The theme of the panel discussion was “Optimism in Wisconsin Manufacturing,” but the CEOs of Generac Power Systems and Ariens Co. shared their pessimism about the current supply-chain woes — predicting the challenge will last at least until 2023.
American manufacturers have struggled attaining deliveries through their international supply chains since the early months of the Covid-19 pandemic in spring 2020. The problem persists as ports in southern California and trucking firms can’t keep pace with demand and overseas suppliers in countries including Vietnam battle Covid-19 surges sidelining their workforces.
Family-owned Ariens is manufacturing snowblowers at its plant in Brillion but because of supply-chain woes, the company lacks engines and other components to finish the products, said CEO Dan Ariens. The company has been trucking the snowblowers to a warehouse in Kenosha where they await their final parts, he said.
One of Ariens’ American-based small-engine suppliers shifted production to Vietnam from China, but now Vietnam is under a lockdown amid a surge of Covid-19 cases, Ariens said.
“We have about $12 million in inventory that needs parts – springs, belts, seats, tires,” Ariens said during the Wisconsin Manufacturing Summit Friday a the Wisconsin Club in downtown Milwaukee. “I think 2023 – it’s going to feel better in ’23. I don’t know if it’s (supply chain) going to be solved.”
Aaron Jagdfeld, president and CEO of Waukesha-based generator manufacturer Generac (NYSE: GNRC), also doesn’t see any short-term resolution to the supply-chain challenges.
“Unfortunately – I hate to be the bearer of bad news – but talking to others here it doesn’t feel like it’s going to get solved even next year,” Jagdfeld said at the event organized by the Independent Business Association of Wisconsin. “And the things that we buy and where we buy from, it looks like it’s more of a 2023 fix — if then.”
One often-discussed solution is re-shoring, or bringing the supply chain back to the United States. Generac has undertaken efforts to do that the past decade but there are limits to the extent of such a strategy, Jagdfeld said.
“We continue to look at that, but the challenge from hiring (employees) here frightens us from continuing to do more unless it’s automated, which is an option if you have enough volume,” Jagdfeld said.
Jagdfeld said the combination of a shrinking labor pool and regulations in the United States will keep more supply-chain work from moving to the U.S.
“There’s this narrative out there that we want to manufacture everything of what we do in the U.S.,” he said. “I support that but when you dig down deep on that, there are a lot of industries that are never coming back.”
As for logjams of container ships in Long Beach and Los Angeles, Jagdfeld said Generac continues pursuing alternative shipping methods, including flying supplies from overseas to company plants.
The optimistic side of the equation for Ariens Co. and Generac is that both are enjoying double-digit percentage sales increases. But with that comes the need for more supplies and employees.
Even international tech business giant Foxconn faces challenges in the race to get components, said Foo-Ming Fu, president and general manager of Foxconn Industrial Internet USA in Mount Pleasant. The Racine County operation does get help from Foxconn’s corporate procurement group, he said.
Labor shortages in the United States and elsewhere add to the challenges for manufacturers attempting to keep pace with rising demand for their products.
Foxconn held a job fair for the first time on Sept. 9 to recruit employees for its Mount Pleasant campus, Fu said. He said 134 people participated in the job fair and Foxconn hired 50 on the spot.
The company plans to hold another job fair “in a couple weeks,” but Fu didn’t give a date. The company is looking to fill more than 100 jobs related to making computer equipment.