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Need a washer and dryer? A refrigerator? Stove? Dishwasher?
How about a car or a truck? Motorcycle or jet ski?
Get ready to practice some patience.
And if you like nothing but the best? Make that elite-level patience.
The complex supply chains that offer Americans all manner of goods remain bolluxed in a number of areas – and could remain so into 2023, experts say, as COVID-19, labor and computer chip shortages, and the war in Ukraine grind on.
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For example, Rigels Appliance Store in downtown Moorhead had 16,277 appliances on order with Whirlpool alone as of Friday, July 1. “We get in anywhere from five to 12 semi loads a week. But it’s never enough. You’re always short something,” President Chuck Matthees said. Lead times for Bosch or higher-end Thermador appliances vary from two months for basic model machines to a year or more for high-end goods, he said.
“If we did Sub-Zero or Wolf, we’d have very similar lead times. There’s a lot of product that the (computer microchip) shortage is still impacting,” Matthees said.
“One of the impacts that we have seen is that a lot of the builders have finally figured out that they have some lead-time issues, so they are literally ordering the appliances before they dig the hole” for a home or apartment basement or foundation, Matthees said.
“It just depends on what you’re picking. If you’re picking very basic, entry-level stuff, the lead times are not great, but they aren’t intolerable. If you’ve picked something that’s very, very high-end? Of course, if you’re in a high-end home, you’re talking more than a year’s lead time to get it finished. So, you know, you’re not that far off. But you’re going to have to get your appliances right away. You can’t wait,” he said. Waiting to pick the appliances when the kitchen is nearly completed “doesn’t work anymore,” Matthees said.
Many appliance makers have streamlined their operations and suspended production of some models. “If they make a model in four colors, when they have to change colors, they have to shut down the assembly line. So what they are doing, they’re saying we’re only going to make stainless steel for the next three months. So, if you want to buy a white or a black one, you have to wait,” Matthees said.
At Wheels Inc. in Fargo, the showroom looks full – if you don’t think about how far apart the motorcycles are spaced – or that some big-boy and girl toys are missing. In early July, Sales Manager Kyle Dux said he normally has 30 or more Indian motorcycles on the showroom floor. That was down to a handful spaced out on the floor. The center of the showroom, normally full of jet skis and ATVs, featured carefully spaced Kawasaki motorcycles. The back of the showroom was filled with used motorcycles.
Stock is thin.
“We’ve been fighting this for at least a year and a half now. We have one new Indian motorcycle on the floor. And we cannot even order Indian motorcycles. We can only take orders from customers and then it’s only on certain models,” Wheels’ Owner Wayne Hartmann said in July. “(The wait) has been anywhere from two weeks to seven months on the Indian motorcycles.”
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For the Polaris off-road utility vehicles, like the Ranger series, waits can range from two weeks to 10 months or more. “We’ve given an allocation of what we can take orders for. We can’t even take orders for all of them that people might want. Some months we’re only able to order four of them (for presale orders).”
And if you think it would be nice if Santa brought you a snowmobile for Christmas, you should have considered contacting the head elf before Easter. “Normally in April, we can order as many snowmobiles as we would like. This past April, we were given an allocation of all that we could order for the coming year. We have very few snowmobiles that will be for sale this fall – probably like four – all the rest have been pre-sold,” Hartmann said.
Hartmann said part of the frustration is trying to figure out when product availability will return to pre-pandemic levels. He said suppliers hold out hope things will improve by this fall, “but we also had hoped it would be better by midsummer. So, who knows?”
Oddly, Hartmann hasn’t had the same problems getting Kawasaki motorcycles, which are made not only in Japan and the U.S., but in several other countries. “The motorcycles we can get. What we can’t get are the all-terrain vehicles, the side-by-sides or the jet skis, because they are made in the United States,” Hartmann said. A big plus is that the backorder rate on parts and accessories supplies has dropped significantly, with parts often available in three days, Hartmann said.
In 2021, many economic and supply chain experts thought that the complex systems that fed factories raw material and got the finished goods into American homes and offices could be working efficiently again by sometime in 2022. That’s looking less likely.
“It is difficult to say when things will level out, I think,” said Alfredo Roa-Henriquez, an assistant professor of logistics at North Dakota State University. He’s also a scholar for the Challey Institute for Global Innovation and Growth. The problems with the global supply chain, finely tuned for just-in-time delivery of products pre-pandemic, will probably outlast the COVID-19 pandemic, he said. “The pandemic didn’t create this issue per se. It only exposed some of the vulnerability” of modern supply chains, Roa-Henriquez said.
When the main objective in moving goods is efficiency, supply chains can break down, particularly when natural disasters, such as floods, earthquakes or hurricanes hit, or when man-made disasters, such as the war between Ukraine and Russia, stress them to breaking.
Companies are adapting, however, relocating factories back to the U.S., widening their reach for suppliers, and adding production capacity, Roa-Henriquez said.
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Consumers are flexible, too. “I think that in general when this kind of phenomenon occurs, consumers adapt,” Roa-Henriquez said.
Vinod Lall, a professor at Minnesota State University Minnesota’s Paseka School of Business, said that he thinks things will get better by the end of 2022.
Right now, retailers are now dealing with overstocking issues, he said. Target, for one, announced in June that it was discounting items and canceling orders to clear out previous seasons’ stock to prepare for Halloween, Thanksgiving, and the Christmas holiday season.
“People still have some money. Unemployment is at a record low level. But I think most businesses have learned a lesson from the past two years. And hopefully, there won’t be a repeat of some of the things that we had, you know, (last) Christmas,” Lall said, with goods arriving too late for the 2021 holidays.
Lall said production of goods is improving in China, the top U.S. trade partner in terms of imports. But the war in Ukraine will negatively affect the supply chains for nations that rely on that country as a supplier of wheat and other grains.
An ongoing need in the U.S. is improved infrastructure and technologies running the nation’s ports and shipping systems, Lall said. “I think what happens in the third quarter (of this year) will give us a better idea of what is going to happen in the fourth quarter. And if we can ride out the fourth quarter of this year, the holiday season of this year, things should start looking better by the first part of next year,” Lall said.
Meanwhile, at Muscatell Burns Ford in Hawley, Minn., General Manager Ryan McKay said that for most new vehicles, sales are on an order-taking basis. “We used to be able to have a customer come in and be able to select and usually get pretty close to the combination of what they were looking to do for new on the lot. Unfortunately with the restraints, we just can’t do that,” McKay said. “If they come in looking for a certain color, make or model, we have them sit down with one of our salesmen and we work out an order form.”
The lack of microchips to run the increasingly sophisticated engines, collision avoidance and other systems of modern vehicles is still an issue, but there are other commodity constraints, too – even with something as straightforward as paint. There is also a shortage of skilled factory labor to produce vehicles, McKay said. A typical special order time on the F-150 pickup in the past used to be eight to 12 weeks. “Now if we order that vehicle, it will be somewhere in that five to six months range,” McKay said.
He said that waits on orders should lessen by this fall and the first of the year. “The actual selection (of vehicles) on the lot I’m predicting will be a ways out,” McKay said. “We’re looking to master that first step before getting that second one done.”
In the meantime, he suggests flexibility. “Most of the time, if we’re flexible on our end and the customer is flexible on their end, we can figure it out together,” McKay said.
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