The impact of the Covid-19 epidemic on the US economy began to become clearer. Many large companies here are suffering from increasing losses.
According to the Washington Post , US businessman James Mault – founder of BiolntelliSense – put all hopes on March 1.
That was the day when his manufacturing partner in China reopened and began to release medical equipment after a period of closure due to the new strain of corona virus (Covid-19).
Engineers have returned to work at a factory in southern China. This is a medical device manufacturing facility for a number of Western companies. According to the schedule, hundreds of workers will be at the factory on March 1.
“We receive products 4-6 weeks late. The current situation is still tolerable. However, if the delay is prolonged, the impact on the business will be significant.” Mr. Mault said.
Worrying to insomnia
economists say the next few weeks will be a challenging time for many American companies waiting for Chinese factories to reopen.
If Chinese suppliers resume operations soon, many American businesses will avoid disaster. And unpredictable developments are making US business owners worried about insomnia.
The problem is not only the number of workers returning to the factory to work. Factories need raw fuel to restore production and to wear masks to ensure worker safety.
The plant also needs a system of trucks and ports to function normally to ensure goods are brought to markets. Congestion caused by the mowiss strain of coronavirus causes this network to become paralyzed.
For many American companies, the Covid-19 epidemic exacerbated the difficulties they experienced during the US-China trade war.
The Covid-19 epidemic also dealt a severe blow to global companies selling products and services in the Chinese market. Last week, Deere announced that sales of construction equipment had plummeted in the past month as construction activity in China stalled.
A number of fast food chains and retail chains, including Starbucks, Domino’s Pizza and Lululemon, have closed stores in mainland China and delayed opening new facilities.
American auto parts maker Axle & Manufacturing acknowledged a $ 25 million drop in sales in February because of stagnant car production in China. Tesla also said profits will be affected.
even businesses operating outside the Chinese market are struggling. “The closure of factories producing goods exported to the US market will certainly have a chain effect,” Washington Post quoted Keith Creel, CEO of Canadian Pacific Railway, as saying.
A number of American businesses have relocated their production lines from China and avoided paralysis due to the coronavirus epidemic. Azazie, a fashion retailer in San Jose (California), previously had 50 processing factories in China.
Currently, the company has taken part of its production line to Cambodia and Vietnam. “We are having a hard time. It’s not easy to expand our market outside of China,” said Ranu Coleman, Azazie Marketing Manager.
But with many multinational companies relying on production lines in China, relocation is not easy. Last week, Apple warned that this quarter’s revenue would not reach its target due to the paralysis of iPhone production lines in China and declining demand there.
Mault said BioIntelliSense plans to bring production lines to other Asian countries or Mexico. “But the relocation is too time-consuming, we still decided to wait for Chinese factories to resume production, ” he explained.
MGA Entertainment, the maker of Bratz dolls and LOL Surprise !, said some of its factories in China had resumed operations, but were unable to obtain raw materials, including steel, resin and cardboard. .
MGA Entertainment’s factory in Hudson (Ohio) is running at full capacity, but the facility only has enough raw materials imported from China for another month. The company is seeking materials from the US. “In 41 years of business, this is the worst disaster for us,” lamented CEO Isaac Larian.
Hubei Province – with the Wuhan capital as the epicenter of the new strain of coronavirus – is a major production center in China. Engine maker Cummins said manufacturing facilities in Hubei would continue to close until March 11.
Companies like Cummins are struggling to supply masks to provide workers. Provinces in China have different rules for the number of masks each day, said Steve Lamar, CEO of the American Apparel Association.
With 40% of apparel and 65% of footwear sold in the US market having Chinese origins, US apparel businesses are racing against time. “There is so much uncertainty ahead,” Lamar admitted.