As U.S. plastics firms grapple with sizable slowdowns in industrial production, some executives and supply chain experts see a potential longer-term benefit from the coronavirus pandemic — a faster pace of reshoring of manufacturing.
Right now the debate is being driven by medical manufacturing needs, as the U.S. struggles to make enough personal protective equipment and other health care equipment. But some see it extending beyond medical, as companies look to reduce risks the pandemic has highlighted for a tightly knit global supply chain.
"I believe that we will see a rapid decoupling from China," said Nick Vyas, executive director of the Center for Global Supply Chain Management at the University of Southern California Marshall School of Business.
When the economy comes out of the COVID-19 crisis, businesses will continue to explore global opportunities, but "the global supply chain trade flow will be very much customer-centric and we will see near or onshore supply chain flow," Vyas said.
Companies will need to make more use of technology like robotics and digital manufacturing to build efficient regional supply chains, he said.
The short term involves weathering what is shaping up to be a sharp slowdown in manufacturing. The Federal Reserve said industrial production fell in March at its fastest monthly drop since 1946.
But they suggest longer-term, the recovery from the crisis is a chance to strengthen U.S. manufacturing supply chains.
Matt Hlavin, CEO of injection molder Thogus Products Co. in Avon Lake, Ohio, said his company is seeing a lot of interest from its customers who want to shorten supply chains.
"These are the conversations we're having every day, we're quoting more business right now, we have more in our queue right now than we've ever had in the history of our company," he said.
It's not all from the pandemic, but he said he believes a "significant portion" of customer reaction is driven by the coronavirus situation and concerns over their ability to get key components.
"I think it's going to have a long-term impact on the supply chain," he said. "I think there's going to be major strategic shifts and incentives."
He pointed to an early April announcement from the Japanese government to put $2.2 billion in its coronavirus relief plan to help companies reduce their vulnerabilities from overreliance on manufacturing in China.