MNI INTERVIEW: US Factories at Less Than 30% of Capacity: ISM

By Ryan Hauser

     WASHINGTON (MNI) - U.S. factories are working at less than 30% of capacity

and struggling to rebuild production amid concerns about worker safety as

facilities re-open, ISM chair Tim Fiore told MNI. 

     Factories worldwide were running around full capacity before the Covid-19

pandemic and are now hit with the "fastest rate of change in economic activity

in modern times," Fiore said Friday. The Institute for Supply Management's April

PMI showed a 7.6 point drop to 41.5, the lowest since April 2009.

     Global factory production is now "closer to 25-35%," relative to capacity,

Fiore said, adding that in the U.S. "companies are struggling to get to 30%."

Survey comments for April were strongly negative on the near-term outlook and

Fiore said no sharp rebound is at hand, though federal stimulus money is helping

a bit. 

     "My biggest concern is bankruptcies," he said. "There has been some

fundamental damage here" as demand falters and supply chains are disrupted,

Fiore said. 

     --WORKER WORRIES

     Part of the disruptions include how to retool and allow workers back onto

factory floors while respecting health regulations. "At present, people are

going back to work voluntarily, and companies are doing everything they can to

keep their employees safe, and there's always going to be that anxiety," said

Fiore. Legal liability problems "could definitely become an issue" later on, he

said.

     The restart problem is made worse by the risk of further waves of

outbreaks. "It's all going to be a function of whether the virus reappears in

any red zones that are related to manufacturing sites and people have to back

off," he said. "As we set back up and bring people back to work, we're bringing

them back at very low levels."

     "A good indication here is watch the protein companies getting those

packaging plants back up and running," he said. "That's a big challenge, and if

they can solve it, it gives me confidence that other companies can too."

--MNI Washington Bureau; +1 202 371 2121; email: ryan.hauser@marketnews.com

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