The COVID-19 pandemic was like an offshore earthquake, and now economic ramifications such as supply-chain shortages, competition from China and recruiting struggles are hitting manufacturing companies like tsunamis.
That was the message from Northern Colorado manufacturing executives during BizWest’s virtual CEO Roundtable Tuesday morning. The roundtable was sponsored by Plante Moran, Elevations Credit Union and Berg Hill Greenleaf Ruscitti. Chris Otto, Mike Grell and Sean Nohavec from Plante Moran, Dennis Paul from Elevations Credit Union and Ashley Cawthorn and David Kerr from Berg Hill Greenleaf Ruscitti were the sponsor attendees.
Bob Walker, CEO of Walker Manufacturing, said his company has stopped taking orders because it’s booked through the next calendar year, “which is something that we’ve never seen at this stage.”
“Our supply chain is holding us back,” Walker continued.
Walker said his company’s suppliers have had their own production schedules disrupted and that maritime and land transportation have become increasingly hard to find.
“Nationally, we have a shortage of about 60,000 commercial truck drivers,” noted Steven Anderson, president and CEO of Forney Industries.
Those issues are nearly universal. Supply chains are being hit in every sector of manufacturing just as many CEOs say they are experiencing unprecedented order volume.
“Our backlog is at historical levels,” said Carl Maxey, vice president and Western region general manager of MGS Inc., and CEO of Maxey Cos.
Tim Reeser, CEO of Lightning eMotors Inc., said his company grew 600% last year and is now working on filling orders for 2022 and 2023. However, it’s experiencing shortages in everything from chassis to batteries to windshields.
Lightning is looking at several options, including manufacturing its own chassis, bringing fabrication in-house and greater vertical integration to help alleviate these issues, Reeser said.
“We can’t fulfill the demand because we don’t have the supplies,” he said. “All of us are trying to look at what we can do with the supply-chain constraints.”
In-Situ vice president of operations Jeff Odell said the company’s purchasing team has had to get creative to come up with strategies that allow In-Situ to keep making predictable promises to customers.
“We’re hand-to-mouth,” Odell said. “We’re certainly seeing abnormal behavior on the supply-chain side.”
In the case of Tharp Custom Cabinetry, president Garth Rummery said mills aren’t even pricing the company’s orders until after they’ve shipped.
“That makes figuring out our pricing very difficult,” he said. “We’ve only been here seven years, but it’s certainly like nothing we’ve seen.”
Competition from China has not helped these issues, said Marcia Coulson, president of Eldon James. She added that recent government policy toward China has been frustrating.
“We’ve been back ordered on additional equipment because there’s such an influx of competition going back to China,” Coulson said.
This pressure is pushing companies to on-shore their manufacturing and bring it home from China and Eastern Europe, said Jay Dokter, president and CEO of Vergent Products.
“If you want your company to get big and grow, you used to go overseas,” Dokter said. “Going overseas is not seen as the big answer it used to be.”
As they deal with this, local manufacturing companies are also facing a difficult labor market.
“Finding line-level operators is a long process right now,” said Andrew Hendrickson, president and CEO of SurgiReal.
Cost of living has been a big barrier, said Jeremiah King, general manager of Wolf Robotics.
“We’ve seen over the last six to 10 months a drastic inflationary challenge on wages,” King said. “The primary driver is housing inflation. It’s driving a higher cost of living in the area. It’s challenging for [prospective employees] to see a future if they don’t think they can afford a house.”
Reeser said that Lightning eMotors hired 120 people last year and is planning to hire about 130 this year. Finding talent from along the Front Range is especially difficult, he said. Often, people will try to commute to Lightning’s Loveland headquarters from Denver, then soon quit.
These issues may not go away anytime soon. To stay ahead of the curve, local manufacturers will have to continue to find new ways to innovate, Dokter said.
“I think we’ve gotten a little bit lazy in manufacturing,” he said. “We have to figure out robotics and automation so we can compete internationally. Manufacturing isn’t going to come back to us. We have to get good at it again.”
© 2021 BizWest Media LLC
