For more than a generation, many executives at large multinationals have pursued a tested strategy: securing inexpensive manufacturing in distant locales, outsourcing many low-skill jobs and relying on just-in-time production and ocean transportation to grind down costs.
But now, many companies can’t get the materials they need to make their products, space on vessels to move them or people to sell them. The shortages are creating constant interruptions in the availability and quality of goods and services, from Southwest Airlines flights to breakfast hours at McDonald’s.
Business leaders are responding by ditching, at least temporarily, some principles of modern economics in favor of reliability at any cost, as Thomas Gryta and I report in the story below.
Delta Air Lines decided it would no longer outsource some of the work of pushing wheelchairs and cleaning planes, hiring its own employees after its contractors couldn’t find enough people to do so. Sherwin-Williams Co. bought one of its suppliers with operations far from the Gulf of Mexico after storms and other severe climate events caused supply shortages. And at the Italian clothing company Benetton, the com-pany is boosting man-u-fac-tur-ing in places like Ser-bia and Croa-tia, away from less ex-pen-sive but more dis-tant lo-cales such as Thai-land — a re-ver-sal of the decades-long shift by many ap-parel com-pa-nies to Asian fac-to-ries that of-fered low-cost sup-plies.
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