Will Manufacturers Weather the COVID-19 Storm?

Will Manufacturers Weather the COVID-19 Storm?

The Covid-19 pandemic is now fully upon most of us. Depending on where you are in the world, you may well have already been dealing with the impacts of this new virus for a while now. However, for nations like the US and the UK, the novel coronavirus has only just begun to exert its effects on us.

While it is true that the majority of people who contract Covid-19 will ultimately be fine, many people are going to be forced out of work either to self-isolate or to tend to loved ones who have contracted the illness. This adds up to a significant economic impact, with some US officials warning of a potential unemployment level of 20% if legislatures don’t act quickly.

Exactly how the virus will spread and the impact it will have on economies around the world remains to be seen, the situation is new and still evolving. Covid-19 is already having a significant economic impact across the board and manufacturers are just as susceptible as anyone else. However, there are also some reasons to be hopeful. Measures taken by the Chinese government appear to be working and the spread of the virus there is slowing. Given the importance of China’s manufacturing sector to the global economy, this is good news for everyone.

Manufacturers In The US

The impact of Covid-19 on the US economy is widespread, but it is not even. Some sectors are being hit or are expected to be hit much harder than others. Compared to the hardest-hit industries, the US manufacturing sector looks set to get off relatively lightly.

However, that isn’t to say that the US manufacturing sector has nothing to fear – Covid-19 is going to have far-reaching impacts across the economy and manufacturers will take a direct and indirect hit. At the time of writing, a number of urban areas in the US are banning large gatherings of people. San Francisco has a shelter in place order active, requiring non-essential businesses to close and people to avoid all non-essential travel.

Even where manufacturing businesses are remaining open, there are widespread issues with supply chain disruption – 75% of businesses have experienced Covid-19-related supply chain disruption, according to a survey from the Institute for Supply Management. The same survey found that 80% of businesses are expecting some degree of Covid-19 related disruption in their futures and this has encouraged a number of businesses to reduce their financial forecasts for the next year.

Manufacturers In China

China was the epicenter of the Covid-19 outbreak and its economy has taken a severe hit already from the virus. Productivity has been down considerably, but the situation is slowly returning to normal. China has been more effective at preventing the spread of Covid-19 and as businesses get back up and running, there are opportunities for other businesses.

Businesses like Rapid Direct who provide CNC machining services and CNC prototyping, among other services are now looking to ramp up their operations again, this is a great time to invest in CNC machining china. If you are looking for online machining services, injection molding services, prototyping, sheet metal fabrication, or rapid tooling services, Rapid Direct is exactly the kind of business that you need – here is more information about them. By offering their services online, Rapid Direct makes it easy for prospective customers to rapidly assess their suitability. For businesses that need prototype machining, moving quickly and efficiently is important. When Covid-19 fully hits the US manufacturing sector, businesses like Rapid Direct will prove valuable for their rapid prototyping services, including prototype molding, sheet metal prototyping, and general prototype machining services. The availability of online CNC services will also be important as more people find themselves in isolation or quarantine. Being able to order CNC machining services online will enable businesses to continue being productive to some extent.

Manufacturing In The EU

Just as Chinese manufacturers are starting to get back up to speed after having to shut down over Covid-19, other manufacturers around the globe are now beginning to feel the pinch. Italy has been particularly hard hit, with the virus breaking out in the industrially and economically significant Lombardy area.

While doctors in the region are reporting a stressed and overwhelmed healthcare system, authorities have put stringent measures in place to try and slow or prevent further spread of the virus. Both of these factors are bad for the Italian manufacturing sector and have a broader implication for the rest of the European Union. The integrated economies of the EU are built on supply chains that cross borders. With major manufacturing, financial, and industrial centers for the EU being so heavily hit by the COVID-19 virus, it is inevitable that there will be a ripple effect across the entire continent.

Global Impacts

In the long-term, there is the potential for Covid-19 to spur a long-term realignment of dynamics in the global manufacturing industry. For example, the Trump administration has pointed to current supply chain issues as an indication that they should be encouraging more domestic manufacturing within America’s borders. There is some logic in arguing for nations to be able to produce essential supplies and pharmaceuticals domestically, even if it does cost more.

However, many people have questioned the wisdom of the administration’s current moves in this regard. Specifically, the closing of a loophole that allowed the federal government to procure and purchase essential supplies from foreign suppliers. An executive order is now pending that would close those loopholes and force the government to purchase supplies from US businesses.

The goal of the executive order is to encourage demand for American-made drugs and equipment, thereby encouraging more investment in the US manufacturing sector and pulling back some of the businesses that would otherwise be leaving for China.

Another global sector that has already been hit hard by Covid-19 is the consumer electronics industry. Electronics manufacturers have reported serious concerns about supply chain disruption. In some cases, essential components are being delayed indefinitely, while smaller delays are building up and creating unsustainable backlogs.

The coronavirus pandemic has yet to peak. The worst of its effects are still to come and will likely take some time to manifest. However, while the impacts of the outbreak are going to be far-reaching and touch on every corner of the economy, some sectors are going to be hit significantly harder than others. Manufacturing sectors across the world are going to be impacted by the coronavirus, there is no escaping that simple fact. However, the most important manufacturing sector in the world is that of China. While the measures being taken by authorities there might seem draconian to westerners, they have proven to be incredibly effective at stopping the virus in its tracks.

Businesses who require the services of manufacturers need to tread carefully over the next few months. It seems likely that domestic manufacturing is going to be difficult for a while, US-based businesses may want to consider manufacturing services in China, especially in areas where the outbreak is now receding. Meanwhile, manufacturing businesses themselves need to be prepared for significant supply chain disruption. Exactly how this disruption will manifest remains to be seen.

Patrick Doherty
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