A faster-than-expected recovery in U.S. manufacturing leads to supply disruptions and higher costs for materials used in products, which meet greater demand.
Prices for steel, aluminum, wood and other materials are rising due to higher order volumes. Operating supply chains are now clogged with orders, causing some producers to add weekend hours and overtime for employees. Orders filled a week or two during the summer need six to eight weeks, according to the manufacturers who require the long waiting times for essential supplies.
“The lack of availability is what kills you,” said Mark Verhein, president of Church Metal Spinning Co., a Milwaukee steel parts manufacturer, for large industrial engines. “If you can not get the material, it’s annoying.”
When many factories shut down for more than a month this past spring to limit the spread of the coronavirus, the production of industrial commodities also declined. Stocks evaporated, and suppliers were wary of increasing production during a slow recovery for manufacturing in a U.S. economy that entered a recession in February. But demand for durable goods picked up in late summer and gained momentum during the fall, even as Covid-19 infections rose to record levels.