Unpredictable supplies are the whack-amole economy in America

Glen Calder was expecting a shipment last week of gearbox reducers to help him build a specific model of one of his company’s paving machines.

He called Thursday on his phone to verify the status of his order. However, the shipping company – which is from Italy – was now three months behind schedule.

Calder was vice president of operations at Calder Brothers Corp. in Taylors. The company employs 80 people. Calder claimed that his factory had already begun cutting the steel needed for the Italian-specific parts, and now he would have to make another. These machines will not be filled because of the delays in their orders.

Through the pandemic, producers such as Calder were plagued by supply chain issues. Manufacturers faced severe shortages in everything, from steel and aluminium to plastic resins and computer chips at the height of the crisis one year ago.

Recent months have seen improvements in the conditions. For example, the number of vessels waiting at U.S. ports to load has decreased. According to the Institute for Supply Management’s latest survey, the proportion of those who said supplier delivery times were quicker than in 2009 was at its highest level since 2009. Those saying it was slower were back below the historic trends levels set by last year. Many commodities are now more easily available.

However, supply chains are far from being normal.

Calder said, “I’m playing whack a mole every week with suppliers who aren’t delivering,” to put it mildly.

This new game is not just for him. The Association of Equipment Manufacturers recently surveyed 179 businesses and found that 98% of them face ongoing supply chain issues. Surprisingly, and more alarming than the recent ISM reports about supply flowing freely, nearly 60% of respondents said that they see problems only getting worse.

The New York Fed’s Global Supply Chain Pressure Index edged up in November and October – reverseing some of last year’s loosening global supply chain bottlenecks.

China is a topic of renewed concern. During much of the pandemic China’s factories were unable to cope with an unexpected rise in demand for its manufactured products. The sudden lift of the pandemic restriction in China has now led to a surge of infection that may once more hamper factories.

Some manufacturers feel certain that the worst is behind them.

Kondex Corp president Keith Johnson said that Kondex Corp makes parts for agriculture equipment manufacturers like Deere & Co and AGCO Corp. (AGCO.N). Johnson also stated, “There’s a feeling that everyone is finally digging out” after the two-year drought.

This includes adding workers to the Lomira factory in Wisconsin. Kondex now has more employees than it had before the pandemic. It wasn’t an easy task to fill these positions.

Johnson has 18 new employees, all of whom were hired out-of-state by a labor-sourcing firm. These workers live in motels near their homes and are three times less expensive than those who were hired locally. Automation and other equipment are being purchased by the company to help alleviate the labour shortage. He said that supply chain delays had caused a lot of delay.


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