What Are the Short- and Long-Term Impacts of COVID-19 on Manufacturing?

This article was originally published in the March 2021 issue of Manufacturing Outlook. For more great manufacturing news, reports, and insights delivered right to your inbox every month, subscribe to Manufacturing Outlook. Click here for your free subscription today.

by Emily Newton

At this point, it’s clear the COVID-19 pandemic will mark the end of one era and the beginning of another. Industries like manufacturing have had to make significant adjustments and won’t likely return to normal when the pandemic fades. The manufacturing challenges that arose in 2020 highlighted the sector’s shortcomings and could force it to change for good.

In some areas, COVID-19 has merely accelerated a trend that was already growing. In others, it has and will continue to inspire manufacturers to reverse course. The sector faces a period of substantial change, and mostly for the better.

Some of these COVID-19-inspired shifts will only last through the short term, but others will long outlast the pandemic. While some difficulties will go with the virus, others have revealed more severe, deep-seated manufacturing challenges. These, in turn, will inspire more lasting changes.

In a recent survey, 30% of Asian manufacturers said they struggled with worker availability, and 41% dealt with steep demand drops. In light of a diminished workforce and needed flexibility, automation looks more enticing than ever.

The short-term advantages of increased automation are obvious. Manufacturers can maintain production levels with fewer employees in the facility. By placing cobots between workers, they can also sustain social distancing. As the pandemic begins to fade, though, the way companies use automation will start to shift.

Since 15% of U.S. adults have lost their jobs because of the pandemic, businesses won’t seek to replace human positions with robots. Instead, they’ll prefer cobots over robotic replacements, using automation to bring out the most in their workers. Automation is more productive, but humans are more flexible, and the pandemic has highlighted the need for both.

Reshoring and Near-Shoring
Before the pandemic, offshoring was the norm for U.S. manufacturers. In 2018, China alone accounted for 28.4% of global manufacturing output, largely thanks to offshoring. As disruptions in the international supply chain resulted in manufacturing challenges amid the pandemic, this trend has reversed.

Differing levels of severity in pandemic outbreaks and responses between nations led to unexpected disruptions. In light of these setbacks, many manufacturers will start to reshore or near-shore to prevent similar incidents in the future. Keeping manufacturing centers closer will enable companies to react to any disruptions faster and avoid complications with cross-border shipping.

Reshoring will also help bring jobs back to a recession-stricken America. As of 2018, manufacturing accounted for 16% of the global GDP, representing a significant potential source of employment. By bringing manufacturing facilities back to America, companies could help employ out-of-work professionals and revitalize the economy.

New Health Standards
One of the most significant immediate effects of COVID-19 on manufacturing is the emergence of new health and safety protocols. The Centers for Disease Control and Prevention (CDC) has recommended steps to minimize exposure risk among workers, and many states have made some of them mandatory. Manufacturers have had to reorganize workflows and scheduling to account for them.

As vaccines roll out and the pandemic fades, some of these short-term regulations will disappear. It won’t be the end of new health standards for the manufacturing industry, though. The rapid spread of COVID-19 in workplaces has highlighted the need for better health and sanitation practices.

Procedures like using cobots to space workers out will likely continue after the pandemic, as they’ll prove effective against diseases like the flu, too. Manufacturers may also continue to enable contact tracing systems to reduce the spread of other conditions. These practices will keep employees healthy and prevent lost productivity from sick days, so the industry will likely maintain them.

Supply Chain Changes
Before the pandemic, many companies were moving towards a culture of lean manufacturing. This approach, which minimizes waste as much as possible, worked well while the global supply chain ran undisturbed. But as facilities started to slow and shut down, 98% of U.S. companies said they experienced supply chain disruption.

In line with lean manufacturing, many of these facilities had little to no surplus inventory on hand. Consequently, their supply chain disruptions led to further delays, leaving them in an increasingly difficult position. In the post-COVID-19 world, many manufacturers will turn away from lean manufacturing, having learned this lesson.

While some companies may overcorrect, most will move towards a hybrid solution. They’ll move away from just-in-time manufacturing but will still keep the surplus low. Many will diversify their sourcing so they can become more flexible and adapt if one source faces disruption.
Industry 4.0 and Cybersecurity

Technology has emerged as an answer to many manufacturing challenges that arose amid the pandemic. An IoT-equipped supply chain provides greater visibility, automation helps account for worker shortages, and so on. Experts predict that manufacturing will experience five years of technological innovation within 18 months in response to COVID-19.

As manufacturers embrace digital transformation, the need for cybersecurity in the industry will skyrocket. In the short term, as companies struggle with tightened budgets, they may not seek to implement new security infrastructure. As they start to recover, though, cybersecurity will account for an increasingly substantial portion of manufacturers’ budgets.

Manufacturers are already at risk when it comes to cybersecurity. A recent survey found that fewer than two-thirds of manufacturers have any cybersecurity program. As they move further into Industry 4.0 and cyberattacks become more prominent, this trend will finally reverse.

Remote Work
The pandemic spurred a work-from-home revolution in many industries. In April 2020, 51% of American workers worked remotely full-time, with another 18% doing so some of the time. For most manufacturing workers, this was a luxury they didn’t have.

Manufacturing is a hands-on job, so most workers in the industry can’t work remotely, at least not yet. Office employees in manufacturing companies can and will take advantage of this movement. In the short term, these workers will operate from home more often, but the trend won’t end there.

In the long term, manufacturers may adopt remote technologies. With machines that employees can operate remotely, likely over 5G connections, manufacturers could let line workers work from home if necessary. This technology is already possible, and as the pandemic highlights the benefits of remote work, the industry could start to implement it more widely.
Manufacturing Won’t Be the Same After COVID-19

The COVID-19 pandemic will serve as a turning point for manufacturing. As the virus fades over the next few years, the industry will transform, becoming more flexible and safe. The pandemic has revealed how traditional ways of doing things create manufacturing challenges, and some companies learned these lessons the hard way.

COVID-19 may have wreaked havoc on manufacturing, but it also gives manufacturers a chance to improve and rebound. As the industrial world recovers from the virus and its effects, it will emerge more resilient than ever.

Emily Newton is a technology and industrial journalist. She is the Editor in Chief of Revolutionized.

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