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Global MFG - Jan 24, 2021

Suppliers Struggle To Keep Up With Manufacturing Snap Back

PYMNTS | pymnts.com

Suppliers Struggle To Keep Up With Manufacturing Snap Back


With the U.S. economy recovering faster than usual, U.S. suppliers are struggling to keep up, a report from Fox Business says. Supply disruptions and higher material costs for items in high demand are causing a build-up of problems, the report says.

The prices for things like steel, aluminum and lumber have risen in concurrence with higher order volumes, and commodity supply chains have become inundated with mass order quantities. That has resulted in some producers adding on weekend hours and overtime.

Some orders that would've taken a week or two to get done last summer are now taking around six to eight weeks, manufacturers say, as they wait longer for essential supplies.

A lot of factories shut down production last year as the pandemic was beginning, and that sent production for industrial commodities falling. Inventories disappeared and the suppliers didn't know if they wanted to boost production when there wasn't expected to be a fast recovery for that sector, particularly as the economy had entered a recession in February.

However, over the summer, demand rose for durable goods, the report says, and consumers who couldn't spend on normal things like dining out or concerts took their money to autos, appliances, recreational vehicles, and various home improvement or construction projects. Because of that, prices for things like steel and copper, among other industrial commodities, are higher than they have been in years, Fox Business writes.

In addition, the price of paper used for corrugated cardboard is up, along with demand for boxes used for eCommerce deliveries, which have skyrocketed since the pandemic began.

In October, PYMNTS wrote that there's been a re-shoring of manufacturing to U.S. locations rather than overseas. It has been driven by the shortages in masks and other personal protective equipment (PPE), which was when many companies realized the shortcomings of manufacturing such things overseas.


#economy #supplychain

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