US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Pallet Manufacturers Considered To Be Essential to Nation’s Infrastructure

Many US consumers are faced with conflicting messaging – assurances from suppliers that there is sufficient product to meet demand, yet empty shelves at grocery stores and other retail outlets across the US. For a number of goods, the main issue is getting product from the manufacturer to the warehouse to the retail outlet. While there are a number of factors that can delay the shipment of goods, a shortage of pallets – used to safely carry numerous cargoes across the US – would be disastrous to the logistic needs of the nation.

Cognizant of this, the Cybersecurity and Infrastructure Security Agency (CISA) has included pallet manufacturers and distributors on its list of “Essential Critical Infrastructure Workers” that the nation needs to ship food, medical supplies, and other needed goods to consumers across the US. Indeed, as US Food and Drug Administration regulations generally require pharmaceuticals and medical products to be shipped on virgin, or newly made, pallets to minimize the risk of cross-contamination, it is necessary for pallet manufacturers to maintain – if not expand – production over the few weeks as respirators, masks, surgical gowns, and other items are transported across the US.

For more information, see The Freedonia Group’s coverage of the Pallets industry. Freedonia Custom Research is available for questions requiring tailored market intelligence.

  Covid-19      Machinery & Equipment      Packaging    

What Exactly is “Essential”?

As the COVID-19 crisis continues, state governors are beginning to mandate broad closures of private “non-essential” workplaces. Businesses such as grocery stores and pharmacies are obviously considered necessary to operate and are exempt.  But beyond that, how do you determine what businesses are “essential”?

This week, the American Chemistry Council penned a letter arguing that chemical and plastics manufacturing is an essential business that needs to be maintained throughout the crisis. While this seems questionable on its face, the group has a point – cleaning products and hand sanitizers are products of chemical manufacturing, and plastic materials are used in all sorts of essential medical products.

Additionally, others – like the steel industry – are making the case that manufacturing that would be difficult or costly to restart should be deemed essential. Still, some firms are voluntarily closing when a staff member is found to be infected.

This just goes to show the definition of “essential” is extremely hard to parse, given the interconnectedness of the economy and daily life. But one thing we can hopefully all agree on – despite all the time we are spending at home now, video game retailers are definitely not essential. Sorry, GameStop.

For more information, see The Freedonia Group’s extensive off-the-shelf industry coverage. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19    

How Movie Studios Are Reacting to the COVID-19 Pandemic

States are taking a variety of steps to help curb the spread of COVID-19, from limiting the size of public gatherings to shutting down movie theaters and other entertainment spaces. This has caused the nation’s two largest theater chains, Regal Cinemas and AMC Theaters, to temporarily shut down all of their theaters in the US.

Unsurprisingly, theater closures are bad for business for the nation’s movie studios. Theatrical releases are scheduled up to a year in advance, and theaters are the main revenue generator for movies that cost hundreds of millions of dollars to produce and market.

Some studios have opted to delay releasing big-budget films until later in 2020, with the hope that the COVID-19 pandemic will be contained and consumers will feel more comfortable congregating in theaters again. NBCUniversal, however, is taking a slightly different approach. In addition to delaying some its releases, the studio also announced that it would release select movies as a digital rental, priced at $20, at the same time as or recently after its theatrical release.

Granted, the movies that NBCUniversal has selected so far are not among its biggest revenue generators, so the risk of lost sales is not as large. However, for an industry that has long resisted altering its business model even as consumers have changed how they view most of their entertainment, this shift is significant and could have a long-term impact on the theaters that support movie studios’ revenue.

Basically, businesses must address this uncertain environment by considering how they can continue to reach and serve customers, even if they have to use avenues they had previously resisted.

For more information see Freedonia Focus’ Motion Pictures & Video: United States and Recreation: United States reports. Freedonia Custom Research is available for questions requiring tailored market intelligence.

  Covid-19      Freedonia Focus    

Decline in New Home Construction Can Affect Multiple Industries

Reports that coronavirus will cause a slowdown in new home construction could have a severe impact on a number of construction-related industries across the US. In addition to the economic disruption caused by the temporary layoff of the thousands of employees who erect America’s homes, a steep decline in home building would also affect such industries as:

  • lumber mills that supply the wood products intensively used in home construction across the US
  • plants that supply prefabricated components – such as roof trusses and wall panels – that are increasingly being used to speed up construction
  • fastener manufacturers, many of whom were buffeted by the imposition of tariffs on metal imported from China, when they often used to make nails, screws, bolts, and other fasteners
  • producers of the many items need to finish a home: roofing, siding, flooring, plumbing products, drywall, cabinets, countertops, and wiring
  • landscapers and garden supply firms that provide and lay down the lawns and outdoor spaces cherished by homeowners
  • concrete suppliers who pour the foundations and slabs on which homes are erected

For more information about these industries, see The Freedonia Group’s coverage of the Building and Construction Industries.


FDA Suspends Routine Surveillance Facility Inspections; Quality To Be Maintained

On March 18, the US Food & Drug Administration announced that it would be suspending all domestic routine surveillance facility inspections in order to assist in limiting the spread of the COVID-19 virus. For-cause inspections will be evaluated on an individual basis. Earlier in March, the agency had already postponed most foreign facility inspections through April, keeping only inspections deemed mission-critical, a status that will be considered on a case-by-case basis.

The FDA notes that facilities will still be subject to reporting requirements and should engage in Current Good Manufacturing Practice requirements covering sanitation, processing controls, and controls pertaining to food safety hazards. Facilities will continue to be evaluated on that reporting. The FDA notes that the violation rate on such inspections in the previous fiscal year was only about 5%.

Although 47% of consumers who responded to The Freedonia Group’s National Online Consumer Survey indicate that they worry about foodborne illness, 49% of consumers indicate that they trust that products available for sale are likely to be safe. This attitude shows that consumers tend to place much of the onus of food safety on the corporations and government agencies that regulate the food supply. Food suppliers need to assure consumers that this change will not affect food quality at a time when consumers are particularly aware of their health.

For more information, see The Freedonia Group’s Meat, Poultry, & Seafood Packaging, Global Food Processing Machinery, and Food Safety Products, with additional coverage available from our sister publisher Packaged Facts’ food & beverage industry coverage. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Machinery & Equipment      Packaging