Industry Trends

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This month's Thomas Industrial Survey revealed a sharp rise in manufacturing companies predicting a decline in revenue for 2020. In March, 55% of manufacturers indicated they anticipated a reduction in revenue compared to only 34% in February's survey results.

About 1 in 2 North American manufacturers (47%) are now looking to source domestically due to the disruptions caused by the recent coronavirus outbreak. The ancillary oil price plunge led more than half (53%) to expect an impact on their business; some are optimistic, but most are concerned.

These results are from a follow-up survey completed by over 1,400 manufacturing companies conducted by Thomas on the impacts of the coronavirus (COVID-19) outbreak on manufacturing this month. You can participate in future surveys by signing up to join the Thomas Industrial Survey Panel. We have also launched the Thomas Coronavirus Resource Hub for manufacturers and industry professionals to help unite and distribute resources to help us overcome this challenge.

Survey Highlights

Fewer Reported Impacts on Manufacturing

Only 45% of companies report that they are impacted by the outbreak, compared to last month’s 60%. Although fewer companies report that their businesses are impacted this month compared to last, this can be attributed to China resuming some of its production and shipping capabilities. The data we collect in April will be much more telling in terms of this outbreak’s economic impacts on the manufacturing sector.

Increased Concerns on Price Surges

We witnessed a significant drop in concerns for disrupted shipping and logistics from 71% in February to 42% in March. Concerns regarding offshore factory suspension and production restrictions are also easing down from 55% to 36%, respectively. However, there is a significant rise in concern from 12% up to 22% regarding price surges for cost of goods.

1 in 2 U.S. Manufacturers Now Seeking Domestic Sources of Supply

We saw a reduced desire to source internationally (from 43% to 34%), and an increased number of respondents (47% from 43%) are now looking to source from North American manufacturers.

Creative Coping Strategies Starting to Emerge

From increasing capacity to support customers impacted by degraded supply chains to using live feed cameras to deliver machinery acceptance tests, we see American ingenuity at its best through manufacturer responses to this month's survey.

Here are some of the main coping tactics shared by the manufacturing community.

On mitigating supply chain challenges, some manufacturers are responding by:

Increasing production, building plants, and adding processing facilities in North America. Taking on more work to support customers impacted by degraded supply chains. Introducing alternative shipping methods, working with factory representatives to prioritize work, and negotiating shipping terms for late shipments when necessary. Shipping ahead of schedule to meet the actual requested delivery date.

In terms of manufacturing operations, manufacturers are:

Seeking new customers and cold calling to gain new business and attempt aggressive sales tactics by utilizing significantly reduced pricing to stabilize their revenue pipeline. Introducing new technologies, e.g. machinery acceptance tests being done by live feed camera. Increasing sanitation / preventive measures.

Impacts on Oil Price Fluctuation

Oil price per barrel has plummeted by more than 50% from $51/barrel in January 2020 to $21 as of this article's publicaton. 53% of the respondents report they are feeling an impact. While this can mean lowered costs of crude oil derivatives, such as virgin plastic, glue, and lubricants, it can also significantly increase the relative costs of recycled plastic and renewable energy.

Specific Materials, Services in Demand to Stabilize Production

When asked what materials were needed to stabilize supply and keep production on schedule, manufacturers report:

fabricated materials (machined, stamped, extruded or molded material) at 41%

metals (steel, aluminum) at 30%

electrical or electronic components at 30%

raw materials (paper, wood, textiles) at 26%

machining tools and parts (fasteners, bearings, cutting bits, abrasives) at 21%

Methodology

The study was conducted online using Qualtrics. As a follow up to the February 2020 survey, the March 2020 survey polled over 1,073 North American suppliers with revenues spanning from less than $4.9 million to over $500 million.

Access the Full 2020 Coronavirus Survey Report

The full report of the Thomas Industrial Survey: Coronavirus’ Impacts on North American Manufacturers is now available. You can download the report by clicking ‘File > Download’.

Resources

Image Credit: Thomas

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