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Local economist: Supply chain issues to continue

Published: Oct. 13, 2021 at 8:37 AM EDT
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SOUTH BURLINGTON, Vt. (WCAX) - From toilet paper to building materials to cars, there have been a number of shortages over the last year-and-a-half and some of it is expected to continue.

Experts say what you’re able to find on shelves inside stores like Ace Hardware boils down to a few problems that are all connected.

“It’s never just one area, it’s everything, it’s seasonal, or there are so many pockets that are affected,” said Greg Bibens, the general manager of Bibens Ace Hardware in South Burlington.

Bibens says for a store that carries a lot, there have been a lot of random holes because of all sorts of supply chain fractures.

“It’s the raw materials, it’s the labor, it’s the shipping, it’s the ports, it’s the production,” Bibens said.

“What we are really looking at is a confluence of preferences and transportation bottlenecks,” said Andrew Fieldhouse, an economics professor at Middlebury College.

Fieldhouse says it’s a complicated web of supply issues from ships stuck in port to worldwide factory shutdowns, but it breaks down into a few problems. One is what we are buying.

“The pandemic has caused wild shifts in consumption preferences away from services, particularly in-person services like leisure and hospitality toward goods,” said Fieldhouse.

Two, not just preferences in what we buy, but where we work. That can impact the ability to create goods and movement of goods like trucking or loading and unloading ships. That means transportation bottlenecks, which is the third problem.

None of these stand alone, as they are all connected.

“There are often ripple effects, right if it takes longer to unload ships in L.A., that’s going to affect the movement of goods and services in both directions,” said Fieldhouse.

Professor Fieldhouse says the general supply of goods adjusts based on wild swings in consumption, but labor preferences pose long-term threats to everything.

“How long it takes massive swings in how people are working, where people are working, what kind of jobs people are willing to do, that could take a while,” said Fieldhouse.

Fieldhouse says employees now have big bargaining power as they look for work. But Bibens says the hardest part is a Catch-22.

“The days we are staffed really well, it’s like great, I don’t have that to sell to you, and days I don’t have staff, it’s like well great, I don’t have anyone to sell it to you,” said Bibens.

Fieldhouse says this issue isn’t something we are familiar with.

“The labor question is a little bit trickier. We don’t have a good idea on what’s going on with the U.S. labor market, it’s been totally upended. A number of sectors are struggling to find truckers, are struggling to find people to work in leisure and hospitality, but it’s pretty clear that the pandemic has fundamentally shifted a lot of people’s willingness to work certain jobs. Workers bargaining powers increased or perceptions of risks have changed and people are unwilling to take jobs, like it’s not worth it to die of COVID flipping burgers or working at a bar,” said Fieldhouse.

He says post-pandemic, a look at the global supply chains and vulnerabilities is needed.

In the meantime, Ace Hardware has made huge shifts online, which helps. But they are hiring in-store.

At the national level, President Biden is expected to meet with heads of some of those backed up shipping ports and some large private sector companies Wednesday.

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