Survey Results: Reaction of Japanese Companies in the US to COVID-19 - Part 4

Since March 2020, JETRO USA has been conducting surveys regarding the business concerns and reactions of Japanese companies to the ongoing COVID-19 crisis in the US. Four parts are now publicly available.

Part One of the survey was released on March 27th with 905 companies responding to the survey, of which 489 companies were from the manufacturing industry. The majority (571 companies) had employees in the range of 1-100 people.

Key findings from the survey were based on challenges while working from home, production and sales levels, labor management, visa restrictions, understanding the federal and state guidelines, and information on public aid and assistance measures.

Approximately 90% of companies implemented work from home guidelines, regardless of whether government Stay-At-Home Orders had been issued. However, 80% of companies are facing challenges including internal and external communication, executing on-site work such as at manufacturing facilities and warehouses, processing accounting, and keeping stable production levels.

70% of companies stated a decrease in sales occurred (both manufacturing and non-manufacturing) and more than 50% of companies suspended production or reported less than the normal rate of production.

Part Two of the survey, released April 6, surveyed an additional 143 companies (1,048 in total) with a particular increase of respondents from the North and Southeast regions.

Key emphases were similar to Part One, with continued impacts on sales and production status, expats continuing to remain in the US despite 30% of companies offering the option of returning home, increase in the number of company employees working from home, and challenges in utilizing available Public Assistance Programs.

More than two-thirds of companies have stated that sales declined 20% year-over-year and over 20% stated sales decreased more than 50%. In our last survey, 50% halted or decreased production capacity, but this has increased to 70% with 75% of companies stating a decrease in domestic demand as the main reason for decline, followed by a shortage of workers.

Part Three, released May 15 with 954 company responses, highlights some of the results and action taken during the month of April. For this round, key findings focused on the overall sentiment of private companies nationwide during this pandemic. Nearly 75% of companies stated that sales have decreased in the past month - a significant increase from the previous survey (54.5%) conducted on April 6~8.

80% of respondents stated that their production has reduced or halted completely, with most reasoning that there was a decrease in domestic demand. However, 15% stated that they ramped up production due to the increased demand for PPE products, medical device, and online sales. On supply chain trends, 10% of companies with reduced production stated they have been affected by the delays in receiving materials, mainly from the US (64%) and Mexico (44%). To reduce the problem of delays, some companies are faced with decisions like changing suppliers to a different region, adjusting production volume, and responding to tariff increases and more.

On employee retention topics, 68.7% of companies still plan on retaining their employees, while 50% of employers offered furloughs to retain employees and additionally provide healthcare benefits. On the other end, 24.1% of employers whom suspended operations laid off employees.

Many US states have begun lifting stay-at-home orders and allowing businesses to re-open. According to our survey, 71.6% of respondents stated that the stay-at-home order in their area has already been lifted. 34.8% of respondents said they expect to reopen their business in May, with another 31.4% expecting to reopen in June. Another 31.1% responded that they are unsure of the timeline as they are waiting on the stay-at-home order in their area to be lifted. Common challenges to reopening businesses include: alleviating employee concerns, securing PPE, preparing for cases if employees get infected, and defining a guideline for reopening business (in accordance with the state guidelines).

Part Four, the most recent section released June 1 with 834 company responses, showed a continuing trend in cautious consumers. 75% of respondents stated a sales decline with only 30% expecting to recover sales by the end of year. Yet as states began reopening, most of the respondents stated they had resumed production. Whereas in the previous survey only 28% of respondents had halted production, that number decreased to 3.5% in this part.

One major cultural shift of note is the wider acceptance of work-from-home measures from Japanese companies in the US. Only 40% of the companies in the manufacturing sector anticipate to return their employees to working on-site by the end of the year. In the non-manufacturing sectors, that number was even less, at 20%. A major reason for this was Japanese companies seeking a safe working environment for their employees.

Regarding supply chain issues, 70% of the respondents did not have any plans to make change their current policies. However, the other 30% is considering the reevaluation of supply chains due to COVID-19 and US-China trade friction.

To stay updated for the results on Part Five of our surveys, please continue to visit our website for more information or contact the nearest JETRO office to get on the mailing list for these reports. Please also follow JETRO USA for the latest news.