Juli 9, 2021
By Scott T. Becker, CEO
Back in April 2021, I wrote about adapting to this new environment raw material shortages and cost escalation, along with the continuation of COVID-19 implications around the globe. I was hoping the COVID-19 situation would be better by now, and perhaps in select areas of the world it is, but there are many countries, provinces, and states that remain challenged by the virus and its variants and the lack of availability and distribution of vaccines. I also thought that raw material availability would have meaningfully improved by now, but that has not happened to the degree that one with expect with such passage of time. It now looks that both issues will be with us for the remainder of 2021.
At Chromaflo, we are managing both challenges. We remain vigilant on the COVID-19 front with high levels of employee vaccinations in countries where vaccines are readily available, and we continue to operate all facilities with the proper hygiene protocols now becoming a way of life. On the raw material availability front, resins, additives, and solvents are the most challenged materials. Select pigments are also finding their way into some restricted supply.
Fortunately, having multiple facilities and multiple raw material inventory locations has allowed us to transfer materials across borders and oceans. When absolutely necessary, we have air-freighted materials from various geographies to address critical customer needs. Additionally, we have instituted cross-functional daily delivery review teams to address very short-time production plans versus market demand to best meet customer needs. Due to this unprecedented raw material shortage, we are making smaller batches more often to best meet individual customer requirements.
Of course, all of these issues come with a cost. We have experienced massive raw material cost increases, freight costs have gone up exponentially, and conversion costs have increased due to the smaller batches being made more often. While not to our liking, we have had to institute price increases and/or surcharges to partially offset such extraordinary inflation.
Our employees are doing exceptional work to overcome the challenges we all are facing in 2021. Rest assured we are completely committed to you and your business.