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.

Forklift Market in North America Weathers COVID-19 Storm

The Industrial Truck Association noted that although forklift sales in North America were down 5.1% from the strong 2019 figure, the forklift segment of the materials handling equipment market still exceeded expectations in 2020.

The COVID-19 pandemic had a major impact on North America’s manufacturing, trade and distribution, construction, and mining sectors A wide range of companies greatly reduced spending on forklifts and other material handling equipment as economic conditions deteriorated, restrictions on businesses were put in place, and international trade declined during 2020. In the face of changing economic activity, industrial enterprises, warehouses, construction firms, and other operators delayed strategic investments and the opening of new facilities, further reducing North America’s forklift needs.

On the other hand, forklifts are essential for the standard operations of many companies, so the region’s replacement needs moderated losses. In some cases, the pandemic provided opportunities to suppliers of fork lifts and other material handling equipment:

  • The onset of the COVID-19 pandemic boosted demand for a variety of goods sold via e-commerce. To meet that need, Amazon and other companies added warehouse and fulfillment spaces, which required the purchase of new forklifts and related equipment.
  • The vaccination campaign resulted in the construction of new specialty warehouses and the purchase of additional forklifts in order to facilitate the transportation of vaccines at a variety of sites.

The Industrial Truck Association notes that the material handling industry is poised for a strong 2021 having weathered the COVID-19 storm.

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

  Covid-19      Machinery & Equipment    

Biden Administration to Investigate Global Supply Chain Issues

On February 24, US President Joe Biden signed an executive order mandating that federal agencies conduct a 100-day review of critically important supply chains, as the COVID-19 pandemic has raised focus on issues regarding access to certain products and materials generally sourced from abroad (and particularly those from China).  The review will focus specifically on four items, some of which have faced supply chain problems even before the pandemic:

  • Semiconductors:  Access to these chips, which are used for multiple purposes in motor vehicles and also are essential components of iPhones, personal computers, smart TVs, gaming systems, and more, increasingly became a problem during the pandemic. As remote working became more commonplace, demand for these chips increased greatly to accommodate the need for more personal computers and laptops. Additionally, trade restrictions placed on imports from China also caused difficulties, as many of China’s leading chip manufacturers had export restrictions placed on them by the United States. Additionally, some of these companies claim plans to expand manufacturing to the United States have been hindered by national security concerns raised by the Committee on Foreign Investment in the United States (CFIUS), due in part to the possible military applications of these products. The US-based Semiconductor Industry Association claims that the US’s share of global semiconductor manufacturing has fallen from 37% in 1990 to 12% today, and US manufacturers are pushing the White House to work with Congress to provide investment that they claim will support research and design operations and to increase domestic semiconductor production.
  • Pharmaceuticals: Shortages in certain drugs during the pandemic has also prompted a deeper examination into the pharmaceutical supply chain. A combination of increased demand for drugs to address the rising number of hospitalizations and the shutdown or slowdown of some international shipping ports led to key shortages. There are also concerns about being too reliant on China for key pharmaceutical ingredients, which has doubled over the last decade
  • Electric vehicle batteries: Global manufacturing of electric vehicle batteries is currently heavily concentrated in China, with Japan and South Korea ranking numbers two and three leading manufacturers, and the US back at number six, according to a report from S&P Global. With major US automobile manufacturers increasingly focusing on electric vehicles – including General Motors, which has announced that it intends to phase out all gas-powered vehicles by 2035 – reliable access to these batteries will be crucial in the coming years. 
  • Critical minerals: Rare earth minerals are used in a wide variety of applications, including airplanes, steel, light bulbs, wind turbines, and many more. Supply chain issues for these minerals long predate the COVID-19 pandemic, as China is the leading global producer of rare earth minerals. This problem of production being so heavily concentrated in a single country has been intensified by some of the Chinese government’s behavior in the past, including a brief restriction of rare earth exports to Japan in 2010 in response to a dispute in the East China Seas. These concerns have led to increased efforts from the rest of the world to ramp up rare earth mineral production, which has lowered China’s share over the last decade from around 98% down to 63%. In a continuation of efforts from the Obama and Trump administrations, Biden’s executive order will examine means of addressing weaknesses in the rare earth minerals supply chain. This will likely include both strengthening the US rare earth mineral industry and transitioning reliance on imports to countries with whom the US has friendlier reliance – primarily meaning a transition away from China.

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.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Metals      Packaging      Plastics & Other Polymers      Tariffs      Textiles & Nonwovens    

Challenges Await to Biden Administration’s Made-in-America Push

The Biden administration has expanded on the “Buy American” trend pushed by the Trump Administration by signing the “Made in America” executive order, which, among other things, called for:

  • increasing the cost saving threshold required for federal contracts to purchase from non-US suppliers
  • stricter enforcement of existing Buy American policies, including closing loopholes that allowed companies to offshore manufacturing while continue to qualify for domestic preferences, for example by having 51% of a product’s materials sourced domestically

The goal of these policies is to ensure that taxpayer-funded federal spending is used to invest in domestic manufacturing, create US jobs, and strengthen national security. However, these policies are likely to face challenges – particularly in the short term – such as:

The impact of the Made in Executive order has the potential to become far more substantial should the Biden administration be able to sign into law vast infrastructure and/or energy bills, which would vastly increase the amount of federal spending impacted by the new regulations.

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.

Future of Food Delivery: Foodservice & Grocers Using Smart Refrigerators

The coronavirus pandemic continues to change the way we get our food. More consumers want easy contactless grocery shopping. Many also desire customizable on-demand fresh offerings featuring high-quality ingredients, but with a contactless payment and pickup experience. In The Freedonia Group National Online Consumer Survey (conducted November – December 2020), 54% of respondents indicated that they were more concerned about food safety and germs transmitted during food delivery because of the coronavirus pandemic.

The next generation of food business plans are using smart refrigerated equipment to not only meet consumers where they are but to also fulfill their demands for a seamless, convenient, and contactless transaction:

  • Sally the Salad Robot from Chowbotics has been seeing increasing installations, first designed as a vending machine replacement in healthcare settings, but now replacing salad bars in grocery store chains (e.g., Heinen’s and Piggly Wiggly).
  • Smart, temperature controlled pickup kiosks are rolling out in a few grocery stores for click-and-collect operations, designed to ease collection and staging operations as well as to potentially place pickup locations away from grocery stores themselves.
  • Being able to offer meals off-premises and close to customers is the driving force behind start-up Alvo as it places smart refrigerators stocked with prepared meals in apartment buildings. After initially installing the refrigerators in office buildings, the firm shifted during the pandemic to residential placements to meet customers where they are.
  • In contrast with Alvo, Farmer’s Fridge has concentrated on offering its smart fridges stocked with salads, oat bowls, and other healthier food options in offices, airports, and hospitals. More recently, the company announced it would debut as a pilot project in select Dunkin’ restaurants in Chicago and New Jersey.

Expect to see continued development as grocers and foodservice vendors seek to make click-and-collect more efficient, to reduce worker time and make the experience more frictionless. Commercial refrigeration and vending machine companies will continue to innovate to fit that market need.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Foodservice, Foodservice Single-Use Products, Global Foodservice Single-Use Products, Retail Bags, Protective Packaging, Commercial Refrigeration Equipment, and Global E-Commerce Packaging. Related reports from our sister publisher, Packaged Facts, include Food Carryout & Delivery, Food Carryout & Delivery: Special COVID-19 Consumer Insights, Consumer & Corporate Food Gifting in the US, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Machinery & Equipment      Services    

It’s Not a Game: Chip Shortages Stall Auto Industry Recovery

The global auto industry, like most manufacturing sectors, was hit hard in the early months of the pandemic in 2020, with plants closing and sales plummeting. However, sales picked up faster than expected, and as 2021 approached, the promise of new vaccines and global economic improvement provided hope that industry growth would accelerate.

However, auto producers worldwide are now having to slow or stop production again due to a shortage of computer chips, which could have a ripple effect throughout the automotive supply chain.

Motor vehicles are increasingly driven by electronics, but auto production is just one outlet for semiconductor chip producers, whose businesses are increasingly driven by consumer electronics and the dispersion of smart technology. As auto production dropped dramatically in early 2020, chip suppliers switched their focus to producing chips used in gaming systems, smart phones, laptops, and other products high in demand by consumers forced to stay at home. When auto producers ramped up output again, chipmakers began to have trouble meeting demand, creating a challenge that is expected to continue well into 2021.

Will a shortage of chips halt the global auto industry recovery? According to Thomas Bowne, Chief Economist at The Freedonia Group, the impact on total annual output expected for 2021 will likely be negligible. “The market allocation by price mechanism is a wonderful thing. The ‘shortage’ of chips will result in motor vehicle manufacturers perhaps having to spend more than they budgeted for motor vehicle production in the short term. But as global motor vehicle demand bounces back in 2021 and production increases accordingly, chip manufacturers, seeing a good opportunity for higher profits, will likely switch course to meet that rising demand in the motor vehicle segment.”

Healthy motor vehicle production is essential to the outlook for growth in many other industries worldwide, including those that produce components such as batteries and filters, as well as coatings, adhesives and even items like professional power tools used on manufacturing lines. Automotive applications account for a large share of demand for many of these products. For example, the industry accounts for over a third of all demand globally for both batteries and filters. 

For more information and a discussion of market opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research related to the auto industry, including Global Batteries, Global Filters, Paint & Coatings, Global Thermoplastic Elastomers, Global Polyolefin Elastomers, Global Adhesives & Sealants, and Power Tools (an update of Global Power Tools is coming soon). Freedonia Focus has also recently published Electronic Components: United States and an update of the Semiconductors: United States report is coming soon. Freedonia Custom Research is available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19      Machinery & Equipment