Modern Australian

High-tech shortages loom as coronavirus shutdowns hit manufacturers

  • Written by John L Hopkins, Theme Leader (Future Urban Mobility), Smart Cities Research Institute, Swinburne University of Technology

There are now more than 45,000 confirmed cases of the coronavirus dubbed COVID-19 by the World Health Organization, and the disease has caused at least 1,115 deaths. The impact of the virus is now reaching way beyond public health: China is at the heart of global manufacturing, and as supply chains suffer, panic is beginning to set in.

In many provinces across China the government has urged hundreds of millions of workers to stay home to help reduce the spread of the virus. As a result, many factories have stayed closed since the Lunar New Year holiday in late January, halting the production of products and parts destined for countries around the world, including Australia.

Apple is one of the most high-profile companies affected, with its manufacturing partner Foxconn hitting a lengthy production delay, but they are far from alone.

Global supply chains, global problems

The sectors hit hardest appear to be high-tech electronics, pharmaceuticals and the automotive industry.

Globalised supply chains and just-in-time manufacturing mean many seemingly unrelated products are vulnerable to pauses in the flow of goods from China.

It only takes one small missing part to bring entire supply chains to a standstill. If a tyre manufacturer in the United States doesn’t receive valves from a supplier in China, a car plant in Germany won’t receive any tyres, and therefore can’t ship finished cars to its customers.

Something similar happened to automotive giant Hyundai, which had to suspend all operations at its manufacturing plant in South Korea due to a lack of parts from China.

Read more: We depend so much more on Chinese travellers now. That makes the impact of this coronavirus novel

Even tech companies such as Samsung, Google and Sony, which have moved their factories out of China in recent years, are being affected. They still rely on China for many components such as sensors or smartphone screens.

It is not just large businesses that will feel these effects. Many small businesses around the world also source products and parts from China.

The supply of these is now uncertain, with no sign yet as to when normal service may resume. For products and parts that are still being manufactured in China, new enhanced screening measures at all Chinese border crossings are likely to cause further delays.

How will Australia be affected?

The effects of the coronavirus are also being felt in Australia. China is our largest trading partner for both imports and exports. According to the United Nations Comtrade database, Australian imports from China were valued at A$85.9 billion in 2018. The biggest product categories were electronics and electrical equipment, making up A$19.8 billion, and machinery, which accounts for another A$15.7 billion.

Moreover, 90% of all Australia’s merchandise imports are from China, and half of those are engineering products such as office and telecommunications equipment.

Besides the well-publicised impact on airlines, universities and tourism, Australian construction companies are warning clients of upcoming project delays as a result of forecast disruptions in materials sourced from China. Aurizon, Australia’s largest rail operator, has said the coronavirus will delay the arrival of 66 new rail wagons being made in Wuhan, the city at the epicentre of the outbreak.

Expect shortages of high-tech goods

Product shortages could also soon be visible on retailers’ shelves, with electronics stores such as JB Hi-Fi and Harvey Norman expected to experience significant disruption to their supply of computers, televisions and smartphones.

When shortages like this occur, customers will struggle to buy the products they want, when they want them. The only channels available might be third-party resellers offering highly inflated prices. In extreme cases, supply shortages like these can also lead to panic buying and stockpiling.

More uncertainty ahead

It is commonly said that “when China sneezes, the world catches a cold”. So what is the long-term diagnosis for the coronavirus breakout, and what will the economic symptoms be?

As so much is still unknown about COVID-19, with no vaccine or formal means of preventing it spreading having emerged yet, it’s too early to predict what the full impact will be.

For many industries the next few months will bring high levels of uncertainty, with disruptions certain to continue, before recovery programs can start to gain traction.

This is obviously a worry for many organisations, but could also be a period of new opportunity for others, as the world comes to terms with this latest global health crisis. Supply chains that are agile enough to react quicker than their competitors’, or those with more robust risk management plans, might find themselves gaining greater market share as a result of this crisis.

Authors: John L Hopkins, Theme Leader (Future Urban Mobility), Smart Cities Research Institute, Swinburne University of Technology

Read more https://theconversation.com/high-tech-shortages-loom-as-coronavirus-shutdowns-hit-manufacturers-131646

NEWS

it's a proven way to reduce emissions but everyone's too scared to mention it

Opposition leader Anthony Albanese sought to claim the climate policy high ground last week with his commitment to a net-zero emissions target by 2050. But figures on Australia’s emissions from...

cashless welfare cards do more harm than good

ShutterstockThe Australian government touts compulsory income management as a way to stop welfare payments being spent on alcohol, drugs or gambling. The Howard government introduced the BasicsCard more than a...

women in mental health wards need better protection from sexual assault

ShutterstockMental health inpatient units should be safe and healing places. But we’ve found women staying in these units are being threatened, harassed and sexually and physically assaulted by men.These are...

Stone tools show humans in India survived the cataclysmic Toba eruption 74,000 years ago

Christina Neudorf, Author providedAbout 74,000 years ago a volcanic eruption at what is now Lake Toba in Sumatra, Indonesia, created one of the most dramatic natural disasters of the past...

Five Australian universities get the bulk of philanthropic donations

Wes Mountain/The Conversation, CC BY-NDPhilanthropy is a growing source of revenue for Australian universities. It’s essential to advancing quality research, equity and learning. On average, Australia’s top five fundraising universities...

Retirement Income Review can't ignore the changing role of home

natasaelena/ShutterstockThe assumption that retired people have minimal housing costs underpins the settings of our retirement incomes system. But the real state of housing for older Australians today makes it critical...

The jobs market is nowhere near as good as you've heard, and it's changing us

We are continually being told that more of us are employed than ever before. Reserve Bank Governor Philip Lowe points out (correctly) that a higher proportion of us are in...

the film that inspired Virginia Woolf, David Bowie and Tim Burton

Decla-Bioscop AGBerlin. February 26 1920. A new silent film, The Cabinet of Dr. Caligari, is released to unsuspecting German audiences and quickly becomes a worldwide sensation. “When will I...

Inquiry probing 55 matters relating to special forces' alleged misconduct in Afghanistan

The inquiry into allegations of misconduct by Australian special forces in Afghanistan is examining 55 separate incidents or issues, according to the Inspector-General of the Australian Defence Force report, tabled...

If you're ageing and on medication, it might be time to re-assess your alcohol intake

ShutterstockDrinking patterns tend to change as we age. The older we get, the more likely we are to drink on a daily basis. But older adults often perceive that drinking...

Government backs Labor call for Bettina Arndt to lose Order of Australia award

The Coalition government has supported Labor’s motion in the Senate to call for men’s rights activist Bettina Arndt to be stripped of her Order of Australia award over her comments...

Weinstein conviction a partial victory for #MeToo, but must not overshadow work still to be done

Hollywood producer Harvey Weinstein (centre) has been convicted of rape in the third degree and a criminal sex act in the first degree.AAP/EPA/Justin LaneThe downfall of disgraced Hollywood producer Harvey...

Popular articles from Modern Australian

Effective Ways to Improve the Value of Your HomeThe Complete Routine to Burn Fat and Build Muscle Tips to get softer skinFive things to do when visiting London5 ways to make your hair shiny through dietHow to stick to your resolutions all-year-roundDebunking Common Physiotherapy MythsWhat drives the growth of online betting in 2020?8 Ways CBD Is Influencing the Coffee IndustryHow to Play Baccarat Like an Expert: A Beginner’s GuideSURPRISE YOUR KID WITH DREAM TOYTIPS FOR BRIDE ON THE EXPO EVEThe Ultimate Annual Home Maintenance GuideWHY SHOULD YOU GIVE UP SUGAR?