Coronavirus-Fueled Fears of Supply-Chain Shortages Worry OEMs

It was bound to happen. After shipping our technology and much of our manufacturing capabilities off to China after it joined the World Trade Organization in 2001, we’re experiencing the consequences. Supply chains are squeezed tight and may run out of inventory for many products that include penicillin and myriad other drugs (my bottle of Aleve says Made in China — yikes!), electronic components and entire product lines such as iPhones, automotive parts, clothing and so many other items that we get from China.

Closed for business sign

Maybe this is the lesson that manufacturers needed to learn. Perhaps it will lead them to begin manufacturing in the United States again, if for no other reason than to have at least a secondary supplier in case a virus breaks out or a container ship sinks, or any one of a number of problems that can occur when a company offshores manufacturing.

Unfortunately, many U.S. companies don’t even have the ability or equipment to manufacture the things they used to make here even if they wanted to. Equipment they used in the 1990s is now outdated and obsolete. Skilled workers have moved on to other manufacturing plants or retired altogether and are now fishing in Florida.  

Articles in business publications abound with news of supply-chain disruptions and shortages as a virus that emerged from somewhere in Wuhan, China, halts the world’s economic engine. For example, a “Heard on the Street” commentary in the Feb. 27 edition of the Wall Street Journal by Nathanial Taplin (“Supply Chains Are at Risk”), notes that much of China has been shut down because of the coronavirus, leaving factories at a standstill, the worst epidemic since SARS in 2003. But that was early on in China’s buildup to becoming the manufacturing plant of the world, and the impact wasn’t nearly as bad.

Taplin reported that while there’s been a “ripple effect” in industries such as automotive, so far the worst is being felt in other Asian countries such as South Korea and Japan, which are used to just-in-time deliveries because of the short shipping distance. Taplin believes that the automotive and electronics industries will take the biggest hits.

What about the plastics industry? Dwight Morgan, executive vice president of M. Holland Co. in Northbrook, IL, described the situation as “very challenging” and one that will take a while to work through the system. “We’re looking at it on three levels of concern,” Morgan explained. “First there’s shipping. We’re starting to see market delays because ships are not available and there are container shortages. We’ve had a week to 30-day delays on imports/exports and its starting to impact trade.”

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