September ’23 at-a-glance … supply chain

New supply chain survey results identify business challenges

Regulations and the cost of compliance are escalating at such a rate that they are among the top business concerns of NAFEM members who replied to NAFEM’s recent supply chain survey.

According to the NAFEM members who completed the survey, their companies’ business challenges are, in order, recruiting/retaining employees, regulations, supply chain issues, raw material costs and taxes/tariffs. Here are some key findings:

  • The costs of regulatory compliance are high, with 40% of respondents reporting spending $20,000 – $40,000 annually and 20% paying greater than $100k on regulatory compliance. If these costs were reduced, those who responded would reallocate these funds to purchase new equipment (58%), hire more employees (34%), increase wages/benefits (32%), expand facilities (22%) and increase community philanthropy (10%).
  • Tariffs are the number one supply chain concern of those who responded, with supply shortages second, followed by shipping costs and international shipping delays.

The NAFEM advocacy team will present full results of the supply chain survey during the October 5 Advocacy Update webinar at 11 a.m. Central. Contact to join.

The association will share the information with elected and appointed officials in continuing efforts to advocate for a business climate that supports growth of good-paying manufacturing jobs in communities across the U.S.

As Panama Canal challenges continue, Mexico advances alternative

Due to the long and expected-to-continue drought in the region, the Panama Canal Authority extended water restrictions for at least another 10 months. The number of ships able to pass remains at 32, versus the normal 36 and ships are required to carry less weight to accommodate lower water levels.

Meanwhile, Mexico continues work on an alternative to the Panama Canal – its trans-isthmus trade corridor. Ships would unload their cargo at either Salina Cruz, Oaxaca or Coatzacoalcos, Veracruz, with the cargo then transported 303 kilometers across the isthmus via rail and reloaded on another ship. Mexican officials estimate transport time of six hours versus the eight-to-ten hours required to pass through the Panama Canal. According to Mexico New Daily, The first tests began in August and the corridor is expected to open by Sept. 2024.

Canada increases pressure to prohibit forced and child labor

Canada’s Fighting Against Forced Labor and Child Labor in Supply Chains Act takes effect Jan. 1, 2024. It aims to increase awareness and transparency and drive businesses to improve practices by requiring companies with $20 million or more in assets, and/or $40 million or more in revenue, and/or 250 employees to:

  • Report annually on efforts to prevent and reduce the risks of child and forced labor in their supply chains.
  • Amending customs tariffs to expand the prohibition on the import of goods manufactured or produced with child and forced labor.