How America’s Manufacturers Cope in the Global Supply Chain Crisis

  • American manufacturers are thriving as global supply chains remain in turmoil.
  • They are not immune to other economic problems, such as labor shortages and rising shipping costs.
  • But “the closer you are to your customer … the fewer issues there are,” Scott Paul, president of the Alliance for American Manufacturing, told Insider.

Unlike many retailers this holiday season, Bayard Winthrop is not concerned with global supply chain issues.

That’s because Winthrop, CEO of clothing retailer American Giant, is close to nearly every aspect of his company’s supply chain: cotton is grown in the United States; it’s spun into fabric and made into hoodies and sweatpants at factories in the Southeast and Midwest; it is then delivered, primarily by UPS, to customers across the country.

This means nothing gets stuck on a container ship or has to be airlifted to the United States to arrive in time for the holidays.

“We expect to be fully in stock during the holidays,” Winthrop told Insider. “We don’t spend time talking about the supply chain internally. ”

Winthrop is one of four manufacturing CEOs who spoke with Insider about what it’s like to make products in the United States at a time when global supply chains are in upheaval.

None of them are immune to the challenges the US economy will face in 2021. Some struggle to hire while others increase prices as raw material costs soar. But they also described the benefits of manufacturing close to home, primarily better control of their supply chains and greater flexibility if something goes wrong.

When the coronavirus began to spread around the world last year, it closed ports and took factories offline while simultaneously triggering a rush in consumer goods. In the United States, where the labor market is tight, there are also fewer people to process all cargo entering the country from overseas, resulting in a backlog at the country’s ports.

And so, in the months that followed, there was more pressure to make more products in the United States.

“There is no guarantee that if you are producing in the United States or North America, you will be safe from it all,” Scott Paul, president of the Alliance for American Manufacturing, an industrial group that s ‘associates with both manufacturers and unions, Insider says. “But there is a better chance that you will be less impacted.”

The labor shortage was very real, even with the promise of a higher salary

Man works at the spoon-making machine at Sherrill Manufacturing

Sherrill Manufacturing produces its Liberty Tabletop line in downtown New York City.

Sherrill Manufacturing

This mindset is on display at Sherrill Manufacturing in central New York City, which produces Liberty Tabletop, a line of cutlery and cooking utensils. Sherrill Manufacturing’s supply chain is “about as vertically integrated as you can imagine,” Greg Owens, CEO of the company, told Insider.

The company’s products begin as a coil or bar of steel manufactured in one of three locations: Western New York, Pittsburgh, or Tennessee. This steel is then processed into forks or knives at the company’s manufacturing facility in Sherrill, New York, and packaged in locally sourced packaging.

Owens said Sherrill’s cutlery sales doubled in 2020 as more people ate at home and grew 50% year-over-year in 2021. The biggest problem facing the company currently faces is keeping products in stock.

But there are other challenges, too: Owens believes steel prices have doubled since before the pandemic, and he said it was more difficult than usual to find workers to fill the vacancies. The company raised wages to attract and retain workers, but filling the 25 positions it created to boost production took a long time, he said.

“We spent a year advertising with our payroll company on their program, which advertises jobs on 10, 15 different sites,” he said. “I haven’t received a single request.”

‘Bite the bullet’ as costs rise

A person holds a flannel fabric under a sewing machine at the facilities of the Vermont Flannel Company

Vermont Flannel Company sews its clothes in the United States.

Vermont Flannel Company

Finding workers has also been a challenge for Vermont Flannel Company President Mark Baker. The 30-year-old company manufactures its flannel shirts, pajamas and blankets in Green Mountain state and Baker said the biggest challenge the company has faced, aside from the initial shutdowns in early 2020, is to fill vacant positions.

“We have lost people who have moved or decided they have other options,” Baker told Insider. “It’s really hard to find people to get into manufacturing these days. ”

The Vermont Flannel Company differs from American Giant or Sherrill Manufacturing in that it imports its raw materials. The company contracts with a factory in Europe that produces the fabric and ships it to the United States, but Baker said the Vermont Flannel hasn’t encountered many problems, despite the supply chain crisis. The company buys its fabrics almost a year in advance, and they’re shipped to the Port of Boston, which isn’t as big – or quite as small – as ports like Los Angeles.

Baker said he was even more concerned about rising costs. The fabric is more expensive now, and the cost of shipping it to the United States has skyrocketed. He is also concerned that flannels will be shipped to U.S. customers ahead of the holidays as carriers like the U.S. Postal Service raise prices and may face issues that delay shipments like last year.

“I think it’s going to be a little tough over the next six months,” he said, adding that the company may have to increase costs if the problems persist.

Soaring shipping prices amid surging sales

Woman wearing green arrow + Phoenix swimsuit laughs outdoors with hand on hip

Arrow + Phoenix swimwear and sportswear is made in Nevada.

Arrow + Phoenix

Kayla Bell also knows the challenges of importing raw materials during times of global upheaval.

As CEO of swimwear and sportswear brand Arrow + Phoenix, which is made in Henderson, Nevada, Bell had to scramble when shipments of its Italian-made fabric were disrupted in 2020 as the country was grappling with devastating waves of the coronavirus.

Arrow + Phoenix was simultaneously seeing demand for its costumes soar, which Bell attributes, in part, to a societal focus on spending with black-owned brands amid the protests following the George Floyd and Breonna murders. Taylor. Customers were placing orders worth $ 1,000 a day, so Bell found an American textile company that produced the same type of fabric as a substitute.

Now Bell says she faces a new logistical nightmare: shipping the finished goods. The brand’s domestic shipping costs have increased by about $ 2.50 more per package with USPS, she said, and its international shipping costs have also skyrocketed.

As a result, Arrow + Phoenix has increased its prices by a few dollars per item, reduced the number of styles and colors it sells, and offered pre-orders for some items.

“Before COVID, it was about $ 40 for us to ship a swimsuit, or any package, to Italy. Now it’s $ 200,” Bell told Insider.

The challenges for Bell, and those of other companies, prove the complex nature of retail in 2021: No company, no matter how it manufactures its products or where, is insulated from the pressures of the global economy or the ripples of the world. supply and demand.

Paul, AFAM President, said these challenges are leading more and more companies to reconsider their supply chains, diversify their suppliers, make their manufacturing processes more flexible and source products. in the USA.

“I don’t know of anyone who is suggesting that we are self-sufficient, that we have just closed our country and that we will be self-sufficient,” said Paul. “Right, the closer you are to your customer, the closer you are to your main assembly, the fewer problems there are. ”