Harbour Results Announces Results From Second COVID-19 Study
Harbour Results, Inc., (HRI) conducted its second of three studies to better understand how the COVID-19 pandemic is impacting small- to medium-sized manufacturers, both production and tooling.
Harbour Results, Inc., (HRI) conducted its second of three studies to better understand how the COVID-19 pandemic is impacting small- to medium-sized manufacturers, both production and tooling. The results show that every industry and every manufacturing process has been impacted. However, unlike the April study, all shops surveyed are open and operating at some level.
On average, shops surveyed predict a 25% drop in revenue from the original 2020 forecast. Die builders and die casters are expecting the most significant drop followed by stamping, molding and mold builders. The industry experiencing the highest level of impact is automotive with an operating level of 33% and, on average, automotive shops have laid off 29% of their workforce. This is an improvement from the April study results, which indicated the automotive industry was at an operating level of 28% with 41% laid off.
“Even though the manufacturing industry is operating, it is not out of the woods. There are a number of challenges shops will face in the remainder of 2020 and 2021, so strategically managing resources required to build capacity and meet customer needs will be increasingly more critical,” says Laurie Harbour, president and CEO, Harbour Results, Inc. “In our study, 35% of tool shops and 47% of production shops indicated they are struggling or concerned about the future. This tells me not all shops will survive this crisis. We know there will be a dip in production across all sectors, so shops need to develop business plans that account for best, worst and likely scenarios.”
As shops look to ramp up operations, operating cash will continue to be critical to maintain viability. In the May study, more than half of shops indicated that they had less than six weeks of cash on hand with 67% of tooling and 56% of production shops experiencing payments being stretched or negotiated. Additionally, 32% of respondents were not modeling 13-week cash flows.
One consideration for cost containment are voluntary and strategic layoffs. The second study indicated that all shops have implemented some level of temporary layoffs and 92% plan to retain their workforce. Additionally, 98% of shops applied for the federal funding (PPP or EIDL loan or CEWS) to support retaining staff.
As a result of the COVID-19 pandemic, many companies are looking to reshore work in an effort to better manage their supply chain and eliminate risk. Nearly 50% of North American tooling shops are quoting on programs historically produced in China and 34% of production shops are increasing North American sourcing.