Supply chain issues impact millwork
November 3, 2022
A couple months ago, I caught up with Robert Jungers to hear how supply chain issues were affecting his business, Elochoman Millwork, from lumber and glass, to parts, to personnel.
“People talk about these issues we’re faced with right now as if they are stand alone issues. Supply chain difficulties, labor difficulties, inflation. In a lot of people’s minds they are separate issues, I think,” Jungers said, “they are all interrelated and for the most part, they all have negative outcomes for the economy, for our culture.”
With the onset of covid-19, Jungers posited that many people affected by the subsequent layoffs went home, and with time on their hands, started home improvement projects.
“The first manifestation locally here was the price of lumber went through the roof,” he said. “On top of that, you had the local mills from Randle down to Salem being forced to lay people off so they can’t produce lumber, which exacerbated that issue.”
Lumber is an essential element to operations at Elochoman Millwork, which makes fine custom doors, windows, and more.
“We’ve used west coast softwood specifically, exclusively for the core of our doors, for 20 years,” Jungers said. “We have a very good supplier of very high quality core material that was custom manufactured to our needs and they cut us off. Boom. Not a 30 day warning. Nothing. They said, we can’t sell you a stick of lumber anymore because our big customer, Simpson Door, is going to take it all.”
“So here we are with, I don’t know, hundreds of thousands of dollars worth of doors on order and we can’t get the finish materials to produce that,” he added.
They have investigated alternatives as they try to acquire replacement core. Jungers explained that there are two different types or grades of lumber in the softwood lumber business, manufacturing grade and construction grade.
“Everybody is familiar with the construction grade, two by four, two by six and so forth,” he said. “The price on the construction grade, partly due to demand, partly due to supply, went through the roof. It doubled and it tripled.”
This put increasing pressure on the manufacturing grades of lumber, which is what Elochoman Millwork consumes. It normally sells for more money than construction grade, Jungers said.
“So now the mills are making more money, those that are running, on turning manufacturing grade lumber into construction grade lumber, which doubles the threat on our supply,” he said.
“It boggles the mind to find out just locally between Salem and say, Olympia, how many different kinds of Douglas fir and even hemlock lumber is available and at what grade, and what quality and what state, and by state, I’m referring to the moisture content,” he said. “Moisture content is extremely critical for manufacturing, not so much for construction. We found suppliers down in west Oregon that we experimented with and their product was more expensive than what we were paying for but a lot less expensive than what most of the market was, but we had nightmares in moisture control so we built product that went out into the market place and went out to the end consumer and the product failed because the moisture content was too high. So we get those back and we eat it. They’re expensive.”
Another factor of the supply chain is the effect it has on machinery, maintenance, and productivity.
“We have very high tech machinery. We have a lot of low tech machinery,” Jungers said. “They all need maintained and from time to time they need replacement parts. Used to be if I needed a [part] for a [machine] built in Europe, I could get on the phone and talk to the distributor in Atlanta and I can have that part off their shelf and in my house in 24 hours.”
Now the waits are weeks, he said.
“The one machine which is our absolute focal point of manufacturing, our five access CNC machining center, it is limping because of a part failure. We can get by with running it at lower speeds and very controlled circumstances, but it’s cut its productivity in half,” Jungers said. “The other machine, a compressor that comes out of Germany, a fantastic machine when it runs, it’s not running. It needs a $4,800 part.”
Instead, the millwork is using a backup compressor system which Jungers speculates has about 50 percent of the capacity of their main compressor.
“The whole shop is limping by with a lot less compressed air than they need. We usually run four air sanders but we can only run one because the CNC and other critical machines need a certain amount of air,” he said.
Along with lumber, the millwork also uses a lot of glass in the production of their glass doors.
“You think glass is glass, right? We use probably 50 varieties of glass that can’t be substituted one for the other,” he said. “The glass companies, I’m just guessing, but I think because of an acute labor shortage, they can’t keep us supplied.”
Once upon a time, the millwork could order a common type of glass and have it in three to five days. Now they wait three to four weeks.
The manufacturers of the more obscure glass, which Jungers said is more than 50 percent of their glass consumption, decided to stop making it, or stop making it over a certain size.
Sometimes the millwork waits six to eight weeks for the product, and when it does show up, they’ve only received 80 percent of the order, and a percentage of what they do receive might be defective and they have to reject it, slowing production down even more.
“Meanwhile I’ve got stacks of doors out there, hundreds of thousands of dollars worth of doors I can’t invoice for, because I can’t get in some cases, two or three pieces of glass,” Jungers said.
“A lot of the shortage I think breaks down as labor shortage, Jungers said. “People we have worked with for 20 years have had a competent staff of mechanics in the shop, making us leaded glass, cutting laminated glass. Those people just went away, and now they can’t even get unskilled laborers to come in and train to replace them. It is an entropic cycle that I think is involving all of manufacturing industry and probably more in the whole United States.”
It’s not just out there, it’s here as well. Jungers was struggling to find people to work when we spoke.
“I could put to work four more people easily,” he said. “We could dance around and juggle the supply issues. We’ve become rather adroit at it.”
“Right now I have $1,660,520 worth of firm orders that we could manufacture. We might not be able to complete all of them because of supply issues, but the schedule we use to project shipping and check inflation, that amount of money with our current labor assets, we are programmed out until May 19 of next year.”
“If I had five more people we could cut three months out of our lead time,” he added.
“When you have a lead time of more than 10 months you are losing customers,” he said. “They ask ‘When can I get this?’ When the answer is June of next year. They go someplace else.”