SMU Poll: Manufacturers Busy and Determined to Work

There is a lot of anxiety associated with the unknowns. There is also an acceptance of a future that may well require manufacturing companies to cease operations in order to stem the spread of the COVID-19 virus.

SMU reached out and asked manufacturing companies to comment on:

• What are you doing to prevent the coronavirus from impacting your company?
• Has your company suspended manufacturing activities at any of your facilities?
• The automotive industry is shutting down for a week or two; do you expect other industries to follow suit and close their plants?

Construction Related Manufacturing

SMU reached out to manufacturing companies that make components for the residential and commercial construction markets. With automotive shutting plants, the construction industry may well be the next shoe to fall as municipalities and states start limiting “non-essential” businesses from operating. Construction is one of the areas being placed in the non-essential category. Here are some of the comments we received from companies associated with the construction markets:

Manufacturing Company #1:

“Up to this point demand has held up pretty well, although my North America leadership team is providing up-to-the-minute updates. We’re beginning to hear some single-family and multi-family builders and/or job sites are shutting temporarily. In some regions (Northwest, Nor Cal for example), new building permits are becoming an issue as local building departments are closed. 

“New York last night, and Florida likely today, will issue orders for closure or paring back to 50 percent of staff for all “non-essential businesses.”  More to follow I am sure.

“With building slowing, our component manufacturing and building materials supply customers will begin slowing production and/or temporarily idling facilities. That will backflush to lower demand for our products. Anxiety and uncertainty are high among our customers in many parts of the country.

“Right now, at least as far as the building industry goes, the impacts are just beginning to be felt. This will move rapidly from here, and I expect the drop from the cliff to happen within a week. The only question is simply how deep and how long the fall will be, and if we see a V-bounce or a U-shaped recovery.

“For a global perspective, the news is much the same from my European and Asia-Pac leadership teams. The catchwords of the day—uncertainty and anxiety.

“From a steel buyer’s perspective, I expect we will see the best buying opportunity we have seen since 2009. Just not sure when the bottom will come, but I believe it is an inevitability.”  

Manufacturing Company #2:

“We had developed an initial Coronavirus Contingency Policy at the end of February. Since then our management team has met at least daily to make changes as more information has become available.

It is very frustrating and confusing that most policy is being made at the state and local level and not on a federal level.

“For instance, on Monday the City of [name removed] issued a mandate to shut down all non-essential business within a few hours. But they did not provide a clear definition for essential business. So, we had to make numerous calls to learn that industrial manufacturing fell under the category of essential. Late yesterday afternoon, I received a call from the [city name removed] Department of Health questioning why we were open. Finally, I received confirmation this morning we can remain open.

“All of our plants remain open. We have given the option to our employees if they want to work. Surprisingly, our attendance is higher than normal. We are not aware of any of our employees exposed to the virus or in quarantine. We have some of our employees working from home. But in a manufacturing environment, that is not feasible.

“All of our customers remain open. For the past three days our order intake in all the plants has been above normal. Probably because customers are concerned the supply chain will shut down or become limited. I am sure that will slow down in the days ahead. At some point we will probably shut down as the virus spreads for the next weeks and maybe months.

“Our number one priority is the safety and health of our employees. At the same time, we are trying to minimize their financial pain.”

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Manufacturing Company #3:

“Good morning. I hope all is well with you and your family. We began our COVID planning three weeks ago and update/adapt the plan daily.

“All three plants are open. We have one-quarter of the staff in the office, everyone else is WFH. We are maintaining all social distancing/hygiene guidelines. We have sequestered portions of our plant employees to segregate the population and keep people as safe as possible.

“We are not experiencing any supply chain issues. There have been some spotty/isolated truck availability issues, but nothing major.

“Incoming order activity is good for the moment.”

Other Manufacturing (Pipe and Tube, Agriculture, etc.)

SMU also spoke with manufacturing companies that are involved in pipe and tube, agriculture, sub-fabrication and other industries. Here is a sample of what we learned from them:

Manufacturing Company #4

“We are really busy right now. Both our locations are very full with backlogs. We have let about 13 people work from home in sales and other positions. No company travel at all, and put in place social distancing. We have two full-time crews cleaning non-stop all touch points in our facilities.

“We are not shutting down and have today no intention of doing anything different. It is an interesting time as we know there could be infections, but also 90 percent of the people who have this virus feel as if they just have the flu and get better quickly.

“But we do have concern for the older people and have made changes to make sure they are protected.

“We think this can turn around quickly, so March has been really good, and looks great the next two weeks. Our backlog today without this virus would make April great, but we assume shipments will fall off, unless we get good news in two weeks from the government. 

“So, love to hear what else is going on across the nation, as we really thought this year was going to be a great year.”

Manufacturing Company #5

“First and foremost, prayers to all affected by these drastic measures to protect everyone. We have pulled all outside salesman off the road to work from home on the phones. We have implemented a NO VISITOR policy at the plant as well as social distancing at work. We do have customers who are shutting down production and stopping all deliveries, so we are adapting. We are committed to do everything we can to keep as many employees working as possible. However, federal or state mandates may change that soon. Unfortunately, test kits in rural parts of the country are non-existent. We have no choice but to send employees home if they exhibit any symptoms and not allow them to return to work without a negative test result. 

“We have NOT suspended any manufacturing activities, however as customers slow down on orders we will be faced with some tough decisions. 

“[Like the auto industry], we anticipate a potential nationwide shutdown for a period of time.”

Manufacturing Company #6

“So far, we are doing everything we can to keep business as usual. Most of our Partners in Progress (employees) are continuing to work at their work stations. We have a few that are working from home and/or staying home as a precaution. 

“So far, we have not had anyone come down with the coronavirus. 

“We have restricted travel this week. Our business activity is still pretty good, and we have been able to deliver our products to customers in every case except Canada as of Wednesday.  We had a driver make it to Canada Tuesday, but Wednesday our driver was turned around at the border. 

“Our objective is to stay open throughout this pandemic. Not sure if we will achieve that goal, but we are preparing a response team to clean up in case of positive tests. We offered opportunities for our people to change/stagger shifts in order to cover childcare needs, with only a few takers. 

“I recently started reaching out to companies in the same industries offering to help if they are shut down. I also asked if they could help us in similar circumstances. We just completed an acquisition of a [name removed] company, so that process has been dramatically slowed down. I hope this helps. Keep up the great work and help us get through these challenging times.”   

Manufacturing Company #7

“We are having constant communication with our customers and watching their forecasts/orders each day to see if there is movement. At this time, orders have not been pushed out and we are very busy. We are utilizing our Southern plant to take some load off of our Northern plant to balance out our hours as our headcount is down due to COVID-19 precautions. We are actually seeing a pickup in work as some customers are asking us to take on some projects as their capacity is also filled. This is mostly in tubing fabrication.

“Supply chain, at this point, is working normally and we have not been impacted. We source almost exclusively domestic, so we are mitigated from overseas logistical issues.

“To support our employees, we are staggering shifts and allowing flexibility. We are also in consistent communication with all employees.

“The company has not suspended manufacturing activities at any of our facilities. 

“We do anticipate our industry to have some inventory corrections in the next few weeks, assuming that orders will be reduced from the end customers and ripple through to our customers. It is possible that plants could suspend production, but we do not see this happening unless mandated or if demand is so low that it does not make sense to be producing.”

Manufacturing Company #8

“We are taking precautions but are operating as normal for production/office staff. Social distancing is being used as much as possible. Limiting visitors.

“Those sick, around someone sick, or who feel they need to work from home have our full support to do so.

“Our facilities are operating as normal. We cannot afford to shut down unless mandated/paid for by the government.

“I think the auto shutdown will have a big impact on capacity and inevitably lead to steel pricing coming down. How much? Time will tell. Scrap already looks to be down $20-30.”

SMU will continue to watch the end-user segment of the industry for any signs of a slowdown in orders, or for forced shutdowns mandated by local, state or federal governments.