Persistent supply chain difficulties hamper production and services

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The economy is still going, it’s still growing at a decent pace – though we don’t see the meteoric growth in late spring and early summer when the vaccination rate rose, stores reopened, and people went out again after a year of pandemic shutdowns.

At least part of the slowdown we’ve seen in recent months has less to do with consumers pulling out – though they did with the proliferation of the Delta variant – and more to do with bigger and bigger problems, businesses when it comes to delivering the goods and services that consumers want to buy.

And we have a lot more evidence for this Tuesday. Two closely watched indices that track the movement and delivery of goods and services reported widespread interruptions in the supply chain.

This is everything from raw material shortages to delays in shipping parts and finished goods to labor shortages on service and manufacturing jobs. All of this has resulted in dwindling inventories, rising back orders and rising prices.

If, like me, you have a household appliance that just broke – for my family it’s the dishwasher – you might hear something like this when you call for repair: “Because of the coronavirus, the demand for device repairs in the US has grown exponentially. We apologize for the delays in service and excessive holding times this caused. “

Basically multiply that by the economy as a whole, and you get a lot of friction for sellers and buyers of everything from parts to finished goods.

“A lack of raw materials in supply chains, exacerbated by shipping restrictions in US ports. In addition, companies report that they just can’t get enough staff, ”said Chris Williamson of IHS Markit, which just reported a slowdown in growth in manufacturing and services in September.

So let’s look at how this works in one sector: cars, for example. Jaaron Smith of Vancouver, Washington, and his wife have two children, two dogs, and are looking for a second set of bikes.

“Yes, a new SUV,” said Smith, 39. “I’ve been working remotely since the pandemic, of course, but I’ll be starting a new job in January and I have to commute to do that, which means we’ll need two cars.”

Dealers tell Smith the wait for a new SUV will be several months.

The problem for automakers starts with a lack of computer chips, according to Williamson. “If you can’t get semiconductors to make as many cars as you want, you will buy fewer windshields and tires,” he said.

All of this means less business for parts suppliers and higher prices for new and used cars. Which didn’t stop Smith from looking far and wide for a new Dodge Durango. “It’s really hard to find one right now, with a lot of new ones,” he said.

So he just ordered one for delivery. It will make him $ 62,000. He also gets an add-on that he really wants: “Ventilated seats,” he said. “I had it once, I never want to be without it again.”

He expects it to arrive in late December or early January.


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