A64Pilot Posted June 8, 2021 Report Share Posted June 8, 2021 (edited) 12 minutes ago, N201MKTurbo said: There are thousands of different chips. Made by hundreds of companies. They never say which chips from which company are the problem. Understand, but free enterprise if there is a shortage due to manufacturing, by its nature goes into double overtime etc and soaks up as much profit as it can before the other companies do, so long as there is competition of course. These chips, if they were sole source the news woud have talked about it. ‘Several years ago one of the two plants that make anti-freeze burnt or something, there was supposed to be a shortage, I guess the remaining plant went into overtime because there never was a shortage even with half the manufacturing capacity gone, price went way up. but the supply was fine, just expensive, there can be serious money to be made with a shortage. Shortages don’t usually last long, unless of course something like OPEC cuts back production. ‘We supposedly have a chicken shortage now too, well if we do I bet Chicken farmers are doing everything they can to grow as many chickens as possible to get some of the profit due to a shortage, so it won’t last long, not as fast as chickens grow, and I bet “chips” don’t take a year and a half to make either. Edited June 8, 2021 by A64Pilot Quote Link to comment Share on other sites More sharing options...
N201MKTurbo Posted June 8, 2021 Report Share Posted June 8, 2021 14 minutes ago, A64Pilot said: Understand, but free enterprise if there is a shortage due to manufacturing, by its nature goes into double overtime etc and soaks up as much profit as it can before the other companies do, so long as there is competition of course. These chips, if they were sole source the news woud have talked about it. ‘Several years ago one of the two plants that make anti-freeze burnt or something, there was supposed to be a shortage, I guess the remaining plant went into overtime because there never was a shortage even with half the manufacturing capacity gone, price went way up. but the supply was fine, just expensive, there can be serious money to be made with a shortage. Shortages don’t usually last long, unless of course something like OPEC cuts back production. ‘We supposedly have a chicken shortage now too, well if we do I bet Chicken farmers are doing everything they can to grow as many chickens as possible to get some of the profit due to a shortage, so it won’t last long, not as fast as chickens grow, and I bet “chips” don’t take a year and a half to make either. Most of these semiconductors are proprietary. It would take a re-design of the parts that use them to design in other parts. Although a company can farm out its production, most don't want to do that because they would be giving their IP to their competitors. Heck, Intel won't even ship their raw silicon by common carrier. They fly them around the world by private jets. Each box about 1 ft cubed can be worth over $10,000,000. 1 Quote Link to comment Share on other sites More sharing options...
EricJ Posted June 8, 2021 Report Share Posted June 8, 2021 3 hours ago, A64Pilot said: Shortages don’t usually last long, unless of course something like OPEC cuts back production. One problem with semiconductor chips of modern geometry or integration level is that the barrier to entry to manufacturing is extremely high. It is very expensive and technically complex and time consuming to build a semiconductor manufacturing plant. So if something within the existing system capacity impedes production, it isn't going to be resolved by somebody else picking up the slack any time soon. Quote Link to comment Share on other sites More sharing options...
A64Pilot Posted June 8, 2021 Report Share Posted June 8, 2021 (edited) 41 minutes ago, EricJ said: One problem with semiconductor chips of modern geometry or integration level is that the barrier to entry to manufacturing is extremely high. It is very expensive and technically complex and time consuming to build a semiconductor manufacturing plant. So if something within the existing system capacity impedes production, it isn't going to be resolved by somebody else picking up the slack any time soon. yes but I bet there are several manufacturers, have we heard any reason why there is a shortage? Every shortage I can remember there is always the reason why in the news report, but for some reason I’ve not heard the cause, gas is high because the pipeline shut down etc. except maybe to blame Covid, which of course gets the blame for everything. But I have not heard due to Covid there were no workers and the plants shutdown etc. just Covid did it. ‘Again with Free Enterprise supply almost always exceeds the demand, unless there is some kind of artificial barrier, like a patent that keeps everyone from playing. ‘But then I never understood the great toilet paper shortage of 2020, what was that? Normal activity is if there is a run on something, there is a temporary shortage, but quickly manufacturing steps up to of course make a profit while prices are high, and if it is some kind of temp run like people hoarding something. like toilet paper, bottled water or gasoline when a hurricane is coming, after the hurricane passes, there is a glut, because people stop buying right about the time supply spools up to fill the demand, they use up their hoarded supply before they buy more. ‘I have friends that live in the NW that tell me the lumber yards are full, why is there a lumber shortage? Are they wrong? Dont anyone get upset, I am not saying Free Enterprise is broken, I’m saying just the opposite, it works. Normal world if widget A isn’t available some smart guy figures out a way to make widget work. Edited June 8, 2021 by A64Pilot Quote Link to comment Share on other sites More sharing options...
Nick Pilotte Posted June 8, 2021 Report Share Posted June 8, 2021 (edited) 5 hours ago, A64Pilot said: Strange as how it’s just or primarily autos that are affected by chip shortages, I would have expected TV’s, computers or other similar types of devices first. Actually....That’s part of the reason. Demand for consumer electronics skyrocketed in the last 16 months because a high volume were working from home/e-learning/not traveling, and automotive demands dropped due to less consumers buying/repairing vehicles because they were staying home more. So consumer electronics companies had to go into high gear and their component needs were addressed due to the dwindling automotive industry. Unfortunately the trickledown effect was that more raw materials shortages occurred due to production and staffing impacts. This will take a while to correct itself. edited to add: just in time manufacturing means that parts aren’t allowed/scheduled to arrive until they are needed. So if automotive manufacturers forecast a drop in production needs, they cancel orders for components. Who swooped in and took their place? You guessed it. Edited June 8, 2021 by Nick Pilotte 1 Quote Link to comment Share on other sites More sharing options...
A64Pilot Posted June 8, 2021 Report Share Posted June 8, 2021 I’ve been involved with manufacturing, and what I saw was let prices get high enough and parts start flowing at a prodigious rate, because the manufacturer starts working additional shifts and overtime etc. ‘Surely before Ford shuts down a plant, they outbid a TV manufacturer or computer etc? Quote Link to comment Share on other sites More sharing options...
EricJ Posted June 8, 2021 Report Share Posted June 8, 2021 3 minutes ago, A64Pilot said: yes but I bet there are several manufacturers, have we heard any reason why there is a shortage? It's pretty simple:https://www.newscientist.com/article/2271918-theres-a-global-shortage-of-computer-chips-whats-causing-it/ Both TSMC and Intel, two of the largest chip makers on the planet, are building new plants here in AZ. There are new plants going up in a lot of places, but, as previously mentioned, they are very complex and expensive and take time to build and test and come online. Quote Link to comment Share on other sites More sharing options...
EricJ Posted June 8, 2021 Report Share Posted June 8, 2021 Just now, A64Pilot said: I’ve been involved with manufacturing, and what I saw was let prices get high enough and parts start flowing at a prodigious rate, because the manufacturer starts working additional shifts and overtime etc. ‘Surely before Ford shuts down a plant, they outbid a TV manufacturer or computer etc? Lol...look at the chip volumes that Ford can bid on and the chip volumes that support television/monitor/consumer electronic manufacturing. The auto manufacturers barely show up on the radar. Plus I bet a lot of the stuff they're waiting on isn't even Ford designs, but boxes that they integrate that somebody else designed and manufactures. It's not an easily solvable problem. Quote Link to comment Share on other sites More sharing options...
A64Pilot Posted June 8, 2021 Report Share Posted June 8, 2021 12 minutes ago, EricJ said: Lol...look at the chip volumes that Ford can bid on and the chip volumes that support television/monitor/consumer electronic manufacturing. The auto manufacturers barely show up on the radar. So then if they are such a small end user, I agree by the way, then how did they cause the problem, and why can’t they simply buy their way out? “chips” have to be a very tiny cost of auto manufacturing, even a 1,000% markup is nothing to a car, but would be huge to a video game. I’m not saying GM, Toyota, VW, Ford etc execs are meeting in back rooms and agreeing to cut production so that they can increase per unit prices by a wide margin, but. I think Companies have learned a new lesson, and that there is tremendous profits in shortages. Do you think Enterprise makes more money renting 10 cars for $30 ea with five more unrented, or renting 8 cars for $80 ea and none go unrented? The profit from almost a 300% markup plus less money spent buying cars that sit, and fewer people needed to service fewer cars, etc etc all adds up. Lumber increasing in price by 300% or more has to be good for a lumberyard. ‘I’d also expect the auto manufacturers to stop producing the cheap less profitable cars and focus on the more profitable luxury SUV’s and PU’s, if you can only build s number of vehicles, build the ones with the biggest profit margins. Plus I expect prices will never return to 2019 levels for autos, rental cars etc. A new trick has been learned and that’s don’t produce so much that it drives down sales prices. Quote Link to comment Share on other sites More sharing options...
carusoam Posted June 9, 2021 Report Share Posted June 9, 2021 Where’s our economist? 1) How many chips does it take to have a car not be ready for sale.... one? 2) What is the challenge? JIT manufacturing has always worked before... The pandemic has put a huge wave in the supply / demand curve... The rapid change in what people want need is great! The follow-up rapid return of what people need now, is equally great! 3) Who is going back to the office? 4) Who hasn’t changed their needs at all? 5) What is going on in China? China doesn’t use JIT as much as we do.... They have been storing commodity chips in advance... 6) Also... China is at odds with a few other governments... and won’t be working much as a team mate for a while... 7) The US government is putting another program together for improving chip manufacturing in the US... The Senate just signed something today... 8) What’s really odd... we haven’t seen the economy grow at this pace for several years... 9) With this much growth... there will be mismatches with all of the supply of everything... including oil and gasoline... 10) There are smart people that figure these things out every day.... 11) The news is making a huge deal out of it... 12) For anyone buying an Nvidea video card to play MSFS... there is always a wait, and a price to pay to get the best... 13) Lumber experienced a spike in pricing... there are still trees... and deliveries have returned... Home Depot raised prices... and have started returning the prices back towards the new normal of the day... 14) Even Baltic shipping prices had peaked, and for weeks have headed back towards normal... 15) There is a lot going on around the world... 16) There is a lot going on locally... 17) The pandemic is winding down.... yet still here... vaccinated people are no longer wearing masks everywhere... (some places it is still important...) 18) Everyone is returning to what they used to do.... at a high rate... 19) My home streets are empty... everyone went down the shore... 20) Keep your eyes on the economy... and the unemployment.... and the jobs created... 21) Overall... there is a shortage causing a delay... it’s not a shortage, and it’s not coming... 22) If there was a shortage like the plants burned down.... the supply disruptions would be huge... the chip manufacturers have just come through the second quarterly earnings announcements... where their sales and earnings per share have beat and exceeded expectations... all but Intel... (who has a technical supply challenge)... Something called supply chain management keeps all the plans B for parts organized... have no fear... these guys are working overtime this year... 23) For fun read up on some chip manufacturers lately... AVGO, NVDA, AMD, MRVL, QRVO, APPL, MU, NXPI... The Who’s who inside all things electric components.... 24) Next on the list of excitement... the companies that build the machinery that build chips... they are getting orders to build more machines.... AMAT and LRCX... The sun is really Shining... Yay! Refire up the plan for the Roaring 20s version II! PP thoughts only, not an economist... Best regards, -a- Quote Link to comment Share on other sites More sharing options...
N201MKTurbo Posted June 9, 2021 Report Share Posted June 9, 2021 (edited) The construction going at the Intel Ocotillo and Ronler Acres campuses would blow your mind if you saw them. I have worked at both places recently. They are spending billions like it was water. I have heard rumors that Intel is considering manufacturing other companies parts. KCHD is the closest airport to the new Silicon Valley being built here in south Chandler. The one in California is looking old and tired and everything is over priced and the traffic is horrible. Ours is new and shiny, you can do business for 1/3 the price and our roads are big wide and pretty. Edited June 9, 2021 by N201MKTurbo 1 Quote Link to comment Share on other sites More sharing options...
FlyingDude Posted June 9, 2021 Report Share Posted June 9, 2021 On 6/7/2021 at 8:36 PM, A64Pilot said: Avgas never sees a pipeline I read that the pipeline hack was to their "fee collection system". So the hackers didn't stop the flow of oil. The company did that, when they couldn't bill their customers. All other price raises are price gouging. I spoke with 1 airport and 1 FBO manager at another airport: their suppliers raised prices overnight. So never mind about the 45 days between when oil is extracted until it's sold. Both bought little (~2000gl) instead of filling their 10k gl, hoping that prices will go down and they won't have to keep prices high. Links https://www-politico-com.cdn.ampproject.org/v/s/www.politico.com/amp/news/2021/05/10/colonial-pipeline-cyber-486726 Quote Link to comment Share on other sites More sharing options...
A64Pilot Posted June 9, 2021 Report Share Posted June 9, 2021 (edited) What drives the price of Avgas is what people will pay. See attached photo, same FBO (Eagles of America), same owner, fuel source is the same, price paid for the fuel is the same. .40 c difference in price. It would be more but I’m sure they have tried that and sales fell off, so ABY people pay 40c more per gl of fuel, because they will. Edited June 9, 2021 by A64Pilot Quote Link to comment Share on other sites More sharing options...
Tony Starke Posted June 10, 2021 Report Share Posted June 10, 2021 On 6/8/2021 at 3:33 PM, N201MKTurbo said: Heck, Intel won't even ship their raw silicon by common carrier. They fly them around the world by private jets. Each box about 1 ft cubed can be worth over $10,000,000. Interesting, I see quite a bit of silicon coming off private jets... Quote Link to comment Share on other sites More sharing options...
N201MKTurbo Posted June 10, 2021 Report Share Posted June 10, 2021 24 minutes ago, Tony Starke said: Interesting, I see quite a bit of silicon coming off private jets... Silicon, or Silicone? 2 Quote Link to comment Share on other sites More sharing options...
FlyingDude Posted June 10, 2021 Report Share Posted June 10, 2021 @A64Pilotonce I spoke with an airport manager (another one in Ohio) about fuel prices. I asked him how come there are so many variations. He said FBOs can elect to either have floating prices or fixed mark-up prices. He said, it takes them a while to go through a stash of 9000-15000 gallons. So if they float prices, they can go up or down, so they may end up losing money. So instead, they buy it at a price, add their markup and sell that stash at that price. That would explain how the same operator charges different prices at different airports. They are separate tanks, filled at separate times, bought at different prices. This actually is the reason why the 2 managers in MI bought only 2000 gl during the price gouging hysteria. Because they expect the prices to come down and they don't want to be stuck with high prices and never be able to finish that stash, but they didn't want to run out of fuel totally either. Quote Link to comment Share on other sites More sharing options...
Tony Starke Posted June 10, 2021 Report Share Posted June 10, 2021 1 hour ago, N201MKTurbo said: Silicon, or Silicone? Sorry, that would be silicone. That little “e” changes everything. 1 Quote Link to comment Share on other sites More sharing options...
carusoam Posted June 10, 2021 Report Share Posted June 10, 2021 Buying commodities is a drag... Especially, when you buy it today... and you have it for months before you buy again... If you get stuck with a load of expensive fuel... it gets harder to off load it if the price goes down a week later... Some airports attract a lot of fuel business... their turn over is rather quick... their price is relatively low... and they compete really well against the other airports in neighboring communities... We have one airport in NJ... where they use the fuel as an attraction for their customers... Similar to a loss leader... PP thoughts only, not a commodities trader... Best regards, -a- Quote Link to comment Share on other sites More sharing options...
N201MKTurbo Posted June 10, 2021 Report Share Posted June 10, 2021 On my trip to Santa Barbara recently I paid $4.45 for avgas at KCHD. when I filled up my rental car the fuel was $4.45. Quote Link to comment Share on other sites More sharing options...
FlyingDude Posted June 10, 2021 Report Share Posted June 10, 2021 3 hours ago, N201MKTurbo said: On my trip to Santa Barbara recently I paid $4.45 for avgas at KCHD. when I filled up my rental car the fuel was $4.45. Yeah man! Tax cars to subsidize planes. Quote Link to comment Share on other sites More sharing options...
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