Ukraine crisis creates ripple effects for Connecticut manufacturers
The Russian invasion of Ukraine is affecting an already beleaguered global supply chain, weakened by pandemic-driven labor shortages. The state’s small, high-value manufacturers are now powering through higher transportation costs and higher prices of imported metals.
“We buy a lot of bar stock which are large rods of metal that we turn into little metal parts,” said Marietta Lee, chief operating officer at the Lee Companyin Westbrook. “And Russia and the Ukraine are some of the largest producers of metals, particularly aluminum and steel, which we use. So we’re seeing longer lead times and higher prices.”
Lee, who is also on the board of the Connecticut Business and Industry Association, said companies like hers are experiencing the domino effect from original equipment manufacturers.
“Auto production in Europe has really slowed down,” Lee said. “BMW closed two factories already in Germany because they don’t have chips to make the cars. So some of our customers are not ordering parts in the quantities that they used to because they don't have the ability to make the cars anymore.”
The Russia-Ukraine crisis also led the London Metal Exchange to halt nickel trading and cancel tradesas prices doubled in March, following sanctions by the West imposed on Russia.
In Bloomfield, Connecticut, Cursor LLC is experiencing the ripple effects.
Most of the alloys that Cursor supplies to the U.S. Department of Defense and the Navy are high nickel-based alloys.
“The prices and lead times have increased exponentially, which has made it harder to meet commitment dates and to hold prices,” said Michelle Allinson, CEO, Cursor LLC. “If you try to get prices for nickel-based alloys from suppliers, they will tell you the prices are valid for one day only, and in some cases they are valid for an hour!”
Still, “Connecticut’s supply chain is very robust, it’s very seasoned, and it’s very mature,” said Ron Angelo, CEO, Connecticut Center for Advanced Technology, Inc.
“There’s been downturns in the past, and it’s really about partnerships with customers, and how they spread the risks and the costs. It’s really about communication. I see Connecticut companies as being able to navigate that,” he said.
Manufacturers have yet to pass on costs to customers. But they are waiting and watching to see what the market can bear.