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22 n e w h a v e n B I Z | D e c e m b e r 2 0 2 1 | n e w h a v e n b i z . c o m Keep up with the top Connecticut business news delivered to your inbox daily! Start your day with curated business news from across the state << SIGN UP TODAY >> GO TO HARTFORDBUSINESS.COM/ENEWSLETTERS ufacturing coming back here because there's too many risks," Scott said. "We saw that first-hand in the beginning of COVID when we couldn't get the [per- sonal protective equipment] here." anks to the PPE crisis, providers like Hartford HealthCare (HHC) were among the first to announce plans to reshore, contracting with local manu- facturers for products like masks and building new warehouse space to stock- pile supplies in 2020. "Our teams worked nonstop to build and create new supply lines, oen paying 10 times what PPE would cost in a normal year," HHC said at the time it opened a new PPE warehouse. "We have committed to building larger stockpiles, ensuring that we will always be pre- pared, whatever the future holds." Reshoring has been an ongoing trend in the state since well before the pan- demic, Scott said, only intensified by recent crises. "ere have been manufacturers in Connecticut reshoring for years, be- cause they know they can make it better and cheaper here in Connecticut, than they can get it from China," he said. From just-in-time to just-in-case Both the supply chain and COVID crises may mean a shi in thinking as companies dependent on "just-in-time" production models falter when materi- als no longer arrive "in time." Cutting costs to the bone by reducing inventory and seeking the cheapest ma- terials from overseas has backfired for some companies, said Jonathan Shoop, a partner in Marcum LLP's assurance ser- vices who specializes in manufacturing. "ose just-in-time guys, those price guys, a lot of them are not getting the orders," Shoop said. "ey're disrupting their customers by not having supply." Aer surveying some of his manu- facturing clients, Shoop said he found that many were thriving despite higher prices due to supply chain issues. Exec- utives said their customers were seeking dependability and turned off by gim- micky promotions and cost-cutting. "e low-cost providers are going to be at risk — their inability to deliver is going to cause them to pivot or be at risk of going out of business because they might lose their customer relation- ships," Shoop said. Companies are also willing to pay more for earlier delivery of machinery and equipment to circumvent congested ports. ose increased costs have been passed on but are not hurting business so far, Shoop said. One of his Midwest clients arranged to get ma- chinery delivered via Seattle rather than Los Angeles, costing him a bit more but saving him four months of delay. "I guarantee you that was not part of the buying decision 18 to 24 months ago," Shoop said. "It was worth paying the price." Flexibility is crucial to survive the supply-chain crisis, said Alfredo Fernán- dez, an attorney for Hartford law firm Shipman & Goodwin who works with regional and national manufacturers. Lo- cal manufacturers have adapted quickly and also benefited from relatively short supply chains due to the proximity of major clients like Pratt & Whitney. "By now, the manufacturing com- munity in Connecticut has figured out how to hedge the risks specific to their businesses a little better," Fernández said, adding, "is is still a pain point for them." Paying for warehouse space or hiring a third-party provider to ensure you have enough materials may be neces- sary, Fernández said. "e desire to be nimble enough for what your customer expects will be one of the driving factors. at may be add- ing some extra cost for supply security." Even at its worst, the supply chain crisis pales to the major issue facing state manufactur- ers — an aging and dwindling work- force, Fernández said. When ranking issues, "the workforce is issue one, two and three — supply chain a generous four," Fernández said. "e workforce thing is so real and what is really keeping CEOs and consultants up at night." At Guilford's George Schmitt & Co., marking its 147th year in business, the recent supply chain issue is just the latest in a series of crises in a history spanning three centuries. "One of the things that's made George Schmitt such a longstanding company is that we're able to adapt to whatever challenges are thrown our way," Gun- ther said. "is just happens to be one of the many challenges." n Jonathan Shoop Alfredo Fernandez 0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 11/28/2020 11/25/2021 5/27/2021 $1,985 $6,257 $9,186 Shipping container prices ease off record highs The world container composite index is an international measure that shows the cost of shipping containers dropped slight- ly in recent months after hitting record highs due to the supply chain crisis. Source: Drewry Supply Chain Advisors World container composite index (per 40-ft. container) Continued from previous page

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