U.S. manufacturers struggle with unpredictable supplies By Reuters

By Timothy Aeppel

(Reuters) – Glen Calder expected a shipment of gearbox reducers needed to build a particular model of his company’s paving machines last week.

But when he called on Thursday to check the status of the order, he learned the shipment – coming from Italy – is now delayed three months.

“No explanation, no excuse, no nothing,” fumed Calder, vice president of operations for Calder Brothers Corp., an 80-employee manufacturer in Taylors, South Carolina. Calder said his factory was already cutting steel for the machines that require the Italian parts and would now have to scramble to produce something else. Orders for those machines, already delayed, will go unfilled for now.

Supply chain problems dogged producers like Calder through the pandemic. At the peak of the crisis a year ago, manufacturers faced shortages of everything from steel and aluminum to computer chips and plastic resins.

Conditions have improved in recent months. The backup of ships waiting to unload at U.S. ports, for instance, has dwindled. The latest monthly survey by the Institute for Supply Management showed the percentage of respondents saying supplier delivery times were faster than the month before was the highest since 2009 and those saying they were slower had fallen back below historic trend levels from last year’s record highs. And many commodities have become more readily available.

But supply chains remain far from normal.

“To put it affectionately, I’m playing whack-a-mole every week with suppliers that aren’t delivering,” said Calder.

He’s not alone in this new game. A recent survey of 179 companies by the Association of Equipment Manufacturers found 98% said they faced continued supply chain problems. More ominously – and surprising, given recent reports like the ISM data about supplies flowing more freely – nearly 60% said they saw problems continuing to worsen.

Another gauge, the New York Fed’s Global Supply Chain Pressure Index, edged higher in October and November – reversing some of the loosening of global supply bottlenecks seen through most of the past year.

And now there’s renewed concern about China. Through much of the pandemic, China’s factories struggled to keep up with the unexpected surge in global demand for manufactured goods. That country’s sudden lifting of pandemic restrictions has now sparked a wave of infections that could once again hamper factories.

To be sure, some manufacturers are confident the worst is over.

Keith Johnson, president of Kondex Corp, which makes metal parts for agricultural equipment makers like Deere (NYSE:) & Co and AGCO Corp, said “there’s a sense that everybody is finally digging out” from the shortages of the past two years.

That includes finally adding the workers needed to hit production targets at the Lomira, Wisconsin factory. Kondex has pushed its workforce up to 280 people, more than the company employed before the pandemic. But it wasn’t easy to fill these jobs.

Johnson’s new workers include 18 people hired from out-of-state through a labor-sourcing company. They live in local motels and cost Kondex about three times more than their comparable locally hired counterparts. The company is investing in automation and other equipment that should help with the labor crunch.

“But a lot of that has been delayed,” he said, by supply chain delays.