Seemingly since the onset (and onslaught) of the pandemic, Marin businesses have been playing a maddening game of whack-a-mole. Every time one crisis subsides, another seemingly arises. And even 19 months into the pandemic, in one of the most highly vaccinated counties in the U.S., a pair of relentless forces – staffing shortages and supply chain chaos – wreak havoc on businesses across Marin and beyond, each with myriad causes and no easy solutions.
Why are you reading about this on the Enjoy Mill Valley Blog of all places?
If you regularly follow the news, you’re quite familiar with both of these pain points, which are being experienced across Marin, throughout California and in much of the country.
Here’s why we’re posting about it right now: an amazing 98% of the eligible population of Marin has received at least one dose of the vaccine, and children 5-11 years old will likely be eligible for a vaccine in the coming weeks. Life is weird and hectic but demonstrably better than it was for much of the previous 18 months.
But businesses across a broad spectrum of industries are still very much in crisis mode, and they could really use your empathy and support at the moment, and would be grateful if you could resist the impulse of hopping on Nextdoor or Yelp to share your experience. This piece is not to chastise but to educate and make ourselves aware of the reality of the moment.
The current conditions are at such a macro level that they are way beyond the control of any individual business or industry. Because of that, this moment might mean waiting a bit longer for your food order than you’d planned, or rolling with the fact that the bike you bought might not be arriving on our shores for many, many months.
In most cases, the turbulence is caused by the double whammy of staffing shortages AND supply chain problems. “We’re kind of just making it through most weeks,” says Joe’s Taco Lounge owner Gabriel Leis.
The first has been nearly ever-present since the arrival of the COVID-19 criss: staffing. Mill Valley employers say they can’t point to a single driving factor, instead identifying several causes, including childcare needs, concerns about exposure to unvaccinated patrons, and workers seizing the moment amidst the pandemic to make long-sought career changes. We’ve also heard that there’s a cyclical effect: limited staff = reduced seating capacity = fewer tips and reduced wages = less people interested in returning to work.
There was widespread expectation that the end of federal unemployment benefits in September would send a flood of workers returning to their jobs. Instead, the labor force shrank in September, with five million fewer people working than before the pandemic began, and three million fewer even looking for work, according to the New York Times.
As Rachel Eager, a 25-year-old, former employee at an after-school program told the Times, “Many people are realizing that the way things were pre-pandemic were not sustainable and not benefiting them. “My financial situation is OK, and I think that is 99 percent of the reason that I can be choosy about my job prospects,” said Eager, who said she is not willing to take a job with low pay, no benefits and little flexibility.
With all those factors driving the job market, local businesses are constantly scrambling.
“We continue to have fewer staff, which means that those employees are overworked,” says Peter Schumacher, co-owner of Bungalow 44, Buckeye Roadhouse and Playa. “People expect things to go back to pre-Covid ‘normality,’ which may never come back. We have lots of guests who are nicer and more patient now than ever before, and we have others who seem to have lost the art of kindness while they were cooped up in their homes.”
“We’re all working short staffed, everyone who is working is overworked,” Leis says. “I’ve had people get upset (at longer wait times), but it’s sort of like, ‘look around, this is the world we live in now.’ Things take longer because we have fewer people working. Every single restaurant is short staffed.”
Supply Chain Chaos
As so many of us canceled travel plans in 2020 and 2021, and while the federal government pumped millions of dollars into the economy through various forms of relief, the S&P 500 is more than 30 percent higher than it was before the pandemic. As a result, as transportation secretary Pete Buttigieg said recently, “Demand is off the charts,” so much so that it is a quintessential case of demand exceeding supply – not enough workers to make those products, and global supply chain bandwidth so constrained that they can’t get them to you.
President Biden announced this month that the Port of Los Angeles will shift to operate 24 hours a day, joining the Port of Long Beach, which did so in September. Together, the two ports handle 40 percent of the shipping containers imported into the United States. Major companies like Walmart, UPS and FedEx are expanding their working hours to relieve backlogs. Those two ports are by no means the only pinch point: The Port of Savannah, the third-largest container port in the U.S. after LA-Long Beach and New York-New Jersey, is “running out of places to put things,” according to the Times.
For Kendall Savelli, owner of Malugani Tires, the early months of the pandemic were about shipping delays. But it’s gotten more complex and unpredictable as time has gone on, she says.
“Now it has kind of morphed into a supply chain issue where our distributors hardly have anything in stock,” she says. “It’s to the point where I can’t recommend a specific tire for a customer’s needs before I see what is available. It’s a huge change for our industry. We’ve gotten more adept at managing it all as time has gone on, but it’s ever changing.”
“You name and it’s back ordered: glassware from Hungary and Italy, champagne from France, silverware and plates from the UK,” Schumacher adds. A wide range of spirits and beers are not available, “meat prices have increased 50%, turkeys will be harder to come by for the holidays and chicken wings were not available and now they have doubled in price.”
Manfred Mendez, general manager at Playa, agrees. “From production to international and domestic distribution, retail stores and restaurants alike are having a difficult time restocking products,” he says. “Mezcal in particular is experiencing a shortage of raw agave. Needless to say, when high demand meets supply shortage prices go up. We have been holding off on raising prices at Playa – we haven’t raised prices in more than two years – but we may not have a choice.”
”It’s constantly shifting every week,” Leis says, rattling off a list of oft-unavailable products from polenta and tortillas to anything made of cardboard and to-go packaging products. Oddly enough, Leis says, the state of the supply chain leads to businesses hoarding similarly to that of consumers in the early days of the pandemic. It takes many more visits to suppliers than it used to, and when you see something you need that you haven’t had in a while, you grab a bunch of it. Every week, it’s something different.”
Across the street from Joe’s, Tam Bikes co-owner Quoc Phan calls this moment “crazy with no real end in sight. We expect this to linger for at least deep into 2022, and in some cases with the availability of specific bike cassettes, well into 2023.”
Pre-pandemic, Phan would build 3-4 comprehensive product orders per month, large enough to get free shipping. Now he has holds on just about every product and he must be ready to pounce instantaneously when the product becomes available.
“When we get that notification, we need to place the order in 10 minutes or it’ll be sold out,” he says, noting that some shops set up bots to automatically buy up inventory as soon as it becomes available. Covid-fueled factory shutdowns in Asia have made matters worse.
The chaos is tempered by the fact that the bike business has boomed during the pandemic, with Tam Bikes’ sales up 30 percent in 2020 and looking to continue to grow in 2021. But the lack of visibility makes it extremely difficult to run a business, he says.
Several hotels reported to us that long-planned room renovations have suffered from lack of product availability like headboards, for instance. The result: guests checking into rooms, all renovated, missing some pieces of furniture.
Mill Valley Market partner Ryan Canepa has been anticipating shortages of staples like sugar and flour over the holidays, and has been stocking up those essentials since August. But some holiday favorites might be beyond his control, he says. Thanksgiving staples like Ocean Spray Cranberry Sauce have been completely unavailable and won’t likely be available for the holidays at all, as is likely the case with fellow holiday staple Pepperidge Farm Stuffing. Gatorade was out of stock for three months due to a shortage of resin used to make plastic bottles, as were all European chocolates, Japanese candies and drinks and many holiday items, Canepa says.
Heather Hardcastle’s Flour Craft Bakery is facing the same conundrum. Just this week, she’s unable to get all compostable takeout disposable products and bamboo/ wood utensils, along with cake boxes and the ‘waste paper’ used to make egg cartons, meaning that eggs could become scarce because the cartons to carry them could be harder to find. The scarcity also spans all imported and specialty food products, coconut milk., imported olive oils, sun-dried tomatoes, tahini, dates, tapioca flour and canned pumpkin puree. “Good luck making pie without canned pumpkin!” Hardcastle says.
JP LaChance, co-CEO at Equator Coffees, says port congestion has delayed the arrival of seasonal coffees and increased prices for the coffee beans themselves as well as the shipping cost to transport them from origin countries to the U.S. Other cost increases are across the board, from building materials for café repairs/remodels to delays in durable equipment such as refrigerators, espresso equipment and waffle makers.
“Whether it’s the increased labor costs as we pay mileage, tolls and ride sharing costs to help team members get one from café to another to cover open shifts, or the reduction in operating hours at a time we actually want to extend hours to take advantage of the weather and the high vaccination rate in Marin County which is leading more people to be out and about, we are straining,” LaChance says. “Eventually, all these higher costs will need to be passed on to consumers through higher menu prices in order to continue to pay for employee healthcare and other benefits.”
Tyler Higgin, general manager at Floodwater, says he’s seen scarcity drive up prices on products like disposable gloves by more than 450 percent.
In an effort to address the lack of transportation workers and the overall supply chain crisis, Gov. Gavin Newsom signed an executive order this week allowing state agencies to create new short-term storage spaces on state-owned property and authorized agencies to lift certain cargo limits on docking ships so more items can be delivered. In response, a statewide coalition sent a letter to the governor urging him to do more. “Convening task forces in 2022, delaying urgent actions for at least a month, and pushing funding discussions to the January budget proposal do not provide the sense of urgency needed to address this crisis now, the groups wrote.
“Bureaucratic red tape and regulatory hurdles created this current crisis and must be addressed in both the short and long-term in order to allow the goods movement sector to move commerce in and out of our ports and drive our economy and job recovery forward,” they added.
“Ultimately, we just want our community to know that we are all working incredibly hard – and smart – to get through this every day,” Higgins says. “We hope our customers can be patient. Even when the pandemic is over, the implications caused to the economy will take some time to normalize. If you’re having trouble staying optimistic, look back at how things were a year ago. Things have certainly gotten better and will only continue to improve over time.”