In April, at the height of the coronavirus pandemic, industrial sourcing and marketing platform ThomasNet sought to reveal how badly and how quickly the virus had affected the manufacturing industry. ThomasNet conducted a survey and published its report, “COVID-19’s Impact on North American Manufacturing,” which examined the industry’s condition, confidence, and expectations for the future. Despite business falling as the pandemic raged, many manufacturers successfully capitalized on stimulus legislation, heading off the need for layoffs and other disruptive business measures. Looking forward, manufacturers reported feeling optimistic about the recovery and expecting reshoring to play a primary role among their rebuilding efforts.
Around 90% of manufacturers have remained open as “essential businesses.” Unfortunately, this hasn’t done much to help maintain business, as a sharp decline in activity has slowed much of the industry to a crawl. ThomasNet reported that all industry sectors have experienced a significant decrease in demand. While an overwhelming number of manufacturers have seen decreased international demand, domestic demand has been harder hit. Meanwhile, to further exacerbate the general stagnation of business, companies postponed many investment decisions and projects as businesses and customers alike have opted to hold on to their cash. This has hit builders and distributors of manufacturing technology particularly hard. However, some AMT customers, particularly job shops, have a wider, more varied customer mix. This ensures their resilience during economic downturns as they can react more quickly to changing economic conditions and may still need equipment for upcoming contracts.
As the virus’ impact has lingered, some AMT members reported that maintenance and service has also begun to slow as a result of slowing production, thus affecting another revenue stream crucial to business when sales slow. Compounding these problems was the disruption and fracturing of supply chains and logistics as the rate of global travel and trade has plummeted and slowed.
Recovery and the future.
Many in the industry have successfully applied to various federal stimulus programs offered in response to the economic crisis; most manufacturers surveyed by ThomasNet had not laid off workers, and a majority applied for the Paycheck Protection Program loans. Most AMT members who applied for such loans already received the funds.
Many manufacturers continue searching for ways to stay active and engaged with their customers, and the vast majority – 85% – have not changed their production to PPE and other COVID-19-related supplies. AMT members reported similar information. While this may change in the future to increase the stores of much-needed medical supplies, manufacturers have also begun considering recovery strategies. Over 90% of manufacturers reported feeling optimistic about North American manufacturing’s recovery. ThomasNet reported that as the coronavirus lingered and the economy worsened, the idea of reshoring gained momentum. By April, 64% reported they were likely, very likely, or extremely likely to consider reshoring moving forward.
The bottom line.
The coronavirus pandemic’s impact on manufacturing has been severe and largely negative. All customer industries of importance to AMT members have been impacted. And while most manufacturers are considered essential, demand has dropped off as consumers and businesses hold on to cash, thus slowing activity, the ripples of which (or lack thereof) affect the whole downstream supply chain. Many businesses have found some relief in the form of federal stimulus programs, and many decision makers have begun rethinking and strategizing for the future by looking into reshoring and increased automation. Despite these challenges, manufacturers are still optimistic about the future.
Read the entire ThomasNet report, “COVID-19’s Impact on North American Manufacturing,” here.