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ISM Survey Shows How COVID-19 Effects Worsened on Business

Bill Koenig
By Bill Koenig Senior Editor, SME Media

A survey by the Institute for Supply Management indicates the supply chain impact of the novel coronavirus (COVID-19) worsened over March.

ISM released its first survey results on March 11. It conducted a follow-up survey of 559 companies, 55 percent of which were manufacturers. Tempe, Ariz.-based ISM performed the second survey from March 17 to March 30.

In early March, 80 percent of respondents said their organizations would have some impact from COVID-19 disruptions. In the second survey, almost all respondents (95 percent) said they would be or already had been affected by disruptions related to virus.

More than half, 57 percent, said in the new survey that demand for their products had decreased by an average of 5 percent. One exception: demand in the “health care & social assistance” category rose 50 percent because of products such as personal protective equipment used for treating COVID-19 patients.

Almost half of respondents, 47 percent, said they reduced their 2020 revenue targets by an average of 22 percent, with 36 percent reporting an average revenue reduction of 27 percent.

“The data suggests that even as companies adjust to supply disruptions – even anticipating normalizing supply conditions by the third quarter -- they are expecting lower aggregate demand this year, which promises to be the most long-lasting impact of the virus outbreak,” Thomas W. Derry, CEO of ISM, said in a statement.

Among other findings of the survey:

--Average lead times have doubled compared with “normal” operations.

--U.S. manufacturing is operating at 79 percent of normal capacity.

That may be worse now. North American auto plants shut down late in March and have remained closed this month.

--Companies said they either have or are likely to have inventory to support current operations.

--Among companies, more than half, 54 percent, will delay hiring during the second quarter while 33 percent will pare hours and 24 percent will cut jobs.

 

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