Omicron becomes latest speed bump for shorthanded U.S. factories

LCI Industries

10/01/2022 11:00

By Timothy Aeppel
    Jan 10 (Reuters) - When Michael Tamasi got to his office
Monday after the holiday shutdown, he found nine workers at his
small factory were absent — either because they had COVID-19 or
had been exposed and were trying to get tested.
    That’s over 10% of his staff of 81, and by far the greatest
single outage he’s seen since the start of the pandemic.
    The latest wave of the health crisis, driven by the highly
contagious Omicron variant, has forced airline cancellations,
closed stores, curbed output at meat processing plants, and shut
classrooms across the U.S. The surge is exacerbating an already
tight labor market and forced government health officials to
curb how long it says workers need to isolate once they’re
infected. 
    The U.S. economy added 199,000 jobs last month, according to
a closely watched report from the Labor Department released
Friday, and the jobless rate dipped to 3.9% from 4.2% in
November, underscoring the tight supply of workers.
    The scramble to fill open jobs has boosted wages and fueled
a surge of inflation. Friday's report showed another round of
strong gains in paychecks, with average hourly wages up 4.7%
from a year ago.
    Many manufacturers, pressed to stay open throughout the
pandemic, have found ways to keep assembly lines rolling. And to
be sure, many say they are so far handling the latest wave of
illness without major production cutbacks.
    “It’s definitely worse than it’s been,” said Tamasi, CEO of
AccuRounds, a contract manufacturer of metal parts in Avon,
Massachusetts. He said he has kept production going by adding
extra overtime.
    “We’re basically opening all hours so we can get the most we
can with the people we have,” said Tamasi, who makes parts used
in airplanes, robots, and medical devices, including machines
that make vaccines.
    To be sure, there could still be a bigger wave of pandemic
absences coming. Family gatherings over holidays have fueled
past surges weeks after the events.
    Jason Lippert, CEO of LCI Industries, the largest parts
supplier to the recreational vehicle industry, said his company
is seeing positive cases daily, ranging from “five on the low
side to 20 on the high side." It’s a nuisance, he said, but it’s
manageable.
    Lippert’s keeping a close watch, however, since the Omicron
variant is just starting to hit harder in the region where he
has most of his 100 plants - in and around Elkhart, Indiana.
    The Omicron variant has hit just when many employers were
finally getting factories back to full strength after
disruptions and shutdowns early in the pandemic. Jim Kirsh,
president of Kirsh Foundry Inc, in Beaver Dam, Wisconsin, said
he hasn’t seen a surge of absenteeism at his 110-person
operation, although he just saw his first COVID case in six
months.
    He said he only recently got his factory close to full
employment after raising starting wages by over 50%, in multiple
steps, since March of 2020.
    He’s passed along those costs to customers, though many
objected. “Most asked for examples of our major cost drivers and
when you show them that wages are up 57%, natural gas is up
100%, alloys are up 50% to 300%, there is not much they can
say,” he wrote in an email.
    Rising costs and tight labor have pushed many companies to
pour resources into new technology, including new automation.
Kirsh plans to spend up to $2 million this year on robots that
will cut between four to eight jobs.
    Kirsh said he has little control over most of his costs—such
as raw materials and transportation—so he’s focused on boosting
how much each worker can produce. ‘The more expensive labor
becomes, the less I use.”

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U.S. labor market near maximum employment despite December
payrolls miss     urn:newsml:reuters.com:*:nL1N2TM2F6
The Fed is going to tighten, the only question is how fast   
 urn:newsml:reuters.com:*:nL1N2TM1SY
U.S. manufacturing catches breath; supply logjam starting to
break up     urn:newsml:reuters.com:*:nL1N2TK0ZC
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 (Reporting by Timothy Aeppel
Editing by Nick Zieminski)
 ((Tim.Aeppel@thomsonreuters.com;))