Business Booms For Some Manufacturers, Dwindles For Others Amid Pandemic
SVA/SEWN assisted in the coordination of connecting WESA with manufacturers we have worked with in the past. Thank you to those who were willing to share their story.
Considered essential businesses, many manufacturers have been exempted from Gov. Tom Wolf’s shutdown order. Some now find themselves with almost too many orders, while others don't have nearly enough. But almost all are facing unexpected challenges from the coronavirus.
Among those finding success — at least for now — is IngMar Medical, based in Pittsburgh’s East Liberty neighborhood. Company president Stefan Frembgen said that when the shutdown order took effect more than six weeks ago, he initially worried about the impact the pandemic would have on his business, despite its being deemed essential by the state.
“But then, it turned totally around, and we were swamped with orders,” Frembgen said.
IngMar Medical makes breathing simulators. Engineers need the devices to test new designs for ventilators, which are critical to treating COVID-19. Hospitals also use the simulators to train staff who don’t normally operate ventilators.
With the explosion in sales, Frembgen expects annual revenues at his 45-employee company to double or triple. But tasks like ordering new supplies present their own challenges.
“Now all the sudden you tell your vendor, ‘OK, we want five times as many, and we want them maybe next week’ – that just doesn’t work,” Frembgen said.
He said after finding new suppliers and hiring additional temporary workers, he now expects IngMar Medical to catch up with demand in a few weeks.
Montgomery County machine shop EF Precision similarly experienced a surge in sales due to the pandemic. The firm’s vice president, Bud Tyler, said demand for a fogging system his company makes has soared to 10 times the normal amount.
Foggers release gases that kill pathogens. Tyler said while hospitals typically use the machines in surgical suites following an operation, now they also use them to sterilize rooms where COVID-19 patients have been treated.
Tyler said at first, it was challenging to stay on top of orders for the devices, which previously accounted for a “small amount” of EF Precision’s work.
“We’ve been doing this product for six, seven, eight years. And our supply chain got into a very comfortable spot because they were easy numbers to hit,” Tyler said. “Now we’re trying to increase the assembly [and] production. And it’s been difficult.”
Tyler said his company ultimately managed to find suppliers for all the necessary parts and is now keeping pace with demand.
He said while the business, which employs about 90 people, is on track for a “very, very good year," it has put a moratorium on hiring. Tyler said such caution is necessary even though EF Precision’s other customers, in the aerospace and defense industries, are still buying equipment.
“I think that they’re building inventory,” Tyler said. “I think that they understand that … there will be [an economic] rebound … And I think they all want to be in place to be able to turn the switches on and go full bore.”
But Tyler added, “If this pandemic were to last another two or three months … [that demand] will wear thin.”
‘A lot of pride in what we do’
Like EF Precision and IngMar Medical, the vast majority of American manufacturers are considered to be essential businesses by the government, data suggest. Machine utilization data, however, indicates industrial activity in the U.S. fell by about 17 percent in March and has since leveled off.
Although it’s not clear how many manufacturers in Pennsylvania are still open, the state has permitted entire sectors, ranging from steel to semiconductors and most chemicals, to continue to operate.
And exemptions often extend to businesses that support life-sustaining industries. Onex, Inc., in Erie, received a waiver from the state to stay open because the firm builds and services furnaces used to make steel. Onex applied for the exception because the governor’s office orginally classified its industry, refractory manufacturing, to be non-life-sustaining. (Refractory is a ceramic material needed to insulate furnace walls against heat loss.)
The U.S. Department of Defense, however, had already declared Onex to be essential. So the company continued to operate the five days it waited for the state’s approval.
“We did have a client that is a primary contract for the Department of Defense,” Onex president Ashleigh Walters said. Once the coronavirus threat became apparent, Walters said, that client “immediately notified us with a defense letter that said, ‘You have to remain open. You’re in the defense supply chain.’”
In addition to helping to sustain the nation’s defense infrastructure, Onex also supports energy producers and aerospace manufacturers, Walters noted.
“If these furnaces have a maintenance issue, it can’t wait to be fixed. It’s hot … It’s going to potentially burn through the metal shell if we don’t get the refractory lining replaced,” she said.
Walters said her approximately 20 employees recognize the importance of their work.
“I think there’s a lot of pride in what we do. I told them very early on that, ‘We are essential. We are keeping U.S. manufacturing alive,’” she said.
While Walters said she is confident in Onex’s prospects for now, she predicted the company would start to struggle if the economic downturn were to continue into the fall.
Electric Materials Company in nearby North East, Pa., has also fared well in the near term, according to its president, Becky Ramsdell. The manufacturer makes components for electrical, data, and defense infrastructure, and has been considered life-sustaining since the beginning of Pennsylvania's shutdown.
“And when this all started [with COVID-19],” Ramsdell said, “we found much business coming to us from overseas that we hadn’t seen before, because they were having difficulty with breaks in their supply chains. And we were able to step up and provide them with the product they needed.”
Ramsdell said her company has taken numerous safety precautions such as spreading out employees, relying more on electronic communications instead of in-person contact, and providing extra soap and hand sanitizer.
“It’s been a challenge just continually monitoring it, to ensure everybody has the mindset,” she said. But she added, “It’s rather surprising how quickly we adapted.”
For some, ‘essential’ does not mean ‘open for business’
The Pennsylvania Department of Community and Economic Development would not disclose how many manufacturers in the state are still operating. Individual businesses can seek a waiver exempting them from shutdowns if the state declares their industry non-essential. And the total number of active businesses "is not available as the exemption review process is still ongoing,” a spokesperson said in an email.
That process has faced complaints that it is slow and unfair. Last week, Pennsylvania Auditor General Eugene DePasquale announced that his office will investigate how the state has run the program.
In the meantime, some manufacturers are hurting. Petra Mitchell, President and CEO of the economic development nonprofit Catalyst Connection, could not say how many manufacturers in the region have been shuttered due to COVID-19. Her agency mainly interacts with those that are operating. But one national survey shows that only half of manufacturers are open amid the pandemic.
Mitchell said her agency has had contact with “well over 200 essential businesses.” She said there were about 3,000 manufacturers operating in the region before the pandemic. Of those that remain open, she estimated, at least 40 to 50 produce medical devices or parts or personal protective equipment.
Mitchell predicted that as some companies work through disruptions in global supply chains caused by the virus, domestic manufacturers will benefit.
“As those industries really think about what are their supply chains going to look like in a post-COVID-19 world, I think the manufacturers in southwestern Pennsylvania are really going to have some significant advantage,” Mitchell said. “I think there’s going to be a trend to reshore supply chains from international sources.”
In interviews with 90.5 WESA, Pennsylvania manufacturers said keeping the doors open is just one challenge they face. And while some have struggled to keep up with skyrocketing demand, others have had trouble keeping hold of their employees.