Issue link: http://palletcentral.uberflip.com/i/1266845
PalletCentral • May-June 2020 19 The Pulse of the NWPCA NWPCA conducted its own member survey in May on the economic impact on manufacturing. The results varied, likely fueled by industries served and other factors determined going into the pandemic. Here is what your peers are reporting. Capacity: Interestingly, a similar number of respondents say they have adversely been affected by the economic shutdown as those who say things have not changed. One quarter of those who took the survey say that manufacturing capacity is down more than 25% at their facility, while 30% report production is relatively the same as prior to the crisis. 37% report only a 10% decrease and less than 10% report an increase in their production between 10-25%. Projections: Looking forward, these same respondents have expectations that not much will change for manufacturing at their facility in the near future. Once the economy is fully open, 20% of respondents say they plan to increase their manufacturing headcount – but slowly, while 39% say they are still in wait-and-see mode. 33% say they have no plans to add people to their payrolls, with less than 10% planning for growth in the immediate future. Customer Needs: Just over one-third of respondents say that their customers' needs will be relatively the same for the next three months, while 36% say their customers have decreased production by 10%, and another 11% report the needs dropped by a quarter. Only 15% say that things are looking better for their customers by 10-25%. Pertaining to their customers, "they all need the economy to re-open," says one survey responder. "They feel confident in their ability to social distance and work safely, but they expect to be impacted if the economy doesn't start up again soon." Other customer concerns include: complete uncertainty to plan; slow demand from end-users; and, slow payments causing cash flow issues. Some customers of NWPCA members even report bankruptcy of their customers and subsequent failure to pay invoices shipped during COVID. "Sales are low right now for my customers," says a respondent, "and flow is not trending to increase quickly. Liabilities and expenses over workers getting sick, and most of them believe doing too much too quickly can backfire, so they are being very careful about their pace to reopen." "Some customers will not be around due to financial hardship," reports another. "Also, pricing has been trending down since they have a surplus on pallets at the moment." Another common concern among customers, "They are not sure when the consumer will return to buying," and concerns of "will their business return? Will consumers buy their product? Will supply chain issues linger into fall/winter?" Hit very hard by pandemic fallout, "customers that are linked to housing and automotive are concerned about how long it will take to get back to something close to normal." As one respondent put succinctly, "We depend on our customers' orders. If they cannot sell their product, they will not be buying pallets. It is chain reaction." Top of Mind Planning for the future can be complex even in times of stability. Drawing from experience, one-third of respondents said there is no quick fix to the post-pandemic economy, with expectation of a 6-12 month period before returning to pre-COVID-19 levels. Another 16% say it could be over a year before they see things level off. A more optimistic 34% are planning for a quicker 3-6 month recovery, while another 21% say they are already at pre-pandemic operations. "Getting the economy back open is worrisome," says a respondent. "Once we have everything opened back up, that will help us assess how to best move forward." Lumbering Concerns "What will happen to the lumber market?" is a real concern to NWPCA members. Many worry about the mills cutting back, driving up pricing. One says, "Indications are that lumber mills are reducing production capacity, which could affect Their customers say complete uncertainty, slow demand from end- users, and slow payments causing cash flow issues are the biggest challenges of future manufacturing.