Retail-focused industries are recovering from inventory shortages and surging prices as the global supply chain returns to normal — but lingering kinks in military, defense and infrastructure continue to cost the sectors extra time and money.
Manufacturers in autos, machinery, defense and non-residential construction sectors are still grappling with tight supplies of microchips and cement — two major suppliers for efforts to arm Ukraine against Russia as well as upgrade crumbling US infrastructure, Reuters reported.
“For sectors where demand is still strong, we are still seeing issues of materials shortages, and these problems will take additional time to resolve,” said Jason Miller, associate professor of logistics at Michigan State University’s business school.
“One of the big issues as we’re trying to ramp up the military industrial base is having enough electronic components,” Miller said.
Companies that make war weapons like shoulder-fired Javelin and Stinger missiles are awaiting word of war-torn Ukraine’s funding before starting new production.
When the defense industry gets that green light, their scramble to source semiconductors and other hard-to-find electronic components could usher in a new wave of supply-chain snarls that disrupt production and drive up costs.
“Any general shortage in semiconductors will affect defense,” said Brad Martin, director of Rand Corp’s National Security Supply Chain Institute.
Taiwan — one of the US’s key allies — plays a critical role in the global semiconductor industry. The escalating tensions between Taiwan and China have raised concerns about the impact on all aspects of chip transportation, according to the National Bureau of Asian Research.
Persistent demand for automobiles and farming equipment has resulted in limited stocks of microchips, which function as the electronic brains in such machinery.
Farm and construction equipment maker Caterpillar is still competing with car makers to get its hands on limited supplies, Caterpillar CEO Jim Umpleby said at a March 14 conference in Las Vegas.
“It’s gotten a bit better, but it’s still not what it was pre-pandemic,” said Umpleby.
After halting production for more than a week due to semiconductor availability disruptions, General Motors last week reopened its Silao, Mexico, plant that produces Chevrolet Silverados and GMC Sierras.
“As we’ve moved through the past year or so, we have seen gradual improvement in our supply chain, including semiconductors … Short-term disruptions will continue to happen,” GM spokesman Dan Flores told Reuters in an email.
A global scarcity of cement, a crucial ingredient for concrete utilized in constructing bridges, highways, and factories, threatens to impede federally-funded infrastructure projects as well as American-made semiconductor and green energy factories.
Cement producer Martin Marietta Materials reported “robust demand” in its largest market of Texas, where it is already seeing “sold-out conditions,” CEO Ward Nye said on a February 15 earnings call.
Ready-mix concrete and concrete products such as blocks and highway dividers are highly sought after, Michigan State University’s Jason Miller said.
“It’s probably one of the strongest sectors in manufacturing at the moment. It hasn’t shown signs of cooling down.”
However, supplies of semiconductors for personal computers improved as kids went back to the classroom and parents returned to their offices – crushing sales of new machines.
With Post wires