Of all the concerns we could have to pick from at the start of the year as an industry, I can bet not a single one of us would have thought a disease would have been one of them. The new coronavirus, or COVID-19 as it is officially known, is spreading around the world, is more fatal than the SARS outbreak and a potential vaccine is up to 18 months away.
I look at how COVID-19 could affect the fenestration industry.
China is one of the fenestration industry’s biggest suppliers. Window and door hardware, door slabs, glass units. A lot of it is made in China. Problem is, much of the workforce has been told to stay at home since the Lunar New Year celebrations in an attempt to stop the spread of the disease. Whether this is working or not its not clear. Some days you see reports of new cases slowing down, then picking back up again. Regardless of that, factories in China are on a major slowdown.
So much so, Apple has released a statement in the last couple of days warning that it won’t meet its revenue guidance targets for Q1 due to supply problems from China and subdued demand.
If China’s factories aren’t producing because people aren’t turning into work, then our industry is not going to be immune from that. Although nothing has been said in public yet by any of our major companies, I have no doubt that in the background phone calls will be being made and contigency plans being considered should the outbreak continue to keep factories closed on the other side of the world.
What could the fenestration industry do should supply become a problem? The world buys from China because its cheap to produce there, its that simple. But in other industries some are already shifting production back to their own countries, or at least other parts of the world that are affected less by the virus. It would be prudent here in the UK to start considering the same. Especially companies who deal in window and door hardware for example. It might be wise to start finding UK suppliers.
That might sound dramatic, but consider that a vaccine is a good 18 months away. Although the rise in cases in China appears to be steady, they’re not reducing significantly either. The fatality rate is twice that of SARS and still rising. The virus infects younger people as well, rather than the traditional demographic of infants, the elderly and vulnerable people. This is going to be a long term problem with long term effects. It would be better now to start producing backup plans before the situation gets potentially worse.
To get an idea as to the damage being done to business by the coronavirus already, the IATA estimated that airlines alone stand to lose $27.8bn because of the virus.
Its still not clear yet how the virus is transmitted. We know it can be passed from human to human, but in what ways we’re not clear yet. Bodily fluids would be the main culprit, as with most flu viruses. So sneezing and coughing, spreading the disease through expelled moisture into the air. Enough is not yet known about the disease however, so there are fears that the germs could live on surfaces for up to 24 hours before dying. That kind of stuff makes transporting goods that have been exposed to potentially ill people dangerous. Especially when symptoms can apparently be dormant for up to two weeks before becoming obvious.
What all this does is make the movement of goods and people very hard. So even if factories did get back to work, its not yet clear that exports would be allowed to resume until it was clear the risk was significantly diminished.
If you read articles from the fenestration industry across the pond, companies are already warning that should the COVID-19 outbreak continue, it is likely to have an impact on performance in 2020. The China Glass 2020 exhibition is also being affected, with exhibitors being given extended deadline. But surely if the outbreak is not yet under control, shows like that will face pressure not to go ahead?
Its worth remembering that right now the chances of catching coronavirus are still low. The attention around this new virus though has been warranted due to the fact that this is a new disease, with little known about it, easily transmittable and a vaccine a long time away. So the risks remain high, which is why we have seen the reactions around the world we have seen so far.
Companies and businesses across all industries, including our own, should be putting into place plans to help minimise the risk of catching the virus. Things as simple as alcohol gel, ensuring staff always wash their hands when appropriate. Knowing when to self-quarantine if symptoms show. Basic stuff to make sure any outbreaks do not spread to other people.
Plans shold also be made to source products from other parts of the world, or the domestic economy, should the availability of products become a problem. As I have said, I think it would be good planning for fenestration companies who source from China to prepare contingency plans to produce products in the UK and help secure the supply chain.
What this does highlight is the vulnerability of the supply chain when something like this happens. We can do all we can to make sure deliveries are on time and the supply of product is good. But when mother nature gets involved, in this case with a new disease, it shows us that there is absolutely nothing we can do as an industry to prevent the damage being done. We are merely human beings in that regard.
There is an argument here for boosting domestic product of our products, whether its hardware, glass, door slabs etc. Supply chains would be better safeguarded from problems in other countries around the world and would help boost the domestic economy. I’m not saying that we should all be pulling out of Asia and shifting everything back here. Thats impossible and far too expensive to do. But there is a valid argument for creating a more balanced supply chain between domestic and overseas suppliers.
The path forwards for this disease and how we manage it is uncertain. South Korea and Japan are suffering from a rise in cases, with other countries also at risk of rising numbers. This is going to have a direct impact of industry of all kinds around the world as efforts to contain the spread of the virus shut down factories and stop people from going to work. As an industry we have to keep a close eye on this and monitor the situation closely.
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