Editorial: Hardening supply chains for the modern world

Every so often, something strikes at the fragility of modern life. Most recently, it was Hurricane Helene.

As the storm laid waste to huge swaths of North Carolina, it flooded a manufacturing site in Marion, where Baxter International makes intravenous (IV) fluids. Baxter accounts for so much of the US IV fluid market—about 60% of it, per NBC News—that hospital systems are already rationing supplies. Mass General Brigham in Boston, for example, expects to receive only 40% of its usual shipment while the plant is closed.

Helene also swirled over the tiny town of Spruce Pine, North Carolina, whose mines produce virtually all of the world’s supply of high-purity quartz, critical to semiconductor manufacturing. The mines’ operators, Sibelco and the Quartz Corp, have not said when they might reopen.

Much of the focus in North Carolina and the southeastern US is now on recovery operations, not the fate of industrial producers. That’s how it should be. More than 80 people in North Carolina have died from the hurricane, about one-third of the storm’s overall death toll. Hundreds more are still unaccounted for. Homes are gone, washed away in floodwaters. Running water and electricity have yet to be restored to many of the buildings that still stand.

But Helene is just the latest instance of a single event kneecapping industrial supply chains.

In 2020, the COVID-19 pandemic strangled lines of production and trade. That March,, diagnostics were delayed, first because of demand for chemical reagents, then from slowdowns at a plant in northern Italy that was one of the world’s top producers of specialized nasal swabs.

In 2021, a freak winter storm sent temperatures in Texas plummeting so low that the power grid failed, waylaying chemical production. Bob Patel, CEO of LyondellBasell Industries at the time, estimated that the freeze would take out 10–14% of overall US polyethylene production that year.

And earlier this summer, a drought in Mexico forced chemical suppliers to stop production of polystyrene, acrylonitrile-butadiene-styrene, polycarbonate, and titanium dioxide—among other chemicals—as authorities diverted water from industrial users to households.

Such problems are not new. But the chemical industry’s vulnerability has arguably increased. Climate change has made extreme weather events both more frequent and more powerful, while manufacturing plants, often situated on coasts or waterways, are growing larger and decreasing in number.

The vulnerability of supply chains is also a human-made issue. A calamity at a single manufacturing site shouldn’t mean that people in need of IV fluids, nasal swabs, or specialty chemicals thousands of kilometers away are suddenly out of luck.

Industry can be good at responding to disruptions after the fact. In 2013, automakers mobilized to prevent a critical shortage of nylon 12, used to fabricate brake and fuel lines, after an explosion at a German plant that was making a chemical precursor. But more sustainable than that all-hands-on-deck galvanization is preempting shortages in the first place by building redundancy and diversity into supply chains.

In the US, the Federal Trade Commission works to ensure that single entities aren’t monopolizing a product or service. Perhaps it could use those same antitrust mechanisms to prevent individual companies and facilities from becoming so critical to the supply chain that they can cause massive disruptions.

Industry players should do the same by, for instance, conducting stress tests to find where supply chains are thin and vulnerable. The cost of breakage can be high. Celanese reported after the Texas freeze that shutting down and repairing its plants cost it $40 million. Maintaining ample inventories as a buffer to outages might be worth the additional tied-up capital. In some cases, substituting raw materials might also be a workable solution.

Government and industry should plan for the worst. They should recall, too, that what constitutes the “worst” is always shifting. It was unthinkable until last month that a hurricane could wipe out whole towns nestled between mountains so far from the shore. It was unthinkable until this week that another, even more powerful hurricane—Milton—could threaten the region so soon afterward.

This editorial is the result of collective deliberation in C&EN. The lead contributors are Rowan Walrath and Alex Tullo.

Views expressed on this page are not necessarily those of ACS.