Unfinished Tractors, Pickup Trucks Pile Up as Components Run Short; Supply-chain problems cause orde | MDU Message Board Posts


MDU Resources Group Inc.

  MDU website

MDU   /  Message Board  /  Read Message

 

 






Keyword
Subject
Between
and
Rec'd By
Authored By
Minimum Recs
  
Previous Message  Next Message    Post Message    Post a Reply return to message boardtop of board
Msg  4392 of 4675  at  8/30/2021 5:04:52 PM  by

jerrykrause


Unfinished Tractors, Pickup Trucks Pile Up as Components Run Short; Supply-chain problems cause order backlogs, cutting into sales volumes for companies like Cleveland-Cliffs, Honeywell and Illinois Tool Works

 Publisher logo. Links to publisher website, opened in a new window.
 
 

Unfinished Tractors, Pickup Trucks Pile Up as Components Run Short; Supply-chain problems cause order backlogs, cutting into sales volumes for companies like Cleveland-Cliffs, Honeywell and Illinois Tool Works

 
 

Manufacturers are stacking up unfinished goods on factory floors and parking incomplete vehicles in airport parking lots while waiting for missing parts, made scarce by supply-chain problems.

Shortages of mechanical parts, commodity materials and electronic components containing semiconductor chips have been disrupting manufacturing across multiple industries for months.

Companies determined to keep factories open are trying to work around shortages by producing what they can, at the same time rising customer demand has cleaned out store shelves, dealer showrooms and distribution centers. As a result, manufacturers are amassing big inventories of unsold or incomplete products such as truck wheels and farm tractors. Companies that are used to filling orders quickly now have bulging backlogs of orders, waiting for scarce parts or green lights from customers willing to take deliveries.

Executives expect the shortages and delivery bottlenecks, exacerbated by overwhelmed transportation networks and a lack of workers, to stretch into the fall. The delays are costing manufacturers sales and pushing some companies to revamp the way they put together their products, executives said.

"There's clearly market strength out there, but you have to have the ability to deliver on that," said David Petratis, chief executive officer of door-lock manufacturer Allegion PLC. "We have an extremely tight supply chain."

Allegion's order backlog has doubled to three to four months of production as the company waits for semiconductor chips and other electronic components to arrive for commercial lock systems. Mr. Petratis said some production lines have been repurposed to make products the company can still assemble.

CNH Industrial NV, which makes New Holland farm machinery and Case construction equipment, has several thousand partially assembled earth-moving machines, tractors and crop harvesters waiting for parts at plants. CEO Scott Wine said CNH risks falling further behind customer demand if the company ceases production until it has all the components it needs.

U.S. inventories of durable goods with production in-progress rose 3% in June, the most recent data available, over the same month last year, to a seasonally adjusted $167 billion. That is nearly 12% higher than June 2019, according to the U.S. Census Bureau. The increase reflected higher production volumes, especially in machinery, wood products, metals and furniture.

Supplies of materials and consumer goods were depleted in spring 2020, when some businesses shut down to contain the spread of the Covid-19 virus. Since then, U.S. consumers have embarked on a spending spree for new homes, recreational vehicles, appliances, cars and other items.

That challenged manufacturers and commodity suppliers to keep up with rising demand. The backlogs of unfinished products are starting to take a financial toll on some companies, even as they report higher sales and profits.

Honeywell International Inc. said its second-quarter revenue would have been $100 million to $200 million higher if the company's supply chains weren't constrained. The industrial conglomerate predicted last month that supply-chain problems will clip that much from revenue again during the current quarter, even as the company raised its sales and profit forecasts for 2021.

Honeywell said shortages of plastic resins , semiconductor chips and other components are a drag on sales growth in its business units that produce building systems, safety gear and productivity equipment for warehouses and factories.

Semiconductor chips' scarcity has disrupted automobile production in North America, leading several assembly plants to idle production. General Motors Co. is storing thousands of new pickup trucks that lack chips or other components in airport parking lots near its Flint, Mich., plant. Ford Motor Co. parked new pickups at a race-car track outside of Louisville, Ky., while it waited for parts to complete the vehicles .

Howmet Aerospace Inc., which makes aluminum wheels for heavy-duty trucks, said its second-quarter sales volume of wheels dropped 7% from the first quarter, as shortages of chips and other parts led truck manufacturers to scale back truck assembly. John Plant, co-CEO of Howmet, said the truck makers halted wheel orders on short notice, causing stocks of wheels at Howmet to increase unexpectedly.

"We've got all these wheels," Mr. Plant said. "All of us are suffering different degrees of pain." The company said it offset the sales slowdown by raising prices.

Industrial conglomerate Illinois Tool Works Inc. said it now has an order backlog of about $200 million, stemming mostly from components it can't deliver to idled auto plants or other customers. Without the backlog and sales stalled by supply-chain delays, the Illinois-based company said second-quarter organic sales growth, which excluded revenue from acquisitions or currency fluctuations, would have been about 10 percentage points higher.

Steelmaker Cleveland-Cliffs Inc. reported that its inventory of steel rose by about $300 million during the second quarter because shipments to automotive customers were 20% less than the company expected. Cliffs said it was able to redirect some of that steel to the spot market, where the company was able to sell it for higher prices than the auto makers typically pay under purchase contracts with the Cleveland-based steelmaker.

"With the microchips being the tip of the iceberg, it shows that the supply chain is pretty weak and it's too complex," Chief Executive Lourenco Goncalves said.

 
 
 


     e-mail to a friend      printer-friendly     add to library      
|  
Recs: 1  
   Views: 0 []
Previous Message  Next Message    Post Message    Post a Reply return to message boardtop of board

Replies
Msg # Subject Author Recs Date Posted
4393 Re: Unfinished Tractors, Pickup Trucks Pile Up as Components Run Short; Supply-chain problems cause order backlogs, cutting into sales volumes for companies like Cleveland-Cliffs, Honeywell and Illinois Tool Works birdog40 2 8/30/2021 5:32:05 PM


Financial Market Data provided by
.
Loading...