(Editor’s note: The following is a guest post from C.J. Nord, C.P.M., CSCP, founder of the nonprofit Supply Chains for Good, and Harry Moser, founder and president of the Reshoring Initiative.)
Don’t hold out hope for the U.S.’s stainless steel shortage to get better until you know of new supply coming online.
There appear to be no plans in the works to increase domestic production. Supply may tighten even more than we have seen. This is similar in scale to the chip shortage.
Stainless steel shortage factors
Like almost all factory shortages, multiple factors have led to the stainless steel shortage.
The shortage became a national concern in January 2021, when ATI Metals took 304 stainless offline and shifted production to 316 grade.
The news of that change didn’t make it downstream. Our nation is still underinformed about the shortage of this type of steel. Stainless is critical for multiple applications in a broad range of industries.
The ATI change took roughly 30% of our nation’s supply offline. Furthermore, only about 10% has come back online (these are rough numbers based on our surveys of users and distributors).
If a mill decides to bring 304 online, it could take as much as a year for supply to reach the distributor level.
This is a long-term, painful shortage.
Business owners have reported projects being canceled due to lack of stainless steel, and/or a price increase that puts it out of budget. The shortage appears to be hitting mom-and-pop manufacturers much harder than the large OEMs.
A resilient supply chain requires a robust and stable domestic source of stainless steel. Engineers are well respected for developing solutions to material shortages; 3D and additive manufacturing has created new solutions. Perhaps there are changes companies can make internally, such as redesign to help them weather the storm.
American ingenuity is at its best when challenged. Readers should share this warning of the stainless steel shortage so users can prepare and suppliers can respond.
A team investigating the shortage — including a broad range of manufacturing trade associations, steel distributors and manufacturing companies — concluded that the broader economic impact is potentially severe.
“Reshoring is booming due to supply chain disruption,” said Harry Moser, founder and president of the Reshoring Initiative. “Companies will be less likely to reshore if 304 is not available.”
So, who needs to know about the shortage?
Some of the impacted end-user industries include construction, infrastructure, defense, aerospace, medical devices and food equipment. OEMs impacted include those in HVAC, mufflers and plumbing, in addition to contract shop types including fabricators, stampers, shims, machine shops and springs.
Metal consumers, in addition to trade and professional associations with any involvement in supply chain, are likely to have members impacted by the shortage and may find this information useful. Any procurement professional needs to be aware of the shortage.