Minnesota executives survey supply chain issues amid a 'war for talent'

The "Whac-A-Mole" game of supply chain problems continues to shape how Minnesota companies are doing business, some top executives said Thursday.

Even as shipping logjams and raw material shortages have eased, unfilled jobs and high turnover are preventing companies from meeting demand.

"It's not about getting people in the door, it's getting them to stay," Hormel Foods chief financial officer Jacinth Smiley told a crowd at an Economic Club of Minnesota gathering Thursday.

"We can't make enough bacon, and we can't make enough Spam."

Andersen Corp. used to have applicants "lined up around the block" to get factory jobs, but the company is advertising for positions like never before, chief financial officer Phil Donaldson said.

"There's a war for talent," he said.

At Cargill, which has 160,000 global employees, chief transformation officer Julian Chase said the labor shortage "is a problem anywhere in the world."

Some supply chain webs have been untangled, Chase said, while others — such as electrical equipment for factories — may be facing a three-year delay.

"The congestion has eased, but not everywhere and not for everything," he said.

The start of the pandemic triggered a massive run on goods that companies could not keep up with, resulting in supply chain problems that have slowly loosened.

"Just-in-time" manufacturing, which companies have refined over decades, meant tight inventories could not be made into products fast enough. That caused material backlogs that could not be fulfilled quickly because of labor shortages and congestion at ports and on rail.

"We worked very, very hard over the past 20 years to squeeze all the slack out of the supply chain," Donaldson said, but now companies need to build in flexibility and likely carry more inventory — something Smiley echoed.

Should a recession occur, he expects it to be shorter and less severe than previous downturns. Andersen has "cushion" to weather it, with five months of backlogged orders to fill compared to the typical one-month backlog, Donaldson said.

Chase said he is watching how demand is changing in the face of inflation and persistently high energy costs, especially in Europe.

"Consumers will just have to make different choices," he said. "It does play out differently in different regions."

At Hormel, which recently posted a 24% annual increase to its quarterly profit, the company is seeing a slight, though not yet significant, drop in demand.

"We've been a lot more consumer-centric, and thinking about the needs of consumers," Smiley said. "The consumer is still spending."