COVID-19

Shelter-in-place orders hit factories

Scott Tong Apr 1, 2020
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The employee parking lots are nearly empty at the Fiat Chrysler Automobiles Belvidere Assembly Plant on March 24, 2020 in Belvidere, Ill. Scott Olson/Getty Images
COVID-19

Shelter-in-place orders hit factories

Scott Tong Apr 1, 2020
The employee parking lots are nearly empty at the Fiat Chrysler Automobiles Belvidere Assembly Plant on March 24, 2020 in Belvidere, Ill. Scott Olson/Getty Images
HTML EMBED:
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Observers have an early look at how bad things are in the manufacturing sector. The April 1 publication of the Institute for Supply Management’s monthly purchasing managers’ index shows new orders received by factories fell to the lowest level since the end of the Great Recession. The manufacturing index fell from 50.1% to 49.1%.

In at least 30 states, shelter-in-place orders have forced factory shutdowns.

“About a week ago our factory in Michigan had to shut down, because of a local state order,” Jim Keane, CEO of Michigan-based office manufacturing giant Steelcase, said. “We continue to make product in Alabama. Our California plants had to shut down. Our Texas plants are also facing local restrictions.”

In the last couple weeks, regional manufacturing indices in Texas, New York and Philadelphia have plummeted. But the national picture is still emerging.

“We have no point of reference,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said. “I’m forecasting everything, but I have much less confidence in all the estimates I’m putting out there. You know, we haven’t been in a situation like this.”

She says it could take three to six months of data to understand the pain in the factory economy, and when it might bounce back. Still, manufacturing may be faring better than a service sector now flat on its back.

“Industrial companies are generally not on the front lines of the localized disruptions,” said Karen Harris, macro trends managing director at Bain and Co., “compared to high-touch consumer businesses like hotels and retail.”

To her, the silver lining is how American factories are showing flexibility in this crisis. Several U.S. automakers, for instance, have begun the process to produce ventilators for hospitals.

And at Steelcase, business is already changing, according to Keane. Customers are requesting office equipment with more safety and distance barriers, along with video chat-friendly design.

“As we come out of this crisis, we will emerge into a new normal, where people will have different sensibilities about infection control and so on,” Keane said. “And that’ll affect the way we live, and that’ll affect the way we work.”

Keane compared the coming change to the post-9/11 world, saying life will be different and factories will adjust.

That is, factories that survive the shakeout.

COVID-19 Economy FAQs

New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?

Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday  — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

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