Roundup: Supply chain woes may further weigh on U.S. companies -- industry insiders
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E-mail Xinhua, November 5, 2021
by Xinhua writer Liu Yanan
NEW YORK, Nov. 5 (Xinhua) -- The supply chain disruptions will take a bigger toll on U.S. companies if the situation extends into 2022, warned industry insiders on Thursday.
A number of manufacturing companies are investing a lot of money in software to decrease reliance on international trade, shorten supply chains and prompt local production so as to be close to the market, according to David Berge, senior vice president at Moody's Investor Service.
"Of course, it hasn't done terribly as far as removing the reliance on international trade as we see today. They are just as much exposed to, and not immune to the (supply chain) slowdowns," said Berge at a panel discussion on U.S.-China cross-border investment and trade organized by the China General Chamber of Commerce (CGCC)-USA Thursday.
Though the strategy of nimbleness and local production worked well for short-term disruptions, "we think that this could become a bit of a problem if the supply chains (disruptions) persist," said Berge.
Apple Inc. lost 6 billion U.S. dollars of revenues in the third quarter of 2021 due to chip shortage and manufacturing delays, and the issues would worsen in the fourth quarter, according to top executives of the company.
U.S. inflation also hit multi-year highs amid supply chain delays, higher labor costs, elevated energy prices and tariffs on imported goods.
If inflation continues to accelerate, it will further increase operating costs of businesses and lower living quality of households, said Xu Chen, chairman of the CGCC-USA.
"This has already significantly impacted small and medium-sized enterprises, and has the potential to do much more damage. This also reduces American companies' competitiveness and foreign direct investment, thus further risking the prospects of economic recovery and social stability," said Xu.
A shortage in semiconductor chips, an ongoing rise in raw material costs, soaring shipping rates and delays, and the ongoing trade tensions with China will no doubt continue to impact prices, profits, efficiency and consumption across the board, according to Xu.
The strength of balance sheet and liquidity is paramount for companies here, and smaller companies or the ones with heavy debt might face more difficulties if the environment persists, according to Berge. Enditem
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