Natural disasters turn people’s thoughts toward risk. Last year, between floods and tornados and other Weather Channel fodder, I visited several fabricators told me about their customers’ concerns about mitigating supply chain risk. For years, large OEMs have pruned their supply chains to the nth degree, giving more business to fabricators who perform well, order after order. Fabricators who don’t perform are pruned.
Then came last year’s floods and tornadoes. This year, some are worried about an economic slowdown, and some sectors have more to worry about than others. As the American Wind Energy Association reports, unless Congress renews a production tax credit for 2013, makers of wind tower components may need to shed 10,000 jobs due to an anticipated slowdown in orders. Vic Abate of General Electric’s renewable energy business told Bloomberg he expects to dramatically reduce the number of parts suppliers. As Bloomberg reported, “The company might have as many as 10 suppliers for certain components now a figure that may dwindle to just three once he is finished pruning.”