Internal alert in the large company for the coronavirus: "Lack of supplies in 2-3 weeks and factory shutdown"

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There is nothing worse for an economic or financial analyst than to walk around a factory and see the stores full of merchandise. The diagnosis leaves no doubt: either the company does not sell what it should or someone is handling operations very badly and charging the group unnecessary storage costs. In the Spanish plants that work with Chinese suppliers, the opposite is true today: the shelves are increasingly empty and, nevertheless, the rictus of their managers transmits every morning more restlessness. The culprit has a name: coronavirus , the epidemic that threatens the global economy and has led the Stock Market to its worst week since the fall of Lehman Brothers.

While the contagions today remain controlled - with 0.0000009% of the Spanish population affected -, the concern is spreading through the headquarters of the large Spanish industrial companies. The attack of Covid-19 comes on several fronts: less consumption, strong stock market falls ... but perhaps the one that produces the most panic at the moment is the one linked to the stoppage of its productive activity. The European business association Business Union has conducted in recent days a survey and various meetings with its partners - among which is the Spanish CEOE - to feel the mood of industrial groups. The internal report prepared after these contacts, to which EL MUNDO has had access, cannot be more devastating. “The main concern is the lack of supplies from China. There is a high probability that some manufacturers, mostly in the automobile and textile sector, will start running out of parts supplies in the next 2-3 weeks, ”says the document entitled First Internal Evolution of the Coronavirus.

For now, factories have survived thanks to the large stock of products that had accumulated preventively by the celebration of the Chinese New Year and the search for alternative suppliers, but more expensive. During the holidays in China, many companies raise their reserves from three to five months, which fortunately for much of them has delayed the critical moment of lack of products to the feared month of May. "Stock breaks are expected from May, not only of the products manufactured there, but also of European productions that depend on components that come from Asia," says Alejandro Lozano , responsible for technological goods, hardware and DIY of the Association of Manufacturers and Distributors Companies (Aecoc).

In the chemical sector, one of which concentrates a large part of imports of Chinese products, the situation is distressing. "We have a great dependence on Chinese value-added products that are not easy to replace, so in May or June we can have local production problems if the crisis spreads," adds Juan Antonio Labat , general director of the Feique chemical management .

This industrial expert explains that the problems are not only of local production in China, but of transport. The employees of the country return to work little to the factories but there are ports totally closed by the ghost of the coronavirus and important bottlenecks are created to remove the merchandise from the country. Something similar is already happening in northern Italy. “The main problem for many EU manufacturers is finding alternative supplies and dealing with existing contracts. If the situation does not improve and lengthens over time, some [members] have suggested the possibility of shortening the working time in European factories , but the risk of closure is also contemplated, ”says the report of the European employers.

This week the first impacts of this supply crisis have been known in Spain. The technological giant Fujitsu has decided to send home more than 300 employees from its factory in Malaga in a Temporary Employment Regulation File (ERTE) agreed with the unions for the coronavirus. It is not the only red alert that has been ignited at the headquarters of CCOO and UGT in recent days, so both social formations have rushed to demand from the Government a contingency plan that regulates quarantine situations and stops layoffs.

Pessimism has also been spread to investment banks. Bank of America was the first to put a figure in the cut on the forecast of GDP growth for this 2020 due to the impact of the virus. According to his calculations the brake will be two tenths or, in round figures, 2,400 million euros . UBS, for its part, focuses on the sectors that will be most affected by the crisis: electronics, machinery, luxury goods and automotive.

The other major threat goes through buying China, that is, the role of the Asian country as the engine of the world economy. The quarantine to which the population is subjected in much of the country has reduced the consumption of homes and businesses and reduced their imports by up to 15%. Not even Apple's iPhone has been saved, which according to data collected by telecommunications market analysts reduced its sales in China by 28% during the month of January with the first contagion alerts. “The sharp decline in consumption in China is affecting different industries and services with or without a presence in the country. There has already been a great impact in the aviation sector, on certain agri-food products or in the automobile sector (demand has fallen 90% in recent weeks) ”, concludes the report of the European employers.

But the problem is not just China. The industrial ties that unite the country with the main European potentials have now become heavy ballasts due to the consumption and production brake. Italy and Germany, two of Spain's main trading partners, will foreseeably enter this semester in recession with the consequent reduction in orders for Spanish factories.

According to the criteria of The Trust Project

• China
• Italy
• Spain
• Malaga
• UGT
• iPhone
• Germany
• Asia
• CCOO
• CEOE
• economy
• Motor industry
• Coronavirus

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