COVID-19 has had a global and monumental impact on virtually every industry. At Orange Seal, we continue to remain thankful that the fluid power industry is as resilient as it is and seems to be handling constantly shifting economic landscapes relatively well.
As it stands, no one can predict with 100% accuracy how the industry will truly be affected as data has been changing daily. Fluid power has very far reaching applications and as the world continues to operate, it will undoubtedly remain necessary, regardless of change.
Because of the rapid fluctuation of news it's no surprise that we all have mounting questions. As such, the National Fluid Power Association (NFPA) has prepared a Q&A document, written by their president, Mr. Eric Lanke, that seeks to respond to more common questions they have received in regards to the impact COVID-19 has had on our industry.
The NFPA is the primary resource for all things fluid power which makes them the ideal source for insight into the current and future state of our industry. Below is their take on the impact of COVID-19 as it relates to many of our concerns.
Q: What have you been hearing from manufacturers about the impact of COVID-19 on their operations?
A: While shelter-in-place orders affect the vast majority of our membership, most of our manufacturer members have reported that their operations are considered exempt from these orders, either entirely or in part, so they are able to maintain at least partial operations. Many of these companies produce products that support, essential industries, such as transportation, medical device, construction or agriculture machinery, food and beverage, energy, or defense.
Q: Are there any specific challenges they've been facing? What are those challenges and why are they making an impact on businesses?
A: A few of the challenges members have reported included getting clarification about whether certain product area are considered essential, keeping up with best practices such as creating more spatial separation, staggering shifts, sanitizing workstations, and working remotely. A few also reported international branch closures within their companies as well as customer closures, all of which have contributed to some reports of slowed operations and decreases in cash flow.
Q: Have any of the OEMs mentioned how or if supply chains are being impacted? In what way is it impacting them and are they doing anything to overcome this impact?
A: A small number of manufacturers reported supply chain disruption of materials and machined components due to suppliers being closed, minimizing operations, and slower delivery times.
Q: Are there any positives manufacturers have found through all of this - such as more internal investments or investment in R&D?
A: Staying positive is an extremely important consideration, It may be too soon to understand the long-term impact on the industry, but many of our members are working hard to keep their teams together and to provide needed supplies for our national response.
Q: Is there any thought as to long-term impacts of COVID-19 on the industry?
A: Some economists and consultants have suggested that a long-term impact may be greater use of automation in many industries as companies seek to be less dependent on workforce for production. This would be not just a continuance of trend, but an acceleration of trend in direction of automation. That would suggest potential growth opportunities for fluid power as an automation technology.
Another potential long-term impact may be the re-shoring or nearer-shoring of material and supply production if companies determine that supply from China is too risky going forward. This may mean production shift toward North America or low cost manufacturing in countries outside of China. To the extent that production lands in the United States, it would suggest a positive long term growth outcome for the U.S. fluid power industry in general, while it would also present nearer term challenges for various companies. Similar customer relocations could also be beneficial long term.
Despite the hardships being faced as a result of the very sudden change in the way we work, it seems the toughness and grit of the fluid power industry continues to be demonstrated in exemplary fashion.
We'd like to thank Eric and the entire NFPA for helping us all to navigate these difficult time and we're sure they will continue to stay on the forefront of the industry as changes undoubtedly occur.
Stay safe out there.