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.

Supply Chain Challenges

Conditions in 2019 and 2020 – from the trade wars and various tariffs applied globally to COVID-19-related workforce reductions, production stoppages, and border closures – have put international supply chains front and center.

30% of companies report considering changes to their supply chains, starting with short-term alternative sourcing options and moving on to relocations, onshoring, supplier diversification, and other more long-term ideas.

The longer the coronavirus crisis lasts, the more companies are likely to consider changes, big and small. The trade war with China got the ball rolling; the coronavirus will provide additional incentives to make adjustments.

For more information, see The Freedonia Group’s catalog of global reports covering machinery and heavy equipment industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Machinery & Equipment    

Flexibility: That’s the Key for Manufacturers

Manufacturers are seeing supply chain disruptions, changing demand patterns, and staffing crunches due to social distancing and illness.

As a result, some are using available capacity, materials, and skill to redirect. For instance, in the UK, the Department for Health and Social Care sent specifications for how to make ventilators to more than 60 manufacturers, including motor vehicle and aerospace firms such as Rolls-Royce, Airbus, Jaguar Land Rover, Honda, and Ford. Many of these firms had already reduced or curtailed their regular production operations due to reduced demand or challenges accessing key components.

Companies are being asked produce components or to make staff available to assist specialist firms, and to shift their own production capacity, if possible.

The challenge is that these vital pieces of equipment are complex machines that are produced under strict safety regulations. However, specialist manufacturers, engineers, and government agencies are working out a basic, functional version that is cheaper and easier to produce.

It typically takes 2-3 years for a ventilator to pass regulatory muster and be approved for use. However, specialists could work with auto manufacturers and others that have advanced manufacturing facilities to adapt their operations to suit current designs.

Manufacturing firms have long used joint ventures to adapt to changing conditions, improve technological capabilities, and expand production capacities. Companies will need to dive into such operations in more depth. Considering how current capabilities align with the needs of other businesses and how current needs in industry and health align with their operations would be the way to start.

For more information, see The Freedonia Group’s extensive catalog of off-the-shelf research. Each report includes analysis of competitive strategies, including joint ventures and merger and acquisition activity. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19    

Short Term Effects of Coronavirus COVID-19 on the Global Pharmaceutical Industry

The rapid spread of the coronavirus (COVID-19) is projected to continue through the third quarter of 2020 or longer and have a mixed impact on the pharmaceuticals industry. 

During the pandemic, individuals will continue to take prescription and over-the-counter medicines to treat their various health problems and needs. In fact, medication consumption will likely rise, both because of patients taking medications to treat the symptoms of COVID-19 and because the virus imposes pressures on the primary healthcare system and inhibits the access to hospitals and physicians for elective procedures.

However, the supply side faces its own challenges.

  • On March 3, India issued restrictions on the export of 26 active pharmaceutical ingredients (APIs) and the medicines and vitamins made from them, certain antibiotics, the hormone progesterone, and vitamins B12, B1 and B6. This was due to reduced stockpiles of key ingredients sourced from China and the inability to get more. The US and Europe rely on supplies from India.
  • By March 13, suppliers noted that supplies were returning, as import shipments have resumed, with airlifts in the case of high-value ingredients. Still, the restrictions remain in place, with the option to apply for a waiver.
  • China is also a key supplier to the US. US officials are considering ways to increase domestic capacity of such drugs. Others are at least considering ways to diversify supply chains. Still, the need for regulatory oversight makes changes expensive and time consuming.
  • Additionally, US production facilities themselves could be closed or capacity could be temporarily redirected to items crucial to either treating or limiting the spread of COVID-19.

Supply shortages appear to be largely a short-term issue. Though it could encourage production of APIs outside of China, there are a number of issues relating to raw material availability, expertise (or lack thereof), logistics, and government regulation. As a result, changes in supply will have a very slow transition and may not actually shift much in the long run.

For more information, see The Freedonia Group’s Global Pharmaceutical Packaging and US Pharmaceutical Packaging studies, with additional coverage from Freedonia Focus (Pharmaceuticals: United States) and our sister publisher Packaged Facts (Pet Medication in the US). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Covid-19      Healthcare & Life Sciences    

What Does It Look Like On the Other Side of “Social Distancing” & Closed Businesses

As we’re all facing or currently operating in conditions of remote work, closed restaurants, limits on large gatherings, and curfews, many start to wonder: what does recovery look like?

The Freedonia Group is based in Ohio, where restaurants and bars closed on Sunday night, K-12 schools closed on Monday, colleges are doing remote learning, the primary election was postponed, and waterparks, movie theaters, and gyms closed as well. Other states are following suit, based on recommendations from the Center for Disease Control.

The Freedonia Group also has an office in Beijing. Reaching out to colleagues there, we find that people are returning to work, but in limited numbers so that people are still not gathered in large groups or in close quarters. Health inspectors make period appearances to ensure that people are not sitting too close together and are wearing the mandated masks.

A number of retail outlets are still closed, as there are few customers out in malls and shopping centers. Reservations are sometimes needed for public transportation to restrict the number of people at given stations.

Some goods – particularly marks – are still in short supply and customers need an appointment to get an opportunity to buy them, kind of like trying to buy tickets for a hot concert. Prices of in-demand goods, including personal electronics like tablets and laptops that enable remote education and work, are up and not likely to see any sales for the foreseeable future.

China is several weeks ahead of the US in terms of development of and recovery from COVID-19, so it seems that the return to normal will likely come in stages and not happen overnight.

For more information, Freedonia Custom Research is available for questions requiring tailored market intelligence.

  Covid-19    

Industries That Have Grown & Still Present Opportunities in China & Elsewhere Due to the Coronavirus Crisis

Despite closures elsewhere, opportunities for market expansion exist in technology and hygiene:

  1. Online Shopping: In addition to the major online retailers – Taobao and JD – local supermarkets are also starting to operate their own website or apps. They can deliver within two hours, faster than the major retailers because these are often closer to the shoppers’ homes. 
  2. Online Education: Most children didn’t previously take online courses, but now it is all online for the time being. However, parents are concerned about eye strain and the difficulty of learning, as children might be less focused when they don’t have face-to-face contact with teachers. Even subjects like sports, piano, dancing, and drawing – which aren’t considered typical avenues for online learning – are being taught remotely because there is no other option. In many cases, different apps are required for each course, which could lead to greater adoption on a permanent basis, particularly for electives and tutoring that takes place outside of school hours.
  3. Electronic devices (e.g., tablets, laptops, desktop computers) are needed by remote workers and students alike. Families that previously had only one such device to share now find that they need more or versions with larger screens so that the children can study at the same time the parents work.
  4. Online payment: Consumers are encouraged to avoid using cash for the time being because it might carry the coronavirus. Plus, with contact-free deliveries, payment must be made remotely rather than be given to the delivery person. Even older generations are learning how to use these options. This might be the nail in the coffin for cash among many younger people who were already preferring credit/debit cards and mobile payments.
  5. Hygiene Products: Hand soaps, face masks, wipes, hand sanitizers with at least 60% alcohol may see just a short-term increase, but the virus may also cause consumers to develop new habits, as is what happened in areas that were hard hit by SARS.
  6. Medical products, especially forehead/ear thermometers: With increased vigilance, consumers and various businesses and public agencies are checking workers and visitors on a regular basis. These products are more hygienic and faster for testing a lot of people, and are therefore poised to see fast growth.

For more information, see The Freedonia Group’s Industrial & Institutional Cleaning Chemicals, Global Nonwovens, and Global E-Commerce reports, as well as information from our sister published Simba Information (e.g., Electronic Education Report Newsletter). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Healthcare & Life Sciences      Textiles & Nonwovens