AICC, The Independent Packaging Association, last week released the results of a survey of its general and supplier members on the effects of COVID-19 on their business operations.
In a survey conducted in the week of March 16, 89 of the 209 AICC general member companies – or 43 percent — responded to questions about the kinds of impacts they are seeing in their businesses as the coronavirus pandemic spreads throughout North America. The survey was sent concurrent with a similar poll to AICC’s supplier members.
Of the respondents, 62 percent are sheet plants; 33 percent are corrugator plants and five percent are sheet suppliers. The initial effects of the coronavirus pandemic and its related societal and business restrictions relates to contacting customers directly.
Fully 80 percent of those responding said they faced an inability to call on their customers directly due to vendor and visitor restrictions. This was followed by an increase in employee absences, then difficulties in the upstream supply chain. Not all the news, however, was negative, even if the underpinning reasons are. “We’re seeing larger than normal orders from customers replenishing food, medicine and medical devices,” wrote one member.
Yet, a predominant theme in the comments received was uncertainty. “Not sure what impact this will have on our business. Yesterday we had our best booking day in over six weeks,” wrote one respondent. Another wrote, “Increase in volume from retail food, beverage and paper products. 10 percent to 35 percent advised and seen. Problem is these are advance purchases so volumes in May and June could be lower than normal.”
Asked to predict the negative impact on their business, 49 percent of general members replied, “Don’t know, too hard to tell.”
AICC also asked its general members what their customers are telling them about their business conditions. Customers slowing orders garnered a 35 percent response while 16 percent were seeing increasing orders. No change was the response of 20 percent. Again, uncertainty seemed to be the ruling opinion.
“Some are ramping up the food sector while others are cutting back,” said one respondent. “We are seeing both increases and decreases, depending on what industry the customer is in,” said another. “So far it has balanced out,” “Too early to tell,” and “Pure uncertainty” were other responses.
As for their own companies’ responses to the coronavirus crisis, 100 percent of box makers have educated and reminded employees about the importance of hygiene and are provided hygienic supplies to them. Eighty-four percent have restricted travel of company employees. Another step taken by 51 percent of those responding was to require employees to self-quarantine if they have traveled overseas or to places of high concentrations of reported infections.
Asked to list additional steps, telework for office staff was mentioned frequently, as well as creatively working on shift changes for plant employees. Another said, “Daily wipe downs of high touch-points throughout the facility and on machines. Evaluating the skills of every employee and aggressively cross-training in gaps identified.”
Many have installed no visitor policies or if visitors are allowed, they must undergo a health evaluation. Other responses included, “Taking all employee and visitor temperatures each day before accessing the building,” “Stagger breaks and lunches to improve social distancing,” and “Changed start and stop time of shifts so there is an hour gap to clean and disinfect all equipment surfaces.”
Supplier Survey Responses
AICC’s supplier members are also facing new challenges and changing their operations to accommodate the COVID-19 crisis. In a survey conducted in the week of March 16, 70 of the 182 AICC supplier member companies – or 38 percent — responded to questions about the kinds of impacts they are seeing in their businesses as the coronavirus pandemic spreads throughout North America.
Just over half of those responding were machinery and equipment suppliers; 15 percent were raw material suppliers, meaning containerboard and/or sheets; 17 percent supplied consumables such as inks, adhesives, strapping, etc.; and 15 percent were suppliers of software or related business services.
The initial effects of the coronavirus pandemic and its related societal and business restrictions appears to be in suppliers’ ability to visit customers directly. Fully 73 percent of those responding said they faced an inability to call on their customers directly due to vendor and visitor restrictions.
This was followed by slowing of business or deferral of capital expenditures among box makers, and an increase in employee absences. Not all these impacts were negative: “We’re having a record week of shipments across the printing spectrum,” wrote one member as his company’s customers responded to increased demand for corrugated packaging products.
Yet, a predominant theme in the comments received was uncertainty. “No forecast is possible,” wrote one member. Said another, “Customers are delaying decisions regarding the purchase of equipment until they can determine the length and scope of the impact of the virus on the economy, which is 100 percent understandable.” Asked to predict the negative impact on their business, 49 percent of associates replied, “Don’t know, too hard to tell.”
AICC asked its supplier members what their customers are telling them about their business conditions. In an even split – 18 percent in each category – box makers reported both “slowing orders” and “increasing orders.” A larger percentage of 27 percent said that there was “no change” in their business. “It’s customer-dependent,” wrote one supplier. “Some orders are slowing; others increasing.” Another supplier said, “We’ve seen a drop in orders from some customers while others report panic buying from some of their end users.”
For major capital equipment makers, deferral of box makers’ 2020 capital projects is an immediate concern, but another reported a silver lining: “Good news is that we are seeing inquiries for business lost to China years ago. Bad news is we are seeing project ship dates getting pushed out.”
As for their own companies’ responses to the coronavirus crisis, the principal actions taken thus far are to restrict travel of company employees and increased employee education about the virus and the prevention of its spread. Eighty five percent say they’ve taken these steps first in their companies. Asked to list additional steps, one supplier said, “We’re undertaking massive amounts of cleaning and basically at every opportunity trying to instill a mentality of ‘procedure in place of fear.’”