Worcester Business Journal

10 2 021 Economic Forecast • Worcester Business Journal • www.wbjournal.com What does financial freedom mean to you? At Bartholomew & Company, we believe it comes down to sound financial planning and investment advice—expertise you can trust to keep you on track at any stage, whether you're just starting your business or getting ready to retire. It's the kind of guidance we've been delivering for more than 25 years. So that when those important moments come along, you can experience every one of them with confidence. Call us for a complimentary consultation at 508.753.8807, or visit www.bartandco.com. Financial Planning Today for All of Tomorrow's Firsts 370 Main Street, Suite 1000, Worcester, MA 01608 | 508.753.8807 Securities and advisory services offered through Commonwealth Financial Network, ® Member FINRA/SIPC, a Registered Investment Adviser. Lamoureux Pagano Associates | Architects Superior Design Inspired by You 2020 Recipient of the Boston Society of Architects Women In Design Award of Excellence: Kathryn Crockett, President ECONOMIC FORECAST 2021 The road ahead for manufacturing amid M anufacturers of every size and across every industry, here in the Worcester area and elsewhere, are weath- ering unforeseen economic forces rising from the coronavirus pandemic. Demand for products has been upended, relationships with suppliers and customers are being tested, and liquidity issues have multiplied. Some have had to increase the production of goods, such as grocery items, house- hold products and essential medical and protective equipment. Others, like aerospace, automotive and energy, have seen a decline in demand. In addition, manufacturers must con- sider the health and safety of their peo- ple. They need to find a balance between keeping factories running and not subjecting employees to unneces- sary health risks. The pandemic has highlighted the need to take for- ward-looking measures such as retool- ing technology systems to handle sup- ply chain issues, inventory management and shifts in production processes. Areas to address: Employee health and well-being To protect employees, manufacturers should consider leaving extended peri- ods between shifts and conducting remote handoffs, which reduces face- to-face interactions. Some are monitor- ing employees' health by checking tem- peratures, setting up health centers, and hiring onsite medical professionals. Because these decisions are both crit- ical and unprecedented, sharing experi- ences is key. Industry leaders should engage in continuing dialogue to address shared issues, like frequency of employee health screenings and steps to take if an outbreak occurs. These considerations are vital, and working with industry colleagues can help com- panies implement solutions. Manufacturers should consider the economic health of employees. While short-term challenges can be acute, manufacturers should think about how they want to be positioned as a busi- ness in the long-term and consider the importance of their employees. Given how challenging it can be to acquire good talent, many are looking at how to maintain their workforce, by tempo- rarily freezing or cutting pay rather than laying off. This can help to build loyalty and retain talent. Short- and long-term business transformations In response to declining demand for certain products, some manufacturers have quickly pivoted. Hockey mask companies are making face shields, fashion designers are selling masks, and distilleries are producing hand sanitizer. This is a smart short-term strategy for those who can retool existing facilities, and it allows manufacturers to reallocate resources toward most pressing needs. It enables them to consider longer-term objectives when future demand is uncertain. To guide strategy, it's essential manu- facturers track orders, inventory and other internal data. For some companies, this will require upgrading or acquiring analytics systems to deliver more robust predictive models. Manufacturers should closely watch indicators including national retail sales numbers, housing stocks, building permit numbers and consumer confidence levels. Financial stability Many businesses are facing liquidity issues and other financial concerns. As they navigate the path forward, manu- facturers can consider implementing more systematic credit checks to ensure customers can pay for orders or requesting advance payment terms. Banking partners can offer insights into best practices for credit management, working capital and cash management. These practices include running sensi- tivity models and stress tests to project how long cash will last. While compa- nies may not need relief immediately, setting thresholds can be helpful when it's time to seek assistance. While manufacturers currently face a host of challenges, there are opportuni- ties to make changes now to benefit companies in the long-term. Policies retaining top talent and build loyalty, technology and process changes mak- ing companies nimbler and more adap- tive, and financial practices lending greater insight into risk can help manu- facturers develop a stronger business foundation for the long-term. John Sundborg is the senior relation- ship manager of commercial banking for Bank of America in Worcester. BY JOHN SUNDBORG Special to the Worcester Business Journal W

• Cover