Unstable Year Reinforces Value of Industry Relationships
I begin 2022 feeling like we have gone 12 rounds in a heavyweight boxing competition. Who would have thought after the challenges we experienced in 2020 that 2021 would be more difficult? Every day presented a new opportunity, and it felt like a fight to keep production rolling to meet customer demand.
Among the many challenges the industry faced were hyperinflation on materials and shipping, lack of material availability, extended lead times, shipping shortages and delays, employee health and availability, work attendance, and a monsoon of demand from customers. We all got creative on how to navigate the challenges, and I feel most of us performed better than in 2020.
So, what does the future hold for 2022? I wish I had a crystal ball to help you with your decision-making, but since I do not, I want to share what we are doing.
Customer Demand
We think the first half of 2022 is going to be strong with customer demand. There is little or no field inventory in the pipeline, there is no reduction of demand from price increases, and our backlog is considerable. After that, it is unclear. You would have to think that inflation will catch up with customers’ cash flow.
Employees
We are hiring every day. This year we were able to maintain our employment level but not add to it. To combat inflation and retain employees, two bonuses were provided this year.
Supply Chain
Talking to our suppliers, they inform us that costs and delays will continue through most of next year. We have bought domestic supply through second quarter and foreign supply through fourth quarter of 2022. Cash flow is a large concern. The cost for the materials and components is higher, but the unforeseen shipping costs have our eyebrows raised. Currently, some containers are costing $20,000, but that is just to port, then there is another $4,000 from port to our dock.
Expansion
Demand for products is the highest in our company history. We have continued over the last several years with our planned building and machinery expansion. In 2022, we are continuing with that plan, only with more caution. We don’t want to miss opportunities, nor do we want to be overextended when this market corrects itself.
What do we do?
In my opinion, relationships in this industry are critical. One positive thing from COVID is that it has brought our industry together with a unified challenge from supply chain, manufacturing, and distribution. I have never been more uncertain in my career than I am today, in trying to forecast the second half of 2022. One thing I have learned over the years is that talking with our peers, suppliers, and distribution brings a lot of ideas to help us navigate the future.
The ¹û¶³´«Ã½ provides us with these opportunities.
The Supply Summit & Showcase is April 6-8 in New Orleans. The Supplier Board of Governors does an outstanding job providing opportunities to network and puts on a terrific showcase for manufacturers to view their products and services. Our company always leaves the convention with ideas for the future. I encourage all of you to take the time to attend, share your ideas, and walk away with a few new ideas for your company.
Sincerely,
Tim Burenga