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ISM Analyzes The Future Supply Chain Impacts From Hurricane Harvey

[fa icon="calendar"] Sep 15, 2017 12:00:00 AM / by Cheli Zhao

The Institute for Supply Management (ISM) is well known for their reports on the growth of the manufacturing sector. Today they released a report documenting the potential economic impacts from Hurricane Harvey. This was based on a special survey that asked members of the Manufacturing and Non-Manufacturing Business Survey Committees to assess as best they could how Harvey might impact six key business metrics and whether they may be impacted by shortages of input materials due to Harvey.

A truck drives through high water along a street in Orange on Sept. 6, 2017, as Texas slowly moves toward recovery from the devastation of Hurricane Harvey. (Photo by Spencer Platt/Getty Images)

The Institute for Supply Management (ISM) is well known for their reports on the growth of the manufacturing sector. Today they released a report documenting the potential economic impacts from Hurricane Harvey. This was based on a special survey that asked members of the Manufacturing and Non-Manufacturing Business Survey Committees to assess as best they could how Harvey might impact six key business metrics and whether they may be impacted by shortages of input materials due to Harvey.

The survey found that two-thirds (67 percent) of responding supply managers believe input materials pricing will be at least somewhat negatively impacted over the next three months. 27 percent expect that prices will be negatively or very negatively impacted. Further, 56 percent of respondents believe supplier deliveries will be at least somewhat negatively impacted over the next three months with another 19 percent expecting deliveries to be negatively or very negatively impacted.

Even six months out, 56 percent expect at least some negative impact on prices will contine. The manufacturing sub-sectors are more concerned than their non-manufacturing counterparts about negative price impacts.

The findings with regard to supplier deliveries are similar, but less dramatic. Overall, 54 percent of respondents expect at least some negative impact to deliveries over the next three months with 19 percent expecting negative to very negative impacts. Six months out, 36 percent expect at least some negative impact on prices. The manufacturing sub-sectors are notably more concerned than their non-manufacturing counterparts about slowed deliveries three and six months out.

Respondents expect that production/business activity, new orders, and inventory level will be somewhat impacted by Harvey. In the near-term, about one in five are concerned about somewhat negative impacts on these metrics, but only roughly one in ten foresee more negative impacts. Six months out, only a very small proportion of respondents are concerned about negative or very negative impacts.

Predictably, respondents expect that fuel and petrochemical feed stocks and derivatives could be in short supply three months out. The following key commodities were most often mentioned as those that could potentially be in short supply over the next three months: Fuel; Plastic Resins; Chemicals; Electronic Components; Feedstocks, Chemicals (raw); Gasoline; Polypropylene; Resin Based Products; Building Materials; Electrical Components; LDPE; Plasticizer; Caustic Soda; Ethylene; HDPE; LLDPE; Methyl Methacrylate; Petroleum Based Products; and Isocyanate. Many more individual commodities were mentioned, but not frequently enough to list here.

With regard to industries which may be impacted by shortages, the following sectors mentioned the broadest number of commodities: Plastics & Rubber Products; Food, Beverage & Tobacco Products; Wholesale Trade; Machinery; Chemical Products; Transportation Equipment Manufacturing; Professional, Scientific, & Technical Services; Utilities; Apparel, Leather & Allied Products; Computer & Electronic Products; Furniture & Related Products; Government; Construction; Paper Products; and Primary Metals. In all, 27 of the 36 industries reported potential commodity shortages.

 

SOURCE: https://www.forbes.com/sites/stevebanker/2017/09/07/ism-analyses-the-future-supply-chain-impacts-from-hurricane-harvey/#3e855b21c592

 

Topics: Industry News

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