Will it ever end?

[TrackMeisterWannabe]

The latest insight on supply chain issues from Ford Authority. Looks like Ford will be scrambling this winter.

https://fordauthority.com/2022/08/ford-production-could-be-impacted-by-european-energy-crisis/

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[EFI]

Nope, even if it in reality things get better.

Everyone selling goods or services have gotten used to charging exorbitant prices and just blaming it on the pandemic or supply issues, so why would they stop? The demand is there and until that completely tanks, these companies or people will continue charging high prices and blaming the supply chain on it.

 

[MCS]

Agreed. The corporate world is loving it. "This is the new normal".

• In the beginning, the business world was afraid of tanking due to COVID but consumer demand was still there; shaky at first but then getting stronger as people went without their goods and services.
• Supply issues caused them to raise prices to make more on single sales instead of volume plus there were increases in costs to mine, manufacture and transport goods.
• Even with the increased prices demand was still there
• Now that the pandemic has eased and people are going back to work
• The pandemic pricing is the new normal because now they are crushing it with profit on single-point sales as well as volume.

The point is; to quote Malcolm Renyolds (Firefly) "the way it is the way it is".

It ain't changing any time soon.

 

[sirben711]

I work for an OEM in the agricultural equipment sector who actually manufactures here in the states.

Prices for raw material are insane right now. A little lower than last year and earlier this year, but still insane. Getting the raw materials has been a massive issue for us - we either have a glut of material all at once (which we cant handle) or not enough. Throw in labor shortages and things get worse. Its bad. Very very bad. There is no way to correct these problems unless demand (for everything) drops and things even out.

We have given our customers three price increases in the past year, 15 % 25% and 20% and its still not enough to cover our exploding costs.

Another issue is - our customer base is placing orders to lock themselves in at lower rates for equipment they may or may not need - which really screws the company I work for -but you never know if its a legit order or not until they cancel. Though, this might just be a problem for my industry - but I digress.

I don't think the energy issue will be a problem here though.

Its bad. And doubtful to change anytime soon.

 

[Mspider]

I think it will get better but not in the short term. I work in supply chain and can say that the cost of shipping goods has went down dramatically. But everyone is still selling product that was bought at a much higher price.

 

[Magnetic Stang]

Vendors tell me it's not changing for a least another year. Some parts I order for electrical control cabinets have crazy long lead times. On drives, PLCs, e-stop modules and even some sensors I get 10 months to a year lead times on quotes from big name companies. So I can imagine every industry is struggling to get what they need unless they over pay from second hand websites.

 

[KingKona]

Nope, even if it in reality things get better.

Everyone selling goods or services have gotten used to charging exorbitant prices and just blaming it on the pandemic or supply issues, so why would they stop? The demand is there and until that completely tanks, these companies or people will continue charging high prices and blaming the supply chain on it.

This.

Right.

Here.

 

[sirben711]

This.

Right.

Here.

There may be some of that. But there are legit issues getting materials.

When customers and distributors switch from "just in time" to "we need it now" and or "just in case" that is throwing a nuke into the supply chain from actual producers in addition to everything else, prices will spike somewhere along the chain.

 

[KingKona]

There may be some of that. But there are legit issues getting materials.

When customers and distributors switch from "just in time" to "we need it now" and or "just in case" that is throwing a nuke into the supply chain from actual producers in addition to everything else, prices will spike somewhere along the chain.

Dealerships and manufacturers will take advantage of the perception of scarcity to keep prices high.

If you owned a dealership, and made the same $$ now as you did 2 years ago, but employed 1/4 or 1/3 the sales staff and worked a lot less hours, you'd be desperate to keep the good times rolling too.

And that also keeps your service department rolling in fat-stacks of cash, as people try and keep their 2005 shit-box rolling for another few months.

Dealerships are selling cars that are ordered, not even on the lot. For MSRP or above. They'd be very happy to keep this going for a long, long time.

 

[EFI]

But there are legit issues getting materials.

Yes manufacturers do have issues getting materials thus having delays or high prices on their final goods...but a alot of those "issues" are self imposed at the supplier level in order to keep prices artificially high.

It all starts somewhere with a greedy businessman, and not only does that trickle down the supply chain but everyone along said chain also adds in a little bit of their own greed and faked "scarcity" to ensure the end price remains as high as possible after seeing the end consumer pay those prices. Noone in the chain has any reason to reduce prices even if the step before them has gotten better.

That is until demand just straight up drops. That's the only way out of this crisis, whether real or made up.

 

[sirben711]

Yes manufacturers do have issues getting materials thus having delays or high prices on their final goods...but a alot of those "issues" are self imposed at the supplier level in order to keep prices artificially high.

It all starts somewhere with a greedy businessman, and not only does that trickle down the supply chain but everyone along said chain also adds in a little bit of their own greed and faked "scarcity" to ensure the end price remains as high as possible after seeing the end consumer pay those prices. Noone in the chain has any reason to reduce prices even if the step before them has gotten better.

That is until demand just straight up drops. That's the only way out of this crisis, whether real or made up.

As I said before there is a serious shortage of raw material. Whether that be due to nobody producing or too many buyers. It doesn't matter. There is too much competition for too few materials which inflates the price. Whomever is willing to pay more for the same materials will get those said resources and they pass on those costs further down the line and then everyone takes their __% margin for that sale. Sure, some may be inflating their margins due to loss of past or future sales or even taking advantage of the situation. I don't disagree, but I also don't blame the businessman either.

I absolutely agree about demand. Demand needs to crash for things to start getting back to normal - for all products and industries.

 

[Hillsndale]

Over 25 years i have developed relationships with a lot of machinery manufacturers and can echo what the others who are in the industrial machinery realms are saying. I spec and buy a variety of machinery for production lines. I go through a bid process as part of my negotiation and ultimate choice on which particular vendor I buy from. Proven ability to perform and deliver along with integrity are factors, not just price. Lead times have become a MAJOR factor in awarding contracts and they are well aware that they are competing on that basis. Their materials and component suppliers also have to compete on lead times or lose market share.

Edit: Almost all of the machinery I buy is built in the USA by USA based companies, but also include Canada, France, Italy, Germany, and China.

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