An Overview of the Manufacturing Disruption During Covid-19 Pandemic

The rapid spread of the COVID-19 pandemic came as a heavy disaster to the world economy. The manufacturing sector in India had come to a near standstill. Regular lockdowns severely impacted manufacturing activities not only in India but across the globe, thereby disrupting the overall economy. Several factories were shuttered due to Government restrictions and failing demands, while few others were facing a significant upsurge in demand for essential supplies.

The impact of the immediate crisis:

While India fairly recovered from the first wave, however, the second wave hit the country hardest in terms of fatalities. The second wave led to more restrictions on businesses – a slowdown in labor-intensive industries, including manufacturing, construction, and infrastructure, due to the reduced labor availability during the pandemic.

First wave:

During the first wave of the COVID-19 pandemic, the lockdown imposed restrictions on the movement of people and products, impacting workforce capacity and disrupting the supply chain on a large scale, thereby making nearly all manufacturing work languish.

To add more, the manufacturing sector was affected in several ways during the outbreak of COVID-19 – low-scale operations that negatively impacted production volumes, liquidity crunch, capacity underutilization, weaker demand, labor shortage, and special regulatory restrictions. It ultimately affected the turnover and revenue of the companies.

Import of heavy machinery and equipment on which India’s manufacturing industries are dependent has been shrinking. The production cuts in the manufacturing sector also suspended the leading operations of Micro, Small, and Medium ventures occupied in small spare parts manufacturing. A large chunk of manufacturing workers returned to their nativity because of the uncertainties and lack of income due to the sporadic lockdown imposed in the country.

The United Nations Industrial Development Organization (UNIDO) conducted a survey that shows that manufacturing in India nearly stopped post the imposition of the lockdown last year, except for the rice milling sector. However, the production of rice reportedly dropped by half.

Other manufacturing industries severely affected by the COVID-19 pandemic were metals and chemical products, automotive, motor vehicles, textiles, machinery and equipment, and many more to add. Most importantly, people lost their jobs, as a direct outcome of the COVID-19 pandemic.

Second waves

The country’s hope for recovery was thrust into further uncertainty as cases increased rapidly toward the end of the 2020 financial year. As several states reimposed lockdowns and restrictions to mitigate the loss of life in the second wave, the manufacturing sector further got hit. The widespread devastation instilled fear among people. It led to individuals being confined to their homes, more out of fear. As a result, the demand for petrol and diesel dropped massively. The number of people working during the second wave was much smaller compared to the first wave, which translated to slower economic recovery.

The announcement of multiple lockdowns continued to sluggish or even temporarily stopped the flow of raw materials and finished goods, thereby extensively disrupting the manufacturing sector.

COVID-19 impact on supply-chain:

Companies reported that the pandemic played havoc with their workforce. While corporate employees were asked to work from home, the same could not be implemented for factory workers. As a result, high-tech manufacturing industries and industrial products are labor-intensive industries that had to stop their operational functions to reduce worker exposure to COVID-19.

The situation had severe implications for the demand and supply chains underpinning manufacturing operations. In short, the manufacturing units and the production networks failed to withstand the pressure of lockdowns and other safety protocols.

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