With iceman on the way, U.S. plants and suppliers get ready

Thu Nov 20, 2014 1:14am EST
 
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By James B. Kelleher

CHICAGO (Reuters) - U.S. Steel is stockpiling extra iron ore ahead of what could be another record-long freeze-up of the Great Lakes.

General Motors has built up inventories of critical parts at its plants and established a supply chain "crisis room" that will swing into action in the event of a major winter storm.

Con-way Freight is issuing strap-on cleats to its drivers and dock workers.

The blast of unseasonably frosty air gripping much of the United States has served as a reminder of the polar vortex that sent a chill through the U.S. manufacturing sector last winter, causing part shortages and plant closures and triggering a 2.1 percent drop in first-quarter gross domestic product.

Manufacturers and their suppliers are scrambling to avoid a costly repeat if this frigid autumn morphs into Polar Vortex II. Companies are stockpiling parts at factories, increasing the amount of goods in transit, reviewing weather contingencies with their freight carriers and booking extra trucks and trailers so shipments do not get sidelined by nasty storms.

The precautions will add hundreds of millions of dollars in cost, supply chain experts estimate, and could temporarily depress the sector's profits. But Whirlpool (WHR.N: Quote), General Motors (GM.N: Quote), Ford Motor Co (F.N: Quote) and Con-way CNW.N, and other companies contacted by Reuters said they aimed to avoid the even more costly disruptions, like those that hit in early 2014.

“It’s an insurance policy,” said Chad Moutray, the chief economist for the National Association of Manufacturers.

Companies such as U.S. Steel (X.N: Quote) believe they have little choice. The country's No. 2 steel producer is moving a key raw material, iron pellets, south and increasing the volume of semi-finished product at steel works around the country.   Continued...

 
Freight driver Antoine Seegars looks up to talk with a fellow driver at the Con-way Freight trucking yard in Romulus, Michigan, November 19, 2014. COLDSNAP  REUTERS/Rebecca Cook