b'BUSINESS MANAGEMENTas pent-up demand creates additional pressures.A decline in the cost of automation has helped Broad effects fuel this trend. The cost of labor has gone up while the cost of electronic equipment has gone The supply chain imbroglio has engaged a broaddown, says Conerly. Something that did not spectrum of industries. For a number of yearspencil out a few years ago may well do so today.our member companies have been dealing withNew strategiesdisruptions caused by factors such as tariffs and higher energy costs, says Tom Palisin, ExecutiveCompanies are responding to the supply chain Director of The Manufacturers Association, achallengebydoingmorewithless,running York, PA-based regional employers group withmachinery beyond its prime and collaborating more than 370 member companies (mascpa.org).with vendors to predict shipping delays. Such With its diverse membership in food processing,moves strike a familiar chord with Palisin at the defense, fabrication, and machinery building,manufacturers association. The pandemic has Palisins association can be viewed as a proxy forreally highlighted the need to develop strategies to American industry. Companies in just about allmitigate potential disruptions in the flow of critical sectors have experienced pauses and shutdowns.components, says Palisin. That means doing Some have even gone out of business. a deep dive into the supply chain, mapping the Labor shortages are one of the most persistentgeographical locations of the first tier of suppliers causes of distribution slowdowns. One bankerand learning about the reliance of second tier told me that his four manufacturing customersas well.could each hire 50 additional workers if enoughPandemic-related shortages have affirmed the applicants were to show up, says Conerly. Whenneed for backup vendors even for lower volume a company I work with in Portland was awaitingitems.Insteadofrelyingononesupplier,a a shipment of brass from Los Angeles, it turnedcompany might have three to manage risks, says out there was no driver for the truck. Jim Hannan, Practice Leader of Manufacturing, The reasons for labor shortages are varied. PartDistributionandLogisticsservicegroupat of the problem is that people are not yet willing toconsultingfirmWithum(withum.com).We come back to work, says Conerly. But the factexpect this trend to continue with the advent is that there were not as many pandemic-relatedofenvironmental,socialgovernance(ESG) layoffs in manufacturing as in, say, food service.standards at larger companies.A larger issue is demographics: Older peopleWhendeliveriesarespotty,companiesare are retiring, and younger people dont want totempted to keep more stock on hand. Companies go into dirty, noisy factories. And then you haveshould no longer rely on just-in-time inventory government cash payments for people who getstrategies, which too often have become just-too-laid off. And finally, there are childcare issues.late failures and stockpile more supplies both in the The labor shortage has caused an increase inUnited States and abroad, says John Manzella, automation as a way to produce goods with fewera consultant on global business and economic man hours. In recent months theres been atrends, East Amherst, NY (JohnManzella.com). surge of business orders for capital equipment,This approach reduces efficiencies but favors saysConerly.Thefactthatmanufacturingrisk reduction.productionhasnotreachedall-timehighs,Companies are willing to turn upside down the though, indicates that the new equipment is nottraditionalviewsofinventorycontrol,given intended to boost capacity. So, I think a lot of thethe increased risk of shortages and customer business capital spending is intended to replacegoodwill. Many companies are investing more empty positions with machines. The idea is If Icash in inventories, and banks seem content with cant hire somebody to assemble this product,lending against that, says Hannan. maybe I can hire a robot to do it. And I thinkWhilebusinessesmustpaythepricefor thats a good strategy. bolstering inventory levels, such costs must be www.mrca.orgMidwest Roofer 7'