David T Phung ⚛️⚡️🚀
@davidtphung
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trying something new long form observations, thoughts and patterns.
1970s usa lesson: the industry ran on imported about 50-100% of minerals in 1975. the minerals that make modern industry machinery, cobalt for jet-engine alloys, niobium for high-strength steel, platinum-group metals for catalysts, etc.
so sources were concentrated (brazil, south africa, zaire [now modern day democratic republic of congo], canada). any geopolitical hiccup, export ban, or dock strike could turn into a production standstill.
after the 1973 oil embargo, energy costs spiked. since smelting & refining metals consume tons of electricity, the price shock “passed through” to aluminum +25 %, steel +30 %, titanium +30 %, plastics +35-50 %.
this resulted in lead times for aluminum extrusions stretched from 12 to one point 73 weeks in august of 1979. demand did soften in 1974, but the scarcity + market power price was still high due to a handful of suppliers.
1. energy and material costs are tied together. the cost of anything is connected to energy prices.
2. concentration risks in terms of supply chain can change overnight due to geopolitics and policy changes.
3. and in todays context, led times for semi conductors and something oeooke are sleeping on the chemical antimony. you’ll soon hear that word in headlines.
so the pattern to lear from is throughout history says the cure is diversifying the supply chain, investing in domestic capacity, and slashing energy costs
systems thinking: reliance feeds price spikes and schedule slips, the cost of energy + materials sets the clock.
if you’d made it this far and are intersted in this reach out. i’d love to chat about it. 0 reply
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