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.

Expanding Range of Manufacturers Declared “Essential” Shows Importance of Construction Industry to Nation

April 2, 2020 - The US Department of Homeland Security issued revised guidelines as to which firms could be considered “essential” and thus could remain in operation during the COVID-19 pandemic. Among the firms specified by the DHS were those involved in the production of:

  • cabinets
  • windows and doors
  • plumbing products
  • heating, ventilation, and air conditioning (HVAC) equipment
  • paints and coatings
  • store fixtures
  • appliances

This revised guidance as to what is considered to be essential demonstrates the continuing importance of the nation’s construction industry, even in times of crisis. The US faces a shortage of affordable housing units and – in many areas – will require additional medical facilities to treat those affected by COVID-19 and other ailments.

By declaring that firms manufacturing those items used in homes, medical facilities, and other structures, the US is signaling its commitment to ensuring that the US will not only continue to fight coronavirus but also to ensure that the economy – once the pandemic ends – can return to normal as quickly as possible.

For more information about the US cabinets, windows and doors, plumbing, HVAC equipment, appliances, and paints and coatings industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.


The Defense Production Act & Recasting Manufacturing Capacity For Ventilators

In a time of lean manufacturing and just-in-time operations, there are often limited stocks available for supply chain crunches or other sudden shifts in demand. So on Friday March 27, President Trump used the Defense Production Act to compel General Motors to produce ventilators, even as insiders noted that the company was already putting workers on an urgent project to do so.

General Motors, Ford, and others are repositioning their operations to produce or procure through their supply chains the components needed by ventilator manufacturers. They and others are also using capacity made available by reductions in their regular manufacturing operations due to reduced demand or challenges accessing key components.

Because ventilators are complex items produced under strict safety measures that often require medical-grade plastics and cleanroom operations that a vehicle manufacturer may not have, joint ventures are needed. Stop the Spread, a new coalition of volunteer CEOs seeking to connect businesses that can provide different levels of assistance in the production of goods needed to respond to the COVID-19 crisis, helped connect GM with its partner Ventec among other companies that can help GM meet its needs.

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 to respond swiftly to the coronavirus pandemic. 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.


Automation: Positioning Companies for Reshoring & COVID-19

Companies that have embraced a high level of automation are better suited to keep operations flowing in the age of social distancing.

But for most industries, this is not new. In fact, this trend has been underway for quite some time. Some industries have adopted automated processes as a way to produce goods in the US that are more cost competitive with those sourced from Asia, particularly since rising employment costs and trade uncertainties with China had already made goods produced overseas not always the given lower cost alternatives they once were.

More manufacturers are noting another benefit to high-tech operations: flexibility. Greater use of technology allows companies to better operate in a world where uncertainty is a common condition.

Automation also allows manufacturers to develop the next generation of products and to perform more complicated tasks via innovations in advanced software and sensors. These underlying software and sensor improvements are leading to product developments that span capital goods industries.

However, one potential downside to automation at a time like this is that the skilled labor pool capable of servicing this equipment is small. If qualified technicians are out of commission with illness, it would be a lot harder to get replacement personal who can handle these pieces of equipment than it would be to just add more unskilled labor to a more manual manufacturing process.

For more information, see The Freedonia Group’s coverage of industrial components and machinery and equipment industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


  Covid-19      Industrial Components      Machinery & Equipment    

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    

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.