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How the Pandemic and Stimulus Affects U.S. Manufacturing

by Last updated Aug 11, 2020 | Published on Apr 14, 2020Contract Manufacturing

Estimated Reading Time: 3 minutes

Manufacturing in a pandemic is the current reality at Axenics and thousands of producers across the country. Our doors are open, morale is thankfully high on the floor and we’re operating four 10s, Monday through Thursday, to limit the team’s potential exposure to the Coronavirus. The Department of Homeland Security (DHS) includes some manufacturers as part of the list of essential critical infrastructure workers.

The DHS guidance states: ““The industries they support represent, but are not limited to, medical and health care, telecommunications, information technology systems, defense, food and agriculture, transportation and logistics, energy, water and wastewater, law enforcement, and public works.”

CARES Stimulus

We’re looking closely at the Coronavirus Aid, Relief, and Economic Security (CARES) Act and how it will affect domestic manufacturing in the short- and long-term. The CARES act is a short-term emergency fund effort to protect and boost the economy during the pandemic. Like our vendor partners and other contract manufacturer suppliers, we’re studying the latest information from the government to see where we fit in the stimulus plan. The manufacturing sector is not specifically mentioned in the CARES Act language, but companies within our industry are eligible for a portion of:

  • $349 billion for the Small Business Administration’s Paycheck Protection Program: This includes Payroll costs, healthcare benefits, insurance premiums, utility payments and interest (but not principal) on mortgages, rent, or other debt obligations incurred prior to February 15, 2020.
  • $10 billion for Economic Injury Disaster Loans: This is for most financial obligations and operating expenses that could have been met had the disaster (COVID-19) not occurred.
  • The CARES Act allows businesses to defer employer payroll taxes from March 27, 2020 until the end of the year, with half due at the end of 2021 and the other half due at the end of 2022.

“The bill also takes key steps from the [National Association of Manufacturers (NAM)] plan by increasing the maximum amount of tax deductions for interest on business loans and by creating an incentive, through loan forgiveness, for small manufacturers to retain their employees during this crisis,” NAM CEO Jay Timmons told The Fabricator.

Protecting the Future of Manufacturing

Earlier this week, the Association of Equipment Manufacturers (AEM) pushed the government to create a strategy to ensure the United States is the strongest nation for manufacturing innovations and business.

“The federal government should take strong and immediate action to support equipment manufacturers, protect the 2.8 million jobs that they support, and guarantee the viability of an industry that is essential to the economic and national security of our country as well as our way of life,” said Dennis Slater, president of AEM. “Between rising manufacturing costs and the industry’s growing skills gap, not to mention the devastating impact of the COVID-19 pandemic on communities across the country, it is imperative that our elected officials mobilize the full force of the federal government in support of the country’s manufacturing sector.”

AEM requests and Axenics supports:

  • The creation of a national institute that would serve as a hub for all federal manufacturing programs in the executive branch and coordinate federal manufacturing policy across agencies.
  • The establishment of a Chief Manufacturing Officer reporting directly to the President of the United States and responsible for developing and carrying out the national manufacturing strategy.
  • The formation of a National Manufacturing Council to provide non-partisan advice to the President on how to strengthen the manufacturing sector and ensure the future competitiveness of U.S. manufacturing in the global economy.

Axenics Maintains Production

Despite manufacturing in a pandemic, the team at Axenics currently is in high spirits and very busy. We adjusted workstations to maintain safe distances from one another. We clean door handles, phones, and other common surfaces multiple times per day, and we have upped our deep cleaning schedule. Coming to work offers some normalcy to us in challenging times. Our General Manager, Dan Reynolds, personally checks in with each member of the team daily to ensure they’re “OK.”

Some of our supply partners have already shrunk their production areas, meaning some production slows. One of our biggest suppliers in California closed its doors until this situation ends, and we’ll see the impact of that beginning in May, when we’re not able to restock with that vendor.

As a sub-contractor to larger original equipment manufacturers (OEMs), the changes for us have been minimal, and we anticipate the future will see us operate “business as usual.” We can’t predict that for OEMs, however. Their future is less clear and the way they operate is likely to alter going forward.

As a longtime partner to OEMs, we’ve always embraced change and we’re certainly capable and willing to bend for our partners to ensure whatever challenge comes at all of us goes as smoothly as possible.

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