Will Supply Snarls Force Capital Spending?
The third-quarter earnings season should clarify whether industrial companies plan to expand manufacturing capacity.
Logistical logjams will be a chief topic for earnings season.
Photographer: Spencer Platt/Getty Images
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One way to gauge just how transitory the current supply-chain challenges are is to look at the degree to which companies are spending to add more capacity.
The third-quarter industrial earnings season kicks off next week with factory-floor distributor Fastenal Co. The theme will undoubtedly be logistical logjams and parts shortages, which have become materially worse since the last time manufacturers reported results en masse over the summer. Data-center equipment maker Vertiv Holdings Co., electrical giant Eaton Corp. and lock manufacturer Allegion Plc are among those that have already warned Wall Street that their sales will be weaker than previously expected because of insufficient supplies. Paint-maker Sherwin-Williams Co. cut its guidance not once but twice in the span of only a few weeks as it gave up hope for an improvement in logistics markets and raw-material costs this year. “The sheer amount of money we’re spending on flying parts around the world isn’t great,” Tesla Inc. Chief Executive Officer Elon Musk said at the electric carmaker’s annual meeting this week.