American Indicators check-in: A machine company faces supply chain disruptions
ARI SHAPIRO, HOST:
At the start of the pandemic, people panic-bought toilet paper and Clorox wipes. Shelves were empty for weeks, and disruptions in the supply chain have continued ever since, even a year and a half later. Lisa Winton is feeling it from several directions. Like, her son swims for Notre Dame. And like most college parents, she was excited to wear some swag to show her support. So she ordered the gear in June, and now it's October, and she still doesn't have it.
LISA WINTON: The vendor is doing everything they can to get the goods from the manufacturers. So it could be in one of those containers on one of those ships somewhere that nobody can unload.
SHAPIRO: And so part of you must be like, where's my sweatshirt? And the other part of you must be like, I feel your pain (laughter). I'm going through the same thing.
WINTON: Yeah. So I was like, they really need their merchandise. But on the other hand, I completely understand.
SHAPIRO: Lisa Winton understands because she's a manufacturer herself. Her family owns Winton Machine Company in Georgia. They make parts for everything from refrigerators to the Mars rover. Lisa Winton is one of our American indicators - people in different parts of the economy who we've been following through the pandemic recession and recovery. Like the vendor struggling to deliver Notre Dame swag, she's had trouble completing orders for her clients. Like, there's a machine that makes tubular parts that go into refrigerators.
WINTON: One part, just one motor was supposed to be on our floor about two weeks ago. And that was six weeks after ordering it. And now we were told we had another eight weeks until this motor would be delivered. So what we're having to do now, like, on this particular machine is we've had to go back to the engineering team, and they've have had to go and try to figure out additional options in order for us to buy from other suppliers.
SHAPIRO: So typically, you'd make this thing. You'd assemble it. You'd ship it out. You'd get paid for it, and that's how you do business. What are the ripple add-on effects of having this kind of half-built thing sitting around for months while you wait for this part that hasn't arrived? Like, what are the impacts of that?
WINTON: Well, we're fortunate that we get a deposit when we build a machine, but that deposit is just an initial deposit to help us with the design process. And, really, the deposit that we receive when we ship the machine is the amount of money that really pays for all of the cost of goods sold. And what's happening is the cycle of that time period of when we receive an order and when we can ship an order has extended three and four times. And so as a result of that, we're having to carry all of those cost of goods sold for a much longer period of time, which tightens your cash flow.
SHAPIRO: I'm thinking about you finding a workaround and saying, look; we're just going to have to get a part from someplace else. We can't wait forever. Do you have customers who are saying the same thing about you? We're going to have to, you know, buy the machines from someplace else because Winton Machine Company is taking too long to get us the thing that we're trying to buy.
WINTON: I guess fortunately or unfortunately, everyone's in the same boat. So other equipment manufacturers are having the same issues we are because we're all having the same issues for the same types of components, so electrical components especially - you know, we talked about motors. But what we have to think about is our vendor. They're waiting for parts to build that motor at their facility. So the reason why they're late is because they're waiting on components to finish those in order to ship them to us. So the supply chain goes all the way back to the component suppliers who can't supply the components to the folks that are building those subassemblies, those motors, those things that go into our products, into our build material. So it's a long supply chain.
SHAPIRO: Can you explain why this is happening?
WINTON: So the ports are just overrun. The factories are producing in Asia. In order to get the goods here, they put them on ships. It's difficult to find containers because containers on the ships are coming to sea, and they're sitting out at sea because they can't be unloaded. So I just recently heard it's about 10 days that some of these ships are just sitting offshore because our ports are so full because they're short of truck drivers, so they can't get the trucks in to get the goods out of the warehouses. They don't have enough warehouse workers to unload the goods. They don't have enough people to unload the ships, so the ships are sitting, whether they're on the dock, waiting to be unloaded or whether they're offshore. So then you can't send more ships in. You know, it's all an entire supply chain that goes all the way through.
SHAPIRO: So on a scale from, like, this is very inconvenient to this is an existential threat to our livelihood, where would you put this?
WINTON: It's a threat all the way across the board because, like we talked about, the components, you know, the factories that can't get the components, they can't build the motors to the companies that need the motors to run their current machinery when their machinery goes down to the people like us who are building new machinery. So we can't get that into the facilities. The facilities are short on labor, so they need these machines to keep making the parts to build their products. So then their products can't get out to market.
I ordered furniture three months ago, and I won't see that furniture until January. You know, they're talking about the toys in the manufacturing industry and how you're not going to see toys for Christmas the way that you have in the past. So I think it's a big threat to us directly as well as a threat to our customers and our vendors.
SHAPIRO: Lisa Winton owns Winton Machine Company in Georgia. She's one of our American indicators. It's great to talk to you again. Thank you.
WINTON: Ari, thank you so much for having me.
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