“It’s the perfect storm,” began Audiotonix Group Operations Director, Tony Williams, describing the issues facing manufacturing in 2021 during a Zoom call with TPi. The original agenda of the call was to discuss how the global shortage of microchips was affecting the companies under the Audiotonix umbrella. However, it quickly become clear that there are several other issues having a serious knock-on effect for all manufacturers.
“It is of vital importance that our industry knows of some of these issues,” said Audiotonix CEO, James Gordon, who was also on the call. “Productions over the years have got used to manufacturers being able to turn around equipment in under two weeks, but right now, no matter who you are, that isn’t possible.”
With some of the biggest audio consoles under its ownership – including Allen & Heath, Calrec, DiGiCo, and Solid State Logic – Williams gave an overview of the issues facing manufacturing today. “On average, each of our desks has around 10,000 components – these include everything from steel, aluminium, glass fibre, copper and gold, all the way to diodes and silicon chips,” he explained. “Take steel, for example, which is increasing in price dramatically. We have to work closely with our supplier to retain stock on our behalf.”
This has seen an increase in lead times from a week to a month, according to Williams. “To keep up with our schedules, we are asking our suppliers to purchase three months ahead. Not only that, but powder coating for steel is also currently in short supply. COVID-19 has been one of the main instigators of this, with chemicals coming out of Southeast Asia which have all had major lockdowns, therefore halting production.” He added that a more long-term concern when it came to steel was the trade wars between China and the USA, meaning that more steel was being held in China for domestic use.
“Another issue that can’t be ignored is shipping,” Williams said. “Cost of shipping has increased due to a shortage of containers and vessels to put them on. For example, shipping used to take four weeks to the UK from the Far East; now it takes up to 10 weeks.”
Steel prices and shipping difficulties notwithstanding, the shortage of silicon chips remains a pressing issue not just for the Audiotonix family but for the global economy. The global shortage has made headlines for the issue it was creating with the sought after items such as the new PS5, to the detrimental affect it has had on the automotive industry.
“Ford and Toyota have had some major closures in the past few months, citing the lack of silicon chips as the key reason,” stated Williams, pointing to a recent report that Volkswagen was planning on cutting its production by 40% in September due to the global shortage.
“There are many reasons that have led to this shortage,” stated Williams, who has become somewhat of an authority on the subject. “In lockdown, even though we were all sitting at home, there was a huge demand for devices that have silicon chips – from laptops for working from home, to devices for children’s educational purposes, webcams, microphones and TVs to make life in lockdown more tolerable.”
This issue was compounded because many of the factories had to be closed as the world locked down. “Factories are booked out for the rest of this year and well into 2022 to fulfil the demand,” Willams pointed out. Both Williams and Gordon explained some of the incentives they had brought in, to try to deal with these issues. “We have constant communication between our General Managers and our purchasing team is assessing the situation every day,” outlined Williams. “James is also in constant contact with our material manufacturers to ensure we can get all the components for our latest products. We have not stopped production at this time. We’re not producing as much as we’d like, and in many ways, we’re just keeping our heads above water to make sure our customers are satisfied.”
However, as Gordon highlighted, the biggest challenge for Audiotonix is that as these issues to the supply chain continue, the events industry has begun to reopen. “It’s very frustrating to see everything coming back when it comes to events but we have these other issues that are seriously hampering our work,” he stated. “These factors have become the main focus for our procurement team. Instead of how they can produce new products, the focus has now become about manufacturing the existing range to satisfy the market demand.”
As detrimental as these factors have been, Gordon is thankful for the situation the company is in. “We’re lucky as a business as we have a big team and are a larger manufacturer, which means we have some weight in the supply chain. These issues are going to be a huge problem for some smaller companies.”
Williams has even reached out to other manufacturers from outside the Audiotonix wheelhouse to help in any way he could. “Everyone in the pro audio community is seeing similar problems, but it’s been good to give some companies contacts due to the relationships James has fostered over a number of years. As a business, we want to support each other and help wherever we can.”
The real question that TPi was keen to put to the two Audiotonix board members was how these issues will affect customers and end users. “We just need to be given more of a heads-up about the needs of productions,” stated Gordon, noting that with longer lead times, manufacturers are more likely to be able to accommodate. “The more people that know about these issues, the more likely we’ll be able to solve the problems another way.”
Both men were incredibly candid that we were certainly not out of the woods yet. “It’s going to get worse before it gets better,” Gordon remarked. “Q1 and Q2 next year will be similar to the situation right now then, hopefully by summer/autumn in 2022, we should begin to see some improvement,” added Williams.
To close, Gordon opted for an analogy that has become pertinent over the past 18 months. “When it comes to the world of electronics, there is a real toilet roll and pasta effect going on – people are over ordering and hoarding to make sure they have enough and that will eventually unwind. This will just take some time to normalise.”
This article originally appeared in issue #265 of TPi, which you can read here.
