Supply chain crunch is reshaping approaches to inventory, says CTEA president

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Canadian Transportation Equipment Association (CTEA) president Blair Norberg understands the challenges that Canada’s vehicle manufacturers and upfitters have faced in recent months.

Falcon Equipment, where he serves as vice-president, has revised several traditional processes to ensure trucks are equipped with whatever cranes, plows and bodies that customers need.

Gone are the days when the business can simply assume chassis dealers will have equipment on the lot when orders arrive. Order boards are too crowded for that. OEMs canceled 30% of Falcon’s own chassis orders in recent months, requiring it to look ever-further afield for other options.

Blair Norberg, CTEA president
Blair Norberg, CTEA president (Photo: John G. Smith)

One day there’s a struggle to source pumps and PTOs. The next day there’s a shortage of fittings. When a traditional supplier’s shelves are empty, it’s time to expand the network.

“We’ve had to gear up on the parts side of things to make sure that we’ve got enough components,” he says. “We really struggled through the times when the steel prices really started jumping up.”

That led to decisions to buy the all-important commodity in larger volumes — sometimes double the traditional amounts to avoid production delays. Many early price increases had to be absorbed as well. And he knows others can always emerge at a moment’s notice. All it takes is the sale of a mill.

“You have to be a little bit flexible and adaptable,” Norberg says.

And sometimes that simply involves cutting bigger cheques. Containers for overseas shipments, once secured for $1,000, commanded as much as $20,000 when the pandemic-related supply chain crunch was at its peak. Even now, they still cost about $4,000.

Customers are generally accepting the higher prices that have emerged along the way, but that requires ongoing communication to ensure everyone is informed.

“I found customers to be very reasonable with some of the price increases that we’ve experienced because they’re experiencing them with other suppliers,” Norberg says. “It’s out there. It’s in everyone’s face. There’s no hiding from it.”

Lasting changes

While some supply chain challenges are beginning to ease, he believes they are still leading to broader changes in the way Canadian manufacturers view inventories and supply chains. Falcon Equipment certainly keeps more steel, components, hoses, and related goods on hand than it did just a few months ago.

“It comes at a real cost,” Norberg says, “[but] anybody that is fairly lean is probably going to loosen up a little. And companies that are holding onto inventory will probably continue to do so.”

Relationships with upstream suppliers are also becoming increasingly important. (“You take care of them, they’ll take care of you.”) Everyone is in the same boat.

While several economic indicators point toward a potential recession early in 2023, Norberg is among those who believe equipment manufacturing will remain strong in Canada. It’s going to take time to address today’s growing order backlogs.

“As long as a company can deliver, they’ll do well,” he says.

Keeping parts, components and systems on hand is just part of the battle, of course. Missing input commodities can also lead to idle hands. Upfitters and manufacturers need to be careful not to lose the trained staff who are the most valuable assets of all, especially in the midst of a tight labor market.

“You find different ways to ensure that you can keep your staff on board,” Norberg says, referring to steps businesses need to take when markets are disrupted.

Such staff are the keys to future growth. Falcon Equipment, for example, has a three-year plan that involves doubling capacity in Edmonton and Saskatoon. Skilled personnel will play a crucial role in that.

“That’s an important part of our business – making sure you have experienced people on the floor.”

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John G. Smith is the editorial director of Newcom Media's trucking and supply chain publications -- including Today's Trucking, trucknews.com, TruckTech, Transport Routier, and Road Today. The award-winning journalist has covered the trucking industry since 1995.


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