Supply Chain Challenges Need To Be Addressed
Randy Wolken, President & CEO

Manufacturing supply chains are stressed. It is a challenge we must address as a nation. Critical shortages and slowed deliveries have hampered manufacturing growth and dampened consumer demand that has recovered quickly from the COVID- induced economic downturn. We must turn our attention to this issue to facilitate the increase in manufacturing in the U.S.

Numerous issues have tangled the global supply chain. The COVID crisis caused a rapid drop in demand due to restrictions on consumers and employers. Demand dropped quickly, which halted the production of many critical components, including needed semiconductor chips used in so much of our technology today. Automobile production was gravely impacted, as were much-needed technology and equipment used in manufacturing. Although significant, many experts expect the supply chain to recover from the rapid slowing and recovery due to COVID.

A more persistent challenge is also responsible for the stress on our supply chain—the shortage of labor in the logistics and transportation industries. Especially hard hit were the trucking and warehousing industries, where we can expect a long-term challenge in staffing. A rash of retirements, increasing demand, and a shift to online purchasing have put a real strain on these industries. Similar problems have emerged in the global shipping sector as a whole.

One of the most surprising consequences of the supply chain shortage has been how American consumers live their lives. Recent supply chain delays and disruptions have left many feeling frustrated, angry, and scared. Also, many feel that the disruptions will never end, according to a new study by Oracle. Furthermore, the supply chain speed of delivery has become critical to people’s purchasing decisions. Organizations that don’t prioritize their supply chains risk declines in customer loyalty and revenue. Over 80 percent of people are willing to pay a premium for their items’ smooth and timely delivery.

The most significant trend to benefit U.S. manufacturing is the desire for re-shoring and near-shoring. Manufacturers are following a trend that has long been used in retail and e-commerce where the companies closest to their end customers are tomorrow’s winners. For example, Amazon has traded its mega-warehouse strategy for an approach that involves smaller, localized warehouses, as we have seen in Central New York most recently. The universal aim is to achieve the goal of near-instant delivery.

These supply challenges require a more dedicated effort to invest in a higher-skilled workforce for the transportation and manufacturing industries. We also need to modernize our roads, bridges, rails, ports, and broadband infrastructure by passing and implementing the physical infrastructure plan still stalled in Congress. MACNY will continue to advocate for members and our communities to accomplish these critical outcomes. Please join us in reaching out to your representatives and letting them know how crucial these investments are to our continued success.