The Friday Report: July 2, 2021

Amazon Invests in New Disaster-Relief Hub

Amazon currently owns over 800 warehouses and has increased its real estate footprint by 50 percent from 2019 to 2020.  In its usual forward-thinking capacity as a supply chain industry leader, Amazon has learned from the response to the myriad of natural disasters as well as the recent pandemic and decided to take action.  As the demand for warehouse space has dramatically increased since the pandemic, Amazon decided to plan ahead and acquire additional warehouse space before it becomes essential in dealing with the aftermath of natural disasters.

Recently, Amazon unveiled plans to open a new warehouse near Atlanta, a location that is ideally located because of its proximity to areas that are typically the hardest hit during hurricane season.

With more than 10,000 cubic feet of fulfillment center space, the new emergency supply hub will carry over 500,000 donated items, enough supplies to fill an Amazon Air 767 cargo plane.  The Amazon aircraft would be used to provide supplies to areas impacted by natural disasters, reducing the response time so that victims can be helped more rapidly.  Supplies stored in the hub would include water filters, medical equipment, kitchen supplies, tents, tarps, clothing, and other essentials.

Amazon reported its intention to partner with a variety of organizations including the American Red Cross, International Medical Corps and World Central Kitchen to handle the distribution of disaster relief supplies when needed. Since 2017, Amazon has donated more than $29 million in natural disaster aid.

India Lures Top Manufacturers with Incentive Plan

In a bid to boost manufacturing in India, the government announces which global companies it has selected to participate in a $1 billion incentive plan to produce and ramp up exports of personal computers, laptops, and tablets.  Dell, Wistron Corp’s ICT, Flex Ltd and Foxconn’s Rising Stars were selected in addition to ten Indian companies including smartphone manufacturer Lava and Dixon.

The plan specifies that the manufacturers will receive cashbacks of 1% to 4% of additional sales of goods that are made locally over the period of four years with 2019-2020 as the base year.  Over the upcoming four years, the participating manufacturers are anticipated to produce 1.61 trillion rupees ($21.59 billion) worth of IT hardware goods, creating over 36,000 jobs.

U.S.  Manufacturing Boom:  Production Held Back by Shortages

According to the Institute of Supply Management, U.S. based manufacturing activity slid from 61.2% in May to 60.6% in June, a bit below the Wall Street forecast.  To put this into context, any number north of 60% is considered to be extraordinary and signals growth.  The great news is that U.S. manufacturers are rolling in orders.  The bad news is that they are worried about filling them. 

In an economy that is now running “very hot”, inflation has reared its ugly head and global trading patterns have been disrupted.  Manufacturers are finding it challenging to procure essential components and supplies, a situation that is unlikely to abate quickly.  One of the most difficult issues to resolve remains that of labor.  Manufacturers report that labor shortages continue to hold back production levels.