Survival Of Manufacturing Firms

Author: Elysia Rezki ~ Junior Legal Associate ~ PKF Malta
Published on: The Malta Chamber on Thursday 30th April 2020

As the Covid-19 takes its toll indiscriminately across the regions of the world, problems for local manufacturers are going to become ever more apparent as they struggle to cope with diminishing export orders. The corona-virus has had a devastating impact on manufacturing sectors across the world. The sector has been forced to adopt drastic measures to contain revenue losses as well as safeguard the health of employees and the general public.

Policymakers and business leaders within the manufacturing community are assiduously seeking ways through which business can stay afloat amidst the corona-virus pandemic. In light of the current situation, businesses in Europe, including manufacturers operating in Malta are forced to try and rethink their business strategies in order to contain the losses emanating from reduced export orders, and of course, reduce the loss of lives.

A common problem for all sectors lies in the health and safety of their staff, and even the most essential workers are of course not immune to corona-virus attacks. Of course, it is vital to safeguard the health of employees through taking proactive measures such as shortening working time and ensuring protective gears are used by employees at all time. In addition, companies should also ensure that where possible, most of their employees work remotely through digital platforms. Local manufactures will undoubtedly struggle to ensure their staff remain healthy, while also staying buoyant in the wake of the pandemic.

A crucial way in which manufacturing companies are being forced to maintain their operations is by providing their products and services via e-commerce facilities. The adoption of e-commerce is however a major issue for manufacturers who mainly deal in commodities that usually require assembling and other logistical issues. This is particularly to significant for Malta, where the exporting of machinery and technical equipment (e.g. integrated circuits, low voltage protection equipment, video and audio equipment) amount to a significant 1.35$ billion in export value.

Another critical issue arising from the pandemic and its incumbent lockdown and closed-borders across the world is that the physical transportation of products and services through the supply chain may be incredibly problematic, if not, entirely infeasible for the fundamental operation of export-based manufacturing companies, of course leading to substantial losses.

Local manufacturers are also facing the problem of supply-chain disruptions and plant closures due to low level of production and poor rate of customer demand with reduced export orders. In this regard, it is critical for Maltese manufacturers and other players to maintain regional supply chains that will see them reduce the impacts of Covid-19 rather than engaging in longer supply-chains, which may be highly problematic to manage given the world-wide scale of the pandemic.

Owing to this, it would be wise for manufacturing companies to explore the proactive deployment of new technologies, such as the use of industrial internet-of-things, collaborative robots, and autonomous materials so that worker density throughout the operation cycle is minimized as much as possible to contain the spread of the virus. Ideally, local manufacturing units can be assisted by Malta Enterprise to fund the cost of conversion of their production facilities to produce any of the long lists of currently scarce PPE items used by medical staff and hospitals. The range is vast and may include medical gowns, a variety of face masks, oxygen tests, respirators, ventilators and other sanitary ware. This may be a paradigm shift for certain operators, as it means installing new machinery, training workers, file for any necessary permits or licenses, arrange for adequate storage space and source raw materials from markets which are already running short of supplying a rush to meet increased global demand. Naturally, the benefits arising from diversification can, in the long run, be highly beneficial for a new mix of products available for export from Malta.

However, with reliance on e-commerce and other technologies now a necessity for businesses to keep afloat – there is an increased need to be diligent around the possibilities and potential impacts of cyber-attacks, which evidently reduce export orders.

Indeed, most manufacturing companies in Europe are increasingly relying on technology for their daily operations, which renders them particularly vulnerable to cyber-attacks. In this regard, it is important for manufacturing companies to deploy state-of-the-art technologies that can detect and contain cyber-threats, thus ensuring that their operations are not disrupted by external forces.

Companies are probably going to become increasingly aware of their needs to reach out to experts who can help them curb and respond to cyber-attacks while at the same time, also ensuring that the business continues to make profits amidst the corona-virus pandemic.

Author: Elysia Rezki ~ Junior Legal Associate ~ PKF Malta
Published on The Malta Chamber on Thursday 30th April 2020
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