COVID-19 Impact on U.S. Manufacturing

The sectors at the heart of the fossil-fuel economy – Petroleum and Coal products – had already been going through fluctuating demand given the adversity of carbon emissions, and have become extremely vulnerable to the crisis due to a severe drop in demand and supply chain interruptions.

The Machinery sector – including construction machinery, industrial machinery, and metalworking machinery as well as mining, oil field, and gas field machinery — was hit first as industrial buyers held off capital investments immediately upon the first signs of a slowing economy.

The Automotive sector had been experiencing a period of weakness prior to the pandemic, driven by the scale-down of internal combustion engines and reduced buyer demand. It has since faced a significant drop in demand and production constraints given its reliance on global supply chains.

Aerospace companies predict that it will take several years for the demand for air travel – thus aircraft, engines, and components – to return to pre-pandemic levels. These manufacturers have also been hit heavily by supply chain interruptions. As a result, manufacturers are drastically reducing their workforce.

Primary Metals including aluminum, iron, and steel had been in low demand as their primary markets anticipated a weak near-term outlook. Since the pandemic, end-users, including the automotive sector, the oil and gas industries, and white-goods manufacturers, have reduced buying and are not likely to increase demand anytime soon.

The Chemical sector is cyclical and was slowing down before the pandemic. It has since experienced a reduction in demand as industries that buy primary or intermediary inputs have slowed down production. Particularly heavy hit are petrochemicals, basic inorganic, polymers, specialty chemicals, and consumer chemicals. Pockets of resilience include pharmaceuticals and medicines, agricultural chemicals, paints, coats, and adhesives.

The Fabricated Metal Products sector had seen higher material costs due to tariffs, particularly with materials such as resins, steel, aluminum, copper, and other metals. Since the pandemic, the sector has seen a significant drop in demand from industrial buyers as well as supply chain interruptions.

Computers and Electronic Components sector have seen mixed results. Communications equipment and electronic components have experienced a surge in demand as companies equipped employees to work at home. On the other hand, computer peripherals, electro-medical equipment, and measuring and control equipment have seen reduced demand and supply chain interruptions.