Coronavirus Impact: How Manufacturing and Service Sectors Adapt to the “New Normal”

June 2020

The Coronavirus (COVID-19) outbreak significantly disrupted manufacturing and service sectors as well as the global transportation system. This briefing examines how manufacturing, services and transportation industries are impacted by the disruptions and how different sectors are adapting to the changing economic and operating environment.

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Key Findings

Investments into digitalisation and production automation to accelerate

COVID-19 is forecast to accelerate industry investments into digitalisation and production automation tools. Such tools would help the companies to better track their supply chains and increase operating flexibility.

Supply chains are expected to become more regionalised

Supply chains are set to become more regionalised in the medium to long term. COVID-19 showed the vulnerability of the existing supply chains and companies have accelerated efforts to create regional supply networks and be closer to end-consumers. This is especially relevant for manufacturing of critical goods, such as food products, pharma ingredients, machinery and electronics parts.

Asia Pacific is forecast to witness the fastest recovery

Asia Pacific is forecast to start recovering from COVID-19 disruptions in 2020 and major industries are expected to reach pre-COVID-19 production levels in 2021. This growth is associated with relatively stable health situations, government stimulus packages and faster than anticipated recovery in China.

Latin America faces the risk of prolonged economic uncertainty

Latin America is expected to face prolonged economic uncertainty and production disruptions, with many industries forecast to fully recover only in 2022-2023. Declining demand for exported commodities, currency issues and the ongoing health crisis are set to weigh on the region’s economy and industries.

Hi-tech goods industry could gain in the long term

Global hi-tech goods industry is forecast to contract by 3% in 2020 due to supply chain and demand disruptions, although negative effects are expected to be short lived. The hi-tech goods industry is set to rebound in 2021, driven by new investments and expanding demand for automation equipment.

Introduction

Scope
Key findings (1)
Key findings (2)

Agriculture

Declining commodity prices and B2B demand cuts into 2020 revenues
Latin America ’s currency depreciation to affect region’s recovery
International agri-food cargo disruptions a key challenge in 2020

Energy

Crude oil price crisis in 2020 crush energy industry’s revenues
Asia Pacific to drive industry’s recovery
Shrinking investment and green energy to strain oil and gas outlook
Sustainability policies to reduce fossil fuel consumption

Construction and Real Estate

Most construction sites keep operating during the COVID-19 pandemic
Government stimulus packages key to global construction recovery
Safe engagement with customers and employees a key shift
3D-printed small homes fit safety and sustainability trends

Chemical Products

Latin American chemical producers to take the most severe hit
Asia Pacific recovery to support global demand for chemicals
Low oil price changes competition and lifts demand for technologies
COVID-19 pandemic to boost demand for isopropyl alcohol

Metal Products

Supply and demand disruptions forced some factory closures
Infrastructure support spending among the key recovery drivers
Producers to seek supply chain differentiation and production automation
Shifting production to cater to medical sector during COVID-19

Non-metallic Mineral Products

Low business confidence dragging demand for cement
Major economies act on financial stimulus to support construction demand
Increasing need to ensure diversified supply routes to end-users

Rubber and Plastic

Deteriorating B2B demand impacts rubber and plastic revenue growth
Gradual recovery to be driven by government stimulus and B2B demand
Supply chains to become more diversified and digitised
Plastic industry shifts to purpose-driven strategy

Pharmaceuticals and Medical Equipment

Disruptions in supply chains will slow growth of medical items industry
Latin American medical equipment producers will be hit most severely
Decreasing dependency on Chinese raw materials will be gradual
Medical equipment industry fights COVID-19 with innovations
Vaccines for SARS-CoV-2 are one year and billions of dollars away

Hi-tech Goods

Hi-tech goods industry proves resilient
Swift recovery for hi-tech goods production expected
COVID-19 will fuel hi-tech goods manufacturing localisation
Case stud y: COVID-19 and US policies will dismantle supply chains

Machinery

Machinery industry challenged by falling capital spending
Government support and automation to drive recovery
Supply diversification and digitalisation are key for machinery industry

Transport and Storage

Travel lockdown and lower trade flows to impact transportation sector
Recovering trade flows to drive transportation industry’s recovery
Transportation industry to become more localised and digital

Monetary Intermediation

Finance and insurance witnesses sharp decline in 2020
Finance and insurance to post moderate growth over the medium term
Rapid movement toward a cashless economy
Case study: digital payments eradicate cash amid COVID-19

Information and Communications

Weak economy poses the largest threat in the short term
COVID-19 to create more opportunities than threats for ICT industry
ICT businesses around the world will quickly ad a pt to new rules
Case study: Teams and Zoom software facilitate global business

Hotels and Restaurants

The pandemic hit hotels and restaurants particularly hard
Recovery for hotels and restaurants may be prolonged
A shift towards in-home eating and e-commerce
Case study: on-demand food delivery popularity soars
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