Even as they are rebounding from a year of financial challenges, suppliers continue to be dogged this summer by daily operating difficulties.
“For the most part, we’re seeing that the majority of small and medium suppliers are healthy now,” said Laurie Harbour, CEO of supplier consulting firm Harbour Results Inc., which surveys parts and tool producers to gauge their condition. “And that’s because companies in the U.S. and Canada got federal funding that helped them restore profitability, and allowed them to pay down debt and clean up their balance sheets.”
But she reports more than a quarter of suppliers appear to be struggling — not just because of the microchip shortage or the economic disruptions of the pandemic, but because of ongoing challenges in daily business.
“They will continue to be challenged over the next 12 to 18 months because of a variety of supply chain operating problems,” Harbour told Automotive News.
Among the operating headaches:
- Manufacturers are facing delays getting factory tools back and forth across the Canadian border, where much of the tool industry is located.
- Raw materials, such as resins and steel, are seeing substantial price increases and, in some cases, supply shortages.
- Work forces are still missing people, partly because COVID-19-era government unemployment benefits are competitive with low-end factory wages.
“A Tier 1 customer is at your door saying, ‘I need these parts,’ ” Harbour explained. “But you can’t make them because five of your people didn’t show up today to run the press.”
To be sure, at the root of all current supply chain challenges is the lingering — and resurging — pandemic. Communities and factories around the globe are still trying to figure out how to return to normal.
