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16 Hartford Business Journal | April 19, 2021 | HartfordBusiness.com Continuity Planning After year of unprecedented disruptions, CT manufacturers rethink supply chain strategies By Sean Teehan steehan@hartfordbusiness.com A nyone who unsuccessfully attempted to buy toilet paper when the COVID-19 pandemic first hit U.S. shores last year is familiar with the concept of supply chain disruption. The dynamic led to a lot of frustration — and some entertaining jerry-rigged solutions — among consumers, but for manufacturing companies the issue of world events creating volatile supply chains is a continuing problem. From COVID-19 leading to periodic global factory closures, to travel restrictions to events like a container ship getting stuck in the Suez Canal, many manufacturers across the world have scrambled and struggled over the past year to get the products they need to complete orders on time for customers. In response, Connecticut manufacturers are taking steps like expanding their supplier base and avoiding purchases from outside North America when possible to sure up their supply chains. "At a moment's notice these things can happen, we learned that the hard way," said Kate McGinnes Collins, general counsel for East Granby- based aerospace parts maker MB Aerospace, which has experienced supply chain disruption over the last year. "We had to pivot quickly." Contracts, jobs at stake Supply chains are the essential, if mundane, vehicle for making and selling products. For example, one company may sell raw metal materials to another that uses them to make aerospace components, which are then used by a company to build a jet engine; the engine maker sells the finished product to an airplane manufacturer. Every cog within the system must operate on a predetermined time schedule in order to maintain a reliable supply chain. At stake are not only on-time orders but contracts, revenues and ultimately jobs. The issue is so important that President Joe Biden in February ordered a far- reaching review of U.S. supply chains in key industries, including semiconductors, defense, pharmaceuticals and energy, in order to bolster domestic manufacturing capacity and try to prevent future shortages of critical goods, like personal protective equipment, during times of crisis. Connecticut manufacturers mostly fall in the middle of supply chains, and sell parts to companies rather than end users, said attorney Jeff White, who heads Hartford law firm Robinson+Cole's manufacturing practice. Raw materials have increased in price, or become harder to find over the past year, and companies that make products for the defense and aerospace markets have been worried customers could enforce "force majeure" clauses that allow them to terminate contracts if they cannot be fulfilled on time due to unforeseen circumstances. Use of a force majeure clause could be especially deleterious to the many Connecticut manufacturers that work on multi-year defense contracts, since a single deal often covers millions of dollars in revenue for years of planned work. "For most of my clients it's been raised at the highest levels as a concern," White said. "The crisis is, 'we're going to be extraordinarily late on our contract and fulfilling our orders.' " But the inability to source raw materials isn't the only issue at play since the pandemic began. Factors like international travel restrictions are creating bottlenecks at ports, where supplies are arriving but cannot be exported out, said Jeff Rossi, Connecticut office managing partner for CohnReznick, who leads the accounting and consulting firm's manufacturing and distribution industry practice. As a result, Rossi's manufacturing clients are buying more products from suppliers in North America to avoid back-ups attributable to cross-border logistical problems. Companies that buy from countries in Asia, for example, are now looking at suppliers in Mexico or the U.S., Rossi said. "Issues caused by COVID have accelerated reshoring efforts," Rossi said. "As U.S. companies make investments in technology and manufacturing capabilities, I think that we'll see [reshoring] to the U.S." Twenty-two percent of the 100 U.S. Jeff White Jeff Rossi North Haven's Ulbrich Stainless Steels & Special Metals Inc. sources about 75% of its materials in the U.S., but has been moving away from some of its suppliers in Asian countries in favor of companies in North America. PHOTO | CONTRIBUTED