The largest US manufacturers, including General Motors, General Electric, 3M and Boeing, face logistics challenges and higher costs due to global bottlenecks that are expected to persist next year, but have agreed that the impact on profits can be mitigated by charging higher prices for their products.
Months ago, companies around the world sounded the alarm bells over supply issues that have driven up prices for raw materials, from chemicals to steel. In this week’s earnings reports, investors took a closer look at how the companies were run.
“It starts with a really high price tag,” GM chief executive Mary Barra said on a call with reporters. “We’ve been able to do really well (with) full-size trucks and full-size SUVs. We just can’t build enough.”
GM is also looking to improve the efficiency of its supply chain and has said the chip shortage is expected to improve in the second half of 2022.
Larry Culp, CEO of General Electric Co, a maker of jet engines and wind turbines, told investors that keeping up with the global supply chain jolts is like playing a carnival game that aims to keep players on their toes.
“I’m not sure we’re still at a point where we would say things are stable,” Culp told investors on a conference call Tuesday. “It’s really like playing a mole shot.”
General Electric also expects supply constraints to persist through the rest of the year and into 2022, hurting profits from its healthcare business. Boeing Co also complained of a “severely weakened supply chain”.
The pandemic has crippled the ability of many companies to send and receive the parts and supplies needed to manufacture a wide range of products, creating shortages, reducing inventory and hammering profits.
Harley-Davidson said on Wednesday it had raised the price of supplements in the United States to offset rising raw material costs. The motorcycle maker expects these costs to remain high and envisions higher overload costs globally.
Harley-Davidson said the shortage of inventory is also reducing its international market share.
McDonald’s Corp has also said it needs to raise prices in the United States.
Industrial giant 3M Co slashed its full-year profit outlook on Tuesday and said it would raise product prices to combat inflation and supply chain pressures.
The company, which has a long list of construction and construction products, said it faces higher costs related to polypropylene, ethylene, resins and labor. He added that the global semiconductor crisis would continue to weigh on its end automotive and electronics markets.
Lockheed Martin Corp on Tuesday lowered its sales expectations significantly for this year, saying the pandemic has hampered the supply chain of America’s top defense contractor. Its shares fell more than 11% on Tuesday.
Lockheed’s chief financial officer said the problem had worsened for them over the past two months, as the maker of the F-35 fighter jet lowered its 2021 revenue forecast by 2.5% to $ 67 billion. dollars and said next year’s revenue could drop to $ 66 billion.
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