This article appeared in the August 2020 issue of MiMfg Magazine. Read the full issue and find past issues online.

Manufacturers are resilient. After COVID-19 brought most plant operations to a virtual standstill through late winter and early spring, the global manufacturing community swiftly recovered and, as of late June, is approaching pre-COVID-19 rates of production. What’s even more impressive about this robust resurgence is the speed with which it happened. New reports from IHS Markit and ISM, two organizations that track U.S. manufacturing industry orders and production, show that after steep drops in activity in April, the industry has expanded for two consecutive months. Similar recoveries are being seen in many other regions around the world, surprising industry experts.

The unique smart manufacturing data that we at Plex Systems have been monitoring show similar positive recovery patterns (see right for comparisons between China, Global and Michigan activity for the first half of 2020). Our evaluation of the production activity (e.g., barcode scans, moved inventory, shipments, etc.) of approximately 1,200 plants around the world running their operations in the cloud indicates that the global manufacturing community is operating at 78 percent of pre-coronavirus rates.

But we’re also seeing that not all recovery patterns around the world are the same. Our newest data shows that while manufacturers worldwide generally experienced a U-shape recovery — including manufacturers with plants located in the state of Michigan — China is the only country that has consistently bucked that trend.

China continues to experience lower rates of activity when compared to the global manufacturing community. Since mid-March, the country has hovered around 50 percent of pre-COVID-19 rates of activity. This trend suggests that either reshoring or nearshoring operations away from China is not something that will happen in the months and years ahead — it’s already happening now.

So, what does this mean for manufacturers?

It’s time to take action to reevaluate supply chain approaches and minimize risks.

Reshoring or nearshoring activities are two potential approaches to reducing supply chain risk, but moving to a multi-threaded supply chain can be achieved in other ways as well. Manufacturers must carefully consider the best strategy for their individual businesses. Cost and competitive issues must be factored into long-term decisions and taken into consideration alongside favorable tariffs or tax breaks.

Regardless of how manufacturers move forward, they must do so with urgency. The time to begin making incremental progress toward building a more resilient supply chain shouldn’t be when the next global crisis occurs. The time to take action is now.

About the Author

Jerry Foster is Chief Technology Officer for Plex. He may be reached at jfos@plex.com or 888-454-7539.