How Are Manufacturers Responding to COVID-19?

In early March, before the most aggressive coronavirus response measures kicked in, the Manufacturers Alliance for Productivity and Innovation (MAPI) asked manufacturing executives how they were navigating the challenges presented by the spread of the virus. This survey, administered March 9-10, 2020, asked 140 executives at 101 companies about their response to the crisis. The National Association of Manufacturers (NAM) conducted a survey of its members February 28 - March 9 and received 558 responses from members about how their supply chains, general operations and finances have been affected by COVID-19.

Results from both surveys indicated rising concern, particularly focused on supply chain issues and uncertainty about how long the crisis would last. As of March 10, only about half of the NAM respondents had emergency response plans in place. 

The Overall Results

The MAPI Survey

MAPI’s survey found that 62 percent of executives were moderately or very concerned about COVID-19’s impact on global operations, up from 37 percent in late January. Comments on the survey highlighted challenges and uncertainties stemming from attempts to manage the global response. There were positives in the survey with 76 percent indicating that manufacturing capacity of China-based operations was at or near normal, a significant concern in the supply chain for most manufacturers.

Some of the challenges executives reported include:

  • Uncertainty and fear over how long the pandemic would last
  • Managing panic in their communities
  • Understanding true risks versus imagined risks
  • Following daily news and discerning what is true and what is false
  • Being unable to predict future impacts on markets
  • Establishing global and regional crisis management leadership
  • Staying up-to-date on local and national government restrictions and guidance
  • Planning for positive COVID-19 diagnoses among employees

Survey responses indicated that HR professionals, CEOs and other manufacturing leaders made up the majority of those responsible for implementing company changes. Approximately 58 percent of companies were placing limits on daily activities, such as facility visitors, and altering their sick leave and PTO rules. Travel restrictions were also prevalent among the respondent companies.

Response planning showed gaps, however, with only 58 percent of companies reporting they had plans in place for those who contract the virus.

The NAM Survey

NAM’s survey focused on specific elements of the manufacturing business. Members answered supply chain, operational and financial questions. Key concerns and roadblocks, as of March 9, included:

  • More than 35% of manufacturers had faced supply chain interferences
  • 53% of companies expected that their operations will change because of the pandemic
  • More than 78% of respondents believed that the ongoing uncertainty surrounding COVID-19 would probably negatively impact their finances

Respondents were evenly divided when asked if their company had an emergency response plan already in place before the crisis; 51 percent had such a plan, while 49 percent did not have an existing emergency response plan.

When it came to questions about supply chain disruptions, members stated that troubles included items arriving late, and thus, being delivered late to consumers. Some said these disruptions were minor but anticipated they would get worse in the future, and there would be a potential financial impact. In responses about operations, members said they expected customer demand to fall.

Where to Go From Here

MAPI Recommendations

The MAPI survey responses included some bright spots. Manufacturing executives shared tactics for managing the unknown:

  • Ensure calm, confident communication from leaders showing concern for employee health and welfare, and plans for managing change
  • Create an interdepartmental team to meet weekly or daily, and set meetings at times when international members can attend
  • Take the opportunity to discover and repair problems in current general crisis management plans
  • Build and maintain a website for COVID-19 updates, plans and useful resources
  • Create a “dedicated task force” to help others with what’s to come
  • Create a blog and post daily content, and allow questions and answers
  • Encourage employees to follow CDC recommendations and exhibit skepticism when reading social media posts

MAPI’s complete report concludes with six links that manufacturing company members can follow for potential assistance with managing the concerns raised. For example, the Member Playbook outlines response actions manufacturers can take (updated March 19, 2020).

NAM Responses

In response to open-ended questions about what resources would be helpful in dealing with the pandemic, many NAM members provided information on five potentially helpful resources:

  • Factual, bipartisan, reliable information, focused on issues relevant to the company
  • Coherent, timely updates on health regulations and changes
  • Other responses in the industry
  • Clear, concise information from the CDC and NIH
  • Quick, reliable testing resources

Companies also discussed their own reactions to current and anticipated problems. NAM survey participants expected slowdowns in customer demand, which at the time of the survey was considered minor. They also asserted that continued declines into the second quarter of 2020 would have a more serious impact on operational and financial results.

Respondents also noted plans to restrict visitors for safety, as well as offer a more lenient PTO policy. Some stated that they did not yet have a plan, but would implement one. For some, shutting down the business entirely was a worst-case-scenario option.

Perspective

In the weeks since these surveys were conducted, market conditions have changed rapidly. Today, almost every business has seen a significant impact from the COVID-19 pandemic. While the problem has progressed, there have been substantial responses from federal, state and local governments to mitigate the spread of the virus, to bolster the healthcare system, to expand production of essential supplies, and to help the overall economy weather the shutdowns.

Find Out More

Whether you’re in the steel fabrication business, heavy equipment manufacturing, food processing, high technology product manufacturing, wholesale distributing, or any other inventory-based business, Weaver can help provide insight into your challenges and offer assistance with resolutions. Contact us to see how we can help you weather the current crisis and emerge stronger than ever.

© 2020

 

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Brad Jay

Brad Jay

Partner-in-Charge, Middle Market Manufacturing, Distribution and Technology Services

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Brad Jay, CPA, CGMA, has more than 20 years of public accounting experience, with a focus on financial reporting, auditing…

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Jody Allred

Jody Allred

Partner-in-Charge, Large Market Manufacturing, Distribution and Technology Services

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Jody Allred, CPA, CISA, CITP, CGMA, has more than 18 years of experience in public accounting, a deep background in…

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