U.S. companies to keep prices high as supply chain headaches persist
28 October, 2021, 11:10 am
The largest U.S. manufacturers including General Motors, General Electric, 3M and Boeing 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.
“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.”
Larry Culp, the chief executive of General Electric Co (GE.N), 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.
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 (BA.N) also complained of a “severely weakened supply chain.”
On Wednesday, Harley-Davidson (HOG.N) 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.
McDonald’s Corp (MCD.N) also said it had to raise prices in the United States.
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.
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.