How COVID-19 broke the supply chain for appliances : The Indicator from Planet Money For months now, there's been a shortage of refrigerators and freezers across the U.S. Shoppers can't find appliances to buy and stores can't find enough appliances to sell. Alina Selyukh joins The Indicator to explain why.
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The Great Fridge Freeze-Out

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The Great Fridge Freeze-Out

The Great Fridge Freeze-Out

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

CARDIFF GARCIA, HOST:

Alina Selyukh, NPR business correspondent visiting THE INDICATOR, how are you?

ALINA SELYUKH, BYLINE: Hello, hello.

GARCIA: You have brought us a story here today, and I'm super excited about this one. Tell us about it.

SELYUKH: So I don't know about you, but since I've been stuck at home, everything around my apartment just seems to be crumbling and, like, bursting at the seams. No joke, I actually broke the microphone stand right before this started.

GARCIA: (Laughter).

SELYUKH: My microwave broke the other day. And I've been hearing this happening to a lot of people. One of them is Shay Chandler (ph) from Texas, who, a few weeks ago, discovered that her fridge had decided it had enough.

SHAY CHANDLER: My refrigerator went out on a Saturday afternoon.

SELYUKH: Do you know what broke?

CHANDLER: Fan motor board, circuit board.

SELYUKH: Circuit board inside a fridge. Who knew? Fridges are so complicated.

GARCIA: That's right.

SELYUKH: So Shay had this nice French-door model. It's got two doors on the top with a freezer drawer on the bottom. It was nice, pretty old. So when it broke, she thought, no reason to panic. I've got some money saved. I'll go to the hardware store, get a new one, easy-peasy.

GARCIA: I'm guessing by where this story is going it's not easy-peasy. It never is.

SELYUKH: No. She walked into her local Lowe's, where normally there's, like, a whole wall of fridges, and she found nothing for sale.

GARCIA: No refrigerators.

SELYUKH: Zero refrigerators.

GARCIA: Zip.

CHANDLER: I found out that all I could buy was a minifridge. I mean, all over San Antonio - and San Antonio is a very large city. All the Lowe's all over San Antonio - every one was out. She looked in the computer for, you know, the entire city.

SELYUKH: That's crazy.

CHANDLER: Yes. Yes, it's nuts. And to order one - you know, 'cause to order what I wanted, I wasn't going to get it till, like, the end of October or something. It was two months out.

GARCIA: Course, she could have gotten three minifridges and just stacked them on top of each other, right?

SELYUKH: I think she actually considered that but then decided that her children would not really put up with that.

GARCIA: Fair enough. This is THE INDICATOR FROM PLANET MONEY. I'm Cardiff Garcia, here today with Alina Selyukh of the NPR Business Desk. And today on the show, the great refrigerator freezeout.

SELYUKH: Why is it so hard to buy a new fridge? A global pandemic wreaks havoc on our kitchen appliances.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

SELYUKH: I know we said this is a story about refrigerators, but it actually begins with - I don't know what freezers are to fridges. Are they cousins?

GARCIA: Close siblings - siblings, you know?

SELYUKH: (Laughter) Right - begins with freezers.

GARCIA: Basically, it starts with prepping for the end of the world back in early spring when people were, like, hoarding food and supplies and things like that - huge spike, for example, in demand for frozen food.

SELYUKH: And you got to store it somewhere, right? So you had people like Sandy Tau, who's been selling appliances for 25 years. She runs the store AHC Appliance in Long Island. And she's watching this insane thing happening in stores like hers. Some people were panic-buying freezers.

SANDY TAU: I can't even begin to tell you how many we sold. We just went all out and ordered as many freezers as we could.

SELYUKH: And, like, freezers are usually this add-on boring appliance. You know, who gets excited about a freezer? But now people were buying fridges because they had freezers in them.

GARCIA: Yeah, they're, like, a package deal - got to get one with the other. I get it. So there's this big boom in demand for both freezers and fridges. That's part one of a shortage. I think that's pretty easy to understand. But obviously, we've also heard a lot about the supply side, too, because the manufacturing process got really disrupted by the pandemic. And a fridge is kind of like other complicated products, like cars. It's a machine that's made of parts that come from all over the world.

SELYUKH: So when you buy one, the box might be stamped in, you know, Ohio or North Carolina, but it's probably got some wiring from China, maybe a compressor from Brazil, some assembly done in Mexico. You can see how much research I did on this.

GARCIA: (Laughter) Yeah, I'm impressed.

SELYUKH: Exactly like you say, the coronavirus cases and the lockdowns - they swept through all these different parts at different times.

GARCIA: So it became, like, this messed-up supply chain. Some things were just taking way longer to get. And when one part of the chain shuts down, it threatens to rupture the whole thing. The whole chain might just fall apart.

SELYUKH: And in the end, you get fewer appliances getting made or shipping off to sellers like Sandy right when demand is booming. And so she'd call up her suppliers to say, give me more stuff to sell. And that didn't always go well.

TAU: I remember speaking to my Sub-Zero Wolf rep probably in about June. And I said, are we OK for inventory? And he said, I know we're good for the next three months. Well, then all of the sudden in middle of the summer - one of their major factories is in Arizona. As we know, Arizona had a very bad uptick this summer, and the factory shut down.

SELYUKH: And so a fridge that would normally be available in max two to four weeks now had a wait time of three months - three months for a new fridge. And freezers - Sandy is still waiting on a bunch of freezers she ordered back in March.

GARCIA: Unbelievable. To save everyone from doing the math, that's six months she's been waiting - half a year. She's still waiting.

SELYUKH: Still waiting. And this, to me, is the weirdest part of the story because - right? - it is a classic shortage situation - confused supply plus high demand. But it wasn't just big demand. It was a totally unexpected demand.

GARCIA: Right. That's the idea, Alina - that even though the economy was melting down and there was a recession, a lot of American shoppers actually still were buying big appliances.

SELYUKH: You saw this in just how resilient - surprisingly resilient home improvement stores like Home Depot have been through the pandemic. Their sales are actually higher now than they were last year.

GARCIA: Right. I'd imagine that's because there's still a lot of people going to new homes, buying new homes. They're remodeling. They're redecorating. They want this place they're spending all this time now to be nicer, to be better.

SELYUKH: Exactly. It's like when people can't splurge on trips and outings, they kind of redirect their cooped-up energy and money to their immediate surroundings.

GARCIA: Yeah. And Alina, what you found here, essentially, is that some manufacturers just couldn't keep up with that unexpected demand.

SELYUKH: Sandy says with appliances, she has never seen shortages like this year.

TAU: The entire industry - washers, dryers, you name it.

GARCIA: Yeah. And Alina, you looked at prices of major appliances tracked by the government. And what you could see is that they're kind of declining last year but then climbing again this year all the way through August, which is consistent with there being a shortage of these things. They become more expensive.

SELYUKH: Shortages were actually so bad this summer that lots of stores had to skip, you know, the classic Labor Day sale because they're like, how am I supposed to put a sale on this imaginary appliance that I don't actually have?

GARCIA: Yeah, can't put something on sale if you don't have it to sell in the first place - just a very bizarre new situation, I guess, for sellers like Sandy, right?

SELYUKH: It's pretty new. But she says the result is actually kind of old-fashioned. It reminded her of this trope she used to hear from the old-timers in the industry.

TAU: This business was started by my father-in-law in the '60s. And one of the things that he used to say was, it was a lot easier back then because you really didn't have too many choices.

GARCIA: Yeah. And that's interesting 'cause, of course, Americans famously - we are a picky people. We like our choices. We like being spoiled for choice. We're used to sort of getting anything we want with all the, like, custom bells and whistles and everything else.

SELYUKH: And, like, now.

GARCIA: Right now, yes.

SELYUKH: Give it to me now (laughter). And I don't want to make it sound like you can't actually buy a new fridge now. You can. It's just instead of, say, 20 options, you might find six. And if your heart's desire is that picky fridge with, you know, four doors and three temperature zones and an Internet-connected air filter, you might have to wait a little while. And the sellers actually say they are not expecting the shortages to ease up that much for the rest of the year.

GARCIA: So, Alina, what ended up happening to Shay from Texas with the broken French-door fridge?

SELYUKH: Yeah, Shay Chandler. Well, someone in the suburbs saved her by canceling their order. She was so excited to find this out, even though it wasn't the model she wanted. It was a side-by-side where the freezer's on the left, not on the bottom.

CHANDLER: That was the only full-sized refrigerator in a 50-mile radius. That's - I mean, that's how crazy it is. I didn't get what I wanted, but I just feel very lucky. I got a fridge. I feel very lucky I got a full-sized fridge.

GARCIA: So I guess the lesson here is that if you lower your expectations, it makes it easier to meet them, right?

SELYUKH: Just pandemic good is fine. Pandemic great is an accomplishment.

GARCIA: Indeed. And Alina, I really hope that your own microwave ends up holding out until these shortages are past.

SELYUKH: Fingers crossed.

GARCIA: Alina Selyukh from NPR's Business Desk, thanks so much.

SELYUKH: Thank you.

GARCIA: This episode of THE INDICATOR was produced by Darian Woods and fact-checked by Sean Saldana. Paddy Hirsch is THE INDICATOR's editor, and THE INDICATOR is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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