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The spread of the Coronavirus across China is impacting global supply chains

By Team PPI on Feb 19, 2020 12:27:09 PM

Coronavirus is impacting manufacturing—what you need to know about the dangerous viral outbreak and what it means for global supply chains and the economy.


Hundreds and thousands of manufacturers have depended on China for parts to keep supply chains moving. But, in light of the recent viral outbreak in Wuhan, China, the global economy is beginning to feel the pain of relying on foreign manufacturing for parts necessary to the means of production.  

Coronavirus and its impact are tragic. Claiming more than one thousand lives and infecting more than 40,000 people at the time of this writing, it’s effects have been felt on a global level. 

But more than simply impacting the personal lives of those who have been struck by the upper respiratory infection, it has also begun to affect the global economy; borders have been closed, cities quarantined, and people have been left unable to work—either because they are sick or because their jobs have been shut down as a precaution. 

Authorities are trying to contain the illness from spreading. Many employers have been ordered to remain closed so as to limit the infection rate.

In fact, BBC News has reported that shutdowns are having a major impact on China’s economy and the global supply chains which rely on the manufacturing industry there. They say: “A large number of China's factories remain closed today even … after the Lunar New Year holiday was extended due to the coronavirus.”

While the conclusion of the holiday season means millions of people are back to work, many others are still off work and waiting for factories to reopen.

Some industries have been hit harder than others. Two that have been impacted include the auto industry and electronics industry. 

There is now the threat of a shortage of parts. Major car maker Hyundai has had to shut down the production of cars outside of China due to Coronavirus. And BBC News stated that Fiat Chrysler may also have to suspend production in Europe as it struggles to get enough components from China.


Impacts on the global market are indeterminate

China's share of the world economy is more than 16 percent and it is the world's second-largest economy. But it’s hard to say how much more of an effect Coronavirus will have on the country, and thus the world.

Many experts believe that it is too early to talk about the extent of economic consequences. If the contagion begins to slow and factories reopen soon, CNN Business reports that the result will be a fleeting hit to the Chinese economy in the first quarter and a dent in global growth.

But, if Coronavirus continues to spread, the economic damage will increase rapidly.


Intricate global supply chains and the reliance on third-world countries for parts has wide-spread ramifications when tragedy hits

It’s obvious when something like Coronavirus hits the impact that disrupted global supply chains have. But, day-to-day, reliance on foreign manufacturing influences our own economy and the American-made products that depend on them. 

It’s wasn’t always like this. 

After World War II, the United States had a strong manufacturing core and was a lead player in the production of our goods. In the 1960s, the importation of goods was as low as 10 percent. Yet, today, nearly half of all our goods are imported from other countries, most often from third-world countries.

In the 1970s, the American market was flooded with cheaper items from overseas markets. While this had some positive impact—American companies could control their production, labor, and marketing costs and gain a larger profit margin—the downside was poor-quality goods and the exploitation of workers in third-world countries, who often worked in dangerous conditions or as child laborers.

Slowly, we have seen an increase in American-made goods as top American manufacturers attempt to restore the manufacturing sector in our own country. The aptly-named “Made in the USA” movement has begun to influence Americans. Now, more than 80 percent of people would prefer to purchase products made right here in America. 

Plus, manufacturing in America means shorter lead times, higher safety and quality controls, reduced cost of deliveries, and more jobs for Americans. It’s also more environmentally-friendly.

Plus, there are issues with global supply chains as a whole. 

According to the Council of Foreign Affairs, trade itself is becoming less of a driver of global growth, and is confronted by a resurgence of protectionism across nearly all major markets. 

There are also other threats, which include climate change, decaying infrastructure, cyberattacks, and human rights abuses. 


Focusing on American-made parts ensures our economy continues running smoothly during a global crisis

There are many reasons to keep manufacturing here. When it’s focused in America, manufacturing creates a strong workforce and a strong economy. And it helps protect our factories from global emergencies that would otherwise delay or postpone production. Together, these reasons confirm that domestic manufacturing is invaluable for our economy. 

Our own proprietary system Round Mate is an Interchangeable Insert Molding System that allows you to build all your parts in-house, which means you don’t have to rely on a third-party at all. 

Learn more about Round Mate here.


About PPI

PPI produces high-quality parts, cuts lead times, and lowers production costs to uplift American manufacturing and provide our purchasers with a better solution. We are a full-service manufacturer located in Kenton, Ohio, that can provide engineering solutions every step of the way.

We offer both injection molding and tool-making capabilities, and through our proprietary Round Mate molding system and value-added services, we create an opportunity for you to make products right here in America.

If you’re interested in learning more, please contact our team. We would love to help you find an American-made solution for your plastic molding and injection molding needs. Call us at (800) 860-3974 to learn more.

Topics: round mate

Author: Team PPI

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