Good Afternoon,
As efforts are made to scale the healthcare response to COVID-19, global governments and central banks scramble to mitigate the associated financial crisis. Following are relevant updates to the plastics industry:
Supply
- Chevron announced expense and capital spending reductions and a suspension of stock buyback. It plans a 20% reduction in production from prior guidance in the Permian Basin.
- Most suppliers continue to operate without interruption.
- Both PE and PP producers are employing a detailed vetting process for all open orders. They are starting to evaluate their production wheels and looking at making any necessary changes to accommodate demand for essential business.
Supply Chain
- Starved for passengers, airlines are diverting capacity to freight transport and considering a full shutdown of domestic passenger travel.
- Grocery supply chains have been upended by COVID-19 and its sudden impact on the economy and food supplies.
- U.S. ports are experiencing modest delays:
Markets
- Seventeen states have now imposed stay-at-home restrictions.
- While definitions of “essential” businesses vary by state, the states are applying a broad interpretation. Resin production and logistics support are considered essential in all restricted states. Definitions of essential manufacturing vary. As an example, Michigan’s definition reads:
“Workers necessary for the manufacturing of materials and products needed for medical supply chains, transportation including automobiles, energy, communications, food and agriculture, chemical manufacturing, nuclear facilities, the operation of dams, water and wastewater treatment, emergency services, and the defense industrial base….” - The private sector is mobilizing to address safety equipment shortages, with Ford, GM and other companies shifting production to safety equipment.
- FEMA plans to invoke the Defense Production Act for the first time today to procure 60,000 test kits.
- Ford announced that it is delaying its planned resumption of production on March 30.
- Stay-at-home mandates and curtailments in air travel led Boeing to cease production in Seattle and GE Aviation to curtail jet engine production, lay off 10% of its workforce and furlough half of its maintenance and repair staff.
- Our medical molders are challenged to meet the surge in demand for safety equipment and supplies.
- The economic shock is affecting more than 401(k)s; there is growing concern about the stability of the pension system, including the wherewithal of the federal Pension Benefit Guaranty Corporation.
International
- India, the second most populous nation, declared a three-week lockdown to combat COVID-19.
- Mexico remains reluctant to impose a national social-distancing mandate for fear of damaging the economy; the State of Mexico and Mexico City have imposed restrictions.
Our Operations
- Our base Distribution business remains firm.
- Our Healthcare and Sourcing teams are busy managing demand tied to COVID-19, including orders from our automotive suppliers who are diverting production to healthcare products.
- States representing nearly half of our annual volume are now under stay-at-home mandates.
- With the uncertainty of new stay-at-home restrictions forcing more manufacturing facilities to close, we are introducing added internal reviews relative to new orders to minimize the risks of stranding needed working capital in inventory.
- M. Holland is open for business, deemed essential and will continue to operate at full capacity.
Thank you,
M. Holland Company
We will provide further COVID-19 bulletins as circumstances dictate. For all COVID-19 updates and notices, please refer to the M. Holland website.