(The Center Square) – Businesses in Connecticut are facing rising costs for supplies and daily operating expenses as supply chain shortages and inflation continue amid the COVID-19 pandemic.
The March producer-price index, which measures the supply conditions throughout the economy, rose by 1.4% signaling stronger consumer demand while butting heads with the ongoing supply chain crisis that is driving the costs to do business even higher.
“Manufacturers in Connecticut have been very busy, however we have both a worker shortage as well as supply chain issues,” Jamison Scott, executive director of ManufactureCT, told The Center Square. “We are a very manufacturing diverse state so the effects of supply chain vary on industry. Connecticut also has some of the highest energy costs in the country and manufacturers have high energy demands, so this is a double whammy.”
Small businesses are also struggling.
“According to NFIB’s latest survey, more than two thirds, 77%, of our small-business owners reported inventory, supplies and material as being a substantial contributor to higher costs,” Andrew Markowski, National Federation of Independent Business Connecticut state director, told The Center Square. “At the same time, another 77% of small-business owners said rising gas prices is a substantial contributor to higher costs.”
Markowski said that as a result, Connecticut businesses and manufacturers have had to pass on their costs to consumers.
According to the organization’s latest survey, inflation is the single biggest issue impacting small-business owners, overtaking issues pertaining to hiring workers.
“Inflation is a major issue right now that every person in Connecticut is feeling,” Markowski said. “Small-business owners don’t want to raise their prices but when they have to pay more for supplies and supply chain issues that cause delays in getting those supplies, they have to pass those costs on to consumers.”
Scott said everyone is paying for the increases.
“For example, my galvanized steel costs are up over 50% in 12 months – I absorb some and have to pass some on to the customer,” Scott said. “Stainless steel costs are over three times higher from a year or so ago. In my case, I put a project on hold until prices come down, however, others have pressing projects and have to pay for these absorbent prices and must pass them on to their customers. Coming full circle, in many cases, their customers are so busy they are willing to pay, hence inflation.”
Scott said that manufacturers in Connecticut are extremely thin in terms of lean manufacturing, maximizing productivity while minimizing waste, but that hasn’t exempted them from the challenges of doing business in this climate.
“Any one of these challenges is a big deal, having multiple challenges (worker shortage, supply chain crisis) has been excruciating at times, but we use our Yankee ingenuity and are resourceful and prevail over these challenges,” Scott said. “By the way, there is still a global pandemic we are all dealing with.”