A look at what developments will ensure manufacturing’s survival post-COVID-19.
There is no doubting the underlying effects of the COVID-19 pandemic to the manufacturing sector. With non-essential factories ordered closed to control the spread of the virus, companies are forced to cut costs and reduce their productive capacity, thereby causing another level of disruption to global supply chains.
Countries like the United States attribute a large slice of their GDP and employment power to the manufacturing sector. The effects of COVID-19 are too hard to ignore, but stakeholders can certainly find ways to remain competitive. It’s only a matter of making rational policy decisions and adapting to the challenges brought by this health crisis.
So, what developments will ensure manufacturing’s survival in the years after COVID-19?
The need to offshore operations
The pandemic brought about an offshoring as companies moved their operations to countries less affected by COVID-19 or that have begun easing their lockdown restrictions. For sure, investors and business leaders will have to consider the immediate challenges that coincide with the shift to offshoring. Higher logistics costs and compliance with local and international policies should factor in decisions and analyses that could affect the entire bottom line.
However, the effects will depend on the unique qualities of each industry in terms of how COVID-19 is affecting them. Key players in the pharmaceutical manufacturing industry, for one, are expected to shift to East Asia as several countries have met considerable success in containing the number of new cases and fatalities from COVID-19.
Investment in new technology
In the same way as any type of disruption, COVID-19 underscores the value of adopting new technology. The rise of big data and the advent of digital transformation have already ensued and it took a pandemic to highlight the need for manufacturers to acquire new tools and enhance the skills of their current workforces in order to reduce risk and ensure long-term profitability. Apart from dry bulk material handling equipment and automated package loading systems, manufacturers should also look toward adopting cloud-based systems, enhancing their cybersecurity, and using predictive analytics for equipment management. Such technologies can provide added-value to companies that want to lessen the pandemic’s impact on their bottom lines.
At the end of the day, the manufacturing industry’s survival will depend mostly on how governments negotiate the risks and disruptions caused by the pandemic. Across the globe, countries have already rolled out billions of dollars in stimulus packages to support local industries. Larger manufacturing firms, for sure, are encouraged to help with COVID-19 response efforts by supplying other companies and refocusing their production toward personal protective equipment, sanitizing solutions, and other goods that can help protect medical frontliners and ensure the availability of critical products. Indeed, with the implementation of the Coronavirus Aid, Relief, and Economic Security Act; the Federal government is expected to spend $60 million for the production of biomedical equipment. Such a level of involvement through the public sector will surely change the sector’s role in society.
Things remain uncertain, but the fact that the manufacturing sector is standing strong against this crisis tells us a lot about the kind of future this important industry holds.