US firms find ways around inflation, scarce labour

July data on producer and consumer prices keenly awaited to gauge extent of pressures

It’s no secret: US businesses are dealing with rising costs, from labour to raw materials to shipping expenses. But many are already starting to see the light at the end of the tunnel.

Take Clorox Co., for example. The Oakland, California-based consumer-products maker’s chief executive officer, Benno Dorer, said on the company’s quarterly earnings conference call Thursday that he expects rises in transportation costs to ease to a “mid to high-single-digit” pace from “high double-digit.”

Below are a few highlights from last week’s earnings calls.

Fast-casual burger chain Shake Shack has begun experimenting with cashless ordering to contain labour costs. So far, so good, according to Shake Shack CEO Randy Garutti, who said, “It’s absolutely one of our goals to decrease the payroll over time.”

While many expect shipping inflation to moderate following big increases, they’re also being proactive to keep costs down. Craig Kesler, the chief financial officer of Eagle Materials Inc., a building-materials producer based in Dallas, indicated “so you start shrinking your shipping radius in order to offset some of the freight increases.”

Many companies are being forced to adjust to rising wages after years of cheap and available labour. Wilson Jones, CEO of heavy-vehicle maker Oshkosh, refers to the initiatives his company is taking as ‘Operation Kitchen Sink.’ “Access to skilled labour is going to be one of our big issues going forward,” he said. “Our team, they call it Operation Kitchen Sink, because we are throwing everything at it.”

Wage growth has been slow to accelerate in the US despite low unemployment. One reason may be that many companies are turning to one-time incentives like bonuses to attract additional labour, before taking the bigger step of increasing base wages.