Supply Chain Effects of Hurricane Ian

Supply Chain Effects of Hurricane Ian

As we watch Hurricane Ian continue to unfold, predictive models estimate that there are about 2,800 manufacturing companies in the aerospace, automotive components, heavy machinery, chemicals, and plastics industries that will be impacted by the storm. There are also about 7,000 companies in the health care sector that produce pharmaceuticals, medical devices, diagnostics, and other items.

At a large production facility or industrial area, even a few hours of downtime results in more time needed for repairs, powering up equipment and restarting work. The anticipated storm zone includes more than 4,500 companies, warehouses, and distribution hubs that create or supply around 74,000 items for everything from electronics to chemicals.

Based on previous experience with similar weather disasters, it will take an average of nine weeks for operations to return to pre-storm run rates. The capacity to produce and ship goods may be hampered by damage to buildings, machinery or inventories. The amount of downtime will depend on whether organizations have backup manufacturing and alternate sites.

“A lot of times people sort of know where the warehouse that they place their orders is, but they don’t know where the factories are actually located, and how the different factories connect into their supply chain,” said Resilinc CEO Bindya Vakil, whose company charts supply chains and makes projections on potential disruptions. “That’s really important because if companies are not monitoring their suppliers that are in Florida right now, then three weeks later, they might have a critical supplier who says, ‘Hey, remember that hurricane that actually knocked down power and my factory went down for two weeks and now I can’t ship you something.’

The effects of the storm will not be confined to its path. The Sunshine State ranks 16th globally in that area and has the fourth-highest domestic GDP in the entire United States. The consequences of a strong natural disaster like Hurricane Ian can be felt all around the nation. Florida's economy is broad, and the hurricane may have an influence on the cost of a variety of goods, including electronics and lumber. Additionally, it might have an effect on aircraft makers.

In July, Florida was already experiencing supply chain issues while attempting to restore power after less powerful storms. “This is not a municipal utility issue. This is not a Florida-specific issue. This is a national issue,” said Amy Zubaly of the Florida Municipal Electric Association. Even at that time, utility providers took longer to get "storm fundamentals" like transformers, cables, and poles. A few years ago, power companies could expect some supplies to take 3-6 months to arrive. In 2022, those same parts have lead times of 2-6 years. “Some manufacturers are declining to accept new orders altogether due to historic backlogs,” said Alisia Hounshell, spokesperson for the Florida Electric Cooperatives Association.

How do you expect Hurricane Ian to affect your business? Let us know on LinkedIn.

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Sep 29th 2022

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