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If you’ve spent any time shopping for new appliances recently, you might have noticed that the lead times for most products are looking pretty excessive. Waiting a few weeks on a custom order is par for the course, but even the most basic models are seeing extended delays (and custom orders can be as far out as 6-8 months).
We know that delays are a COVID related issue, but we also know people are past hearing that as an excuse. What does “It’s because of COVID” even mean? Here at Factory Builder Stores, we pride ourselves on our knowledge and service to our customers, so we decided to put this article together and record a Podcast episode to give you a clearer picture of where the issues lie.
A myriad of problems are at play, but lets start with what the problem isn’t.
Not A People Problem
The first response we hear when it comes to product delays is “Why don’t the factories just add more shifts?” Unfortunately, this is not a people problem. If there’s anything America has right now, it’s an over-abundance of people that are looking for work because they were let go during the pandemic. If personnel was the problem, manufacturers would easily be able to fill in these gaps. Most manufacturers are already running around the clock shifts to catch up and doing anything they can to minimize down time.
One of the most visible bottlenecks causing delays though lies in social distancing. While Texas has fully opened up, most states have not, and most factories are still enforcing social distancing guidelines. The majority of appliance factories have had at least one or two covid related shutdowns, so they’re erring on the side of safety because of the ripple that causes in production. This focus on safety is completely understandable, but because people are spaced further apart, it limits how many people can work production lines at the same time. This creates a longer tail on manufacture times.
100% American Made Doesn’t Mean 100% American Parts
A large number of the brands we sell at Factory Builder Stores are primarly built here in America. Bosch, Thermador, KitchenAid, Whirlpool, GE, Sub-Zero Wolf – even if the company is owned overseas, there’s still a good chance they have a production facility in the states. But just because the products are built in America does not mean every part sourced is from America. A big reason we’re seeing such long lead times is because every manufacturer is scrambling for the same finite part supply at the same time. Several important appliance pieces come from overseas locations like China, or across the border in Mexico. This creates a few different problems.
Problem One: But My Mom Said I Was Essential!
The first problem is that every country handled the pandemic differently. Some countries didn’t deem appliance manufacturing or the construction industry as essential business when this all began. A good example of an issue COVID created relates to refrigerator electrical harnesses – every manufacturer needs these for refrigerators, and most everyone gets them from the same factory in Mexico. Unfortunately, Mexico shut down this factory for several months – creating yet another production ripple – and this has contributed to refrigeration being one of the toughest categories when it comes to lead times.
Problem Two: Does Anyone Have A Port Hostage Negotiator?
The second problem this creates is getting products through U.S. Customs. Most parts are shipped over via container ships, not by air, and they have to be checked in by the port authorities, most commonly in America through the Port of Los Angeles. This is unfortunately another industry having issues at the moment, with several ships waiting in port to be checked in. Essentially this is creating a port hostage situation. The problem is so bad that food is having to be brought on to ships while they wait because they’ve already exhausted their supply for crew members.
Problem Three: Container Quandary, feat. Your Manufacturer
Yet another problem (as if there aren’t enough already) is that the actual containers used to ship products are now facing a shortage. By containers we mean the giant multicolored steel boxes that you see on ships in port, or occasionally as a trailer on a semi-truck. This particular stumbling block has appeared because of how global exports work. One of the biggest product exporters is China (in general, not just appliances or parts), and usually the flow of imports and exports even out enough that containers are not an issue. But a large majority of existing containers have made their way into countries in Africa during the pandemic, delivering various resources. These are countries that largely don’t send many exports back out.
Manufacturers arranging these shipments don’t “own” the container, so we’re now facing a situation where empty containers are building up in Africa, and they don’t have anyone exporting them back out (thus paying for their usage). These containers need to get back to larger export countries, but they end up sitting unused because there is no one to foot the bill, and the shipping company will lose money doing so out of pocket.
This is how one thing piles on to another… and another… and another… and now suddenly many manufacturers are facing down material/part/product delays for months on end.
Chemical Turmoil and Microchip Mayhem
If you’re from Texas, you may know that the chemical industry is a pretty big deal in Houston – not just a haven for oilfield companies like Shell or Chevron, but also for companies like DuPont that make chemicals for a variety of different things. You may have also heard about the recent polar vortex freeze that Houston endured, getting hit harder than other places in Texas. One thing that many don’t know is that the resins used to make insulation for your refrigerator (that funny pink or orange foam) are largely produced in Houston. Unfortunately resin production, like many other chemicals, is not something where you can flip a switch and suddenly be running at full capacity. So an additional delay goes up on the chalkboard because of another random event.
Another material issue cropping up is that microchips are about to face a world-wide shortage. A large majority of people have spent the last year stuck at home, without any outside sources of entertainment. So sales of iPads, TVs, Playstations and Xboxes went through the roof. This is fantastic for the manufacturers of all these great technologies that keep our Netflix subscriptions running, but it also put a strain on the supply of microchips for anything else. Whether you want it or not, all your appliances these days have a microchip – either regulating temperature in your refrigerator or oven, or monitoring cycles in your dishwasher or laundry appliances. Even the most basic appliances have microchips now.
This will likely prolong availability issues throughout the remainder of 2021, though some companies may be affected more than others. Manufacturers like Samsung (who also makes microchips) may be more readily available, but as of now we’re still bracing down on how the appliance industry will be impacted.
Selling the Classics (if by Classic you mean Stainless)
One final thing to keep in mind is that many manufacturers have pared down their available choices. They’ve done so in an attempt to catch up on existing backorders, which are months behind due to many of the above issues. This basically means anything that is not stainless steel is getting put on the backburner – black stainless, white, black and custom colors have extended lead times, if they’re even being produced at all. Manufacturers are buckling down and focusing on what sells, with their lines being whittled down to only their biggest movers.
This also relates to how manufacturers actually produce these colors – most don’t have the “matte white line” or the “black stainless line”. They just have appliance lines, and they run a particular color every few weeks. This is especially true with custom colors on upper end products like Blue Star, where non-COVID lead times averaged 8-12 weeks. The reasoning for this is to build up enough orders to justify switching the line over to a particular color, as your avocado greens and fire engine reds don’t dominate the industry. But with 95% of industry sales being stainless steel, manufacturers are now heavily focusing their lines on those products, and limiting orders on anything else.
What Lies Beyond the Horizon
At FBS, we understand that our customers need their appliances, and we’re doing everything we can to help them where we can. Our sales teams have become less sales and more availability specialists – spending a large portion of their time just trying to get info and ETA’s. We understand the frustration; we’re living it right here with you every day.
Having said that –
If Factory Builder Stores can’t get it, no one can.
We hold strong relationships with our brands, our builders and our customers and have been tirelessly using every method we can to help meet home closings and get homeowners their appliances as quickly as we can. We know insight into a problem doesn’t necessarily solve that problem, but we hope that it helps explain that this is not just a singular issue. We will get through this, and it’s still a rough road ahead, but we’ll do everything we can to help you along the way.
Rodney lives is Houston, Texas and has worked 7 glorious years at Factory Builder Stores. He is well known for being a guy who does stuff and things. Occasionally he writes something.
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