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How the Coronavirus is Impacting the Manufacturing Industry

The novel coronavirus, COVID-19, has affected hundreds of thousands of individuals on every inhabited continent. As markets react, events are canceled, and schools close, it’s leaving many businesses and consumers wondering what’s going to come next.

The pandemic has already had significant impacts on the business world, especially in manufacturing. From shortages to delayed deliveries, everyone is feeling the shutdown of China’s factories. Here are five ways that the coronavirus has already impacted production, and what that may mean for business in the future.

The Top 5 Ways the Coronavirus Has Impacted Manufacturing

As the coronavirus sweeps through the world, more and more businesses are feeling its impact. Many experts believe that the pandemic will affect every aspect of manufacturing as workers fall sick or are asked to stay home. As of March 2020, the full extent of the highly contagious virus is only beginning to become known. The top five impacts so far have been:

1. Many Chinese Factories Remain Temporarily Closed

As the epicenter of the outbreak, China has felt the effects of the coronavirus very keenly. As early as January 2020, the Chinese government began shutting down factories in Wuhan in an attempt to prevent the virus from spreading. Although meant as a temporary measure, large swathes of the country’s manufacturing sector have become paralyzed and unable to resume operations.

For western consumers, that meant slight delays in goods ranging from household necessities to entertainment devices. In late February, new cases of the coronavirus began to slow. Factories are beginning to reopen, but it will be a slow road to recovery.

2. Some Parts are Beginning to Become Scarce

Although it’s no surprise that much of the world relies on Chinese manufacturers, that reliance has meant slowdowns in other sectors as well. In early February, Apple began experiencing supply shortages for its iPhones due to the shutdown of its factory in China. As the closures continued, it disrupted other major companies as well. Notably, Toyota’s manufacturing has languished as the virus disrupted its Chinese supply chains.

In mid-March, China began reopening factories with caution and at reduced capacities. However, no one yet knows how long it will be until full capacity is resumed, or whether any long-term effects will appear that haven’t yet been realized.

3. American Employers are Rethinking Sick Days and Employment

Mass cancellations of events and gatherings have dominated headlines around the world, but they weren’t the only cancellations that occurred. The coronavirus has also proven a stressful experiment in working from home – but not every position is suited to it.

Some American manufacturers have been stubborn about telling workers to stay home, and some have been hesitant to do so. US workers, in particular, fear that taking sick days may result in diminished career outcomes – a fear that’s pronounced in the manufacturing sector.

Some manufacturers, like Boeing, are taking precautions to keep the workplace clean and encouraging sick employees to stay home. Others are tweaking their sick-leave policies in an attempt to reduce employee anxiety about missing work.

4. Non-Chinese Asian Manufacturers See an Opportunity

China has long been a manufacturing powerhouse and has shown no signs of stepping away from that role any time soon. However, as its factories have languished, other Asian manufacturers have seen a moment of opportunity – they’re acting upon it.

Indian companies have been especially keen to leverage the coronavirus into an economic opportunity. In late February, India Inc, an active pharmaceutical ingredient manufacturer, moved aggressively to expand its operations in the west. Those operations have increased yet further as other major manufacturing origins of pharmaceutical ingredients – Taiwan and South Korea – have experienced their own outbreaks.

5. Western Manufacturers are Experiencing a Slowdown

The American manufacturing sector has slowed significantly as the coronavirus spreads through the country. The manufacturing industry, which constitutes 11 percent of the US economy, relies on cheap Chinese labor and technological advancements for many critical parts. With the Chinese economy on lockdown, American manufacturers have been forced to contract their orders and reduce their output.

In Europe, a similar story is playing out. European carmakers, in particular, have expressed concern that they’re not able to source the materials they need to produce. That’s resulting in large numbers of businesses stockpiling goods and spare parts to reduce supply chain disruptions.

Stay Ahead of Disruption with First Phase Data

Manufacturing sectors in all parts of the world have seen slowdowns and delays. Still, early signs from China suggest the worst might be over for manufacturers that rely on the country for its labor and technological expertise. Nonetheless, with the virus rapidly spreading through Europe and North America, it’s still too early to say what may happen next.

First Phase Data is committed to helping its customers stay safe during the coronavirus pandemic. Learn more about how we work with companies in manufacturing to develop the best office processes and workflows.

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