Everywhere you look, the global supply chain is a message

Samsung, a giant that makes smartphones and makes chips, said a massive global shortage of semiconductors would hurt its business into the next quarter. Samsung co-chief executive Koh Dong-jin told investors on Wednesday that tackling the chip supply-demand imbalance had become a priority for employees and that employees were action traveling abroad, despite restrictions, to discuss the issue with business partners.

The riots reinforce the coming together of several forces to squeeze global supply chains, from the pandemic rise in consumer demand for technical goods to a backdrop of imports at California’s clogged ports to U.S. factory torrents caused by weather vibrations. They create rising costs and delays for a number of businesses, company executives and analysts say, affecting profit margins and the prices companies and consumers pay for many goods. in the end.

“We’ve been scrambling to get enough raw materials,” said Tom Nathanson, chief executive of Summit Plastics Inc., which predicted potential permanent damage to the plastics industry in lost customer structure.

He said the Mississippi company, which makes plastic sheets for everything from a hospital gown to packaging, was already struggling with supply-demand issues ahead of Texas cold spells. “The costs have been reimbursed,” Mr Nathanson said. “We, as consumers, feel so sorry. ”

The upheavals, which come as the U.S. and some other economies begin to move toward normalization, illustrate the difficulty of reopening business a year after the start of the allotment. -distributed, and how vulnerable supply chains remain.

The long-term economic impact remains unclear. Federal Reserve Chairman Jerome Powell said at a news conference Wednesday that he expects supply chains to change as economic growth accelerates. “It’s very possible, let’s put it that way, see bottles appear and then clear over time…. These are not permanent. It is unlikely that the supply side will be able to accept these. It will – clean the market. It may take a while. ”

Last month’s frost in Texas was the latest plank on the mast. The state is home to the world’s largest petrochemical plant, which converts oil and gas and its by-products into plastics. The February frost erupted large lumps that closed plants, many of which are still offline.

“What we’ve seen with the freeze is that we are one issue, one weather event away from demand-driven work levels, so it won’t take much to tighten the market,” said Howard Ungerleider. Dow ‘s chief financial officer Inc., Inc.

he said at a conference Tuesday.

Several Dow petrochemical plants in Texas had to shut down during the frost, and Mr. Ungerleider said they would be running at 80% capacity by the end of March.

He said plastic prices in Asia and Europe had already started to rise due to a shortage of supply in the US. He believed it would take more than six months to correct the supply and demand imbalances caused by the February storm.

That assessment could be bad news for tent maker Anchor Industries Inc., whose products are used for outdoor gatherings. The Indiana-based company is having trouble finding polypropylene tie straps, a product that is usually cheap and readily available, so workers are manually tapping boxes closed cardboard, a move that delayed shipments, said Mike McKim, purchasing manager.

“Texas has come close to the worst,” said Mr. McKim, who said that demand for tents is increasing due to immigration issues at the border and how event planners expect an increase in weddings in the country. -summer. “Someone is going to be behind the line and they won’t get what they need. We just hope not us. ”

Samsung, one of the world’s largest chipmakers, was forced to shut down two chip factories in Austin, Texas, last month. The facilities represent about 28% of Samsung’s total output, according to Citi analysts, and remained closed Wednesday.

Toyota has announced a petrochemical shortage for rations at its factory in Kentucky, where it will build Camry and Avalon sedans and the hybrid version of its RAV4 sports utility vehicle. The shortage would also lead to cuts in the production of his Tacoma pickup truck built in Mexico.

Meanwhile, California ports of Los Angeles and Long Beach, which together handle more than a third of U.S. ship imports, remain flooded by an investment reinstatement campaign that began late last year and which has picked up steam in 2021.

Long reserves left at one point about 40 boats anchored offshore awaiting dock location, but 17 ships were still waiting off the coast of Southern California earlier in the week. . The backs have stretched to other West Coast gates like Port Oakland while importers tried to move goods around the bottles.

“Supply chain problems have been relentless and have a direct impact on us for the past year,” said Abbie Durkin, owner of Palmer & Purchase, a women’s clothing and accessories store in Rye, NY. we’ve been keeping cargo in Los Angeles for months and now use airfreight for about a quarter of our books to make sure things arrive on time. Our freight costs have doubled and we need to increase our prices starting in June. ”

Gene Seroka, Executive Director of Port of Los Angeles, expects with little relief, with 18 more boats ready to arrive at the port by this weekend.

“Import volumes will continue to be strong through the spring and early summer,” Mr Seroka said on Tuesday.

As for semiconductors, they have been in short supply for months after manufacturers of cars, smartphones, PCs, tablets and TVs predicted expectations during the pandemic, before put up orders taken by chip manufacturers unprepared.

General motors Co.

, Ford Motor Co.

and Nissan Motor Co.

they have announced production cuts or temporary plant closures due to chip shortages. Such factory outages – even short-term ones – can appear in earnings products as car companies retain revenue when a vehicle is shipped from the plant to the dealer. Many dealers are tight on inventory, and some car buyers have to hunt harder for models you like and pay the highest dollar when they find them. as retailers and brands have withdrawn discounts.

—Dan Strumpf in Hong Kong and Austen Hufford in Chicago contributed to this article.

Write to Sean McLain at [email protected], Christopher M. Matthews at [email protected] and Costas Paris at [email protected]