Manufacturing: Surviving our New Normal

By early 2020, manufacturing had regained much of the momentum it lost after the 2008 recession. Then the pandemic hit, bringing with it staffing and supply chain woes.

(The following is an excerpt from our report, The New Retool: Pivoting Manufacturing To Be Ready for Anything.)

As the COVID-19 pandemic exploded around the globe, it’s not surprising the industry that makes personal protective equipment (PPE) rapidly ramped up production. The demand for N95 respirators and a range of other vital protective equipment like faceshields, gloves, atmosphere-supplying respirators (supplied-air respirators (SARs), self-contained breathing apparatuses (SCBAs) and combination SARs/SCBAs) and protective garments initially overwhelmed supply.

A video from the International Safety Equipment Association (ISEA) – “Beyond the Mask” – shows how the PPE industry responded to the unprecedented challenges posed by the worst public-health crisis in a century.

“Beyond the Mask” reveals the behind-the-scenes work involved in getting PPE into the hands of those whose lives depended on it. “In January, we started to see that the scale of this epidemic was something we’d never seen before, and we knew at that point as an industry that more would have to be done than had ever been done before to step up production and to address supply scarcities,” Wp Health Care News explained in the video.

“It’s about keeping people safe,” said Charles Johnson, ISEA President. “And that’s what we as an industry will continue to do.”

That huge demand fueled a quick pivot by companies manufacturing other types of products into production of PPE in response to urging from the federal government, which was trying to meet the surging demand from healthcare workers and other frontline responders.

Manufacturing Hard Hit by Pandemic, Supply Chain Woes

However, while PPE manufacturers and manufacturers who initially were able to pivot to PPE are thriving, the same cannot be said of other manufacturers. As noted by Deloitte in its 2021 Manufacturing Industry Outlook, in early 2020, manufacturing had regained much of the momentum it lost after the 2008 recession. Then the pandemic hit.

After the first wave of pandemic-driven shutdowns, segment recoveries for various manufacturers have been uneven, according to Deloitte. Looking ahead to 2021, the recovery may take longer to reach pre-pandemic levels, as Deloitte projections based on the Oxford Economic Model (OEM) anticipate a decline in annual manufacturing GDP growth levels for 2020-2021, with a forecast of -6.3 percent for 2020 and 3.5 percent for 2021.

“Reeling from the effects of a global pandemic-driven shutdown, U.S. industrial production (-16.5 percent year-over-year) and U.S. total factory orders (-22.7 percent year-over-year) saw a steep decline in April, followed by suppressed improvement,” according to Deloittle. “The current U.S. Industrial Production Index stands at 105.7 in December (the most recent month available), a substantial dip from its pre-pandemic level of 110.”

Production and order levels are still below 2019 levels, but the trajectory of the decline has slowed, according to the report. Total industrial capacity utilization improved to 74.5 percent in December, up from 64.1 percent in April. However, it’s still below pre-pandemic levels of 77 percent.

The report points out that 2020 showed “a significant dip in manufacturing employment levels,” largely due to forced shutdowns early in the pandemic and suppressed orders, with April recording manufacturing’s lowest employment levels since 2010. Despite recent gains from much of the country’s manufacturing base back in operation, employment levels in December 2020 were still 543,000 lower than the previous February.

All is not lost, according to the National Association of Manufacturers (NAM), however. A recent survey shows that manufacturers are optimistic about the future, rising from 34 percent in Q2 2020, just after the pandemic was declared, to 88 percent in Q1 2021.

(Want to learn more about the ways innovative organizations are using technology to adapt to a new normal and meet and exceed challenges? Download the full report, The New Retool: Pivoting Manufacturing To Be Ready for Anything.)

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