Type to search

Insider Only Manufacturing & Distribution News Statewide

Expert: Manufacturing faces bumpy recovery

Avatar photo
Share
Bill Keller Bank of America Delaware State Chamber of Commerce

Bill Keller, managing director and senior investment strategist for Bank of America, addresses the Delaware State Chamber of Commerce’s Spring Manufacturing Conference on March 28. | DBT PHOTO BY JACOB OWENS

DOVER – While the COVID pandemic may be cooling around the world, its lingering effects on supply chains, commodities, energy, and workforces will likely impact the manufacturing sector for at least the next year, according to a top investment strategist.

After addressing the Delaware State Chamber of Commerce’s Spring Manufacturing Conference, Bill Keller, managing director and senior investment strategist for Bank of America, said there is just so much economic uncertainty right now, but especially in essential facets of manufacturing like labor, energy and commodities.

“I think manufacturing is going to have some more wrinkles as we go forward. We’ve added some new variables that are moving back into the equation that haven’t moved in the long term like commodity prices,” he told Delaware Business Times. “We may look back at the 2010s and say those were the nice years.”

One key manufacturing commodity, hot-rolled steel, has seen prices increase more than 50% just since the start of this year, due in large part to China restarting production after the end of its Zero COVID policy. Conversely, natural gas prices have fallen more than 60% in 2023 as supply has caught up to replace gas cut off from Russia.

“You’re going to see more spikes. It’s going to be kind of a nature until this until the repercussion from COVID really have worked itself out,” he noted.

Bill Keller Bank of America Delaware State Chamber of Commerce

Several hundred stakeholders attended the Delaware State Chamber of Commerce’s Spring Manufacturing Conference on March 28 at Delaware Technical Community College in Dover. | DBT PHOTO BY JACOB OWENS

Before COVID, volatility in commodity prices largely hinged on weather-related disasters or geopolitical turmoil, but now companies and countries are asking bigger questions about the dynamics of global supply chains, Keller explained. While just-in-time supply chains with lighter inventories were able to meet pre-COVID market needs that will likely change moving forward.

“I think most businesses today say that as the global dynamics start to change a little bit having a little extra inventory on hand makes some sense,” Keller said, noting that will likely strain companies’ profit margins in the future as they produce or acquire extra product and must pay to store it.

Businesses have already begun to think about reshoring supply chains in order to limit risk of future production slowdowns, but the higher cost of labor and manufacturing in America will also likely affect bottom lines.

“It’s all part of the New World and when you make a change, there’s usually added cost,” Keller said.

In protecting against future crises, Keller said the Biden administration’s CHIPS & Science Act to invest tens of billions into semiconductor production in the U.S. was a strategic achievement. The U.S. and other countries are also strengthening trade relations with allies and ramping up tensions with rivals, which could reshape global manufacturing, he added.

“If you’re a big technology company, and you do 100% of your manufacturing in China, you’re probably questioning, ‘Is that the right thing to do? Where else can I go?’” Keller said.

The problem with manufacturing is that so many wrinkles in the equation aren’t recognized until it’s too late, he said.

“How did we ever have a shortage of toilet paper? We have lots of trees, right? But it happened. And I think those scars are still real for so many manufacturing,” he said.

Get the free DBT email newsletter  

Follow the people, companies and issues that matter most to business in Delaware.

Tags:

You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *

Premier Digital Partners

© 2024 Delaware Business Times

Flash Sale! Subscribe to Delaware Business Times and save 50%.

Limited time offer. New subscribers only.

Limited time offer. New subscribers only.

SUMMER FLASH SALE!

Subscribe to Delaware Business Times and save 50%