Unravelling Polymers

The Definitive Blog on Polymers by Poly Fluoro Ltd.

Can Indian Manufacturing Survive COVID?

To say that the last 12 months have been very tricky to navigate would be a gross understatement. The combined impacts of COVID, the resulting lockdown, the migrant worker crisis, and the highly mercurial post-lockdown business climate have made each passing month a challenge to work through. And yet, most clients and vendors we have spoken with will agree that post-June 2020, things did somehow settle down on the business front. Demand picked up, companies slowly returned to a new kind of normalcy, and work started to get done.

Throughout history, India’s numbers have always been staggering. We swelled with pride as our population numbers were in no way reflected in the caseloads we saw post-September 2020. We beat our chests at the news that we were now supplying the rest of the world with vaccines.

The idea that within 6 short weeks, India went from a COVID success story to staring down the abyss of a potential apocalypse is stunning. The blame game aside – we all know the levers that helped nudge the numbers up so that there was enough critical mass to begin the avalanche of cases – the fact remains that as the developed world starts leaning towards a post-COVID environment, India is still mired in the depths of a crisis that does not seem to be letting up in any way. 

Most manufacturers have been terrified of a second lockdown. It was tough enough to make it through the first one, but companies somehow survived. A second shutdown would be devastating, possibly beyond recovery, mainly because this time, things are very different.

Last year, the world was united in its fight against COVID. Companies in every country came to a standstill and those of us lucky enough to have cooperative clients learnt that orders were not being cancelled – only pushed out by a month or so. Even those in industries where existing orders would not roll over and accumulate over the following months were relieved to know that India’s total lockdown was seen somewhat favourably by the rest of the world and demand resumed once doors reopened. At the same time, China was reeling under a lot of ill-sentiment thanks to COVID, so the tendency for export clients to shun Indian suppliers in favour of their Chinese counterparts was limited. Indeed, India’s problems with China in mid-2020 brought a lot of local demand back to local suppliers as the rush of patriotism temporarily eclipsed the lure of better margins.

It is not an exaggeration to say that none of these factors are very much at play anymore. For one, India-China relations, while still somewhat icy, are not strained enough to push Indian buyers away from China’s deliciously low prices. Even global sentiment towards China is somewhat muddled between still blaming them for COVID, holding them accountable for human rights abuses, and an inability to fully detach themselves economically. China continues to be the world’s factory and its supposedly excellent handling of the COVID crisis locally has allowed it to project a ‘back to business’ image while India still struggles with record-breaking caseloads each day.

Finally, the fact remains that the US and Europe – with a huge ramp-up in vaccinations – have started returning to normal and expect their businesses to function as such. It would not be feasible for a company to rest easy knowing that part of its supply chain depended on an Indian manufacturer. This year was supposed to be the time for everyone to get back on their feet and India’s inability to keep pace with the rest of the world has severely hurt both our image as well as the stability of our contracts with clients in other countries. Even the most generous of customers cannot be expected to indulge an Indian supplier marred by COVID cases and lockdowns when the client’s own business is being jeopardised by the resulting delivery delays.

It is possibly due to this reason that lockdowns, when imposed, have given leeway to manufacturers to stay open. However, manufacturers themselves need to juggle workload with the very real possibility that their employees remain at risk if the proper precautions are not taken. It is a very fine balance and Indian manufacturers need to tread it carefully for the next 3-4 months at least until the crisis is brought under some kind of control.

In this regard, there are certain things manufacturers can do to manage the situation:

  1. Plan ahead: considering we are consistently exceeding our expectations of worst-case scenarios, this is not always easy. However, where possible we need to stock inventories of raw materials, so we are not exposed to supply-side shocks ourselves. With a disruption in everything from logistics to production schedules to worker movement, the risks remain high that just-in-time manufacturing will not work in the present climate

  2. Prioritise: with resources scarce – especially around the workforce – we need to focus on clients and orders where timelines cannot be compromised. Indian clients may be more willing to understand delays, as many of them would similarly be dealing with demand and supply shocks. Export clients whose lines are depending on materials being delivered on time would need to take priority to ensure business relationships are not eroded.

  3. Communicate: a client may have ordered 15 different parts but might suffer a potential line stoppage only for 3-4 parts. Open communication with the client would help their work to continue smoothly while allowing the manufacturer the leeway to push some parts forward. Our experience with Indian vendors has been that they tend to stay quiet when things don’t go as planned. Most clients can adjust their schedules, provided they are given some advance warning. Avoiding last-minute surprises would help ensure the client retains confidence in the supplier.

  4. Train: Especially for a small enterprise, a key component of survival is building skills among its employees. Staggered working and the inevitable quarantine period of an employee with COVID means that work can come to a standstill if a key staff member is not present. Encouraging staff to gain a basic understanding of cross functions would be critical in making sure that work gets done even without full strength.

  5. Motivate: This is a time when many tend to feel hopeless. The toll that COVID has placed on us all is starting to wear individuals down and the fact that there is no end in sight can be demoralising. Keeping staff motivated is critical in a time like this. Employees need to know that they are working towards keeping the business alive and that their efforts will ensure that there is still a business around once the pandemic eases off!

As we said in the beginning – this has been a very tricky time to steer a business forward. The necessity for a manufacturing plant to operate in person has only made that tougher since not everyone has the privilege to work from home. At the same time, without manufacturing, the economy, in general, starts to stumble and could collapse in a manner that causes long-lasting damage. Only by carefully navigating through the current climate can businesses plot a course for sustainability beyond the pandemic.

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