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Volcano in Iceland Could Wreak Havoc on Global Economy

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The Volcano in Iceland is showing no signs of letting up according to geologists.  Two thirds of the flights in Europe have Iceland's Volcano doesn't appear to be ending anytime soon. Photo:http://www.bendbulletin.com/apps/pbcs.dll/article?AID=/20100418/NEWS0107/4180366/-1/RSSNEWSMAPbeen cancelled due to an invisible cloud of ash that inhibits the ability of any plane.

Aside from the Eyjafjallajökull Volcano threatening the lives of Icelandic citizens, it is costing the European Aviation Industry $200 million per day. Added to that, it is disrupting travel plans for hundreds of thousands of people around the globe. 

When the Eyjafjallajökull Volcano in Iceland erupted in 1821, it continued for more than a year.  This will not bode well for Europe's economy and could wreak havoc on the global economy.

Many companies around the globe depend upon air travel to get them products as quickly as possible.  Now that flights into and out of Europe have been grounded for four days, it's already hampering efforts for companies to ship products via air.  Thus, Supply Chain Management becomes thwarted.  Typically, when a company orders a product from a European supplier, they can expect the product to arrive within a few days or a week.  However, when companies depend upon supplies to arrive across the Atlantic, this takes weeks.

Suddenly, the company that has to supply a motorcyle manufacturer with electrical assemblies cannot fufill it's obligations because they might have to wait weeks to receive supplies from a European supplier-sometimes the only supplier of a required product.  Companies work on tight deadlines and when a link in the chain is broken, it can cause chaotic problems.  I'm just talking about a situation involving two companies.  This situation will affect thousands of companies around the globe.  Suddenly we have a potential issue that could disrupt deadlines for thousands of businesses.  Could it set off a chain reaction like the 2008 Economic Collapse? Probably not, but it certainly won't help a Global Economy that has been on the rebound for the past year.  

There is no telling just yet how long the Volcano could last.  Some say weeks, but others are saying it could last a year or longer. 

Contact Dennis Bakay at dbakay@philly2philly.com

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