Pulse of the Industry: Members Continue to See Promise in the Summer
Members’ outlook on short-term business conditions has become slightly more pessimistic according to results from our second Pulse of the Industry poll, while the percentage of participants expecting better times in less than 12 months has grown nearly 20%. Expectations for better conditions next year was held by 86% of participants, up from 73% in the last poll. Looking out over the next 30 days, the results were a mirror image as 85% of participants expect things to get worse, up from 73%. The percentage of participants who are optimistic about the next 6 months fell significantly, but, fortunately, the percentage of pessimists only moved upon percentage point as the percentage who were unsure or indifferent moved up.
The changes are understandable. During the first six weeks after the coronavirus hit, the front pages of American papers reported that business continued to flourish. February shipments, orders, and quotations were up from January levels, though restrictions on travel and work were announced in a handful of cities and states. By mid-March, AMT members were busy reconstructing how they managed their businesses and relationships with clients as states began to issue stay-at-home orders. By the end of March, everyone had a much better understanding of how deeply this disease would impact lives and businesses.
In the poll that closed on April 6, 60% of the members participating reported significant drops in quotation activity while only 7% saw an increase over the previous four weeks. Many companies still have substantial backlogs that have helped keep production teams – reduced for social distancing – busy in the past few weeks. Still, we have members posting orders in March and April related to customers expanding capacity to provide much-needed medical personal protective equipment (PPE) and medical equipment. Members are also getting orders from first- and second-tier suppliers to industries that will ramp up production in the fourth quarter and must be equipped to deliver on their contracts. The auto industry, consumer electronics, toys, consumer durables, and production lines tooling up for winter and spring equipment inventories represent the customers continuing to make investments to prepare for late 2020 obligations.
Members have learned and quickly adapted to virtual service and sales calls. AMT members are addressing more than half of their service calls using tools like augmented reality, Skype, Zoom, and FaceTime. The creative solutions which members are using to address challenges are astounding, and we hope to bring some of these stories here to you soon.
Members looking for a silver lining have looked back at the declining market in 2019. The belt-tightening moves made last year as the market softened made tightening the belt a couple more notches less painful than it otherwise would have been. As noted in the last update, members are finding ways to use the slowdown in useful and wise ways. Many have encouraged their staff to engage with learning programs. Numerous members have shared that their sales and administration staff are calling their regular customers to listen to their stories, take their pulse, and reassure them that their company is ready to jump in and help.
About half our members have reduced their staff, but many are hoping to receive Payroll Protection Program loans and bring those people back. Almost to a tee, members are lamenting the disruption to their company teams that they have taken great efforts to assemble in a tight labor market. And, our members appear to be making machines and parts. Responses to the poll and our calls with members suggest that members are operating from a low of 30% to a high of 80% of pre-coronavirus levels. Conditions will likely get tougher before it gets better, but this industry is responding very well to tough times.