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November 2011

Shoe molds and scuba divers: How natural disasters affect our supply chains

Thomas Farole's picture

A scuba diver in Mexico. Source: http://www.flickr.com/photos/akumaldiveshop/5824559898/sizes/m/in/photostream/Like the massive earthquake in Japan earlier this year, the floods in Thailand are again exposing the vulnerabilities of fragmented global supply chains.

Last month, a team of economists from PREM's International Trade Department encountered some flooding side-effects during a visit to the Indonesian production site for ECCO, a Danish company that manufactures footwear. The news from Thailand: the ECCO production site there was under three meters of water, a problem for shoe-making. In order to transfer production to the factory in Indonesia, the workers needed the specific shoe molds used in the Thai factory. These specialized molds would have taken several weeks to manufacture, which would have further delayed production. So ECCO hired scuba divers to enter the Thai factory and recover the molds. They then shipped them via air to other factories around the region, including ECCO Indonesia.