Submitted by mmetz@kcma.org on Tue, 07/27/2021 - 19:33
Industry News Update June 24, 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:

CONGESTED CHINESE PORT HOLDS UP GLOBAL SUPPLIES

China Port

When it started: This particular problem, the latest in a series of issues creating turmoil across international shipping supply lines, began in late May when an outbreak of COVID-19 caused authorities in China to close parts of the province that houses Yantian—one of the most active ports in the world. As a result, products like electronics, furniture, home appliances, and car parts that typically go through the port for global distribution have been delayed.

The impact: The congestion, and the downstream effects from additional delays, are leading to higher prices for shipping, as well as longer wait times for products and materials flowing through multiple Chinese ports. It’s affecting markets worldwide.

Where we are: According to port officials, operations that were functioning at 30% capacity earlier this month have returned to about 70% capacity. Still, returning to full capacity operations is not the only remaining issue hindering cargo movement; there are still dozens of container ships anchored around the port and around 350,000 loaded containers presently waiting to be placed on ships. The line of ships waiting to enter the port has become so long that new arrivals are being diverted elsewhere. And those ports, too, are finding themselves overwhelmed with vessels and cargo. 

The big picture: The logjam is the latest in a series of disruptions that have battered supply chains around the world this year, leading to shortages of everything from raw materials to consumer goods, raising costs for manufacturers and retailers and undercutting attempts by companies to capitalize on resurgent demand in Western economies. 

 

DEERE & COMPANY AND IOWA ARE GROWING LOCAL TALENT

John Deere

Back in 2019, Iowa knew they had a problem. John Deere knew it too. If they didn’t take immediate action, the company and the state wouldn’t be able to find the production and skilled trade workers necessary to keep industries growing.

A strategic workforce study was able to identify a potential labor source that the company had not traditionally pursued -- high school students, who were not planning to attend college. 

For the past two years, the company has been placing its efforts on increasing the awareness and benefits of manufacturing as a career -- talking directly to the students and dispelling myths about the field as a long-term career. Read more.

 

TRUCKING'S WORSENING LABOR SHORTAGE

Which Way

As the economy continues to gain steam, trucking companies are facing even more pressure to hire and retain drivers to meet the growing demand from ­shippers.

Hirschbach Motor Lines CEO Brad Pinchuk said the current driver recruiting environment is the most difficult he’s ever seen “by a long shot.”

“It’s always been tough, but on a scale of 1 to 10 right now … I’d put it at a 15 or something like that,” he said. “It’s really off the charts.”

To address that challenge, Hirschbach has hired about 50% more recruiters than it had a year ago and is spending more than twice as much on advertising, Pinchuk said. The refrigerated car­rier also is trying new ­approaches, including establishing its own training program for commercial driver students.

Hirschbach received rate increases from its customers late last year and early this year, but Pinchuk said it hasn’t been enough to cover the rising costs of recruiting drivers and increasing their pay. Read more.

 

LUMBER PRICES DOWN MORE THAN 40% FROM MAY PEAK

Lumber Mill
 

Lumber prices, which reached record-highs of $1,670 per thousand board feet in May, fell more than 40% in mid-June to under $900, according to the Wall Street Journal.

The plunge follows record price surges induced by limited supply mixed with soaring demand caused by the pandemic. Prior to the pandemic, lumber sold for around $400 per thousand board feet, according to Markets Insider.

New York Times report cited a surge of sawmill activity to meet the demand as a factor for the recent price plunge, as well as a cooling in demand.

The surging cost of lumber over the past year has added nearly $36,000 to the price of a new single family home.

 

COLORFUL WATER STATIONS

Water Station

Adding a pop of color to the kitchen is trending in a major way, as is adding ultimate function via appliances, cabinet inserts and even water stations. Today’s kitchen sinks come in a range of colorful options to make a statement or enhance the overall design.

Some of the key trends in kitchen sinks:

• Workstations continue to gain momentum, with the latest styles including cutting boards that fit neatly in the sink to create additional countertop space when needed.

• Shades of black as well as white are rivaling stainless steel for position, in both matte and glossy finishes.

• Bolder colors such as navy blue, red, green and yellow are also gaining ground, providing a pop of color to white and gray design schemes.

• Accessories are becoming important add ons, going beyond the colander and cutting board to include strainers, drying racks and a host of other options.

Read more.

 

EVEN WITH MAY DECLINE, RETAIL SALES HAVE SOARED 18% SINCE PANDEMIC BEGAN

  • Retail sales fell 1.3% in May, pulled lower by sharply reduced sales at motor vehicles and parts dealers, among other segments. Yet, it is important to put the current data into perspective. Retail spending has soared 18.0% since February 2020, buoyed by stimulus benefits and a rebounding economy.
  • In addition, retail sales should continue to grow strongly over the coming months as the U.S. economy continues to reopen and as supply chain disruptions in the marketplace stabilize.
  • Manufacturing production rose 0.9% in May, bouncing back after edging down 0.1% in April. More importantly, output in the manufacturing sector is off just 0.5% from pre-pandemic levels, and manufacturing capacity utilization increased from 74.9% in April to 75.6% in May, the best rate since December 2019.
  • Manufacturing activity in the New York and Philadelphia Federal Reserve Bank districts expanded solidly once again in June, even with some easing. In the Empire State Manufacturing Survey, delivery times narrowed to the slowest on record, and in both regions, input and final product prices continue to accelerate sharply.
  • New residential construction activity rose 3.6% from 1,517,000 units at the annual rate in April to 1,572,000 units in May, with stronger single-family and multifamily housing starts. While activity has decelerated in the past couple months, housing starts remain solid overall despite rising construction costs and difficulties in finding talent.
  • Homebuilders remain optimistic about growth over the next six months, and housing permits signal continued strength moving forward. Housing permits have risen 13.7% since February 2020, with single-family and multifamily permitting up 12.0% and 17.5% over the past 15 months, respectively.