COVID-19 has emerged not only as a significant health challenge but also one that has begun to impact business and economy in an unprecedented manner across the world. Latest indices are pointing towards a sharp slowdown in manufacturing output across countries. In fact the Corona virus outbreak could impact the global economy in 3 ways:
By affecting production- Countries beginning with China have already seen a major disruption in production. This in turn has had a ripple impact across the world. The impact has been felt on exporters to China as well as on China’s sources of import.
By disrupting the supply chain– With many countries dependent on importing intermediate goods from China and other impacted countries, supply chains have been majorly disrupted. The slowdown in the impacted countries therefore has had a direct bearing on the production and profitability of these countries as well.
By its impact on financial markets– Disruptions such as the ones mentioned above have its impact on declining equity markets and corporate bond markets. There is weakening trust in financial instruments and markets thereby causing widespread disruption.
China’s Impact
An important aspect of the impact is the fact that China has been at the forefront of this virus and that it is a primary supplier of core electronics components has impacted a host of industries.
There have already been a number of researches, among them that done by Omdia, a leading player when it comes to research in the areas of technology and telecommunications. The research points out that the smartphone market is likely to be impacted on account of China’s high market share. These trends are as true of PCB Manufacturing and PCB Assembly Industries.
The Chinese New Year traditionally has been a period when even in a regular year supply comes to a grinding halt. This year the period saw the issue being further aggravated with factories being closed and a host of quarantine measures and travel restrictions in place. Even in places where production is resumed the delays are already taking a toll on the supply chain.
Another major impact of this on the Electronics Manufacturing Industry is that engineering teams typically travel to China for development of new models and designs. New design development is likely to be seriously impacted with the travel restrictions. The fact remains that even when these restrictions are lifted, there could be a general hesitation with perceived fears of safety. Even if the old supply chains start moving, the issue of new design development is likely to remain unsolved in the short run.
In fact, the longer the duration of the Corona virus outbreak, the greater is going to be the impact on the PCB Manufacturing and Electronics Manufacturing industry, which may need to halt production. Surveys have gone on to show that there is likely to be a minimum of 5 weeks delay in shipments. The need of the hour for USA PCB Manufacturers clearly is to be prepared for them and have contingency plans in place and to prepare for the unexpected. Managing component flow is more important than ever now in ensuring that there is minimal supply chain disruption.
Likely Way Forward
At Mermar, we have our ear totally to the ground so as to be able to track the issue extremely closely. Regular contact with our freight partners also means that we track developments by the hour. If the situation worsens, of course, supplies could get hit further. Whichever way things turn we will be tracking them in real time giving us the ability to react quickly to any changes.
At this time it would be advisable to plan your estimated requirements well in advance and be in constant touch with your account managers who will do what it takes to mitigate the issues being faced as also keep you posted of developments. Please feel free to reach out to us for any clarifications as we tide these times together.
The pandemic, in that sense, is an eye opener on the fact that as global manufacturing declines businesses with international supply chains can get severely impacted and at best can operate only intermittently. In the long term, therefore, it is possible that the PCB Manufacturing industry could also look for onshore manufacturing options for supplies as a likely alternative.
Here is hoping the world overcomes the pandemic and the global economy begins to rebuild itself at the earliest!
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