Preparing for the worst, hoping for the best

If metal fabricators want to have a shot at surviving an elongated economic slowdown, keeping employees healthy from the effects of the COVID-19 virus is the main priority.

The question posed to a fabricator on March 16 probably won’t be answered the same way seven or even 14 days from now. But for at least one day I was hopeful.

“Are you seeing any indication from customers that you could be seeing a drop in orders or changes in plans?” I asked a Wisconsin fabricator. “Actually, it’s been the inverse. They’ve been telling us it’s business as usual.”

Since then, a lot has changed as people try to come to grips with what normal means during the COVID-19 pandemic. Chrysler, GM, and Ford have closed all of their factories to protect workers from the coronavirus. The U.S. and Canada plant to close the border to nonessential travel. Supply chains that rely on internationally sourced parts or are dependent on domestic factories that may be shorthanded because of suspected coronavirus-infected workers are struggling to fill orders.

The forward-looking indicators don’t promise much better days ahead. The New York Fed’s Empire State Business Conditions Index plunged a record 34.4 points to -21.5 in March. The regional bank pointed to a dramatic collapse in the new orders index of the business conditions report as being one of the main causes for the index falling to its lowest level since the Great Recession of 2009. Already Federal Reserve Chairman Jerome Powell is predicting negative GDP growth for the U.S. in the second quarter.

Anecdotally, I’m hearing some hesitation from metal fabricators as well.

“The fear of the unknown seems to be growing and people will stop spending money if they don’t know what will happen next. I’m hoping for the best but I am afraid that the cure (the shut downs) will be worse than the virus,” said a metal fabricator from the Southwest.

“There’s a lot of meetings being canceled, and we’re not quoting as much,” said a fab shop executive from the Midwest.

Expert opinion suggests that the steps needed to tame the pandemic in the U.S. will require time to work. That means the idea that the impact of this crisis on the economy is going to fit neatly in a 30-day window isn’t likely.

What can a fabricator do? Prepare as best as it can.

The Occupational Safety and Health Administration actually has some pretty good tips:

• Have front-office employees telecommute when possible
• Spread workers over multiple shifts, if possible, to minimize employees being on top of each other on the shop floor
• Cross-train so employees can cover for others who may be out sick

Modern fab shops aren’t necessarily places where people work within inches of each other. This isn’t the assembly line of Henry Ford’s day. Shops typically have ample space for workers to handle and manipulate large parts and assemblies. It seems like the perfect place to practice social distancing.

But the industry still depends on customers. If people aren’t spending money, that tends to put a damper on economic activity. Let’s all hope that the U.S. economic engine doesn’t grind to a complete halt in the days to come.

For small business assistance, check out the COVID-19 Resource Center from Wipfli. Small and medium-sized shops can get the latest news and advice to help them stay afloat during the oncoming economic slowdown.