Supply Chain Crisis During Pandemic

U.S. manufacturers are facing a shortage of critical supplies and materials—a common theme over the past year, but one that has intensified over the past few months to include a wide range of materials. 

Any businessman knows that the supply chain is broken in the United States. We share stories of delays, price increases and shortages. The cost of new mobile homes from the manufacturers have increased 20%+ in just a few months—if you can get them. For many manufacturers, the timeline to have a home delivered can be anywhere from 3-12 months.  

But it isn’t just the manufactured housing industry that is affected; it’s the entire economy. Let’s examine the evolution of supply shortages in the U.S., which industries are impacted, how long shortages are expected to last, and what manufacturers can expect in terms of long-term solutions.


In an executive order delivered in February on strengthening the critical supply chain, President Biden called semiconductors “A 21st century horseshoe nail,” referring to a proverb that exemplifies the current supply chain crisis in the U.S.: “For want of a nail, the shoe was lost. For want of a shoe, the horse was lost.”

Demand for home electronics skyrocketed during the Pandemic as more workers invested in home office electronics and lockdowns spurred greater consumption of electronic devices. Although this was a boon for the electronics industry (one of the few sectors to add jobs during the height of the Pandemic), the rest of the industrial world began to feel the burn. Chip producers could not keep up with demand, leading to a worldwide shortage that is expected to extend through 2021.

Alix Partners estimates that the global auto industry will lose $60.6 billion this year due to the shortage of microelectronics. Volvo has idled truck manufacturing at some of its plants, as have many of the Big Three manufacturing operations in the U.S. Toyota was the only automaker to foresee the semiconductor shortage, and stockpiled chips early on in the Pandemic and thus far has not been impacted by shortages. The dearth of microelectronics is impacting everything from smartphone and consumer electronics to advanced manufacturing operations. Included in this are the appliances that go into newly manufactured mobile homes.

The shortage has spurred panic buying and has driven up prices, with Taiwan Semiconductor expecting prices to rise 20% to 40% this year. Global semiconductor sales increased 13.2% year-over-year in January 2021.

So what are the potential long-term solutions? On February 25th, President Biden signed an executive order aimed at strengthening U.S supply chains, including semiconductor manufacturing in the U.S. In addition, the U.S. Semiconductor Industry Association is currently providing policy guidance to the Biden Administration for strengthening domestic semiconductor manufacturing – including calls to include substantial funding for domestic semiconductor manufacturing.

The Biden Administration has since pledged to seek $37 billion to boost semiconductor manufacturing in the U.S.

Intel announced last week that it was undergoing a massive investment in chip manufacturing, with plans to pour $20 billion into two new facilities at its campus in Arizona – billed as the largest private sector investment in Arizona’s history. The company credits incentives for the project from the state of Arizona as well as the recently revamped CHIPS for America Act, which provides subsidies for domestic semiconductor manufacturers and a range of R&D initiatives. However, with production at the facility not expected to start until 2024, the new Intel project is not expected to improve the microelectronics shortage any time soon.

Meanwhile, looking close to home, the U.S. semiconductor industry association reports that a little over half of U.S. semiconductor companies do their manufacturing in the United States. 


U.S. manufacturers are also facing a shortage of steel and many are contending with higher prices as steel supplies dry up. This shortage is also related to COVID-19 as many steelmakers idled production amid the height of the pandemic, with capacity utilization for the industry at a record 56% (compared to a pre-pandemic level of 86%). As the U.S. manufacturing recovery hit full swing by the summer of 2020 and continued on to 2021, steelmakers have struggled to keep up with demand, leading to shortages and higher prices.

U.S. automakers are among those subindustries hardest hit, but the steel shortage is impacting a wide range of manufacturers. Think about how much steel goes into the manufactured homes that are in our communities? Unfilled orders for steel in Q4 2020 hit five-year high, while prices for certain types of steel are hitting highs not seen in more than a decade. Domestic steel prices overall have risen 160% since August of 2020.

Orders continue to surge, leading to a frustrating situation for many companies that face a big boost in new orders, but lack the materials to fulfill them.

Companies that rely on steel to produce their products were already being squeezed by tariffs on imported steel, leading the Coalition of American Metal Manufacturers and Users to press the Biden administration on removing the tariffs, which would have the added benefit of offsetting the high prices currently plaguing the market. Meanwhile, domestic steel producers are enjoying record profits and are encouraging Biden to keep the tariffs.

At Joe Biden’s first press conference of his administration on March 25th, one reporter questioned Biden on tariffs. The President’s answer emphasized planned investments in strengthening manufacturing R&D in the United States and reestablishing global manufacturing alliances but fell short of answering the tariff question directly, leaving the question of what approach the new administration will take on tariffs, very much in the air.


Similar to the spike in consumer demand for home electronics hitting the semiconductor industry, a surge in home improvements and homebuying during the Pandemic has led to a shortage of lumber in the United States. Good news for construction industry, which saw home starts hit a 14-year high in December 2020. But for companies that need to buy lumber to produce their goods are facing a 188% increase in lumber prices, and many are looking for new suppliers in 2021.

Lumber has ranked among the most popular industrial search categories on the search engines for much of the Pandemic as a shortage has sent industrial companies looking for alternative sources. Other reasons for the shortage include idled plants during the height of the coronavirus-related shutdowns and the wildfires of 2020 impacting much of the supply on the West Coast.

So how long is the shortage expected to continue? Probably for a while, say experts, but some foresee new lumber companies jumping into this hot market, especially in the U.S. South. Additionally, once vaccinations are widely available, economists expect lumber production lines to be at full capacity.


The shipping industry is facing a shortage of containers, which has a direct impact on manufacturers seeking to import parts and products from Asia. The current shipping container shortage was also caused by the Pandemic, with many containers left at port as manufacturers idled production and shipping volume slowed to a trickle.

Production bounced back in Asia before the West, which meant many containers headed to other parts of the world as exports resumed in Asia, but exports from the United States and Europe did not recover quickly enough to send containers back to Asia. This means that exports from Asia are now increasingly difficult as the region is facing a shortage of empty containers. Manufacturers that rely on parts made in Asia are facing huge premiums in shipping costs, with spot freight rates from Asia to the U.S. West coast 145% higher than they were a year ago.

Adding fuel to the fire, alternatives to cargo shipping are severely restricted as international flight volumes have been reduced due to the Pandemic. And although there is now a big push to build new containers, the worldwide shortage of lumber and steel needed to build them is hampering these efforts.

Meanwhile, to make things worse, a massive container ship, roughly the length of the Empire State Building was moored in the Suez Canal for more than a week, blocking off a major shipping artery and contributing more chaos to global supply chains. Although the ship was finally freed Monday, March 29th, the supply chain fallout is likely to be felt for weeks or even months.


The fallout from February’s deep, unprecedented freeze in Texas continues to hit the oil industry but has also caused a global shortage of plastics. Why plastics? Because the massive petrochemical producing region of the state was essentially shut down for the protracted freeze, producing a shortage of the chemicals needed to produce many types of plastics.

Thankfully, this particular crisis is short-lived as the weather forecast for Texas is expected to be business as usual.