COVID-19 Impact on Manufacturing

The coronavirus pandemic has put the world as we know it on pause. As of August 2020, more than 24 million people have contracted the virus, leading to more than 822,000 deaths worldwide. The United States has been one of the hardest-hit countries, and people everywhere have felt the COVID-19 impact on manufacturing.

Manufacturers have seen production, demand, and revenue fall across all business areas, from mining to mechanical engineering. Many companies are struggling to maintain cash flow and handle their existing debts. Some manufacturers cannot outsource production remotely, disrupting the entire supply chain.

As detrimental as the coronavirus pandemic has been for people’s well-being and the economy, COVID-19’s impact on manufacturing has benefitted some industries as much as it has harmed others. While these benefits do not act as counterbalances for the hundreds of thousands of lives lost, these adaptions suggest a way forward from the crisis.

How COVID-19 Affects Lean Manufacturing

The pandemic has touched communities across the world, from hospitals to hotels and schools to service industries. We’ve seen both influxes in demand and dramatic drop-offs. Even five months after the initial outbreak hit the US, we have seen shortages in hospital cots, surgical masks, and ventilators.

Consider the pivot of Pathfindr, an asset tracking business in the United Kingdom. The company makes sensors that track parts during the manufacturing process, thanks to GPS and Bluetooth.

Since the pandemic, Pathfindr’s engineers have redesigned their technology to help people maintain social distancing. As a result, they have created a device called the Safe Distancing Assistant that gives users a jolt if the gadget senses them reaching to touch their face.

The same applies to manufacturers in San Diego. The city’s core manufacturing strengths include defense, aerospace, craft brewing, and shipbuilding. Disruptions to the supply chain have forced many local manufacturers to adapt their business models to meet demand, including:

  • ResMed: A company known for treating sleep apnea, they have begun producing respirators and ventilators for hospital and residential use.
  • Orucase: This travel bag manufacturer now makes half a million medical-grade face masks per day.
  • Cubic: The public tech company that provides products and services for transportation and defense has pivoted to prototype ventilators.
  • Flexsystems: This plastic products manufacturer has updated its operations to create splash guards and fabric masks for healthcare professionals and residents.

How Manufacturing Is Adapting

We have already touched on issues and adaption within the crisis management and response. The manufacturing ecosystem remains fragile in other sectors. Here are some of the current issues we face in the workforce, supply chain, and finance, as well as how manufacturers can respond with practical steps.

Workforce

Safety should be every company’s top priority, now and in the future. Every manufacturing company should implement additional safety measures if they haven’t already. That includes determining which jobs employees can perform remotely and which must occur on-site.

Manufacturing, like countless other industries, has experienced labor cuts and cost structure overhauls. These declines may continue as long as critical sectors, like travel and aviation, remain stifled under the coronavirus. Some companies may benefit from outsourcing labor, whether they move their information technology to the cloud or hire contractors to fill in for full-time employees.

Other potential steps include:

  • Training employees on proper safety protocols
  • Eliminating non-essential travel
  • Encouraging remote working
  • Encouraging sick employees to stay home
  • Finding new ways to work with more remote employees

Operations and Supply Chain

While manufacturers can adapt to new demands, they must prepare for bottlenecking domestically and abroad. The weakening supply chain will likely increase strain on operations over the coming months, and lower levels of manufacturers may suffer.

Cutting discretionary operations can reduce the stress of the coronavirus pandemic in the short term. The real question is whether or not companies have the financial reserves to outlast the recession. The remaining manufacturers of surviving companies will have a leg up when we reach a new normal.

Some other steps manufacturers can implement include:

  • Improving sanitation
  • Automating as much as possible
  • Updating best practices
  • Communicating with staff
  • Evaluating cybersecurity
  • Transferring knowledge via the supply chain

Finances

The COVID-19 impact on manufacturing has put us in uncertain times when it comes to producing necessary items. No one knows with certainty the best path forward, and many companies have made changes to adapt to these new challenges.

Companies should prioritize transparency as they address ongoing hurdles. Leaders should disclose pressing risks and the ripple effect they may have on trade and taxes. Multinational companies should look overseas for a resurgence of cash flow as the United States stagnates in its recovery.

Other solutions may involve resolving employee mobility issues for people in COVID hotspots and considering the impact of tariffs on the new manufacturing climate. As manufacturers navigate these obstacles, they should proactively talk with stakeholders to minimize surprises and unexpected setbacks.