Tri-county manufacturers up to COVID-19 challenge
Manufacturers are finding niche opportunities as Central Coast operations pivot to serve essential industries like health care in order to survive a deep downturn.
The shift has resonated throughout the supply chain as manufacturers aim to retain all-important relationships.
“The challenge isn’t just in operating, keeping your doors open, it’s keeping supplies and components coming in the door and shipments going out the door,” said Peter Zierhut, vice president of Oxnard machine tool maker Haas Automation.
In Camarillo, Meissner Filtration has hired some 20 people per week as it carefully scales up to manage increased demand from its biotechnology customers.
“We’ve already been growing fast, but the order intake is already up 50 percent from what we expected,” Meissner told the Business Times.
While industrial production nationally fell in March, the declines were largely due to sales of autos and other durable consumer products, said economist Chris Thornberg, founding partner of Beacon Economics.
“One of the reasons that manufacturing tends to get whacked in these sorts of episodes is that it has an inventory cycle problem,” Thornberg said.
Most manufacturers, though, operate on longer outlooks, with critical contracts like government aerospace orders and drug manufacturing still generating demand.
“You don’t buy or not buy an airplane because of one down month,” Thornberg said. “These decisions are years in the making, and they’re years in the unmaking.
A revised order April 18 from Ventura County gave smaller manufacturers the green light to reopen with modified operations, impacting some 500 manufacturing companies with 10 or fewer employees.
For Meissner, the uptick began in February and hasn’t slowed down in March or April, but the company’s response to the COVID-19 crisis started earlier, when it instituted a travel ban for its sales and other staff.
Cleanroom staff haven’t seen many changes as the company ramps up its production of sterilizing filters and bio containers for the pharma industry. But in addition to social distancing procedures, Meissner has minimized contact between employees with critical knowledge.
“We’re trying to anticipate the social circles we navigate and intentionally manage them because we’ve got to stay operational,” Meissner said. “We’re also trying to be really wise because we don’t know how bad this could be. It’s not like the industry is recession-proof.”
At Haas, production has hovered around 70-80 percent of normal, Zierhut said, with around 1,100 of its 1,500 employees still working their regular shifts.
Since many manufacturers work on contract and provide components to a variety of industries, companies like Haas and Meissner have had to maintain close ties with their vendor networks, from Tier 1 suppliers to specialized pallet vendors critical to shipping sterile products.
That can get complicated when those companies don’t realize they’re connected to essential supply chains, Meissner said.
“They’re the people who the large manufacturers turn to,” said Zierhut. “If they have customers in any of those crucial industries right now, they are probably still open.”
Manufacturers in Northern Santa Barbara and San Luis Obispo counties such as ruggedized tablet and phone accessory producer Mob Armor and plane seat manufacturer Safran have also kept production lines going.
That includes working with Poor Richard’s Press to repair defective elastic bands on 175,000 masks provided to Marian Regional Medical Center by the Santa Barbara County Public Health Department.
“Everybody had gotten a little lean and mean,” said Glenn Morris, CEO of the Santa Maria Chamber of Commerce.
Many companies have seen an uptick in orders, though, as companies aim to bulk up emergency supplies on everything from sensors to control valves.
“Their customers are asking them for more product, in case the guy upstream gets sick,” Morris said.
For Meissner, that’s meant onboarding new staff in a virtual environment and providing training at a distance.
Even for staff that have been reduced, the layoffs are temporary, Thornberg said. He anticipated a “sharp V” for the economy with a third quarter recovery after steep losses in the second quarter of 2020.
“These are furloughs, these are not people who have lost their jobs,” he said. “There are lots of headaches in the supply chain, but where there’s a profit, there’s a way.”
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