In a year of unpredictable outcomes and business projections, the manufacturing industry took a hit early in the COVID-19 pandemic but is bouncing back to end the year strong. The 2020 Indiana Manufacturing Survey: COVID-19 Special Edition, conducted by Katz, Sapper & Miller in partnership with Indiana University’s Kelley School of Business at IUPUI and the Indiana Manufacturers Association, surveyed more than 100 Indiana-based companies and found 93% of respondents think their business will survive the impact of the pandemic.
This echoes the national sentiment found in an Institute for Supply Management poll released earlier this month that revealed manufacturing orders across the U.S. have risen to the highest levels in nearly 17 years. The national index increased to 59.3 in October 2020 – the highest since November 2018 and tops September 2020’s index of 55.4. Additionally, about 11.5 of the 22.2 million nationwide jobs lost this year have been recovered.
Locally, survey respondents wrote that they have increased confidence in telecommunications capabilities, flexible work practices, hygienic work environments, digital marketing efforts, and supply chain and automation innovations as they move into 2021 and beyond.
Survey respondents (44%) cited the Paycheck Protection Program (PPP) as the primary reason their businesses were able to continue operating. To alleviate workforce and income issues, Congress passed the CARES Act in March 2020 which offered several tax changes – credits, payment delays, interest deduction increases – which included millions of dollars in forgivable small business loans as part of the PPP.
“PPP was a game-changer for many of our clients as they were able to shift production, keep employees safe and on the payroll, and adjust supply chain needs accordingly,” said Jason Patch, partner-in-charge of KSM’s Manufacturing and Distribution Services Group. “According to the survey, the program played a key role in manufacturing companies feeling very supported by the federal government during the pandemic.”
Data shows 74% of Hoosier manufacturers felt the federal government did a good job of supporting their businesses this year, and 87% of respondents responded affirmatively when asked the same question about the state government’s support.
While supply chain, workforce development, and automation were issues the industry has struggled with previously, the pandemic forced companies to adapt sooner than many anticipated. Approximately 42% identified adapting business practices – diversifying supply chains, closing operations, accelerating automation changes, implementing social distancing, limiting outside visitors, requiring face masks, and more – as their primary reason for survival.
Overwhelmingly, supply chain management was a critical component to manufacturers’ ability to adjust during the height of the pandemic. Nearly 77% saw their supply chain partners able to maintain industry standard performance, but they acknowledge the pandemic could still have long-term effects moving forward. One in five Hoosier manufacturers say they have started or plan to onshore elements of their supply chain, and 25% say they have or will reduce the exposure of their supply chains to China.
As many line and non-line workers were forced to stay home during mandatory lockdowns, the need to balance a human workforce and automation became clear. Adjusting this practice would not only make operations less susceptible to future pandemics, but also create a much more competitive environment for skilled labor. That leads to another long-standing workforce issue of recruiting, retention, and training of a more flexible workforce that companies have started tackling in full force this year. For example, when asked about anticipated workforce changes, respondents said that they plan to increase available positions, add cross-training opportunities, raise starting wages, and rely less on temp agencies to fill vacancies.
Another top priority during the pandemic was developing new ways to protect workers from COVID-19 so they could come back to work. As businesses began to welcome their workforce back, companies found that implementing CDC-recommended practices kept employees safe and reduced the risk of spreading the virus. Some respondents said applying these safety measures will help in the future to keep employees healthy during regular cold and flu seasons.
“Even with the push from the pandemic to make these adjustments sooner, companies ranked – in order – process and automation, workforce, supply chain, and products as the general areas of business operations they see leading to future change because of their experiences this year,” said Mark Frohlich, associate professor of operations management at the Kelley School of Business at IUPUI. “Our past surveys revealed these long-standing issues before and showed that companies in every subset of the industry were working to find cost-effective solutions. Manufacturing companies, even more so this year, are becoming known for their ability to adapt to ever-changing factors such as technologies, employee standards, and economic issues.”
Download the full 2020 Indiana Manufacturing Survey: COVID-19 Special Edition report here.
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