The Impact of COVID-19 on the Manufacturing Industry and Solutions

Abstract

The COVID-19 outbreak has had a tremendous impact on the manufacturing industry globally. Compared with pre-pandemic time, every step of production, from the supply chain to the production line, from marketing to sales, has been affected by various degrees. This paper discusses the impacts from the aspect of business risk and between different types of manufacturing industries, including clothing processing, automobile making, energy, and food processing. Based on the levered beta formula, companies’ business risks are estimated as the unlevered risk and compared between before and during/after the pandemic for each sub-industries. The automotive sub-industry is highlighted because the pandemic has had its most substantial impact. The paper analyzes both short-term and long-term effects.  Potential solutions to the governments and the companies for the manufacturing industry to maintain a healthy and stable state are also discussed.