Supply Chain Disruptions Expected From Coronavirus Outbreak

Coronavirus crisis expected in USA


The China Coronavirus outbreak continues to spread worldwide with Italy being the latest country to identify rapidly spreading infection. While China’s reporting has been shaky at best, the spread of the virus here in the United States is very limited so far. The U.S. has restricted travel from China and established quarantine centers around the country for cruise ship passengers and other Americans who’ve come in contact with potential carriers.

With a pandemic announcement likely looming from the world health organization, the virus spread while alarming, the appropriate measures being taken are having a positive impact on its spread. The largest immediate impact beyond population sickness is economic in nature and we all need to be aware of that.

We saw a 3 percent drop in the stock market yesterday and down another 1000 points at this writing. Western democracies saw large increases in cases in Italy and manufacturers are starting to feel the real stresses on the global market caused by supply chain disruption due to China’s attempts to get the virus spread under control. Major impacts are likely to continue and worsen as more time passes without restrictions in China being lifted on travel and business operation.

The most significant major concern in America is the impact on pharmaceutical supply. Large numbers of drugs used to treat serious medical conditions are manufactured or their key components are produced in China. Medicines such as antibiotics amoxicillin, doxycycline, penicillin and other’s availabilities will be impacted as China continues its lock-down of factory workers because 90% of their sourcing is in China.

Are we at disaster levels yet? No, but the indicators are there that the strong possibility of a major supply chain disruption in manufacturing and medicine/medical device production is there: Apple corporation is reporting its unable to meet revenue targets this quarter due to reduced manufacturing and sales, the US Food and Drug Administration recently advised that potential disruptions may be on the horizon, and large medical technology company Medtronics recently announced its production is affected by factory closures continuing in China. By no means is it time to panic but all of us should be aware of what is really happening and why.

The US Centers for Disease Control recently said we should expect many more cases of the virus, that the numbers will rise quickly and sharply, increasing the need to take actions like telework and school, social distancing etc as the outbreak becomes more severe in the US. Government and non-government leaders around the world, especially in the United States, are working hard assessing supply chain impacts and planning for them but we all need to keep in mind we are dealing with a very fluid and evolving situation that can change dramatically over short periods of time.

This piece originally appeared in LifeZette and is used by permission.

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