The COVID-19 Impact on Manufacturing Subsectors 

COVID-19

COVID-19

How manufacturing subsectors are preparing for the post-pandemic? 

The impact of COVID-19 has resulted in a sharp decline in the global economy due to limited economic activities that caused tighter credits and cash flow restraints. The pandemic has also deeply impacted manufacturing processes and disrupted supply chain networks. According to OECD predictions, global trade is expected to witness a massive fall by 20 percent to 35 percent. On the other side, nearly 80 percent of manufacturers believe that the pandemic will have a financial impact on their business, as per a recent survey by the National Association of Manufacturers (NAM).

As the COVID-19 has caused businesses to either shut down or reduce operations, most companies now are making effective business continuity plans. They are even looking for essential metrics to bring back their businesses in the new normal. Most industries now are planning to reopen their economic activities by putting preventative measures in place at large.

 

Automotive

The automotive industry is one of the major contributors to the economy and is a critical component of economic growth. In the time of crisis induced by COVID-19, the industry has been hit by factory closures, disruption in the supply chain, and a downfall in demands. Some automotive manufacturers are cutting fixed costs, so they can have low liquidity in order to power their revenues. Reduction in market capitalization will likely stimulate industry consolidation and pave ways to recovery from this uncertain time.

Streamlining supply chains with limited manpower and raw material, and keep tracking potential changes in demand and production will enable OEMs to operate for the new normal. They also must monitor employee health using IoT-enabled health management systems such as Deloitte’s “Restart Now”, to assist them to plan the workforce and trace the spread of infection.

 

Food and Beverages

Food and beverage companies are facing a significant reduction in the consumption of consumer products as well as disrupted supply chains. As the epidemic outbreak has forced people to stay home, at-home consumption has increased, meanwhile, out-of-home consumption, which previously generates the highest margin, has come to nearly a standstill. In addition, packaged food and beverage companies are witnessing an uptick in the demand, such as shelf-stable foods and beverages including milk products, as consumers rush to stock the pantries.

However, companies are now turning to innovative ideas and technology solutions to keep serving their customers, creating and bringing new products to the market. For instance, energy drink company Red Bull is looking to product localization and premiumization in the APAC region for its energy drink expansion.


Electronics

COVID-19 has put the consumer electronics industry at the mercy of the supply chains as electronics manufacturers increasingly rely on components made in other countries. According to a survey by UK-based embedded design consultancy ByteSnap Design, 16 percent of industry personnel were uncertain how the pandemic would impact the electronics industry. On the other side, 36 percent believe a drop in demand, while 18 percent anticipated supply chain disruption. 

Moreover, as governments are still imposing physical distancing requirements, electronics manufacturing companies are now looking ahead to the time when the pandemic subsides. To prepare for the new normal, they are developing strategies for reimagining and reforming business models.