Supply and demand: Savvy planning helps county businesses prevail in supply chain delay | TheUnion.com
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Supply and demand: Savvy planning helps county businesses prevail in supply chain delay

Savvy planning keeps county business in black through supply chain delay

MEC Roofing’s Matthew Gross explains how the global lack of computer chips has affected his ability to provide certain types of electronic skylights. Skylights with computer chips are back ordered by a few months.
Photo: Elias Funez

For some businesses the pandemic economy has been a roller coaster ride as employers strive to fill vacancies while supply chain delays force up prices.

Part of the disruption to commerce is the coronavirus that’s affected the world the last 18 months, and the likelihood is the upheaval will continue for a time, as a group of businessmen pointed out to Jerome Powell, Federal Reserve chair, a few weeks ago.

Powell was briefed during a “Fed Listens” virtual roundtable late last month. That meeting emphasized ways COVID-19 continues to reshape the economy. Some of the attendees explained their business plans were still evolving. Meanwhile, a few complained of slack sales after the pandemic eased in early summer and then escalated in August.



“I’ve never seen these kinds of supply chain issues, never seen drastic labor shortages with lots of unemployed people … so it’s a very fast changing economy,” Powell was reported as saying.

Locally, Robin Davies, CEO of the Greater Grass Valley Chamber of Commerce, said from her perspective as a consumer, she, too, was experiencing supply chain delay.



“I ordered an under-the-desk tread mill,” she said. “It was a product ordered at the end of September with a promised delivery date of October 4. But we’re experiencing shortages in all aspects of business.”

What the precise cause of employee vacancies is, she’s uncertain.

“Why vacancies go unfulfilled, I don’t have a solid answer, but people are not stepping forward. It’s the long-term ramification of what transpired in the last year with COVID,” Davies said.

Davies knows of a chamber member who is building a home. However, because of product delays the building permit expired. Now this person must get another building permit, and the delay will cost an additional permit fee.

CHALLENGES

Some people anticipated challenges soon after the pandemic hit.

Mathew Gross and Haven Caravelli operate MEC Roofing in Grass Valley. A lot of their materials come from Owens Corning in Compton, just south of Los Angeles.

“So we moved from typically ordering for a week in advance to three or four months in advance,” said Gross. “There’s a lot of staples we know we’re going to use, so we’re not going to run into any delays.”

But one particular item he cannot get until early next year are skylights that electronically open. And the problem is the delay in getting computer chips needed, and that takes massive preparation.

Mathew Gross shows off some of the skylights currently in stock from their show floor earlier this week. Skylights containing solar panels and computer chips are back ordered due to the global supply shortage of computer chips.
Photo: Elias Funez

“We’re in a business where every roof is warrantied,” he said. “We have to spend so much extra time to get jobs completed on schedule with the correct materials. We’ll not sacrifice correct materials just to get a job done.”

Despite his efforts, Gross has still faced higher prices over the past 18 months. Roofing materials have gone up about 10%, he said. But lumber, a couple of months into the pandemic, was up around 400%. It’s recently dropped to about 100% of pre-pandemic prices.

“The whole reason for extra leg work in preordering is to remain price competitive,” he said. “Construction has been phenomenal over the last two years. It’s very different from a restaurant or a mom-and-pop store. Our success is related to residents keeping their dollars local throughout the pandemic.”

Penny Short, owner of Tess’ Kitchen, is another who’s learned the value of preparation. With a passion for home decor and cooking, the former general manager assumed ownership in December 2019, taking over the reins from Steve and Rachel Rosenthal. Short started purchasing stock in June and July for the holidays, she said.

“Early summer is generally when we purchase fourth-quarter product,” she said. “But the most interesting thing is some manufacturers are charging a 5 to 15% ‘container fee,’ passing on the costs to vendors.”

That’s happening because the cost to ship goods internationally has increased. There’s a logjam of containers in ports, with a ripple effect of trucking issues and some containers being transferred to other ports altogether. The cost to ship is up between 20 to 80% more than last year — an estimate given to Short by a manufacturer.

MEC Roofing’s co-owners Mathew Gross, Christian Garcia, and Haven Caravelli sit in the show floor of their Colfax Avenue business.
Photo: Elias Funez

“I tell my customers, if you see something you like, get it now, because prices are going up and there’ll not be additional shipments by some manufacturers,” she said.

When the pandemic hit, it caused a lot of people to rely on cooking at home with restaurants either closed or maintaining reduced hours. Consequently, it made a difference for Tess’ Kitchen.

“We’ve seen record highs and record silos in 2021,” said Short. “Until recently we were in a downward spiral. But now we’re up over 2020, but not by much. I was hoping COVID would come to an end with kids back in school, but that has not been the case.”

SHORTAGES

Labor shortages persist despite the expiration of the $300 weekly federal unemployment supplement. Those shortages are contributing to backups in California seaports.

California ports are the main seaborne gateway to the U.S. due to the growth of containerization over the past 60 years. Last year Los Angeles and Long Beach handled 8.8 million import containers, more then twice of the next busiest port, New York/New Jersey, according to the Wall Street Journal.

Currently, demand is so high ocean shippers will take almost any route into the country to restock inventories. Some shippers have transferred freight to Gulf and East Coast ports, yet that adds weeks to transit times for Asian suppliers.

Robert Bernardo is the spokesperson for the Port of Oakland. He said there is no congestion in Oakland Harbor. However, that wasn’t the case until recently. And because of the backups, numerous shippers began to avoid Oakland.

“The reason was labor shortage,” said Bernanrdo. “To address that, the International Longshore and Warehouse Union hired and trained hundreds of dock workers in May.”

Between May and September, ocean carriers were skipping Oakland.

“But starting in August, we talked to shippers, and they’re returning to Oakland,” said Bernardo. “We now expect to be back to pre-pandemic levels by November or December.”

William Roller is a staff writer with The Union. He can be reached at wroller@theunion.com


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