Now might be a good time to start gearing up for a resurging economy.
The COVID-19 pandemic has impacted the world’s economy in many ways. In the United States, overall economic activity has dropped significantly, though some segments of the economy were less affected.
While it is fairly easy to measure consumer demand, the impact on U.S. rubber parts manufacturing is harder to measure because of the lead-times necessary to plan future production. There is no doubt, however, that thousands of businesses have delayed or reduced orders for new parts.
TMI has experienced this reduction in sales, just like most other businesses.
Though these economic realities have hurt some manufacturers, this could end up creating a huge opportunity for your company.
There is one reality associated with this pandemic: It will soon be over. Whether it’s a vaccine, a cure, or herd immunity that ends the crisis, it won’t be long before the economy comes roaring back.
Pent Up Demand
This may actually be a great time to gear up for an increased demand that is expected in coming months.
Every company has to make its own projections on when the demand for new products or equipment will happen, but those plans should be considered right now.
No company can afford to miss out on the surge that will soon happen.
If your company needs rubber parts and components for industry sectors that are getting ready for a comeback, start planning now.
There are a few factors to consider when planning for this resurgence in business activity, including the types of manufacturing that will return first and the sources for parts and components.
While making your plans, consider that one of the world’s largest suppliers of parts has been greatly affected by the worldwide pandemic — China.
Many economists are of the opinion that China can no longer be counted on as a major supplier of rubber products or components. During the early weeks of the pandemic in March and April, the world supply chain of parts was not affected because of a huge inventory that already existed. That is no longer the case.
There have been many reports of parts shortages around the world, mostly because of China’s reduced capacity. South Korea reported parts shortages as early as February of this year. Japan complained about parts shortages in March. Shortages of Chinese parts in the U.S. became apparent by the end of April after a fairly large inventory was quickly eroded.
The production problems happening in China appear to be getting worse. A survey by the University of Akron indicates that 62 percent of companies that purchase parts from China are experiencing delays in receiving orders. Reports from around the world indicate that Chinese manufacturers are only operating at 50 percent capacity.
Even if China was able to gear up its production tomorrow, the long planning and shipping lead-times mean that China won’t be a viable source for the foreseeable future.
Made in the USA
This means that future parts production will rely more and more on U.S. manufacturers. TMI has been gearing up for this increased demand with new technologies, equipment, and capacity.
Though the global rubber parts market was negatively impacted by the Covid-19 pandemic, projections call for a massive rebound through 2023 with global sales growing to $433 billion (from $359 billion in 2019). That’s a 21 percent increase, and most of that growth will come from U.S. companies.
TMI is ready for the increase in demand that is coming. Contact a TMI engineer today, so your company will be ready to cash in as we turn towards the new year.