Supply Chains in Disarray; Shortages Shutter Factories; Scarcity in Plastics

March 19, 2021

(WSJ) There’s no escaping the supply-chain woes hitting companies world-wide. Manufacturers of everything from cars and clothing to home siding and medical needle containers are scrambling, the WSJ’s Sean McLain, Christopher M. Matthews and Costas Paris report. The upheaval in supply chains that began with last year’s coronavirus-triggered lockdowns is only growing as global economies rebound while crammed ports, container shortages and severe weather hit operations. Backlogs at U.S. ports that began late last year are likely to persist, with Port of Los Angeles chief Gene Seroka projecting continued strong imports “through the spring and early summer.” The timing is concerning because the U.S. and some other economies are beginning to try to lurch toward normalcy thanks to vaccination campaigns. The problems show how messy the reopening of business is proving to be a year after pandemic’s onset, and how vulnerable supply chains remain.

Supply Chain Strategies

The world’s supply-chain bottlenecks are choking factory operations. Toyota Motor, Honda Motor and Samsung Electronics are among a growing range of manufacturers saying that squeezes on crucial supplies are complicating their operations. The WSJ’s Dan Strumpf and Sean McLain report that Toyota and Honda are halting production at plants in North America because port logjams, freak weather and Covid-19 constraints are limiting availability of key components. The disruptions underscore how a number of forces are coming together to squeeze the world’s supply chains, and how extended supply lines have left companies vulnerable to choke points in distribution channels. Toyota blames a shortage of petrochemicals for a shutdown of its factory in Kentucky, while Honda is suspending production at most of its U.S. and Canadian car factories next week because of issues including port backlogs, a lack of chips and severe weather that hit its facilities.

Commodities

The February freeze is still sending a chill through supply chains for raw materials. Texas chemical plants shut down during the state’s mass blackouts remain far behind in their production, the WSJ’s Christopher M. Matthews, Austen Hufford and Collin Eaton report, triggering shortages of industrial materials and higher prices for buyers of polyethylene, polypropylene and other chemical compounds. The shortages are part of the growing economic price tag of a storm that pummeled industrial production in Texas. Many plants remain offline a month later, and it could be months more before all are fully back. Factory lines for goods from medical face shields to smartphones are crimped, and increases in raw materials prices are likely to lead to higher costs for a range of businesses. Longer-term, experts say the winter storm exposed risks in supply chains that depend on a region with a high concentration of chemical plants

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