Exploring how the 2021 supply chain disruptions have impacted the water industry & how professionals are responding
To be certain, the supply chain in the water sector has experienced one challenge after another in more than a year.
Strategies to Mitigate Supply Chain Disruptions
A key mitigation strategy: keep as much inventory on hand as is possible.
“You have to look at your standard suppliers, vendors and manufacturers," said Blake Talmitt, president of Winisupply. "You have to be versatile enough and willing to buy from people you haven't bought from before and try new products. It comes down to that. There’s not much of an option. You can either have something to sell or have nothing."
Talkmitt is president of Winsupply in Lubbock, Texas, a locally owned and operated water well wholesale supply company that sells to and supports licensed water well contractors with line shaft/submersible turbines, residential, booster, solar powered pumps and accessories.
Not only has the combination of the pandemic-related pause on business and the challenge of getting people back to work impacted the supply chain, but Texas got a third punch: record-breaking winter snow, sleet and freezing rain during February resulting in road closures, power outages, loss of heat, and broken pipes, among other impacts, with the National Weather Service calling it "potentially the most costly weather disaster for the state of Texas in history."
Resin Production Impacts
With much of the country’s resin production based in Texas, the impact sent shockwaves throughout the industry.
The COVID-19 pandemic affected manufacturing facilities throughout the supply chain as employees were either affected by COVID-19 or production shifts were adjusted in response to quarantines.
Staffing shortages resulted from people not returning to the workforce for a variety of reasons, albeit as federal unemployment benefits end and school districts resume in-person education for children who have been learning from home.
Working on the unpredictable employee issue is critical, Talkmitt said.
“Your employees are your number one commodity,” he added. “You sell your service. If you don't have the people to do the service, you don't have much to go off of.”
Talkmitt said it is possible that by the end of the third quarter 2021, he might be able to start ordering PVC pipe again.
“That’s just a ‘maybe’,” he said. “Even when they’re shipping orders out right now, they’ve got trucks just waiting or trying to get trucks to get all these loads out of the yard. You have to buy what you can get when you can get it. Prices are going to continue to grow and availability is going to continue to drop.”
For example, the Purolite Corp. recently announced an 8% average global price increase for its ion exchange, catalyst, adsorbent and specialty high-performance resins in its core technologies business in the residential, municipal, commercial and industrial sectors. Since the beginning of 2021, Purolite has experienced increasing raw material, freight and packaging costs, according to a press release by the company.
Chemical price increases of 20 to 30% — particularly with anything related to petrochemicals — impacts styrene, DVB and other ethylene-based chemicals. Domestic and international freight costs — especially ocean container rates — have increased significantly. Prices of lumber, paper and steel have hit record highs, driving up packaging costs.
“These adjustments will allow Purolite to continue offering the same high level of quality, sales and technical support,” Jacob Brodie, vice president Americas for Purolite, said in the release. “We will continue to monitor the situation to align with market conditions.”
“If I could have managed to keep half a year or three quarters of a year’s supply, I would have,” Talkmitt said. “I didn’t anticipate the shortages lasting this long. It’s continuing to get worse.
“As far as wholesale distribution, everyone is running out, so even if I would have been planning on keeping three quarters’ of a year supply and I was the lucky one, there are contractors who don't normally deal with you that call on you and we still would have run out.”
The disruption is sure to impact relationships, Talkmitt said.
“If you have to use new products, some people won't have the loyalty to the products they have been using because they haven't seen the sales rep necessarily for that product in maybe a year and a half because of the pandemic,” he said.
“It helps them to where they can use a new product a little more easily. But in the past few months, you’re definitely seeing the manufacturers’ sales reps getting back on the road to regroup and figure out what is going on out there.”
Communication & Staying Ahead of Supply Chain Issues
Communication is key, Talkmitt said. He spends a great deal of time with others in the industry talking about copper, PVC and steel prices.
“Contractors are thinking they can lose money at the end of the day if they don't sell the product for a replacement cost because it continues to go up every couple of weeks," he said. "They’ve got a project that they know if it’s in stock, buy it now because if you wait, there's a good chance you could not have it. Or they may have to change specs on a project because they can't get something, which can cause them to lose a job.”
To mitigate today’s industry challenges with supply, Mark Kinder’s strategy has been to order more to keep more in stock.
“When we’ve gone to reorder, they're out,” Kinder said. “It means having to work at a broader range and have more suppliers than we normally use.”
Kinder owns Affordable Water in Jacksonville, Florida, which for more than three decades has been a full-service company that sells, installs and service water treatment equipment and offers water treatment in water softening. conditioning and purification primarily to the residential sector as well as commercial throughout northeast Florida. Kinder is a Master Water Specialist with the Water Quality Association, a certified installer and a past Florida Water Quality Association board member. He has a Class C Drinking Water Operator’s License through the State of Florida’s Department of Environmental Protection. He also is a W-32 Licensed Contractor in Duval County which requires pulling permits for water treatment installations.
Like others in the industry, Kinder’s business is experiencing the impact that the pause on manufacturing took place as a result of COVID-19, as well as current challenges companies have in finding and retaining employees, with impacts up and down the supply chain.
Kinder is seeing price increases, which he said he must occasionally pass on to his customers. He is also endeavoring to provide products made in the U.S. to meet his customers’ preferences.
“It’s a situation where we’re just going to have to ride it out,” he said. “Fortunately, we’re in a position to be able to invest money in inventory because we have to plan for months ahead. At times, it feels like I'm holding more product than my suppliers are holding.
“I don’t know if there's any availability problems with imported equipment or materials, but I’m buying greater quantities of product in order to guarantee my customers I'm using American-made products.”
Given the criticality of the water industry, Talkmitt is not reticent to use the word "frightening" to describe current challenges.
“It’s something we stress about every day and we’re working on digging our way out of it,” Talkmitt said. “At the end of the day, as long as we can provide our customers water in some type of way, that is the goal.”