Is a supply shortage on the horizon in the mobility sector as coronavirus slows China’s output?
A number of suppliers of equipment in the mobility and independent living industry have indicated that supply problems may arise if China is unable to bring production capacity back up to 100 per cent next week.
It comes as COVID-19, the latest strain of coronavirus, continues to spread across China’s Hubei Province, the epicentre of the epidemic, severely impacting on production and movement of products from the region.
The virus, which has killed over 1,300 people and infected more than 63,000 as of the 14th February, has resulted in the Chinese government to impose travel bans and factory closures to curb the spread, which have been largely successful.
Outside of China, there have only been two reported deaths and less than 500 confirmed cases in 24 countries.
Despite success in preventing a world pandemic, the resulting slowdown in China’s manufacturing output is being felt across global supply chains over multiple sectors.
The spread of the coronavirus across China came at the start of the Lunar New Year – the world’s biggest human migration when billions of people in South East Asia travel home to celebrate with families.
During the period, the Chinse government closes all factories in the country, with the majority of suppliers outside of China planning well in advance for the disruption to lead times of goods.
This year, however, the coronavirus epidemic has led the Government to extend the holiday, extending the period of factory closures and pushing back production and export schedules.
“Companies that operate just-in-time operations and hold little stock will likely be the ones to really feel the immediate impact on supply” Mobility equipment supplier
Speaking to one mobility supplier, they explained the current situation: “Our factory has told us that it will open on Monday, however, the situation is fluid. The New Year started on the 24th January and was scheduled to last until the 30th but it was extended to the 2nd February. It was then extended another week and we were told last weekend it was being extended again. So there has been no production for three weeks.
“The factories are told by the Chinese authorities on the weekend and they relay that information to us so there is every chance it may be extended again this weekend.”
Alongside closures at factories, the movement of materials, components and products has also been disrupted, with goods at docks not leaving the country.
Another supplier confirmed that they have a shipment in a container that has yet to be shipped because of the extended closures of factories and docks.
Discussing the potential impact with a number of suppliers in the industry, many emphasised that their current level of stock in the UK will enable them to weather the storm and avoid major supply disruption.
Any predicted delays are forecast to be relatively short and will likely begin to appear in the sector around May, June and July time.
The outbreak shines a light on just how interlinked and global trade is, with China, the world’s manufacturing base, being the starting point of many complex, multinational supply chains.
Even for UK suppliers that do not directly import from China, delays have occurred.
One UK manufacturer in the sector emphasised the point, stating that their company is facing delays because one of their specialist suppliers in Europe who sources specific components from China was facing supply shortages.
“Companies that operate just-in-time operations and hold little stock will likely be the ones to really feel the immediate impact on supply,” noted one importer.
“For those with larger warehousing and stockholdings, the ripple in supply is not as deep. If factories remain closed, however, there will be supply issues across the entire industry. If that happens, it will present opportunities for those that do not rely on imports from China as others scramble to find new suppliers.”
One supplier that was prepared to go on record was batter distributor Cillian Brugha, Sales Director of Easystart Batteries, who explained that battery specialist was not facing any supply concerns in the foreseeable future.
“Fortunately, we hold good levels of stock in the UK and the level of communication we have with our factory in China is fantastic,” he told THIIS.
“The co-owner of Haze is an English gentleman and his Chinese business partner has close ties to the UK so we are in constant close contact. It allows us to be prepared as the situation develops.”
With numbers of reported cases of the virus in China jumping considerably this week, all eyes with be on the Asian manufacturing powerhouse to see if factory doors open and ships hit the water next week.https://thiis.co.uk/is-a-supply-shortage-on-the-horizon-in-the-mobility-sector-as-coronavirus-slows-chinas-output/https://i0.wp.com/thiis.co.uk/wp-content/uploads/2020/02/supply-chain-shortage-china-coronavirus.jpg?fit=900%2C600&ssl=1https://i0.wp.com/thiis.co.uk/wp-content/uploads/2020/02/supply-chain-shortage-china-coronavirus.jpg?resize=150%2C150&ssl=1Coronavirus NewsCOVID-19 Trade NewsNewsroomRetailer NewsSupplier NewsTrade Newschina,Chinese Government,coronavirus,COVID-19,Easystart,epidemic,Haze,Hubei Province,Lunar New Year,mobility retailers,mobility suppliers,pandemic,supply chainA number of suppliers of equipment in the mobility and independent living industry have indicated that supply problems may arise if China is unable to bring production capacity back up to 100 per cent next week.It comes as COVID-19, the latest strain of coronavirus, continues to spread across China’s...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine