How COVID-19 Increased Material Costs

Rachel Harmon
Samantha Mikos
Rob Szafarowicz
Megan Boerner

Since the spring of 2020, the manufacturing industry has seen a major setback with increased material costs. For example, the price of lumber has risen by 180%Likewise, since August 2020, the price of steel climbed by 168%. These goods are not unique. Other materials like zinc, aluminum, and acrylic have also taken a big hit with the growing price hikes. 

With the new fiscal year, the COVID-19 pandemic charges on, and its impact growsMaterial costs are rising, and this problem cannot be explained by just one thing. As production, demand, and transportation change, this shift in the supply chain proves to be complex and will continue to impact all manufacturing. 

This shift in global manufacturing will affect all industriesHoweveryou can work hard now before it’s too late. Most importantly, identify the toll this change may have on your recognition program, and let us help you manage it. 

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SHIFT IN PRODUCTION

Around the world, suppliers struggle to rebuild their factory floors after extensive shutdowns. 

While business was frozen for two or three months, manufacturers wondered how they would make up for lost time. Not able to work for extended time periods, suppliers became overwhelmed. As piles of untouched materials grew higher and higher, workloads became congested. As a result, delays and material costs increased. 

Some suppliers, like those in the United Kingdom, are currently still on lockdown. With warehouses empty of personnel, many of our UK partners hope to reopen in May. Catching up on delayed work may seem hopeless, but it is essential to economic recovery. 

 Additionallymanufacturers have less workers employed due to COVID-19 restrictionsConcerns include self-isolation, recovery, physicaldistancing protocols, and economic stress. Stretched thin, warehouse teams push themselves to meet ever-pressing needs. Essentially, less people have less time to complete the same amount of work. As product demand increases, the cost of products increases as well. 

Considering the frequent challenges facing organizations today, it is important to learn how to develop a genuine relationship with your supplier. Strong collaborations can promote product quality, accountability, and excellent customer service. As uncertainty continues, ensure that your partner relationships are stable. 

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SHIFT IN DEMAND

The COVID-19 pandemic changed needs and, thus, demands. 

After the science community shared what was needed for global health and safety, organizations needed personal protective equipment (PPE). Facemasks, ventilators, and more were not only the new number-one products; they were essential to the health and future of every person on Earth. 

As a result, manufacturers stopped producing their typical goods. They restructured their processes to supply these crucial commodities. For example, acrylic suppliers shifted to produce protective shields for workplaces. 

Additionally, some distributors began to hoard the supplies needed for PPE. These middlemen capitalized during shutdowns, increased material costs, and reworked their systems to make the greatest gains. 

With Cristaux’s vast vendor network, we work hard to expect change and avoid shortages. We source materials stateside and globally to avoid future setbacks.  

 

Cristaux-Warehouse-Inventory-Management

SHIFT IN TRANSPORTATION

Shipping delays, exhausted dockworkers, and increased imports to the United States are all effects of COVID-19. 

The freight industry is backlogged and overwhelmed by the shortage of operating docks. With twice the vessels to dock and half the workers to unload cargosetbacks are inevitable. 

Shipments continue to lag. With new lockdowns and recent holidays like Lunar New Year, transportation slows down. As a result, delay costs increased material costs. Additionally, foreign shipping is more expensive than it used to be thanks to added tariffs. 

U.S. manufacturers who work with suppliers based in China now face increased taxes on imported goods. This may affect the overall cost of your recognition program. At Cristaux, we are dedicated to educating each client on the best possible solution. 

 

Over the last year, industries have changed as drastically as lifestyles have. Production continues to ebb and flow. Demands are shifting, and overseas transportation is becoming more costly. Above all, it is important for suppliers and distributors to collaborateSolutions need to be developed to make things easier for their teams and our clients. 

Connect with a Cristaux team member to discover what solutions are possible for your program.