Coronavirus continues to dominate global headlines, with the prospect of a global pandemic causing a ripple effect across global supply chains and the manufacturing sector.
Stocks have tumbled and travel warnings issued and procuring supplies from overseas has proved challenging, while a number of domestic suppliers are in overdrive to fill the gap left by idled production overseas.
This article will take a look at the latest impact of coronavirus on the global supply chain and explore some of the U.S. companies that are helping to stop the spread of the disease.
The Latest on Coronavirus
Although the number of new cases in China is beginning to wane, additional cases are rising in a number of other countries. There are roughly 80,000 cases of COVID-19 worldwide and 2,700 deaths at the time of this writing, with the fatality rate ranging from 2-4%.
Coronaviruses are a relatively common family of viruses that cause upper respiratory infections in humans. There are actually four distinct coronaviruses that infect humans on a regular basis and typically just cause the common cold. Although the otherwise innocuous common cold is a type of coronavirus, there are certain strains of the illness that can turn life-threatening.
Most cases have occurred in mainland China, where the virus originated, though it has now spread across the globe, with cases spiking in South Korea, Japan Italy, Iran, Romania and the United States.
In the U.S., there are currently 57 cases and no deaths.
Notably, these figures pale in comparison to the seasonal flu, which has accounted for 26 million illnesses in the U.S. alone in 2019 and 14,000 deaths.
However, the mortality rate for the flu works out to be roughly .05% -- far lower than COVID-19. Also, the novel coronavirus is relatively new and represents a significant number of unknowns.
Researchers are scrambling to understand this new virus and develop a vaccine.
Economic Repercussions
The global economy faces significant challenges as governments struggle to balance containment efforts with economic needs. The U.S. stock market plunged for a second straight day on Tuesday and markets around the world fared no better, as uncertainty continues to spook investors.
Milan, Italy’s financial capital, has been in virtual lockdown in response to the now 323 cases of coronavirus.
Supply Chain Vulnerabilities
The interdependence of global supply chains has come into focus as coronavirus fears spread.
Coronavirus fears have exposed vulnerabilities in the supply chain, with the U.S. heavily reliant on foreign sourced materials.
Although U.S. biotech companies are currently at the forefront of vaccine and treatment development, roughly 72% of pharmaceutical ingredients are manufactured outside the U.S., with much of that development occurring in China—the epicenter of the current outbreak.
Nations that rely on China-based supply chains are especially vulnerable. In Wuhan, the epicenter of the outbreak, factories have been closed, while many companies have required employees to work from home, travel has been restricted and trade limited.
China has recently pushed to reopen factories and restart production as the number of new cases has waned in recent weeks, but the process is slow-going.
Oil and Gas Woes
The oil and gas industry is especially vulnerable, having already taken a hit from falling oil prices. With the threat of coronavirus underfoot, oil prices continue to sink, dipping below $50 a barrel this week.
Energy industry stocks have plunged, on February 25th falling to their lowest close in 10 years. Demand for shipping continues to fall, as some of the world’s largest economies have seen their exports slow, particularly in Asia.
For instance, South Korea has seen its exports fall by ten percent, while imports have fallen fifteen percent.
U.S. Manufacturers on Deck to Help Stop Coronavirus Spread
Surgical masks are essential to fighting the spread of COVID-19 – yet, most surgical masks are made in China and Taiwan, with China producing roughly half of the world’s surgical masks and Taiwan producing another 20%.
With so many factories shut down in these regions, other suppliers are scrambling to fulfill these orders. One Texas manufacturer, Prestige Ameritech, the largest U.S. supplier of surgical masks, has found itself inundated with orders from around the world.
Currently, the company produces 600,000 masks per day, but the Department of Health and Human Services estimates the U.S. alone will require 300 million masks.
President Donald Trump has asked Congress for $2.5 billion in funding to help stop the spread of the disease. $1 billion of this would be earmarked for vaccine development and personal protective equipment, like surgical masks.
U.S. manufacturers that supply this type of equipment may see an increase in demand.
Many U.S. medical and surgical equipment companies rely on Chinese manufacturers to supply various parts and components of their final product.
According to IndustrySelect, there are currently 4,016 U.S. manufacturers of surgical and medical appliances, instruments and supplies. 15% of these companies rely on imported materials to produce these goods.
American Biotech Companies Rush to Address Coronavirus
A number of biotech companies have gone into overdrive, working on a potential vaccine, treatments and diagnositcs for COVID-19.
Among them is Gaithersburg, Maryland-based Novavax, and San Francisco-based infectious disease company Vir Biotechnology. Boston-based biotech firm Moderna emerged this week with the news that it has developed an experimental vaccine for the virus, which it had developed within 42 days of receiving the genetic profile of the virus.
Clinical trials are due to start, but the company say it will be at least a year before the vaccine is available to the public.
Tarrytown, NY-based Regeneron is also in the process of developing antibody treatments for the coronavirus.
The biotech company made headlines in 2014, when it developed antibodies for the Ebola virus within six months, following an outbreak in West Africa.
Finding Domestic Suppliers
Since 1912, MNI has been at the forefront of helping industrial buyers find domestic suppliers for their parts, supplies and services.
Supporting domestic manufacturing not only improves local economies, but also alleviates many of the uncertainties that can occur overseas.
MNI’s free industrial marketplace IndustryNet lists 400,000 U.S. manufacturers and suppliers of more than 10,000 types of parts and services.
