Shortages and Demand Make Anxious Bedfellows
Updated: Sep 13, 2021
by GHOST ROCK
The fallout from one year of shutdowns is playing out on the world stage.
And no one seems to be talking about it.
Some say this is the evitable consequence of globalization: pandemic, logistics disruptions, scarcity. There it is in a nutshell. It has long been known that we would reap the inevitable consequences of global mass production fueling a wealthy consumer society. But the warnings were fringe and seemed more like fearmongering in a healthy economy. Well, now it's here. Everything from the t-shirt you're wearing, to the restaurant on the street corner is feeling the domino effects of global labor shortages, mandated shutdowns, and sudden increases in demand.
Our clients are considering switching suppliers, if they can find them, for food products. Some have taken items off the menu entirely. Apparel suppliers that we work with are listing inventories that look like a bunch of empty eyes staring back at you, 'O-O-O-O-O'. A list of zeroes.
In some ways, reopening the economy has been just as hard on small businesses as shutdowns.
Here is a list of the materials and industries that are suffering from labor and materials shortages and hyper-inflation.
Raw Materials - Wood, Metal, Plastic
Whether you have a personal anecdote about your DIY project coming to a full stop, or you work in the manufacturing industry, you've noted the hyperinflation with raw materials. What's driving the prices higher? Increased demand and lack of materials and labor. Lumber from northern Europe, metal from mines in Africa and Central Asia, plastics developed in Chinese factories. Labor shortages in processing plants and factories have delayed production, while waves of viral infection have depleted the mining and harvesting teams.
If you've ever played a sandbox video game, then you know that without raw materials, nothing is built. No wood means no furniture, no house, no roof. No metal means no car, no machines. No plastic means no computers, no packaging, no appliances, no.... well, anything.
For those on you that are still living under the illusion that you are an autonomous, organic being, I'm here to rock your world - computers run everything. Without microchips it's difficult to manufacture almost anything from refrigerators to vehicles and phones.
The car industry has been the hardest hit by the microchip shortage. Some lots are no longer selling new vehicles (because they can't get them).
Chicken wings, sauce, okra, and fish - these are what we know about, but the list goes on. From sauce shortages at Chick-fil-a to outrageous prices of a basket of wings at local restaurants, after being forced to shut their doors for months at a time, restaurants are now slashing their menu offerings.
There is no question that the hospitality and travel industries took the biggest hit during the shutdowns. With further shutdowns looming in some cities and products being difficult to procure, we haven't seen the end of restaurant closures in 2021 and into 2022.
Nearly 100% of all apparel Americans wear is imported. Textile manufacturing is notoriously toxic and the demand for fast, cheap fashion high. So, what does a wealthy nation full of shopaholics do? Outsource. Even if you're spending more on American made, odds are the raw material is from India and Pakistan.
So what happens when the price of cotton goes through the roof due to a pandemic crisis? No t-shirts for you. That is exactly what is happening to some manufacturers.
But it's the labor shortage that is really slowing down manufacturing at shipping.
Labor - All Industries with historically low pay
The robot revolution is coming, and apparently employees can't wait. We get it - waiting tables is a hard job physically and comes with a lot of risk when a super contagious virus is making its rounds. Manual labor in factories, fields, and food generally suck for myriad reasons: low pay, long hours, boredom, poor treatment (sometimes), physical stress. So why, if you're making more money staying at home with your family would you go back? You wouldn't. No one with any common sense would. The the most grounded of employees would bide their time and focus on self improvement (like getting a certification or degree) while out of work so they can return to the employment market to earn higher pay.
Before leaving that two-star review, know what small businesses are up against. Along with all the hurdlers to owning a business that exist in a healthy economy, business owners are dealing with two extremes of the Pandemic problem.