MANUFACTURING INDUSTRY TRENDS 2020

Similar to every other industry, in 2020, the manufacturing industry was set to travel on the path of growth but it was also put on the standstill as the entire economy. But the magnitude of this unprecedented crisis has yet to be fully realized or manifested. There are various aspects of the business affected and trends or plan of actions which have emerged holding high significance.

From rapidly redeploying underutilized factories to learning new ways to secure and build local, regional, national and global supply chains, manufacturing must help today while planning for tomorrow. While many companies are looking at new technologies as each region’s experience with COVID-19 causes fractures in supply chains to roil across the globe, in wake of the pandemic, here are the possible issues and trends in the manufacturing industry 2020:

CRISIS MANAGEMENT

As the pandemic intensified, manufacturers are facing continued downward pressure on demand, production and revenues and it is vulnerable especially when most of its workforce is employed in on-site jobs that cannot be done remotely. Apart from the workforce, and major global supply chain disruptions, there is also a chance of prolonged recovery.

The trends relevant in the industry in 2020 include reviewing capital and corporate cost budgets to identify not only marginal investments but also discretionary items that can be cut, considering divesting non-core or underperforming assets — or assessing M&A prospects — as a potential source of cash and working closely with municipal, state and federal governments to coordinate plans on worker and consumer safety while keeping mission-critical productions running.

WORKFORCE SAFETY

To avoid the outbreak to happen within different ranks of the workforce, the manufacturers should put in place immediately and contingent safety measures for their employees and should decide which functions can be carried out remotely. While to ensure widening outbreaks of COVID-19 does not affect their workers, companies have been outsourcing some corporate functions to reduce operating costs and eliminate maintenance capital.

Apart from that, instituting sanitation rules in the workplace, and assess mobility policies to encourage remote working, expect a learning curve as companies devise new ways of working that involve more remote workers and automation on the factory floors, and assessing strategies and plans to retain and deploy the workforce during the slowdown, and establish risk mitigation programs for employees who still need to work on-site should be focused on.

OPERATIONS AND SUPPLY CHAIN

Besides the jurisdictions, there is continued weakening links in the supply chain, as some vendors and suppliers faced operational or financial struggles of their own. Manufacturers with global supply chains are likely to find that Tier 2 and especially Tier 3 suppliers are most affected by disruptions while the large manufacturers have instant online visibility into top-tier suppliers, the challenge grows at lower levels.

Immediately implement sanitation measures and reconfigure workspaces for safety while you focus on autonomous materials movement (e.g., autonomous forklifts and cranes and high-payload drones); automation of repetitive tasks, including assembly (e.g., industrial robotics and mobile/collaborative robots); and predictive maintenance (e.g., using IoT and AI for predictive maintenance).

TAX AND TRADE

Manufacturers must respond to the changes to supply chains and workforce global mobility due to COVID-19 and these requires careful consideration of potential tax implications, and companies ought to consider these implications now. While some manufacturers are contenders for government-provided financial assistance, the multinational companies may face potential cash-flow constraints from overseas operations — including cash repatriation complications and irregularities. Cash could also be bottlenecked when goods are purchased but not supplied (or delayed and stranded). Such cash bottlenecks will likely occur in regions most affected by COVID-19.

The plan of action may include taking into account the tax and tariff implications of any changes to the supply chain, addressing mobility and immigration issues for employees moving in and out of areas affected by COVID-19, considering the tax implications of mobility, and depending on where you temporarily host employees, the company — and the employees — may face unintended tax consequences.

THE WAY FORWARD

As the COVID-19 crisis continues to expand, manufacturers are facing challenges on the outset of any major commercial disruption, companies will be looking for immediate measures to keep their workforces safe and their businesses solvent.

Indeed, this will be an enormous load to carry, and, for many companies in the sector, it will mean taking every measure possible to survive now and thrive in the future. It includes coordinating closely with the public sector to forge plans that are essential to both public safety and the solvency of their workforce while keeping the lights on in their operations.

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