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From coffee to microchips – how the supply chain crisis is disrupting UK plc


Fast food chains are running out of chicken. Hauliers’ wage bills are going through the roof. Crops are rotting in the fields. The scale of Britain’s supply chain meltdown is the worst since the 1970s, when the three-day week, power cuts and industrial disputes saw rubbish pile up in the streets.

Fast forward four decades and the shortages in modern Britain stem from Covid-19 disrupting an intricate network of global supply chains where the slightest problem throws the whole system. Brexit has added to the rebooted anarchy in the UK, with years of chronic underinvestment in people and infrastructure, both from government and business, painfully exposed.

Experts say worker shortages are at the heart of the UK’s problems, causing issues to bubble up across the economy; from McDonald’s milkshake deficit to builders rationing cement and plasterboard. A global lack of microchips is hurting manufacturers and slashing car production, while a surge in international demand as the planet emerges from lockdown has pushed up the price of various raw materials.

Britain’s economy came close to stalling in July as disruption from shortages of workers and materials dragged down growth. Official figures published on Friday showed GDP only grew by 0.1% on the month, despite the easing of most pandemic restrictions on the government’s 19 July “freedom day” in England.

In an example of the multiple touch points for the supply crisis, the Guardian has tracked a humble cup of takeaway coffee from its source, revealing the impact of global heating, shortages of workers and materials, and soaring prices.

coffee problems

Food production

Fruit has been left to rot on farms, slaughterhouses are struggling to process pigs and chickens, and milk deliveries are delayed. Industry leaders say the problems stem from a lack of workers to pick, process and transport goods, rather than insufficient volumes of food. Global food prices, including coffee, have soared. Pasta prices are set to rise after drought and soaring temperatures hit farms in Canada, one of the biggest producers of wheat, while there are supply issues in Italy.

Matt Knight, the managing director of the Royal Association of British Dairy Farmers, said: “There is no shortage of milk or collection issues. However, there have been issues getting deliveries to supermarkets mainly due to lorry driver shortages.”

Key to the worker shortage are difficulties with Brexit after casual workers left the country during the pandemic, while the coronavirus Delta variant and continuing border restrictions have acted as a further drag.

Employment of EU workers has fallen faster than for the domestic workforce. The number of Romanian and Bulgarian workers in particular, who would typically fill lower-paid logistics and food production roles, has plunged by almost 90,000, or 24%, since the end of 2019. Employees from eight eastern European countries, including Poland and the Czech Republic, have fallen by more than 100,000, or 12%.

Retail

Empty shelves at a Lidl in Durham.
Empty shelves at a Lidl in Durham. Photograph: Tom Wilkinson/PA

Stock levels have hit the lowest since 1983 as the HGV driver shortage prevents goods from getting to supermarket shelves. Retailers have urged parents to buy Christmas presents early to avoid disappointment; that’s tougher for festive food such as pigs in blankets and turkeys, with a short shelf life, risking discontented diners.

A boom in demand for online shopping during lockdown has added to the problem, while Britain’s lack of lorry drivers has led retailers such as Tesco and Ocado to offer bonuses of up to £1,000 to lure new recruits. There are similar perks for warehouse jobs, including at Amazon and Pets at Home.

The Road Haulage Association estimates Britain is short of about 100,000 drivers to keep goods flowing smoothly. It said inadequate staff numbers pre-pandemic were made worse as migrant drivers left the country during the crisis, while training and licensing of new recruits hit the skids.

Iceland has warned that up to 40 deliveries to its stores could be cancelled each day. One industry expert said an importer of Christmas lights was forced to charter seven planes to fly in goods from Asia to avoid delays at seaports and on lorries.

Hospitality

A hiring notice in a restaurant window in Windsor, Berkshire, UK.
A hiring notice in a restaurant window in Windsor, Berkshire, UK. Photograph: Maureen McLean/REX/Shutterstock

Supply chain snarl-ups have taken chicken off the menu at some Nando’s and KFC restaurants, milkshake at McDonald’s, and left Wetherspoon’s running out of toast and lager.

There might have been a summertime boom in bookings for pubs and restaurants after the easing of lockdown, but many venues have missed out altogether due to “pingdemic’” absences and a lack of staff.

Employers have struggled to find chefs, kitchen porters, and cleaners, with firms reporting the worst labour shortages since 1997 and record vacancies despite the furlough scheme gradually winding down.

Iain Hoskins, the owner of Ma Boyle’s Alehouse & Eatery in Liverpool, said: “For many hospitality businesses like myself, we’ve had a summer of adjusting to new ways of operating amid the pingdemic, and then add the Brexit-related supply issues and staffing crisis and we’re really hanging on by a thread.”

Manufacturing

Shortages of microchips are denting car production.
Shortages of microchips are denting car production. Photograph: Jonathan Nackstrand/AFP/Getty Images

The worst shortages of components and raw materials since at least 1977 have befallen Britain’s manufacturing sector, hitting factory production and holding back its economic recovery from lockdown.

Shortages of microchips have affected production across the manufacturing sector, forcing carmakers to reduce their output and hitting delivery times for a range of consumer products from microwaves to smartphones. Drivers are having to wait months for some new cars, or accept models with lower specifications and gadgets. Fewer new cars rolling off production lines has also pushed up the price of secondhand vehicles.

The chip deficit comes as elevated Covid infections in south-east Asia affect factories, while a fire at a plant in Japan has disrupted availability.

Construction

Some builders are reporting difficulties in getting supplies. The price of timber, for examples, has surged.
Some builders are reporting difficulties in getting supplies. The price of timber, for examples, reached record heights recently. Photograph: Maureen McLean/REX/Shutterstock

Britain’s pandemic house price boom and DIY revolution has stoked red-hot demand for construction materials. But suppliers have struggled to keep pace, with materials from cement to plasterboard being rationed by manufacturers.

The global price of lumber soared to record highs earlier this summer, before falling back again in recent weeks, but costs remain elevated. Builders’ merchants have put up prices for a range of goods, from wheelbarrows to plastics, MDF and steel.

Construction firms are struggling to recruit workers, hindered by migrant EU workers leaving Britain, forcing employers to push up starting salaries to hire more staff. Construction projects have been slowed as a result, from housebuilding to commercial and civil engineering.



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