Second, there are supply chain disruptions and shortages. “That’s the one I think that manufacturing is worried about the most,” Morgan told PlasticsToday. “You’ve got a certain cushion of inventory but that only lasts so long. We’ve not seen that in our markets, but automotive will be the most vulnerable the most quickly. The electronics firms will be hit hard, as well. We’re looking at that as something to come as inventories weaken. There’s some pain that manufacturing will experience as shortages deepen.”
There’s also the concern of another recession with global implications. “Most recessions are kicked off by a catalytic event — a black swan — and this has the potential to be that,” Morgan said. “We’re watching this very closely — looking at various scenarios mostly affecting shipping and looking at alternative routes and ports to make sure our bases are covered.”
Morgan added that it’s difficult to say just how much of an impact China’s “curtailed manufacturing” will have on processors in the United States. “So far it hasn’t had a dramatic impact on pricing,” said Morgan on the day of this interview. “Inevitably it will have an impact if other countries start suffering from China’s slowdown, like Italy. There’s obviously more anxiety.”
Speaking of Italy, RadiciGroup (Bergamo, Italy) just put out an announcement that all the production and sales companies of RadiciGroup are operating regularly and can ensure the continuity of business relationships with their customers and suppliers. “Despite the exceptional situation caused by the spreading of the coronavirus, our staff are working as a team harder than ever to guarantee and optimize . . . our business activities.”
RadiciGroup’s announcement noted that all the proper “precautions” prescribed by competent authorities are being taken to safeguard the health of the employees without interrupting work activities.
Concerning M. Holland’s business, Morgan added that the company has been “fortunate so far. We sourced some resin out of China a while back and have ample inventory, but in the next four to five weeks we’ll know whether we’ll have trouble with replenishments.”
Image: Eskystudio/Adobe Stock