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Supply and demand: Shortages across America run deep, with no end in sight

Economic fallout of COVID-19
General Motors-Chip Shortage
Posted at 8:14 AM, May 11, 2021

TAMPA, Fla. — How Floridians go from A to B is getting more expensive. From gas prices to new and used cars, tires, and everyday items like paper — costs are going up as demand exceeds supply.

The fallout from the pandemic is shifting from a health crisis to an economic crisis.

When the economic engines that fueled the world came to a screeching halt during lockdowns in March 2020, no one could've predicted where we'd be a year later. Countries are still fighting the coronavirus pandemic and now they're facing shortages, price increases, and demand for everyday items.

MICROCHIPS

Microchip shortages are limiting the number of new cars from rolling off the assembly line and sending prices for used cars soaring. Car dealerships across the country are now in a dog eat dog fight to buy up used cars to offset the new cars not coming in.

"Any vehicle that didn't require the chip they (Ford) were trying to produce at a larger rate so we'd at least have some inventories," Sean Sullivan, the General Manager of Bill Currie Ford, said. "It's driven the pricing up on new cars because I can't replace them. But, at the same time, it's driven up the used car trade-in prices cause I need those drastically."

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Sullivan said he is buying used cars off the street and offering incentives to get customers in the door.

"We are doing a ten-year roadside assistance and a lifetime warranty on the used car to try and save the customer some benefit of having to buy a warranty on a used car," Sullivan said.

On an average day, Sullivan said his lot on North Dale Mabry would have 1,000 new cars. Right now, they have about a hundred. Some customers can purchase a new car, but it may not have the advanced technology people expect of a new car.

"It's going to be rear cameras. It's going to be the 360 camera which is a big deal right now cause it's all powered by the chip," Sullivan said. "All of this technology, the advance track, the blind-spot monitoring, the backup camera, the front cameras for parking the trucks. All this technology we are so used to and been embedded in us is now controlled by a CPU that is run by a chip."

RUBBER

Concerns over a rubber shortage that could impact tire supplies are also a growing concern.

"What we have seen are some price increases from all the manufacturers," Chris Brazzeal, the owner of Brazzeal Automotive, said. "The increase currently is about 8% to 10%, depending on the manufacturer. If you need tires and it's an extra $25 per tire, the cost for four tires will add up."

The good news is that Brazzeal said they do not see any supply issues in their store so far.

"Inventory is okay for us, it's not an issue right now, and we are open to a bunch of brands, so if Michelin doesn't have it, another brand or manufacturer will, so we still have all of that," Brazzeal said.

Last week, Goodyear Tire and Rubber CEO Rich Kramer told CNBC he doesn't anticipate any impacts from the looming shortage. On "Mad Money," Kramer said in an interview what he sees "happening is either speculation or it's a lot of even China (putting) rubber in warehouses."

FUEL

The shutdown of the pipeline that carries gasoline and other fuel from Texas to the Northeast is continuing, and gasoline futures are ticking upward.

According to the Colonial Pipeline, the company was a "victim of a cybersecurity attack" on Friday. The system quickly went offline, preventing fuel transportation to the East Coast.

Colonial Pipeline delivers roughly 45% of the fuel consumed on the East Coast.

PAPER

Logistics, transportation, and production issues are also driving up the price of paper.

"Nothing has ever been like what we are seeing now. It's completely unprecedented," Will Crabtree, the owner of TampaPrinter.com, said. "Everything across the board is getting more expensive. A lot of it is supply chain issues production is down because of the pandemic. We are seeing issues with freight. Freight costs have increased exponentially cause freight companies can basically dictate whatever they want at this point."

Crabtree said they couldn't buy their regular paper in bulk, forcing them to choose other distributors costing them more money. So far, he hasn't increased prices yet. But, he may have to push those to the consumer as the shortages continue.

"That paper that we buy in bulk we've seen about a 10% to 15% increase some of the stuff that we don't buy in bulk we've seen a 25% to 35% increase in the cost of paper, and it's definitely substantial. Ink is up 15%."

HOW LONG WILL IT LAST?

There is no definitive answer to how long supply chain issues, microchip shortages, and fuel will be in limbo.

But, Sullivan predicts they will be fully stocked by the fall and have the variety of cars people are used to seeing by Christmas. Sullivan said the company is taking a big hit, but they are focused on adapting as they did during the pandemic. Sullivan said there would be no shortage in their core mission of taking care of the community through the philanthropy of Currie Cares.

"I have faith we will get through this time," Sullivan said. "We are struggling but will survive. They (the Currie family) have built this business on charity. Every time we've given back, we've received 10 times more, and that's why we continue to do our business and not cut one dollar into the community."