Municipal Management

Municipalities grapple with supply challenges

By BETH ANNE BRINK-COX | The Municipal

The supply shortage began more than two years ago, with the advent of the pandemic and its subsequent quarantine period. It has not fully resolved itself even now, and many businesses that you might have used when ordering for your projects, whether a small one for home or an enormous one for the city, have closed down; after all, they couldn’t send you what they couldn’t get themselves. This means that many projects had to be postponed—some indefinitely—and many more canceled altogether. What is the solution? How do you handle supply chain shortages? Businesses everywhere are asking themselves that same question and brainstorming alternative ideas.

Toyota was the first company to implement what is known as lean management inventory (LMI), and other companies such as Nike, Kimberley-Clarke and John Deere, just to name a few, soon followed. Gone were the days of plentifully stocked stockrooms. This, of course, led to the particular nuisance that many buyers and purchasing agents encounter regularly: a customer who might believe that every single item they want and need is in a warehouse just across town. LMI works well in reducing overstock and rarely used items, but it also meant that in times of shortages everywhere, there was no excess to carry through the through.

The obvious thought is to consider alternate materials, but that’s not always possible. For some projects, only certain materials can be used. In other instances, one company might still be able to get a component required for a particular need, while another company might be able to get a different, equally vital piece, leading to a sort of cobbling together. That is project solving at its finest, something along the lines of a great scene in “Apollo 13” where a character makes it clear that “we have to make this fit into this using only this,” dumping a box of assorted oddities on the table.

There are other problems caused by the shortage of semiconductor chips — a computer chip or an integrated circuit. The semiconductor is typically made of silicon to conduct electricity, while the chip is an electric circuit with various components. Obviously, you can’t Despite materials and staff shortages, the work goes on as Eau Claire, Wis., is determined to meet every project date possible. (Photo provided by the city of Eau Claire, Wis.)

cobble or substitute such a thing, and therein lays the problem: Semiconductors are used in so many things today, including cars, smartphones, refrigerators and televisions.

No one is likely to forget the nightly news coverage of cargo ships, sitting still while shelves grew emptier by the day. The war between Russia and Ukraine is affecting flights and deliveries. And then there’s inflation, meaning whatever can be found is almost certainly going to cost more, possibly even more than when a project was first quoted. What do you do then? Do you absorb the cost and eat the loss? That’s not really something most businesses want to do.

Other communities have their own particular struggles. It’s not just the lack of building materials like roofing tiles and joists and plumbing supplies that cause the troubles. Santa Fe, N.M., has been trying to acquire equipment in a more timely manner, and major projects have been delayed because of the sluggish supply chain. Natural gas and electric providers have been experiencing slowdowns in their operations, and a planned solar and battery project meant to replace those utilities has been delayed. And line maintenance and repair

Another big project along the Eau Claire river trail was planned and would involve erosion control, grading and removing the existing gravel surface, laying a 6-inch crushed aggregate base course, 5-inch concrete pavement, retaining wall installation, pipe and tube railing installation and lawn restoration. Due to manufacturing delays, the railing installation is on hold and the trail remains closed for safety. (Photo provided by the city of Eau Claire, Wis.)

have been affected, as well. With summer storm season upon us, the ramifications of this are quite serious.

Aaron J. White, economic development manager for the city of Eau Claire, Wis., has given this a great deal of thought. He said, “As a municipality, we really noticed changes in supply, and in projects being bid in late 2020, lead times were getting longer and quotes on material were really shortening. A quote for a material price that might have been valid for 30 days would now be good for two weeks and sometimes good for only days. Local industry was experiencing that same thing in the manufacturing sector. We have typically not carried a lot of material on hand, because we use lean inventory practices.”

Eau Claire has a lot of roadwork projects going on now, three of which have been completed and seven that are underway. Another one in the works is along the downtown Eau Claire river trail. It has gone well but stalled because of manufacturing delay, and that means the trail has to remain closed for the time being. Other projects were slated to begin in June, and there are projected plans in a five-year capital improvements plan. The question remains how timely these can be, given the continued shortages and delays in shipping.

White said, “Again, 2020 was the first real impact we felt on municipal projects. The community is in the middle of a large construction project, which includes a transit transfer center and privately owned residential units on top of public structures. The original developer came to the city with a large financial gap — well beyond anything anticipated — and eventually dropped the project. The city found an alternate developer to move forward with, but with costs still The proposed work for the Omaha Street project includes removing existing asphalt surface, removing curbs and gutters, sanitary sewer installation and services, water main installation and services, storm sewer installation, grading and graveling, new asphalt surface, new curbs and gutters, new sidewalk as required, and sod installation. (Photo provided by the city of Eau Claire, Wis.)

significantly higher than anticipated, it was the construction material increases that drove these issues.”

So the city did what many others have had to do, and White explained it well. “The city works with projects to try and accommodate changes to designs that will reduce cost, such as modifications to site plans, extending deadlines for development and so on. In some cases, the city helped developers find sources of alternate funding. Projects are still moving forward, so we have met with some success.”

White said, though, “Local industries have reported mixed results: some are having incredible years, with significant growth, while there are others just trying to keep afloat.”

And, as other businesses have also experienced, it’s been difficult to have enough workers. White said, “Labor is still a challenge, depending on the industry. In construction, the shortage is in framers and masons. In manufacturing, it’s experienced technicians, welders and machinists. Most of our employers are now hiring unskilled labor to train on the job. But they report that they can only place so many unskilled workers before they run short on experienced employees who can train them. In restaurants and retail industries, the struggle is to find workers to fill the less desirable shifts, such as early

mornings, weekends and late evenings. Retail and restaurants are additionally challenged, because they were the first industries to get hit with the pandemic lockdowns. Many retail and restaurant workers changed industries due to the uncertainty.”

White is right. Forbes Magazine said that more than 110,000 bars and restaurants closed temporarily or permanently in 2020. That meant that nearly 2.5 million jobs were erased; it also meant that sales fell by $240 billion when the expected level had been $899 billion. Of those who closed a restaurant permanently, 72% said they would not open a new restaurant. And for those who have only ever known a career in those kinds of business, there was great uncertainty about finding a different field, especially if you were past a certain age.

And there are still tough times ahead in supplies and shipping. White explained, “Lead times have stretched to unseen lengths. Precast concrete panels are about a 14 month lead time. The same must be said for some structural steel products. In manufacturing, electrical components are lagging significantly in shipments, and that is holding up production of a variety of products.”

But it’s not all bleak. This has permanently changed the way many companies and municipalities are doing business. White agreed, saying, “Yes. There’s a lot of on-the-job training occurring now. Employers are no longer holding out for the perfect candidate and are hiring a reliable candidate they can train. Companies are promoting careers in the trades much more than before and also touting trade schools as options for candidates, as these programs need to expand. The city has also adapted as other businesses have; we are flex scheduling, and some now work from home whenever possible. We flex around childcare needs and the like much more than we did before.”

We’re all in this together, whatever happens, and we’ll get through it better and faster whenever we work together, helping each other in any way possible. This new normal is still taking shape.

A big project on Eddy Lane was slated to begin in June and involved work on water mains and services, sanitary sewer and services, storm sewers, grading of gravel, curb and gutter repair, driveway approaches, pavement and boulevard restoration. (Photo provided by the city of Eau Claire, Wis.)

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