Rep. Dusty Johnson (R-S.D.) visited Hendrickson International’s plant Thursday to discuss the local impacts of domestic and global supply chain disruptions on the manufacturing sector.
Hendrickson International’s location in Mitchell is one of the company’s 11 manufacturing plants in the United States, which altogether produce 70% of heavy-duty suspension systems in use in North America.
Brett Sinkie, plant manager, told Johnson that tariffs and other supply chain issues are causing “terrible” problems for Hendrickson’s production.
The company gets most of its raw steel from domestic suppliers, but some steel components — and other materials like plastic and rubber — come from foreign distributors. Supply chain disruptions have led to an increase in the company’s lead time for fulfilling orders.
“Normally, we’ll have a two-week lead time. Right now, we’ve got a line that’s going out in to January, about 10-15 weeks,” Sinkie said.
“We’re known for our quick lead time,” added Shari Lunders, production manager at the plant. “If we start pushing that out, it can start to cause problems.”
Sinkie clarified to Johnson that labor shortages are not responsible for the increase in lead times — the plant is fully staffed with over 70 employees. Rather, if it increases productivity in any way, the plant would be without the parts necessary to fill orders.
“If we try to increase our capacity, it'll hurt us,” Sinkie said. “We have the labor and the capacity, but if I work overtime, I may not have the parts to keep working.”
Johnson also addressed Hendrickson’s concerns surrounding congressional appropriation cuts to certain Department of Defense programs.
Hendrickson produces 18 types of heavy-duty suspensions, some of which are produced under contract for the Marine Corps and Air Force.
Michael Golttschalk, director of business development for Hendrickson, believes the U.S. House Committee on Appropriations may have accidentally cut funding for suspension upgrades in the military without fully examining the details of the budget.
“In 2022, they had $9 million slated for (suspension) upgrades (on military vehicles), and the House kind of looked at that as a budget reduction and said, ‘Well that's just excess and cut it in half,’” Golttschalk told Johnson. “That’s a major impact on us. That’s about 112 suspensions.”
Golttschalk noted that the cuts could put the entire product line at risk, as the specific suspension system is used primarily by the military.
Johnson suggested that Hendrickson, which has corporate offices in Chicago, assemble a team to speak with bipartisan legislators in areas where they have a major presence.
“There’s probably eight democratic members (of Congress) in the greater Chicago area,” Johnson said. “You shouldn’t have to be worrying about the government.”
The conversation comes as Johnson, alongside Rep. John Garamendi (D-Calif.), has introduced the Ocean Shipping Reform Act of 2021 to the U.S. House of Representatives.
The bill aims to support American exports by establishing reciprocal trade opportunities to reduce the United States’ “longstanding trade imbalance with China” and other countries
The bipartisan legislation is the first major update of federal regulations for the global ocean shipping industry since 1998.
“Right now, the Federal Maritime Commission doesn’t have a very robust set of tools,” Johnson said. “As a result, there’s been so much concentration in the ocean shipping arena that it’s just been harder and harder for them to hold these four big foreign-owned carriers accountable.”
Johnson said the bill would create basic rules of the road — or the water — to say foreign carriers cannot unfairly discriminate against American imports or exports.
His website says that dozens of agricultural exporters have contacted his office to report that ocean carriers have refused to accept cargo bookings for American exports, opting instead to send empty canisters back to Asia to refill with foreign exports during the pandemic.
This has also led to an expected delay of goods ahead of the Christmas shipping season, Johnson said.
“Americans have things we want to sell and things we want to buy —but if you’re gonna come in and use American ports, I think you need to assume some common carrier obligations,” Johnson said. “Just some basic rules of the road that you’re gonna play fair and you're not gonna unduly discriminate against American shippers.”
Johnson made stops in Aberdeen, Watertown, Brookings, Sioux Falls and Mitchell during a two-week committee workweek. He's currently scheduled to make appearances in Baltic, Box Elder, Rapid City, Huron and at Augustana University before returning to Washington.