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.

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    

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