X-Message-Number: 10143
Date: Thu, 30 Jul 1998 12:38:29 -0400
From: <> (Jeffrey Soreff)
Subject: Re: What is the real Y2K threat?

Scott Badger wrote:
>I have read quotes from allegedly respectable economists, however, that
>predict a global recession as a result of the Y2K problem.  The greatest
>concern seems to be with countries other than the United States who have
>purchased the technology but not the technological expertise to handle the
>bug.

I don't normally write much about economic effects of Y2K, because I think
that the embedded systems' effects on utilities is more hazardous, but I
want to make a brief note about this scenario.

Even in the U.S., surveys of small and medium sized companies have found
that roughly half of them have thus far done nothing about y2k problems.
Consider that these firms supply critical components to each other and
to the rest of the economy.  Also consider that a typical manufacturing
operation will have a dozen or more critical outside suppliers.  Even
if half of the firms which are currently doing nothing wake up and fix
their problems, and half of the remainder have the pure dumb luck to
have systems that only suffer minor damage from y2k bugs, this still
leaves 12% dead in the water after 1/1/2000.  This then leaves a typical
manufacturing operation with at least a couple of types of critical
parts unavailable.  Now a lot of businesses have been moving to JIT
operations, with perhaps a few days' inventory of incoming parts.  I've
also read that debugging y2k problems in a live environment can easily
be a multimonth task.  I therefore expect that most manufacturing in
the U.S. (and presumably in Canada, UK, Australia, and comparable
countries), manufacturing will be mostly shut down from perhaps
mid-January till 95%+ of the small and medium sized companies solve
or work around their y2k bugs, several months later.  This assumes
that utilities are OK, large companies are OK internally, banks are
OK, tranportation is OK, and that no side effects of y2k make it
unexpectedly hard to fix bugs.
                                         Best wishes,
                                         Jeffrey Soreff
standard disclaimer: I do not speak for my employer.

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