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How The Invasion Of Ukraine May Affect Your Business

Manufacturing companies across the nation are experiencing kickback from the invasion of Ukraine by Russia due to the disruption of global supply chains. Since sanctions have been imposed, the Russian railways’ utilization for freight services is now non-existent, fuel prices are skyrocketing, and air freight rates are increasing due to limited air capacity. Considering both countries are responsible for producing and transporting key material to the United States, your organization may also experience problems within your supply chain.

Last year major manufacturers were finally getting back into the groove of things as trade became easier despite the world recovering from the pandemic. The unemployment rate decreased, shortages were a thing in the past, and cost was average. However, inflation has increased tremendously since the war, with companies suspending shipments to and from Russia, surging demand for goods, and spiked production costs. Here’s how your business may be affected by the invasion of Ukraine if it hasn’t already.

Limited Supply

Ukraine and Russia supply essential goods into the U.S., like sunflower oil, used in potato chips and cosmetics, and neon gas, platinum, aluminum, and steel. Large manufacturers worldwide depend on these critical materials to produce the products they sell. Without the supply, companies are experiencing a decrease in production and profit. Automotive companies like BMW and Volkswagen are already feeling the effect. Since there was a shortage of parts, these companies were forced to close facilities, laying off thousands of workers.

Travel Restrictions

Cargo flights have been canceled or forced to reroute to avoid hitting war territory. This has created a significant delay in supplies across the nation. Some flights have been canceled due to safety concerns, while others have been forced to cancel due to Russia cutting off shipping routes. These areas have also been the key spot for attacks and ship arrests, creating extremely dangerous territories throughout trade routes. In addition, with a flying ban currently in place, freight flights are forced to take longer alternate routes, resulting in increased fuel costs.

Increased Cost

As the supply chain tightens, prices will continue to rise. Americans have seen a considerable spike in gas prices and grocery items across the country, and based on how long the war lasts, the Summer Wheat Harvest may also be threatened. This means businesses could experience a shortage of bread, pasta, and packaged goods, and once they receive those goods, they could be forced to jack up the price before selling it to the consumer.

How Manufacturing Companies Can Stay Ahead

With no knowledge of when the war will end. Companies should begin enforcing supply chain strategies to prepare for worst-case scenarios. A few ways companies can stay ahead of the curb:

  • Build a pipeline of qualified candidates to help with any staffing needs that may occur
  • Stress test supply trains to make them more resilient to risks
  • Put plans in place now to begin reducing costs amongst the organization

Let’s put a recruitment strategy together. Contact us today to discuss industrial staffing for your company.

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