In fact, we learn from the article that producers of manufactured goods were beset by "snarled supply chains" and "labor shortages" following the "sharp rebound in consumer demand."For example, we learn that Simplicity Sofas could not "find enough skilled sewers" and depended on fabric produced by STI Fabrics who, in turn, depended on Drake Extrusion who "turns plastic pellets into colored yarn." Focusing on STI Fabrics:
Explain what hurdles it faced in meeting new orders for fabric from manufacturers.
Using a supply and demand graph of the market for labor inputs (labor market), explain in words and demonstrate in your graph how STI Fabrics attempted to increase production and explain why or why not it was successful.
ECN412WConsumers Open Wallets, And Factories Can't Keep Up.pdf - Adobe Reader X File Edit View Window Help 75% Tools Sign Comment 2/23/ 2 Consumers Open Wallets, Click on Sign to add text and place signature on a PDF File. And Factories Can't Keep Up Snarled supply chains and a labor shortage thwart manufacturers BY Bou TITA AND AUSTEN HUFFORD appliances, furniture and power tools. Manu- have been trying to catch up ever U.S, manufacturers aced the shutdown of since. Nearly a year since initial coronavirus their factories and warehouses last spring in lockdowns in the U.S., barbells, kitchen mix- response to Covid-19. They're botching the ers, mattresses and webcams are still hard recovery. ad. A global shortage of semiconductors After carrying out an orderly retreat from car makers to cut produc- the pandemic arrived in assembly lines as the pander ion in recent weeks. any manufacturers pulled out the "Everyone was caught flat footed," said allowed in past recession Jack Springer, chief executive officer of Mal cutting costs and preserving cash. That left ibu Boats Inc. them unprepared for the sharp rebound in The boating industry was preparing for a consumer demand that downturn but instead sales jumped, he said. later and never let up. Please turntopage A8 Without restaurants to visit and trips to take, Americans bought out stocks of cars, * Biden eyes next package after aid bil. -. A2 Factories Can't Meet Demand Continued from Page One Malibu's orders were up by more than half last June from a year earlier an sales of rec- reational boats in the U.S. in 2020 were the highest in 13 years, according to the Na- tional Marine Manufacturers Association, a trade group. Consumer spending long-lasting goods in the U.S rose 6.4% last year but domes- tic production of those goods fell 8.4%, according to federal data, leading to shortages and higher prices. Supply chains typically get beaten up during recessions. As sales decline, companies draw down inventories to con- serve cash instead of purchas- ing more parts and mat a materials. Entire pipelines of supplies get cleaned out. When demand improves, even modestly, suppliers re- spond with an outsize increase in production to restock empty warehouses and assembly plants. The so-called bullwhip effect ripples all along supply chains, generating unusually large orders for suppliers that are far from end customers. SW W A 8:51 PM 3/9/2021able to the distortions of the expand into more factory ufacturer is training replace 40% a week last April from a competitors that aren't getting bullwhip effect, economists space near its plant in High ments for about a quarter of year earlier. By May though, products to the U.S. as swiftly say. To cut costs and boost Point, N.C., to cut delivery its hourly workers, who didn't CEO James Loree said those as usual. Beverly Semmann, This time, the bullwhip er- profits, U.S. companies out- times that have stretched to return after the company shut retailers were selling about owner of Rowe Pottery, said feet is even more pronounced _ sourced operations and whit- eight months during the pan- down for two months last 30% more of the company's the Wisconsin maker of din- because demand for consumer tled inventories. Many of their demic. But Simplicity Sofas year. New recruits are less "nerware has seen sales jump products has been extraordi suppliers did the same. products than than a year founder Jeff Frank said that he productive than veterans, Mr. narily high. At the same time, earlier, as homebound con- as foreign-made products have When demand Increased can't find enough skilled sew- Parkinson said. sumers tackled renovations been hard to get. companies are placing super-* unexpectedly last year, the ers to staff new production Drake is running about 15% and yard work. "If you walk into a lot of big size orders to compensate for same companies all placed or- lines, and that some fabrics below capacity while demand Retailers weren't placing retailers, the store shelves are the extra time it takes to pro- ders at once into increasingly take months to arrive from has increased by 50% from new orders with Stanley, really kind of empty," she said cure supplies from factories diffuse networks of far flung suppliers. customers that make cars and though. They were drawing "They are looking for ways to and freight operators con- suppliers. He recently started charg- furniture, leading to wait fill the stores." strained by global efforts to Some customers are frus- i down inventory instead. Exec- ing prospective customers for times of three months, more utives weighed their options: Baltimore-based Marlin contain the coronavirus. That's trated at the long wait for rec- fabric swatches that used to than double the usual. Hurri- wait for retailers to place Steel Wire Products LLC, a exacerbating the strain on reational vehicles, workout be free. "I'm basically discour- canes last fall also disrupted | panic-size orders that Stanley maker of wire baskets and supply chains. equipment and other goods. aging people from buying," he production of the company's might not be able to deliver on racks used in medical-sterilize- Tennessee-based Malibu said. main raw material, a type of time, or raise production on tion equipment, last year was preparing for a downturn One of his suppliers, STI the belief retailers would soon : started producing metal stands as it stopped production. To Waiting for weights Fabrics, is delivering many or the company's surprise, within When the University of start restocking. If they didn't, for hand sanitizers, intrave- ders in 16 weeks, up from 6 Stanley would be stuck with nous medications and test-tube weeks its dealers started re Michigan closed campus gyms weeks before the pandemic. 'Everyone was The 350-person Kings Moun- caught flat-footed' six months of inventory. racks that were mostly sup- porting many new customers. last spring due to the pan- Mr. Loree decided to build plied from China in the past. When Malibu reopened last demic, computer science stu- tain, N.C., maker of Revolution $600 million worth of tools, spring, it ramped up produc- dent Jonny Chow set out to Fabrics has about 50 open jobs by the rebound in including power drills, table tion of its boats for towing replicate his weightlifting rou- even after raising its starting consumer demand. saws and tool chests. It was China's basket water skiers and wake board- time at home. But he said the hourly wage by about $2.50 to the right call. Tools were sell- Companies have figured ers. But some suppliers were, rubber weights he wanted to $15. Anderson Gibbons, the ing out at stores by early sum- out that putting all their eggs slow to respond. Smaller com- buy from Columbus, Ohio- firm's head of marketing, said mer. Stanley's tools business in China's basket is risky" said panies with less cash have had based Rogue Fitness were al- STI bought equipment last plastic called polypropylene, reported a 57% increase in Drew Greenblatt, Marlin's a harder time accelerating ways out of stock. year to increase capacity by a leading to supply constraints profit for the fourth quarter president. production, acquiring materi- Mr. Chow wrote a program third, but foreign engineers and doubling prices. on a 25% increase in sales, Mr. Greenblatt said finding als and shipping components, to send him a Facebook mes. who were scheduled to help "This was a perfect-storm partly fueled by its ability to steel in the U.S. to increase his especially from overseas, Mal- sage when the weights were get it running were delayed by year," Drake's CEO, John Par- boost prices. production has been a chal- ibu said, leading to shortages available on Rogue Fitness's travel restrictions. kinson, said. "Anything that The market went down so lenge. Prices for steel, copper of components for outboard website. He said more than "You can't just turn off sup- could have gone wrong has hard and then came back so and other industrial commodi- engines and windshields 1,700 people are using the pro- ply chains and turn them back gone wrong." hard," Mr. Loree said. ties are at the highest point in well as wiring harnesses. gram today. on and there not be hiccups," Some companies did recog years. That is putting pressure Rogue Fitness sald it is reg- Mr. Gibbons said. nize that the pandemic would on profit margins for Marlin ularly making new supplies STI has also had trouble supercharge demand for their Mexico challenge Auto bottleneck and other manufacturers. but they quickly get sold out. getting enough yarn from products. The build-out wasn't easy. Domestic steel companies Wanxiang America Corp., The company has more than Drake Extrusion Inc., which Retailers slashed orders for The Connecticut-based com- aggressively curtailed produc- the U.S. arm of one of China's doubled its workforce and in- turns plastic pellets into col- Stanley Black & Decker Inc.'s pany dispatched employees to tion last spring as customers largest auto-component mami- creased its minimum wage to ored yarn. power tools, wrenches, tape 100 of its suppliers' plants in closed factories and canceled facturers, quickly reopened its $25 an hour to make more The Martinsville, Va., man- measures and utility knives by China and Mexico to press orders. Consolidation has U.S. plants last spring. Bu equipment. them to make Stanley's com given the remaining steelmal transportation bottlenecks "The entire supply chain Change from a year earlier" ISM Supplier Deliveries Index pomerits a priority. At a Stan- ers more pricing power during have lengthened th the lead was stressed in 2020 and is ley-operated power-tool plant the rebound. times needed to get parts from still in a bad spot," founder 20%% in Reynosa, Mexico, the com- The reduction in domestic its sister plants and other sup- Bill Henniger said. Personal pany challenged seven at- production of specialty metals pliers in China to Chicago to Some companies who are consumption tempts by government offl- including stainless steel is 0 weeks from four typically. reliant on foreign suppliers cials to idle production as a even more acute. By the end of "With three, four or 5,000 have been particularly hurt by 70 way to control the pandemic the year, just three companies components in a car, you only delays as shipping containers The company hired a chief in the U.S. will supply stain- need one to keep it from get- have been hard to get and U.S. Industrial medical officer for the plant to less steel. Gregg Boucher, ting out of the factory parking ports struggle to unload them. production help limit employees' exposure . president of distribution for lot," said Pin Ni, president of Peloton Interactive Inc. added to Covid-19, Stanley paid for Connecticut-based Ulbrich Illinois-based Wanxiang Amer- two million monthly subscribe ride-shares to drive employees Stainless Steels & Special Met- ica. Mr. Pin resorted to air ers for its digitally connected to and from the plant to avoid als Inc., said decreasing avail- freight for some smaller items, exercise bikes in 2020 but the exposing them to the virus on ability of domestic stainless which he said costs some 10 company said it was spending public transportation , and steel will drive more stainless times more than a year ago. more than $100 million to re- housed some in hotels to keep users out of the country or out "The global supply chain is duce shipping times. them from contracting it from of business. not as strong as people Even U.S. manufacturers family members. "Customers get concerned thought," Mr. Pin said. who have focused on sourcing 60 2012 14 16 18 20 "You do whatever you could about availability," he said. A decadeslong devotion to domestically have been beset do to keep the plants run- "They don't want to be in a making factories smaller, with issues. ning," Mr. Loree said. situation where they miss a cheaper and more efficient Dimarmel Inc., the maker of Sources: Fefecal Reserve (productial: Forces of Exstands Analysis (morganoptionk Institute for Some companies have delivery because they're short made companies more vulner- Simplicity Sofas, is looking to supply Merejurent gained ground on overseas on inventory."
