Mar 13, 2020 - Economy

Manufacturers' unease grows with coronavirus outbreak

Employees wearing face masks weld parts of ship at Shanghai Waigaoqiao Shipbuilding (SWS) company amid the novel coronavirus outbreak on March 3, 2020 in Shanghai, China.

Manufacturing in China partly resumes. Employees wearing face masks weld parts of ship amid the novel coronavirus outbreak. Photo: Yin Liqin/China News Service via Getty Images

Nearly 40% of electronics manufacturers feel worse about the impact of COVID-19 on their business than they did a month ago, according to an updated survey being released later today by electronics industry trade group IPC.

Why it matters: Although the coronavirus outlook in China is improving, elsewhere the situation has deteriorated. Plus, most companies are now dealing with problems on both the demand and supply sides of their businesses.

Among the other findings:

  • More than two-thirds of respondents said they have been told by suppliers to expect some shipment delays, and some of the delays are growing. While on average, companies are being told to expect three-week delays, 15% said they are being quoted delays of six weeks or longer, which no companies reported in last month's survey.
  • Similar to the past survey, electronics manufacturers actually expect the delays to average five weeks, which is significantly longer than the quotes they are receiving.
  • As for when things get back to normal, the majority of manufacturers and suppliers expect that to occur by July, with three-quarters expecting a normal situation by October. However, a quarter of respondents said it was too soon to say.

What they're saying: IPC chief economist Shawn DuBravac told Axios that although delays remain, the information has been largely clear and consistent, allowing companies to take orders.

  • "All indications suggest China's manufacturing capacity, and related transportation networks, are quickly coming back online and the early delays there are working through global supply chains now," DuBravac said, adding that ongoing "spot shortages" are being worked out.
  • "While companies aren't cutting back in significant ways right now, they do indicate a consensus that sales are likely to be lower this year as a result of the impact of coronavirus," he said.

Go deeper: Brace for coronavirus supply shocks

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