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Tuesday, 28 April 2020 20:22

The COVID-19 Impact on Automotive Manufacturing

Written by Laurie Harbour, Wards Auto

Index

From a business volume standpoint, tool suppliers will see slow quote activity in the third and fourth quarters this year, and possibly the first quarter of next year, as companies rebuild profits and prioritize which products to launch for tools.

 

On the whole, the economic impact of the pandemic is going to be felt most likely through December, and we will start to see a rebound in manufacturing in the first quarter of 2021.

 

There are certain practices that businesses need to be adopting to help them prepare for the next time a crisis comes about. Chief among them is embracing technology and automation like never before. Businesses must find avenues to run their operations with technology at the forefront.

 

Additionally, businesses will need to have tighter control when it comes to cash management, including paying down debt more rapidly, as well as implementing practices to address workforce readiness.

 

There’s no question the industry will undergo some significant changes as a result of this pandemic. One of the biggest shifts will be around the level of dependence on China when it comes to production and tooling.

 

On the one hand, there’s the potential for the industry to be less reliant on China because of what has transpired, and a scenario in which a larger percentage of production moves back to the U.S.

 

However, it’s important to realize the Chinese tooling industry will be extremely aggressive after restart, coming back with a vengeance. The Chinese government has been emphatically backing this industry and recognizes the need to rebuild this vital segment of its economy.

 

On a more holistic level, this crisis can yield positive change. Hopefully, this will be the shift in the industry that we’ve been waiting for. This includes businesses implementing new technologies and automation strategies, embracing a flexible workplace and placing a greater emphasis on keeping employees safe and healthy.

 

If they haven’t done so already, companies should be taking the necessary steps now to prioritize efficiency and reduce costs.

 

We thank Wards Auto for reprint permission. 


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