Shortages of “Everything”: Why, and What To Do? Part 2.

by Gerry Allan | Nov 2, 2021 | Managing | 0 comments

“In the middle of every difficulty lies opportunity.”
— Albert Einstein

“Great things are done when men and mountains meet.”
— William Blake

“Face a challenge and find joy in the capacity to meet it.”
— Ayn Rand

“Our most significant opportunities will be found in times of greatest difficulty.”
― Thomas S. Monson

“Every challenge, every adversity, contains within it the seeds of opportunity and growth.”
― Roy Bennett

Note: This post is really a “thinking out loud” piece as I am trying to make some sense of what is going on for my own use. Time to worry, or maybe not?

What I have been reading lately goes all over the map. What to believe, if anything? I was going to hold off on writing this post until my understanding could be greatly improved but things just seem to be getting murkier by the day. Perhaps you are feeling somewhat the same way. In any case, this post is where I have come out so far after much struggling through the fog and confusion.

Because it has turned into a lengthy post, it has been broken into two parts: Part 1: A look at what seems to be happening with “shortages of everything” and why; Part 2: A first attempt to figure out what we might do in this whatever-is-happening situation.

Part 1 was posted last week. Part 2 is below.

Where we left off in Part 1

My take on the shortages-of-everything situation thus far:

Our pre-2020 world was tightly integrated and very brittle – designed largely for maximum efficiency in a predictable, stable environment.
COVID killed predictability and stability – perhaps forever – leaving us with a very different world that requires agility, adaptability, and resilience.
This dramatic change was inevitable in hindsight – its timing and nature only being uncertain. Our job going forward is to redesign almost everything for this new world.

Catastrophe or challenge? The latter I think

While there is no doubt that the “shortages” situation is huge and very damaging, I have begun to see the situation quite differently from what I mostly have been reading. The old world of stability and predictability has ended. The new world of instability and unpredictability is here. It’s coming was inevitable. Hard lesson.

We have a real mess on our hands at the moment but there are some quite promising signs appearing that suggest the situation is being dealt with effectively. Rather than a “catastrophe”, the COVID black swan has been the essential world-changer. What we really have today is a set of very great and unavoidable challenges as we move ourselves into a new world. Transitional, not catastrophic.

As ancient Chinese general and military strategist Sun Tzu reputedly observed, “In the midst of chaos, there is also opportunity” and “Opportunities multiply as they are seized”. We certainly have lots of chaos so we must also have lots of opportunity. The challenge then is to survive and at the same time identify and take advantage of the associated opportunities. Sun Tzu says so.

A bit tricky to actually pull off but there are so many creative and farsighted leaders around that this is certainly doable. The difference is your chosen context for moving ahead: catastrophe or opportunity?

What to do about “shortages of everything”?

Shortages of everything are really a sign that the past structures and practices have failed and that a new way is required. Pretty nasty “sign” but one so essential to moving forward. Nothing less than COVID could have motivated the changes that are beginning to take place.

This is actually great news!

1. Energy shortages

Why are there energy shortages? Regulations restrict producers’ flexibility and push investment into many unproductive directions. Highly variable demand makes planning difficult and requires major and costly operating shifts to accommodate. Fuel (coal, oil, gas, wind, solar, hydro) markets are presently chaotic and prices are rising rapidly. Reliable options like nuclear face huge political obstacles. The list here goes on.

All of these factors combine to make energy availability and cost increasingly variable and unpredictable. This is just the way the world works today. It is probably the world that we will have to deal with indefinitely.

Here are a couple of examples that look to me like solid places to start dealing now with energy shortages:

What to do about energy shortages

The basic concept is to be able to detach from the primary power grid so as to generate power independently and from small local power units, or microgrids. The technology required is new and still very much under development but the approach makes sense. One high-profile microgrid supplier is Bloom Energy, which despite many difficulties, appears to be making serious headway:

“Bloom Energy has developed a revolutionary on-site primary power generation system. The Bloom Energy Server® is based on a proprietary fuel cell technology that provides a more reliable, cleaner, and cost-effective alternative to the traditional electric grid. Bloom provides a transformational new electrical network topology that greatly simplifies the architecture and eliminates the need for many legacy components.”

“Microgrids are miniature versions of the centralized electric grid that dispatches, distributes, and regulates the flow of electricity. It can operate and switch between either grid connected or islanded modes. Bloom provides power generation to support critical loads for the microgrid in both modes of operation.”

“A microgrid generally operates while connected to the grid, but importantly, it can break off and operate on its own using local energy generation in times of crisis like storms or power outages, or for other reasons.”

“A microgrid can be powered by distributed generators, batteries, and/or renewable resources like solar panels. Depending on how it’s fueled and how its requirements are managed, a microgrid might run indefinitely.”

The solution is localization, small scales, and energy source diversity

Additions or changes to conventional primary power sources take years and billions of dollars. Struggling through the current regulatory maze is almost impossible. These hurdles cannot be overcome quickly enough in times of great, rapid change like today. They are not the agile, resilient answer we desperately need right now.

Microgrids may well be the answer near term despite the many technological problems still to be resolved. These units are comparatively low cost, minimally disruptive, and often fast to install. They can connect to multiple energy sources, including the primary grid, and switch quickly as sources appear or disappear, or as source economics and user requirements change.

Just what we need, yes?

2. Worker shortages

Worker shortages don’t seem to make any sense today. As of early 2020, the U.S. labor force was over 164 million, as the chart below shows. Following the COVID whack, it dropped by roughly 8 million and has since recovered to around 161 million. Where did those 3 million people, who were employed just two years back, go?

Job openings are still over 10 million – easily enough in principle at least to absorb the missing 3 million formerly-employed folks. What’s going on?

Here’s one clue: “Denver International Airport, the fifth-busiest airport in the USA, held a job fair recently with an expectation of 5,000 visitors. Only 100 people showed up. It is understandable why people are hesitant to work in a notoriously regulated environment where they will likely be forced to wear a mask all day in addition to the now-mandatory vaccine.”

Staffing consultant Innovative Employee Solutions (IES) has an interesting perspective on this situation: “Employers Are Struggling to Find Workers. Here’s How to Overcome That Challenge”:

“So why is there a labor shortage along with record-high job openings? The pandemic has collided with many other factors to create this worker shortage. Some of those who are out of work are still uneasy about COVID-19 and feel more comfortable staying away from office settings. Others have had their lives upturned by illness, caregiving obligations, child care and remote learning responsibilities, and relocations. And people who moved during the pandemic aren’t always able to find jobs that coincide with their skill sets in their new locations.”

“On top of that, many industries have changed over the last 18 months. Consumers are choosing delivery over shopping in stores, for instance. So the need for different positions has changed, and the unemployed might or might not be suited for those roles.”

“Extended benefits also have prevented some from going back to work. Those who earn less than $34,000 at their jobs can make more on unemployment benefits and often choose to extend their unemployed status while they wait for better opportunities — especially if they have child care responsibilities.”

“Lastly, many people have come to enjoy commute-free, flexible workdays, and they don’t want to work for employers who are going back to how things were pre-pandemic. In one survey, 39% of respondents said they would consider quitting if their employers didn’t offer flexible remote work options.”

We noted in the last post that there were also 4.3 million job “quits” in August 2021. BLS JOLTS “quits” are understood to be connected to worker confidence in future prospects: more quits mean higher confidence. Makes sense since people seeking better jobs often need to be free to job-hunt. Tough to do when you have a full-time job.

Check out “The Great Resignation” story highlighted in Related Reading below.

Lots of workers out there who just want something different

There may be less a shortage of workers than a shortage of folks who are willing to work as they did previously. COVID-days opened a lot of eyes. Jobs have changed and worker expectations have changed, as IES has observed. Maybe the “worker shortage” is simply a symptom of a dramatically changed workforce that is no longer well-matched to old workplaces and job structures.

A recent post dealt with the huge growth in freelancing and self-employment – now over 36% of the total U.S. workforce. During the extended COVID unpleasantness, huge numbers of workers got a taste of what they could do as an alternative to their former jobs.

It appears the real crisis is caused by a greatly changed workforce that employers are no longer addressing effectively. The workforce probably has changed for good; employers seem to be largely in catch-up mode.

Dealing with the worker shortage: employers must change and adapt

Again, this situation seems to be part of the huge and likely permanent changes wrought by COVID and its kin. It may well be that many of these changes were building up long before COVID triggered the avalanche.

One almost certain change is the major shift toward self-employed and freelancing work. This could well reach 50% of the U.S. workforce in a few years if the current trend continues. Workers are available but now increasingly only on very different working arrangements. Many do not want to be employed but instead to fashion their own work arrangements around far greater flexibility.

Workers are probably going to cost more as well. The taste of freedom for so long from what many consider to be underpaying, poorly designed, inflexible jobs seems likely to persist. Employers who cannot afford higher pay and better working conditions are going to be forced into automation and greatly restructured jobs for those remaining employees.

Entrepreneurs are getting into the worker shortage action

I couldn’t resist including a couple of examples of real ingenuity and resourcefulness that have arisen to deal with the new problem of vaxx mandates and fired workers.

RedBalloon

“Mission: to unite a community of businesses and job seekers who value and preserve the freedom to work. RedBalloon was founded in 2021 as the solution to the ever-growing problem of government overreach and “cancel culture” invading the American workplace. RedBalloon connects like-minded businesses and Americans who seek the freedom to work without the fear of discrimination against personal beliefs, infringement on constitutional rights, or invasion of medical privacy. We pioneered RedBalloon to honor and celebrate the American liberties that make this country great. We strive to empower employers to preserve these liberties for their workforce, and to place talented Americans into careers that will value their freedom and prioritize their success.”

“There were 528 jobs listed as of October 24, 2021”

“Andrew Crapuchettes, Founder & CEO. Andrew Crapuchettes is the visionary behind RedBalloon. Mr. Crapuchettes has worked in the high-tech industry for over twenty years. He began his career in Silicon Valley, building business process automation and selling 3D modeling software. In 2001, Mr. Crapuchettes became a founding member and later CEO of Emsi, which he transformed from a little-known consulting company of three employees to an international economic data firm with over 250 employees worldwide.”

“Mr. Crapuchettes not only pioneered the operational tenets that rocketed Emsi to success (Bless the Customer, Bless the Employee, Bless the Shareholder), but led the company through four successful transitions to two private equity firms, a strategic buyer, and a national non-profit, with each transition producing significant returns for the investors.”

Job Boards

“Job boards for sharing open roles at companies that do not require employees to be vaccinated against COVID-19 have been popping up online as vaccine mandates are becoming more common.”

“One board is hosted on Gab, the social media platform that has been embraced by some conservatives and members of the far-right. In an email sent to users on Wednesday, Gab CEO Andrew Torba announced the ‘No Vax Mandate Job Board.’”

“’This job board is for sharing job openings that do not require employees to inject themselves with an experimental substance or violate their bodily autonomy and religious beliefs in order to retain employment’,” he wrote, adding that job seekers are welcome to post their resumes in the group.”

“The group, which had nearly 30,000 members after just two days, was filled with messages from people looking for work that won’t require them to be vaccinated.”

Enough already – it happened again

This critter has reached a high-end post length (for me) but there is still the huge area of supply chain disruption shortages to address. Seems sensible to break it here and add a Part 3 to this two-part story. Part 3 next week.

Bottom line:

“Shortages of everything” is being reported so often as a catastrophe or worse. We may well be doomed. But what if this is just a symptom of massive changes underway that are now driven by the COVID black swan? Changes that were inevitable in our way-too-brittle world. If so, this shifts our management context to one of challenge and opportunity. Lots of struggle ahead short-term but the extended outlook seems very positive and full of opportunities.

Related Reading

Wikipedia gives an overview of MicroCHP as an alternative power source:

“MicroCHP. Micro combined heat and power or ‘Micro cogeneration’ is a so-called distributed energy resource (DER). The installation is usually less than 5 kWe in a house or small business. Instead of burning fuel to merely heat space or water, some of the energy is converted to electricity in addition to heat. This electricity can be used within the home or business or, if permitted by the grid management, sold back into the electric power grid.”

“Delta-ee consultants stated in 2013 that with 64% of global sales the fuel cell micro-combined heat and power passed the conventional systems in sales in 2012. 20.000 units were sold in Japan in 2012 overall within the Ene Farm project. With a Lifetime of around 60,000 hours. For PEM fuel cell units, which shut down at night, this equates to an estimated lifetime of between ten and fifteen years. For a price of $22,600 before installation. For 2013 a state subsidy for 50,000 units is in place.”

“MicroCHP installations use five different technologies: microturbines, internal combustion engines, Stirling engines, closed-cycle steam engines, and fuel cells. One author indicated in 2008 that MicroCHP based on Stirling engines is the most cost-effective of the so-called microgeneration technologies in abating carbon emissions. A 2013 UK report from Ecuity Consulting stated that MCHP is the most cost-effective method of using gas to generate energy at the domestic level. However, advances in reciprocation engine technology are adding efficiency to CHP plants, particularly in the biogas field. As both MiniCHP and CHP have been shown to reduce emissions they could play a large role in the field of CO2 reduction from buildings, where more than 14% of emissions can be saved using CHP in buildings. The University of Cambridge reported a cost-effective steam engine MicroCHP prototype in 2017 which has the potential to be commercially competitive in the following decades. Quite recently, in some private homes, fuel cell micro-CHP plants can now be found, which can operate on hydrogen, or other fuels as natural gas or LPG. When running on natural gas, it relies on steam reforming of natural gas to convert the natural gas to hydrogen prior to use in the fuel cell. This hence still emits CO2 (see reaction) but (temporarily) running on this can be a good solution until the point where the hydrogen is starting to be distributed through the (natural gas) piping system.”

Walnut Creek Magazine has a pretty wide-reaching view of the labor crisis but sees various emergency relief programs as a bridge solution: “Overcoming The Labor Shortage”:

“7.5 million Americans will lose their extended unemployment benefits in September. The question remains, what will this do to the labor shortage plaguing the majority of small businesses? Fortunately, we don’t have to wait to find out. Twenty-two states have ended their employment benefits early, and the numbers are in. “

“Let’s start with the bad news, in these twenty-two states, consumer spending dropped. This is bad for local businesses and couldn’t come at a worse time. A new research paper from Harvard University found that these twenty-two states experienced an average of 20% decrease in week-over-week consumer spending, compared to states that kept benefits in place.”

“Eliminated Benefits means millions of Americans will finally be available to work. Right? You wouldn’t be alone in this thought process. However, the data from this study shows only 4.4% more workers in the 22 states gained employment, compared to their colleagues in states that kept the benefits in place. For every eight workers that lost benefits in the early out states, only one went on to gain employment.”

“What does this mean for my business? Well, for starters, it means weathering the storm a little longer. Even though 7.5 million Americans will lose a significant portion of income this month, we shouldn’t expect a flood of job applicants. Potential employees re-entering the workforce are demanding more than ever before, and small businesses are often unable to keep up. It also means being prepared to weather a potential decrease in income due to a decline in consumer spending, estimated at approximately 20%.”

“What can be done? Fortunately, Congress has released and/or renewed many programs to offset the catastrophic effects Covid-19 is having on small businesses. All employers qualify for up to $33,000 per employee of emergency relief even if their business took advantage of the PPP program or other emergency relief programs.”

This of course just buys some breathing time but doesn’t address what is actually taking place. Still, breathing time is good if you are going to drown short-term.

Publisher forconstructionpros.com gets into details about how construction industry businesses are dealing with the “unprecedented labor shortage: “The Construction Labor Shortage: Overcoming Adversity with Workforce Management”:

“Industries across the nation are facing an unprecedented labor shortage — the construction industry is no exception. Skilled laborers with years of experience are retiring with a lack of qualified workers lined up behind them. This is a familiar issue in construction, but has recently intensified.”

“As one generation tries to pass the reins to the next, it’s become increasingly difficult to hang on to up-and-coming talent or identify the next set of leaders ready to take over. This not only impacts construction, but also families, businesses, doctors, teachers and more. How? The construction industry molds the communities we live in, shapes the city skylines we work in and builds the hospitals and schools we rely on. Without a healthy pipeline of construction workers, progress stops. The labor shortage creates a lasting impact that will be felt not only today, but for generations to come.”

“Our suggestion on battling the labor shortage? Retain the employees you currently have first. And one way to do that is by managing field workers properly. Let’s take a deeper dive into a few of our customers’ stories to understand how they’re implementing better workforce management practices to retain employees, and ultimately, combat the labor shortage. ‍”

This article gets into some long overdue labor management practices upgrading. It is not just pay but the whole worker-employer relationship that needs restructuring more in the worker’s favor.

LinkedIn has an article that targets worker reluctance to go back to former jobs: “Overcoming Labor Shortages and Workforce Turnover”:

“Childcare difficulties. A recent report from the U.S. Census Bureau states that the number of working mothers has declined by 1.4 million since the start of the pandemic. As schools shifted to remote education models to curb the spread of the virus, children were left to take classes from their homes—thereby disrupting the traditional education structure. As schools and daycare centers were closed, some working mothers had no other option but to quit their jobs entirely to care for their kids.”

“How to fix it: It should come as no surprise that working parents are longing for remote work flexibility. Studies from Catalyst show that women with childcare responsibilities are 32 percent less likely to leave their jobs if they have the ability to work remotely. By offering this workplace flexibility, parents can more effectively center their work obligations around their children’s schedules without having to worry about childcare.”

“Early retirement. Not only has the pandemic caused working mothers to depart from the workforce in droves, but the same is also true of retirees. Oxford Economics approximates that more than two million workers have retired since the pandemic’s outbreak—about two times the normal retiree rate. From health concerns to the desire to spend more time with family, over 25 percent of all workers said that they were prompted to accelerate their retirement plans because of the pandemic.”

“Preparing for Employee Turnover. How to fix it: While it may be difficult to sway some of your older employees to postpone their early retirement plans, try to convince them to stay on board with your organization for an additional 90 or 180 days. That way, they can train other employees and facilitate a smoother transition process upon their departure. To find high-quality talent, organizations will start to dip into younger generations of the talent pool—such as recent college graduates—to eventually replace their aging populations.”

This article gets into some helpful specifics about what employers might do to overcome labor shortages. The answer seems to be doing a lot of things to make the employment option attractive enough.

Gallup in July 2021 shed some interesting light on the “Great Resignation” in its: “The ‘Great Resignation’ Is Really the ‘Great Discontent’”:

“A new Gallup analysis finds that 48% of America’s working population is actively job searching or watching for opportunities. Businesses are facing a staggeringly high quit rate — 3.6 million Americans resigned in May alone — and a record-high number of unfilled positions. And Gallup discovered that workers in all job categories, from customer-facing service roles to highly professional positions, are actively or passively job hunting at roughly the same rate.”

Gallup poll on workers actively job-seeking

“People are calling it the “Great Resignation,” and as the Gallup data show, it’s not an industry, role or pay issue. It’s a workplace issue — because the highest quit rate is among not engaged and actively disengaged workers.”