A faster-than-expected recovery in U.S. manufacturing causes supply disruptions and higher costs for materials used in products that meet increased demand.
Prices for steel, aluminum, wood and other materials are rising in response to higher order volumes. Raw material supply chains are clogged with orders, causing some producers to add weekend hours and overtime for employees. Orders that took a week or two to cover during the summer now require six to eight weeks, depending on manufacturers facing extended waiting times for essential supplies.
“Lack of availability is what kills you,” said Mark Verhein, president of Church Metal Spinning Co., a Milwaukee industrial engine steel parts manufacturer. “If you can’t get the material, it’s annoying.”
When many factories closed for more than a month last spring to contain the spread of coronavirus, industrial commodity production also fell. Inventories evaporated and suppliers were wary of rising production during what was expected to be a slow recovery in manufacturing in a U.S. economy that had entered a recession in February. But demand for durable goods increased in late summer and picked up momentum during the fall, even as Covid-19 infections soared to record levels.