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(Editor’s Note: The following is a guest article from CJ Nord, CPM, CSCP, founder of the nonprofit Supply Chains for Good, and Harry Moser, founder and chair of the Reshoring Initiative.)
Don’t hold out on hope that the stainless steel shortage in the United States is getting better until you know that a new deal is coming online.
There appears to be no plan underway to increase domestic production. Supply may tighten even more than we have seen. This is of a similar magnitude to the flea shortage.
Stainless steel shortage factors
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Like almost all factory shortages, multiple factors have led to the shortage of stainless steel.
The shortage became a national concern in January 2021, when ATI Metals took 304 stainless steel offline and shifted production to grade 316.
News of this change did not reach downstream. Our nation is still under-informed about the shortage of this type of steel. Stainless steel is essential for multiple applications in a wide variety of industries.
The change of ATI took about 30% of our country’s supply offline. In addition, only around 10% returned online (these are rough figures based on our surveys of users and distributors).
If a factory decides to bring 304 online, it could take up to a year for the supply to reach the distributor level.
This is a painful long-term shortage.
Commercial impacts
Business owners have reported that projects have been canceled due to a lack of stainless steel and / or a price increase that puts them off budget. The shortage appears to be hitting family manufacturers much harder than major OEMs.
A resilient supply chain requires a domestic source of strong and stable stainless steel. Engineers are highly respected for developing solutions to material shortages; 3D and additive manufacturing have created new solutions. Maybe there are some changes companies can make internally, like an overhaul to help them weather the storm.
American ingenuity is at its best when challenged. Readers should share this warning regarding the shortage of stainless steel so that users can prepare and suppliers can respond.
A team investigating the shortage – including a wide range of manufacturing trade associations, steel distributors and manufacturing companies – concluded that the wider economic impact is potentially serious.
“Relocation is booming due to the disruption of the supply chain,†said Harry Moser, Founder and Chairman of the Reshoring Initiative. “Businesses will be less likely to relocate if 304 is not available.”
So who needs to know about the shortage?
Some of the affected end-user industries include construction, infrastructure, defense, aerospace, medical devices, and food equipment. Relevant OEMs include HVAC, mufflers, and plumbing, in addition to contract shop types including manufacturers, stampers, shims, machine shops, and springs.
Consumers of metals, in addition to trade and professional associations involved in the supply chain, are likely to have members affected by the shortage and may find this information useful. Any procurement professional should be aware of the shortage.
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