Helpful Insights for Manufacturers Navigating Ongoing Supply Chain Troubles

Manufacturers struggling to deal with the ongoing supply chain disruption due to the COVID-19 pandemic got some valuable insight into the disruption as well as, and perhaps most importantly, when they may start to get some relief.

RSM Deputy Chief Economist Kevin Depew was among the guest presenters at the final Gilmore Jasion Mahler (GJM) Manufacturing Financial Executive Roundtable event of 2021, hosted December 2 at GJM’s Maumee office, and moderated by GJM Assurance Partner Wes Beham.

Depew says the supply chain conditions right now are very stressful and data shows the landscape is similar to the stress brought on by the Great Recession of 2009. But Depew says as they survey the ports, domestic trucking and rail, and shipping container backlogs, he believes we will start to see a slow easing of supply chain issues as we get further into 2022, and toward the end of 2022.

“It’s probably going to take at least nine to twelve months to really get back to something where our supply chain looks a little bit more normalized,” Depew added.

Attorney Matt Harper, a member at Eastman & Smith LTD, offered some valuable legal perspective for manufacturers as the supply chain disruption forces them to reexamine their business contracts.

Harper says most contracts have a Force Majeure clause, which refers to something like an act of God that you can’t foresee or control. Here’s what he says a typical Force Majeure clause looks like:

“Seller shall not be responsible for its failure to perform under this Agreement if such failure results from causes beyond its reasonable control and the nonoccurrence of which was a basic assumption at the time the Agreement was made.”

Harper says these causes “beyond reasonable control” include, but are not limited to:  

  • Acts of God
  • Strikes or other labor disturbances
  • Equipment failure
  • Power failure
  • Inability to obtain suitable supplies
  • Material
  • Parts
  • War
  • Acts of terrorism
  • Epidemics (pandemics)
  • Floods
  • Fires
  • Accidents or other similar events

He says there are other legal arguments as well, when examining your business contracts, including:

Impossibility or Impracticability of Performance, which, Harper says, cites the occurrence of an unforeseeable event in rendering a contract impossible to fulfill.

Frustration of Purpose, which Harper says refers to when you can fulfill a contract, but the outcome is dramatically different that what both parties anticipated when the contract was signed.

He says as you move forward with future contracts, remember that negotiation is critical.  

GJM Assurance Partner Bob Bobek addressed some funding opportunities still available to businesses struggling with the supply chain disruption, including Economic Injury Disaster Loans (EIDL) through the Small Business Administration and the Employee Retention Credit.

And, GJM Tax Partner Charlie Heid offered a summary to attendees on where the Biden administration’s tax and spending plan, the Build Back Better Act (HR 5376) stands, including some of the key provisions that may impact businesses, should it be signed into law as is. They include:

  • Expansion of NIIT (Net Investment Income Tax)
  • Surcharge on high wealth individuals - $10M or more
  • Individual excess business losses - permanent limitation
  • International tax provisions
  • Increase in state and local income tax deduction from $10k to $80k

The Build Back Better Act, passed by the U.S. House of Representatives shortly before Thanksgiving, now moves on to the U.S. Senate for consideration. Senators may dramatically change the legislation, removing certain elements and adding others. Heid says with every passing day and no movement on the legislation, it seems less and less likely that the U.S. Senate will pass anything in 2021.

Looking ahead to 2022, RSM’s Kevin Depew says, yes, we’re still dealing with many economic challenges, including the tight labor market, inflation, and a disrupted supply chain. But, he says, on an optimistic note headed into 2022, this is a stronger economy than one might expect.

“We saved money differently after the Great Recession… we learned our lesson… we saved more. We entered the COVID-19 recession in an extraordinarily strong state, except for those bottom two quintiles of earners that had not seen their wages rise at any point over the last twenty years. That’s kinda changed too.”

GJM’s Manufacturing & Distribution Financial Executive Roundtable events are held three times a year and feature guest presenters and panel discussions on topics directly impacting middle market manufacturers and distributors. The sessions are only open to financial decision makers within private businesses, offering a way to share challenges and best practices with each other. If your business is interested in learning more about the events, and receiving future invitations, please email

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

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