New York: The cold snap that swept across the United States in February not only caused chaos in Texas and the Southwest, but also triggered a shortage of plastics, which has disrupted an already stressed supply chain due to a lack of microchips and increased port congestion. The result of the coronavirus pandemic.
So factories have had to shut their doors and consumers are feeling the crunch.
At Toyota, a petrochemicals shortage affected production at plants in Kentucky, West Virginia and Mexico.
Honda cited supply chain issues “related to the impact of Covid-19, congestion at various ports, semiconductor shortages and severe winter weather” to justify the temporary closure of five of its factories in Canada and the United States.
Consumers are also affected.
Nike said on Thursday that sales of its shoes and sportswear were affected by congestion in ports across the country.
At a Best Buy home appliance store in suburban Washington, a customer said she spent an hour with a sales assistant, only to find that many stove models wouldn’t be available for several weeks.
“I had to buy a black stainless steel stove when I wanted a white one, and for $200 dollars more than I’d budgeted”, complained Virginie Hines, a French woman living in Maryland.
The problems in the plastics sector are the latest glitch in the supply chain.
In mid-February, freezing temperatures paralyzed Texas and Louisiana, and many factories converted petroleum into polyethylene. These factories used to make plastic bags, shampoo bottles or toothpaste tubes, polypropylene, and used in car meters. Hard plastic or PVC for plates or refrigerators, used to make pipes or window frames.
Although they are accustomed to weathering hurricanes, they rarely experience low temperatures.
At the height of the cold snap, more than 70 percent of ethylene production capacity was down and at least 62 percent of polypropylene production, according to S&P Global Platts.
“Not only was supply knocked off line from a freeze, but the demand for products had just started to rebound,” said Robert Benedict of the American Fuel & Petrochemical Manufacturers (AFPM).
The consequences are hard to pinpoint, but with petro-chemicals accounting for a third of the raw material costs of a car, “it’s easy to understand why we’re now seeing ripple effect in other manufacturing supply chains,” he said.