By Stella Lorence
Boston University Statehouse Program
BOSTON – The ink that Keith Beaudette uses to make custom promotional items like t-shirts and water bottles uses the same resins that are used in plastic medical products – including syringes.
About four months ago, the companies that supply that ink put a quota on how much businesses like Beaudette’s Marcott Designs could order per month, since they were also supplying raw materials for the COVID-19 vaccination efforts.
On top of the ink ration, Beaudette has been having a hard time ordering enough stock of the shirts he usually gets, which he said is “kind of unexplainable,” at least compared to the resin quotas.
“It’s hit or miss,” Beaudette said. “You’ll go in one day and they’ll have stock, you’ll go in the next and they don’t have it.”
Marcott Designs in Attleboro is just one victim of the supply chain disruptions that are rippling through the economy locally and nationally, and not every business has been as good as Beaudette’s has at “rolling with the punches and surviving.”
Businesses looking to the approaching holiday season, and the prospect of gaining back some of the business lost to months of lockdowns, are doing what they can to shore up stock now or exploring new options with distributors and shipping.
“It is having the ripple effect through the entire economy,” said Christopher Carlozzi, senior state director for the National Federation of Independent Business.
The shortages are affecting a range of businesses, from restaurants which can no longer get certain ingredients they used to have no problem getting, to manufacturers competing for the same raw materials.
A September report of NFIB members found 35% of business owners reported a “significant impact” on their businesses from the supply chain disruptions.
“The impacts can vary, but by and large it can be hit or miss in terms of product availability,” said Bill Rennie, vice president of the Retailers Association of Massachusetts. “And if you see some empty shelves in stores today, that’s exactly what it is.”
But many experts agree that the COVID-19 pandemic is a primary culprit, both of the supply chain disruptions and the related labor shortage.
“The pandemic has changed all kinds of things and all kinds of assumptions about things,” said Phineas Baxandall, a senior policy analyst at the Massachusetts Budget and Policy Center, a left-leaning think tank.
Baxandall explained that people are buying more goods than services, and that for a lot of people, the pandemic was a wake-up call about the low wages they had been receiving.
“People have a concept in their minds about what’s reasonable in terms of benefits and job flexibility and wages,” Baxandall said, noting that job flexibility is also tied to child care for many – an industry that has also been disrupted by the pandemic and the lack of vaccines for young children.
For the shipping industry, the labor shortages and the supply chain disruptions are more closely intertwined. A lack of truck drivers and port workers has caused delays in cargo being unloaded and delivered at ports around the world.
“The supply chain will become more of a customer-facing, public issue as the holidays approach,” Rennie said.
Rennie explained that the holiday season did not have the same issue last year because most of the products shipped to online shoppers were already in the supply chain.
Some retailers may find a way around the shortages this year by paying for more expensive shipping methods to meet demand (and potentially passing the cost on to customers), or using connections with a different supplier, Rennie said.
But the labor shortage remains an issue for many businesses.
“The staffing shortage has been really well-known and is sort of an on-going concern,” Rennie said. “What we’re seeing is some folks are saying, ‘I can figure this out, I can make it work, and I’m not going to go back to the schedule I had before.’”
Some believe the labor shortages can be partly traced back to the relatively generous unemployment benefits offered by the federal government and the state throughout the pandemic, which businesses had to “compete” with to attract people back to the workforce. Massachusetts base unemployment insurance benefits have a maximum amount of $974 per week.
Carlozzi’s NFIB membership survey found just over half of the owners surveyed currently have openings they are unable to fill.
But Baxandall said the unemployment insurance benefits are only part of the equation.
“That may be people’s perceptions, and there could be individual workers for whom that’s the case, but the data clearly contradicts it,” he said.
If unemployment insurance benefits were the only reason for the labor shortage, Baxandall explained, then the state would have seen an “avalanche” of new workers when the federal unemployment insurance benefits expired last month. Rather, the state’s unemployment rate increased from 5% to 5.2% in September.
The Retailers Association of Massachusetts has been working on the “public policy side of things” to deal with the labor shortages, Rennie said. They’re looking for the state to step in with tax revenue or federal funds from the American Rescue Plan Act to replenish the state’s trust fund for unemployment benefits. The trust fund ending balance was in the red in at the end of May, according to the most recent monthly report from the Office of Labor and Workforce Development.
At the national level, the Biden administration has been working to address the supply chain disruptions. President Joe Biden announced a Supply Chain Disruptions Task force in June, and more recently, reached an agreement with the Port of Los Angeles to begin 24/7 operations, doubling the number of hours the port is open per week.
The Port of Long Beach had reached a similar agreement a few weeks prior. Together the two ports see 40% of the shipping containers that come through the U.S.
“The commitments being made today are a sign of major progress in moving goods from manufacturers to a store or to your front door,” Biden said in his announcement of the agreement. “We need to take a longer view, though, and invest in building greater resilience in to withstand the kinds of shocks we’ve seen over and over, year in and year out.”
There have been no announcements of similar plans to expand hours at the Port of Boston. The Massachusetts Port Authority did not respond to requests for comment.
Even with the Biden administration’s efforts, it’s unclear how long the disruptions will last.
John Sylvia of Bridgewater Trophy, which supplies custom awards, said he’s been buying what he can when he starts noticing certain items or materials running low around the country. He hasn’t lost any business from the disruptions yet, but said he’s wary he still could.
“Until next summer, at least, I’m going to be ready for it,” Sylvia said. “I figure it’s going to last awhile.”