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It's important for everybody to understand a few things about the manufacturing supply chain.

Not just some people.

But everybody.

Everybody who in interested in the health of the US economy needs to understand some basic things about the manufacturing supply chain.

A fire recently broke out in a factory in Howell, Michigan. A factory that makes interior trim for automobiles. Just one...ONE...ONE factory having a fire and being shut down brings much of the supply chain in many auto manufacturing plants to a halt, including Mazda, Nissan, and GM...

GM officials say the fire has affected work at seven plants: Arlington, Detroit-Hamtramck, Lansing Delta Township, Lordstown, Flint, Fort Wayne and Oshawa Consolidated.

So how can this be? How can a single fire in a single factory cripple the manufacturing capacity of entire lines of vehicles?

This all has to do with the "supply chain."


I have a pal who works at a company that makes software for warehouses. He's been doing it for many years, and has created software for warehouses around the country, including warehouses that supply parts to auto manufacturers, as well as the auto manufacturers themselves.

As it turns out, auto manufacturers have the supply chain down to an art form.

As in: AS the last part is taken out of a box and placed onto the assembly line, a truck from a supplier is LITERALLY pulling up with the next shipment of parts and are being unloaded at exactly the moment those parts are needed. Suppliers who can meet these extreme deadlines and 15 minute windows of demand are the ones who get the contracts from auto manufacturers...and they will, also very literally, charter airplanes to get the parts to the auto manufacturers on time rather than miss a deadline because the penalty for missing a shipment is so high, and the potential for losing a lucrative client is so huge, that companies do ABSOLUTELY everything in their power to get their parts to the auto manufacturer within the 15 minute window that they demand.

Imagine an item made up of 30,000 parts.

And now imagine that ONE part is missing.

Just ONE part.

Even if ONE part out of 30,000 is missing...the final product cannot be made.

If ONE part cannot be supplied on time then EVERYTHING grinds to a halt. Everything beyond the point where the missing piece is supposed to be added comes to a standstill. Entire factories shut down. People are idle.

This is how modern manufacturing works. It is the apex of efficiency: removing the need for excess assets waiting in a massive warehouse because a truck is always, always, always supposed to pull up at exactly the time you need the parts, give of take 15 minutes...that's a huge money savings.

From cars, to motorcycles, to refrigerators, to ovens, to office chairs, to toaster streudel, this is how manufacturing works. It's a web of businesses working together to meet very strict, very time sensitive deadlines and the one who drops the ball brings scores, possibly hundreds of other small businesses to a standstill. It just stops. That ONE part is missing...that's it. You have no car.

Now lets bring this back to the rescue of GM and Chrysler and why that was so critical to the US economy. Why that was so critical to manufacturers both foreign and domestic, not just in the US, but worldwide: If you were to remove a single major Original Equipment Manufacturer (OEM) then you would see many small manufacturers...SUPPLY CHAIN manufacturers, go out of business. And it doesn't matter if it's 1 or 20,000 small parts manufacturers...because once Ford can't order a part...that's it for a very long time until they can find a manufacturer who can make that one part and meet those tight deadlines. And Mazda. And Toyota. And Honda. And Hyundai. And ANY other manufacturing company that relied on whatever parts the small manufacturer made: whether it was 1 part or 100,000 parts.

The fire in a single plant in Howell, Michigan, is bringing many companies and many factories to a standstill, though they produce a few parts out of tens of thousands that go into an automobile.

I don't think enough people understand what exactly was at stake when the auto manufacturers were about to crumble. It wasn't just the auto companies that Obama saved. It was the ENTIRE United States manufacturing supply chain that was about to grind to a halt in the midst of the worst recession in 70 years.

When Obama freed up 8 billion dollars to help small manufacturers get loans to keep them going during the down turn...THAT's when I realized that Obama GOT it. He understood what was on the line.

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