© Reuters. FILE PHOTO: The congested Port of Los Angeles is shown in San Pedro, California, U.S., September 29, 2021. REUTERS/Mike Blake/File Photo
NEW YORK (Reuters) – The largest U.S. manufacturers including General Motors (NYSE:), General Electric (NYSE:), 3M and Boeing (NYSE:) face logistics headaches and higher costs due to global supply bottlenecks that are likely to persist into next year but agreed the hit to profits can be mitigated by charging higher prices for their goods.
Companies across the globe sounded the alarm on supply issues months ago that have pushed prices higher on raw materials from chemicals to steel.
In earnings reports this week investors got a closer look at how companies are managing.
“It starts with really strong price,” said GM Chief Executive Officer Mary Barra in a call with reporters. “We were able to do very well (with) full-size trucks and full-size SUVs. We just can’t build enough of those vehicles.”
GM is also looking to wring efficiencies from its supply chain and she said the chip shortage is likely to improve in the second half of 2022.
Larry Culp, the chief executive of General Electric Co, a maker of jet engines and wind turbines, told investors keeping up with fits and starts in the global supply chain was akin to playing a carnival game that aims to keep players on their toes.
“I’m not sure we’re yet at a place where we would say that things are stable,” Culp told investors on an earnings call on Tuesday. “It really is akin to playing a whack-a-mole.”
General Electric also expects supply constraints to persist through the rest of the year and in 2022, hurting profit in its healthcare business. Boeing Co also complained of a “severely weakened supply chain.”
The pandemic has crippled many companies’ ability to send and receive the parts and supplies needed to make a wide range of products, creating shortages, reducing inventories and hammering profits.
On Wednesday, Harley-Davidson (NYSE:) said it increased surcharge pricing in the United States to offset higher raw material costs. The motorcycle maker expects these costs to remain high and is exploring higher surcharge costs globally.
Harley-Davidson said the inventory shortage is also squeezing its international market share.
McDonald’s Corp (NYSE:) also said it had to raise prices in the United States.
Industrial giant 3M Co cut its full-year earnings outlook on Tuesday and said it would increase product prices to combat inflationary and supply chain pressures.
The company, which makes a long list of building and construction products, said it was facing higher costs related to polypropylene, ethylene, resins and labor. It added that the global semiconductor crunch would continue to weigh on its automotive and electronics end-markets.
On Tuesday, Lockheed Martin Corp (NYSE:) dramatically lowered its sales expectations for this year, saying the pandemic has hobbled the top U.S. defense contractor’s supply chain. Its shares fell more than 11% on Tuesday.
Lockheed’s chief financial officer said the problem worsened for them over the last two months, as the maker of the F-35 fighter jet lowered its 2021 revenue expectations by 2.5% to $67 billion and said next year’s revenue could fall to $66 billion.
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