“The System Is Broken”: Boots-on-the-Ground View by a US Manufacturer on the Supply Chain Chaos

“We are simply limited to what our suppliers tell us we can have. It really isn’t supposed to work this way!”

By Wolf Richter for WOLF STREET.

For what seems like a long time now, Wolf Street has been discussing the apparently never-ending shortages that US manufacturers, construction companies, retailers, and other businesses have been struggling with. So here are the boots-on-the-ground observations by an Ohio-based manufacturer, with operations in other states, about the global supply-chain chaos. Todd Miller is the president of Isaiah Industries, which manufactures metal roofing shingles for residences and commercial buildings and sells them under several brands, such as Classic Metal Roofing Systems, in North America, Japan, and the Caribbean. He shared his observations with Wolf Street:

By Todd Miller, president of Isaiah Industries:

Over the years, we have seen some situations where metal supply was tight and caused some disruption for us and our customers. However, we’ve never seen anything like we’re experiencing now as it goes beyond just metal supply to also include the specialty coatings we use.

Supply shortages started in 2020 with Covid-related closures at the leading metal mills where we buy steel, aluminum, and copper. Once the consumer demand for virtually everything under the sun started to accelerate wildly in the latter part of 2020, mills were caught with shortages, and significant delays and backlogs developed – a situation that has yet to be rectified.

Generally, consumers are understanding of the price increases. But now delays and shortages threaten our ability to meet consumer needs. We currently are running about a 60-day backlog on orders, the bulk of which we are waiting for raw materials to arrive. Historically, our backlog was a couple of weeks at the most.

Isaiah Industries has been put on allocation from the metal mills. The days of being able to place orders and know that we will receive the metal we need when we need it are long gone. Manufactures now tell us how much they can sell us. And even at that, they are often delayed on shipments.

Along with that, prices accelerated. Those shortages and increasing prices continue today.

While historically allocation scenarios have allowed us to seek out additional vendors or, on rare occasion, offshore metal, the situation now is that no one has extra metal to spare. Occasionally we might find something at a very high premium price, but usually we are simply limited to what our suppliers tell us we can have. It really isn’t supposed to work this way! The system is broken.

The metal shortage is now compounded by an extreme shortage of polyvinylidene fluoride (PVDF), a resin compound that is the “secret sauce” to the highly durable coatings that we and our competitors use. PVDF is known for its fade and chalk-resistant properties that hallmark the long life expectancy of quality metal roof systems.

The PVDF and coatings shortages are only partly Covid-related; they’re largely related to a reduction in Chinese production of these compounds to meet environmental requirements. And Electric Vehicle batteries also use PVDF.

The end result has not only been shortages and allocations on these coatings but price increases. We’re told that the EV folks use PVDF in pretty small quantities, and apparently the sky is the limit in terms of what they will pay for it.

While PVDF allocation levels have been based on prior years’ use, those numbers were lower in recent years due to metal shortages.

The end result is we’re doing our best, and I believe our suppliers are doing their best, but the system has been stretched beyond its limits. If consumer demand for our products remains high, and we expect that it will, I don’t see how we will be able to provide what customers want this year.

At the same time, rapidly spiraling raw material costs are pinching margins. We can’t put through price increases as quickly as we’re seeing them. And that’s not just metals and coatings but also packaging, transportation, and, well, pretty much everything.

Metal, now at about a 15% share of the residential roofing market, will have its continued growth threatened in coming years. Most of these products, by the way, are domestically produced.

An interesting side note to all of this is that 2009, in the midst of the Great recession, was one of our best years ever as a company. The same could really be true this year but we will be held back by the supply-chain issues.

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  188 comments for ““The System Is Broken”: Boots-on-the-Ground View by a US Manufacturer on the Supply Chain Chaos

  1. The Bob who cried Wolf says:

    This PVDF thing could help explain what’s happening with doors and windows. My supplier told me that Anderson’s E series doors (a metal clad product) is stating a 38 week lead time. To put that in perspective, that’s a full term pregnancy. The first thing I tell prospective customers now is to get their doors abs windows ordered well before the start of a job. I’m seeing all sorts of shortages of virtually everything in supply houses. Combine that with astronomically high prices and it’s a consumer nightmare.
    I gotta hbd it to you, you’re certainly up early posting these articles.

    • IStever says:

      Powell fiddles as Main Street burns.

      • historicus says:

        ISterve
        He’s keeping a close eye on it.

        • DR DOOM says:

          Powell has that calibrated and jaded eye locked in on everything. He is looking the Beast in the eye in a cold steely stare. One wrong move by the Beast,any move, a flinch, a twitch and Powell will call a press conference and will open his massive jaws and gum the beast in a furious toothless attack untill the Beast yields. This man Powell is not a man to be trifled with my friends. Congress can give a great sigh of relief , and take a deep breath, and concentrate on grave threats such as equity, horn man and Vlad the Bad.

      • andy says:

        They don’t need Main Street anymore. They print money for themselves by themselves, thank you very much.

        • reader says:

          More than the public knows!
          See the following for yet another example of George Carlin’s Big Club and we ain’t in it.

      • DB Cooper says:

        Broken hands on broken ploughs,
        Broken treaties, broken vows,
        Broken pipes, broken tools,
        People bending broken rules
        Hound dog howling, bull frog croaking,
        Everything is broken

        Bob Dylan

      • Depth Charge says:

        Powell needs to be put on a stretching rack.

      • DCWarrior says:

        Question though. Powell may be making errors elsewhere, but what does monetary policy have to do with supply chain disruptions caused by COVID? When a factory or transport service or warehouse has to close due to illness, that production stops, leading to a shortage in supply. That can’t be fixed with more or less money, so why is Powell pertinent to this particular article?

        • Wolf Richter says:

          DCWarrior,

          “…what does monetary policy have to do with supply chain disruptions caused by COVID?”

          For how long will folks keep dragging out this red herring?

          $4.5 trillion in money printing and interest rate repression caused a huge surge in demand that supply chains could not meet. That was the first trigger of monetary policy.

          The second trigger now is that all this money is circulating and chasing after goods and services … so now prices of services are spiking, such as rents, that have nothing to do with supply chains.

        • Trailer Trash says:

          DCWarrior, I agree that analysts are understating the effect that Covid and especially Long Covid is having on the labor force. There are millions of workers with Long Covid, many of them will never recover enough to resume full time employment.

          There is no unemployment category labeled, “Want to Work But Too Sick”. Long Covid people are being kicked to the curb, dismissed by doctors, and denied both social and financial support. Their lives have been destroyed but it is just tough luck to be born into a society organized around “Greed Is Good” and “Sink Or Swim”.

          Yesterday I received a home delivery of fuel oil. The driver said he was hired to be part-time (he has an excavation business in the summer) but is now working full-time plus overtime due to other drivers being out sick.

          Drivers with a clean record can name their price. They are not sitting at home drinking beer and watching The Price Is Right.

          The party line claims that millions of sick workers are all lazy slackers living off generous welfare benefits which are handed out like candy at Halloween. Nothing could be further from the truth.

        • DCWarrior says:

          Wolf, with respect, by definition, inflation is where demand exceeds supply. What the fed’s money supply does is increase the amount of money available for investment, which in the 80s, the Reaganites ‘splained was “supply side” tactics. You can see that in the spike in asset prices, like stocks and homes.

          But even though there is a ton of money to invest, that money is pushing a string when it comes to manufacturing, transportation, distribution and retail, given retirements, illness and exits for less crappy jobs. investing money can’t push supplies through the system if there aren’t workers to do it.

          The demand on the consumer side comes from Congress’ stimulus and deficit spending, plus the fact that the remaining workers are finding better jobs.

          So my main argument is the technical argument that what the fed does is monetary policy, but what Congress does is fiscal. It’s still printing money, but it is not Powell doing it.

        • Wolf Richter says:

          DCWarrior,

          Much to agree with, but…

          “by definition, inflation is where demand exceeds supply.”

          Ha, no. Inflation happens just fine in gluts. Gluts are the normal condition in a modern economy. There is unlimited supply of services, such as Amazon’s Prime, or insurance, broadband services, or many of the other services we’re paying for, and prices still go up – and that’s inflation.

          The actual causes of inflation are not fully understood, that’s one of the ironies of economics. But we know it’s a complex phenomenon, composed of many factors, and that monetary factors contribute to it, and demand factors can contribute to it, and that at least part of inflation has to do with mass psychology – what I call the “inflationary mindset,” where consumers and businesses are willing to pay higher prices. If they refuse to pay higher prices, inflation ends. But now they’re jostling for position to pay higher prices. That makes inflation possible because companies will then raise their prices knowing that they can get away with it.

    • Minutes says:

      Windows now a luxury we can’t afford.

      • dishonest says:

        The pioneers supposedly made windows for their log cabins by coating paper with bear fat. I suppose bear fat is now all but unobtainable.

        I wonder what Powell uses?

  2. Jay says:

    The only way broken supply chains get fixed is with a good old fashioned recession. Good luck, JPowell!

    • Martin says:

      Totally agree

    • China is pulling back. Nobody wants to report this. Goldman is over there buying distressed Chinese RE bonds, when these companies miss payments they short the dollar bond holders first. Goldman says the trade will jump when the government opens the credit spigot. The fashionable trade is long China short the dollar, and stocks. When US corporations turn multinational we give them a corporate tax break in order to repatriate their cash. The Fed gives them zero interest rates and QE, or maybe this is the mollified banking industries taper tantrum. The globalization of labor and then profits, (and finally tax liabilities) has destroyed the illusion of sovereign wealth.

  3. historicus says:

    The United States has been IMPORTING DEFLATION for decades….as we lost our manufacturing base.
    No longer do we hear “Trade Deficits don’t matter”.
    Because they do.
    At the very least, they point to dependency and a lack of self sufficiency.
    Certainly the dollars must return, as the argument goes, but missing from the discussion is that with the return, change in ownership, change in power also occurs.
    And now we hamstring our industry with regulations designed to “save the planet” ( a noble endeavor) while China and India disregard climate concerns and are full speed ahead.
    (Trump was right, the Paris Climate Accord was worthless.)
    The bottlenecks will not go away. They are driven by Inflationary Demand Awareness forces. “Get me all you can at that price”, for to not have inventory in an inflation is to be out of business.
    Did Powell learn that in economics class? Did he ever take one?

    • gametv says:

      Powell is a lawyer, not an economist.

      Can you imagine the hutzpah of Wall Street, to foist this pathetic liar (lawyer) on us?

      • Cas127 says:

        DC has been destabilizing the US economy for at least 20 yrs via ZIRP (interest rate suppression/money printing).

        Why? Because otherwise their policy failures (spending levels, spending priorities, non-existent oversight) would have been exposed long, long ago – forcing political consequences (starting in 2002).

        So instead, DC “bought” its way out of it using its power of global forgery (Fed immunizes endless DC deficits by buying Treasury paper at low, low rates no sane independent actor would accept…using “money” the Fed simply wishes into existence…diluting/devaluing the accumulated savings of every dollar holder on the globe).

        But such “fixes” simply distort and ultimately destroy the vanishing productive capacity of the real economy.

        China’s massive takeover of global productive capacity (and the US’ incredible withering) would have long, long ago had massive financial impacts had the Fed not intervened to obscure them…all in the service of a sociopathic DC political class.

        • kam says:

          Cas 127
          Well observed, well stated.
          Politics always controls economics. Only with Political change will economics change.
          For the USA, which has changed from a Country whose Production capacity financed all kinds of wonderful economic spin-offs, now become a rump of itself, financing bubbles with debts payable only with depreciating dollars, the future is bleak.
          Alaric has been at the Gate for at least a decade – open southern border while a small group on business benefit, family killing job losses, drugs running rampant, and an upper-class totally walled off, physically and emotionally. Money created, debt incurred to benefit the profligate few, all passed on as obligations of the future.
          Slowly at first, then suddenly.

      • Harvey Mushman says:

        “Powell is a lawyer, not an economist.”

        Paul Volcker studied Economics. We’ll see how Powell handles things when the sh*t hits the fan.

        • Jake W says:

          if he’s like most lawyers, he’ll first lie, and when that no longer works, he’ll try to blame someone else.

        • Crunchy says:

          Jake W – in other words, modern-day leadership.

        • WES says:

          He will just tell a bigger lie!

        • Anthony A. says:

          Jake, they still have Trump to blame all this on. He’s good for another 7 years of blame.

        • Swamp Creature says:

          Anthony

          “they still have Trump to blame all this on. He’s good for another 7 years of blame.”

          Since Trump appointed Powell they can continue to blame Trump for the economic calamity that both of them inflicted on us. Not a bad strategy.

        • Jake W says:

          when biden has just reappointed him, it’s not a particularly good one either.

        • JeffD says:

          And Bowman has an advertising and jouralism background!

          Michelle Bowman received a BS in advertising and journalism from the University of Kansas and a JD from the Washburn University School of Law.

        • Boomer says:

          Since much of what economists “know” seems to be incorrect, is having an economist at the helm a good idea, or rather risky?

      • historicus says:

        game tv
        Take a look at the candidates for Fed positions….
        no one appears to have a notion of monetary policy but are well schooled in inclusive employment and climate change.
        God save us.

      • Winston says:

        “Powell is a lawyer, not an economist.”

        It doesn’t really matter because he’s actually only the titular head anyway and the economic theory and resulting models the FOMC and all of the other central planners use are simplistic garbage anyway fed with garbage data manipulated for political reasons.

      • Asul says:

        I listened to Lagarde today … Well, Powell is a genius, if I compare them.

    • MarkinSF says:

      “And now we hamstring our industry with regulations designed to “save the planet” ( a noble endeavor) while China and India disregard climate concerns and are full speed ahead.”

      Apparently the author of these observations believes China is instituting environmental safeguards into production.
      Besides that any fool could make the observation you’re crediting Trump with.

      “The PVDF and coatings shortages are only partly Covid-related; they’re largely related to a reduction in Chinese production of these compounds to meet environmental requirements.”

      • historicus says:

        Markin
        “Apparently the author of these observations believes China is instituting environmental safeguards into production.”
        How can you read what I wrote and come to that conclusion?
        China is building coal plants as we speak as they promised otherwise…
        China cares little of environmental impact…..China IS NOT instituting safeguards….unless for show.
        China is the guy smoking in the no smoking restaurant…..

        • Brian says:

          I read some interesting information the other day about how if you account for California forest fires, we’re also blowing way through our carbon emissions goals by not managing the forests properly. Every forest fire is a mass carbon releasing event.

          Clearly China is a mass polluter in many ways, but California isn’t innocent either, it’s just our impact doesn’t actually grow our economy.

        • Winston says:

          Yes and China has also touted that their Winter Olympics will be run with renewable energy!

          You know, the Olympics Western nations are attending as hearty thanks for their nasty bug which has cost the world over 5 million lives and $tens of trillions in economic damage, allowed to spread worldwide by their blatant violation of WHO pandemic policies EXACTLY like the last time the forefather of this bug showed up back in 2002, showing how completely China Inc. OWNED all Western governments are.

          “The earliest case developed symptoms on 16 November 2002… Chinese government officials did not inform the World Health Organization of the outbreak until February 2003. This lack of openness caused delays in efforts to control the epidemic…”

          Hey -SUCKERS-, on that renewable energy thing, please increase your expense of doing business while we more than overcome any environmental gains you’ve paid for:

          Beijing Winter Olympics: China Pledges ‘Green Games’ Using Only Wind, Hydro and Solar Energy

          China has pledged to power the Beijing Winter Olympics using only wind, hydro and solar energy amidst dependence on coal to power almost two-thirds of its economy.

          China Dominates 2020 Coal Plant Development

          In 2020, China built over three times as much new coal power capacity as all other countries in the world combined – the equivalent of more than one large coal plant per week. In addition, over 73 gigawatts (GW) of new coal power projects were initiated in China, five times as much as in all other countries, while construction permits for new coal projects also accelerated.

        • Winston says:

          Oh, yeah, and about those solar cells you’ll need. We’ll make those for you. And those rare earth magnets absolutely essential to your electric cars and wind turbines? We’ll make those, too, or at least supply all of the refined rare earth metals you need to make them.

          Oh, and on both the solar cell and rare earth topics, we’ll drive into the dust any private effort to produce those natively as we have already done in the past. Do we have a sufficient grasp of your testicles now?

        • NBay says:

          I heard all we have to do is rake our leaves, like “other” places do. So simple.

    • cb says:

      How do you import deflation?

  4. Ace says:

    Hmm. What to glean from this.. Persistent and expected price increases driven by an onslaught of demand through the vehicle of cheap, irresponsible monies. How long will it last? Will the money behind all this demand prove to be productive? Labor isn’t available to assist business with that demand-it’s just changing teams. demand without the resources to supply means… double digit inflation by the end of the year?

    • historicus says:

      Transitory. The middle class is transitory.

    • Augustus Frost says:

      Will it prove to be productive?

      Of course not. Artificial demand substantially if not mostly induced by borrowing at artificially low interest rates is a recipe for waste on a colossal scale.

      • WES says:

        And nobody is willing to invest to increase their production capacity either. Even if they are foolish enough to try and increase their production capacity, they won’t be able to due to shortages of materials and labor, and rising prices!

    • DawnsEarlyLight says:

      Last person standing, turn off the lights.

    • Flea says:

      Double digit inflation is here currently about 15% pay attention

  5. andy says:

    Tha’s just tiny part of the economy. Google added $300 Billion in market cap in the last 5 days. No supply shortages on the web searches.

    • historicus says:

      How many more ads can they force on the viewer?

      • Seneca’s Cliff says:

        The question is,” how long will companies pay for adds when they have no product to sell?

        • andy says:

          They pay $100 Billion a year to Facebook alone. Facebook has the fact-checkers to find the right truth for you.

        • Mike G says:

          Who needs advertising when you can jack up prices and still can’t produce enough to meet existing demand?

        • NBay says:

          More like when nobody has the money to buy what’s being advertised.

    • Augustus Frost says:

      The ad market size is also a function of the fake economy. Advertisers waste even more resources on something they cannot measure ROI (most if any of the time) because of loose monetary policy and an asset mania combined with fake demand from consumers due to federal deficit spending giving them “free” money and distorting the labor market.

      Remove the fakery from the economy by “normalizing” the federal budget and monetary policy and watch it contract, noticeably.

      • Nat says:

        Ads are a funny thing these days because for sufficiently large corps with excellent brand recognition and stable customer bases, they are less about actual advertising and more about power. If a given corp’s ads represent say 5% or more of the ad revinue for a company mostly based on ads for revinue, then the large corp holds huge sway with the ad revinue based corp.

        For such arangements, the big corp doesn’t care if no one sees $200 mil worth of their ads so long as they have $200 mil worth of usable sway and athority over the associayed media or other platforms the “ad” money is spent on.

        • Augustus Frost says:

          Nat,

          I used to work for a large credit card issuer. You can probably guess the company. It was 10 years ago but I doubt much has changed since. They spend a lot of advertising and so do others to maintain brand recognition.

          It’s a necessary investment even if the ROI can’t be measured but almost certainly today, the ad market is still vastly inflated by what I wrote in my last post. The level of ad spending seems totally unsupportable based upon a non-distorted economy.

          With on-line ad spending, much of it is a reallocation of market share from “legacy” media to new media but it’s more profitable for a variety of reasons.

        • Jake W says:

          augustus frost, that’s what i’ve been saying for years. the tech advertising oligopoly doesn’t produce anything on its own. it depends on a functioning economy around it. and that economy is rapidly deteriorating.

        • Tony22 says:

          Advertising revenues from pharmaceutical firms $9.53 billion in 2020. Even more now.

          “US Healthcare and Pharma Digital Aid Spending 2020,” Emarketer

          $9.53 billion, gee, think that could influence editorial opinions about “various subjects?”

        • Nat says:

          Tony22

          Exactly. Its spent and budgeted as “advertising” but at a certain level its actualy influence and possibly even control.

          Augustus Frost

          If a big corp can get some brand recognition or maintanence thereof out of it that is a bonus in multiple ways including giving cover to its real intentions. They aren’t overspending on ads due to legacey lockin, they know what they are doing in this new era.

    • Wolf Richter says:

      andy,

      Big G gets to screw the publishers — including this little-bitty one here — with its near-monopoly in advertising infrastructure and platforms, and has been getting away with it in part because it’s so big. It’s now tangled up in lawsuits by the biggest publishers, including News Corp, and in investigations and lawsuits by various government agencies about these issues, but all this will take years to shake out, and meanwhile Big G continues to abuse its monopoly power to screw publishers and fatten its profits. It should be broken up and its decision makers should be sent to the hoosegow.

      The stock market adores evil. The eviler the better.

      • andy says:

        Eviler. Lol. Good one, Wolf. Upvote.

      • sam says:

        “Correctamondo”. Thank You Senor Wolf for the clarity that is ignored by lame stream media.
        Happy Chinese New Year.
        Interesting times soon to flower……

    • Frank says:

      Google and Facebook’s gains are at the expense of traditional and all other advertisers. There is no competitive alternative for those needing to market to a wide audience. They have a dual-oply that needs to be broken up.

      • David Hall says:

        I need Google as I think they have the best search engine of all, except sometimes I used Bing or DuckDuckGo. Google is constantly hiring new talent to make better AI algorithms. The Chinese are stealing tech left and right. If you break US tech, Americans will lose jobs and valuable services.

        Facebook users posted so many news links, news media organizations put up pay walls to protect their content.

        • Adbarrack says:

          Haven’t seen an ad since AOL. Just google (ha!) adblock.

        • Flea says:

          Why is apple so safe

        • AK says:

          There aren’t that many people working for Google in US, and many of them is imported from abroad via H1Bs. So breakup of Google won’t cause any significant job losses in US.

          As for Chinese stealing US technology, this isn’t true in the specific case of Google – it gave them Android for free, no need to bother with stealing it.

          And what are those valuable Google services that we will lose ? Adds won’t be shown in our browsers ? Search engine ? Not really – duckduckgo is very good now, I use it for work and private needs, didn’t do any single Google search in 2021. And I do searches dozens of times a day at work (software developer).

          Youtube can easily exists as separate business (as it was before Google bought it). Gmail and Maps can also be separate companies, using the same ads selling business models as they do now, except they will have to compete for advertisers money (so lower ad rates => low costs for end consumer)

        • Neil Williams says:

          Trying using ECOSIA for search engine and phone browser.
          THEY donate their proifts to building trees around the world.They
          have 15 million users and are based in Germany. I would much rather use then than G.

  6. Peter Weyant says:

    So the question remains how do we return or start production of the downstream components needed for the finished goods in the US? I am a conservative, but we need as a country to frame an industrial policy in support of this goal across all goods. Maybe similar to a policy in place in support of the war effort in WWII? That left us with massive production capabilities going into the 1950s. We cannot continue to support the export of our production and intellectual property on an ongoing basis. We cannot be solely a consumer economy.

    • Anthony A. says:

      “So the question remains how do we return or start production of the downstream components needed for the finished goods in the US?”

      It would take decades to bring our manufacturing base back to where it was 40 years ago. I came out of manufacturing (non-ferrous metals basic fab -rod, sheet, strip, etc) back in Connecticut and left in 1981 as the plants were shutting their operations behind me. Go back there now and the biggest employer in a city of 105,000 is the City! Second biggest is the hospital. I kid you not.

      All of our steel mills are gone (two left if memory serves me right). Basic materials manufacturing, whether it’s steel, plastics, rubber, brass and copper, etc is all overseas. And they have the latest manufacturing machinery and technology. Good luck going against that!

      • Crunchy says:

        One way to get it done is to go bankrupt first. Get rid of that old rotted-out dollar that got us into this mess. It’d be a long, tough slog alright, but we’d be FORCED to do it on our own with honest effort and sincere investments.

        The problem we face is that our problems are shared globally by so many other countries. There’s bound to be some that will face the issue through investments in violence and war over resources they can’t get because their creditworthiness is gone. This global retrenchment is at high risk of international instability.

        • sunny129 says:

          Crunchy

          ‘Get rid of that old rotted-out dollar that got us into this mess’

          And replace it with what? Ruble, Yen, Yuan , Sterling? Euro??
          The least dirty shirt still reigns in the global commerce!

        • Crunchy says:

          I guess this needs to be spelled out.
          When a currency becomes worthless, its problems are addressed when it it replaced by something that has accepted and enduring value…something people will work for, trade for, and hang onto if there are no immediate needs.

    • Dan Romig says:

      Downstream components. I just rode a few miles on some of them. Wolf Tooth Components, that is. Made in Burnsville, Minnesota in an engineering and manufacturing plant run by mechanical engineers who ride bicycles.

      The frame is carbon-fibre and designed in Burnsville, laid up and initially formed in Taiwan, then brought back to be finished in-house. A combination of Shimano and Wolf Tooth parts finish everything but the wheels and tires.

      My road bikes have wheels made in Roseville, Minnesota. One set are carbon-fibre & made in-house. Biased? Perhaps, but I think they are the best made anywhere on Earth.

      There are quality products that are made in the USA.

      I tip my hat to Mr. Miller & commenters such as “Seneca’s Cliff, The Bob who cried Wolf and Random guy 62” who run manufacturing enterprises.

      It kind of hurts to read about Mr. Miller’s situation. All the best to you Todd, and to the above mentioned commenters as well.

    • Augustus Frost says:

      I agree with your conclusion, in the last sentence. Regardless that it increases GDP, many (and maybe most) services don’t represent real production but unaffordable luxuries paid for by increased borrowing.

      It’s going to be most evident first, when the asset mania ends, the economy experiences a large contraction and/or extended stagnation, and the rinse-and-repeat formula of government fiscal-monetary policy fails to prevent noticeably falling living standards.

      Second, when US foreign policy leads to a future “hot war” against a real adversary.

      It’s not possible to conduct a large-scale conventional war when the country’s manufacturing has been gutted. Many seem to believe large scale wars are in the past but they are wrong.

      As for an industrial policy, I don’t believe it will work. It presumes the politicians who joined the corporatists in selling out the country actually want to do something about it when it’s evident most of them don’t. It’s the result of long term extended social decay, again.

      It’s also not going to happen without decreasing living standards first. Someone has to pay for the higher wages, lower profits or both. If it’s mostly at the expense of lower profits, I see zero chance that this unprecedented historically overpriced market wouldn’t crater. I expect it to for different reasons anyway but this would potentially expedite it.

      • Martok says:

        Augustus Frost,

        This is so much what I argued starting in college in ’74 when the Economics Prof said we would become a service economy and all manufacturing would go overseas, and I went totally ballistic.

        I told him this country has to be self-reliant so if we have to fight a war that we would have the domestic might like we had in WWII and weren’t dependent on anybody or resources.

        Fast forward to the 90’s and offshoring of factories and even computer programming/engineering jobs became a reality.

        Then the admission of China into the WTO and the elites and politicians selling out US jobs to .05 cents a hour slave workers and building new factories and leaving US factories to rust away, and it was called the “Global Economy”.

        I was furious and predicted China would be a military adversary and we would become dependent on them, and people laughed at me when I talked of National Security and Economic Security being sold away, and that in a crisis we wouldn’t be able to respond, they called me a protectionist, and I called them “nuts”.

        Fast forward to today and that’s what we have, China threatening Taiwan, Japan, and southeast Asia, they have the military might, a powerful new country of the highest tech, and they could say thanks for all the new factories, tech, resource mines developed by the US but they are now ours “nationalized” – go home and don’t let the door hit you in the ass, you big dumb greedy, stupid Yankee, – go home and buy our products, and be even more dependent – we will take over from here.

        I could go on more but will leave it at that, – it makes me too furious.

        • NBay says:

          The “Corporation” is the most evil bit of law EVER written, and is always getting modified to be even worse.

    • AK says:

      step 1 – raise interest rates to induce recession
      step 2 – pass legislation to install high and permanent tariffs on everything
      manufactured outside of the developed world
      step 3 – drop interest rates down in controlled manner to increase demand

  7. Brant Lee says:

    Supply problems seem to be hitting the hardest now. My local Aldi’s grocery seemed to keep most items stocked until a few months ago. An employee said that they just wait and see what comes in on the truck now. The store looks to be about half stocked and prices now are pushing higher faster.

    Next stop, Dollar Tree. It’s $1.25 Tree now, Everything is up .25. I don’t know they held the price down this long. And of course, the stock is low on the shelves.

    It’s 2-2-22, things are still going downhill and we have ice storms moving this way. Hoping we don’t get another Texas freeze, that would top it all off.

    • Anthony A. says:

      Brant, I buy Walmart “Great Value” yogurt as I like it and the price is way lower than name brands. For over a month now, the three big super Walmart’s near me have been out of it. Also, when I did find some three weeks ago, the price has been raised from $1.24 to $1.72.

      I asked a store manager where is the yogurt? He said he has no idea since whatever is in the delivery truck is what he gets no matter what he orders.

      • Harvey Mushman says:

        Yeah, of all things, my local supermarket has been out of “Quaker Oats Original Plain” oatmeal. They have plenty of the flavored oatmeal but none of the plain. A minor inconvenience I know, but just goes to show how far reaching this supply chain issue is.

        I need to replace the windows on my house… but looks like I may need to put that off for a while.

        • Dan Romig says:

          Harvey,

          I believe that the oat crop from 2021 was a record low in the U.S. as a result of the very dry conditions.

          The USDA prediction was just under 40 million bushels harvested, and a lot of acreage with no combine needed — unharvested.

        • NBay says:

          We still have plenty of it in the 42oz size, if you mean “Quaker Oats Old Fashioned”.

      • RedRaider says:

        For about a year I’ve been making yogurt in my instant pot. 3 quarts of whole milk one of those small cans a sweetened condensed milk and 24 hours later I have the most delicious yogurt I’ve ever tasted.

        If you’re a yogurt lover I highly recommend you give it a try. Make sure you get the instant pot that has a yogurt function on it.

        • RedRaider says:

          PS

          To the above listed ingredients you will, of course, throw in one single serve portion of yogurt. I use Chobani because it has 5/6 active cultures in it. I used to add another brand name yogurt because it has 2 different cultures in it. But that isn’t being stocked right now. Imagine that! 7/8 active cultures.

        • Motorcycle guy says:

          RedRaider,
          Once you make your yogurt, can’t you use your yogurt as the future “starter stock” instead of using the Chobani?
          Curious minds would like to know.

        • Anthony A. says:

          Thank Red, I’m going to look into that as we have an Instant Pot Duo 7 with the yogurt capability we got for Christmas two years ago that is just sitting in the pantry.

        • TeacupDragon says:

          I make instant pot yogurt from half&half in 4 pint jars set in a water bath so I can just remove & refrigerate them when done. I’ve been starting a new batch from the previous batch of yogurt for several years. See Dr. Davis instructions for L.Reuteri fermentation. Best yogurt ever & inexpensive.

        • TeacupDragon says:

          Forgot to say…if you use Costco ultrapasturized half&half, you can use a “cold start” process for yogurt. No need to heat the mix before starting the ferment.

      • Jake W says:

        i wasn’t able to find chick peas at any of my local stores for three weeks last month.

    • Flea says:

      Aldi raised beef broth from .99 to 1.15$ that’s 15% inflation wow

  8. michael earussi says:

    The end result of a “just-in-time” manufacturing philosophy and offshoring too much of our product needs.

    Hopefully a lot of our companies will decide to bring manufacturing back from overseas and back to North America.

    BTW, Powell didn’t cause our present inflation, that’s a supply problem, he just hasn’t responded to it fast enough by cutting the money supply.

    • Ace says:

      Lets see what Wolf thinks about that last sentence….

      • Augustus Frost says:

        Agree.

        Few would like it but without the trillions of stimulus (fiscal and monetary), demand would be much lower now with a likely surplus of supply.

        The COVID impacts are part of it but the political decisions behind it were optional. It was a choice, as many other countries didn’t choose likewise. This isn’t a judgment call on whether it was “right” or “wrong”, just reality.

        • Jake W says:

          exactly. some change in consumer behavior from covid was inevitable. dumping $6 trillion into the economy to counteract a $1.5 trillion drop in economic activity was a choice. and as we’re seeing now, a very poor one.

    • Wolf Richter says:

      michael earussi,

      “BTW, Powell didn’t cause our present inflation…”

      Hahahahaha, printing $4.5 trillion in two years and repressing interest rates to 0%, and thereby creating the hugest asset-price inflation ever, and now the hugest consumer price inflation in 40 years.

      “…. that’s a supply problem, he just hasn’t responded to it fast enough by cutting the money supply.”

      Hahahaha, rents up by the double digits, and other services too are shooting higher. So blame the container shortage and the factories in China, hahahaha…

      https://wolfstreet.com/2022/01/31/dear-mr-fed-chair-powell-sir-rents-are-blowing-out-and-people-are-hurting/

      • Al Loco says:

        Wolf, be easy on him. Money supply, supply chain, air supply, office supplies, all the same thing. Here’s my boots on the ground….This will end in the most massive glut in history.

        • Wolf Richter says:

          The normal condition in a modern healthy economy is a glut. Lots of goods, and lots of services offered, and not enough takers, so you have to compete and try hard and advertise to sell anything, etc. That’s the norm. And there can be plenty of inflation during normal times (glut), as we have seen in the past. Shortages in a modern economy are crazy.

      • michael earussi says:

        We’ve had money being pumped into our economy for the last four decades. The only reason we haven’t faced inflation from it is because we’ve had even more cheap and plentiful goods from China to absorb that excess money.

        Our present inflation started when Trump decided to put a tariff on Chinese imports raising prices. Covid made it many times worse by constricting Chinese production, now further exacerbated by transportation problems. Anything that constricts supply will trigger inflation.

        The amount of inflation for any given item is determined by demand vs. how long it takes to ramp up production of that item to meet that demand, the longer the time lag the greater the inflation. In the case of housing, production takes a comparatively long time for supplies to increase vs. demand causing a very high inflation rate.

        Powell’s mistake was allowing too much of the stimulus to be concentrated into too few hands providing them with “money to burn” so to speak causing them to look for somewhere to invest it in. Housing became a primary target as did the stock market resulting in inflation in both (stocks that go up in value without a concomitant increase in income or profit for that company is just inflation).

        If most of the stimulus was instead focused on the lower classes we would have still had inflation just in different areas. This is known as the “class inflation rate” since different classes buy different items and any shortage in those items produces inflation.

        Restricting the money supply won’t “fix” our present inflation problems, it will just slow it down. Our inflation rate will only return to “normal” when supply keeps up with demand. Whether that will ever happen is an open question.

        • Wolf Richter says:

          Quit inflating DEMAND by printing money. That would be the first step.

        • Swamp Creature says:

          michael earussi

          This post is giving me a royal headache. The only way out of this mess now is a major recession, including much higher interest rates, cutbacks in Federal spending, and unfortunately, pain for nearly everyone. Volcker did this in 1979 to 1983 and we’re gong to have to do it again to get a handle on inflation. No one has the guts to stand up and say the truth, so we’re destined for a continuation of the status quo until there is a breakdown in civil society. The top 1% will insulate themselves from the chaos.

    • gametv says:

      Manufacturing in the USA wont happen unless our government creates the rules to make it viable. There are just too many issues, including building permitting, a lack of labor, environmental issues, etc.

      Trump’s attempt to thwart Chinese production was just stupid. Tariffs only moved the production from China to Vietnam, not back to the US.

      We need a corporate tax policy that rewards investment in the US in good old fashion manufacturing. It really isnt rocket-science, but Wall Street wants no part of it. Outsourcing to China is a Wall Street, financial-engineering product.

      • stoneweapon says:

        The number one problem is the cost of real estate, it fucks the engineering we need to be locally sustainable and competitive. We don’t have a two tier system where we can house our factory labour in work barracks.

        Finance capital is always most beneficial in the early stages of development, if we don’t have the freedom to control liquidity at the community level of commerce, then we’re at the mercy of outsiders who seek to maximize profits through unlimited accumulation of our resources right down to the last drop of water.

      • historicus says:

        gametv

        “Trump’s attempt to thwart Chinese production was just stupid.”
        Read and understand that every tariff place on China by the Trump administration was in RETALIATION for tariffs they had placed ON OUR GOODS.
        Ever hear the phrase “turn about is fair play”?

        • michael earussi says:

          Regardless of the rationalization, raising the price of Chinese imports triggered inflation in this country.

        • Ryan Luoma says:

          What tariff did China impose on the USA that started this? From my recollection it was the USA that implemented the first tariff due to China’s “unfair trade policies and intellectual property theft”.

          I could be wrong!

      • George says:

        “Tariffs only moved the production from China to Vietnam, not back to the US.”

        That’s an insanely positive outcome, especially given the speed at which it happened. The enemy of your enemy is your friend, and having manufacturing in Vietnam (a country that isn’t commiting genocide and trying to start WWIII) is absolutely preferable to having it in China.

        Returning manufacturing back to the US won’t happen on a short time scale, or within a single presidential term. It’ll happen over decades, and it’ll require that subsequent administrations don’t bend over to the Chinese Communist Party at every chance they get, as is the case with our current administration. There’s a reason progress stopped at Vietnam.

    • Brant Lee says:

      “Hopefully a lot of our companies will decide to bring manufacturing back from overseas and back to North America.”

      That’s the problem, we don’t have A LOT of companies anymore that aren’t monopolies. In retail, two giant mega-corporations rule and control. AND they killed production in the U.S. to start with.

      And apparently, it will be a cold day in wherever when a politician says BUY American.

      • David Hall says:

        Walmart can compete. That store is crowded on Saturdays. Other grocery stores charged more. Most Americans live within ten miles of a Walmart. The Walton family earned their pay.

    • Flea says:

      That’s what build back better is for ,corporations won’t pay for factories,but taxpayers will f**** up

  9. Brent says:

    For those who want even bigger picture google “Cleveland-Cliffs idled blast furnaces”

    1.Cleveland-Cliffs is the largest producer of rolled metal in the US owned by foreigh investors

    2.Blast furnace is the ORIGINAL source of steel aka “primary steel-making”

    Congratulations ! Cleveland is green city now ! $19 coffee latte echo mocha frappucino,$100K Teslas and $200K IT jobs for everybody !

    You may also consider buying NFT of blast furnace and watch it skyrocket on a daily basis

  10. Peanut Gallery says:

    Is global trading contracting?

    • Wolf Richter says:

      No, but too much demand globally, and supply cannot keep up, and transportation cannot keep up, and the whole system has gotten bogged down and has become very inefficient.

  11. BuySome says:

    Correct on those dollar stores. My swab-o-meter said they can’t continue at 300:1 much longer. Now it’s 300:1.25. And if you happen to pick up Matchbox cars for the kiddies, 5 will now set you back $6.25. Still $1 elsewhere, but that may soon change? In short, 25% inflation overnight at the basic level of the economy. Nickels and dimes will hang more people than all the hemp ropes in the world. Here’s your new reality about to hit like a ’55 Buick Highway Patrol Special plowing through a sheep farm. (Matchbox did that car pre-covid.) Chinese? Yes.
    Miracle? Wait and see.

  12. Nemo 300 BLK says:

    I feel Mr. Miller’s pain.

    I manufacture my brand of automotive coatings. Unfortunately, in addition to many other shortages that have come and gone, I have severe supply issues on the resin I need to manufacture my clearcoats.

    While the manufacturer has been tight-lipped, I learned from a polymer chemist that this particular company (and others) is having difficulty getting acrylic polymers from China to make the resins here in the States.

    These clearcoat resin shortages have been going on since Summer 2021, and after a lot of work of our own, we found a workaround that should be available next month.

    And speaking of price increases, the metal quart and gallon cans we use increased 68.5% back January 1st. Unfortunately, these aren’t the type of quarts and gallons you see at HD and SW, so we are limited to sourcing them.

    • georgist says:

      Poor America. Environmental and labor law arbitrage didn’t end well. No surprise!

    • Nathan Dumbrowski says:

      What an interesting tid bit of information. My father used to say anybody in a winning situation “had them by the short hairs”. Well it would appear that China has USA and the world perhaps in this situation

      Would and Could they use this against us. Of course under the guise of the COVID / inflations / transportation quagmire

  13. gametv says:

    This is a debt bubble, yet debt prices have barely risen. Powell is lying about what they are doing. But give it another month or two where the Treasury has to sell alot of this junk and where Powell is limited in buying.

    We saw the first round of financial changes hit the SPAC stocks and Cathie Woods-type of stocks. At some point, debt will get hit hard. The 20 year bond touched down on a long-term uptrend support line. It is only a matter of time before bonds collapse below that trendline. That will be a time when the bond market finally wakes up and all the money managers start selling bonds rapidly.

    The next long term debt issuance is middle of next week. I think there will be tepid demand, but the issuance after that one will be the really bad auction in my guess. Or maybe it will take 3-4 auctions of long terms bonds before the demand collapses. Just a matter of time.

    Watch those mortgage rates hit 5%.

    • stoneweapon says:

      Commercial bank deposits less loans and leases is $7 trillion (almost equivalent of Fed balance sheet)

      Do you really believe demand for bonds is going to collapse?

      • Augustus Frost says:

        The first places I would look are junk bond spreads versus UST and credit default swap premiums. It’s the most direct and timely indicator of credit stress I know.

        A central bank can “print” to inflate the money as much as they want. Where it is lent out and at what terms is a risk preference decision, meaning psychological.

  14. stoneweapon says:

    The reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions. 70% of Q4 GDP was change in private inventories. True GDP was 2% since inventories net to zero over time. Shuttering sea ports is intentional because imports are deducted from GDP. December POLA numbers have yet to be deducted from GDP. The true numbers define stagflation. When cash is being devalued at double digit rates it makes sense to stock up and buy whatever inventory you can get your hands on.

    • historicus says:

      stoneweapon
      “The reality is that inflation is the cause of supply chain disruptions, not the result of supply chain disruptions”
      Dead on!!
      Every thinking purchasing agent saw this coming (Powell not)…and said to their suppliers “Get me all you can at that price.”
      For to not have inventory in an inflation is to be out of business.
      Powell’s understanding of actual business dealings is shallow…..at best…or he is a liar…..

  15. truth says:

    Yes, Boots on The Ground Rings in with the Times
    Soon we may Have Boots on The Ground supporting the Ukraine Yes?
    And that I expect well affect the economy and of course a sense of Most likely misdirected New Powell objective toward the current economy and why to enrich the already Rich must continue despite the downfall of the masses.
    Nowadays perhaps we will no longer need goods and services just basic survival lifelines. If no one can afford a Home and Food and huge amounts of Tents
    and Viruses across the country become the “new normal” perhaps some will show up to camp out on Powells Property? along with the already occupied public property across the USA by Homeless spreading’s daily. No Health insurance then you must pay a fine a Large fine BTW

  16. MiTurn says:

    “The PVDF and coatings shortages are only partly Covid-related; they’re largely related to a reduction in Chinese production of these compounds to meet environmental requirements.”

    Will this Chinese-centric shortage incentivize domestic production, or has that been off-shored years ago?

    • AK says:

      I think most businesses still see these shortages as temporary, and are unwilling to take the big risk of investing in domestic manufacturing. They will have to change this attitude if government installs high and permanent tariffs, but this of cause will not happen in the near future (I think).

  17. stoneweapon says:

    Just to put things in perspective from the micro view. I’ve been a self-employed manufacturer of building products for 25 years. I currently have 8000sf of production space. I’ve been downsizing for a decade, moving production from civil/institutional infrastructure to monster custom homes, I have one 36,000sf home on the order book, this is how half ass fucking backwards this world is! I’m sold out for 2022. Generally I buy enough inventory to last for 60 days, today I’ve bought inventory to last 1 year. So my little puny company has contributed to GDP through buying 1 years’ worth of inventory, and if prices go up another 10% I’m going to double my inventory. Do you see the inflationary picture?

    • Anthony A. says:

      Who the hell buys 36,000 sf houses?

      • stoneweapon says:

        I’m not sure who the owner is yet.
        I just know the architect has specified some of my products in the build. The last 20,000 sf house I did was a land developer and sewer/water main contractor.

      • David G LA says:

        People who want more than they need. The basis of our economy.

      • georgist says:

        Someone whose workers rent a tiny apartment

  18. DawnsEarlyLight says:

    I see Wolf has a new refreshed game face on today. Let the games begin!

    HahahahahaHahahahaha!

  19. Michael Engel says:

    1) A flood of new orders will cause backlogs and higher prices.
    2) Shortages cause backlogs and higher prices.
    3) A combination of : a flood of new orders and shortages might cause losses. Mfg are stuck waiting for parts, while paying high prices for labor and material, producing no or few A/R…. Building capacity, a wrong capex allocation on the cusp of recession is a formula that form – gluts. The scary G word.
    4) During periods like that, mfg might provide inferior material and push production with defects,reduce QC, in order to move, move & move stuff out of the door.
    5) In the early eighties during Iran & Iraq war, oil co grudgingly went
    down, during the recessions.
    6) First shortages, thereafter building capacity in new oilfields in Alaska,
    N. Sea, Siberia, the Gulf of Mexico, before twenty years of gluts.
    7) We might have a global glut, because nobody trust China.
    8) GOOGL gap higher to a new all time high. The Nasdaq 100 futures have a selling tail.

  20. Bobber says:

    Some people say the inflation problem will fix itself because people will run out of money, but I’m not buying it.

    It’s not struggling folks who are feeding the inflation. It’s people with means that find themselves with newfound stock and RE wealth, courtesy of Federal Reserve policy. They won’t run out of money as long as interest rates remain below inflation. Their paper wealth will continue to grow,.

    Problem is, people with $50k salaries and limited stock or RE assets are swimming in strong ocean currents driven by the 25% annual stock market gains and 15% annual RE price gains. You need asset price gains of $50k to $100k per year just to maintain your head above water. How many folks are realizing asset price gains of this magnitude.

    Things change only when the population gets fed up with the Federal Reserve’s method of picking winners and losers, and they limit it’s scope of influence.

    • COWG says:

      The worst place in the world to be today is the $50-80 thousand w-2 folks…

      You have no protection and are totally at the mercy of what you described above…

    • Frank says:

      Agree. I hear about the stress of rent, inflation, etc. but on the other hand , the sales of $55K+ trucks is only limited by supply, $100K RVs, cash buyers for housing, etc. The local high school is full of new/late model vehicles! Somebody has some serious bank. There are defiantly the have and have’s-not’s. And the not’s are driving inflation.

      • Harrold says:

        I’ve heard around half of all car purchases are leases. Few plunk down $55k when they buy those new trucks.

    • Augustus Frost says:

      Inflation is substantially psychological. “Money” isn’t evenly distributed but changing sentiment is what gets them to spend it on nonessentials at higher prices.

      As for the more affluent, there is or at least used to be a luxury index published in the Wall Street Journal when I read it about 15-20 years ago. This was early in the current asset mania but even back then, this luxury index was increasing at more than double the CPI for the reason you gave.

  21. Random guy 62 says:

    We are seeing these same issues at our small/medium Midwest manufacturing plant.

    IMO all the people thinking these shortages will trigger any meaningful reshoring are smoking crack. The cost difference between domestic and foreign production is too big to ignore.

    We have been forced to get quotes on some key components in our product from foreign manufacturing sources – India and China. Even with all the shipping cost and hassle, they are HALF the price of our best domestic suppliers. And the quality is on par if not better. Lead times on domestic versions are barely any better.

    We hear weekly that the foreign guys are 20-40% cheaper than use for essentially the same thing. Our competitors with dominant market share are those that sent their factories overseas and embraced global component sourcing years ago. 2021 only made it worse. Way worse.

    I could trace the issues for each component to explain why, but that would give away some anonymity.

    • COWG says:

      If I recall correctly, didn’t many of the manufacturing that was shipped overseas were also relocated to or built in some of the US regions for the same reasons to start with…

      Textiles in the Southern regions comes to mind…

    • Kenny says:

      I share the same sentiment that re-shoring is not happening.
      I work for a small automotive supplier in Midwest and we are moving some of our production to our Mexico plant soon.
      Why? The hourly wage of workers in the area increased significantly and there is no profit to be made.

      If more parts were to be made in the US just for the sake of re-shoring, Auto OEM’s would have to accept much higher parts price, thereby making the cost of vehicles much higher.
      But American consumers can only pay so much for their vehicles, so if a model cannot be made under a certain cost range, they would not build that model at all.

      For any meaningful re-shoring to happen, US either needs to devalue the USD so much that it doesn’t make sense to buy from other countries, or maybe consumers need to be willing to buy bare-bones vehicles that would cost much less to build.

      • Random guy 62 says:

        It’s seems to me the natural end is a drastically lower standard of living for Americans.

      • Brian says:

        It’s all about tax law. 20+ years in supply chain for a multi-billion dollar tech company and our final assembly network is all optimized around taxes first. If you mfg a product in the USA and sell that product abroad, you owe US taxes. If you have a factory in Mexico (or somewhere else) and sell that product abroad, you owe foreign taxes. We can better optimize a tax structure for those foreign sales with foreign mfg than we can with domestic. In many cases it doesn’t make sense to have foreign and domestic factory. We’d love to build more in the USA, but since we have to compete globally and everyone else is optimized for tax, we only build a small % of our business in the USA and might move that also.

        • Cookdoggie says:

          I also believe we can turn all the offshoring around with tax policy. Corps are simply whores, they will mfg wherever they make the most bank. Just change the incentives.

    • georgist says:

      Sounds like China have lower land costs? You can have that too.
      Land value tax!
      But oh no we can’t have social value socialized that’s socialism!

  22. carbpow says:

    As far as shipping is concerned I have some experience with ocean shipping. We have a major problem with crew on ships. We cannot keep them. When ships come into port they wait to be unloaded due to things that are out of the control of the engineers and deck crew on board ship. Due to Covid restrictions the crew cannot get off and return to their families. Many of the crew have not seen their families for 6 months to a year. When they do finally get off they often do not return. The more skilled can find shore side jobs, even if it is less money they prefer that rather than being stuck on a ship. Consequently, we have to look for qualified mariners to replace them and they are increasingly hard to find. The ship owners do not want to increase the wages enough to attract the qualified mariners, so ships sail with less qualified low paid folks who cannot manage the on time port call of the ship well. It is a race to the bottom. The winners are the ship owners. The losers are the manufacturers and consumers. Though the supply chain is complicated we all know it depends on raw material and labor. The raw material exists now just as it existed 3 years ago before. The difference is the labor is not available to extract or deliver the raw material, at least under the conditions the “market” offers.

    • Swamp Creature says:

      carbpow

      Hire some new parollees

    • Shipengineer says:

      US flagged vessels are desperate for qualified mariners. Internet access is poor, and mental health in the fleet is at a low. It is also becoming extremely difficult (time consuming) and expensive to maintain the vast amount of licenses and certifications needed to work on board a vessel, especially for the officers.

      I know of quite a few offshore oilfield supply companies who are changing out equipment to domestic from foreign. A ship can not afford to wait months for parts in a shipyard, as they will lose their customers and overrun costs in the yard. They are finding it cheaper to pay the premium for US made equipment that can be “hotshotted” in 2 days rather than wait 16 weeks for a critical piece of equipment.

      • Jerry says:

        I`ll do it for half a millie. A trip. You can always find labor, at the right price. Don’t want to pay? Go sink your boat.

  23. Michael Engel says:

    1) Recession and gluts will do wonders to Seattle, SF and NYC homeless.
    2) The inelastic labor force will crack.
    3) If the gov will turn their back on the radical left, void billionaires
    tax shelters that feed their organizations, tax largest co and protect “infant
    industries” with tariffs, mfg in Oh will have a chance.

    • Bobber says:

      Good point. We need a progressive income tax for corporations that creates a market-friendly disincentive to discourage too-big-to-fail enterprises from forming. Large corporations should be taxed at a higher rate than small corporations. Right now, it’s the other way around.
      For example, US-based Big Tech has a 10-18% effective tax rate, while your average mid-size US-based manufacturer pays 23% or more. That makes no sense, assuming you want to encourage innovation and create jobs.

      • Augustus Frost says:

        The first step in eliminating too–big-too-fail should be getting rid of government created distortions, like the FRB “put” and ultra-loose monetary policy. The mania has also distorted the cost of capital by subsidizing so many cash burn machines.

        Without the asset mania, I suspect that many of these megacorps belonging to oligopolies would be voluntarily broken up or go bankrupt. GE is an example of successful financial engineering until it wasn’t.

  24. Michael Engel says:

    PPG – a resin, paint and coating co – gap up in Apr 2021, stuck in a trading range for one year, making a lower high.

  25. Finster says:

    It’s not just covid. It’s a hallmark of inflation. As the article points out, it started when consumer demand “started to accelerate wildly”. We’ve been dealing with shortages of everything from toilet paper to oil to semiconductors to foodstuffs. Is it just a coincidence that this came on the heels of the most reckless monetary policy ever?

    I don’t think so. Price is the mechanism that balances supply and demand. In rapidly accelerating inflation, transaction prices may fail to keep up, leading to imbalances. The price of something you can’t buy at all is effectively infinite, but doesn’t get counted in price statistics. Shortages indicate that inflation is much higher than price statistics capture.

  26. Wisdom Seeker says:

    It’s long been clear that the inflation is a hydra with multiple heads, and this article really nails it.

    One item that struck a nerve with me is where the author pointed out that some inputs his firm needed were in short supply NOT because of COVID shutdowns, supply chain transportation bottlenecks, or excess demand – but simply because the supplier was being mandated to cut output to meet climate-change mandates.

    Another eye-opener (and thanks for the other comments here) was that intermediate goods are de-facto being rationed (on what basis?) to customers and retail stores. Rationing was a big deal in WW1, WW2 … and the 1970s.

    Another biggie is how vulnerable we’ve made ourselves. Too many manufacturers have gotten themselves locked into product designs with few-source supply chains, where they are at the mercy of vendors with monopoly or near-monopoly power. That’s a recipe for getting yourself screwed!

    High prices lead eventually to increased competition, but only if investors are willing to take the plunge. If those investors are at risk of getting shut down because of global warming output-reduction targets, they aren’t going to make the investments.

    Curtailing demand by way of tighter credit will help some of these, but the bottom line is that when output’s not going up, standards of living will fall until we get creative. We’re all going to face “substantial incentives*” to find ways to make do with less, to develop new products with lighter resource demands, to find backup options, to do things differently.

    * A polite way for saying things are going to really suck for a while…

    • Brian says:

      You hit the nail on the head. Shortages are being caused by government policy, inflation is being caused by government policy. Clearly the answer to fix it is more government policy.

  27. Stillastudent says:

    As Nouriel Roubini has said, even if manufacturing is repatriated onshore, the jobs will not be there to the extent that they formerly were because of AI and robotics along with no extant unions.

    • Augustus Frost says:

      If it’s really due to automation, collective bargaining doesn’t make hiring excess (and unnecessary) labor economical.

      It’s no different than paying above market clearing wages, whatever the level may be. Unions are able to obtain above market clearing wages through non-market means, just as monopolies and oligopolies are created and continue to exist through anti-competitive behavior.

      Going forward, I expect an increase in unionization and attempts to unionize. If it achieves (or appears to have the potential to achieve) any noticeably increased scale, I concurrently expect millions of jobs to disappear through additional automation.

      Or, the jobs will be eliminated anyway. I started as a grocery bagger at age 16 in 1981 in a union. Kroger (where I worked) doesn’t have any baggers (to my knowledge) anymore. They weren’t automated away, just replaced by free customer labor. My first store had in the vicinity of 200 employees in the 80’s. Where I shop now, it might have less than 50 and it is larger. If it’s noticeably more, probably virtually no full time like me when I worked there. I’m not there 24X7 but there is a skeleton crew every time I shop.

      How many will disappear and in what companies or industries remains to be seen. It’s almost certainly going to be a lot cheaper to automate (or eliminate) many of these jobs out of existence than pay the unrealistic wages and especially benefits someone else (who isn’t even paying the wage) thinks these people should be paid.

    • Wisdom Seeker says:

      The jobs don’t matter so much, with unemployment so low. We need the stable domestic production supply chains to ensure adequate supplies (to fight inflation) and that alone will improve the standard of living.

      Advanced manufacturing jobs may not be numerous, but they will be much higher quality than the ones they displace, and those workers will spend a lot of their incomes locally and benefit their entire community.

  28. Saylor says:

    To address returning manufacturing to ‘on shore’ and address the climate issue globally, we could consider having tariffs on material that is produced off shore in places where environmental impact (ie. China, India etc.) are not complying with necessary restraint. This would go a long way to making U.S. manufacturing more viable.

  29. Michael Engel says:

    1) There are more guppies in the ocean than billionaires. Guppies pay income tax and capital gains, billionaires, with their tax shelters, don’t.
    2) Billionaires became billionaires due to capitalism. Billionaires support the radical left, not to be shamed, or lose China.
    3) Support the radical left, divide the whole nation, or become an outcast.
    4) Low interest rates, large quantities and overseas production prevent
    an OH guppy from becoming a billionaire like them.
    5) Mfg AI, not the divisive social AI, and robotic – with gov protection and incentives – might help a tiny OH guppy to compete with China, India, Vietnam… and depose the old hollow bones buybacks billionaires.

  30. Michael Engel says:

    1) Productivity start at age 13Y – 15Y, peak @17. By 18 it’s too late. Many high school grads are sucked to one of the liberal colleges, ruined for life.
    2) A small mfg in OH should invite junior high kids, boys & girls, to his shop, show them how AI and robots work, how to operate them, how clean is a modern mfg shop, with options, by 18Y : make a six figure salary, or pile six figure student loans debt.
    3) Boys and girls are welcome to work few hours/ week, especially second or third generation blue collar families, untainted, and get an invitation to a real video game in action.

  31. Rowen says:

    In anticipation of spring, I looked up the price of R410A refrigerant. It’s like $450 for a 25lb tank. In 2019, it was around $100.

  32. coboarts says:

    Post a list of the American manufacturers posting here. Going forward, I’ll buy everything that I need from them, starting with Classic Metal Roofing Systems. Let’s all be together on this thing.

  33. rick m says:

    Mr Miller, I am sorry for the situation you are having to deal with through no fault of your own. Your company’s website is inspirational, i loved the Brennan Manning quote and your description of your father, who reminds me of mine, still with me at 90, thankfully.
    I attended Moeller high school in ’73 and driver’s ed on Saturday mornings was in the area north of Dayton, including Piqua. It’s a beautiful part of southern Ohio with friendly people who were kind to novice drivers endangering their streets.
    The whole industry apparently has the same issues, and this Pvdf is such useful stuff that it’s affecting lots of different end-users. With regard to the reason for the delays, in the article reference is made to environmental restrictions being a factor on top of COVID-associated pinch-points. From the way it reads I am assuming Chinese environmental restrictions. If so, it’s a pretty rotten time for Xi to go all Greta Thunderbug on us, presumably they have been selling this product widely for some time.
    A poorly translated article i found blames the Pvdf chemical precursor export shortages out of China on delayed feedstocks in their turn, didn’t say why, not hard to imagine why. Seemingly minor discontinuities are amplifying, JIT inventory management was kinda new when I took accounting, so was Lotus1-2-3, and both were guaranteed to fix everything forever, no worries. Cursed be Powell for awakening the Ghost of Cost Accounting, dead for decades.
    Other countries build cheaper than us to start, then they get the quality fixed or lose out to whoever’s gaining on them. And they live cheap. I wired a shrimp packing plant across from Biloxi after Katrina and did their electrical bidding thereafter, and the employees are mostly Vietnamese. Most fresh shrimp boats and all freezer boats around here are owned and operated by Vietnamese families. I have immense respect for these people, but I am spoiled and don’t want to have to live like they are willing to live, and unless I am ready to change and live their way I can’t beat them on price on the same work, probably not even then. Same work being the key. I do the electrical, they work the shrimp, and nobody wants to trade jobs.
    When we want to, we build the best on earth. Value-added quality products made by people who are treated with the respect that they deserve by their employer, like Mr Miller and his crew, ought to be the niche that America becomes known for. We’ve had a standard of excellence before. And the imagination to do what others dream of. We’ve never needed walls to keep people in. And money alone should never buy admittance to the USA. Just my thoughts. Good luck to you and your family and team members, sir.

    • sam says:

      “We’ve had a standard of excellence before.
      And the imagination to do what others dream of.”

      Past tense. While accounting/finance/and legal (to wit: head of the Fed)
      became the oracle of leadership for US manufacturing.

      BA was the “Std of the world” [ref Cadillac’s 1908 Dewars trophy award) till MD’s absorption instigating corp realignment of a mfg. company into a financial organization.

      737 MAX s_hitshow (and 787 problems) was the fruit of ‘new age’ mgmt. leadership.

    • Todd Miller says:

      Thanks Rick. Small world. I appreciate your comment. You have the correct understanding of things as far as China. I really appreciate your words. Sounds like you have a great father as well. Glad you’re still getting to spend time with him! Take care of yourself.

  34. Jacky says:

    If you can’t keep up with demand due to supply constraints, why don’t you simply raise prices?

    • Todd Miller says:

      That’s the right question, Jacky. And price increases have happened, driven by increases in raw material costs. There is a fine line we face though of where you just shut off the marketplace. Metal roofing is the high end of the residential roofing market and, at some point, all customers will just opt for less costly products that are not having these situations.

  35. c1ue says:

    In response to a Noahpinion article “A New Industrialist Roundup” – the usual technotopian nonsense combined with climate change blah blah, I looked at the so-called NAICS manufacturing sector

    The top 10 NAICS “manufacturing” businesses:
    https://www.naics.com/naics-code-description/?code=31-33#topbusinesses

    Philip Morris Intl Inc
    Mars Incorporated
    Kraft Heinz Company
    Mondelez International Inc
    Altria Group Inc
    Tyson Fresh Meats Inc
    Pepsi-Cola Metro Btlg Co Inc
    Anheuser-Busch Companies LLC
    Nestle Holdings Inc
    Dairy Farmers America Inc

    So we have 2 cigarette makers, 1 beer company, 3 candy companies and a soft drink company along with a chicken, a milk/cheese and a ketchup company.

    Notice a pattern? No wonder Americans are fat.

    So even assuming the NAICS $ from these 10 companies are actually in the US – because they’re all multinationals – we have ZERO manufacturing as defined as creating non-human-food/drink/smoke stuff.

    I am 100% certain China’s top 10 manufacturing companies by revenue look completely different. Zoominfo has a list which I don’t know is accurate:

    https://www.zoominfo.com/top-lists/top-10-companies-from-mfg-industry-in-CN-by-revenue

    PetroChina Company Limited
    Sinopec
    Sinochem
    Xinbao Group
    CNOOC Limited
    CSSC
    China FAW Group
    Hengli Group
    AMER International Group
    BAIC Group

    5 companies producing oil/gas, but also glass, gases, electricity, chemicals, petrochemicals
    1 makes auto parts
    1 makes consumer electronics
    1 makes boats and subs
    1 sells, repairs cars
    1 “general manufacturing” as well as metals/minerals

    Now, oil/gas/metal/mineral extraction isn’t manufacturing but petrochemicals/oil & gas processing is so the lists aren’t precisely comparable, but the US is the largest consumer of oil in the world yet we don’t have a petrochemical company in the top 10?

    Whatever. The point is: not a single food/drink/smoke stuff “manufacturing” company in Zoominfo’s top 10 list.

    This is what the end product of manufacturing hollowing out looks like: the US has clearly stopped making actual stuff in favor of food/drink/smoke and the like.

    • Wolf Richter says:

      c1ue,

      Your list is total BS because you don’t understand how NIACS work, what “top businesses” means, and you don’t understand what you’re talking about. And then, based on your utter ignorance, you build this grand BS theory.

      For example cigarette makers Philip Morris and Altria on your list had $28 and $21 billion in annual revenues, dwarfed by Boeing ($62 billion), GM ($122 billion), even Tesla ($31 billion). There are a gazillion manufacturers in the US with more revenues than the companies on your stupid-ass list. This is manipulative ignorant BS you posted.

      So here is part of the list of US manufacturing:

      Electrical Equipment Manufacturing 4,865
      Power, Distribution, and Specialty Transformer Manufacturing 797
      Motor and Generator Manufacturing 1,458
      Switchgear and Switchboard Apparatus Manufacturing 839
      Relay and Industrial Control Manufacturing 1,771
      Other Electrical Equipment and Component Manufacturing 6,482
      Storage Battery Manufacturing 625
      Primary Battery Manufacturing 102
      Fiber Optic Cable Manufacturing 179
      Other Communication and Energy Wire Manufacturing 147
      Current-Carrying Wiring Device Manufacturing 708
      Noncurrent-Carrying Wiring Device Manufacturing 511
      Carbon and Graphite Product Manufacturing 283
      All Other Miscellaneous Electrical Equipment and Component Manufacturing 3,927
      Motor Vehicle Manufacturing 1,950
      Automobile Manufacturing 1,275
      Light Truck and Utility Vehicle Manufacturing 94
      Heavy Duty Truck Manufacturing 581
      Motor Vehicle Body and Trailer Manufacturing 2,732
      Motor Vehicle Body Manufacturing 943
      Truck Trailer Manufacturing 1,047
      Motor Home Manufacturing 85
      Travel Trailer and Camper Manufacturing 657
      Motor Vehicle Parts Manufacturing 8,931
      Motor Vehicle Gasoline Engine and Engine Parts Manufacturing 605
      Motor Vehicle Electrical and Electronic Equipment Manufacturing 1,146
      Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing 147
      Motor Vehicle Brake System Manufacturing 171
      Motor Vehicle Transmission and Power Train Parts Manufacturing 435
      Motor Vehicle Seating and Interior Trim Manufacturing 419
      Motor Vehicle Metal Stamping 657
      Other Motor Vehicle Parts Manufacturing 5,351
      Aerospace Product and Parts Manufacturing 7,237
      Aircraft Manufacturing 2,375
      Aircraft Engine and Engine Parts Manufacturing 1,208
      Other Aircraft Parts and Auxiliary Equipment Manufacturing 3,223
      Guided Missile and Space Vehicle Manufacturing 226
      Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing 124
      Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing 81
      Railroad Rolling Stock Manufacturing 771
      Railroad Rolling Stock Manufacturing 771
      Ship and Boat Building 3,800
      Ship Building and Repairing 1,156
      Boat Building 2,644
      Other Transportation Equipment Manufacturing 2,625
      Motorcycle, Bicycle, and Parts Manufacturing 1,048
      Military Armored Vehicle, Tank, and Tank Component Manufacturing 234
      All Other Transportation Equipment Manufacturing 1,343
      Household and Institutional Furniture and Kitchen Cabinet Manufacturing 22,517
      Wood Kitchen Cabinet and Countertop Manufacturing 15,268
      Upholstered Household Furniture Manufacturing 796
      Nonupholstered Wood Household Furniture Manufacturing 3,004
      Metal Household Furniture Manufacturing 411
      Household Furniture (except Wood and Metal) Manufacturing 466
      Institutional Furniture Manufacturing 2,572
      Office Furniture (including Fixtures) Manufacturing 3,142
      Wood Office Furniture Manufacturing 821
      Custom Architectural Woodwork and Millwork Manufacturing 840
      Office Furniture (except Wood) Manufacturing 515
      Showcase, Partition, Shelving, and Locker Manufacturing 966
      Other Furniture Related Product Manufacturing 1,761
      Mattress Manufacturing 590
      Blind and Shade Manufacturing 1,171
      Medical Equipment and Supplies Manufacturing 20,127
      Surgical and Medical Instrument Manufacturing 5,983
      Surgical Appliance and Supplies Manufacturing 3,986
      Dental Equipment and Supplies Manufacturing 1,207
      Ophthalmic Goods Manufacturing 915
      Dental Laboratories 8,036
      Other Miscellaneous Manufacturing 75,365
      Jewelry and Silverware Manufacturing 4,775
      Sporting and Athletic Goods Manufacturing 7,730
      Doll, Toy, and Game Manufacturing 3,525

  36. Dazed And Confused says:

    A serious academic report from respected US and European institutions released yesterday concluded that:

    ” lockdowns have had little to no effect on COVID-19 mortality.

    More specifically, stringency index studies find that lockdowns in Europe and the United States only reduced COVID-19 mortality by 0.2% on average.

    shelter-in-place-orders (SIPOs) were also ineffective, only reducing
    COVID-19 mortality by 2.9% on average. Specific Non Phamaceutical Intervention (NPI) studies also find no broad-based evidence
    of noticeable effects on COVID-19 mortality.

    While this meta-analysis concludes that lockdowns have had little to no public health effects, they have imposed enormous economic and social costs where they have been adopted. In consequence, lockdown policies are ill-founded and should be rejected as a pandemic policy instrument.

    No doubt this research will be challenged by other academics and there will be other studies with different conclusions based on different data or analyses BUT it’s quite possible that the consensus will be that lockdowns were a huge mistake once the dust settles.

    If so, it might cause a re-evaluation of who is really to blame for the current mess. The massive fiscal and monetary stimulus occurred because the economy experienced an all-time record contraction in Q2 2020 and that contraction was not caused by the pandemic itself but by the extreme lockdowns imposed by governments upon the recommendation of public health “experts” at WHO, CDC, NIAID etc.

  37. joe2 says:

    Ha Ha! Just in Time. Little legal papers drawn up by MBAs and lawyers that had no idea WTF your business was doing. And you believed them. I remember the old days when business was done on a handshake not a blithering complicated legal document of dubious value. You trusted your partners or you failed. You cheated someone, you were done.

    I also remember doing business in Asia where your personal qualities and trustworthiness were evaluated after drinking a LOT. You passed or you failed. On your own personal merits, not some weasel worded BS. No one cared what the words said – it was what you personally promised.

    It was a high standard to uphold. You did not want to let your friends down. It was not “just business”.

  38. Kenny Logouts says:

    Have the Fed even raised interest rates yet?

    I’ll believe it when I see it.

    I think the demand side of this equation will resolve once things actually start moving.

  39. Trailer Trash says:

    From Marketwatch:

    “Why do so many jobs in the U.S. remain unfilled? COVID-19 long haulers may be part of the answer”

    “The magnitude of the numbers involved suggests that long Covid merits consideration in discussions about the labor shortage”

    (one last attempt to break through the denial)

  40. Quit yer moanin
    Make yer own stuff
    You want coatings? Make them.
    You want metal? Make it.
    Powell did a huge favour by showing the failures of the supply chain.
    The response that is happening and was needed is supply is being built out.
    Crisis was needed and useful and, therefore, not wasted.

    • Wolf Richter says:

      Services are spiking too, including rents. Nothing to do with supply chains or factories in China.

      BTW, when you print $4.8 trillion in 22 months and throw it at the markets, and then it starts flowing, you’re going to create artificial demand that no supply chain can withstand.

      • DCWarrior says:

        Wolf, I think you are overstating this. It’s both too much demand in the system as well as disruptions in the chain. The supply chain problem would be there even without the flood in demand. The two together make it worse.

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