One more thing about the winter

OK, so this past winter was brutal. That may go down as the understatement of the year. We have written about it a bunch on this site and in print––and for good reason.

The impact the winter had on freight transportation and logistics operations is well-documented, too, what with making it harder for shippers to secure capacity, especially over the road, as well as railroad-related service issues, among other issues.

But when it comes to how the harsh winter weather impacted manufacturing and non-manufacturing operations, it was not nearly as dire as it was for freight transportation and logistics, according to the Institute for Supply Management’s (ISM) Spring 2014 Semiannual Economic Forecast that was issued earlier this month.

In each ISM Semiannual Economic Forecast, a “special question” is included for both its manufacturing and non-manufacturing member respondents. The Spring 2014 question was along the lines of whether or not there was an impact on their businesses (specifically new orders, production, and employment for manufacturing and new orders business activity, and employment for non-manufacturing) and, if so, whether those impacts were short-term (to be made up in the balance of 2014) or long-term (impact having a lasting effect on the whole year).

Looking at the feedback for this question in the report, I initially expected a much different response than what the data indicated.

For manufacturing, on the new orders side, 51.3 percent of the panel said there was no impact, with 34.2 percent citing a short-term impact, 6 percent long-term, and 8.5 percent unsure. The report added that for manufacturing production, 52.8 percent of respondents indicated no impact, 34.2 percent indicated that the impact was short-term, 7.5 percent indicated that the impact was long-term, and 5.5 percent were unsure of the extent of the impact. And for employment, 78.5 percent of respondents indicated no impact, 12.5 percent indicated that the impact was short-term, 3 percent indicated that the impact was long-term, and 6 percent were unsure of the extent of the impact.

As for non-manufacturing, for new orders, 58 percent of respondents indicated no impact, 26.4 percent indicated that the impact was short-term, 6.3 percent indicated that the impact was long-term, and 9.2 percent were unsure of the extent of the impact. For Business Activity, 57.1 percent of respondents indicated no impact, 32.6 percent indicated that the impact was short-term, 5.7 percent indicated that the impact was long-term, and 4.6 percent were unsure of the extent of the impact. Finally, for Employment, 81.7 percent of respondents indicated no impact, 9.7 percent indicated that the impact was short-term, 2.3 percent indicated that the impact was long-term, and 6.3 percent were unsure of the extent of the impact.

So, looking at that feedback, the general consensus could be something like: “take that, winter!” Grin. As I previously mentioned, I mistakenly assumed that the impact would be far more severe. In my own defense, living through this past winter in Maine was not a cause for celebration (summer is a different story fortunately!).

Brad Holcomb, chair of the ISM Manufacturing Survey Business Committee, told me that he anecdotally heard about 40 percent of publicly traded companies pointed to weather as a drag on their first quarter earnings reports, which saw pundits labeling bad weather as an “excuse” for poor performance.

“We saw with the data that the winter’s impact was not that severe,” he said. “It was difficult, of course, but it is over now and companies are back on track.”

Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee, agreed with Holcomb, explaining that while the weather had some impact in the first two months of the year, once there was a break in the weather things got back to business as usual.

“It was definitely a speed bump but not a crash,” he said.

The fact that Old Man winter did not beat down overall throughput for ISM members is a good thing. Even with some of the challenges it presented for nearly everyone, they were able to work through it and persevere, which is a good thing. Will things be as smooth the next time winter rears its ugly head? Only time will tell.