Supply Chain Woes Pushing up Paint Prices
Raw material shortages and cost increases have prompted paint manufacturer Sherwin-Williams to raise prices. The company recently told investors that its cost for resins and polymers to make paint and steel to make cans will increase somewhere in the high teens for the year and exceed 20% during the fourth quarter. So the manufacturer has to respond with price hikes.
There has been a lot of talk about the current spike in inflation being "transitory." But CEO John Morikis and other Sherwin Williams executives don't necessarily see that being the case.
"The reality is there's a tight supply chain market, there's a strong demand and we expect raw material costs will stay elevated for a period of time," said CFO Allen Mistysyn.
"The actions we're taking say we're expecting them to be longer term rather than shorter term," said Morikis.
The suppy disruptions started earlier this year when the severe winter storm that hit Texas caused prolonged power outages and damaged some suppliers' plants.
"Recovery of suppliers in Texas has consistently been slower than has been communicated to us all year, with some suppliers still not back to pre-storm operating levels seven months later," Morikis said.
Damage to suppliers from Hurricane Ida only added to the problems.
"Our suppliers are now reporting that the impacts of Hurricane Ida are more severe and will be longer lasting than initially thought," Morkis said. "Production of several key resins, additives and solvents, expected to resume by late September, has been pushed out."