The COVID-19 pandemic impact on the economy was drastic – that would be an understatement. There is no sphere of activity that has not been impacted by the circumstances attributable to the dreaded virus. When the various industries are considered, the sector of manufacturing is the one that has been most seriously affected by the pandemic.
The manufacturing industry is an integral element of the global economy, for it significantly contributes to the worldwide GDP. Here, it won’t be inappropriate to focus on the important aspects.
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The COVID-19 started in China where several plants provide raw materials to numerous manufacturing entities spread across diverse regions of the globe. Most of the above plants stopped their operations due to the lockdown. Consequently, the manufacturing industry of the world got bogged down with a severe shortage of raw materials.
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China is the leading supplier of API (active pharmaceutical ingredients) to major pharma companies. Post Corona, this supply got interrupted and the pharmaceutical companies were put to several hardships. But some of these manufacturers and retailers, by concentrating on the manufacture of COVID specific products like masks, sanitizers, ventilators among others were able to offset the negative effects to a reasonable extent.
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The sector involved in the manufacture of food and beverages is facing problems, too. Apart from raw material shortage, panic buying during the early phase of the pandemic also contributed to consumers’ woes. Restarting operations in many countries took time, as pandemic specific adjustments were made.
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The cosmetics manufacturing sector is engulfed by several hardships, as well. The lock-down has led to the closure of the brick & mortar stores and the e-commerce platforms are refusing to sell cosmetic products. These products do not come under “essentials.”
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Similarly, the sector of aerospace is likely to shrink by well over 20% in the current year. This is unsurprising, as practically all flights of the world have come to a standstill.
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The paint & coating industry is also at the receiving end of the recession resulting from COVID. Here again, along with the paucity of raw materials, there is one more reason that has turned out to be the nemesis of the sector. A major chunk of the clients is big industries, which are temporarily closed because of the lock-down. So, with almost zero demand, the sector is in troubled waters.
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The automotive manufacturing industry is among the sectors where the impact of the pandemic is extremely severe. It is expected that normalcy is going to be restored in this sector only after about four years.
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The FDI of the global economy is projected to reduce by more than 10%, as the manufacturing industry has been badly hit by the pandemic.
There is another reason as to why the manufacturing sector is terribly affected. Most of the manufacturing jobs need to be carried out in plants. Work from home is not possible. And, given the risk of infection, asking the workers to be present in factories is unimaginable.
It is highly probable that two more years have to elapse before the worldwide manufacturing sector can regain its position of the pre-pandemic phase.
The economy of the future will not be the same as past. Local supply chains will replace global supply chains. As many pandemics have originated from China and due to its behaviors in the COVID pandemic, many big companies have firmly decided to move their manufacturing outside of China.
It is said that every unpleasant circumstance has a positive side to it. The same holds good for the situations arising from the Corona crisis.
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It is being forecast that in the prevalent circumstances, the process of digital transformation would speed-up in the Worldwide manufacturing industry.
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The sector is going to bring out a strong network consisting of several partners. This shall ensure that the industry will not be caught unawares, in the event of any future contingency.
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Manufacturers have now realized the importance of transferring the data and systems to the cloud, at the earliest.
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Local manufacturing has increased and the importance of having local manufacturing has been realized.