WASHINGTON: Surging inflation is disrupting everything from carpools to the ability to quote prices on new business at already-strained US factories.
At BCI Solutions Inc., a metal foundry in Bremen, Indiana, 14 workers quit in the last two weeks – over 7% of its total workforce and an unprecedented number compared with pre-pandemic times. BCI has long struggled to hold workers but never lost that many in such a short span.
Company Chief Executive Officer JB Brown blames at least part of the sudden loss of workers on the spike in gasoline prices in the wake of Russia’s attack on Ukraine, which has roiled global energy markets and sent prices at the pump through the roof. Regular unleaded gas was a record $4.33 a gallon on Friday, according to AAA, up 85 cents in a month.
“When gas goes up, people want to work closer to home”, he said, and with the jobless rate in the surrounding largely rural Marshall County under 1%, according to Bureau of Labour Statistics data, those jobs are easy to find. In some cases, he knows workers who don’t want to quit — but do so because the person they carpool with does.
The current wave of disruptions come as many manufacturers felt they were starting to untangle supply chain and labour problems created by the Covid-19 pandemic. Backlogs at major US ports have declined in recent weeks, for instance.
And it remains too early to fully assess how much the crisis in Ukraine will slow a return to normal operations — or create new issues.
Federal Reserve Chair Jerome Powell has said the central bank would start “carefully” hiking interest rates at its upcoming March meeting as it balances the threat of high inflation and complex new risks posed by the war in Europe. He has also said, however, that the Fed would be ready to move more aggressively if inflation does not cool as quickly as expected.
Powell called the Russian attack “a game changer” that could have unpredictable consequences.
Some of those hard-to-predict things have already hit factory floors. At Gent Machine Co, in Cleveland, that includes disrupting work on a bid for new business.
Rich Gent, who runs the 50-employee company with his brother, said he has been working for five months with a customer who wants his factory to start producing a stainless steel part for its marine products. Stainless prices, as with most metals, shot up during the pandemic and supplies remain tight.
Earlier this week, when Gent called around to his five metal suppliers, none could give him a price estimate for the 5,000 pounds a month he needs. Production of stainless requires nickel, and with Russia a major nickel producer, prices have surged.
Two suppliers said they could only start shipping in two months and the price would be the spot price on shipping day. The others couldn’t even commit to supplying metal. “Their best guess was they could get me the material in November”, he said. — Reuters