Market Update: Consumer Goods & Contract Manufacturing Q4 2021
The consumer goods industry heavily relies on the economy and consumers’ willingness to purchase goods. The Market update combines consumer goods into two categories: durables (longer lifespan) vs. non-durables (shorter lifespan). Over the past two years, large amounts of capital were poured into the economy to fuel consumer demand, the demand in conjunction with covid implications created instability within the supply chain. The net-net is that this proved very difficult to understand consumer businesses. The underlying variables being that Investors could not get comfortable with the macro variables within the consumer industry.
The burden of prolonged supply chain issues due to COVID-19, in addition to, onset technology advancements within the supply chain pronounced a shift towards contract manufacturing ranging from increased demand for convenient consumer packaged goods to the sheer necessity of the urgent distribution of life-saving medical devices and drugs. The consequences of supply chain interruptions will bode well for near-shore supply Contract manufacturers as CEOS will use contract manufacturers to minimize workforce, expand margin, and avoid delayed products due to backlogged ports.
However, supply shortages and unreliable logistics are forcing contract manufacturers to deviate from their manufacturing plans, shifting production to match available materials. Many contract manufacturers have initiated policies refusing to schedule production until the necessary materials are on-site, thus causing months of backlogged orders. 7MA will continue monitoring such near-term headwinds and how it all relates to the future of the contract manufacturing industry. Please contact Mark Landry, Ilia Ulianchuk, or Tanner Lange if you would like to hear more about Consumer Goods and Contract Manufacturing.