Craig Guttmann,

President, Algood Caster Innovations

2 Supply Chain Truths

You can’t read an industry e-newsletter or visit a business website these days without reading something about the supply chain logjam that is gripping the world. But with all that has been written, there are two lesser-known truths that don’t get mentioned. First, the current situation was entirely predictable and as early as last January business and political leaders could have been working to mitigate what was coming. Second, there is a North American bright side to this mess.

In March 2020, the world, and with it the manufacturing industry, shut down. Completely.  The only goods that were being produced were related to fighting Covid. Just-in-time manufacturing, which had dominated the industry for decades, stopped dead. Employees were laid off, plants were closed, ships were docked, rail cars and transport trucks sat in yards.

In early 2021, as vaccination campaigns were being planned and implemented, a glimmer of hope emerged. That was the inflection point. That was the time for planning and action. It was clear that restarting the economy was going to be like starting a car that had been sitting for months. It was going to cough and sputter and it was going to need programs and policies to smooth the way.

By the spring of this year, the demand for goods was building. Gearing up to meet that demand didn’t go very well. Plants had to be brought back to life. Raw materials had to be sourced and most importantly, employees had to return. That was particularly difficult with concerns about workplace safety, parents having to be home to support their kids’ online learning and government assistance programs that, for some, made not working affordable and attractive.

Demand quickly outpaced supply and that imbalance has only grown in the past few months. Now, we wait weeks or months for supplies that used to be available in days. Even after goods have been produced, it takes an inordinately long time to receive them. Shipping supplies, like skids and boxes, are scarce and transportation channels are clogged. The economy needed to go from 0 to 100 and the manufacturing engine couldn’t keep up.

The situation is even worse for companies depending on product that is manufactured offshore. China had huge challenges getting workers back into plants and now is contending with power supply issues that are shutting down operations for one or two days a week. In addition, getting materials here from the Far East has been plagued with problems. There is now a worldwide shortage of shipping containers and even when goods are finally on the water, the backlog at North American ports accounts for weeks-long delays.

All of that leads to the second truth – the silver lining. The advantages of North American manufacturing have never been greater. While offshore producers need 16 weeks to supply goods, we can manufacture and ship casters in a quarter of that time. In the time it takes for one of the millions of containers at congested ports to finally be unloaded, North American suppliers, like Algood, are satisfying their customers.

In addition, the quality and accuracy of overseas shipments can’t be taken for granted. So, imagine that you wait four months to receive the supplies you need to finish a project that is delayed and you discover they can’t be used and need to be returned. That’s not a hypothetical situation. It’s happening every day.

The global supply chain shortage may be doing more for reshoring movement than any previous initiatives. North American manufacturers have the capability, expertise, ingenuity and the drive to produce goods of guaranteed superior quality with lead times that are shorter than those of any offshore producer. If that’s not a competitive advantage, nothing is.

Hopefully recognizing these truths will lead to change. On one hand, government and business leaders may be more proactive when faced with a looming global business crisis. And, on the other hand, the trend toward North American production may now have the momentum to rejuvenate the manufacturing sectors in Canada and the U.S.

7 comments on “2 Supply Chain Truths
  1. tom lombard says:

    you left out the Longshoreman’s strike in Long Beach California, and around the USA

  2. David Cranston says:

    Great synopsis of what has happened. The only thing that needs more emphasis is the terrible things that the Democrats have done to aggravate the problem here in America. The money they are flooding the country is making it possible for workers to not work and that is just one of many disasters they are promoting that’ll destroy business. If their trillion dollar bills go thru it will truly destroy our productivity.

  3. Lee Harrison says:

    Well said, Craig. Classic case of reactive versus proactive. This is proving to be the most problematic time that I’ve personally experienced within our industry.

  4. Mark A Mullin says:

    Excellent read Craig!
    I like they way you think…. nice positive spin and yes I agree there are opportunities for North American manufacturers

  5. Mark says:

    Also don’t forget a couple other truths in this crisis…. the cost of a container from China has gone from 4,000/ container to well over $20,000 a container (over 500% increase within 1.5 years), the cost of the CYN has gone from $7.15 US dollars to $6.38 ( an increase in imports of over 10% in 1.5 years) and the 15% to 25% tariffs put in place by President Trump are still in place. Oh yeah, a supply chain of 4 weeks or less (two or less once caught up) vs. 16 weeks today (best case 8 weeks if we get back to normal import lead times) would require a lot less inventory to assure supply is available when your customer needs it…… very large working capital and customer satisfaction improvement.

    All these additional truths, along with Craig’s comments above, should make bringing your products back to North America an easy analysis.

  6. Craig Guttmann says:

    Thanks for you input!

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