Big companies may soon dump suppliers that aren't Y2K ready.greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Be Bug-Free or Get Squashed Big companies may soon dump suppliers that aren't Y2K-ready. Llyod Davis is feeling squeezed. In 1978, his $2 million, 25-employee fertilizer-equipment business was buffeted by the harsh winds that swept the farm economy. This year, his Golden Plains Agriculutural Technologies Inc. in Colby, Kan., is getting slammed by Y2K. Davis needs $71,000 to make his computer systems bug-free by Jan. 1. But he has been able to rustle up only $39,000. His bank has denied him a loan because--ironically--he's not Y2K-ready. But Davis knows he must make the fixes or lose business. "Our big customers aren't going to wait much longer," he frets. Golden Plains and thousands of other samll businesses are getting a dire ultimatum from the big corporation they sell to: Get ready for Y2K, or get lost. Multinationals such as General Motors (GM), McDonald's (MCD), Nike (NKE), and Deere (DE) are making the first quarter--or the second at the latest--the deadline for partners and vendors to prove they're bug-free. A recent survey by consultants Cap Gemini America says 69% of the 2,000 largest companies will stop doing business with companies that can't pass muster. The National Federation of Independent Business figures more than 1 million companies with 100 workers or less won't make the cut and as many as half could lose big chunks of business or even fail. WEAK LINKS. Cutting thousands of companies out of the supply chain might strain supply lines and could even crimp output. But most CEOs figure it'll be cheaper in the long run to avoid bugs in the first place. Some small outfits are already losing key customers. In the past year, Prudential Insurance Co. has cut nine suppliers from its "critical" list of more than 3,000 core vendors, and it continues to look for weak links, says Irene Dec, vice-president for information systems at the company. At Citibank, says Vice-President Ravi Apte, "cuts have already been made." Suppliers around the world are feeling the pinch. Nike Inc. has warned its Hong Kong vendors that they must prove they're Y2K ready by Apr. 1. In India, Kishore Padmanabhan, vice-president of Bombay's Tata Consultancy Services, says repairs are running 6 to 12 months behind. In Japan, "small firms are having a tough time making fixes and are likely to be the main source of any Y2K problems," says Akira Ogata, general research manager for Japan Information Service Users Assn. Foreign companies operating in emerging economies such as China, Malaysia, and Russia are particularly hard-pressed to make Y2K fixes. In Indonesia, where the currency has plummeted to 27% of its 1977 value, many companies still don't consider Y2K a priority. A December, 1998 World Bank survey shows that only 54 of 139 developing countries have begun planning for Y2K. Of those, 21 are taking steps to fix problems, but 33 have yet to take action. Indeed, the Global 2000 Coordinating Group, an international group of more than 230 institutions in 46 countries, has reconsidered its December, 1998 promise to the U.N. to publish its country-by-country Y2K-readiness ratings. The problem: A peek at the preliminary list has convinced some group members that its release could cause massive capital flight from some developing countries. Big U.S. companies are not sugarcoating the problem. According to Sun Microsystems CEO Scott G. McNealy, Asia is "anywhere from 6 to 24 months behind" in fixing the Y2K problem--one he says could lead to shortages of core computers and disk drives early next year. Unresolved, says Guy Rabbat, corporate vice-president for Y2K at Solectron Corp. in San Jose, Calif., the problem could lead to price hikes and costly delivery delays. Thanks to federal legislation passed last fall allowing companies to share Y2K data to speed fixes, Sun (SUNW) and other tech companies, including Cisco Systems (CSCO), Dell Computer (DELL), Hewlett-Packard (HWP), IBM (IBM), Intel (INTC), and Motorola (MOT), are teaming up to put pressure on the suppliers they judge to be least Y2K-ready. Their new High-Technology Consortium on Year 2000 and Beyond is building a private database of suppliers of everyhting from disk drives to computer-mouse housings. He says the group will offer technical help to laggard firms--partly to show good faith if the industry is challenged later in court. But "if a vendor's not up to speed by April or May," Rabbat says, "it's serious crunch time." WARNINGS. Other industries are following suit. Through the Automotive Industry Action Group, GM and other carmakers have set Mar. 31 deadlines for vendores to become Y2K-compliant. In March, members of the Grocery Manufacturers of America will meet with their counterparts from the Food Marketing Institute to launch similar efforts. Other companies are sending a warning to laggards--and shifting business to the tech-savvy. "Y2K can be a great opportunity to clean up and modernize the supply chain," says Roland S. Boreham, Jr., chairman of the board of Baldor Eectric Co. in Fort Smith, Ark. In Washington, Senators Christopher S. Bond (R-Mo.) and Robert F. Bennett (R-Utah) have introduced separate bills to make it easier for small companies like Davis' to get loans and stay in business. And the World Bank has shelled out $72 million in loans and grants to Y2K-stressed nations, including Argentina and Sri Lanka. But it may be too little too late: AT&T (T) alone has spent $900 million fixing its systems. Davis, for one, is not ready to quit. "I've survived tornadoes, windstorms, and drought," he says. "We'll be damaged, yes, but we'll survive." Sadly, not everyone will be able to make that claim. By Marcia Stepanek in New York, with Ann Therese Palmer in Chicago, Michael Shari in Jakarta, and bureau reports.
-- Anon (firstname.lastname@example.org), February 25, 1999
I'll try the link again.
Also, I don't know why the article came out in one whole block form. I put in spacing and paragraphs.....
-- Anon (email@example.com), February 25, 1999.
BLANK LINES BLANK LINES between paragraphs. I had to learn it the hard way too.
Chuck a night driver
-- Chuck, night driver (firstname.lastname@example.org), February 25, 1999.
y2k insanity. It's starting to get nutty.
Business owner: I need to borrow 70 grand to buy new computers.
Banker: Sorry, we can't loan you the money. You're not y2k-compliant.
Business owner: But if you loan me the money, I WILL be compliant.
Banker: I can't. You have to be compliant first, then we'll loan you the money.
Business owner: But if I was conpliant, I wouldn't need the money. Who's on first?
Banker: I don't know.
Both: Third base!
-- rick blaine (email@example.com), February 25, 1999.
Business owner: Is this bank Y2K compliant?
Banker: Uhh, no, not quite, but we are working on it.
Business owner: I want to close out all the accounts that my business has.
Banker: Now, wait a minute ...
Business owner: And I want it all in cash!!!
-- Jack (firstname.lastname@example.org), February 25, 1999.
Articles like this one are why I think a panic could start inside the business and financial community, rather than with the general public.
-- Kevin (email@example.com), February 25, 1999.