Michael Aubuchon, president and CEO of North American Fire Hose Corp. in Santa Maria, Calif., said the first quarter of 2021 has seen business grow, but now his firm is having to deal with this whole new set of challenges. His firm has found it difficult to obtain raw materials, and many producers are scaling back on output of everything from reinforcing yarn used in hose production to synthetic rubber, various compounding ingredients, thermoplastic polyurethane, coating materials, and even the brass and aluminum couplings.
He sees three reasons for many of these difficult business conditions. First, producers curtailed manufacturing of a lot of these materials in anticipation of reduced global demand during the early shutdowns caused by the global coronavirus pandemic. Then the freeze in the Gulf States shut down refineries, adversely impacting many materials, raw materials, intermediates, monomers and polymers that NAFH uses in its production.
The last factor he said has complicated matters even more is the global and domestic logistical issues. First it was the inability to find shipping containers for raw materials produced overseas, mostly in Asia. Then it became difficult to book space on freighters, followed by the ports becoming overloaded and unable to offload shipments in a timely manner. And the final piece of the puzzle is finding truckers to truck materials either from harbors or across the country.
All of these happened in stages, making it very difficult to obtain certain materials, according to Aubuchon. TPU has been tough to come by, and a number of raw materials producers have declared force majeure.
"One of our compounders called and said your next shipment of rubber stock is going to be late," he said. "They couldn't get a particular process oil they need to mix up our compounds."
The price increases have been hefty in most cases, the NAFH CEO said, in the range of 10-20 percent for some materials, including rubber, yarn and others. There was one quote for butane diol, used in the manufacturing of urethanes, where one price came in at double the normal price because the supplier was having to buy it on the spot market at a time when there was virtually no supply available.
Freight costs also have exploded, with Aubuchon saying a 50-75 percent premium to ship goods across the U.S. now is commonplace—if you can secure shipping at all.
"We got a call from a shipper, who said you have a shipment scheduled for Monday," he said. "They asked us to give them an extra $1,000. When we told them no, they said, 'Well, we won't be there on Monday then.' It's been that ridiculous in some cases."
Aubuchon said NAFH has been able to pass on some of the increases they've received this year, but he doubts it will be enough as costs continue to skyrocket. "We're hoping that the increase we did get through will be adequate to cover the costs through the end of the year, but we're not sure that's the case," he said.