© filipefrazao84 dreamstime.com_ General | February 24, 2020
U.S. paying the price as Coronavirus interrupts supplies
On top of the two-year trade war’s effects to their bottom line, the global health crisis caused by the coronavirus has forced U.S.-based suppliers to pay a premium to satisfy domestic manufacturing needs.
After a number of Chinese factories darkened as a result of the virus outbreak in late 2019 and rapid spread in early 2020, significantly slowing down the flow of industrial parts and supplies from China, suppliers to U.S. manufacturers like Caterpillar, Deere & Co., and Komatsu Ltd., are paying a premium to keep supplies flowing to their U.S. manufacturing customers, a Reuters story is reporting. Those products still being sourced from China are costing more to transport for some suppliers, who have resorted to booking more expensive air freight, as opposed to sea freight, due to travel restrictions on both roads and shipping routes. Additionally, workforce shortages in the Chinese trucking and shipping industries are affecting overall costs of goods. As a work around, some suppliers have seen little choice but to look outside of China, which has surged prices as much as 30%, according to the Reuters story, as the global rush is on for non-China sourced supplies. At Illinois-based electronics manufacturer Morey Corp., shortages are looming for circuit boards and casting parts as soon as March if supplies are not replenished. As a remedy, the company has called on vendors in the United States, but Sourcing Director Tanveer Khan told Reuters the difference between domestic and Asian suppliers “is as much as 30%.” In another example, Illinois-based Morton Industries said it is scrambling to secure a domestic source for tooling and fixtures it needs to shape metal that it previously imported from China. While the trade war lumbers on, industries around the globe are bracing for the effects of a protracted global health crisis if countries cannot handily contain the virus the way China has been able to. According to the World Health Organization (WHO), China’s number of new coronavirus cases has peaked and steadily receded since early February, according to a media briefing conducted today by WHO officials. However, a very recent spike in the sudden increases of cases in Italy, Iran and the Republic of Korea are raising concerns, though WHO Director General Dr. Tedros Adhanom Ghebreyesus said in remarks today that the organization is still not calling the COVID19 outbreak a “pandemic.” “For the moment, we are not witnessing the uncontained global spread of this virus, and we are not witnessing large-scale severe disease or death. Does this virus have pandemic potential? Absolutely, it has. Are we there yet? From our assessment, not yet.”