WHAT MAKES THE PROBLEM WORSE?
Supply chain issues began nearly two years ago with the start of the COVID-19 pandemic. Included in this timeline are consumer price index figures for Texas, which measure the average change over time of prices of consumer goods and services since the early 1980s, when the CPI was 100. START? WHERE DID THE PROBLEM overseas travel and trade. The return to production of goods is not universal, and many borders remain closed. April 2020 CPI: 231.8 The first round of federal stimulus checks is distributed via the Coronavirus Aid, Relief and Economic Security Act. Many consumers use the money to buy goods they otherwise would not have, creating an unexpected spike in demand. March 2020 CPI: 234.3 The onset of COVID-19 halts March 2021 CPI: 240.5 The American Rescue Plan Act provides another round of federal stimulus funding, continuing to create additional demand for goods.
2019
A January survey of Texas business owners found 70% of businesses had been negatively affected by COVID-19 in the past month. Of those businesses negatively impacted, the following factors played a part.
January 2019 CPI: 230.5 Construction costs begin increasing more frequently than in years past.
Increased employee absenteeism
Lower demand
83.3%
25.3%
Reduced productivity due to alternative work arrangements
Partially shut down business operations temporarily
July 2019 CPI: 234.3 Robust pre-COVID-19 demand for goods from overseas reduces demand for locally produced goods.
46.7%
13.6%
New or worsened hiring difficulty
Fully shut down business operations temporarily
43.6%
1.6%
2020
April 2020 CPI: 231.8
New or worsened supply chain disruptions
SOURCE: FEDERAL RESERVE BANK OF DALLAS/ COMMUNITY IMPACT NEWSPAPER
43.6%
As people are panic- buying toilet paper,
the first sign of supply chain issues emerge. Goods that are able to be stocked on shelves do not meet the 40% increase in demand for the product.
struggled to find food supplies and paper goods. “We’ve had to make do by finding other sources,” Giannina’s owner Giovanna Cicciarella said. “I actually ordered on Amazon for plasticware. So we’d go to Restaurant Depot, or we would [try to] get it from our distrib- utor, and I had to get it on Amazon.” Lisa Lau, co-owner of L3 Craft Cof- fee in Cy-Fair, said the coffee shop has had to stock up on certain items to avoid stress later on. “We’ve actually stocked quite a bit of our safety stock. … Even at home, my office that is usually empty is now full of boxes,” Lau said. “So it’s only because the wait times are a lot longer. An example is that we placed an order to have the things custom made, and they didn’t get in until like August. And we usually get them in one month, but we took into account the processing time, so we ordered a month ahead.” Jankowski said other businesses have turned to Walmart or Target to stock their coolers with sodas and their shelves with cups as their usual providers limit distribution. Alongside supply chain disruptions are staffing shortages. Local business leaders agree people have come to expect higher pay for what are coined “behind-the-counter” jobs. Jankow- ski said he believes this is due in part to people becoming accustomed to working from home or having more flexibility during the peak of the pan- demic. The GHP reported there are around 92,000 fewer workers in the Houston region now than there were a year ago.
It was the strongest quarter on record for job growth.” With businesses fully operational, they need as many hands as they can get, meaning less flexibility in scheduling than there was a year ago, Jankowski said. Costs for goods and supplies are higher for these mom and pop shops as well, making it more difficult to raise wages and leaving a gap in production as more people go out to shops or eat at short- staffed restaurants. A January inflation update from the GHP reported a 7.5% rise in con- sumer prices nationwide since the start of 2021. The GHP also reported a 5.1% increase in job creation in 2021 with 151,800 positions created. This influx of job opportunities has left businesses competing for work- ers. Many employees are using this opportunity to change careers ormove from one industry giant to another, Martone said. When faced with these hardships, local Cy-Fair businesses have adapted and persevered. Ongoing challenges Many of the issues businesses are facing are related to the supply chain—the flow of goods from the producer to the customer—which was essentially halted when the pan- demic first hit and nations ceased trading and shipping, Jankowski said. Although many ports have opened back up, variant outbreaks still pose a threat to this system, leaving busi- ness owners wondering when they will get their next shipments in. One such local business is Gianni- na’s Pizza and Catering, which
December 2020 CPI: 235.1 A second round
May 2021 CPI: 244.9 The consumer price index shows the cost of lumber is three times what it was a year ago, delaying construction timelines or forcing builders to scale down projects. of stimulus funds goes out as part of the Coronavirus Response and Consolidated Appropriations Act.
2021
October 2021 CPI: 250.4 Surges in e-commerce and logistics disruptions
July 2021 CPI: 246.9, September 2021 CPI: 248 A shortage of semiconductors in the
lead to supply chain issues affecting businesses and consumers. Shipping delays caused by container shortages
U.S. causes a price hike in new and used vehicles, resulting in limited stock for sale. SOURCES: SAM TENENBAUM, WHITEHOUSE. GOV/COMMUNITY IMPACT NEWSPAPER
2022
at international ports compound the issue.
research for the Greater Houston Partnership. “We shut everything down inMarch and April of 2020, and we realized we didn’t need to shut it down,” Jankow- ski said. “So things started opening back up, and that’s when we saw the first surges in growth. The last quar- ter of 2021 was just incredibly strong.
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you think about us coming back to the office?’ And I said, … ‘If you’re a mom and pop, it’s your own thing.’” Houston’s economy has recovered and rebounded from shutdowns, oftentimes resulting in more demand than there is supply, said Patrick Jankowski, senior vice president of
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