Submitted by mmetz@kcma.org on Fri, 08/27/2021 - 17:23
Industry News Update August 26, 2021

The Kitchen Cabinet Manufacturers Association is committed to bringing you the most up-to-date information in the industry. Here’s a look at what’s happening:

THE 'BUILD AMERICA, BUY AMERICA ACT'

BABA

The Senate’s recently passed $550 billion bipartisan infrastructure bill was chock full of how to fund routine infrastructure projects like water treatment facilities, railroads, and preparing for building up a domestic electric vehicle supply chain. But the Build America, Buy America Act incorporated in that bill is a standout.

That section alone shows the Senate, and White House, remain heading in the same direction in terms of their thinking on local manufacturing and supply chain resilience. It’s been unmoved since Trump put tariffs on numerous China goods, and the International Trade Commission placed anti-dumping duties on China solar panel imports in 2018 and kitchen cabinets in 2020. In the wake of the global trade war, the U.S. Senate is becoming a little less globalist. Build America, Buy America, a bipartisan Act, is a plus for President Joe Biden who has been talking this up since January.

For decades, small to midsized manufacturers in the U.S. have been forced by the major global corporations – whether Walmart or GE – to compete against cheap labor and near-zero environmental rules in Mexico and China. It was a daunting task. Thousands folded. More firms laid off and automated, buying robotic equipment increasingly imported from Asia.

Build America, Buy America is a recognition that this is not sustainable on all counts: economically, socially, and politically.

What does the language in that Act tell us? Read more.

 

U.S. DEPARTMENT OF LABOR AWARDS $1.8M TO REINTEGRATE WORKERS AFFECTED BY THE ILLINOIS’ OPIOID CRISIS

Opie

 

The U.S. Department of Labor awarded $1,866,667 in incremental funding to the Illinois Department of Commerce and Economic Opportunity to support job creation and workforce training services in 13 counties affected significantly by widespread opioid use, addiction and overdose.

This funding will serve eligible individuals in Bureau, Carroll, Cook, DeWitt, Jo Daviess, Lake, LaSalle, Lee, Macon, Ogle, Putnam, Whiteside and Will counties.

The National Opioid Disaster Recovery Dislocated Worker Grants create temporary jobs and provide services to reintegrate workers affected by the crisis and train individuals to work in mental health treatment, addiction treatment and pain management. Read more.

 

THE U.S. IS LAGGING IN R&D INVESTMENT, BUT WE CAN TURN IT AROUND

Manu

Our economy depends on the U.S. manufacturing sector being best-in-class globally. Yet it is no secret that U.S. manufacturing has been lagging China for the last decade—and the gap is growing, which creates an urgency to act.

For example, in the research and development space, the Chinese government's R&D investment grew by 13% in 2019—and, through its "Made in China 2025" initiative, China plans to increase its investment by 7% each year through 2025. Here at home, our investment grew by just 8% in 2019, despite competing in the same global race. We are not investing to win, and that is hugely problematic for our nation.

Do we truly expect to win this race without applying an equal or more significant investment? Are we so much smarter than China?

It is more likely that we will continue to fall behind without making the investments needed. Read more.

 

EVERYTHING IS TRACEABLE – UNLESS YOU DON’T WANT IT TO BE

LogYard

Traceability is a simple matter really. Consumers have the right to know where the products they buy come from, and to trace them back to the source of the raw materials to ensure that they are not linked to anything dodgy, such as deforestation and human rights violations. Consequently, brands, retailers, and manufacturers have the responsibility to provide this traceability information to consumers.

In a nutshell, everything is traceable. Traceability is not only about mapping supply chains and tracing the documents whenever products change shapes and hands.

A good traceability system should also be verifiable and transparent, especially when the products are linked to large risks such as deforestation, environmental degradation, and human rights violations. A good traceability system must include maps of the source of the raw materials, which are published for the public to see and independently verify. The longer a company waits to achieve full traceability and transparency for its supply chains, the longer the company deliberately tolerates possible environmental and social non-compliances. Read more.

 

HIGH LUMBER PRICES LEAD TO UNEXPECTED SURPLUS OF CHEESE

Cheese

The soaring lumber price saga of 2021 will forever live in infamy. An odd consequence of the hot U.S. real estate market is how it affected the price of cheese.

Fast and furious homebuilding in North America has resulted in a dearth of wooden boxes that hold 640-pound blocks of cheese, which usually end up as shredded cheeses or cubes on party platters.

To compensate, the industry has produced more 500-pound barrels of cheese, a vehicle for more processed varieties like Kraft Singles and Velveeta ("barrels" really aren't barrels - they're more likely "a plastic bag and a corrugated box with multiple dimensions," Ohio-based cheesemaker Kurt Epprecht told trade publication Hoard's Dairyman.)

Sidenote: Hoard's Dairyman is my new favorite site - https://hoards.com/

The flood of massive barrels in the market has resulted in the lowest prices for processed cheese in more than a year. On the Chicago Mercantile Exchange, cheese barrels traded at $1.3075 a pound at the beginning of August, the lowest since May 2020.

 

THE SEARCH FOR DRIVERS AND THE FIGHT TO KEEP THEM

Trucker

Although the career opportunities in trucking are abundant, the driver shortage has been a thorn in the industry’s side for years, and it has only become more severe as freight demand has surged amid the recovery from the COVID-19 pandemic. In fact, the driver shortage has ranked No. 1 on the American Transportation Research Institute’s annual Top Industry Issues list in each of the past four years. While there isn’t a quick-fix solution, getting to the root of the problem is the first line of attack for many fleets. Read more.

 

A SUPPLY CHAIN LEADER SHARES THEIR SECRET SAUCE

TopSecret

Significant changes in overall supply management strategy and practice are already happening at progressive corporations. The changes are leading to positive financial impacts above and beyond what can be achieved through a primary focus on piece-price reduction. 

The vice president of supply chain management of a company shares “secret-sauce” information to help others, but on the condition of anonymity. Below is a blurb from their documented supply management strategy—which is shared with all suppliers—that gives a window into their approach.

The top factor listed in their strategy is titled “Leveraging Time.”  To that end, they have a goal to:

“… select and develop suppliers that compress their internal manufacturing cycle time to the point that they can produce and deliver parts within our customer lead time. To the extent that this is possible, we eliminate the cost of carrying inventory both in-house and at the supplier. We eliminate the cost of obsolescence and improve our responsiveness as we are not tethered with legacy considerations. Time compression drives out cost as it helps to eliminate the non-value-added work and overhead associated with wait time.”

How many companies place a statement like this at the top of their supply management’s strategic plan? Why is it important? Because the company has products with very seasonal and variable demand—which brings difficulty in making accurate forecasts and a very short time to react to demand that varies from forecast. Read more.