THE COVID-19 EFFECT: PREPARING YOUR BUSINESS FOR A ‘NEW NORMAL’ by Laurie Harbour, president and CEO, Harbour Results
Tmanufacturer is going to come out of this crisis intact. The industry
he COVID-19 pandemic has made one thing clear: Not every
has experienced a significant impact, causing ripples throughout the supply chain. And, if a business went into 2020 in a weakened state, it’s really going to show on the backside of this year. Ramping back up will certainly be a major challenge for the industry. Nearly all companies will be slowly restarting operations – first for OEMs and then suppliers. In North America, most manufacturers began operations in May with limited or staggered shifts and other safety precautions in place. While this ultimately is a step in the right direction, the reality is the industry still is facing serious headwinds as restrictions on public life remain in effect and will continue for some time. In fact, the marketplace will not return to normal until a COVID-19 vaccine is in place, which clearly will not occur in the near future. For now, the key questions we face are “What is the business going to look like when operations resume?” and “What do we need to do to better prepare the company for success?” CHALLENGES FACING MANUFACTURERS Companies will face a number of challenges as a result of this crisis. To start, a global recession is here. A recession to this extent is something we have not experienced in recent times – and, frankly, we
26
the american MOLD BUILDER | Issue 2 2020
don’t have a clear picture of how quickly the economy will rebound or if we can expect future recessions in the next two to five years. Additionally, looking at most industries – automotive, recreational vehicles, aerospace, etc. – we can expect a 50% to 60% drop in production for the remainder of the year. As ramp-up activities proceed, suppliers also can expect business inconsistencies due to products and launches being modified or even canceled while others become a priority. Also, raw materials and supplies may be in short supply. In the end, companies with good supplier relationships will likely have an advantage as the supply chain opens up. Internally, reengaging a workforce safely could be difficult and costly. Additional resources to ensure safety standards are in place will be needed, and it is highly likely many employees will be nervous or unwilling to return until the pandemic is better under control. In fact, those who are close to or at retirement age may decide not to return at all – or they might decide to stay longer because of the impact on their 401(k). And finally, cash. It has been a continuing edict since this crisis started: Conserve your cash. Doing so will continue to be a challenge for manufacturers. Cash will be required to operate and meet customer demands, so companies need to be conservative because there is no clear picture as to how long the ramp-up will be or – even worse – if there could be a second wave of the virus forcing future shutdowns.
