Product recalls across industries increased in Q3
Operational challenges around labor and supply chains coupled with stricter regulatory actions are propelling recall rates.
The rate of product recalls increased during the third quarter compared with the prior three-month period, according to Sedgwick, which reported a slew of business challenges and increased regulator pressure will continue to drive recalls into 2022.
Automotive recalls reached a seven-quarter high and increased 21.1% compared with Q2 2021, while consumer product recalls remained relatively flat when compared to quarterly averages from 2019 and 2020. After showing multiple quarters of declines, medical devices and pharmaceutical industries both saw recalls increase 35.8% and 45.8%, respectively, during Q3 2021, Sedgwick reported.
The uptick in recalls during the previous quarter was attributed to labor shortages, supply chain issues and inflation. The first two issues are limiting companies’ abilities to produce and deliver goods. In some cases, companies are attempting to cope with losses because they don’t have inventory to sell, Sedgwick reported.
The combination of labor shortages and supply chain issues are driving up costs across industries, the recall study found. Prices for key ingredients and components, shipping and transportation expenses and labor costs are all growing.
Additionally, government agencies ranging from the Food and Drug Administration to the Consumer Product Safety Commission and the National Highway Traffic Safety Administration (NHTSA) are all expected to increase regulator enforcement efforts and rulemaking across industries, Sedgwick reported.
For example, with an increase in traffic deaths this year and automation features gaining traction, stricter regulatory oversight and increased enforcement of the automotive sector is expected, according to Sedgwick, which noted the NHTSA’s consumer-oriented goals will be backed by a stronger regulatory position moving forward.
“We are living through a virtual avalanche of business risks — from labor shortages, supply chain issues and inflation to increased regulatory oversight and enforcement,” Chris Harvey, senior vice president at Sedgwick, said in a release. “When combined, these challenges collectively threaten a company’s reputation and even its financial viability. Companies across all industries should closely re-evaluate all manufacturing processes, vet supply chain partners and invest time and resources to prepare for the next product crisis.”
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