As the full impact of the coronavirus sets in, our daily updates to manufacturing utilization have become an ever more useful item in the toolkit of manufacturers and economists in gauging the true effects of the economic shutdown on manufacturing. The Wall Street Journal likens what policy makers are doing to putting the economy in a medically-induced coma and providing life support a la fiscal and monetary stimulus.
Even when in a coma, the economy, just like a person, must retain certain vital functions. A person’s autonomic and parasympathetic nervous system needs to still function, supported by various life-support machinery. And our society must retain certain vital functions as well, like feeding our people and providing support to the sick and infirm. You can see this in your daily routine - places that provide basic sustenance (grocery stores, farms, pharmacies) and life-preservation functions (hospitals) remain open, while virtually everything else remains shuttered and given a lifeline by state and federal government in the form of loans/grants to float them by during these trying times.
Companies that contribute to the supply chain for these vital products and services also remain open. Manufacturing constitutes the genesis of that supply chain - manufacturers create all physical products you see - including the ones that will get us out of this whole debacle. The manufacturing community and our customers have stepped up to the plate, re-tooling to produce ventilator components and other necessary medical devices, in addition to assuming workloads from companies in harder-hit areas with worker shortages.
We are proud to support both our customers during this time through providing our combined internal knowledge on manufacturing as consulting services, and even to our non-customers that contribute to this vital supply chain with free remote monitoring so they can spend more time with their families and loved ones, and still have visibility and control of their operations.
Since our last blog-update (March 21st), there have been several notable trends. Most importantly, the decline in utilization seems to have leveled off, for now, due largely to manufacturers re-tooling and responding to demand for necessary life-support equipment.
We saw a relative 17% decline, or ~5% absolute decline, in utilization during the month of March, from ~30% to ~25%. It appears as if a stabilization has occurred starting on March 28th. This is the day the US surpassed China as having the most coronavirus cases in the world, the House approved a $2 trillion dollar stimulus package, and hospitals really heightened their alarm for ventilators and PPE. These elements may have driven some manufacturers to choose to re-tool rather than shut down in the days leading up to the 28th.
Digging deeper into this by industry, we validate the data corroborates our theory amongst our customer base. There was a marked increase in utilization from the Automotive segment and Industrial Machinery segment around the end of March, as they prepare to re-tool to manufacture medical components. This has partially offset the continued decrease we see in Aerospace & Defense, as Boeing and other major manufacturers continue to struggle. Medical device manufacturing, unsurprisingly, continues to rise and is now our highest-utilization industry as of March 31st, historically being in 3rd place.
Note that industry breakdowns do not have large enough sample size per vertical to claim this reflects broader industry trends. We merely claim these trends hold true for MachineMetrics customers.
As our insights have gained more attention over the past few weeks, we realize we are in a unique position to provide live-updates for broadly interested audiences on trends in manufacturing. As such, we have also received many inquiries on our methodology and our data sources. I will attempt to provide a brief answer to those here.
5. Are there any particular assumptions or quirks with the data or methodology we should know about? Yes, there are several.
As we make our way through the biggest pandemic in a century as a nation, it is important that we as a manufacturing community continue to support each other. We have confidence that manufacturing will recover, and we believe our live updates to data will help inform policy-makers and manufacturers of the true state of the industry.
We wish you the best in these times, and please don't hesitate to reach out to us with any questions.
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