVID daily tests as part of local government guidelines.  Workers are scheduled to work two twelve-hour shifts, six days per week. The production facility itself continues to run in a closed campus fashion where workers must reside and work within the campus.  The facility’s operations director indicated to state-owned media outlet Xinhua that the production facility had limited inventory, enough to support one week of production. Challenges remain in coordination with more than 100 suppliers on ongoing component supply needs.

The manufacturing areas most impacted currently include areas around Shanghai, Jiangsu and Jilin provinces.

Bloomberg reported last week that more than 30 Taiwanese manufacturers including Pegatron and Quanta Computer have had to halt production to comply with local virus restrictions. Last week, other key Apple suppliers such as Luxshare and Compal Electronics were forced to suspend production operations in Kunshan because of local virus outbreaks and consequent restrictions. Further reported are component shortages now occurring because of trucking interruptions or slowdowns.


Added Concerns of Prolonged Semiconductor Shortages in High Performance Needs

The Chief Executive of TSMC, the globe’s largest contract semiconductor design and production operator indicated last week that the global semiconductor shortage is likely to extend throughout 2022 and possibly into 2023.

During a briefing on the company’s latest quarterly financial performance, CEO C.C. Wei indicated that TSMC suppliers continue grappling with labor, component and chip constraints due to the effects of the pandemic. That reportedly includes deliveries of needed chip processing and fabrication equipment.  He indicated that the company’s existing production capacity: “is not enough to support our existing customers.”  Among TSMC’s largest customers are Apple and Advanced Micro Devices.

The chip producer reported quarterly revenues equivalent to $7 billion in the March ending quarter, a year over year increase of 45 percent. Total revenues increased 36 percent. Current revenue growth is being driven by the company’s high performance computing sector, which are semiconductor devices utilized in CPU’s, high-end graphics processing and autonomous driving application needs.


Report That Amazon Warehouse Workers Suffer Twice the Rate of Serious Injuries

Last week, Business Broadcasting Network CNBC, citing a new workplace safety study, which indicated that Amazon warehouse workers in the United States suffered serious injuries at twice the rate of rival companies in 2021.

Strategic Organizing Center, authors of this work safety study, which represents a coalition of labor unions including the International Brotherhood of Teamsters and the Service Employees International Union, analyzed data Amazon submitted to the U.S. Occupational Safety and Health Administration (OSHA) about its warehouses in 2021.The study indicated that there were 6.8 serious injuries for every 100 Amazon warehouse workers, more than twice the rate of all other employers in the warehouse industry, which had 3.3 serious injuries per 100 workers. Specifically noted in this report was that the vast majority of worker injuries in 2021 were categorized as serious, or injuries “where workers were hurt so badly that they were either unable to perform their regular job functions (light duty) or forced to miss work entirely.”

In a statement provided to the business broadcaster network, an Amazon spokesperson pointed to the company’s pandemic-induced hiring spree as one catalyst behind the increase in recordable injuries between 2020 and 2021. Amazon’s recordable injury rate last year dropped roughly 13 percent compared to 2019. “While we still have more work to do and won’t be satisfied until we are excellent when it comes to safety, we continue to make measurable improvements in reducing injuries and keeping employees safe and appreciate the work from all of our employees and safety teams who are contributing to this effort.”

Further noted was that in 2021, Amazon invested $300 million on worker safety improvements.

In his letter of departure from the role of CEO, Founder Jeff Bezos actually hinted that the company needed to pay closer attention to employee practices, particularly worker safety practices. In October 2021, Amazon incoming CEO Andy Jassy had indicated that there was more the company could do to treat employees better. He reportedly further acknowledged that one of the retailer’s approaches to worker safety during the pandemic fell short, including the existence of automated reporting systems that account for worker time and attendance, worker efficiencies, and sick time requests. The online retail platform provider has since launched a series of wellness programs with the goal of reducing worker injury rates by half by 2025.

Revelations of this warehouse worker accident rate findings are perhaps timed as added worker unionization efforts continue among select Amazon customer warehouse facilities. The latest is the right to hold an election at a New Jersey warehouse facility which operates as a customer delivery center. That vote represents the fourth labor organizing election involving an Amazon facility after warehouse workers at the Staten Island, New York warehouse facility voted in the affirmative for labor union representation.

The International Brotherhood of Teamsters International labor union has previously publicly acknowledged that monies have been set aside to support added labor activist campaigns among Amazon warehouse facilities and logistics operations.


© Copyright 2022, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.