No Sector Escapes The Global Supply Crisis

The exit from the coronavirus pandemic is being much more complicated than expected. Although the health crisis has generally evolved positively on the world map thanks to vaccination, its consequences in other areas will continue to be felt for a few months.

A shop assistant attends a couple in a toy store
And the fact is that the opening of world trade has caused a huge increase in demand that at the moment the industry cannot assume. To this must be added the crisis of microchips , which are key elements for most technological products, the increase in raw materials, the shortage of containers and a huge rise in freight costs (rental price of a boat for transportation).

In Spain, in addition, the homeland industry has to deal with another element that makes the process even more expensive: the increase in the electricity bill . All this added up, it has become a ‘perfect storm’ that is causing shortages, which generates a rise in the price of products. We review the sectors that are being or may be affected by this supply crisis, which occurs at the door of Christmas, the time of highest consumption of the year and key to the viability of many businesses.

Toys are up 40%
At the moment, the toy sector does not speak of a shortage of products but it does speak of an increase in price . “The variable cost of the toy sector has risen between 20 and 40% due to the increase in raw materials, the rise of up to 500% in the price of maritime transport and the sharp rise in electricity bills,” he said. explained to 20 minutes José Antonio Pastor, president of the Spanish Association of Toy Manufacturers (AEFJ).

With these perspectives, it is obvious that the companies in the sector will pass on the increase in costs to their customers, although the proportion of the increase in the price of toys “will depend on the strategy of each company,” Pastor underlines.

Construction work stoppage
The alarm has been raised by the National Construction Confederation (CNC) , the business organization that groups together almost the entire sector that represents almost 10% of GDP and employs about 1.3 million people.

World maritime trade, in check
The management has warned that the rising cost of raw materials and delays in deliveries due to the container crisis in world maritime trade have caused four out of ten companies -39.5% – to have been forced to cancel or paralyze its works , which could jeopardize the effectiveness of the 3,420 million euros of European funds to be allocated to the housing rehabilitation program.

The CNC report reveals that the rise in raw materials has increased on average the total cost of works by around 22% and that the materials that have become more expensive in the last three months have been wood (125%) , stone (68%) and copper (63%). In addition, 75.6% of the companies operating in the sector have suffered unusual shortages or delays during the last three months in the delivery of essential materials such as wood, steel or aluminum.

Shortage of alcoholic beverages in bars
Drinking a Seagram’s with tonic or an Absolut with lemon in a Spanish bar or nightclub can become a real challenge in the coming weeks. Some brands of spirits, such as gin, vodka, rum or whiskey, have become scarce on the shelves of national bars .

These supply complications, which have not affected all establishments equally, have not yet reached supermarkets and some hoteliers have resorted to these establishments to purchase certain beverages, according to reports from the retail sector.

Glass and cork are missing to bottle the wine
The wine sector has also denounced that the lack of glass and cork is causing problems when bottling wine, since there are more liters than bottles and stoppers available.

Winemakers, manufacturers and distributors have publicly stated that this matter is beginning to disrupt the sale of wine in the run-up to Christmas. The sector’s employer’s association, the National Association of Glass Container Manufacturers (Anfevi), expects it to be temporary due to the current peak in demand and that the situation will normalize after the holidays.

Automobiles: almost 8 million will be discontinued
The global crisis of microchips and semiconductors seriously threatens global car production. The huge demand for these parts that are used in the engine and the brakes will prevent the production of almost eight million vehicles worldwide.

China is branded as protecting the production of this fundamental component.
Automobile manufacturers such as Ford, Mecedes-Benz, Renault or Seat have had to appeal to the ERTE in view of the employment continuity of their employees.

In Spain, the 17 car plants throughout the country stopped producing more than 231,000 cars between January and May of this year. In the world, the most affected country is India. It is where the largest number of vehicles are manufactured. There, for example, it has its Suzuki base, which warns of economic losses of almost 180,000 million euros.

Less mobiles, tablets, washing machines …
Microchip shortages also affect other electrical appliances. Among them are mobile phones, tablets, washing machines, payment cards (credit and debit) and computers, among others. In other words, any last-generation device that requires an element as decisive as semiconductors for its activation is affected.

The most widely used material to make chips is silicon. At present, 80% of the silicon chip production is concentrated in Taiwan and South Korea . But now these markets cannot supply world demand.

Paper shortage affects the publishing industry
The publishing sector also suffers from a shortage, in this case of paper and especially of the so-called gray cardboard, which is used for hardcover books . The situation is more delicate for medium and small publishing houses, which observe an increase in price and an extension of delivery times.

In the case of large firms, such as Planeta, their large purchases allow them for now to have enough material to cover their demand. The problem can arise if this problem persists for a long time.

The paper problem will also affect all types of products transported in cardboard boxes that will foreseeably have to find another material for packaging.

Problems buying Christmas products?
The mass consumer sector has ruled out the possibility of problems in the supply of food and beverages for Christmas, but already predicts a rise in prices linked to rising costs. At the moment, this increase has not occurred , the president of the Association of Mass Consumption Companies (Aecoc), Ignacio González , has recently highlighted .

Aecoc is made up of 30,000 partners, including Mercadona, Inditex, Coca-Cola or El Corte Inglés , with a combined weight of 20% of the Gross Domestic Product (GDP).

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