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.

The Need for Change as More Workers Are Called to Return to Offices

The old adage follows that you can’t do what you always did and expect different results. As infection rates ease and pandemic fatigue hits us all big-time, many of us are ready for “normal”. But what is that? A life that looks like 2019 with the same commute, the same office, the same lunch routine, the same happy hours, the same gym, concerts and events at the same venues?

But infectious disease experts say that this won’t be our last global pandemic of an airborne virus. So what then?

Infectious disease experts also agree that there are reasonably accessible ways we can improve public health now and for future cold, flu, or other outbreaks with little or no change in habits by workers and event attendees. These measures include:

  • Ventilation – out with the old air and in with the new air! Even where windows can’t be opened, HVAC systems can be designed to have appropriate rates of fresh air exchange.
  • Filtration – HEPA filters are still the gold standard for air cleaning, but an increasing number of systems also include ultraviolet lights in ducts or at air exchange points to kill viral particles in the air.
  • Hand hygiene – hand washing is never a bad idea.
  • Routine cleaning of frequently user surfaces – while most infectious disease experts believe we have been over-cleaning our buildings given that COVID-19 is airborne, routine disinfecting of high-touch areas such as phones, desks, elevator buttons, bathroom faucets, and community coffee pots contribute to reducing spread of other illnesses.

Plexiglass barriers between certain types of workers – e.g., cashiers, receptionists – and the public may also continue to be helpful as mask wearing eases. Many think of these as the sneeze guards for the modern era.

Freedonia analysts will continue to watch for innovations in building air quality as well as preferences of occupants, builders, and owners to see how our construction elements can contribute to overall worker wellness and productivity.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly Indoor Air Quality Equipment, Global HVAC Equipment, and Nonwovens. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Russian Aggression Toward Ukraine Threatens Metal Supply Chain Issues

As Russia continues to amass troops near its border with Ukraine, the rest of the world waits to see if there will be aggression or a step back. NATO powers have been united in their condemnation of the aggression (though not in the level of material support) and vow to implement crushing sanctions if Russia does follow through with the invasion. 

The economic impact of a renewed war between Russia and Ukraine would be profound, impacting everything from commodity prices and a global supply chain already fraught with issues. The manufacturing sector, for instance, could face serious repercussions from the conflict and “mother of all sanctions” that the US has promised would follow given Russia’s position as a prominent exporter of metals

As Russia is the leading global exporter of nickel and palladium (and is also a major supplier of aluminum, platinum, steel, and copper), these sanctions would have broad effects on a number of industries:

  • automobile production, as palladium is a key component of catalytic converters, copper is used in radiators and electric vehicle production, and aluminum is used in engines
  • electronics, as nickel, aluminum, and copper are used in medical equipment, power generation, mobile phones, kitchenware, and other consumer electronics, which have been in especially high demand following the pandemic
  • industrial equipment manufacturing, which uses platinum
  • others that are extensive users of aluminum, such as can and airplane manufacturers

This is not to mention the supply chain issues that would arise from price spikes related to energy and food, which would also follow an invasion of Ukraine. While NATO has refused Russia’s demand to stop expansion into Eastern countries, it is important to remember that it is not yet a certainty that there will be conflict. 

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Industrial Components, Machinery & Equipment, Automotive & Transport, and Construction & Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Automation & the Changing Workforce: Robots as Employees?

Automation efforts have long targeted simple repetitive tasks in a manufacturing process. Now, more sophisticated sensors and software, including artificial intelligence and analytics, are allowing automation to cover even more tasks, and capital-rich larger manufacturers are benefitting.

But what about smaller firms, many have been producing their components or products in much the same way for decades? Many smaller operators do not have the capital or cash on hand to pay for robotic equipment up front.

Solution: robots as a service.

Many other high tech products – most notably in the security area – have already made significant moves away from buying to leasing, renting, or otherwise paying for technology (equipment and software) on an ongoing rather than up-front basis. This business model allows the customer to leave programming, maintenance, and upgrades to the specialists. It will allow faster diffusion of automation into more businesses that either couldn’t afford to buy it outright or saw the technology as too intimidating or outside their own experience to handle themselves.

Formic is one company offering robots in this way. Customers “pay” the robot an hourly rate in exchange for having these robots in operation.

With the ongoing need to better deploy our resources and our workers for optimal efficiency, along with challenges from a pandemic to  that stress our workforce, the need for automation isn’t going away. The outstanding question is more about how best to do it and where to employ it…and how best to use the workers who shift out of those tasks.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly titles such as Global Off-Road Equipment Technology and Global Material Handling Equipment. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Automation Spurred by the COVID-19 Pandemic: Investments in Meat Processing & Beyond

We first discussed the trend of pandemic-related increases in manufacturing automation in 2020. At the time, meat processing – an industry that has long considered automation inferior to human activity due to inexact cuts and too much waste – was only just considering it and looking into how they could make it happen.

However, machinery innovations through the use of artificial intelligence, sensors, and cameras are resulting in machinery that is both increasingly better performing and less expensive. To that point, recently Tyson Foods announced plans to invest $1.3 billion to automate parts of its production lines over the next three years.

The need to implement automation has been spurred by a variety of challenges:

  • worker protection – particularly the need to space workers out amid high infection rates
  • the need to continue operating when outbreaks occur
  • labor shortages as it becomes difficult to find sufficient staffing for all necessary shifts
  • high demand as restaurants reopened this year and consumer grocery spending remains at elevated levels

Tyson Foods stated that they expected automation will allow them to increase production volumes, produce more reliability, and reduce costs over time. The company expects to automate roles that are more difficult to do and where worker turnover is high.

This is a trend that continues to spread across a variety of other industries as well. For instance, Amazon has invested in robots to help fill orders in warehouses and smart machinery that makes right-sized custom boxes for each individual shipment.

The benefits of investments in automation in this era include:

  • hedging against hiring challenges, when not enough of the right kind of workers available
  • reducing the cost of production in a country or region with high labor rates to become more competitive with other areas as more manufacturers are diversifying their supply chains
  • increasing worker safety, not only in terms of keeping workers spaced out for pandemic productions, but also potentially reducing human involvement in tasks more prone to worker injury, whether repetitive or traumatic
  • improving efficiency as sensor-driven machinery can quickly make customize operations, including shipping container selections for fulfillment firms

Freedonia analysts continue to track the automation trend throughout our coverage areas, searching for key impacts and opportunities for growth.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Food Processing Machinery, Global Packaging Machinery, and Meat, Poultry & Seafood Packaging. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Is This the End for Lean Inventories & Just-in-Time Deliveries? Producers & Distributors Avoided Inventory Buildups During COVID-19 Shut Downs but Many Still Struggle to Catch Up

The just-in-time, or lean inventory, method that spread throughout the world over the past few decades met its match with the COVID-19 crisis. While lean inventory methods help factories, distributors, and retailers minimize costs, they place potential strain on the factories and logistics companies that must make and distribute the goods just-in-time. Avoiding excess inventory and/or carrying costs is one the main principles of JIT systems.

Producers, distributors, and retailers canceled orders amid production shut-downs and sharp shifts in consumer behavior with an uncertain outlook around March 2020. Then consumer shifts to cooking and working from home led to high demand for a wide variety of goods (e.g., items such as toilet paper and flour packaged for retail rather than foodservice, as well as electronics, lawn and garden products, and home improvement materials).

However, the modern global production and distribution system relies on predictability and isn’t built for surprise surges in orders or rapid shifts in demand – it’s more streamlined to deliver a steady level of orders via the “just-in-time” methods.

The fact that the JIT system can’t handle a huge crisis is one of the known drawbacks, but no one expected a large hit to multiple supply chains at once, and any system would face strains in such circumstances. Typical challenges for the JIT system usually involve natural disasters such as hurricanes that results in closed roads and factories for a few days.

However, this era has put unprecedented pressure on the system, after a global pandemic -- and the widespread understanding that this won’t be the last one – and the extended supply disruptions (e.g., hurricanes, polar vortex, floods, factory closures, and a container ship blocking the Suez Canal) and the downstream effects of port backups and trucking delays.

Is this the end of lean inventories? More companies – especially those burned by high profile issues such as computer chip shortages and volatile lumber pricing – are rethinking the process and reconsidering how their supply chains might look going forward. Maintaining larger stocks of inventories might cushion against supply shocks and pricing volatility, but requires investment in warehouse space and related operations and more focus on potential challenges (or a greater tolerance for risk of overbuying or waste).

If JIT required data to get the right supplies to arrive at the right time, so does maintaining enough stocks to hedge challenges without overshooting.

This shift is something that will play out throughout the economy. Freedonia analysts will continue monitoring the effects of adjustments made to supply chains and will continue to consider how future adaptations to logistical processes could work in various industries.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.