U.S. supplier industry is on alert as coronavirus spreads in China

As China and the rest of the world try to contain the spread of the 2019 Novel Coronavirus (2019-nCoV), otherwise known as the coronavirus, the RV industry is bracing for a potential supply chain disruption.

According to the World Health Organization (WHO) — which on Thursday (Jan. 30) declared the new strain a global health emergency — coronaviruses are a large family of viruses that range from the common cold to much more serious diseases. This new coronavirus strain, which so far has infected more than 5,570 people on four continents and killed at least 130, was first detected Dec. 31 in Wuhan, China’s seventh largest city resulting in the largest-ever quarantine zone involving more than 50 million people.

Also, Chinese government officials pushed back the end of the country’s Lunar New Year national holiday from Sunday (Feb. 2) to Thursday (Feb. 9) to “reduce mass gatherings” and “block the spread of the epidemic.”

With people unable to report for work, the world is quickly discovering how dependent it is on Chinese manufacturing and production. Ford and Toyota have idled some of their vast Chinese assembly plants for an extra week. Apple is rerouting supply chains. Starbucks has closed thousands of stores and is warning of a financial blow. Airlines have begun suspending or reducing its flights to China as well.

The RV industry also is bracing for the looming impact on its supply chain, officials noted.

“So far, so good, for now” was the sentiment expressed by Albert Benzion, owner of National Quality Products, which manufactures the Contoure line of built-in, space saver appliances for the construction, military, marine and RV markets.

“Right now, everything that we planned ahead for has been shipped,” he told RVBUSINESS.com, sister pulbication to WOODALLSCM.com, “but going forward, there may be some issues.”

He noted the coronavirus outbreak occurred during the Chinese New Year, the biggest holiday in China. “The government is issuing some extensions to their Chinese New Year, by 10 days,” he said. “So, there’s going to be a slowdown in the factories. And that’s not only one factory.”

He said smaller companies that supply parts to the larger manufacturers in China also will be shut down, sending ripples through the supply chain.

“It’s like a car, where one manufacturer makes the wheels and another makes the tires, and so on. Yes, I would say going forward, over the next three months if it (the virus) doesn’t clear out quickly, it will affect the supply chain,” he said.

Similarly, Wayne Kaylor, CEO of WAY Interglobal, an international importer/distributor to the RV, marine and housing markets based in Elkhart, Ind., with offices in both northern and southern China, said everything is essentially in a “wait-and-see” pattern.

“I’ll tell you what I do know –– and all I know is what my people over there are telling me – the Chinese government has pushed back the end of Chinese New Year. They’re telling factory workers not to come back until Feb. 9 in almost all territories. Same with shipping areas. Only certain ports can ship out prior to the 9th, so there is a possible effect for delay because of the coronavirus,” he continued.

“They’ve already pushed it back a little over a week. If they push it back again, it’s going to have a definite negative impact. They’re all hopeful that the 9th is kind of the date that they allow everything to get back to normal. So, it should be okay, but it’s kind of a wait-and-see for now,” he said. “We’re all in the same boat. We’re all just waiting to see what happens. I know my employees over there have not left their homes for five days.”

Jeff Cornell, mechanical engineering manager at Marshall, Mich.-based Progressive Dynamics, which manufactures power centers, power converters, charge wizards and AC/DC distribution panels for the RV industry, echoed the views of others who depend on shipments from China.

“We do business with China and get a lot of components out of there,” Cornell said. “The good thing is, I guess, right now, is that we’ve been doing business in China for at least 20 years. We know about Chinese New Year, so we put a lot of our orders in early, so I think we’re going to be covered as far as materials go currently.”

Progressive mainly imports circuit boards, transformers, coils and magnetic products from China. Cornell said although the near term shouldn’t be a problem, the coronavirus outbreak could have an affect looking forward.

“The concern is what happens when the factories go to start up after Chinese New Year,” he said. “There’s always an issue with the employees going back to their homes, finding out that there’s other work in a different city that might pay more money, and they don’t come back to the factory where they were before.”

The coronavirus also could add to normal levels of attrition if workers get sick and don’t come back to work.

“I’m not too concerned right now with shipments that will be coming. I don’t feel the ports are going to be having an issue with this long term,” he said. “But, certainly, I think the production workers in China making product – that’s going to be an issue.”