AkzoNobel Blames US Disruptions on Trucking
In a recent interview with global paint and coatings manufacturer AkzoNobel’s Chief Executive, Thierry Vanlacker warned North American customers that a shortage of truck drivers has disrupted some of its operations.
The announcement highlights the continued labor shortage experienced in the country as a result of the COVID-19 pandemic, particularly in the transportation industry.
Operation, Transportation Hurdles
According to Vanlancker, AkzoNobel’s North American operations is suffering from supply constraints, partially due to the absence of truckers. The Dutch paint and coatings manufacturer is known for its architectural coatings brand, Dulux.
“The great resignation has definitely impacted the trucking industry in the U.S. It is the most difficult region if you have the materials to ship them around the country,” he told The Financial Times.
In recent article by Forbes, it was reported that the American Trucking Association estimated that the 2021 driver shortage capped at 80,000 drivers. If this trend is to continue throughout 2022, experts predict that the trucking industry could need more than 160,000 drivers by 2030.
Current issues impacting the trucking industry include supply shortages, skyrocketing prices and labor shortages.
Looking to the future of this sector of the transportation industry, the publication suggests that companies invest in the safety and efficiency of the current model, as well as consider investments in freight technology.
Despite the operational hurdles, AkzoNobel was able to offset supply chain issues, a coronavirus resurgence in China and the impact of Russia’s invasion of Ukraine through its decision to raise the prices of its products—which are up 17%.
Vanlancker said in a statement that the group’s “vigorous pricing initiatives” had helped it manage “the unprecedented variable cost inflation that impacted our industry during the quarter.”
In the company’s first quarter earnings report for 2022, AkzoNobel reported a 12% increase in revenue year-over-year (10% in constant currencies), along with a 9.1% ROS. However, regardless of the price hikes, the company’s affected ROS was noted to be a result of raw material and freight cost inflation, and supply constraints.
Operating income for the quarter is also down 23% from 303 million euros (about $328.3 million) to 232 million euros. Adjusted operating income is down 25% from 307 million euros to 230 million euros, and net income is down from 217 million euros to 154 million euros.
In the future, Vanlacker expects that the operating environment will improve throughout the year and that a possible easing of raw material prices will be experienced in the second half of 2022.
Improving Labor Shortages
At the beginning of the year, a variety of jobs reports, employment forecasts and publications were reporting that the industry was suffering from labor shortages. From skilled craftworkers to painters, contractors in the work force were reporting an employment decline despite new work opportunities and design contracts.
Cloud-based human resources and talent acquisition solution LaborIQ, by ThinkWhy, issued a job forecast for construction and extraction occupations at the time, detailing that while the industry is expected to expand by 3.9% (nearly 240,000 jobs) in 2022, the growth could be thwarted by limited labor supply.
In 2021, despite COVID-19 challenges, the construction industry was able to add 121,000 jobs overall with gains in the following major subsectors:
In the months to follow, however, it was reported that the construction industry reportedly witnessed a 40-year high in terms of growth rates in both nonsupervisory positions and wage increases.
According to the U.S Bureau of Labor Statistics, the construction industry added 60,000 jobs on net in February—marking the recovery of virtually all 99% of the jobs lost during the early stages of the COVID-19 pandemic. Currently, construction industry employment (both residential and nonresidential) is 7.6 million, according to the National Association of Home Builders.
In taking a closer look at the February numbers, nonresidential construction employment increased by 29,400 positions, with all three subsectors experiencing growth, and is up 3.9% over the past twelve months. The residential sector added 31,000 and is up 4.5% since February 2021.
The number of unemployed jobseekers with construction experience shrank by 26% over the past year, from February 2021 to 677,000 in February 2022.