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.

Concerns About Coronavirus Transmission Promote Use of Single-Use Plastic Bags

One unintended consequence of the coronavirus outbreak has a been a resurgence in the use of single-use plastic bags. Derided by many due to their perceived negative effects on the environment, many local and state governments across the US – including the key states of California and New York – have banned use of or begun charging fees for single-use bags in recent years, and leading grocery retailers announced plans to stop giving them away at their stores.

However, a growing number of stores are again giving away single-use plastic bags as part of their efforts to reduce the spread of coronavirus. In fact, one state – New Hampshire – has temporarily banned reusable bags, and Maine postponed the implementation of its plastic shopping bag ban. The reason: concerns about the cleanliness of reusable bags. While coronavirus can be removed from plastic surfaces (many plastic shopping bags are made from a high level of recycled plastic content), few shoppers clean their own reusable bags after each use. Thus, to minimize concerns about coronavirus spreading via cross-contamination, retailers are encouraging and again supplying single-use plastic bags.

While the long-term effect of these efforts remain unclear – no one is sure how hygienic practices will change as the virus becomes less of a threat – in the short term, at least, demand for single-use plastic bags is expected to rise.

This presents an opportunity for plastic bag manufacturers to reargue their position that plastic shopping bags – which are readily recyclable (even if the recycling rate remains low) and often made with high post-consumer recycled content – are the more sustainable option compared to polypropylene reusable bags, which are not recyclable. However, now they are adding the hygiene angle. In fact, the Plastics Industry Association has already requested that the US Department of Health and Human Services endorse plastic bags as the safest choice during this pandemic.

To counter that argument and support what had been the increasing consumer habit of carrying reusable bags, the reusable bag industry will need to educate consumers about adequate bag cleaning measures and ensure that the bags are able to withstand frequent cleaning cycles.

For more information, see The Freedonia Group’s Retail Bags report as well as total coverage of the Plastics and Packaging industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Packaging      Plastics & Other Polymers    

Lumberyards & Hardware Stores Declared Essential Businesses

A number of governors – including those of our most populous states – have closed all but “essential” businesses in an attempt to limit the spread of the coronavirus.

Fortunately for the construction industry, most governors have included lumberyards and hardware stores as among those businesses classified as essential. In many cases, owners and industry associations have pushed to keep these business open due to such factors as:

  • the large number of people employed by the industry ­– not only by lumberyards and other retail outlets, but also in the construction industry as a whole
  • the key role lumberyards play in ensuring that construction materials can reach contractors and other construction professionals
  • the broad range of products offered by these stores – many of them carry items essential to health and safety, such as cleaning supplies, waste receptacles, toilet paper, and wipes, as well as items needed to maintain a house, which become more important as consumers are told to stay at home
  • the ability of stores to deliver goods while minimizing contact – such as by limiting hours, arranging for curbside pickup and delivery, or by coordinating deliveries when few people are at job sites

Indeed, as state and local authorities increasingly consider erecting temporary medical facilities or converting existing structures (such as college dormitories) into sites for housing coronavirus patients, demand for building materials is expected to climb: proving that the nation’s lumberyards, hardware stores, and other construction products retailers are “essential”.

For more information, see The Freedonia Group’s extensive research on the construction & building products industries. 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    

What Exactly is “Essential”?

As the COVID-19 crisis continues, state governors are beginning to mandate broad closures of private “non-essential” workplaces. Businesses such as grocery stores and pharmacies are obviously considered necessary to operate and are exempt.  But beyond that, how do you determine what businesses are “essential”?

This week, the American Chemistry Council penned a letter arguing that chemical and plastics manufacturing is an essential business that needs to be maintained throughout the crisis. While this seems questionable on its face, the group has a point – cleaning products and hand sanitizers are products of chemical manufacturing, and plastic materials are used in all sorts of essential medical products.

Additionally, others – like the steel industry – are making the case that manufacturing that would be difficult or costly to restart should be deemed essential. Still, some firms are voluntarily closing when a staff member is found to be infected.

This just goes to show the definition of “essential” is extremely hard to parse, given the interconnectedness of the economy and daily life. But one thing we can hopefully all agree on – despite all the time we are spending at home now, video game retailers are definitely not essential. Sorry, GameStop.

For more information, see The Freedonia Group’s extensive off-the-shelf industry coverage. Freedonia Custom Research is also available for questions requiring tailored market intelligence.