Metalworking Activity Collapses as Coronavirus Forces Broad Economic Contraction

With a reading of 41.0, the Gardner Business Index (GBI): Metalworking reported the lowest reading in its more than eight-year history. Gardner Intelligence’s review of the six underlying industry components — whose average is calculated for the reading — observed all-time lows for new orders, exports and employment.

It is important to remember that these readings represent the breadth of change occurring within the metalworking industry, not the rate of decline. As such, these low readings indicate only that a large proportion of metalworking manufacturers reported some decreased level of business activity. The reading does not quantify the magnitude of the downward change. 

Unlike the other components of the Metalworking Index, the reading for supplier deliveries moved significantly higher. The reason for this has to do with how the supplier delivery question is asked (responses are either “slower,” “same” or “faster”). In normal times, when demand for upstream goods is high, supply chains cannot keep pace with these orders. The resulting backlog of supplier orders thus lengthens their delivery times. This delay causes our surveyed companies to report slowing deliveries and, by our survey’s design, this elevates the supplier deliveries reading. The world’s efforts to slow the spread of COVID-19 have significantly disrupted supply chains worldwide. It is thus due to this disruption, as opposed to strong demand for upstream products overall, that supplier delivery times have lengthened and the reading has increased.