The Friday Report: June 4th, 2021

Supply Chain Problems Are Not Limiting U.S. Economic Growth

Although supply chain disruptions held back supplies needed for manufacturing, the United States economy grew at a slightly faster pace in both April and May 2021 according to a Federal Reserve report.  Several of the Federal Reserve’s districts relayed that areas were experiencing a positive economic impact from increased COVID vaccination rates and relaxed social distancing measures.  Supply chain disruptions are viewed as off-setting at least some of the gains, however.

The boost in vaccination rates has helped consumer spending rebound.  This is notable in categories including restaurant dining and leisure travel.  Manufacturing output also increased, despite supply chain disruptions.

Industry experts anticipate that as businesses catch up with demand, the supply chain problems will smooth out and inflation will abate.

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Impact of Supply Chain Disruption of Rare Earth Minerals

Rare earth minerals are essential components of finished goods including clean energy products such as electric vehicles and lithium-ion batteries, phones, and fighter jets.  As demand rises, these goods may be especially vulnerable.  After a year of not exporting numerous rare earth minerals and two years of mine closures, industry experts anticipate that these factors will significantly impact pricing, production, and capacity. 

China dominates the rare earth mineral industry with 57.57 percent of distribution followed by the United States at 15.63 percent, Burma at 12.34 percent and Australia at 6.99 percent.  Although the term “rare” is applied to these materials, that is not actually the case.   Instead the materials are difficult and expensive to mine and produce rather than being rare in occurrence.

China also controls 85 percent of global refining capacity.  Although rare earth mining has begun on alternative sites, it is unlikely that these sites would be likely to continue to operate once the primary sourcing options are available.

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Kroger Expands Diversity Supplier Usage Using New Competition

As part of its promise to encourage its investment in diversity, Kroger is planning to launch a competition for shelf space.  Kroger will be expanding the volume of local and regional growers and producers from which it sources fresh products across multiple categories. The affected product categories include deli, bakery, meat, seafood, dairy, specialty cheese, floral and produce.  In August, the major grocer will hold a competition between fifteen companies.  Kroger’s Go Fresh & Local Supplier Accelerator competition will be hosted in the company’s hometown of Cincinnati.

A panel of judges will determine which five companies will receive product placement in Kroger stores.  The companies will also receive ongoing business development mentorship from Kroger, food distributor Gourmet Foods International as well as its affiliates.

Kroger also has committed to investing up to $10 billion in diverse suppliers by 2030.  The company will be hosting summits for suppliers and providing both business incubators and accelerators.  The Kroger accelerator program is divided into categories reflecting its five geographic regions.  Applicants will be evaluated on criteria including company size and local relevance of their product offerings.