Minnesota’s Economic News — W/E 12/8/23
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We hear a lot of generalities about the potential disruption of the supply chain of goods and materials that businesses rely on to produce and market products to consumers. But recently, a group of business leaders caught in the middle of the shortages bluntly laid out the practical consequences for northern businesses and consumers at a roundtable convened at a Duluth iron works company by Rep. Pete Stauber, R-MN and Rep. Tom Tiffany, R-WI.
The group got quite an earful on the real-life impact of the supply chain backlog on the area’s daily life, according to the News Tribune.
Patrick Miner of Miner’s Inc. in Hermantown said the implications of shortages on the manufacturing side will bring an even greater impact to distribution at the company’s grocery and liquor stores, which includes Super One. Many large manufacturing companies, like Procter & Gamble and Kraft Heinz, are increasing prices of products.
Miner said offering competitive pricing is critical for the business, but it’s hard to keep the price of products low when they have to pay more for inventory. In addition, he said many trucks are coming half- or three-quarters full, which means there is less of a need for employees to unload those trucks and stock shelves with fewer products.
Several other employers provided everyday examples of how the inefficiencies now typical of the system affect their workers and the company’s ability to provide the best service at the best price to customers.
London Road Rental Center’s Jerry Kortesmaki said some products for the business’ inventory, including floor finisher, are stuck on trucks or ships, and the delay of their delivery will also delay the jobs of people who need those products in order to complete their projects. He also noted that equipment is aging and can’t be replaced, and the money he would use to buy new equipment is instead going toward raised taxes.
Dwayne Haapanen of Kolar Auto Group described the dealership as “the poster child for supply chain issues.” He said the global chip shortage has prolonged the inventory shortage of new cars and trucks, and hundreds of thousands of dollars in taxes are owed due to the last-in, first-out reserve method.
Not surprisingly, the two congressmen placed much of the fault for the continuing supply chain crunch on the Biden administration. Yet the discussion also turned to the ever-more-generous welfare state’s unemployment benefits that some employers believe can discourage work.
Kortesmaki said he has witnessed a lack of work experience in individuals seeking jobs, which he believes is due to too much dependence on government assistance. He sees high turnover rates of staff as well. Tiffany said that while the enhanced unemployment benefits may have been necessary at the beginning of the pandemic, he believes they were too prolonged and incentivized people to drop out of the labor pool.
“The fabric of this country was built on work ethic,” Stauber said. “Before you can get a better job, first you have to get a job.”
Yet it’s clear that even for many with jobs and their employers, there’s no end in sight to the supply chain bottleneck that’s holding back a broader recovery, while pushing up prices even further for consumers.
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