(Editor’s note: The following is a guest post by CJ Nord, CPM, CSCP, founder of the nonprofit organization Supply Chains for Good, and Harry Moser, founder and president of the Reshoring Initiative.)
Don’t hold out hope that the US stainless steel shortage is getting better until you know a new supply is on the line.
There do not appear to be any plans underway to increase domestic production. Supply could tighten even more than we have seen. This magnitude is similar to that of the chip shortage.
Stainless Steel Shortage Factors
Like almost all factory shortages, multiple factors led to the stainless steel shortage.
The shortage became a national concern in January 2021, when ATI Metals took 304 stainless steel offline and moved production to 316 grade.
The news of this change did not make it downstream. Our nation is still under-informed of the shortage of this type of steel. Stainless steel is essential for multiple applications in a wide range of industries.
The ATI change has taken about 30% of our nation’s supply offline. Additionally, only around 10% returned online (these are ballpark figures based on our user and distributor surveys).
If a factory decides to bring the 304 online, it could take up to a year for supply to reach distributor level.
This is a long-lasting and painful shortage.
Business owners have reported projects being canceled due to a lack of stainless steel and/or a price increase that put it out of budget. The shortage seems to be hitting mom-and-pop manufacturers much harder than the big OEMs.
A resilient supply chain requires a domestic source of strong and stable stainless steel. Engineers are well respected for developing solutions to material shortages; 3D and additive manufacturing have created new solutions. Maybe there are changes companies can make internally, like a redesign to help them weather the storm.
American ingenuity is at its best when challenged. Readers should share this warning about the shortage of stainless steel so 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.
“Reshoring is booming due to supply chain disruption,” 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, defence, aerospace, medical devices and food equipment. Affected OEMs include those for HVAC, mufflers, and plumbing, in addition to types of contract shops, including fabricators, stampers, shims, machine shops, and springs.
Metal consumers, 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.