I live in the world of HVAC distribution, which is basically a subset of industrial distribution. The information flow concerning COVID-19 is interesting. There are some of my vendors who are in full freak out mode, as they are already getting short on items imported from China. Some of these items are part of a larger item being put together either in Mexico or here in the States. Other items are things that my vendors simply repackage and resell. I have also heard a rumor that certain chemicals and finished copper products are going to have issues in the near future. There are some vendors that are just “shoulder shrugging” the whole thing off at this point. The reactions are all over the board from my vendors.
I imagine that we will know a lot more when the Spring AC calls start coming as most vendors typically have a 30-60 day safety supply stateside.
This could end up quite profitable for other regions of the world vs. China, and it may be business that China will never get back. Time will tell.
Dan,
My son is an award winning master brewer. He is up in your neck of the woods [within a couple hundred miles as the crow flies] where he was hired to design, build, and run a brewery for a few years. His contract is coming to an end and they have decided to move home to Colorado. He, beloved daughter-in-law, and beloved baby grandchild were here over the long weekend checking out real estate for the return next year. Y’all can guess that Grandpa and Grandma were overjoyed.
While they were here, I talked with my son about what has been happening from the COVID-19. In his industry, the only affordable kegs and cans ready to fill come ultimately from China. The big tanks and brewing vessels come from China. They are OK for now because being a micro-brewery they do not can, they have plenty of kegs, and probably will be raising the deposit on the kegs drastically. They just completed a major expansion of their brewing capacity and have the additional tanks and brewing vessels in hand and online. It sounds like though, that starting up from scratch in the brewing industry is going to be an absolute bugger. I assume that replacements for breakdowns is going to be a similar bugger.
For many industries, not all, it seems now that there will be shortages and increased prices, but if we prevent the Democrats from taking power here we may be able to make the adjustments eventually so we are not suffering too badly from shortages of the goods we outsourced to China. Maybe. But economically it is going to hurt. I don’t want to even think about how much it is going to hurt the electronics and auto industry.
Apple betting the farm on China is going to hurt them. They will be known for both kinds of viruses maybe. Car components are coming up short already, I understand as Chinese manufacturing and supply chains go Tango Uniform ripple effects are hitting. I heard a couple of weeks ago that Hyundai in South Korea had to shut down because they could not get parts and components from China.
The other reason to keep Democrat/Marxists out of power at all costs is to maintain some form of disease quarantine control of our borders. KEEP IN MIND THAT EVERY SINGLE DEMOCRAT PRESIDENTIAL CANDIDATE RUNNING HAS DECLARED IN PUBLIC DEBATES AND/OR THEIR PLATFORMS THAT THEY WILL INSIST ON WIDE OPEN BORDERS. Everywhere, literally, where the Democrats hold sufficient power they have declared themselves a sanctuary for illegal invaders, offering in some places to protect them with deadly force. Keeping a pandemic out is worth exercising the right to control our borders.
Subotai Bahadur
Fascinating, Dan and SB. I should think that a lot of manufacturers and suppliers will be re-thinking sourcing things from China …
I am an Amazon Vine reviewer – I can ask for and receive a wide variety of items, for nothing more than using them and posting a fair review; a lot of items received lately are from … ta-dah! China! We have begun wondering when those consumer goods will began vanishing from my Vine queue.
I have an acquaintance that needed some large plastic injection molds. They were far less expensive from China then domestic, still 6 figure. Chinese companies have gone very aggressively after all sorts of high end industrial production and until very recently had a good reputation.
They’re doing the actual production in the U.S. so will have some chance to find an alternative supplier, probably in competition with all of the others doing the same thing. They’ll probably be competing for molders as well with other companies on-shoring.
Another sector that is nearly 100% Chinese produced is vaping.
https://www.resilience360.dhl.com/resilienceinsights/force-majeure-a-new-dimension-to-the-coronavirus-outbreak/
With production and logistics operations across China gradually resuming, supply chain managers across industries like automotive, machinery, and chemicals may soon face a new risk dimension pertaining to the coronavirus outbreak: suppliers or buyers invoking force majeure. As authorities seek to provide financial and legal support to companies struggling with the coronavirus fallout, the China Council for the Promotion of International Trade (CCPIT) has already issued force majeure certificates to 1,615 companies covering 30 sectors and a total contract value of RMB 109.9 billion (USD 15.7 billion; EUR 14.5 billion) until February 16.