HBD has unique insight to the factors shaping the American manufacturing
as the economy recovers from the pandemic. We would like to share our observations and
Over the years, various factors including exchange rates, shipping costs, oil prices, the labor market, Chinese government policy, and US-Chinese relations have affected prices to a greater or less degree. Right now, the effects are greater.
The major factors include:
– The value of the US dollar has dropped nearly 10% in recent months, reflecting our weak dollar policy (which helps exporters but hurts importers and consumers) and the huge amount of dollars printed to keep interest rates low. This impacts the cost of raw materials imported by American mills and manufacturers.
– High demand and tight Chinese labor markets have driven up labor costs relentlessly, impacting prices of finished goods.
– US-China relations remain contentious. Tariffs continue to keep costs higher on imported finished goods, and particularly on raw materials and components.
prices have doubled since their lows, greatly affecting the price of anything
made from petroleum. Materials we use such as vinyl and nylon included.
– And of course, the corona virus has added a layer of misery to shipping. Supply chains have been disrupted, shipping prices have spiked, ports are seeing weeks long backups, and shipping service has become erratic. Price increases for freight (both overseas and domestic) seem steady and here to stay.
So what do we look for and recommend?
In short, prices are going up. Count on it. We do not see any of these forces subsiding in the short to medium term.
This news does have one solution: plan ahead. Planning will save you money, as waiting will only increase the risk of higher costs. Planning will also reduce the risk of supply chain disruption.
Our aim is to continue to maintain stock items and provide short lead times. But we can only do so with your help.
We ask that all our customers and partners be as forward
thinking as possible when it comes to ordering and anticipating needs.
Please call us at HBD to discuss any of this, and to help reduce disruptions as much as possible.