AFTERMATH EFFECTS OF PANDEMIC ON INDUSTRIAL PRODUCTION AND THE MANUFACTURING PROCESS
Industrial production and manufacturing assume a significant role in the world economy, as they represent the nation’s Gross Domestic Product (GDP). It is not surprising that every nation centres fundamentally on manufacturing. In this way, China, for instance, energizes the production of merchandise in China through the “Made in China” initiative to lessen its over-reliance on the regard to products from other countries (Philemon, 2019).
According to Olanrewaju (2019), the manufacturing sector is a significant piece of the economy, representing practically 16% of world GDP in 2018. Subsequently, the administration of all nations is mainly centred around encouraging the manufacturing sector.
A few initiatives in emerging economies to advance the manufacturing sector include “Made in China (MIC) 2025” (Lee et al., 2020). MIC 2025 is the initial phase in a more extensive three-advance procedure to change China into a leading manufacturing power. The initiative expects to move China up the manufacturing esteem chain using innovative manufacturing advancements or brilliant manufacturing.
Be that as it may, after the coronavirus epidemic, worldwide inflows of Foreign direct investment (FDI) fell abruptly. According to a report by the United Nations Conference on Trade and Development (UNCTAD, 2020), the COVID-19 epidemic could prompt a 5 to 15% drop in world FDI, because of the fall of the sector manufacturer along with the closure of processing plants.
The negative impacts of COVID-19 on FDI investment are relied upon to be high in the energy sector, automotive and air transport sectors. Because of the epidemics of COVID-19 around the world, automakers, manufacturers of synthetic substances, electronics, air crafts and chemicals are facing worries about the accessibility of raw materials.
Study on the effect of COVID-19 on the worldwide manufacturing industry is grouped in cars, food and beverages, machinery, power, chemical, aviation, pharmaceutical and clinical equipment and others. The electronics industry has been essentially influenced by the COVID-19 epidemic, with China accounting for practically 85% of the absolute estimation of the parts utilized in cell phones and practically 75% for the situation of TVs.
Every single basic component, for example, printed circuit sheets, portable showcases, LED chips, memory, open-cell TV boards, and capacitors are imported from China. Most Chinese factories have been shut due to the coronavirus pandemic. Subsequently, in January 2020, Chinese providers increased part costs by just about 2 to 3% because of a lack of provisions because of the plant closure. Therefore, it has adversely influenced the electronics manufacturing area around the world.
Moreover, the impact of COVID-19 on manufacturing is dissected by area, including North America, Europe, Asia-Pacific, and the remainder of the world. In Asia-Pacific, China is mainly influenced by the circumstance, because of the reduction in industrial production alongside the closure of factories. In Europe, most automakers and electronic manufacturers have incidentally shut their factories or minimized production, resulting in misfortune for world exchange.
For instance, Daimler and Volkswagen recently said they would incidentally suspend vehicle and engine production at their factories in Europe due to the coronavirus epidemic. The initiative focuses on the well-being of its labourers. The closure of factories by the main vehicle manufacturers has caused a decrease in car production, which, in turn, influences the automotive sector in Europe.
In a report discharged by Bloomberg.com on April 30, Access Bank Nigeria declared the cutback of workers and the decrease of salaries amid the Covid-19 crisis. The plan to cut wages and fire workers was the result of the government-imposed stalemate that hindered Nigeria’s largest lender, people with first-hand knowledge of the matter said. According to reuters.com, on May 4, 2020, the Nigerian central bank banned commercial lenders from firing staff as part of measures to reduce the impact of the coronavirus pandemic on households and the economy.
Companies influenced by the coronavirus epidemic include Fiat Chrysler Automobiles NV, Ford Motors Co., Samsung Electronics Co., Ltd., BASF SE and Boeing Co. A portion of these companies are moving their production offices to nations with less COVID – 19 epidemic. For instance, in March 2020, Samsung Electronics Co., Ltd. said it is moving parts of its domestic smartphone production to Vietnam, alongside the extension of the quickest developing coronavirus in South Korea. This is to minimize the expected impact of the coronavirus on your smartphone manufacturing tasks.
Manufacturing and production companies, for example, the oil and gas sectors, will be influenced as we have just observed an enormous drop in the price of oil from $ 71 for each barrel to $ 30 for each barrel (EIA, 2020). This, as in numerous cases, has influenced the future as people get notices from pipeline companies that they can no longer take unrefined petroleum. This implies producers will begin to close their wells.
According to Reuters (2020), Norway, one of the world’s leading oil producers, plans to use the combustion of its oil to withdraw from the market.
What is to be expected after the pandemic?
Numerous new initiatives will be introduced in this new stage. However, it is most likely difficult to know precisely how companies will lead their approach to success, at any rate for the present.
Markets will in the long run sink into another post-pandemic typicality, which will just somewhat take after the world we are used to. In fact, there will be a closer dependence on local markets and most likely an interruption to world exchange.
Finally, production and manufacturing will be based on smaller market structures and shorter value chains. In this condition, companies should rethink the footprint of their supply chain and transform their tasks to suit their necessities and set them up for the next shortage.
References
Abiola, C. E., & Ekemiabasi, S. I. (2017). Direct payments, catastrophic health spending and poverty among households in Nigeria, 2011. International journal of health policy and management, 11(3), 6
EIA (2020)
Lee L. U., Huan, R.R., Changchang, O., Changpu, F, D. (2020) Strategies for the adoption of “Made in China 2025” and its implementation. International Journal of Social Science. Hun Publishers: China, 4(2) pp. 7-9
Olanrewaju (2019). Nigeria economic recession and the way forward. International Journal of Human Social Science, 15(1), 81-95.
Philemon U.K., (2019) How the Covid-19 is affecting the oil and gas industry. Journal of Society of Petroleum Engineers, Lakers Publishers: USA, 12, pp. 12-23.
UNCTAD (2020)
UNDP (2020)
Vladimir, E. (2020). Economic crisis and regional resilience: Evidence from Russia. Papers in Regional Science, 96(3), 451-476.
WHO (2020)
Internet sources
https://www.offshore-technology.com/features/coronavirus-impact-offshore/
