Key Metrics and Supply Alert

Staff -- Purchasing, 10/7/2004

• Increased Coast Guard attention will be paid to ships that sail under the flags of 31 countries that have failed to meet new international security standards. In effect, the Coast Guard will board and inspect more vessels entering U.S. ports than ever before. Reason: The independent commission that investigated the Sept. 11, 2001, attacks said efforts to protect the nation's 361 ports from terrorists are inadequate.
• Future exports from the world's two biggest developing countries will be radically different. China and India are taking different paths to economic prosperity, says Diana Farrell, director of the McKinsey Global Institute. China's growth has been driven by manufacturing while India owes much of its progress to private businesses involved with software, information technology services and pharmaceuticals.
• The global supply chain for crude oil is far from balanced, so near-term price variability around $46 a barrel is a virtual certainty, according to traders, who are edgy about the world's limited production capabilities and rising demand. Note that mid-September supply constraints in the U.S. and Russia piqued the nerves of traders already worried that there might not be enough excess output capacity to handle a more serious, prolonged disruption. "In the current environment, any little thing that slows supply is going to have an effect," says trader Mike Fitzpatrick at Fimat USA.
• Don't be surprised to see Australia's commodity exports soaring into the U.S. in coming months. Brian Fisher, executive director of Australian Bureau of Agricultural and Resource Economics, says global economic growth has spurred higher minerals and energy prices on world markets, boosting export shipments. Fisher says U.S.-bound export earnings were expected to increase for such mineral resources as coal, iron ore, crude oil, aluminum, copper, lead, nickel and zinc.
• U.S. companies sending jobs overseas aren't having a big impact on the total job market, insists Maury Harris, chief economist at UBS Investment Research. Foreign workers have become a political concern as well as an economic issue this year as the presidential election approaches and growth has slowed. Elected officials often blame international outsourcing for lost manufacturing jobs when seeking business for their districts. But, between 2001 and 2003, Harris says increased international outsourcing didn't have much effect on overall jobs or wages because the U.S. economy always adds new jobs in some areas even as it loses them in others.