Why supply-chain problems aren’t going away

SUPPLY CHAINSGE have seldom featured in companies’ earnings reports over the three decades since globalisation took off in earnest, save for the occasional mention of the benefits of low costs and lean inventories. This earnings season, though, covid-induced shortages are among the first problems mentioned by many firms. The Omicron variant has worsened the logjams by forcing workers, in many industries and the logistics business that weaves them together, to quarantine. And shortages of both staff and materials are contributing to inflation, raising costs across the board.On January 25th disappointed investors sent ’s share price down by 6% after Larry Culp, the industrial icon’s boss, said that supply-chain “headwinds” had hit its health-care business especially hard. Fourth-quarter revenues declined by 3.5%, year on year. On the same day Gregory Hayes, boss of Raytheon, presented mixed results, noting that the defence firm had “seen its share of supply disruptions”. Others sniff trouble coming. On January 26th Boeing said that supply chains were not a “constraint” because its airliner production was low and inventories full. But, it added, raw materials, labour and logistical challenges were a “watch item”. Hours later Tesla said supply-chain snags had forced it to run factories below capacity.