The post-pandemic rebound for Utah’s manufacturing industry could occur earlier than once expected.
A new report by the Utah Industry Resource Alliance (UIRA) paints a rosier picture for recovery than a forecast published in November. The new study indicates that as a group, Utah manufacturers could return to pre-COVID-19 sales levels a year earlier than originally forecast — by late this year in the expected case, and by 2022 in a more-pessimistic case.
“Utah’s economic performance, combined with mostly positive economic activity and improvements in logistics over the same period nationwide, places Utah’s manufacturers in good position for further recovery and growth over the forecast period to 2025,” said Tulinda Larsen, executive director of the Utah Advanced Materials and Manufacturing Initiative (UAMMI).
“Moreover, other factors with relation to the virus itself and public policy are moving in a direction that fosters a higher level of economic activity over the forecast horizon.”
Using funding from the CARES Act, UIRA’s study considered three economic scenarios based on GDP growth: low, expected and high and UIRA expects the economic return to growth in four phases: containment, recovery, reset and growth.
Under the low scenario, sales would not return to pre-pandemic levels until 2023. However, under the high scenario, a return to pre-COVID sales volume could happen as early as this year.
The report also looked at individual manufacturing sectors:
• Petroleum and coal products: “36.7 percent drop in 2020 due to less travel and commuting; industry has likely hit bottom, so it should recover in 2021.”
• Medical equipment and pharmaceuticals: “Short-term downtown due to canceled elective procedures; expected quick return and pharma strength.”
• Aerospace and defense: “Air travel recovering slowly but still only at 50 percent of pre-pandemic levels; defense is benefiting from SpaceX and NASA but not offsetting commercial.”
• Automotive: “Sales performed better than expected in 2020; strength could continue due to stimulus.”
• Food products: “Restaurant recovery essential to recovery; transportation and product costs remain high.”
• Metals: “Structural metals benefiting from construction surge; nonferrous metals weak generally, but Rio Tinto mining activity in Utah is strong.”
• Recreational equipment: “Sales of durable recreation equipment up strongly in 2020; supply chain challenges remain.” The report noted that sales performance in Utah was up 8.2 percent in 2020, well above the change in sales for the U.S. as a whole. Employment in the state
fell by less than a percentage point, while the nation’s fell 6.1 percent. Utah’s 2020 exports likewise were estimated to have performed better than the nation as a whole, up by 1.7 percent to $17.6 billion.
“Utah has demonstrated a strong level of resiliency, especially among its manufacturers, who have managed to increase employment in the sector and help make Utah one of the most successful states, from an economic standpoint, throughout the pandemic,” the report said.
