FT Fronts a Thin Story on Manufacturing Suppliers

A dog-bites-man story posing as a trend piece fails at both

Here’s one of those thin Financial Times stories that doesn’t make much sense.

Yesterday it put this story on page one with the headline:

Smaller US suppliers broadened customer bases during recession

Competitive position boosted in tough times

That seems unlikely on its face. I doubt most or even many small US suppliers actually picked up customers during the recession, which they would need to do to get “broadened customer bases.”

Sure enough, the story has no support for this assertion other than a couple of anecdotes, nor does the accompanying piece inside the paper, which goes a little more in depth on the anecdotal reporting. It assures us:

As a result of the recession, the new norm in the US supply chain is more diversified suppliers, less dependent on a handful of big local customers.

But again, there’s no real evidence of this. And the anecdotal stuff doesn’t cut it.

And anyway: Isn’t it an obvious story that businesses are always seeking to (emphasis on “seeking to”) diversify and broaden their customer bases, even in booms? Some are successful at it and take away customers from other businesses. Those unlucky businesses then have narrowed customer bases or they fold. That’s how the economy works. See the second paragraph of the lede here:

Smaller US companies that make components for big manufacturers broadened their customer bases during the recession, strengthening their competitive position at a time of economic stress, industry executives say.

Subcontractors are moving into new sectors, as well as seeking new customers, because of fears that big manufacturers could fail or scale back orders.

That’s what businesses do all the time.

Basically this story is dog-bites-man posing as trend. It doesn’t succeed at either.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.