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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

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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