A faster-than-expected recovery in US manufacturing is leading to supply disruptions and higher costs for materials used in products that meet increased demand.
Prices for steel, aluminum, lumber and other materials are rising due to higher order volumes. The raw material supply chains are now clogged with orders, forcing some producers to add weekend hours and overtime for workers. Orders that took a week or two in the summer now take six to eight weeks, according to manufacturers facing longer wait times for essential supplies.
“The lack of availability is what kills you,” said Mark Verhein, president of Church Metal Spinning Co., a Milwaukee-based manufacturer of steel parts for large industrial engines. “If you can’t get the material, that’s annoying.”
When many factories closed for more than a month last spring to contain the spread of the corona virus, production of industrial raw materials also fell. Inventories evaporated and suppliers were reluctant to ramp up production during what was expected to be a slow recovery in production in a US economy that went into recession in February. But demand for durable goods picked up in the late summer and gained momentum during the fall, even as Covid-19 infections soared to record levels.