Q: Are middle market business leaders feeling better or worse about supply chain issues?
A: One of the most striking effects of the global pandemic was supply chain disruption for all kinds of materials and goods. KeyBank’s latest middle market sentiment report found business owners’ and executives’ concerns about the implications for their companies that are slowly, but steadily, diminishing. In the fourth quarter of 2021, nearly half of the owners and executives said that supply chain developments had a negative impact on their businesses in the past 12 months. As of the second quarter of 2022, that proportion has fallen to 39%.
However, supply chain challenges persist for many businesses. Difficulties in obtaining raw materials persist because of higher costs, lower availability, and longer wait times. The survey found that more than half (64%) of these companies have experienced reduced profit margins as a result.
A majority of these companies plan to identify alternative suppliers or sources of raw materials, and 41% plan to pass through cost increases to customers over the next 12 months.
The survey found a strong correlation between supply chain developments and company outlook. Among the business owners and executives who characterized their company’s financial performance in the next 12 months as good, fair, or poor, and also reported that supply chain issues had a “somewhat negative impact” on their operations, increased by 20% between first and second quarter 2022. At the same time, the number who reported no impact from supply chain developments fell to 16%. Clearly, middle market businesses with a neutral or negative outlook are significantly more likely than businesses with a positive outlook to be facing continuing supply chain challenges.
President and Commercial Sales Leader
KeyBank’s Michigan Market
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