Manufacturing is a diversified industry and one that includes building cars, food production, and hospital equipment. As such, the industry has had varying levels of disruption from COVID-19. Some businesses in the industry have been ‘essential businesses’ from the beginning, like those working in food. Others, like General Motors have moved from producing cars to using their facilities to create ventilators and facemasks in response to increased need. Regardless of the type of manufacturing, all have been affected by COVID-19. Whatever the product, manufacturing has been severely disrupted as the supply, demand and workforce capability are all being disrupted at the same time.
For the states that had stay-at-home orders in place, which was a majority of the country, many of the workers in manufacturing jobs that were not deemed ‘essential’ were laid off or furloughed. In March, 18,000 people working in manufacturing lost their job. Ford Motor lost 2 billion in the first quarter due to factory and dealership shutdowns. The state of Michigan has one of largest manufacturing industries in the country, with manufacturing accounting for 20.5% of the non-governmental GDP, which is double the national average. Due to COVID-19, Michigan’s jobless rate is now one of the highest in the country at 24%. For those businesses manufacturing food, demand has increased and workers have continued to produce through this crisis.
Looking towards Reopening
As many states start to open back up, businesses deemed non-essential will start to be able to get back to work. Somes states are requiring or strongly suggesting the continued use of social distancing and masks if possible while their workers go back to work. A lot of larger businesses are looking to Chinese manufacturers to see how they have reopened. This includes increased testing, taking temperatures, and social distancing once inside the factory. Some car factories in China are using fences to force separation, with the parts workers frequently touch regularly sanitized. Once companies are allowed to reopen, the process will be a several week transition for large companies like GM.
Concerns about Reopening
Extreme management and logistical challenges face businesses as they contemplate safely opening back up. Manufacturers will be working through how to socially distance at work, and how to do that when a job is a two- or three- worker job. Another major concern is the lack of demand for some products, as over 30 million Americans have filed for unemployment. Consequently, the demand for goods such as cars is down.
Many people, including economic developers, are calling for the policymakers and supply chain managers in the manufacturing industry to use this crisis to take a closer look at their supply chain, as COVID-19 has brought to light how fragile and complex it is. From pharmaceutical companies to traditional manufacturers, the United States is heavily reliant on many other countries for components. Even products made in the United States receive key parts from other countries. The pandemic has shown that complicated supply chains that are globally dependent are a threat to national security and economic health.
Assistance to manufacturers is coming from the local and federal level. For example, the Right Place, an economic development organization based in West Michigan has put together a list of best practices for small to mid-sized manufacturers during COVID-19.
Federally, the CARES Act, which provided much needed relief through the Paycheck Protection Program was able to be accessed by some manufacturers that fit the description of a small business. However, there has not been targeted assistance to this industry. The National Association of Manufacturers is weighing in on this topic, and suggesting lawmakers consider their American Renewal Action Plan.