Global Supply Chain Disruptions: Fabricators and COVID-19
April 22, 2020
There are numerous advantages to connecting to the Global Supply Chain: attractive pricing, economies of scale, a variety of suppliers to choose from, etc. So many U.S. companies have taken advantage of the situation that it has almost become a normal business practice. But the entire concept has suddenly come into serious question due to the “Black Swan” that is COVID-19.
A black swan is an event that is unexpected, unknowable and has potentially severe consequences. When the phrase was coined, black swans were presumed not to exist. The importance of the metaphor lies in calling to our attention the dangers of the unforeseen. It is hard to think of a better example that the swift spread of the Coronavirus and how it has impacted standard business.
The Situation Now
As this post is being written, the result of the COVID-19 pandemic is unknown. We do know that since its beginnings, supply chains all over the world have been seriously disrupted as the authorities attempt to deal with the spread and to help those affected. It is not an exaggeration to say that the effect on the American economy and its small businesses has been catastrophic.
As fabricators, there some actions we can take. In most states, metal fabricators have been designated essential business entities because of the end products our parts are consumed in. First and foremost is addressing the safety issues of our employees. Our situation is unique in that a manufacturing workforce obviously cannot work from home. But measures such as staggered shifts, additional sanitation stations and education on proper hand washing techniques can help. In addition, mandatory social distancing, mask and glove wearing, and preemptive temperature checks are all things fabricators can do to mitigate risk. Where possible, an adjustment of sick leave benefits can also alleviate stress on the part of workers. This effort is being helped put forth by various short-term grant and loan programs by the federal government.
The second action we have already undertaken is to continue domestic consumption of raw materials and partial part components. Many U.S. manufacturers are picking up some of the slack for shortfalls in the global supply chain and have continued production throughout the entire pandemic.
Fabrication companies with full in-house machining operations are also well positioned to create components further upstream than before. They have an opportunity to repurpose any equipment to assist with and integrate them seamlessly into the flow downstream of particular components.
This may seem to be the “new normal” for North American fabricators. But a word of caution. As the COVID-19 story continues to play out, new developments may call for additional improvisation. Companies who continue to innovate and provide value in the post virus economy will certainly reap the rewards.