Firms Nimbly Pivot to Build Innovative Products That Use Fewer Chips

(p. A1) Manufacturers struggling with a shortage of semiconductor chips are finding workarounds, executives said, redesigning products, shipping uncompleted units and focusing on older, lower-tech models.

. . .

Boss Products typically used hand-held controls with computer chips to angle snow truck blades. The company, which is owned by Toro Co., hasn’t been able to find enough chips. So employees started looking for ways to use fewer of them. Some remembered that joysticks, without computer chips, were used to control these features until electronics became affordable and commonplace.

“Let’s go back to the old design,” said Rick Rodier, a Toro executive. “It still does the job. It was done this way for 30 years. It was reliable. It was fine. It was just a little more cumbersome to build and assemble.”

. . .

(p. A6) T3 Motion, which makes electric stand-up vehicles for airport and university security officers, is redesigning its products to use fewer computer chips and electronics.

William Tsumpes, the company’s CEO, said instead of multiple components to control features like batteries, lighting and sirens, the redesigned vehicle will use a centralized, integrated board with a single processor to control all the parts of the vehicle. This move will eliminate the other five individual circuit boards, he said. Mr. Tsumpes said it was tough to quickly execute the redesign, but the moves, and an engine change, will lead to increased vehicle range.

“It’s spurring innovation,” Mr. Tsumpes said.

For the full story, see:

Austen Hufford. “Chip Shortage Leads to Redesigned Products.” The Wall Street Journal (Monday, Nov. 15, 2021): A1 & A6.

(Note: ellipses added.)

(Note: the online version of the story has the date November 14, 2021, and has the title “Chip Shortage Sees Manufacturers Pitch Lower-Tech Models.”)

California Labor and Environment Policies Reduce Nimble Response to Supply Chain Backups

(p. A17) The backup of container ships at the Long Beach and Los Angeles ports has grown in recent weeks despite President Biden’s intervention to get terminal operators to move goods 24/7.

. . .

The two Southern California ports handle only about 40% of containers entering the U.S., mostly from Asia. Yet ports in other states seem to be handling the surge better. Gov. Ron DeSantis said last month that Florida’s seaports had open capacity. So what’s the matter with California? State labor and environmental policies.

Some 20 business groups recently asked Gov. Gavin Newsom to declare a state of emergency and suspend labor and environmental laws that are interfering with the movement of goods. Opening the Port of Los Angeles 24 hours a day “alone will do little without immediate action from the state to address other barriers that have created bottlenecks at the ports, warehouses, trucking, rail, and the entire supply chain,” they wrote.

One barrier is a law known as AB5. Before its enactment in 2019, tens of thousands of truck drivers worked as independent contractors, which gave them more autonomy and flexibility than if they were employees. As contractors, truck drivers can work for multiple companies, which allows them to nimbly respond to surges in demand.

. . .

Another problem: a shortage of storage space. “There is absolutely no available capacity in the warehousing sector due to the difficulty in developing any new capacity,” the businesses noted in their letter. The vacancy rate for warehouses near the Los Angeles and Long Beach ports was a mere 1%, compared with 3.6% nationwide.

If warehouses don’t have space in their facilities or parking lots to unload goods, drivers can’t make deliveries. Some truck drivers are leaving container boxes along with the chassis outside storage facilities and are picking them up later, but that results in a shortage of chassis at the ports. (About half of chassis are leased to truckers from a common pool supplied by private companies.)

. . .

. . . in California warehouse growth ignited opposition from environmental groups, which complain of pollution and noise. Many cities have limited new logistics facilities.

For the full commentary, see:

Allysia Finley. “California Is the Supply Chain’s Weakest Link.” The Wall Street Journal (Friday, Nov. 5, 2021): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date November 4, 2021, and has the same title as the print version.)

Shifting to Small Ports Requires Also Finding Containers, Trucks, and Storage at Small Ports

(p. B1) When Flexport Inc. learned in the past month that an ocean carrier planned to shift cargo from the congested operations at the Port of Los Angeles to little Port Hueneme some 80 miles up the California coast, the freight forwarder found that trucking companies weren’t ready to go along with the changing direction of the imports.

“We talked to trucking carriers throughout the market in L.A. and Oakland and the sense was that they could not support the volume if it moved through Port Hueneme,” said Jason Parker, the company’s head of trucking.

The San Francisco-based company shifted gears, pulling 200 containers from the ocean booking and instead routing many of them to Los Angeles despite a likely longer wait there to offload goods.

“The two-week delay coming to Los Angeles versus the Hueneme routing was going to cause less headache for the customers,” Mr. Parker said.

. . .

(p. B2) Sailing to alternative ports can add weeks to the time it takes to get goods from Asia to the U.S., however, and can pile on new costs and complications.

Rachel Rowell, a spokeswoman for freight middleman C.H. Robinson Worldwide Inc., said shifting the flow of goods requires container availability, space on a vessel, truck capacity and equipment including the chassis that attaches to trucks to allow them to carry containers. All of those may be in short supply.

“Shifting entire chains is a more challenging ordeal than a cab shifting which street it takes, which is why shifting ports is not often a preferred option and why it is difficult to do last-minute,” she said.

For the full story, see:

Paul Berger. “Smaller Ports Handicap Shippers.” The Wall Street Journal (Monday, October 25, 2021): B1-B2.

(Note: ellipses added.)

(Note: the online version of the story has the date October 24, 2021, and has the title “Shippers Find New Supply-Chain Hurdles at Alternate Ports.”)

Higher Stock Market and Unemployment Benefits Allow Many Workers to “Be More Picky About the Jobs They Take”

(p. A1) Fall was meant to mark the beginning of the end of the labor shortage that has held back the nation’s economic recovery. Expanded unemployment benefits were ending. Schools were reopening, freeing up many caregivers. Surely, economists and business owners reasoned, a flood of workers would follow.

Instead, the labor force shrank in September. There are five million fewer people working than before the pandemic began, and three million fewer even looking for work.

The slow return of workers is causing headaches for the Biden administration, which was counting on a strong economic rebound to give momentum to its political agenda. Forecasters were largely blindsided by the problem and don’t know how long it will last.

. . .

(p. A13) Ms. Eager, who is vaccinated, said that she had always been careful with money and that she built savings this year by staying home and socking away unemployment benefits and other aid. “My financial situation is OK, and I think that is 99 percent of the reason that I can be choosy about my job prospects,” she said.

Americans have saved trillions of dollars since the pandemic began. Much of that wealth is concentrated among high earners, who mostly kept their jobs, reduced spending on dining and vacations, and benefited from a soaring stock market. But many lower-income Americans, too, were able to set aside money thanks to the government’s multitrillion-dollar response to the pandemic, which included not only direct cash assistance but also increased food aid, forbearance on mortgages and student loans and an eviction moratorium.

Economists said the extra savings alone aren’t necessarily keeping people out of the labor force. But the cushion is letting people be more picky about the jobs they take, when many have good reasons to be picky.

In addition to health concerns, child care issues remain a factor. Most schools have resumed in-person classes, but parents in many districts have had to grapple with quarantines or temporary returns to remote learning. And many parents of younger children are struggling to find day care, in part because that industry is dealing with its own staffing crisis.

. . .

When Danielle Miess, 30, lost her job at a Philadelphia-area travel agency at the start of the pandemic, it was in some ways a blessing. Some time away helped her realize how bad the job had been for her mental health, and for her finances — her bank balance was negative on the day she was laid off. With federally supplemented unemployment benefits providing more than she made on the job, she said, she gained a measure of financial stability.

Ms. Miess’s unemployment benefits ran out in September, but she isn’t looking for another office job. Instead, she is cobbling together a living from a variety of gigs. She is trying to build a business as an independent travel agent, while also doing house sitting, dog sitting and selling clothes online. She estimates she is earning somewhat more than the roughly $36,000 a year she made before the pandemic, and although she is working as many hours as ever, she enjoys the flexibility.

“The thought of going to an office job 40 hours a week and clocking in at the exact time, it sounds incredibly difficult,” she said. “The rigidity of doing that job, feeling like I’m being watched like a hawk, it just doesn’t sound fun. I really don’t want to go back to that.”

For the full story, see:

Ben Casselman. “Economic Gains Hobbled As Labor Market Shrinks.” The New York Times (Wednesday, October 20, 2021): A1 & A13.

(Note: ellipses added.)

(Note: the online version of the story has the date October 19, 2021, and has the title “The Economic Rebound Is Still Waiting for Workers.”)

Union Pacific Buying More Chassis to Carry More Containers

(p. B6) Union Pacific is buying more chassis that can carry shipping containers, and opening facilities outside of Los Angeles and in Minnesota to handle the increased volume.

Mr. Foote of CSX said that while supply chains are strained globally, the railroads are handling their role of moving goods between destinations well. A bigger problem of late has been what happens after the cargo gets to its destination.

He said containers carrying finished goods often sit idle because of a lack of truck drivers, equipment to put shipping containers on trucks and warehouse workers to unload them.

For the full story, see:

Paul Ziobro. “Railroads Shun Some Business Amid Congestion.” The Wall Street Journal (Wednesday, October 22, 2021): B6.

(Note: the online version of the story has the date October 21, 2021, and has the title “Rail-Yard Congestion Holds Down Shipping Volumes,’ CEO Says.”)

Much Is Still Unknown About How the Macroeconomy Works

(p. B5) It has long been a central tenet of mainstream economic theory that public fears of inflation tend to be self-fulfilling.

Now though, a cheeky and even gleeful takedown of this idea has emerged from an unlikely source, a senior adviser at the Federal Reserve named Jeremy B. Rudd. His 27-page paper, published as part of the Fed’s Finance and Economics Discussion Series, has become what passes for a viral sensation among economists.

The paper disputes the idea that people’s expectations for future inflation matter much for the level of inflation experienced today.

. . .

“Macroeconomics behaves like we’re doing physics after the quantum revolution, that we really understand at a fundamental level the forces around us,” said Adam Posen, president of the Peterson Institute for International Economics, in an interview. “We’re really at the level of Galileo and Copernicus,” just figuring out the basics of how the universe works.

“It requires more humility and acceptance that not everything fits into one model yet,” he said.

Or put less politely, as Mr. Rudd writes in the first sentence of his paper, “Mainstream economics is replete with ideas that ‘everyone knows’ to be true, but that are actually arrant nonsense.”

For the full commentary, see:

Neil Irwin. “THE UPSHOT; How Does the Economy Really Work? Your Guess May Be as Good as Policy Experts’.” The New York Times (Tuesday, October 5, 2021): B5.

(Note: ellipsis added.)

(Note: the online version of the commentary was updated October 15 [sic], 2021, and has the title “THE UPSHOT; Nobody Really Knows How the Economy Works. A Fed Paper Is the Latest Sign.”)

The paper by Rudd, mentioned above, is:

Rudd, Jeremy B. “Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?),” Finance and Economics Discussion Series 2021-062. Washington: Board of Governors of the Federal Reserve System, (Sept. 23, 2021). https://doi.org/10.17016/FEDS.2021.062.

“Our Cities Protect Insiders and Leave Outsiders to Suffer”

(p. A15) Mr. Glaeser’s “Survival of the City: Living and Thriving in an Age of Isolation,” written with Harvard health economist David Cutler, shares the pleasing style of its predecessor, an engaging mixture of history and analysis. It has none of the triumphalism of its predecessor, however. In the move to social distancing that began in the spring of 2020, Messrs. Glaeser and Cutler see nothing less than “the rapid-fire deurbanization of our world.”

“Uncontrolled pandemic,” the authors write, poses “an existential threat” to the urban world. Nor is the coronavirus the only problem that cities face. “A Pandora’s Box of urban woes has emerged,” they continue, “including overly expensive housing, violent conflict over gentrification, persistently low levels of upward mobility, and outrage over brutal and racially targeted policing and long prison sentences for minor drug crimes.” These are not disparate problems. Rather, they “all stem from a common root: our cities protect insiders and leave outsiders to suffer.”

In Messrs. Glaeser and Cutler’s view, something has gone deeply wrong with how policy is set in many American cities. Insiders have captured control of how cities operate—and used that control to enrich themselves while providing limited opportunities for newer, younger residents. Consider Los Angeles. In 1970, housing costs in Southern California were much the same as those nationwide. By 1990, building limitations and strong demand had sent prices soaring in many coastal cities. The result: a massive redistribution of wealth from the young to the old.

For the full review, see:

John Buntin. “BOOKSHELF; Saving Our Urban Future.” The Wall Street Journal (Friday, Sept. 10, 2021): A15.

(Note: the online version of the review has the date September 9, 2021, and has the title “BOOKSHELF; ‘Survival of the City’ Review: Saving Our Urban Future.”)

The book under review is:

Glaeser, Edward L., and David Cutler. Survival of the City: Living and Thriving in an Age of Isolation. New York: Penguin Press, 2021.

Chinese Proletariat Yells: “Evergrande, Give Back My Money I Earned With Blood and Sweat!”

(p. B1) When the troubled Chinese property giant Evergrande was starved for cash earlier this year, it turned to its own employees with a strong-arm pitch: Those who wanted to keep their bonuses would have to give Evergrande a short-term loan.

Some workers tapped their friends and family for money to lend to the company. Others borrowed from the bank. Then, this month, Evergrande suddenly stopped paying back the loans, which had been packaged as high-interest investments.

Now, hundreds of employees have joined panicked home buyers in demanding their money back from Evergrande, gathering outside the company’s offices across China to protest last week.

Once China’s most prolific property developer, Evergrande has become the country’s most in-(p. B7)debted company. It owes money to lenders, suppliers and foreign investors. It owes unfinished apartments to home buyers and has racked up more than $300 billion in unpaid bills. Evergrande faces lawsuits from creditors and has seen its shares lose more than 80 percent of their value this year.

Regulators fear that the collapse of a company Evergrande’s size would send tremors through the entire Chinese financial system. Yet so far, Beijing has not stepped in with a bailout, having promised to teach debt-saddled corporate giants a lesson.

. . .

As rumors rippled through the Chinese internet that Evergrande might go bankrupt this month, Mr. Jin and some of his colleagues gathered in front of provincial government offices to pressure the authorities to step in.

In the southern city of Shenzhen, home buyers and employees crowded into the lobby of Evergrande’s headquarters last week and shouted for their money back. “Evergrande, give back my money I earned with blood and sweat!” some could be heard yelling in video footage.

For the full story, see:

Alexandra Stevenson and Cao Li. “Workers Had To Lend Cash To China Firm.” The New York Times (Saturday, September 20, 2021): B1 & B7.

(Note: ellipsis added.)

(Note: the online version of the story was updated Sept. 22, 2021, and has the title “Evergrande Gave Workers a Choice: Lend Us Cash or Lose Your Bonus.”)

“Unemployment Rises Like a Rocket and Falls Like a Feather”

(p. B7) Robert Hall, an economics professor at Stanford University, says the job matching process has progressed in two stages. Last year, millions of people were called back to their jobs from temporary layoffs and the unemployment rate descended quickly from 14.8% to 6.7%. This year, the progress has slowed markedly; the jobless rate fell from 6.3% in January [2021] to 5.9% in June.

Mr. Hall and Marianna Kudlyak at the Federal Reserve Bank of San Francisco studied the past 10 recoveries and concluded that U.S. job recoveries have a common pattern. In normal times, they find, “unemployment rises like a rocket and falls like a feather.”

“The easy stuff has been accomplished,” Mr. Hall said in an interview. The rest of the job recovery, he concluded, is going to take some time.

For the full story, see:

Jon Hilsenrath and Sarah Chaney Cambon. “The Mismatch That Is Hammering Job Prospects.” The Wall Street Journal (Saturday, July 10, 2021): B1 & B6-B7.

(Note: bracketed year added.)

(Note: the online version of the story has the date July 9, 2021, and has the title “Why Aren’t Millions of Unemployed Americans Finding Jobs?”)

120 Million Added People Face Food Scarcity Due to Covid-19

(p. A1) An estimated 270 million people are expected to face potentially life-threatening food shortages this year — compared to 150 million before the pandemic — according to analysis from the World Food Program, the anti-hunger agency of the United Nations. The number of people on the brink of famine, the most severe phase of a hunger crisis, jumped to 41 million people currently from 34 million last year, the analysis showed.

The World Food Program sounded the alarm further last week in a joint report with the U.N.’s Food and Agriculture Organization, warning that “conflict, the economic repercussions of Covid-19 and the climate crisis are expected to drive higher levels of acute food insecurity in 23 hunger hot spots over the next four months,” mostly in Africa but also Central America, Afghanistan and North Korea.

The situation is particularly bleak in Africa, where new infections have surged. In recent months, aid organizations have raised alarms about Ethiopia — where the number of people affected by famine is higher than anywhere in the world — and (p. A5) southern Madagascar, where hundreds of thousands are nearing famine after an extraordinarily severe drought.

. . .

In South Africa, typically one of the most food-secure nations on the continent, hunger has rippled across the country.

. . .

An estimated three million South Africans lost their jobs and pushed the unemployment rate to 32.6 percent — a record high since the government began collecting quarterly data in 2008.

. . .

In Duncan Village, the sprawling township in Eastern Cape Province, the economic lifelines for tens of thousands of families have been destroyed.

Before the pandemic, the orange-and-teal sea of corrugated metal shacks and concrete houses buzzed every morning as workers boarded minibuses bound for the heart of nearby East London. An industrial hub for car assembly plants, textiles and processed food, the city offered stable jobs and steady incomes.

“We always had enough — we had plenty,” said Anelisa Langeni, 32, sitting at the kitchen table of the two-bedroom home she shared with her father and twin sister in Duncan Village.

For nearly 40 years, her father worked as a machine operator at the Mercedes-Benz plant. By the time he retired, he had saved enough to build two more single family homes on their plot — rental units he hoped would provide some financial stability for his children.

The pandemic upended those plans. Within weeks of the first lockdown, the tenants lost their jobs and could no longer pay rent. When Ms. Langeni was laid off from her waitressing job at a seafood restaurant and her sister lost her job at a popular pizza joint, they leaned on their father’s $120 monthly pension.

Then in July, he collapsed with a cough and fever and died of suspected Covid-19 en route to the hospital.

“I couldn’t breathe when they told me,” Ms. Langeni said. “My father and everything we had, everything, gone.”

For the full story, see:

Christina Goldbaum and Joao Silva. “No Job, No Food: Virus Deepens Global Hunger.” The New York Times (Friday, August 6, 2021): A1 & A5.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. 6, 2021, and has the title “No Work, No Food: Pandemic Deepens Global Hunger.”)

Harvard Democrat Larry Summers Says Trillion Dollar Stimulus Was “Least Responsible” Policy of Past 40 Years

(p. 1) Larry Summers has split his pandemic time between houses in Massachusetts and Arizona. He also seems to live inside the collective mind of the Washington economic establishment.

. . .

Mr. Summers spent his last White House stint as a top economic adviser, when the administration settled for a smaller Great Recession stimulus package out of political practicality, and has since disputed criticism by saying he favored more spending then. He has spent 2021 protesting that the $1.9 trillion spending package the Biden administration passed in March was too large for reasons both political and economic, while fretting that the Federal Reserve will be too slow to sop up the mess. The result, he has warned, could be an overheating economy and runaway inflation.

Other respected academics were repeating variations on the same theme, though most economists argued that a 2021 price pop was more likely to be short-lived. But it was Mr. Summers, a longtime Harvard pro-(p. 6)fessor, whose brash declarations worked a sort of nerd magic, drawing the boundaries of the debate and forcing the White House — one he largely supports — on the offensive.

Mr. Summers had combined the swagger of a former Treasury secretary with the gravitas of a respected academic and punchy lines — the stimulus wasn’t just a bad idea, according to him, it was the “least responsible” policy in four decades — to set off a national conversation that was hard to ignore.

. . .

. . . Mr. Summers has said he takes issue not with the idea of spending aggressively to break the economy out of a malaise, but with the magnitude and style — the trillions spent to combat the pandemic downturn exceeded the size of the hole it blew in the economy, basically. He seemed to worry that if he didn’t speak out, there would be too little discussion of the risks.

. . .

Whether or not Mr. Summers turns out to be the sage of Scottsdale and Brookline, his staying power is perhaps best understood as a statement about what he represents: the belief that government spending has real if hard-to-know boundaries, and that trying to measure and work within economic and practical limits can lead to better policymaking.

For the full story, see:

Jeanna Smialek. “Larry Summers: Yelling From the Sidelines.” The New York Times, SundayBusiness Section (Sunday, June 27, 2021): 1 & 6.

(Note: ellipses added.)

(Note: the online version of the story was updated June 26, 2021, and has the title “Why Washington Can’t Quit Listening to Larry Summers.”)