Kreischer Miller Survey Finds that Philadelphia-Area Manufacturers and Distributors Continue to Grapple with COVID-19-Related Challenges

Kreischer Miller recently conducted a survey to gather information about the current outlook of manufacturers and distributors in the Greater Philadelphia region, given the ongoing challenges of the COVID-19 pandemic. The survey also aimed to provide insight into the obstacles these businesses have faced over the past several months and their plans going forward. Below are some of the survey’s key findings.

Business Shutdowns

First, some good news. Of the 63 survey respondents, an impressive 78 percent indicated that they did not experience a shutdown during the pandemic; another 14 percent reported they experienced only a one to two week shutdown. These businesses were either deemed essential or were able to pivot their operations to meet the conditions to remain open.

COVID-19-Related Challenges

However, when asked about new challenges they faced as a result of COVID-19, 62 percent indicated that they experienced order declines. Relatedly, 60 percent said that their production and/or shipments over the past six months declined as compared to the same period in the previous year, with 43 percent citing a decline of greater than five percent.

Additionally, 43 percent of respondents indicated that they have experienced supply chain disruptions. In an effort to overcome this challenge, many companies diversified their supply chains and decreased reliance on overseas suppliers, while several (14%) made downstream acquisitions of suppliers.

The next biggest challenge cited by respondents (43%) was their inability to attract new skilled labor. The skilled labor shortage has been well documented for the past several years, particularly among manufacturers. The extent to which the pandemic further accelerated the retirements of an already aging workforce is likely to exacerbate this issue.

Another challenge facing manufacturers and distributors as a result of the pandemic is the loss of workforce, cited by 28 percent of respondents. More specifically, 51 percent revealed that their current headcount is less than it was before the pandemic (February 2020), while just 35 percent said that they were at the same level. On a more positive note, 49 percent indicated that they expect headcount to increase over the next six months, though not necessarily to that of pre-pandemic levels.

Measures to Overcome Challenges

When asked about specific short-term measures they’ve put in place as a result of COVID-19, a large majority of survey respondents (71%) noted that they secured Paycheck Protection Program funding and/or other governmental loans or grants, while 45 percent developed business plans for operational disruptions related to supply chains, multiple positive virus tests in the workforce, etc.

When asked about longer-term initiatives, 31 percent plan to shift to permanent remote work for a portion of their staff, 27 percent anticipate making product changes based on shifts in the economy and environment, 25 percent will change how they recruit skilled labor, and 10 percent plan to accelerate the implementation of Industry 4.0 technologies.

As we know, the pandemic is still in our midst and virus counts are increasing across our region and the country. When asked how their companies would be affected if a COVID-19 surge arose in late 2020 or into 2021 (the survey was conducted in late October), 53 percent anticipated a decrease in orders and/or production, while 36 percent expected workforce morale and turnover issues. Just 32 percent said they expected no significant change.

The next several months will likely be challenging for many manufacturing and distribution companies in our region as they continue to produce, sell, and ship products while striving to maintain a safe environment for their workforce and grappling with the ever-evolving skilled labor shortage. But we expect these companies to continue to showcase their resilience and adaptability demonstrated thus far through these trying times.

If you have any questions about these survey results or would like to discuss any pandemic-related matters impacting your business, please contact your Kreischer Miller relationship professional or any member of our team. We also continue to update our COVID-19 Resource Center, which you can access here.

Michael Coakley can be reached at Email or 215.441.4600.

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