COVID-19 has brought some of the biggest challenges the world has seen in living memory. Like every other industry, the manufacturers and distributors of commercial vacuum sealing machines have felt the impact, though it’s not all doom and gloom. Many of the changes brought about by COVID-19 have inadvertently brought about an upturn for the industry.
We’ve highlighted below some of the main effects – both positive and negative – caused by the pandemic.
Supply chain disruption
Early disruption caused by supply chain issues in China was magnified tenfold when wider lockdowns were implemented around the world. Manufacturers were unable to operate safely, with many closing their doors for a prolonged period of time.
Basic components that had previously been easy to source suddenly became a rarity which ultimately resulted in increased costs. PricewaterhouseCoopers highlight the additional cost of taxation, as manufacturers turned to different regions of the world to source their materials.
In many cases this continues to be a challenge in terms of ongoing supply chain issues and/or the impact on quarterly profits. It is essential for businesses to review their disaster recovery plans and risk registers in order to prepare for future ‘second wave’ lockdowns around the world.
Workforce reduction
Whilst many companies continued to operate through the pandemic, the UK government brought in strict requirements for additional hygiene practices and the need to social distance. This brought with it a necessary workforce reduction since companies simply couldn’t house as many staff whilst adhering to these guidelines.
The resulting loss in production output, even with the government’s furlough scheme, hit the bottom line hard. Though at the same time, reduced demand from a long-term client base (see below), along with an impacted supply chain (see above) did provide some positive opportunities. It allowed a business to operate in a ‘skeletal’ capacity, ticking over and allowing time for reflection.
This can be a very useful thing, particularly within management. Companies have a tendency to fall into a rut and become overly dependent on existing supply chains and customer bases. This can result in missed opportunities, for example a new area of potential market growth. Having time to fully explore the direction of a company from a conceptual standpoint can be a real blessing in disguise.
Changes in consumer demand
Industries creating vacuum packing machinery have been heavily affected by the closure of the catering industry during the second financial quarter. In most cases, the catering industry was the ‘bread and butter’ for sales of vacuum food sealers, and it disappeared virtually overnight.
Although it might not seem like it, this is actually one area where manufacturers of vacuum food sealers have an advantage. The catering industry is slowly coming back to life, and it faces a huge range of new challenges that the vacuum packing industry can help with.
Manufacturers of Perspex screens will report record demands for their products as the catering industry invests in new equipment to align with government guidelines. Far from being ‘business as usual’, now is a time when the catering industry needs to look carefully at its asset list to determine what stays, what goes and what is needed.
The vacuum packing industry can and should focus its efforts on meeting the demands of an industry that is itself tackling major supply chain issues – costs are rising and foot traffic remains low. Many catering businesses haven’t previously considered buying a vacuum pack machine but in this new environment they would clearly benefit from being able to bulk-buy and store a wider range of fresh food supplies.
It is also a time for the vacuum packing industry to take a fresh look at the domestic market. Many people are shielding from the virus and can’t go to the shops as regularly as they would like. Affordable, domestic vacuum food sealers can make a significant impact here, allowing people to store and freeze larger amounts of food that would otherwise need replenishing more regularly.
Silver linings
John Adams famously said that ‘every problem is an opportunity in disguise’, and those working in the vacuum packing industry would do well to take this to heart. Companies that adapt quickly to changing market demands will soon offset their Q2 deficits, even if it takes some investment in marketing and rebranding to make it happen.
71% of respondents to a recent PwC survey stated that financial impact was their main concern about the effects of COVID-19 on their business. Taking on the challenge of COVID-19, and seeing it as an opportunity to expand and develop into new areas of the market, could be the key to maintaining a thriving business in the difficult months to come.